LONDON — Credit Suisse posted a loss of 2.35 billion Swiss francs ($US2.34 billion) for the last three months of 2016, a bigger hit than the 2.07 billion francs estimated by seven analysts surveyed by Bloomberg.
The bank must pay $US5.3 billion to settle a US Department of Justice investigation into the behaviour of its residential mortgages division leading up to the 2008 financial crisis Under the terms of the settlement, pushing the lender to a loss for the year.
CEO Tidjane Thiam said: “We have reached an agreement with the US Department of Justice on the RMBS matter, thus removing a major source of uncertainty for our future.”
Despite the litigation cost, Credit Suisse managed to maintain a high capital ratio, which is an indicator of how well the bank can weather losses in the future.
The lender had a ratio of 11.6%, down from 12.5% before the DOJ settlement but higher than the 10.2% ratio when the bank’s new strategy began in October 2015.
Like many European investment banks, Credit Suisse has had to rethink its business model in an environment of low interest rates, low economic growth and increased regulation.
The bank’s CEO, Tidjane Thiam, has tried to steer away from the capital-intensive markets business towards providing more services for high-net worth individuals. Credit Suisse committed to slashing headcount by 6,000 people in 2016.
“2016 was the first full year of implementing our new strategy and it was a challenging and busy 12 months,” Thiam said.
“Thanks to our strong client franchise and the dedication of our teams, we have made good progress on our key objectives.”