Credit Suisse Estimates Lowered

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Credit Suisse Estimates Lowered

By Ann Heffron on December 12, 2008 | More Posts By Ann Heffron | Author's Website

We are continuing our Hold on Credit Suisse Group (CS). On December 4, CSG announced a 4th quarter net loss of CHF3 billion through the end of November due to weakness at the investment bank, which is being restructured. The investment bank will reduce risk-weighted assets by 43%, headcount will be cut by 11%, and total costs will fall by CHF2 billion.

In the third quarter (in line with its pre-announcement), CSG posted a net loss of CHF1.3 billion compared to net earnings of CHF1.3 billion a year ago. This poor performance reflected large trading losses and further writedowns in the leveraged finance and structured products businesses. In other news, Credit Suisse has raised CHF10 billion in Tier 1 capital, with a pro forma Tier 1 ratio of 13.7% at September 30, 2008, which exceeds regulatory requirements for 2013.

We are cutting our estimates to a net loss of $4.60 from EPS of $2.45 for 2008 and to EPS of $1.30 from $5.85 for 2009.

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