The Swiss bank said it had a made a strong start to 2009 and each division was showing a profit in the year to date, echoing relatively upbeat comments from rival UBS AG which on Tuesday reported the biggest annual net loss in Swiss corporate history.
"We are well positioned going into 2009," Chief Executive Brady Dougan told a news conference, but added: "This is not a light at the end of the tunnel message".
Switzerland's second-largest bank unveiled an annual net loss of 8.2 billion francs, worse than the average analyst forecast of 6.3 billion from a Reuters poll but in line with predictions from some Swiss newspapers and less than half the loss posted by UBS.
Credit Suisse racked up a fourth-quarter loss of 6 billion Swiss francs ($5.2 billion), missing an average analyst forecast of 4 billion while further reducing its exposure to risky asset classes as it slashed its dividend and staff bonuses.
On average bonuses were slashed by 60 percent, with managing directors getting no unrestricted cash. The overall bonus payout for 2008 was 2 billion Swiss francs, mostly for junior staff.
Dougan said the bank had made mistakes but now had a stronger capital base than most of its peers thanks to a Tier 1 ratio of 13.3 percent and less than 12 billion Swiss franc of toxic assets on its books and was still managing to attract client inflows at its private bank.
West LB analyst Georg Kanders said: "Results are negative and not much better than UBS in Q4. But there were lots of extraordinary items ... Toxic assets are now less of an item. They have confirmed they have been significantly reduced.
"Overall I would say that wealth management did much better than UBS. They have also had a positive start in January and just confirmed they have new inflows in the period."
After falling as much as 7 percent, shares in Credit Suisse later turned positive, rising 1.1 percent to 31.22 francs at 1151 GMT, while UBS shares, which gained strongly on Tuesday, rose 1.3 percent to 13.80 francs, compared with a 1.1 percent drop in the DJ Stoxx European banking index.
BIG TRADING LOSS
CS also cut some of its long-term targets, including its goal for an annual return on equity which was pared back to "above 18 percent" from a previous 20 percent.
It said it would pay a 2008 cash dividend of just 0.10 francs, compared to 2.50 francs in 2007.
Credit Suisse had already warned in December that it made a net loss of about 3 billion francs in October and November and would take restructuring charges of about 900 million in the quarter as it moves to cut 5,300 jobs, or 11 percent of staff.
Analysts were also anticipating the 538 million franc loss it booked in the quarter for selling part of its fund management arm to Aberdeen Asset Management, but said they were surprised by the extent of trading losses in December.
The bank was hit by a trading loss of 6.7 billion francs in the quarter, of which about 1.7 billion francs came in December.
Credit Suisse said its private bank recorded net new assets of 50.9 billion francs in 2008, but only 2 billion in the fourth quarter, as strong net client inflows of 13.8 billion francs were offset by deleveraging.
"Inflows in the private bank look disappointing. A good aspect is that they have said January was positive, but the first impression is that the report is weak," said Citibank analyst Jeremy Sigee.
Walter Berchthold, CEO of private banking at Credit Suisse, said half the deleveraging happened in Switzerland while inflows mainly came from the U.S. onshore business: "I think the worst is behind us," he said, talking about the trend in deleveraging.
Credit Suisse said it had achieved about 50 percent of its targeted job cuts to bring headcount down to 47,800 by the end of 2008. It reiterated a target of paring its investment bank to 17,500 staff by the end of 2009 from 19,700 at the end of 2008.
Dougan said Credit Suisse, which contrary to UBS did not need state help, will focus more on private banking, where he sees the best growth environment in a generation, and asset management.
Credit Suisse today reported a record full-year loss of 8.2bn Swiss francs (£4.91bn) after suffering losses of 14.2bn francs at its investment bank in 2008.
Switzerland's second-largest bank is already shedding 5,300 jobs and said it was halfway to its target of bringing its headcount down to 47,800 by the year end. The investment bank's staff is being shrunk by 2,200, to 17,500, and the bank said it was on track to deliver 2bn francs of cost savings.
It underlined the depth of the crisis unleashed in the final quarter of last year by recording a pre-tax loss of 7.8bn francs in investment banking. But Brady Dougan, CS's chief executive, insisted that the bank had made a "strong" start to 2009 and was trading profitably across all divisions.
"We have positioned our businesses to be less susceptible to negative market trends, if they persist in the coming months, and to prosper when markets recover," he stated. He later told reporters that he was "optimistic" about the business but could not yet deliver a "light at the end of the tunnel message".
Dougan hailed CS's Tier 1 capital ratio as one of the strongest in the banking sector. He added: "We now have a capital-efficient and streamlined investment banking business with a significantly lower risk profile."
He insisted that, unlike UBS, his bank had no need to seek government aid after raising 10bn francs last year from Middle East investors. "If CS manages to get out of this crisis without the support of the Swiss government and Swiss national bank, then it will have a strong competitive advantage compared to most of its international peers in future," said Nicolas Michellod of research firm Celent.
Reporting a day after its bigger rival UBS made Swiss corporate history with a 20bn franc loss, CS underscored its relative health by showing net new assets in private banking of 51bn francs during 2008, though these dwindled to just 2bn francs in the final quarter. UBS has consistently suffered net asset outflows – a trend reversed only in recent weeks. CS said its private banking operations earned 4.2bn francs – down 23% on 2007, but net revenues slipped just 5%.
The annual losses at the bank, including a net loss of 6bn francs in the final quarter alone, was worse than analysts' expectations, with one saying the outturn was simply "horrible". CS, which cut bonuses by 28%, wrote down a further 3.2bn francs of leveraged finance and structured products in the final quarter. Job cuts cost it a further 600m francs.
The bulk of the losses, it explained, came in December when its standard hedges became ineffective "in the extraordinary market environment" and it was hit by "a severe widening of credit spreads".
The scale of the crisis caused by the failure of Lehman Brothers was again underlined by the collapse of the bank's core net annual revenues, from 34.5bn francs in 2007 to 11.9bn francs. But CS's corporate and retail banking division bucked the trend with record pre-tax profits of 1.8bn francs.
The total of risky assets in investment banking was down to 11.6bn francs, from 27bn francs at the end of September and 99bn francs at the start of the credit crisis 18 months ago.
Credit Suisse shares, which fell more than 8% at one point, recovered to show only marginal losses by midday as investors predicted a healthier recovery than at rival UBS.
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