Swiss financial services firm Credit Suisse Group AG reported a pre-tax loss of $2.42 billion for 2015, its first full-year loss since 2008, owing to a challenging fourth quarter and substantial write-downs and legal expenses, the company said Thursday. The company also vowed to step up its downsizing program designed to cut 3.5 billion Swiss francs ($3.5 billion) in costs and eliminate 4,000 jobs by 2018.
Shares of the company dropped 12 percent in reaction to the results. The bank's stock has dropped about 29 percent this year.
The bank said it expects the current set of measures to save up to 1.2 billion Swiss francs ($1.2 billion) annually — about a third of its targeted cost reductions by 2018. Under the overhaul, announced in October last year, the company pledged to scale back the investment banking business in favor of wealth management.
"There are a lot of restructuring charges attached to what we are doing. It's a big clean-up, but it's necessary," CEO Tidjane Thiam told CNBC.
The cost cuts also include reducing Credit Suisse’s bonus pool by 11 percent.
Big financial agencies have scaled back their investment banking divisions amid tougher capital requirements and a slump in revenue. At Deutsche Bank AG, the investment banking unit slipped into losses while UBS Group AG reported a drop in profits at its investment bank. Both companies have announced sweeping job cuts in the past quarter.
In the fourth quarter, Credit Suisse swung to a loss of a 5.8 billion Swiss francs ($5.8 billion) compared to a profit of 691 million Swiss francs a year earlier, hurt by a goodwill impairment of 3.8 billion Swiss francs. The company also warned that it expected markets to remain volatile through the remainder of the first quarter of 2016
“It is not clear when some of the current negative trends in financial markets and in the world economy may start to abate,” Thiam said.
“We view these as very poor results,” Citigroup Inc. analysts including Andrew Coombs told Bloomberg Thursday. “We do not believe the 2018 targets are achievable. We expect near-term profits will continue to suffer as the bank restructures.”