Feb 25 (Reuters) - Credit Suisse Group AG CSGN.VX will need to take another $2.5 billion of writedowns on its residual exposure to fully complete its exit of troubled assets, an ING analyst said.
However, analyst Alain Tchibozo expects the Swiss bank’s earnings capacity to recover by 2010.
With trading continuing to account for two thirds of the investment banking revenues, Credit Suisse’s revenues are not expected torecover fully until next year, the analyst said.
Earlier this month, Credit Suisse posted its biggest-ever annual loss after a poor fourth quarter hit by trading losses and restructuring charges, but expressed cautious optimism for 2009.
The investment bank business, the main source of the bank’s troubles in 2008, reported a fourth-quarter pretax loss of 7.78 billion Swiss francs and a full-year loss of 14.18 billion francs. [nLB52428]
Credit Suisse is exiting some of the riskier and more capital-intensive investment-banking activities, for example mortgage lending and highly structured derivatives, and beefing up in equities, foreign exchange and advisory businesses.
Tchibozo cut his 2009 earnings forecast for the bank by 48.5 percent as he expects Credit Suisse to complete the markdowns, and said adverse conditions could push it into losses, with the bulk of the negative coming from capital markets.
The analyst maintained his “hold” rating on the stock and slashed his share-price target to 28.50 Sfr from 40.5 Sfr. Shares of Credit Suisse were up 5 percent at 26.38 Sfr by 0927 GMT Wednesday.
(Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott)
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