Credit Suisse Estimates Lowered

On February 11, 2009, Credit Suisse Group (CS - Analyst Report) posted a net loss from continuing operations of CHF5.5 billion, which was worse than our estimate, largely reflecting higher-than-expected trading losses and CHF833 million in costs related to accelerated implementation of CS's strategic plan to restructure the investment bank. Results benefited from CHF2.1 billion accounting gain from the widening of credit spreads on CS's own debt.

The investment bank will reduce risk-weighted assets by 43%, headcount will be cut by 5,300 (of which 2,600 was reflected in 2008, with the balance in first half 2009), and total costs will fall by CHF2 billion. In other news, Credit Suisse raised CHF11.2 billion in Tier 1 capital, resulting in a 13.3% Tier 1capital ratio at 2008 year-end, and cut the dividend to CHF0.10 from CHF2.50 in 2007.

We are reducing our 2009 EPADS estimate to ($1.15) from ($1.30) due to higher estimates for loss provisions and a change in FX assumptions related to appreciation of the US$ against the CHF.

Our current recommendation for CS is Hold. The Zacks rank is 3, indicating no clear directional pressure on the share price. In afternoon trading, CS shares are up over 8% from Monday's closing price of $21.55.

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