By John Revill
ZURICH (Reuters) – Credit Suisse <CSGN.S> expects to take a write-down of 2.3 billion Swiss francs (2 billion pounds) during its 2017 fourth quarter following changes to the U.S. tax system, the Swiss bank said on Friday.
A tax overhaul, signed into law by President Donald Trump on Friday, means Switzerland’s second biggest lender will have to reduce the value of its deferred tax assets.
The figure suggests Credit Suisse would make a net loss for the full year, which would be its third straight annual loss. It reported 1.1 billion francs in net income in the first nine months of 2017.
The U.S. tax package, the largest such overhaul since the 1980s, slashes the corporate rate from 35 percent to 21 percent and temporarily reduces the tax burden for most individuals.
Credit Suisse described the loss as a one-time accounting adjustment with a “minimal impact” on the bank’s regulatory capital position.
It said the policy for returning capital to shareholders announced at its Investor Day remained unchanged.
The figure was higher than a previous estimate Credit Suisse gave earlier this month, when it said it expected the tax cuts to cost it 2.1 billion Swiss francs.
Cross-town rival UBS<UBSG.S> said then it expected 3 billion francs in deferred tax asset write-downs due to the tax cut, according to its own estimates.
Credit Suisse also said on Friday that it expected to face a bigger U.S. corporate tax liability due to the introduction of a new tax on services and interest payments to affiliated companies outside the United States.
It added that it expected the tax changes to increase its activity levels in the United States, particularly in investment banking.
It said it would give further details on the implications of the U.S. bill when it publishes its fourth quarter results on Feb. 14.
($1 = 0.9891 Swiss francs)
(Reporting by John Revill, Editing by Rosalba O’Brien)