Credit Suisse: DOJ Settlement Resolution Provides Earnings Clarity

Credit Suisse’s litigation settlement with the DOJ over its pre-financial crisis mortgage-related underwriting and securitization practices provides better clarity over the bank’s litigation expenses over the upcoming years. Thesis : Progressive ROE normalization to just 7% by 2021 and book value of equity growth of 3%-5% year-over-year would project to generate annualized returns of ~10% over the next five years.