Credit Suisse swung to a fourth-quarter loss of SFr353m ($393m) as coronavirus-related credit writedowns and provisions for litigation eroded modest gains in underlying performance at the bank.

Write-offs related to underperforming loans and defaults tripled to SFr1.1bn, almost four times higher than the average level over the previous 11 years, the bank said on Thursday. This was driven by the economic fallout from the coronavirus pandemic.

The results mean Credit Suisse’s net income for 2020 was down 22 per cent year on year to SFr2.7bn, with revenues flat at SFr22.4bn.

By contrast, Zurich rival UBS posted its highest profit in five years last month, with a 54 per cent year-on-year increase to $6.6bn. The group benefited from a surge in trading and avoided significant writedowns.

UBS’s share price has risen 8 per cent over the past 12 months, compared with a 6 per cent fall for Credit Suisse, which fell 0.5 per cent on Thursday morning.

During the last three months of the year, Credit Suisse also booked a loss of SFr414m related to its ownership of hedge fund York Capital Management and SFr757m in litigation costs. Credit Suisse had previously disclosed both hits to profits.

The numbers are nevertheless comfortably ahead of analysts’ expectations, which had a consensus forecast for a SFr566m loss in the fourth quarter leading to a net income of just SFr2.45bn for the year.

“Despite a challenging environment for societies and economies in 2020, we saw a strong underlying performance across wealth management and investment banking, while addressing historic issues,” said chief executive Thomas Gottstein.

Hits to the bank’s profits in recent months and embarrassing legal cases have been an early hindrance for Gottstein, who took the helm of the Swiss lender in February last year.

Gottstein announced Credit Suisse had pared back its bonus pool by 7 per cent this year, having previously said it would be reduced following a year of restructuring and damaging scandals.

But he added some staff, such as investment bankers who brought in strong revenues in the equities business, would receive higher bonuses, while most workers in other divisions would see reductions. “We had a mixed 2020 . . . [but] we have to pay for performance,” Gottstein said.

Gottstein told the Financial Times in December he hoped Credit Suisse could start 2021 with a “clean slate”.

The bank said that despite the fall in profits for 2020, it would push ahead with plans to return capital to shareholders, and had begun its 2021 share buyback programme, under which it would return SFr1.5bn to shareholders over the year.

Credit Suisse said it was also on track to meet its aim of increasing its annual dividend by 5 per cent a year.

In its core international wealth management division — which caters to wealthy clients — underlying revenues, excluding exceptional charges and foreign currency fluctuations, were down 10 per cent year on year at SFr4.9bn. Underlying income in the division dropped 30 per cent to SFr1.18bn.

In its investment banking arm, Credit Suisse reported stronger performance, with underlying revenues up 18 per cent to SFr9.7bn, and income up 70 per cent to SFr1.88bn.

Underlying revenues at its Swiss retail banking division were flat, with a modest decline in income. In its Asia Pacific division, underlying revenues rose slightly over the year by 5 per cent, but profits fell 7 per cent.