Credit Suisse to cut costs after Q3 profit slump
GENEVA -- Credit Suisse Group said Thursday it would boost its cost-cutting program as it posted a 63 percent fall in third-quarter profit following an accounting charge on its debt.
Switzerland's second-largest bank, which is already shedding 7 percent of its workforce, or about 3,500 employees, did not provide details on how many more jobs would be targeted as part of plans to cut an additional 1 billion Swiss francs ($1.07 billion) in costs in 2014 and 2015.
Those reductions are to come on top of the 3 billion francs in previously announced cuts the Zurich-based bank plans to have achieved by the end of next year.
Shares in Credit Suisse rose 2.3 percent to 21.82 francs in early trading on the Zurich exchange.
The cuts were announced as the bank reported net profit of 254 million Swiss francs ($272 million) between July and September, compared with 683 million francs ($785 million) in the comparable period of 2011.
The bank attributed the decline to a pretax charge of 1.05 billion francs ($1.12 billion) linked to an accounting rule on how banks must value their debt. Banks can post gains if the value of their debt falls, because it would theoretically become cheaper for the bank to repurchase that debt. But the rule also says that when a bank's debt increases, it must take a write-down because it would theoretically have to pay more to buy back its own debt on the open market.
Credit Suisse also said most of its credit risk is linked to its private and investment bank, adding that its exposure to Greece, Ireland, Italy, Portugal and Spain rose to (EURO)4.2 billion ($5.5 billion) from (EURO)3.9 billion three months earlier.
Chief Executive Brady Dougan said the bank is successfully implementing cost-saving measures it began last year and substantially reducing risks while realigning business and improving its capital cushion to meet regulatory and market demands.
"At the same time, we have significantly cut costs and improved efficiencies across the bank," he said.
Analysts at Zuercher Kantonalbank said Credit Suisse's third-quarter results met expectations, noting that investment banking and fixed-income trading had profited from the good market conditions while margins at the bank's wealth management business were disappointing.
Associated Press Writer Frank Jordans contributed to this report from Berlin