Credit Suisse reported a 31 percent fall in group net profits to 1.302 billion Swiss francs ($1.12 billion), with profit at its investment banking unit all but wiped out by mortgage-linked writedowns.
Investment banking income was hit by writedowns of over 2.2 billion Swiss francs ($1.9 billion) in leveraged loan commitments, residential mortgages and collateralised debt obligations. The division barely broke even, making a net profit of 6 million francs.
Banks worldwide have taken charges totalling more than $20 billion on holdings in mortgage-backed securities which have been hit by rising defaults in U.S. subprime mortgages -- loans extended to borrowers with patchy credit histories.
"The extreme market conditions that characterised the third quarter affected many of our businesses," Chief Executive Brady Dougan said in a statement on Thursday.
"It is too early to predict when all of the affected markets will return to normal levels," he added.
Net new money in wealth management was 9.7 billion Swiss francs, the Swiss bank said, down from 10.9 billion francs in the third quarter of 2006 and compared with an average forecast by analysts of 10.7 billion francs.