Credit Suisse plans further cost cuts
Credit Suisse increased a target for cost reductions after posting a drop in third-quarter profit that exceeded analysts' estimates on an accounting charge related to its own debt.
The Swiss bank plans to save an additional 1 billion francs in costs by the end of 2015, adding to the 3 billion-franc savings programs already announced, Zurich-based Credit Suisse said in a statement today.
Net income fell 63 per cent to 254 million Swiss francs (€209 million) a year earlier.
Chief executive officer Brady Dougan is cutting costs and accelerating a capital build-up as Europe's sovereign-debt crisis curtails client activity and hurts earnings.
The bank booked a pre-tax charge of 1.05 billion francs in the quarter because of an accounting rule tied to the theoretical cost of buying back the bank's debt as market prices fluctuate.
"We have realigned our business to better meet the demands of a changed regulatory and market environment and, in doing so, have substantially reduced risks," Mr Dougan said in a statement today.
"At the same time, we have significantly cut costs and improved efficiencies across the bank. We are committed to deliver additional cost savings in subsequent years."
Credit Suisse gained 24 per cent in Zurich trading since July 18, when it announced plans to cut an additional 1 billion francs in costs by the end of 2013 and boost capital by 15.3 billion francs after the Swiss National Bank called for a "marked increase."
The investment bank posted a pre-tax profit of 508 million francs in the third quarter, compared with a loss of 720 million francs in the year-earlier period.
Earnings in private banking jumped to 689 million francs from 207 million francs a year ago, when Credit Suisse booked provisions related to German and US probes into alleged tax evasion by some clients.
Asset management profit rose to 222 million francs from 97 million francs, helped by a 140 million-franc gain on the sale of a 7 per cent stake in Aberdeen Asset Management.
The US Federal Reserve's third round of quantitative easing "has had a positive impact on investment bank revenue streams," Teresa Nielsen, a Zurich-based analyst at Vontobel, said in a note to clients before today's release.