Credit Suisse eyes new cuts as profits plunge

Swiss banking giant Credit Suisse said on Thursday that third-quarter net profit plunged 63 percent to 254 million Swiss francs ($225.6 million) and that it would enact further cost cutting measures.

Credit Suisse eyes new cuts as profits plunge
Photo: Giorgia Xenakis (File)

The net profit slightly exceeded the 230 million francs expected by analysts surveyed by Swiss financial news agency AWP.

However the bank increased its intake of new funds by 20 percent compared to the level the previous quarter to 5.3 billion francs and said that assets under management rose by 3.1 percent to 1.25 trillion.

We are successfully executing on the strategic measures we began last year," said chief executive Brady W. Dougan said in a statement.

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," he added.

While Credit Suisse said it has already significantly cut costs and improved efficiencies, it announced further it would seek to make an additional billion in cuts in 2014 and 2015 to take total savings to 4 billion francs.

Thanks to such measures Credit Suisse will be able to attain its target of 15 percent return on equity over the business cycle, said Dougan.

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Credit Suisse slashes jobs, branches to move ‘online’

Credit Suisse, Switzerland's second-biggest bank, said Tuesday it would reorientate its domestic services towards digital banking, with a quarter of its Swiss branches to close and hundreds of jobs at risk.

Credit Suisse slashes jobs, branches to move 'online'
A Credit Suisse branch. Photo: FABRICE COFFRINI / AFP

“In the last two years alone, use of online banking at Credit Suisse has grown by approximately 40 percent, while the use of mobile banking has more than doubled,” the bank said in a statement.

“The COVID-19 crisis has further accelerated these trends. In contrast, the number of visits to branches has been declining for years.

“Credit Suisse will introduce a new digital offering and a future-oriented branch concept at the end of October.”

The bank also plans to merge the activities of regional subsidiary Neue Aargauer Bank with those under the Credit Suisse brand to avoid duplication.

READ: How to open a bank account in Switzerland 

With its realignment, the bank intends to reduce annual costs by around 100 million Swiss francs ($110 million, 93 million euros) from 2022 onwards. It plans to cut the number of bank branches from 146 to 109.

Meanwhile up to 500 jobs could be axed, Andre Helfenstein, head of the bank's operations within Switzerland, told reporters during a conference call.

The restructuring costs are expected to be 75 million Swiss francs. “Digitalisation is happening all around us,” Helfenstein said in a statement.

“The changes we are making to our branch network — while simultaneously investing in digital solutions and in advisory services for clients with more complex needs — represent a logical step forward.”

In late July, the bank's new chief executive Thomas Gottstein unveiled his plans for Credit Suisse, which involved regrouping its different investment bank activities.

Gottstein took charge in February after Tidjane Thiam was ousted over a massive spying scandal.