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Credit Suisse cuts costs to counter high franc

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Credit Suisse cuts costs to counter high franc
Photo: AFP
12:34 CET+01:00
Swiss banking giant Credit Suisse on Thursday reported a better-than-expected profit for 2014 but also announced cost-savings measures to compensate for the higher value of the Swiss franc.

In the last year, the number two Swiss bank said in a statement it achieved a net profit of 2.1 billion Swiss francs ($2.2 billion), a ten-percent decrease over 2013.

Analysts interviewed by the AWP agency had predicted a profit of 1.8 billion francs.
   
Like other banks, Credit Suisse nonetheless highlighted the negative impact of the soaring franc.
   
The Swiss central bank suddenly announced in mid-January that after more than three years it was lifting an enforced minimum exchange rate of 1.20 francs to the euro, allowing the Swiss currency to float.
   
"Based on 2014 earnings, we estimate the net adverse impact on our profit to be approximately three percent and we expect to more than offset this impact through the announced measures by end-2017," Chief Executive Officer Brady Dougan said in the statement.
   
The bank, which in 2011 launched a reorganization of its activities mainly by reducing staff, plans to cut expenses by an extra 200 million francs.
   
Chief Financial Officer David Mathers said in a telephone conference call that the bank would bring expenses in Switzerland into line with revenue, but did not say whether job cuts were planned.
   
In 2014, the board of directors and the executive board accepted "voluntary reductions" in compensation, with the bank linking the cuts to a legal settlement in the United States.
   
Last year Credit Suisse was slapped with a fine of $2.8 billion after it pleaded guilty to having helped rich Americans evade taxes.
   
Credit Suisse said it will propose a dividend of 0.70 francs per share, with shareholders having the possibility to receive it through the form of new shares.
   
In morning trading, the share price surged by 7.58 percent to 21.30 francs, while the SMI index of blue chip stocks rose by 0.06 percent.
   
Its competitor UBS said on Tuesday that its net profit jumped 12.6 percent last year, but warned recent pressures due to the ballooning value of the  franc and negative interest rates could hurt profits.
   
Last week, Zurich-based private bank Julius Bär announced cost-cutting measures including the elimination of 200 jobs.

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