Arnd Wiegmann/ReutersBrady W. Dougan, left, chief of Credit Suisse, and David Mathers, chief financial officer.
Credit Suisse said on Thursday that it planned to cut about 2,000 jobs after a “disappointing” second quarter that saw a big drop in earnings in investment banking.
Net income fell to 768 million Swiss francs ($958 million) in the three months ended June 30, from 1.6 billion francs in the period a year earlier, the bank said in a statement. The earnings missed analysts’ consensus forecast of 1 billion francs, according to Reuters.
The bank’s shares fell 43 centimes, or 1.47 percent, to 28.83 francs in late morning trading in Zurich on Thursday.
Brady W. Dougan, the chief executive, said the bank’s results were a “disappointing performance” and that earnings at the investment banking unit were “below our expectations.” Pretax profit at its investment banking unit fell 71 percent in the period as concern about European sovereign debt prompted a drop in bond trading.
“These were very poor results, although away from the very poor performance in trading they did hold up quite well in a difficult quarter,” said Christopher Wheeler, an analyst at Mediobanca in London. “However, the management changes and the cost-cutting program demonstrate management’s concern about the business.”
Credit Suisse, the second-largest bank in Switzerland, after UBS, said it planned to cut 4 percent of the total work force of 50,700 by the end of 2012 to reduce costs by 1 billion francs. Credit Suisse had added 1,500 jobs over the last 12 months.
Return on equity, a measure of profitability, fell to 9.7 percent in the second quarter from 17.8 percent in the period a year earlier.
“In order to ensure attractive returns in the face of an uncertain and challenging economic and market environment, we continue to be proactive about seeking cost efficiencies across the bank,” Mr. Dougan said.
The earnings come two days after UBS warned that it would miss its profit target for 2014, after earnings fell by half in the second quarter because of a similar drop in investment banking income.
Trading operations at the investment banks were hit hardest amid concerns that Greece’s sovereign debt crisis could spread to more European economies. Credit Suisse also cited “deteriorating economic indicators, particularly in the U.S.”
Earnings at Swiss banks were additionally burdened because the Swiss franc appreciated against major currencies as a result of debt troubles in Europe and the United States.
Pretax profit at Credit Suisse’s investment banking operation fell to 231 million francs in the second quarter from 784 million francs in the period a year earlier. Revenues at the unit dropped to 2.8 billion francs from 4.1 billion francs.
To help add private banking clients, Credit Suisse said on Thursday that Walter Berchtold would be chairman of private banking and Hans-Ulrich Meister was to become chief executive of the business in addition to his role as head of the bank’s Swiss operations. The changes would be effective from the beginning of August.
The bank’s private banking business attracted 11.5 billion francs in net new assets in the quarter while its asset management arm had 4 billion francs in new money. Still, assets under management at its private bank fell 0.7 percent.
Article source: http://feeds.nytimes.com/click.phdo?i=58d9305ececb1a5e07ee2780e9bc83a0
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