Weaker Credit Suisse third-quarter results expected

Analysts are expecting Credit Suisse to post weaker results Keystone

Switzerland's second biggest bank, Credit Suisse, is expected to show a steep decline in third quarter earnings on Tuesday.

Like other global financial institutions, the banking giant is suffering from the economic slowdown and the uncertainty on the equity markets.

On Friday, the group’s investment banking arm, Credit Suisse First Boston, posted a third-quarter loss of almost $400 million (SFr660 million).

Although rivals have seen stock market volatility eat into their margins, they are at least still making money. But CSFB has one of the highest pay scales in the industry and this has seen the unit sink into the red.

The group has appointed John Mack to sort things out. Known as “Mack the Knife” in industry circles, he has already announced plans to cut 7,000 jobs.

He’s also introducing compensation packages in the form of share portfolios to link performance and pay.

Employee incentives

Many of CSFB’s employees came to it last year with the acquisition of the American investment company, Donaldson, Lufkin and Jenrette. CSFB offered big incentives to keep them on board and is now suffering the consequences.

The Credit Suisse Group also includes Credit Suisse private banking and the Winterthur insurance unit.

The release of the group’s third quarter figures follows last week’s numbers from the country’s biggest bank UBS. UBS profits were down around a third from the previous quarter.

The hearing appliances producer, Phonak, releases its first half figures on Tuesday.

At the beginning of the month, the company warned investors that it expected profit for the year as a whole to come in at the bottom range of previously issued forecasts. That would mean growth of about 12 per cent.

Phonak says that sentiment is slowly improving in the wake of the September 11 attacks and that logistics problems caused by the attacks had been overcome.

It expects full year sales of over SFr600 million compared with SFr460 million for the previous year.

The country’s largest telecommunications operator, Swisscom, comes through with third quarter figures on Wednesday.

Analysts expect the numbers to show that Swisscom is continuing to adjust to fierce competition in the industry.

It has had one setback recently when it had to admit that it was having technical problems with the launch of its high-speed ADSL internet network. But it has denied reports of a complete breakdown and says up to 1,000 new customers a week are signing up for the connection.

By Michael Hollingdale