Credit Suisse has said it will cut more costs, after fourth-quarter net profit of SFr397 million ($435 million) missed expectations on sluggish results from its investment bank.
Chief Executive Officer Brady Dougan on Thursday increased the bank’s cost-cutting program by SFr400 million by the end of 2015, on top of SFr4 billion in reductions already announced since 2011.
The fourth-quarter net profit undershot analyst forecasts, which averaged SFr645 million in a Reuters poll. This figure compared, however, with a loss of SFr637 million a year earlier.
Total profit for 2012 came to SFr1.48 billion.
Revenue and profit from Credit Suisse’s investment bank slid from the third quarter, with client activity muted in both main fixed income and equity arms, the bank said.
Meanwhile, revenue and profit at the private bank, recently merged with Credit Suisse’s asset management unit, rose on the year.
Credit Suisse reaffirmed in November its commitment to a fully-fledged investment bank after Swiss rival UBS said it would cut 10,000 jobs and shrink debt trading to focus on money management.
UBS earlier this week posted a net loss of SFr1.89 billion after booking a fine for trying to rig global interest rates and costs tied to the reorganisation.
Dougan has said that he expects the profit contribution from the investment bank to rebound as competitors reorganise their businesses and markets improve. The unit, which contributed about 39 per cent to the group’s pre-tax earnings in the first nine months of 2012, should be making about half the profits in the future, he said in November.
Thus far, Credit Suisse has been coy about how many employees it plans to let go in order to reach its spending cut target. The bank employed 47,400 staff at the end of December, meaning it had shed 1,000 employees since September.
Credit Suisse said it would pay shareholders 0.75 francs per share, of it 0.10 in cash and the remainder in shares. The previous year shareholders were able to choose whether they wanted to get 75 centimes a share in cash or in stock to help the company build up capital ratios.