CS Group plunges into the red

Lukas Mühlemann, chairman of the board of directors, said the entire banking industry faced "major problems" Keystone Archive

The Credit Suisse Group, Switzerland's second-largest bank, reported a net loss of SFr299 million ($179.6 million) for the third quarter against a background of negative market developments.

This content was published on November 20, 2001 - 09:59

The loss compared with a net income of Sfr1.6 billion in the comparable period last year and a profit of SFr1.3 billion in the second quarter this year.

Credit Suisse said in early October it would have a loss of about SFr300 million.

It is the first of Europe's big banks to report a third-quarter loss. Its rival UBS last week announced a 56 per cent fall in its earnings to SFr903 million.

The group said in a statement that its investment banking arm, Credit Suisse First Boston, made an operating loss of SFr204 million reflecting "demanding" market conditions, lower transaction volumes and the impact of the terrorist attacks on September 11.

Job cuts

Under the leadership of John Mack, formerly of Morgan Stanley Dean Witter and Co., CSFB is aiming to lower expenses by $1 billion by the end of next year, a move that has included cutting 2,000 jobs.

Operating profit at Credit Suisse Financial Services, which includes the Winterthur insurance unit, fell by 49 per cent to SFr225 million on lower investment income.

Commenting on the result, chairman and CEO Lukas Mühlemann said the entire banking industry faced "major challenges" in the third quarter.

"As we expected, our results reflect the demanding market conditions," he said, adding that the group had now introduced "significant cost reductions across all business units".

Commenting on the outlook for the remainder of the year, Mühlemann said that the group remained cautious.

"Transaction volumes are expected to stay at relatively low levels and markets will continue to be challenging," he said.

Credit Suisse also reported a SFr400 million fall in the value of its five per cent stake in Switzerland's largest life insurer, Swiss Life, whose shares have fallen by almost 20 per cent in the last month alone.

Unsecured loans

The group also said it had put aside SFr200 million for unsecured loans to the Swissair Group which collapsed and filed for bankruptcy protection in October.

Mühlemann said Credit Suisse was well positioned for growth when the market environment improved because the company's fundamentals remained strong.

"We are continuing to build leadership positions in key markets worldwide with our powerful global franchise," he said.

"Priorities include reducing costs in our top-tier investment banking business, and investing in our asset gathering initiatives, including personal finance and life insurance, in Europe," he added.

Net new assets were SFr7.1 billion in the third quarter, down from the previous quarter as expected due to seasonality, but up 42 per cent over the same period last year.

Total assets under management stood at SFr1,290.4 billion at the end of September, down by 11.1 per cent compared with the figure at the end of June. The decline was attributed to market movements and foreign exchange impact.

swissinfo with agencies

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