Credit Suisse Profits Rise, But Results Fall Short of Expectations

PARIS - Credit Suisse, the large Swiss bank, said its third-quarter profit jumped by nearly 79 percent from a year earlier, but the results still fell short of market expectations.

The bank reported net income of 454 million Swiss francs, or $509 million, for the July-September period, up from 254 million francs in the same three months of 2012.

Net income for the latest quarter was far short of the 705 million francs analysts surveyed by Reuters had been expecting, as revenue in the bank’s investment banking division slid 20 percent from a year earlier, weighed down by lower volume in its fixed-income business. Credit Suisse said it was “restructuring and simplifying our rates business in order to increase returns.”

The latest figures look even less impressive when considering that the results from the same period a year ago had been held back by a pretax charge of nearly 1.1 billion francs. The bank booked that charge because accounting rules required it to consider the cost of repurchasing its own debt as the value of that debt improved.

Credit Suisse nonetheless said the results reflected “resilient” profitability in its private banking and wealth management business, as well as “strong” revenue on equity trading and “continued progress on cost and capital.”

Based in Zurich like its larger rival UBS, Credit Suisse operates in more than 50 countries with 46,000 employees. The bank also reported in the latest quarter “core pretax income” of 685 million francs, up 97 percent, and said its return on equity rose to 4 percent, from 2.9 percent a year earlier.

It said the cost of compensation and benefits for its employees fell 24 percent from a year earlier, to 348 million francs, as it paid out less in bonuses.

Brady W. Dougan, the Credit Suisse chief executive, said in a statement that the latest results showed that the bank’s “continued expense discipline and effective capital management mitigated the impact of challenging market conditions, characterized by low levels of client activity across many of our businesses.”

Credit Suisse said it had reduced risk-weighted assets by $31 billion over the last year, bringing the total down to $169 billion, “thereby exceeding our 2013 year-end target ahead of schedule.”
The bank also said it had raised its Basel III core equity tier-1 ratio, a measure of its ability to weather financial shocks, to 10.2 percent, from 9.3 percent at the end of June.