GLOBAL - Swiss giant Credit Suisse Group (CSG) became the latest casualty of volatile markets and the post September 11 downturn after it reported a massive CHF299m drop in Q3 profits on the same period last year - its first drop in overall profits in four years.
CSG reported a net operating profit of CHF21m in Q3, compared to CHF1.7bn in Q3 of 2000, adjusted following amortisation and goodwill.
In October the firm took the unprecedented step of announcing anticipated losses of around CHF300m. CSFB also warned of approximately 2,000 job cuts on a global basis in bid to save US$1bn by the end of 2002.
CSG’s investment banking arm, Credit Suisse First Boston, took the biggest battering, accounting for CHF204m of the overall slump.
Credit Suisse Asset Management reported a Q3 net operating profit of CHF34m, also down 58% on the previous quarter. This was due to a reduction in assets, as well as to the reversal of a tax benefit recognised in the first half of the year, said the firm. Over the first nine months of 2001, assets under management fell 10.8% to CHF 434.4bn. Net new business gains for the same period added CHF 7.3bn to discretionary assets of CHF 317.8bn, which were down 14.7% quarter-on-quarter.
The firm cited an operating loss at CSFB, lower profits from the insurance businesses due to lower investment income, a writedown on the Group’s holding in Swiss Life, and provisions for unsecured credit exposure to SAirGroup, as the reason for the overall loss.
Lukas Mühlemann, chairman and chief executive officer, said: “Credit Suisse Group faced major challenges in the third quarter, as did our entire industry. As we expected, our results reflect the demanding market conditions. We have implemented comprehensive programs to adapt our business to the current environment, including significant cost reductions across all business units.”
He added: “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.”
Although the firm remained optimistic about the medium- and long-term prospects, Mühlemann continued that market conditions would remain “difficult” for the short-term.
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