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Credit Suisse posts loss
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November 20, 2001: 4:04 a.m. ET
Swiss bank's 3Q profit drops as investment banking earnings, revenue falls
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LONDON (CNN) - Credit Suisse Group, Switzerland's second-largest bank, posted a third-quarter loss as investment banking revenue declined.
Like its rivals, Switzerland's UBS and Deutsche Bank, Europe's biggest bank, Credit Suisse has struggled to win business from corporations who are trying to cope with the global economic slowdown rather than expansion.
The bank made a loss of 299 million Swiss francs ($181 million), or 0.25 francs a share. That compares with a profit of 1.6 billion francs, or 1.46 francs in the same period a year ago.
"Demanding market conditions impacted our investment banking business as well as investment income from the insurance unit," said chief executive Lukas Muhlemann.
CS Group's investment bank, Credit Suisse First Boston (CSFB), which earns revenue from advising companies on mergers, acquisitions and selling shares, announced plans to slash 2,000 jobs in October as global market activity waned. The September 11 terror attacks exacerbated the problems.
CSFB, under the new chief executive John Mack, posted a third-quarter operating loss of $123 million. Its revenue fell 17 percent. The company warned in October it expected to report an operating loss of about $120 million.
The investment bank does not expect operating results to improve in the fourth quarter compared with the third quarter, CS said. Mack has said job cuts at CSFB will help drive down operating cost by $1 billion at the end of 2002.
CS also registered a 400 million franc loss on Swiss Life, whose shares have plunged more than 40 percent in the third quarter. CS has a 5 percent stake in Switzerland's biggest insurer.
The bank has also set aside 200 million francs for a possible loan default from Swissair, which has sought bankruptcy protection.
Costs related to the acquisition of U.S. brokerage Donaldson, Lufkin & Jenrette also added to the group's losses.
Muehlemann said the group "remains cautious in its outlook for the current quarter. Transaction volumes are expected to stay at relatively low levels, and markets will continue to be challenging."
Shares in CS fell 2.2 percent to 68.90 francs in Zurich on Tuesday morning. The stock has fallen more than 20 percent from a high for the year of 87.25 francs in February.
Among it other businesses, CS said assets managed for clients fell 11 percent to 1.29 trillion francs at the end of September from 1.45 trillion francs at the end of June. The level was down 7.3 percent from the end of last year, due to weak markets and currency moves.
Net new assets -- inflows from clients -- were 7.1 billion francs in the third quarter. The inflows were less than some forecasts. Private banking showed a net operating profit of 513 million francs, down 11 percent versus the second quarter. 
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