The FINANCIAL — Swiss banking giant Credit Suisse Group on October 21 said its third-quarter profit declined 24 percent from last year, amid a drop in revenues as the Investment Banking and Private Banking & Wealth Management divisions continued to be hurt by low client activity. Separately, the company announced two separate share capital increases totaling over 6 billion Swiss francs.
During the quarter, the company continued to see strength in Asia and in equities and strong net new assets. However, the lender also continued to witness challenging market conditions and low levels of client activity, mainly in the fixed income sales and trading businesses, according to Nasdaq.
Net income attributable to shareholders fell to 779 million francs from 1.025 billion francs reported in the prior year. Earnings per share were 0.45 franc, compared with 0.61 francs last year.
Net revenues declined 9 percent to 5.985 billion francs from 6.578 billion francs reported last year. Provision for credit losses was 110 million francs, compared with 59 million francs.
In Private Banking & Wealth Management, net revenues dropped 6 percent and income before taxes fell 31 percent,
Meanwhile, Assets under management – Private Banking & Wealth Management were strong with net new assets of 16.4 billion francs, compared to 7.4 billion francs last year.
Separately, the company plans to conduct an Extraordinary General Meeting to be held on November 19, to approve two separate share capital increases – one issue to certain qualified investors, and the second issue as rights offering to the existing shareholders. With the proceeds, Credit Suisse intends to strengthen its Common Equity Tier 1 capital and gain greater financial flexibility for the implementation of its strategic objectives.
In the first step, the gross proceeds for Credit Suisse are expected to amount to 1.35 billion francs. In the second step, the company expects 4.7 billion francs in gross proceeds from the rights offering.
In a third statement, the Swiss banking giant said it would grow its Universal Bank in its Swiss home market, with a partial IPO planned by 2017. The lender plans to significantly reduce capital usage in its Investment Banking operations.
The company is also working towards reducing its fixed costs by delivering 3.5 billion francs of gross cost savings by end-2018, and invest 1.5 billion francs in new growth initiatives in the next three years.
Credit Suisse will also implement a streamlined organizational structure as part of its strategic objectives, with three geographic divisions – Swiss Universal Bank, Asia Pacific and International Wealth Management – as well as two investment banking divisions: Global Markets and Investment Banking and Capital Markets.
The stock closed up 1.1 percent on Tuesday in Zurich at 24.89 francs.