Of Special Interest
29th July 2011
Credit Suisse profits down - announces cuts
Credit Suisse reported Q2 net attributable of CHF 768m (€663m £585m $958m ¥74.5bn Y6,170m) and half year of CHF 1,907m (€1,646m £1,454m $2,378m ¥185.1bn Y15,321m) DOWN 52% and 48% respectively. The biggest problem was in the fall in trading revenues. Noticeably Credit Suisse showed falls across the board, whilst rival UBS showed growth in some areas although was also affected by the FICC falls. The fall in Credit Suisse profit was significantly greater than the market had expected.
Chief Executive Brady Dougan and Chairman Urs Rohner were of the opinion that the market was to blame and more significantly that it would be irresponsible to assume an early improvement. A 4% staff reduction in employees was announced, amounting to around 2,000 jobs. The cuts will be biased towards FICC as this is the unit most affected. Smaller cuts will occur in other divisions and all geographies. The bank is intent on saving CHF 1bn in costs per annum starting next year. Many of the cuts may fall with people only recently recruited since the financial crisis. The bank charged restructuring expenses of CHF 142m to Q2 and will charge between CHF 260m and CHF 310m restructuring costs during the remainder of this year.
Brady W. Dougan, Chief Executive Officer, said: "In order to ensure attractive returns in the face of an uncertain and challenging economic and market environment, we continue to be proactive about seeking cost efficiencies across the bank. The ability to take concerted actions to achieve efficiencies while at the same time investing in client-focused businesses, continuing to grow our assets under management and winning market share, is confirmation of the strength of our business model.
"We have adapted early to the new regulatory landscape, we are taking action to adjust the cost base of our business, and our platform will provide us with substantial upside potential when economic and market conditions improve."
Summary income statement Q2 Change 6 Mths Change
CHFm % CHFm %
Interest and dividend income 7,082 -12 12,534 -10
Interest expense -5,705 -17 -9,404 -12
Net interest income 1,377 15 3,130 -1
Commissions and fees 3,463 -3 7,134 2
Trading revenues 1,116 -69 3,127 -56
Other revenues 936 – 1,657 >
Net revenues 6,892 -19 15,048 -14
Provision for credit losses 13 -35 6 –
Compensation and benefits 3,096 -22 7,125 -10
General and administrative expenses 1,652 -20 3,284 -12
Commission expenses 491 -14 1,027 -6
Total other operating expenses 2,143 -19 4,311 -11
Total operating expenses 5,239 -21 11,436 -10
Income from continuing operations 1,640 -14 3,606 -26
Income tax expense 271 45 736 -28
Income from continuing operations 1,369 -20 2,870 -26
Net Income from discontinued operations 0 - - -
Net income 1,369 -20 2,870 -25
Noncontrolling interests 601 366 963 404
Net income attributable to shareholders 768 -52 1,907 -48