Cost-cutting gives Credit Suisse a huge Q1 lift

Credit Suisse Q1 profit jumps to $1.37 billion thanks to fewer charges on debt

Associated Press
Cost-cutting gives Credit Suisse a huge Q1 lift
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FILE - In this Oct. 31, 2011 file photo a man passes a branch of the bank Credit Suisse in Zurich, Switzerland. Swiss bank Credit Suisse Group reported Wednesday, April 24, 2013, a huge jump in first-quarter profits compared with a year earlier, when it booked significant charges to its own debt. Switzerland's second-biggest bank posted a profit of 1.3 billion Swiss francs (US dollar 1.37 billion), up sharply from the 44 million francs in the first quarter of 2012, when it booked a loss of 1.6 billion francs on its own outstanding debt and paid out higher bonuses. Net revenue rose 6 percent to 7.2 billion francs. (AP Photo/Keystone, Steffen Schmidt, File)

BASEL, Switzerland (AP) -- Swiss bank Credit Suisse Group said Wednesday that its cost-cutting efforts helped it record a huge jump in first-quarter profits compared with a year earlier.

Switzerland's second-biggest bank posted a profit of 1.3 billion Swiss francs ($1.37 billion), up sharply from the 44 million francs in the first quarter of 2012, when it booked a loss of 1.6 billion francs on its own outstanding debt and paid out higher bonuses.

Net revenue rose 6 percent to 7.2 billion francs.

The bank said the figures showed "positive momentum" coming from its attempts to transform its business model, that includes a lot of cost-cutting.

Credit Suisse shares closed up 1.47 percent at 26.84 francs Wednesday in Zurich.

"The first quarter of 2013 shows that the strategic measures we have successfully implemented since mid-2011 are effective in bringing results to the bottom line on a consistent basis," Chief Executive Brady Dougan said. "We had a very good start to 2013."

The bank, based in Zurich, said the results for the January-March period showed "high returns, strong client franchises, reduced cost base and lower risk-weighted assets."

Like its cross-town and bigger competitor, UBS AG, Credit Suisse has been reducing its riskier assets at a time when Europe's economy is hurting.

Both banks have been setting aside more capital cushion to meet international and domestic regulatory demands. But Credit Suisse has not cut back on its investment banking as much as UBS, and a restructuring in Credit Suisse's investment bank compensated for a falloff in profits from its private banking, one of the largest such operations in the world in terms of assets.

The figures showed further cuts to the bank's workforce to 46,900 people, down 4 percent from 47,400 a year earlier. The downsizing is part of a program that has cut 2.5 billion francs in costs since 2011, and the bank said Wednesday it is on track to extend that to 4.4 billion francs by the end of 2015.

Credit Suisse said Monday it was selling its private equity business, Strategic Partners, which is also based in Zurich, to New York-based Blackstone Group LP for an undisclosed amount.

Strategic Partners manages $9 billion in assets and buys stakes in other private equity funds. The Zurich bank agreed last month to buy Morgan Stanley's wealth management unit, with $13 billion in assets under management, to expand in Europe, the Middle East and Africa.

The bank also said it had no new information about when talks with the Swiss government might wrap up over a U.S. investigation of the bank over suspected American tax cheats.

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