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Credit Suisse will cut more costs after missing fourth-quarter profit forecasts because of weak results at the investment bank which is at the heart of its business strategy. The Zurich-based bank said on Thursday it would cut costs by 4.4 billion Swiss francs by the end of 2015, up from its previous target of 4 billion. Fourth-quarter net profit came in at 397 million francs. Earnings were hit by a 38% drop in pretax profit at the investment bank, with low levels of business activity in both its fixed-income and equity arms. Credit Suisse also took 304 million francs in charges related to its own debt. "Going into 2013, revenues have so far been consistent with the good starts we have seen to prior years, with profitability further benefiting from the strategic measures we took in 2012," Chief Executive Brady Dougan said in a statement. Unlike hometown rival UBS which is scaling back its investment bank, Credit Suisse is putting its focus on that business, even as it adapts to capital rules that make it harder to turn a profit from trading. So far, the strategy appears to have been well received, with Credit Suisse's stock gaining 23% since UBS announced it would exit most fixed income activities, while UBS itself has gained 13%. The Stoxx 600 European bank index has added 11%. Credit Suisse shares were seen down 1.5% in pre-market indications provided by Julius Baer. "It's a mixed bag of results: it's certainly not what the market was hoping for, but it's not an entirely bad set of results," Bank Sarasin analyst Rainer Skierka said. Credit Suisse said it had cut back on riskier assets, in line with other banks as they strive to meet tougher regulations aimed at preventing a repeat of the 2008 financial crisis. It said so-called risk-weighted assets (RWAs) fell 99 billion francs to 924 billion francs, close to a year-end target for less than 900 billion francs. So far, Credit Suisse has been coy about how many jobs it plans to cut in order to reach its cost savings target, beyond 3,500 jobs it said it would axe in November 2011. The bank employed 47,400 staff at the end of December, meaning it had shed 1,000 employees since September. Britain's Barclays is nearing completion of a raft of job cuts at its investment bank as it also looks for savings, a person close to the matter said on Wednesday. Meanwhile, revenue and profit at Credit Suisse's private bank, recently merged with its asset management unit, rose on the year. The private banking unit for the wealthy, which posted 6.8 billion francs in fourth-quarter new client money, is like most rivals suffering outflows from clients in Europe, where tax officials are cracking down on hidden offshore accounts. For the year, clients from western Europe withdrew 6.9 billion francs, while clients at Clariden Leu, a boutique bank integrated into Credit Suisse last year, pulled 7.5 billion. Credit Suisse said it would pay a dividend of 0.75 francs per share, with 0.10 francs in cash and the rest in shares.
It expects to lift key capital ratios by mid-year, allowing a return to an all-cash payout, finance chief David Mathers said. The bank said it doesn't see a global probe into rigging of benchmark interest rates hitting earnings. On Wednesday, Royal Bank of Scotland was fined $612 million by U. S. and British regulators to settle allegations it manipulated the benchmark Libor rate.