Credit Suisse announces capital increase as quarterly profit misses estimates

Credit Suisse announced a capital increase as it posted weaker-than-expected results for the third quarter.

Net income at the Swiss lender fell to 779m Swiss francs from 1.03bn in the year ago period,falling short of consensus estimates of 858m.

Profits before tax at its private banking and wealth management unit dropped 31% to 647m Swiss francs, well below the 896m analysts had expected.

“Extreme dislocations” in credit markets, which led to reduced client activity, blew a hole in its net revenues from fixed-income sales and trading, which cratered by 53%, the bank said in a statement.

Zurich-based Credit Suisse is looking to raise approximately 6.05bn francs (£4.1bn) in fresh shareholder equity as part of a restructuring that will see it focus on Switzerland and Asian wealth management.

Investment banking will be scaled back and its Swiss banking unit will be floated in the market by the end of 2017; the latter announcement came as a surprise to analysts, who nonetheless hailed it as a positive for the stock's valuation.

On a gross basis, management also set a target of 3.5bn francs in cost savings by the end of 2018.

The bank said it will reorganise into three units focused on specific geographical regions, with the securities unit being split into a markets and investment banking arm.

As of 0900 BST, shares of Credit Suisse were trading 3.98% lower at CHF23.90.