ZURICH, Switzerland — Credit Suisse Group reported a 1.26 billion Swiss franc ($1.08 billion) loss during the third quarter Thursday, blaming bad investments and the global financial turmoil, and the bank said it was working to further cut its exposure to toxic assets.
Credit Suisse's second quarterly loss this year came as no surprise, following a warning by Switzerland's No. 2 bank last week that it expected to book writedowns of 2.4 billion francs ($2.06 billion) from its investment banking business during the quarter.
Analysts at Zuercher Kantonalbank noted that those losses would have been higher if Credit Suisse had not revalued its own debt to reflect a book profit of 1.9 billion francs ($1.63 billion).
Last year Credit Suisse made an overall net profit of 1.3 billion francs during the July-September period.
Revenues halved to 3.11 billion francs ($2.66 billion) compared with 6.02 billion during the period last year.
"While understandable in the context of the market environment, this result is clearly disappointing," said chief executive Brady Dougan.
Institutional investors withdrew some 16.5 billion francs ($14.1 billion) from its asset management division during the quarter, but deposits in its private banking business saw a net increase of 14.5 billion francs ($12.4 billion), a sign Dougan said that the bank still enjoys considerable trust among individual customers. Overall, funds managed by Credit Suisse have declined almost 13 percent to 1.37 trillion francs ($1.17 trillion) since the third quarter 2007.
Rival UBS AG reported massive customer withdrawals in recent months as it struggled to turn around its business after losses and heavy writedowns since the start of the subprime crisis last year. Last week Switzerland's largest bank took up a government offer of almost $60 billion that will allow it to dispose of toxic assets _ the complex securities that have fallen in value and helped trigger the world financial crisis.
Credit Suisse passed up a similar offer, opting instead to seek a 10 billion franc ($8.6 billion) capital injection from foreign investors, including the government-controlled Qatar Investment Authority, to bolster its reserves.
Banking analysts said earlier this week that they were looking for reassurances that Credit Suisse too is disposing of its troubled investments.
Dougan said Credit Suisse was working hard to reduce those liabilities, but Thursday's results show the bank is still sitting on leveraged loans, commercial mortgage-backed securities and subprime assets worth 31.5 billion francs (almost $27 billion), down from 35.8 billion francs last quarter.
"We expect the market environment to remain very challenging and we are cautious with regard to the outlook for the fourth quarter," Dougan said.
Shares in Credit Suisse dropped 6.1 percent to 43.70 francs ($37.51) on the Zurich exchange.