Dec. 7 (Bloomberg) -- Credit Suisse Group, Switzerland's second-biggest bank, said plans to merge its First Boston securities unit with the rest of the banking business will add 1 billion Swiss francs ($760 million) to annual earnings.

Revenue gains from improved cooperation among the company's three main divisions and savings from cutting costs in areas such as computer networks, purchasing and real estate will boost profit in 2008, the Zurich-based bank said in a statement today.

Chief Executive Officer Oswald Gruebel, 62, in June announced plans to drop the 73-year-old First Boston name as the company aligns the securities unit more closely with the private banking business, which accounts for more than a third of earnings. Credit Suisse's shares have trailed competitors in the past five years and the bank's profitability still lags behind Wall Street rivals.

Shares of Credit Suisse fell 65 centimes, or 1 percent, to 67.85 francs at 9:29 a.m. in Zurich. The shares are up 42 percent this year and increased 7 percent in the past four trading days.

The company's return on equity, a measure of profitability, increased to 20.1 percent in the third quarter from 15.3 percent a year ago. The return still trails that of UBS, Citigroup Inc., Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc.

Gruebel a year ago said he aimed to boost profit by almost half to 8 billion francs in 2007, with the biggest increase coming from Credit Suisse First Boston. Brady Dougan, who replaced John Mack as head of the unit last year, is focusing the business on profitable areas such as commodities and proprietary trading.

Earnings from investment banking should increase by 63 percent to 3 billion francs in 2007, while the company expects private banking profit to rise 19 percent to 4 billion francs. Credit Suisse will stop using the First Boston brand on Jan. 16.

UBS raised its rating on Credit Suisse stock to ``Buy 2'' from ``Neutral 2'' on optimism the company's private banking and asset management businesses will benefit from rising stock markets. CSFB meanwhile is unlikely to reach its target for a 20 percent pretax margin in 2007, according to the analysts.

As part of the plan to focus on its banking business, Credit Suisse is preparing its Winterthur insurance unit for a stock market listing. The business yesterday won a dispute with XL Capital Ltd. over reserves involving a unit it sold to the Bermuda- based insurer in 2001, clearing the way for the sale.

Credit Suisse will focus ``on enhancing profitability in preparation for a potential capital market transaction,'' the company said today. Credit Suisse bought Winterthur in 1997, hoping to benefit by selling banking and insurance products. Instead, the unit contributed to a record 4.3 billion-franc loss in 2002.

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