Investment banking helped Credit Suisse beat second-quarter profit forecasts this morning, despite a large accounting charge as the bank continues to cut its balance sheet and win market share.
Credit Suisse said it made a net profit of 1.6 billion Swiss francs ($1.50 billion) in the three months to end-June, which compared with an average forecast of 1.4 billion francs given in a Reuters poll.
The bank's net figure was up 29 per cent from the previous year but down 22 per cent from a better than expected 2 billion francs made in the first quarter of the year.
Credit Suisse, which has overtaken UBS as Switzerland's largest bank by market value, has proved resilient in the subprime crisis but predicted conditions would remain tough.
“We expect the global economic environment to remain challenging and uneven business condition to persist,” chief executive Brady Dougan said in a statement.
“However, if markets continue to improve we expect to see further momentum across all our businesses,” he said.
Credit Suisse shares were up 2.9 per cent at 50.35 francs by 8.12am. The stock has risen over 72 per cent this year, outperforming a 28 per cent rise in the DJ Stoxx European Banking Index.
“Another solid quarter from the big Swiss bank. Particularly gratifying is the profit from investment banking and private banking, return to profit in asset management and net new money in private banking,” Wegelin analysts said in a note. “However renewed net outflows in asset management are a negative.”
The asset management business suffered bigger than expected outflows in the quarter even though the division's income turned slightly positive.
Credit Suisse has shone in comparison with domestic rival UBS, which has warned of a second-quarter loss and has yet to recover from the subprime shock despite a state cash injection and a new chief executive.
The bank took a 1.1 billion Swiss franc fair value charge from improved spreads on its own debt, more than analysts had expected, and a one-off pre-tax hit of 0.5 billion francs for the settling of the Huntsman legal case in the United States.
Investment banking was a key earnings driver as the bank posted pre-tax income of 1.655 billion Swiss francs.
Reuters