Credit Suisse second quarter profit falls

 

Credit Suisse beat expectations with a second quarter earnings of 1.2 billion Swiss francs ($1.16 billion), down 62 per cent from a year earlier, as its investment bank, private bank and asset management business all posted profits.

Credit Suisse, which has reported billions of francs in losses stemming from the credit crunch and was forced to admit billions more from a trading scandal, said today volatile market conditions were set to continue but this offered opportunities.

"At a time when many competitors are questioning their business models, our strategic direction is clear and consistent," said chief financial officer Renato Fassbind, adding the credit crunch "is definitely still here" and volatility would last into the medium term.

"Given our strength, this period of change in our industry will provide Credit Suisse with unprecedented opportunities," he told reporters on a conference call.

Credit Suisse shares were indicated to rise about 4 per cent in premarket trading. They closed yesterday at 49.9 francs.

The bank - which has emerged less damaged from the turmoil than other big names, notably arch rival UBS - said net new money in its wealth management unit rose to 15.4 billion francs, more than twice the forecast amount and up from 13.3 billion a year ago.

The inflow last quarter included about 3.5 billion francs in Switzerland, Mr Fassbind said.

A 5.3 billion franc writedown in the first quarter dragged Credit Suisse to a 2.1 billion franc loss, its first quarterly loss in five years.

Net writedowns were immaterial at 22 million francs in the second quarter, the bank said.

But it has not had to turn to shareholders for cash, unlike UBS and other European rivals such as Royal Bank of Scotland and Credit Agricole, who have had to repair their damaged balance sheets.

Its tier 1 capital ratio improved to 10.2 per cent at the end of June, from 9.8 per cent at the end of March.

Credit Suisse trades at about 7.6 times forecast 2009 earnings, a small premium to the European banking sector due to its more limited exposure to debt linked to subprime mortgages.

Credit Suisse had been expected to post net profit of 526 million francs in the second quarter, according to a Reuters poll.