Credit Suisse profit beats expectations

Management at CS headquarters is confident that it can improve group figures. Credit Suisse

The Credit Suisse Group has reported a net income of SFr1.457 billion ($1.14 billion) for the second quarter, slightly beating forecasts.

Switzerland’s second-largest bank said it had seen solid growth in its flagship wealth management business and healthy investment income at its Winterthur insurance unit.

But caution about future prospects sent the group’s share price falling at the stock exchange as investors seemed to ignore the figures and focus on the bank’s tough tasks ahead.

Following a decline that began during mid-morning trading, the stock ended the day on SFr38.80, more than six per cent down on Tuesday’s close of SFr41.40.

Analysts had forecast profit around the SFr1.35 billion mark. Total net income for the first half was SFr3.3 billion.

Credit Suisse Financial Services recorded net income of SFr1.07 billion from January to March, while the investment bank Credit Suisse First Boston showed a net profit of SFr430 million.

The group posted a loss of SFr556 million for the second-quarter of 2003.

“Confident”

In a statement from its headquarters in Zurich, Credit Suisse said it was “confident” that it could achieve further improvements in its results.

But it cautioned that the group’s results were dependent on economic and market conditions, and their impact on client activity and transaction volumes.

Credit Suisse added that the group was subject to “continued cost pressure”, particularly in its investment business.

And its chief financial officer, Phil Ryan, was later prudent concerning future earnings from the Private Banking business.

“Typically, the third quarter is a weak quarter in private banking due to the seasonality of client behaviour,” Ryan commented.

“We do see that materialising to be the case in 2004,” he added.

A decline in trading income, which has also hit United States and European competitors, was partly offset by figures from its Private Banking unit.

Credit Suisse reported SFr9.1 billion in net new assets in the second quarter, with Private Banking contributing SFr7.9 billion.

Total assets under management at the end of June were SFr1.227 trillion, a decrease of 1.1 per cent from the end of March, due to market valuations and foreign exchange impacts.

“We are pleased”

“We are pleased with our results in the first half of 2004, with healthy revenue growth at Private Banking, and Corporate and Retail Banking, accompanied by continued operating performance and solid investment income at Winterthur,” commented chief executive Oswald Grübel.

The German, who has been sole CEO since the departure of John Mack in mid-July after a management shake-up, said the second-quarter results had pinpointed areas the group had to build on.

They include growth markets worldwide in Private Banking, increasing market share in the lending business in Corporate and Retail Banking in Switzerland, and driving revenue growth at CSFB.

Grübel also singled out Winterthur, which some speculators believe may eventually be sold.

“In insurance, we remain firmly committed to enhancing business momentum and to positioning Winterthur as one of the leading retail insurers in key European and other selected markets, while exploring options to capture value for stakeholders.”

Rival UBS, which is Switzerland’s largest bank, is due to publish its figures on August 10.

swissinfo with agencies

Key facts

Second quarter:

Net revenues: SFr13.51 billion
Net profit: SFr1.457 billion (SFr1.861 billion in first quarter)
Return on equity: 16.6 per cent
Total assets under management: SFr1.227 trillion.
Credit Suisse made a profit of SFr770 million in 2003.

In brief

The Credit Suisse group made a net profit of SFr1.457 billion ($1.14 billion) in the second-quarter, making a total of SFr3.3 billion for the first six months.

It was slightly higher than the average forecast by financial analysts.

Credit Suisse is “confident” it can further improve its results.