Credit Suisse says it’s making good progress

Credit Suisse has its headquarters on Zurich's Paradeplatz. Credit Suisse

The Credit Suisse Group has reported net income of SFr5.85 billion ($4.47 billion) for 2005, slightly above the SFr5.628 result it achieved the previous year.

Income for the year was cut by SFr421 million after the group announced on Monday it was changing the way it accounted for share-based compensation awards.

Net profit for the fourth quarter rose by 15 per cent to SFr1.103 billion, just below analysts’ forecasts.

The figures did not seem to impress investors, with the share price falling by five per cent in morning trading to SFr74.10 from Tuesday’s close of SFr78.

Credit Suisse, which is Switzerland’s second-largest bank after UBS, recorded net new assets of SFr58.4 billion in 2005 and a return of equity of 15.4 per cent.

“2005 was a decisive year for Credit Suisse Group, as we merged our banking entities while simultaneously growing our business and delivering improved profitability,” commented chief executive Oswald Grübel.

“In particular, our businesses capitalised on increased client activity to produce stronger revenues.”

Grübel added that the results showed that Credit Suisse was making good progress in transforming the underlying profitability of its business.

A statement from CS headquarters in Zurich on Wednesday said the group’s new integrated structure would help to enhance growth and returns for shareholders.

The board of directors is to propose a dividend of SFr2 per share to the annual shareholders’ meeting at the end of April.

The bank said it had bought back 26.15 million shares worth SFr1.4 billion in a share buyback programme.

Private banking record

The private banking unit of Credit Suisse posted record net income of SFr2.467 billion, a seven per cent increase over 2004.

This was mainly attributable to strong revenues related to the increase in assets under management, higher trading revenues and a rise in brokerage volumes, it explained.

Credit Suisse said in a presentation to analysts that it was within range of achieving its mid-term targets. These include a declared goal of earning more than SFr8 billion in net profit for 2007.

Grübel said he was happy with the performance of the group’s Winterthur insurance arm in 2005.

There was a six per cent decline in net income to SFr490 million in the life and pensions business but non-life reported net income of SFr578 million, compared with SFr206 million in 2004.

“I am convinced that Winterthur still has further potential to grow and to enhance its profitability,” he added.

Potential to grow

Credit Suisse said its outlook for global economic growth and the capital markets was “positive”.

It believed that growth would continue to be “robust” and inflation would remain under control.

Rival UBS on Tuesday reported a record net income of SFr9.844 billion from its operations in 2005.

Switzerland’s largest bank said that total 2005 attributable profit was SFr14.029 billion, which included a net gain of SFr3.704 billion from the sale of three private banks and asset manager GAM to Bank Julius Bär.

swissinfo with agencies

Key facts

Financial figures 2005

Net profit: SFr5.85 billion (+4% compared with 2004)
Total net new money: SFr58.4 billion
Assets under management: SFr1,484.3 billion (+21.6%)
Proposed dividend: SFr2
Number of employees at end of 2005: 63,523 (+5%)

In brief

Alfred Escher founded the Schweizerische Kreditantstalt (Swiss Credit Bank) in 1856 as a vehicle to push forward the expansion of the railway network and industrialisation in Switzerland.

By taking a stake in the investment bank First Boston, it decisively strengthened its position in international business in the 1980s.

After a series of strategic mergers and takeovers over the following decade, the bank for a time enjoyed the position of Switzerland’s largest retail bank.

In 1996/97 CS Holding, originally founded in 1982 as a sister company to the bank, was transformed into Credit Suisse Group.

It began operating as an integrated global bank on January 1, 2006 with the launch of new brand and logo worldwide.