Credit Suisse flies above forecast on big trading gain
Written on April 24, 2009
Credit Suisse’s first-quarter net profit far exceeded forecasts thanks to surprisingly robust trading gains and healthy rich client inflows, making it upbeat about its future while other banks still struggle.
Credit Suisse on Thursday posted a net profit of 2 billion Swiss francs ($1.71 billion) after its investment bank recorded trading revenues of 4.9 billion Swiss francs, triggering a 5-percent share rally.
News that Switzerland’s second-largest bank had swung back to profit after a record annual loss in 2008 adds to optimism about the banking sector sparked by forecast-beating results from Goldman Sachs and JP Morgan Chase and contrasts with the problems still faced by Swiss rival UBS.
“Credit Suisse was right not to disinvest in fixed income and equities trading as it recovered,” said Alain Tchibozo, a Paris-based bank analyst with ING Wholesale Banking.
“UBS and all those banks that have completely closed down certain segments could not benefit from this.”
Shares in Credit Suisse were up 6.8 percent at 42.30 francs at 0703 GMT, outperforming the Dow Jones index of European banks .SX7P, which was down 0.91 percent.
“We remain optimistic about the prospects for Credit Suisse, particularly in the context of the overall industry,” Chief Executive Brady Dougan said in a statement.
The bank continued to cut risky positions and was able to boost its capital base to a tier 1 ratio of 14.1 percent of risk-weighted assets, making it one of Europe’s best capitalized banks with capital well above strict Swiss requirements paydayloan.
Asset management remained unprofitable.
Analysts polled by Reuters had expected Credit Suisse to post a net profit of 948 million Swiss francs. Credit Suisse’s bottom line beat the highest forecasts thanks to hefty trading profits and gains it made on its own debt.
ONE SHINES, THE OTHER STRUGGLES
Credit Suisse’s net profit shone compared with a forecast of a 2 billion franc loss in the first quarter by larger Swiss competitor UBS, which has been hit harder in the crisis and is still struggling to recover.
“The results were very good, especially the development in investment banking, that reminds us of the good old days,” said a Swiss trader. “The crisis begun 18 months ago and some banks like Credit Suisse have had the time to put their business back in shape.”
Credit Suisse reported 1.4 billion francs of writedowns as it cut its most illiquid assets by a further 31 percent and said its private banking division had net new inflows of 11.4 billion francs, an indication the bank is still attracting wealthy clients despite global pressure on Swiss bank secrecy.
“During the quarter we saw our client businesses generate strong revenue growth and gain market share,” Dougan added.
Filed in: technology.