Credit Suisse Profit Climbs 5% on Investment Bank
Credit Suisse Group, Switzerland's second-largest bank, said first-quarter profit rose 5 percent as record revenue from bond sales and stock trading outweighed lost income following the sale of its insurance division.
Net income climbed to 2.73 billion Swiss francs ($2.25 billion), or 2.42 francs a share, from 2.6 billion francs, or 2.21 francs, a year ago, Zurich-based Credit Suisse said today. Earnings from continuing operations rose 17 percent.
Brady Dougan, who takes over as chief executive officer from Oswald Gruebel this week, helped lead the bank to its biggest first-quarter profit. Credit Suisse still trails competitors in the U.S., where the five largest securities firms posted record combined earnings of $9.7 billion. Profit at JPMorgan Chase & Co., the No. 3 U.S. bank, surged 55 percent.
"The results were good, but they weren't sensational enough to push the shares up further," said Rudolf Buxtorf, a Zurich-based fund manager at Coutts Bank von Ernst Ltd., which oversees the equivalent of $40 billion, including Credit Suisse shares.
The stock fell 45 centimes, or 0.5 percent, to 95 francs in Zurich. The shares are up 20 percent in the past 12 months, double the 8.7 percent gain of Zurich-based UBS AG, Europe's largest bank by assets. UBS may say tomorrow that first-quarter profit fell 5.7 percent to 3.3 billion francs from a year earlier, when earnings included a 290 million-franc gain from the sale of a Swiss power company, analysts estimated.
Life After Gruebel
Pretax earnings at Credit Suisse's investment bank rose 27 percent from a year earlier to 2 billion francs, the bank said. Analysts forecast profit of 1.9 billion francs. At the main wealth management unit, profit gained 2.6 percent to 988 million francs, compared with an estimate of 959 million francs.
Return on equity, a measure of how effectively companies reinvest earnings, rose to 25.2 percent in the first quarter from 24.4 percent a year earlier. Revenue rose 11 percent to 10.7 billion francs.
"Credit Suisse's business pipeline remains robust and it is optimistic about its long-term growth prospects," Chief Financial Officer Renato Fassbind said on a conference call with reporters, adding that "market corrections cannot be excluded and market volatility may increase."
Gruebel retires May 4 after more than 36 years at the bank. He returned Credit Suisse to profit after a record loss in 2002, and last year sold the Winterthur insurance unit to Axa SA, scrapping the strategy of his predecessor, Lukas Muehlemann, to marry banking and insurance.
Source: Bloomberg
Date: 03.05.2007 [ID: 23]