Credit Suisse raises profits, but stock falls
Credit Suisse Group tripled its quarterly profit to 2.1 billion Swiss francs (2.0 billion dollars, 1.5 billion euros) in the first three months, it reported on Thursday, saying the figures bolstered its recovery.
Chief executive Brady Dougan said the bank was maintaining "stable, high-quality earnings" following its turnaround last year in the wake of the financial crisis.
But his upbeat assessment contrasted with a cool reaction on stock markets as investors cast a wary eye on the banking sector as a whole, fearful of outstanding fallout lurking from the financial crisis, analysts said.
Dougan said in a statement: "Market conditions in the second quarter to date have remained similar to those in the first quarter and we are confident that our business model will enable us to continue to generate high-quality results in good as well as in more challenging market conditions."
Credit Suisse revenues in the firts three months of the year reached 9.0 billion Swiss francs. The bank reported a continuing strong inflows of new client assets, especially compared to its plagued Swiss rival UBS.
The bank's first-quarter 2010 result compared to a 793-million-franc net profit in the preceding quarter and a 2.0 billion franc profit in the first three months of 2009.
However, its share price dropped in early trading by 3.8 percent on the Swiss exchange to 52.1 francs.
Analysts at Bank Wegelin said last week's US regulatory lawsuit against Goldman Sachs over alleged fraud in the run-up to the crisis had soured the climate for the banking industry as a whole, despite Credit Suisse's "robust" results.
"The commercial property sector in Europe and the United States is clearly regarded as an explosive minefield for financial institutions," they added.
Credit Suisse in February announced a return to annual net profit last year of 6.7 billion Swiss francs, marking a turnaround from a record 8.2-billion-franc loss for 2008 recorded at the height of the financial crisis.
Unlike UBS, which has been struggling to stem withdrawals by disgruntled or fearful clients over past months, Dougan vaunted Credit Suisse's ability to attract business.
"We also generated strong client flows and maintained our track record of attracting strong net new assets," he said.
Inflows of new money more than doubled to 26 billion francs in the first three months of 2010 against 12.5 billion francs in the preceding quarter, the bank reported.
Nearly three quarters of the net inflows were in its elite private banking business for wealthy customers, despite Swiss concessions on banking secrecy over the past year following an international clampdown on tax evasion by foreign clients.
"We are positioned to perform well in the changing regulatory environment in cross-border banking as we have been building a multi-shore business with a robust compliance framework for many years," Dougan commented.
Credit Suisse said it was also moving to increase market share in investment banking despite the weakening of the dollar against the Swiss franc in the first quarter, which hit revenues.
Credit Suisse said it was well positioned to meet tighter new liquidity requirements from the second quarter which were announced by the Swiss financial regulator on Wednesday, following a build up of funds since the crisis.
Swiss authorities now require that the two biggest banks have enough reserves for at least 30 days should a bank run occur, to guard against the risks to the financial system of big bank failures.
© 2010 AFP