Credit Suisse says earnings 'resilient' in volatile market

22nd July 2010, Comments 0 comments

Swiss bank Credit Suisse said on Thursday its second-quarter net profit was 1.6 billion francs (1.19 billion euros, 1.52 billion dollars) despite market volatility over Europe's sovereign debt crisis.

Compared to the equivalent outcome last year, the banking giant's earnings were up a slight one percent, but compared to results in the first quarter this year, they were down 22 percent.

"This was a resilient performance during a difficult second quarter for the banking sector," said Brady Dougan, the group's chief executive officer.

"We remain confident that our strategy is appropriate and resilient in the face of an uncertain and challenging economic and market environment."

The tough market conditions were felt particularly by its investment bank division, which recorded a 32 percent drop in net revenues to 4.099 billion francs during the period compared to the second quarter last year.

The plunge was due mainly to weak fixed income sales and trading revenues, said the bank.

The Zurich-based institution continued to attract new deposits, with net new assets reaching 14.5 billion francs during the period.

However, this was at a much slower pace than during the first quarter, when the bank recorded net new assets of 26 billion francs.

The bank's executives also revealed that there had been "modest net outflows in the 2nd quarter" of German clients in Switzerland, after German prosecutors announced in March that it had launched 1,100 tax evasion investigations against customers and staff of Credit Suisse.

Last week, the Duesseldorf prosecutor's office held a mass raid Switzerland's second biggest bank's branches in 13 German cities as part of the probe.

German state attorney Johannes Mocken had told AFP that the raids were a success and that they yielded lots of information.

Giving an update on the case, Dougan said the bank has been cooperating and that he is confident that it has done nothing wrong.

"We believe we are compliant with all the rules and regulations," said Dougan, although he would not go into further details of the case.

Acknowledging that the "regulatory issues ... are getting more active," Dougan noted that "Switzerland will have to find some sort of solution with its neighbours."

Credit Suisse's rival UBS has also come under pressure over tax evasion, with the United States having filed lawsuits against the bank.

In a first case, UBS admitted last February to tax fraud and agreed to pay 780 million dollars to settle charges that it helped US clients evade taxes.

But the United States swiftly filed a second larger case in which it sought data of 52,000 clients from the bank, which will post its second quarter earnings on July 27.

The US government and UBS finally reached an out-of-court settlement in which the bank agreed to identify 4,450 American clients suspected of dodging taxes.

Shares in Credit Suisse were weak in morning trade, falling 2.64 percent to 43.08 francs, underperforming the flat Swiss Market Index.

© 2010 AFP

0 Comments To This Article