Credit Suisse sees Q1 net loss of CHF 2.1 billion

24th April 2008, Comments 0 comments

Swiss second largest bank posted greater than expected loss of CHF 2.1 billion and writedowns of CHF 5.3 billion.

24 April 2008

ZURICH - Credit Suisse Group on Thursday posted a CHF 2.1 billion net loss for the first quarter as the global effects of the U.S. subprime mortgage crisis continued to spread.

Switzerland's second-largest bank said it also had net writedowns of CHF 5.3 billion for big buyout loans and mortgage securities.

It was the first time the bank, Switzerland's second largest, had posted a loss in the subprime crisis that has caused its crosstown rival UBS AG to write down CHF 38.4 billion in assets because of bad investments in U.S. mortgage securities.

For the fourth quarter of 2007 Credit Suisse posted a revised net profit of CHF 540 million.

"Our first-quarter results are clearly unsatisfactory," Credit Suisse chief executive Brady Dougan said, but he said other operations of the bank did well.

Credit Suisse is the first of the major European investment banks to report the quarter, but others have warned investors to brace for more writedowns.

Germany's Deutsche Bank AG has said it expects to post EUR 2.5 billion (CHF 4 billion) in markdowns for buyout loans and mortgage securities, while UBS expects a net loss of CHF 12.45 billion because of its subprime exposure.

Credit Suisse said it has continued to reduce exposure to risk in the market and that other areas of its operations performed well

The bank posted a net profit of CHF 2.7 billion in the first quarter of 2007.

Credit Suisse shares, which have slid 43 percent in the last 12 months, rose 0.7 percent to CHF 52.90 on the Zurich exchange.

"Other than the areas affected directly by the credit crisis, most of our businesses performed well, with revenues near, or in some cases above, those in the first quarter of 2007," Dougan said.

He said the bank "remains well positioned in an extremely challenging environment".

Credit Suisse's capital position is strong, Dougan said, adding that the bank would continue to manage its liquidity conservatively.

"I am confident that we will continue to serve as a safe haven for clients in uncertain and volatile markets, and to seize the opportunities that arise in times of market dislocation to create long-term value," Dougan said.

Credit Suisse took the bulk of its writedowns – CHF 2.66 billion - for collateralised debt obligations.

But it also marked down CHF 1.68 billion for buyout loans granted but failed to sell to investors and CHF 944 million for mortgage securities.

Credit Suisse trimmed its exposures to the troubled areas during the quarter. Leveraged loans outstanding fell to CHF 20.8 billion from CHF 35.1 billion at the end of last year. Subprime CDOs shrank to CHF 700 million from CHF 1.6 billion.

[AP / Expatica]

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