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Credit Suisse reports 5 percent rise in 1st-quarter profit to US$2.23 billion

Credit Suisse reports 5 percent rise in 1st-quarter profit to US$2.23 billion

Credit Suisse Group said Wednesday that first-quarter net profit rose 5 percent thanks to excellent markets for trading stocks and bonds and more commissions from wealthy clients.
Switzerland's second-largest bank said net profit for the three months was 2.7 billion Swiss francs (US$2.23 billion; euro1.64 billion), from 2.6 billion francs a year earlier.
The company said it was optimistic about long-term growth in its three main businesses _ investment banking, private banking and asset management.
Credit Suisse's overall income rose 6 percent to 11.62 billion francs (US$9.61 billion; euro7.06 billion). The private banking arm also benefited from healthy markets, with commissions and fees up 18 percent.
Credit Suisse gained 15.2 billion francs in fresh private banking assets, mainly from Europe, Asia and the United States. That translates into 7.8 percent growth when annualized, well over the bank's 6 percent target.
Net new assets are a closely watched indicator for Swiss banks because they point to future revenue.
The bank's shares closed down 0.5 percent at 95 francs (US$78.58; euro57.83) in Zurich.
Analysts said they were surprised with the decline. Dresdner Kleinwort suggested funny arithmetic was the explanation, given that earnings were 8 percent higher than market consensus.
Dresdner analyst Stefan Stalmann said the result underscored progress made in reining in costs and strong private banking inflows.
Outgoing Chief Executive Oswald Gruebel said the results reflected the progress of Credit Suisse's "one-bank reorganization" and boded well for the future.
"I am convinced that under the leadership of Brady Dougan, the new chief executive, Credit Suisse will continue to grow and strengthen its profitability," Gruebel said in a statement.
Gruebel, 63, will hand over to Dougan on Friday. Dougan improved profitability at Credit Suisse's investment bank, partly by a return to risk-taking, along with cost cuts.
"This is certainly a good result, perhaps not the blowout that some market participants expected, but healthy nevertheless," said Andreas Venditti, Zurich-based analyst for Zuercher Kantonalbank.
Keefe, Bruyette & Woods said the results showed Credit Suisse is keeping a lid on costs.
The earnings came after a year of Credit Suisse's "one-bank" reorganization of the business under private banking, investment banking and asset management to boost revenue and cut costs by getting traditionally independent units to work more closely together.
Analysts cited cost controls in investment banking, where revenue rose 14 percent _ twice as much as costs, which climbed mainly because of increased banker bonuses.
"Credit Suisse remains our preferred investment banking-play," due to the potential for more cost-cutting under the one-bank program and the "Mark Rufeh factor," JP Morgan analyst Kian Abouhossein said, referring to the Wall Street cost-cutter brought in to help tame spending.
Senior analyst Cubillas Ding at Celent, an international financial research and consulting firm, said there were concerns about the U.S. sub-prime lending market and how it would affect Credit Suisse, but that "the latest results quarter indicates that these challenges remain well contained for Credit Suisse."
"Investment banking as a whole is going through an upward-cycle at present," Ding said. "But due to its recent restructuring efforts, Credit Suisse is particularly forceful in holding a tight reign on costs, and has therefore increased margins."
In Asia, he said, "investment banking remains a beachhead business for Credit Suisse," with 80 percent of Asia Pacific revenues from advisory, sales and trading activities.
Helvea said Credit Suisse's first-quarter earnings showed "the investment bank is doing well, and private banking continues to perform."
Bear Stearns also praised the earnings, and said revenue and cost management were strong.


Updated : 2021-04-22 11:14 GMT+08:00