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Credit Suisse Posts Small Profit Despite Hefty Debt Charge - Update

Credit Suisse Posts Small Profit Despite Hefty Debt Charge - Update
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4/25/2012 1:55 AM ET

Swiss banking giant Credit Suisse Group (CS: Quote) on Wednesday reported a modest profit for the first quarter, despite a hefty charge tied to tightening of its own credit spreads. The results improved significantly from the previous quarter amid a rebound in its investment banking business.

Brady Dougan, Chief Executive Officer, said: "We had a good start to 2012. We began to see the effects from the measures we announced in mid-2011 to evolve our business model and cost structure and we benefited from an improved market environment."

Net income attributable to shareholders slumped to 44 million Swiss francs ($48.33 million) from 1.14 billion francs in the prior year. In the preceding quarter, the company reported a loss of 637 million francs. Earnings per share dropped to 0.03 francs from 0.90 francs in the previous year.

The results included fair value losses of 1.55 billion francs before taxes resulting from the company significantly tightening its own credit spreads. Normalized earnings, which exclude such one-time losses or gains, totaled 1.01 francs per share in the first quarter.

Core net revenues declined 25 percent from last year to 5.88 billion francs from 7.81 billion francs, but improved from the prior quarter's 4.47 billion francs.

Investment banking revenues dropped 18 percent from last year to 4.14 billion francs but more than tripled from the previous quarter's 1.11 billion francs. The segment also saw a bottom line recovery from a loss in the prior quarter.

Within the segment, fixed income sales and trading revenues of 2.024 billion francs were significantly higher from the prior quarter, driven by client momentum, improved trading conditions and better client flow.

The company reduced its Basel III risk-weighted assets in Investment Banking division by 15 percent compared to the fourth quarter of 2011.

Credit Suisse said in its Private Banking business, which comprises the global Wealth Management Clients business and the Swiss Corporate & Institutional Clients business, net revenues dropped 8 percent to 2.651 billion francs. Revenues and pre-tax profit for the division improved sequentially.

In Asset Management division, net revenues of 663 million francs climbed 12 percent from last year and increased 45 percent from the previous quarter. The segment's results included a gain from the partial sale of its investment in Aberdeen Asset Management.

Credit Suisse Group attracted net new assets of 8.4 billion francs in the first quarter of 2012. Net asset outflows were 7.1 billion francs.

The stock closed in Zurich on Tuesday higher by 1.50 percent at 23.55 francs on a volume of 5.57 million shares.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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