Thursday April 23, 01:15 PM
Credit Suisse ends losing streak
ZURICH (AFP) - Swiss banking giant Credit Suisse on Thursday ended a losing streak with a net profit of 2.0 billion francs for the first quarter, saying cost cutting and capital raising measures have worked.
The profit, equivalent to 1.32 billion euros or 1.71 billion dollars, marked a sharp turnaround from the bank's record full-year loss of 8.2 billion francs in 2008, the bulk of which was made in the last three months of the year.
Chief executive Brady Dougan said the results reflected the impact of measures taken by the group to deal with the crisis, including cutting costs and raising capital.
"While we may still be affected by continued volatility and market disruptions if difficult conditions persist, we believe that we are in a position to weather the storms and perform well when market opportunities arise," he added.
Credit Suisse, Switzerland's second biggest bank, has been hurt by the financial crisis. In December, it said it would slash 5,300 jobs in a bid to cut costs.
On Thursday, the group said its investment bank unit, which was blamed for incurring massive losses during the financial crisis, also turned profitable, with profit before taxes of 2.4 billion francs.
Funds were flowing back into the group, with net new money reaching 8.0 billion francs for the first three months of the year, reversing an outflow of 12.6 billion in the last quarter of 2008.
However, the group's executives were hesitant about giving a full-year outlook.
When asked for his assessment on the ongoing second quarter, the group's chief financial officer Renato Fassbind would only say that "market conditions have not changed materially from the first quarter."
"It's very difficult to predict markets right now, markets are still very volatile. We can say that there was no major change for us so far in the quarter," he said.
He stressed, however, that the bank was "extremely well-funded and our liquidity very high."
The bank's Tier 1 capital ratio -- an international measure of capital adequacy -- was at 14.1 percent at the end of the first quarter, up from 13.3 percent at the end of 2008.
Major Swiss banks are required to fulfil a higher ratio than the international 'Basel II' minimum requirement of 8.0 percent.
At midday, the stock was trading up 6.75 percent at 42.38 francs, outperforming the Swiss Market Index, which was trading flat.
Bank Wegelin described the results as "impressive," noting that the money inflow and "very comfortable" Tier 1 ratio would convince investors.
It expressed doubts that the investment bank unit could keep churning out profits during the year, but added that the overall Credit Suisse group (NYSE: CS - news) "appears well positioned to benefit from an improved market situation."
"With its comfortable capitalisation, it should be equipped to weather a possible deepening of the economic crisis. Recent gains in stock price are therefore justified and further gains are possible today," said Bank Wegelin.
Bank Vontobel said the "better-than-expected" results showed that Credit Suisse is "gaining market share in some of its investment banking businesses."
Credit Suisse has so far fared better in the crisis than its local rival UBS (Virt-X: UBSN.VX - news) , which earlier this month warned of further billion-dollar losses for the first quarter.
UBS last year also posted its second consecutive annual loss and the biggest in Swiss corporate history.
UBS also had to seek government aid, while Credit Suisse turned to a group of investors including a Qatari investor for 10 billion francs in new capital last October.
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