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Credit Suisse plunges into the red

Lukas Mühlemann is CEO of the Credit Suisse Group Keystone Archive

Switzerland's second-biggest bank, Credit Suisse, has announced a second quarter net loss of SFr579 million ($386.8 million).

The loss – which comes after CS reported a net profit of SFr368 million for the first quarter – was worse than expected.

Net loss for the first half of the year was SFr211 million, following a net profit of SFr2.7 billion for the corresponding period of 2001.

The result was in marked contrast to the bank’s biggest rival, UBS, which on Tuesday reported a second quarter net profit of SFr1.331 billion ($890.3 million) – down four per cent on the same period last year.

In a statement released on Wednesday, Credit Suisse described the result as “unsatisfactory”, but blamed weak equity markets for the fall in profits.

Responding to the figures, Chief Financial Officer, Philip Ryan, said the bank would implement additional measures to strengthen its loss-making Winterthur insurance business.

“We continue to expect a loss-making quarter for the insurance in the third quarter, unless we see some robust rally in equity markets which looks unlikely right now,” commented Ryan.

Stemming losses

Ryan added that the group was considering the implementation of a series of steps to boost Winterthur’s capital base.

“We will have to put some capital into Winterthur, and we’re in the process of deciding how much and how to do it,” he said.

The group’s investment banking division, Credit Suisse First Boston, reported a net operating profit of SFr371 million in the second quarter, up 48 per cent on the first quarter of 2002. But this was down 24 per cent on the corresponding period in 2001.

The bank said it expected the market environment to remain “challenging” during the second half of the year, adding that expansion in the private and retail banking sectors would be “focused” and “proceed at a pace in line with prevailing market conditions”.

swissinfo with agencies

Winterthur is proving a cash drain for CS, which bought the insurer in 1997.
The bank is blaming weak equity markets for the fall in profits.
UBS is weathering the economic downturn better than its rival.
CS boss Lukas Mühlemann plans to step down as chairman in 2003, but will stay on as CEO.

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