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Credit Suisse returns to profit

Zurich-based Credit Suisse believes it is back on track (CS Group)

The Credit Suisse Group is back in the black after reporting a first-quarter net profit of SFr652 million ($485 million).

The figures have raised hopes that Switzerland's second-biggest bank has turned the corner after posting the worst loss in the company's history in 2002.

Last year's SFr3.3 billion loss was blamed on the global economic downturn and included pre-tax charges of around SFr1 billion to cover lawsuits in the United States.

Credit Suisse said on Tuesday that it had now moved towards its goal of a return to "solid profitability" in 2003.

However, the bank warned that it remained "cautious" due to the continued challenging market environment and global uncertainty.

Chief financial officer Philip Ryan said it was impossible to predict full-year profits.

"It's a very difficult environment and the level of profitability is just unclear at this time because of the volatility in financial markets," he said.

"At the present time we see a better future, but it's a future that's a modest improvement over where we are now."

The bank's investment arm, Credit Suisse First Boston (CSFB), reported a SFr221 million first-quarter net profit, compared with a SFr1.3 billion net loss in the final quarter of 2002.

Credit Suisse Financial Services, which includes private banking and its Winterthur insurance unit - previously a major drag on the company - made a SFr666 million net profit.

Write-offs

However, write-offs on the group's investments in loss-making insurer Swiss Life and the national carrier, Swiss, cost the bank SFr150 million in the first quarter.

Commenting on Tuesday's results, Hilary Cook, director of Investment Strategy at Barclay's Private Clients, said Credit Suisse had produced "an impressive set of results".

"This isn't just good luck. This is a real turnaround in the sense that the group has done a very good job indeed of cost-cutting... and its capital base has turned out much stronger than previously feared," she said.

Last week CSFB finally reached a $200 million settlement with US regulators over charges of issuing biased stock research and securities fraud.

The announcement came days after CSFB investment banker Frank Quattrone was charged in the US with obstructing justice and destroying evidence.

The group has slashed jobs in a bid to return to profitability, shedding 900 in banking and 300 at Winterthur. These cuts come on top of some 6,500 jobs cut at CSFB and another 700 positions in the financial services division last year.

"It's a sad day when jobs have to go, but in order to ensure company survival, it has been necessary," Hilary Cook observed. "It has put Credit Suisse in a much stronger position going forward".

swissinfo with agencies

Credit Suisse

The bank posted a net loss of SFr950 million for the fourth quarter of 2002.
The group's operating income was SFr7 billion - up ten per cent on the previous quarter.
The Private Banking unit recorded net new assets of SFr1.5 billion.

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