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CS makes record profit despite US subprime woes

The CS Group has managed to limit the damage

(imagepoint)

Credit Suisse has reported a 31 per cent decline in its net profit for the third quarter to SFr1.3 billion ($1.12 billion), citing "extreme market conditions".

But Switzerland's second-largest bank showed a record net income of SFr7.2 billion for the first nine months of 2007.

The group, which is based in Zurich, reported income from continuing operations in its investment banking business before taxes of SFr6 million, down from SFr758 million in the same period of 2006.

"The extreme market conditions that characterised the third quarter affected many of our business," said CS Group CEO Brady Dougan.

"However, our global diversification and balanced business mix helped us to mitigate the impact on our overall performance, maintain solid profitability and deliver a record result for the first nine months of the year."

Credit Suisse showed net income of SFr7.2 billion between January and September.

Loan defaults

Increasing US home loan defaults have been cascading through credit markets, forcing Switzerland's largest bank, UBS, to write down more than SFr4 billion in fixed-income securities and post its first quarterly loss since 2002.

UBS reported on Tuesday a pre-tax loss of SFr726 million for the third quarter, a performance described by UBS chief executive Marcel Rohner as "unquestionably disappointing".

The bank had earlier announced a management shake-up, with the departure of the head of the investment banking unit Huw Jenkins and chief financial officer Clive Standish.

At the same time, UBS said it was cutting about 1,500 jobs in the US.

Good news

"The good news with Credit Suisse is the private banking side," said Justin Urquhart Stewart, who helps oversee about $3 billion as director of 7 Investment Management in London.

Net new money in wealth management was SFr9.7 billion, CS said in a statement, down from SFr10.9 billion in the third quarter of 2006.

Credit Suisse said at the beginning of October it expected third-quarter net profit to fall within a range of plus or minus 20 per cent of SFr1.3 billion.

The average forecast in a Reuters poll of 14 analysts was for a net profit of SFr1.268 billion.

CEO Dougan was cautious about market developments. "We are seeing encouraging signs that activity in the credit markets is increasing although it is too early to predict when all of the affected markets will return to more normal levels."

swissinfo with agencies

Key facts

CS figures
Net income for the third quarter was SFr1.3 billion.
CS posted record net income of SFr7.2 billion for the first nine months of 2007.
Total assets under management at the end of September were SFr1,571.3 billion – down 3.5% from June 30.
2006 results
Net revenues: SFr38.603 billion (+ 27% compared with 2005)
Total operating expenses: SFr24.414 billion (+5%)
Net income: SFr11.327 billion (+94%)

end of infobox
(swissinfo.ch)


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