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Profits plunge at Credit Suisse

The Enron scandal has had a negative effect on the Credit Suisse Group's results

(Keystone)

Profits at Credit Suisse Group for the first half of 2005 have dropped by nearly SFr500 million ($392 million) against the same period in 2004 to SFr2.83 billion.

The results included a SFr624 million after-tax charge to cover future litigation costs.

Switzerland’s second largest bank netted SFr3.3 billion during the same period last year.

Net profit at the Credit Suisse Group in the second quarter of 2005 fell to SFr919 million, well short of expectations.

This is down from SFr1.5 billion in the same period in 2004. Independent analysts had predicted that second-quarter profits would be closer to SFr1.3 billion.

The bank announced on Wednesday that the charge was in addition to a SFr702 million pre-tax charge imposed in 2002 for potential litigation involving issues such as Enron, initial public offerings or IPOs and research independence.

Credit Suisse has been battling with problems at its New York-based First Boston investment bank (CSFB). This is among seven former Enron lenders which face claims that they helped executives at the failed energy trader inflate revenue.

Uptrend correction

"We believe that equity markets will improve in the second half of the year after a short-term correction of the recent uptrend," the bank said on Wednesday.

Net profit was also down from the SFr1.91 billion seen in the first three months of the year.

Credit Suisse, the ninth largest bank in Europe, warned in February that weaker markets would hurt its second-quarter results.

Credit Suisse shares have gained more than 13 per cent so far this year, outperforming rival UBS, which is due to release its quarterly results on August 9.

2004 was a bumper year for the banking giant – it earned seven times more than it did in 2003 or a net profit of SFr5.63 billion.

swissinfo with agencies

Key facts

The Credit Suisse Group has recorded a net profit of SFr2.829 billion ($2.21 billion) in the first six months of 2005.
This compares with SFr3.318 billion for the same period in 2004.
Net profit in the second quarter fell to SFr919 million.
This is down from SFr1.457 billion in the same period in 2004.

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In brief

The Credit Suisse Group is active in 50 countries and employs 60,000 people around the world.

It is currently the second largest bank in Switzerland, behind UBS.

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