Strong growth gives Credit Suisse stock market boost

Net operating profits at Credit Suisse are up 35 per cent swissinfo.ch

Credit Suisse Group has reported net profit of SFr5.8 billion ($3.52 billion) for last year. The results were higher than analysts' expectations and made the group one of the few gainers on a battered Swiss stock exchange.

The 11 per cent increase in net profits was helped by a surprisingly strong fourth quarter that led to annual double-digit growth for all the group’s business units.

Operating profit for the year was up 35 per cent to SFr7.2 billion, with assets under management growing by 19.3 per cent to SFr1,417 billion. The company said 4.5 per cent of the asset growth, or SFr53.3 billion, was attributable to new assets.

The Credit Suisse Group, which includes Winterthur Insurance and the investment bank, Credit Suisse First Boston, admits that the year ahead is likely to be more difficult because of unpredictable equity markets but says it is better placed than many of its competitors.

“Our portfolio offers us a fair amount of diversity,” the group’s chief financial officer, Philip Ryan, told swissinfo. “For the private banking arm, 65 per cent of its revenues are asset-based as opposed to transactions. The insurance company isn’t too badly affected by this kind of environment either.”

There has been intense speculation that Credit Suisse may be hit hard by the collapse of so-called “TMT” – telecoms, media and technology – stocks.

But Ryan says he is confident that the group is not over-exposed in these sectors. “Our total loan exposure to TMTs is just over five per cent and our exposure to telecoms is about 3.5 per cent. That’s well below the industry weighting.”

Credit Suisse last November concluded its acquisition of the US investment bank, Donaldson, Lufkin and Jenrette, in a SFr20 billion deal that will strengthen its position in the US.

Although hit by some high-profile defections after the takeover, Ryan says 90 per cent of the staff have stayed on and that the bank’s integration into the group is proceeding smoothly.

And the group is planning more acquisitions to plug strategic gaps. Ryan says it has its eye on brokerage firms and private banks in the European market.

The Credit Suisse group hasn’t been without its problems in the past few years. Last week, it became the first foreign bank to be found guilty of criminal activities in Japan after an employee was convicted of obstructing an investigation into allegations that the bank helped investors conceal losses.

Credit Suisse is now the subject of an inquiry in New York for allegedly violating antitrust laws with regard to initial public offerings in the US.

“It’s fair to say we’ve had some problems,” says Ryan. “But the Japanese chapter is now behind us. In the US, the IPO question is industry-wide and we are one of several big players being investigated. But we believe our practices are completely in line with the industry and completely legal.”

In a separate move on Tuesday, the bank announced a four-to-one share split to take advantage of changes to Swiss corporate law.

Credit Suisse is the latest in a string of big names to take advantage of a change in Swiss law designed to increase the volume of shares traded and broaden the shareholder base.

It’s also launching a share buy-back programme of up to five billion shares over the next two years.

swissinfo with agencies