Credit Suisse moves back into profit

Swiss bank Credit Suisse has gone back into the black after strong quarterly performance by its investment banking arm

BY Euan Stuart LAST UPDATED AT 11:24 ON Thu 23 Apr 2009

Credit Suisse surprised the markets today after reporting first-quarter profits twice as high as analysts had expected. It made SFr2bn (£1.2bn) after tax in the first three months of the year, following a SFr6bn loss between October and December last year, when it wrote off billions of Swiss Francs in bad debt.

The turnaround was down to the strong performance in its investment banking division, which returned a profit of SFr2.4bn and gains in its private banking business. However its wealth management and retail banking unit reported a 25 per cent drop in earnings and its asset management arm lost SFr490m, a slight improvement on last year.

Last year the bank lost SFr2.15bn in the same period and as a result slashed its global workforce by 11 per cent, Chief executive Brady Dougan said that the improvement was down to "the measures we took last year across the bank, including cost reductions and the further strengthening of our capital position".

He added in a statement: "Our prudent approach in the new market environment has served us well. While we may still be affected by continued volatility and market disruptions if difficult conditions persist, we believe that we are in a position to weather the storms and perform well when market opportunities arise."

Credit Suisse's upturn in fortunes follows on the heels of recent positive first-quarter announcements from Goldman Sachs, Citigroup and JPMorgan Chase.

WHAT THEY SAID

Jeffrey Goldfarb, on Breakingviews.com: The secret to Credit Suisse's success seems to have been clever deployment of capital. It increased revenue in areas such as prime brokerage, where competitors are retreating, and did well in a strong market for trading high-grade debt, without even gaining market-share. The good quarter was made possible by decisive action earlier in the crisis. Credit Suisse was fast to raise a big slug of capital, without the state's help and at a reasonable price. It was also quicker than peers to aggressively slash holdings of risky assets. The prudence is paying off.

Huw van Steenis, analyst at Morgan Stanley on Bloomberg.com: These results give the strong impression Credit Suisse is winning share in private banking and investment banking as competitors are in disarray.

Peter Thorne, analyst at independent brokerage Helvea, in the Wall Street Journal: One good quarter does not make a transformation, but Credit Suisse has demonstrated with the results what can be achieved with an investment bank focused on flow business. · 

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