Credit Suisse Swings to Profit

123jump.com Staff
23 Apr, 2009
New York City

Credit Suisse returned to profitability on a rise in income. Tier 1 capital ratio increased as the bank lowered its risk profile. The bank benefitted from the net new asset flows in asset management. The investment bank reported net income of $1.9 billion and tier 1 capital ratio of 14.1%.

[R]8:20 AM New York, 4:20 PM Zurich – Credit Suisse returned to profitability on a rise in income. Tier 1 capital ratio increased as the bank lowered its risk profile. The bank benefitted from the net new asset flows in asset management.[/R]

Credit Suisse reported first quarter income of Sfr 2.01 billion compared with a loss of Sfr 2.15 billion. The core net revenues in the quarter were Sfr 9.6 billion compared to Sfr 2.92 billion in the year ago period. Earnings per share jumped to Sfr 1.60.

Investment bank reported tier 1 capital ratio of 14.1%, an increase from 13.3% at the end of the fourth quarter 2008. The bank also plans to redeem two upper ties 2 issues of 125 million euros and 150 million pounds.

Credit Suisse benefitted in private banking and wealth management while competitors are in disarray in Switzerland and in Europe.

Private banking which includes wealth management and corporate and retail banking businesses net income before taxes declined 25% to Sfr 992 million with net revenues fall of 14% to Sfr 2.87 billion.

Wealth management reported net income before taxes declined of 25% to Sfr 646 million on net revenues fall of 17% to Sfr 1.9 billion as recurring and new clients’ revenues declined. Wealth management attracted net new assets of Sfr 9 billion.

Corporate and retail banking reported income before taxes declined 25% to Sfr 346 million on 9% decline in revenues of Sfr 953 million. The pre-tax income margin fell to 36.3% from 44.5%.

Investment banking net revenues increased to Sfr 6.4 billion from negative revenues of Sfr 503 million. Net income before taxes increased to Sfr 2.4 billion. Emerging markets trading, U.S. leverage financing and convertible and equity trading returned to profitability with total revenues of Sfr 1.4 billion.

Investment banking continues to lower its asset positions of troubled real estate linked loans known as collateralized mortgage bonds and others. The bank lowered its holdings of these assets by 31% from the fourth quarter 2008 and 92% lower since the third quarter 2007. Net write downs in the quarter of Sfr 1.4 billion in the portfolio led the negative revenue of Sfr 1.7 billion.

In the quarter compensation cost in investment banking was Sfr 2.9 billion that included prior year compensation awards and 2009 accruals related to performance.

Asset management net revenues increased Sfr 52 million to Sfr 6 million and net loss before taxes were Sfr 490 million compared to Sfr 544 million in the quarter a year ago. Total asset under management increased to Sfr 1.12 trillion, up 1.4% from a year ago and alternative asset management strategies attracted net flows of Sfr 1.0 billion.

Tobias Guldimann will be responsible for the risk management on the Executive Board from his current position of Chief Risk Officer at the bank and a member of the board.