Credit Suisse reports 45 percent drop in Q1 profit
Wednesday, April 27, 2011
GENEVA (AP) — Credit Suisse Group reported a 45 percent drop in first-quarter net profits Wednesday, to 1.14 billion Swiss francs ($1.3 billion) from 2.06 billion francs a year ago.
Analysts had expected the Zurich-based bank to report significantly lower earnings in the first quarter as the strong franc against the dollar and euro and other factors take their toll.
Operating income fell 16.6 percent to 1.67 billion francs during the first three months of the year, Credit Suisse said.
It played up its underlying return on equity of 18.8 percent, gain in market share and generation of 19.1 billion francs in net new assets, citing strong fixed income, solid equity sales and higher trading income from its investment banking unit.
Credit Suisse, a global player in investment banking, private banking and corporate advisory, said it was well prepared to capitalize on its improved market position going into the next quarter despite volatile currency exchange rates due to Europe’s sovereign debt crisis and turmoil in the Middle East.
“We have provided further evidence that our business model generates stable, high-quality earnings,” CEO Brady Dougan said. “In a quarter marked by significant market uncertainty, we have maintained our strong momentum with clients, gaining market share and generating 19.1 billion francs net new assets.”
He had cut the profits goal for Switzerland’s second-biggest bank in February in response to tougher capital requirements. The bank had lower losses and writedowns during the global financial crisis than its competitors, notably including the biggest Swiss bank, UBS AG.
The share price of Credit Suisse has sagged again since 2009, to about 40 Swiss francs from 60 francs, as hopes faded that Credit Suisse would be able to maintain its lead over rival UBS AG. But shares of Credit Suisse are up about 4 percent in Swiss trading this year.
The bank’s chief financial officer, David Mathers, said Credit Suisse had “a strong quarter overall” and was well-positioned and strongly capitalized in line with new global and Swiss regulations.
On Tuesday, UBS reported better-than-expected results and its share price surged, adding to the pressure on Credit Suisse.
Those results set a “high bar for Credit Suisse, who are in a much better position, but have had a bit of a reputation for underachieving in the last four quarters,” said Chris Wheeler, an analyst at Mediobanca.
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