Credit Suisse reports 1Q net profit of $1.93 bln; says well-placed to meet new rules

Credit Suisse makes $1.93 bln profit in Q1

GENEVA — Credit Suisse Group reported a first-quarter net profit of 2.06 billion Swiss francs ($1.93 billion) Thursday and said it was well placed to meet new banking rules due to come into force in Switzerland later this year.

The figures met analyst predictions and are a marginal improvement on the bank’s 2.01 billion francs net profit during the first quarter of 2009.

But the results disappointed investors who had hoped to see stronger earnings after U.S. banks Morgan Stanley and Goldman Sachs posted better-than-expected profits earlier this week.

Credit Suisse shares fell 4.7 percent to close at 51.60 francs ($47.86) on the Zurich exchange.

Helvea analyst Peter Thorne rated the results overall as good, but noted that the Wealth Management unit performed worse than forecast. Credit Suisse also benefited from exceptional gains of net 186 million francs ($173 million) — without which it would have been down on year-ago earnings.

The Zurich-based bank risks being outshone next month when its cross-town rival UBS AG is expected to report a first-quarter pretax profit of at least 2.5 billion Swiss francs. This would bring UBS a step closer to reclaiming the lead it held over Credit Suisse for many years until its spectacular crash in 2007-2008.

Renato Fassbind, the bank’s chief financial officer, appeared unconcerned at the prospect of having to once again relinquish the Swiss banking crown to UBS, insisting that Credit Suisse was concentrating only on its own results.

“Our focus is not to be in the lead of anybody else,” he told reporters in a conference call.

Nevertheless, Fassbind pointed to Credit Suisse’s 26 billion francs in new customer deposits during the January-March period, the best quarterly result for five years. By contrast, UBS has reported heavy net withdrawals for several consecutive quarters as it struggles to regain client confidence. The so-called net new money figure is a closely watched indicator of future business in the banking industry.

Credit Suisse, which unlike UBS didn’t require a government bailout, also said it was in a good position to meet new rules announced Wednesday by Switzerland’s financial regulator FINMA. The rules coming into force June 30 include a requirement to hold enough cash and high-quality assets to be able to withstand a crisis for at least 30 days.

Credit Suisse said its Tier 1 capital ratio was 16.4 percent by the end of March, up from 16.3 percent at the end of the previous quarter. The higher the ratio, the more stable a bank is generally considered to be.

Fassbind said Credit Suisse hasn’t been notified of any investigation against it by the U.S. Securities and Exchange Commission in connection with the sale of complex mortgage-related securities known as collateralized debt obligations, or CDOs. The SEC filed a complaint against Goldman Sachs Group Inc. on Friday alleging the bank marketed CDOs to investors without telling them the pools were picked by a hedge fund that was betting on them to fail.

Questions have been raised about other banks’ involvement in the CDO market, but Fassbind said for Credit Suisse “this is not a business that had a meaningful size.”

Meanwhile the prospect that Credit Suisse could become the target of foreign tax investigators grew more likely. So far UBS has borne the brunt of recent tax evasion investigations over its cross-border business dealing with wealthy U.S. clients.

Fassbind said it now appeared increasingly likely that some of Credit Suisse’s clients are listed on a disk containing stolen data purchased earlier this year by German authorities investigating alleged tax cheats.

“We still have no concrete evidence about this case in the format of an official statement,” he said.

Switzerland agreed to soften its strict banking secrecy laws last year after coming under heavy pressure from the United States, Germany and France because of the way it protected bank client information from foreign tax investigators.