Credit Suisse profit falls 62 pct

An April 24, 2008 file photo shows the logo of the Credit Suisse in Zurich, Switzerland. Credit Suisse Group returned to profit from subprime losses in the second quarter, posting net earnings Thursday, July 24, 2008, of 1.22 billion Swiss francs (about US$1.16 billion, about 750 million euro). Credit Suisse's second-quarter result was 62 percent lower than the net income of 3.2 billion francs in the same period last year, but did not show the massive writedowns from subprime that have marred bank earnings for months. (AP Photo/Keystone, Alessandro Della Bella)

ZURICH, Switzerland—Credit Suisse Group's profit skidded 62 percent from a year ago, but was a major improvement from the loss it posted in the first three months of this year.

Switzerland's second largest bank said it earned 1.22 billion Swiss francs ($1.16 billion) in the April-June period, down from a profit of 3.2 billion francs in the same period last year.

The bank, which has weathered the U.S. subprime mortgage crisis better than crosstown rival UBS AG, had gone into the red for the first quarter, posting a net loss of 2.1 billion Swiss francs.

In the latest quarter, Credit Suisse said it had combined net writedowns of only 22 million francs ($21.3 million) in the leveraged finance and structured products businesses, which it said was so low as to be "immaterial." In the first quarter, Credit Suisse had net writedowns of 5.3 billion francs for big buyout loans and mortgage securities.

"We are pleased with our second-quarter results, which reflect the resilience and earnings power of our integrated business model and our continued focus on risk and cost management," said Chief Executive Brady W. Dougan.

He said the bank had further reduced its risk positions.

"Our conservative funding structure and our position as one of the world's best capitalized banks remain competitive advantages," Dougan said in a company statement.

One reason for the decline in second-quarter profit compared with a year ago was that its investment banking division had income before taxes of 281 million francs ($272 million), down from its record high of 2.5 billion francs in the second quarter of 2007.

The bank said its private banking division, which comprises the wealth management and corporate and retail banking businesses, reported income before taxes of 1.2 billion francs (US$1.16) for the quarter, a 12 percent decrease from the same period of 2007.

"Credit Suisse has reclaimed its status as a survivor of the credit crisis," said Isabel Schauerte, analyst at Celent, an international financial research and consulting firm.

She said the latest results along with a stronger capitalization makes for good ammunition to fend off the Swiss regulators' proposal to raise capital requirements and introduce a U.S.-type leverage ratio for Credit Suisse and UBS.

"Positive results in the investment banking segment, while humble, underscore that the one bank model has a future at Credit Suisse," Schauerte added.

Credit Suisse shares rose 5.3 percent to 52.55 francs ($50.86) in Zurich.