CREDIT Suisse Group, Switzerland's second-biggest bank, reported its first loss in almost five years on 5.3 billion Swiss francs (US$5.2 billion) of writedowns linked to deteriorating credit markets.
The net loss totaled 2.15 billion francs in the first quarter, compared with a 2.73 billion-franc profit a year earlier, the Zurich-based bank said in a statement yesterday. Credit Suisse rose as much as 3.4 percent in Swiss trading after the company said it was "comfortable" with its capital position.
"The only positive thing is that they are not announcing a capital increase, at least not yet," said Joerg de Vries-Hippen, who oversees about US$26 billion, including Credit Suisse shares, as chief investment officer for European equities at Allianz Global Investors in Frankfurt.
While Chief Executive Officer Brady Dougan said the results were "clearly unsatisfactory," the company's losses have been dwarfed by UBS AG, its larger Swiss rival, which said on April 1 that it will seek 15 billion francs from shareholders to replenish capital after record losses.
Royal Bank of Scotland Group Plc announced plans two days ago to raise 12 billion pounds (US$23.70 billion) selling stock after debt writedowns.
Credit Suisse rose 1.25 francs, or 2.4 percent, to 53.80 francs in Zurich. The shares have dropped 21 percent this year, trimming its market value to 62.6 billion francs and pushing the stock in March to the lowest since December 2004. UBS has declined 33 percent so far in 2008.
The world's biggest banks and securities firms have reported credit losses and writedowns of about US$290 billion linked to the collapse of the US subprime mortgage market, Bloomberg News reported.
10% target
Credit Suisse's Tier 1 capital ratio fell to 9.8 percent by the end of the first quarter from 10 percent at the end of 2007. The bank targets a ratio of about 10 percent and feels "comfortable" around that level, Dougan told analysts on a conference call.
The investment bank had a pretax loss of 3.46 billion francs in an "extremely challenging market environment," after posting a 1.99 billion-franc profit a year before. Asset management had a loss of 468 million francs after marking down securities the bank purchased from its own money market funds by 566 million francs.
The writedowns at the securities unit included collateralized debt obligations that the bank said last month were intentionally mispriced by "a small group" of traders. The bank had writedowns of 2.66 billion francs on CDOs, 1.68 billion francs on leveraged finance and 848 million francs on commercial mortgage-backed securities.