Credit Suisse reported today a 13 per cent year-on-year fall to SFr581 million ($453,7 million) in net profit in the second quarter for its ...

Credit Suisse reported today a 13 per cent year-on-year fall to SFr581 million ($453,7 million) in net profit in the second quarter for its private banking business. The bank said it gained SFr7 billion of net new money in its private banking business in the first quarter, a third less than in the year-ago period, and likely to be much less than achieved by its great rival, UBS, which reports its results next week. Overall, the bank reported a 36.9 per cent year-on-year fall in net profits to SFr919 million for the second quarter of 2005. "Following a strong start to 2005, the second quarter was impacted by the anticipated slowdown in market activity and our banking businesses experienced low levels of client activity in April and May,” said Oswald Greubel, chief executive of the Zurich-based bank, in a results statement. He added: “Benefiting from significant improvements in June, the group generated a respectable second-quarter result, driven by good net revenues and effective cost management.” On a quarter-on-quarter basis, net profit in private banking was down 15 per cent in the second quarter, which Credit Suisse said was “due primarily to a reduction in overall trading revenues as a result of lower income from trading execution.” Hedge funds also look to have undermined the bank’s private banking results. The bank said the loss in terms of a year-on-year comparison was “mainly attributable to small losses during the quarter in the fair value of interest rate derivatives used for risk management purposes which did not qualify for hedge accounting, compared to large gains in the second quarter of 2004.” The cost/income ratio at the bank's private banking unit was 59.9 per cent for the second quarter, up 4.5 percentage points versus the previous quarter and up 2.0 percentage points versus the second quarter of 2004. The bank said this reflected seasonally higher expenses compared to the first quarter of 2005, strategic investments in key growth markets and lower net revenues. Looking forward to the rest of the year, Credit Suisse said that it expects a recovery in client activity in the banking business, which started in June, to continue. “We believe that equity markets will improve in the second half of the year after a short-term correction of the recent uptrend. Interest rates will most likely move in a narrow range. Credit Suisse Group is well positioned to benefit from this economic environment,” the bank said in its results statement.