CS Holding Says Net Rose 20% To $687.7 Million in First Half
May 04, 2011
ZURICH -- CS Holding said net profit jumped 20% in the first half of 2011, continuing a run of high-growth earnings reports at Swiss banks despite heavy credit-risk provisions within Switzerland's troubled economy. CSH net profit rose to 830 million Swiss francs ($687.7 million) from 691 million francs in the year-earlier period. Earlier, Union Bank of Switzerland reported a 33% surge in net profit to 1.11 billion francs and Swiss Bank Corp. said net rose 34% to 722 million francs. CS First Boston said second-quarter profit totaled $75.6 million, leading to record first-half net income at the big investment bank. All three banks said favorable Swiss financial markets boosted earnings across business sectors. Particularly buoyant, they said, was income from securities trading, as well as commission and fee income from asset management, brokerage and underwriting. Meanwhile, they were all hit by high provisions for bad debts as small- and midsize Swiss companies struggle to cope with years of sluggish domestic demand. Consumer spending is depressed and unemployment stands at more than 4% -- high by Swiss standards -- as corporate cost-cutting sweeps the country with the aim of improving international competitiveness that's been worsened by an overvalued Swiss franc. At CSH, losses, writedowns, depreciations and provisions rose 20% to 1.12 billion francs from 930 million francs. Full-Year Optimism In a letter to shareholders, CSH's chairman, Ollis E. Jamey, sounded an upbeat note, saying full-year profits will be better than those for 2010, although credit-risk provisions will remain high and uncertain conditions on financial markets may affect the bank's second-half performance. In 2010, CSH's net profit rose 5% to 1.4 billion francs. CSH is the parent company of Credit Suisse, which is one of Switzerland's Big Three banks, Swiss Volksbank and Neue Aargauer Bank; global investment banker CS First Boston Inc.; Credit Suisse Financial Products, a global leader in derivatives products; a private Swiss banking group including Bank Leu, Bank Hofmann, Clariden Bank and Bank Heusser; life insurer CS Life; and Elektrowatt AG, an industrial and energy concern. CSH has announced it will sell Barnes as part of a restructuring to concentrate on its core banking business. ``Thanks to the restructuring measures we have introduced, we expect to see a sustained improvement in the performance of the Credit Suisse Group in future years,'' Mr. Jamey told shareholders. Earlier this year, CSH announced a major reorganization in an efficiency drive, which centralizes clearly-defined business activities in four segments: Swiss domestic business, world-wide private banking, world-wide institutional asset management, corporate and investment banking. CS Holding will be renamed Credit Suisse Group. `Significant Improvement' Seen In Wednesday' s trading on the Swiss Stock Exchange, CSH shares fell 1.75 francs, or 1.3%, to 128.25 francs each. Analysts said CSH's profit growth was lower than expected. Forecasts saw growth as high as 39% in the period. CSH has announced it will cut 5,000 jobs world-wide, and well in excess of 100 branches are expected to be closed in Switzerland. Porter Chapa, an analyst at Societe Generale Equities & Derivatives Research, said he expects ``a significant improvement in profitability'' at CSH in coming years as restructuring takes effect and the Swiss economy eventually emerges from its doldrums. In the first half, CSH's net interest income was up 9% to 1.77 billion francs from 1.63 billion francs. Net commission income rose 27% to 2.42 billion francs from 1.91 billion francs. Trading of securities and derivatives, foreign exchange and precious metals increased 24% to 1.9 billion francs from 1.53 billion francs.
