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CS sees recovery from record loss
ZURICH, Switzerland (Reuters) -- Credit Suisse Group said on Friday it expected net profit of about 650 million Swiss francs ($475 million) in the first quarter as improved insurance and investment banking earnings helped it recover from a record 2002 loss. The country's second-largest bank, due to report final first-quarter results on May 6, said earnings were helped by strong results in the fixed income business at investment banking division Credit Suisse First Boston and by lower credit provisions. At the Winterthur insurance business, higher investment income and premium increases helped lift earnings. Net new assets in its flagship private banking business increased compared with the fourth quarter of 2002, CS added without giving details. CS had already said it aimed to return to profitability this year after a 2002 loss of 3.3 billion francs, caused by a host of one-off charges amid the worst financial market rout in at least a generation. Insurer Winterthur had already been profitable in the last quarter of 2002, but Credit Suisse First Boston managed a turnaround in the first three months of 2002. CS said CSFB was expected to have first-quarter net profit of about $160 million, while net profit at CS Financial Services was seen at about 660 million Swiss francs. The group said it had to book further writedowns on its investment in loss-making Swiss flag carrier Swiss International Air Lines and loss-making Swiss insurer Swiss Life. It gave no details. John Mack, Co-CEO of CS Group and CEO of CSFB said in a statement: "We are very pleased that CSFB has returned to profitability in the first quarter...in this challenging market environment." Oswald Gruebel, Co-CEO of the group and CEO of CS Financial Services, said efforts to reposition Financial Services since last summer, especially at Winterthur, were beginning to bear fruit and he was optimistic about further developments. To help restore profits, CS has been cutting 900 jobs in its Financial Services division and shaving 350 jobs by combining Winterthur's life and non-life business. Despite CSFB's woes, CS insists it does not want to spin off the investment bank, while Winterthur was under no pressure to sell any units as it focuses on its core markets in Europe.
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