Less-than-expected profits fall for Credit Suisse

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The Independent Online

Credit Suisse said yesterday that a decline in share trading and advisory fees hit earnings at its investment bank as the company posted a fall in profits.

Credit Suisse also said falling revenues at the investment bank would hit the bonuses paid to its multi-millionaire bankers. But analysts said the results were better than those of its larger rival UBS, which unusually stumbled by making a bad bet on interest rate trends.

Credit Suisse's third-quarter profits came in at Sfr1.89bn (£796m) against Sfr1.92bn during the same period last year. However, thanks to buoyant first-half figures, the bank is still showing an increase over the first nine months to Sfr6.6bn compared with Sfr4.7bn last time.

Despite the fact that profits fell, the figures were welcomed by most analysts. An average of their estimates had the bank making Sfr1.68bn in the third quarter.

In contrast to the usually consistent UBS, Credit Suisse has had a habit of producing unexpected surprises when reporting its results and there had been rumours circulating around the City that there could be another one this time.

"People are breathing a sigh of relief," said one analyst. "They're better than expected."

The bank said the fall in fees from advising companies on deals and reduced share trading was "partially offset" by an increase in fees for underwriting bond issues for companies.

It added: "Total operating expenses decreased by 1 per cent compared to the third quarter of 2005 due primarily to lower compensation accruals in line with lower revenues."

The ratio of pay to revenues was 53.5 per cent, an improvement of 2 per cent compared to 2005. The investment bank's overall earnings fell by 19 per cent compared to a year earlier.

Private banking profits were virtually unchanged while earnings from fund management fell 21 per cent. However, the corporate and retail bank was a bright spot, posting a 7 per cent profit rise.

Credit Suisse also gave an upbeat assessment of future prospects. "The economic outlook for 2007 is positive in view of the financial strength of corporations, the robustness of the financial services industry and the growth prospects for emerging markets," it said.

The chief executive, Oswald Grübel, said: "We achieved a good overall performance in the first nine months of 2006."