Credit Suisse Q3 Results from WSJ

By KATHARINA BART

ZURICH -- Credit Suisse Group on Thursday reported buoyant third-quarter results as its investment banking business helped push it to a larger-than-expected net profit, prompting the Swiss bank to give an upbeat outlook.

The Zurich-based company posted net profit of 2.35 billion Swiss francs ($2.38 billion) for the three months to Sept. 30, compared with a loss of 1.26 billion francs a year earlier. Analysts had forecast net profit of 1.72 billion francs.

Net revenue was 8.92 billion francs -- nearly triple revenue of 3.02 billion francs a year earlier, when major trading losses and write-downs on mortgage securities plunged the bank to a net loss.

The latest results are likely to be taken as further evidence the Swiss bank has navigated the financial crisis far better than rivals, and places it alongside U.S. banks such as J.P. Morgan & Chase Co., Goldman Sachs Group Inc. and Morgan Stanley, which all posted healthy earnings for the quarter.

As in recent quarters, Credit Suisse's investment bank dominated the earnings over its private bank, which caters to wealthy individuals with financial services. The securities unit swung to a 1.75 billion franc pretax profit -- more than twice the private bank's profit before taxes, which stood at 867 million francs.

In particular, global interest-rate products, foreign-exchange trading, prime brokerage, cash equities leveraged buyout loans and trading in U.S. residential mortgage securities and derivatives made a strong showing.

Responding to questions on whether the investment bank's performance is sustainable, financial head Renato Fassbind said the unit hasn't yet hit full stride, and is poised to benefit when client activity perks up and win market share from rivals.

Credit Suisse said it is confident of its position among competitors. "If markets remain constructive, we expect to be able to maintain our momentum," Chief Executive Brady Dougan said. "Even if markets become more difficult, we believe that Credit Suisse is positioned to perform well."

Credit Suisse, which recorded a strong Tier 1 ratio of 16.4% in the quarter, also said it wanted to signal to investors that it is setting funds aside for a "reasonable" 2009 dividend, which would mark a return to more normal shareholder payouts. In 2008, when Credit Suisse posted a full-year net loss, it paid shareholders 10 centimes a share. Past dividends have typically been far richer. It paid 2.24 francs a share in 2006 and 2.50 francs in 2007.

At Credit Suisse's private bank, which garnered fresh assets of 13.1 billion francs during the quarter, the gross margin on assets fell sequentially.

Credit Suisse is the first major European investment banks to report third-quarter results. Germany's Deutsche Bank AG surprised investors Wednesday, saying that net profit in the quarter will be more than triple the year-earlier figure, helped by tax-related gains.

Swiss rival UBS AG is expected to remain firmly entrenched in losses when it reports on Nov. 3, while British bank Barclays PLC will release an interim statement on Nov. 10.