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ZURICH, Feb 15 (AFP): Swiss bank Credit Suisse Group disappointed investors Wednesday with a 4.0-per cent increase in net profit for 2005, weak by comparison with other European banks, and its share price fell sharply.
Credit Suisse, the second-biggest Swiss banking group after UBS, said that its figures had been hit by changed accounting rules and provisions for US litigation.
The results sparked a 5.9-per cent fall in Credit Suisse's share price to 73.35 Swiss francs at the start of trading in Zurich. By mid-day the share was showing a loss of about 8.0 per cent to 71.60 Swiss francs, although it recovered somewhat in early afternoon trading to 72.50 Swiss francs.
Chief Executive Oswald Gruebel said the full-year performance "wasn't so bad" given a substantial restructuring efforts, even though the fourth-quarter results were widely off the mark, he noted.
In the fourth quarter, Credit Suisse saw its net profit rise by 15.0 per cent to 1.1 billion Swiss francs compared with same period in 2004.
But that represented a 42-per cent fall compared with net profit in the third quarter of 2005.
Credit Suisse had announced on Monday that its 2005 figures would be hit by a one-off charge of 421 million Swiss francs after a change in accounting regulations.
The new rules, tied to share-based compensation packages for employees and agreed after talks with the US Securities and Exchange Commission, meant that personnel charges rose by 630 million Swiss francs, Credit Suisse said in a statement on Wednesday.
In addition, Credit Suisse's Institutional Securities division booked an after-tax charge of 624.0 million Swiss francs in the second quarter to increase its reserve for private litigation in the United States, the group said.
The group has faced headaches there over the Enron scandal and the independence of financial analysts.
Full-year net revenue rose 10 per cent to 60.6 billion Swiss francs, Credit Suisse said.
Clients poured in 58.4 billion Swiss francs of new money, an increase of 77.0 per cent on the 2004 figure, but far below the figure of 148.0 billion Swiss francs drawn by UBS.
UBS, which announced its results on Tuesday, posted a 75.0 per cent increase in full-year net profit, hitting a record 14.0 billion Swiss francs.
Other European banks have also delivered rosier figures than Credit Suisse, including the biggest bank in the euro zone, Santander Central Hispano of Spain which saw a 45.0-per cent increase in net profit, and German giant Deutsche Bank, with 53.0 per cent.
However, Credit Suisse, has recovered from several years in the doldrums.
The poor performances of its New York-based merchant banking arm CSFB and the Winterthur insurance division were blamed for record losses in recent years, but widespread cost-cutting and the recovery of financial markets helped it climb back into profit.
In 2004, Credit Suisse posted a sevenfold increase in full-year profit, reaching 5.63 billion Swiss francs.
The group's new "one bank" strategy, bringing previously distinct units Credit Suisse and CSFB closer together, would will help to boost the bank's profitability, Gruebel said.
The management's confidence was reflected in the fact that the dividend had been raised to 2.00 Swiss francs, from 1.50 Swiss francs previously, he said.
Still, the cost base needs to be improved, he added.
The group's financial director, Renato Fassbind, said the performance so far this year has been "strong".
Credit Suisse was aiming for a profit of 8.0 billion Swiss francs in 2007, he added.
Credit Suisse said it was "positive" about the prospects for 2006.
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