Credit Suisse expected to report higher first quarter profit

Tue Apr 23, 2013 2:34pm EDT

* Q1 net profit forecast at 1.255 bln Sfr vs 44 mln yr-ago

* Focus on cost cuts, risk-weighted assets, capital

* C.Suisse one of first European investment banks to report

By Katharina Bart

ZURICH, April 23 (Reuters) - Credit Suisse is forecast to report an increase in first-quarter net profit on Wednesday, supported partly by a rise in sales and trading revenue from its investment bank.

"We expect the investment bank to deliver good first quarter results," Bank Vontobel analyst Teresa Nielsen said.

The first quarter is traditionally a strong one for investment banks, but in the United States investment banks' first quarter was not so healthy.

Wall Street's big five banks have reported investment bank revenues down 7 percent on the year, although they were up 35 percent on a weak fourth quarter.

Morgan Stanley, for example, reported a 14 percent drop in adjusted earnings last week as its bond trading unit faltered.

Credit Suisse results will provide the first taste of how big European investment banks have fared. Barclays also reports on Wednesday.

Like other big banks, Credit Suisse has to meet tougher regulations aimed at preventing a repeat of the 2008 financial crisis. This involves cutting back on risk and strengthening capital.

The bank is expected to have made progress in the quarter in cutting higher-risk assets. These stood at 924 billion Swiss francs in the fourth quarter already within striking distance of a year-end target of 900 billion francs.

Unlike hometown rival UBS, Credit Suisse is not withdrawing from fixed income but is having to make major cost cuts. In February, the bank increased its target for spending cuts to 4.4 billion francs by the end of 2015, up from a previous 4 billion target.

Credit Suisse on Tuesday said it is selling a private equity business to Blackstone Group, part of an effort to boost capital by 15.3 billion Swiss francs ($16.25 billion) after a call from the Swiss National Bank.

Last year, the bank paid its dividend largely in stock and said it expected to raise key capital ratios by mid-year, which would, in turn, allow a return to an all-cash payout.

Credit Suisse's net profit for the quarter is forecast by analysts in a Reuters poll at 1.255 billion francs, compared with 44 million francs in the year-ago quarter. Then, Credit Suisse booked 1.5 billion francs in own debt charges.

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