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February 12, 2008    

Credit Suisse quarterly profits plummet 72%

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by Kay Murchie
”Credit

Swiss giant Credit Suisse has announced a 72% fall in quarterly profits. Net profit in the fourth quarter of 2007 was SFr1.33 billion (£619 million), slightly worse than the analysts had predicted.

However, the bank said losses on sub-prime investments were SFr2 billion last year - less than it anticipated. The banking giant has been relatively unhurt by the sub-prime mortgage crisis.

In addition, the bank said its money management unit was performing well, attracting an additional SFr12 billion in new funds during the fourth quarter of 2007.

However, in spite of a weak trading environment, investment banking remained profitable in the 3 months to December with pre-tax earnings of SFr328 million, down 86% year-on-year. Earnings before tax for the full year fell 19% to SFr4.83 billion.

The biggest impact of market turbulence came in the group’s small asset management division which, in the fourth quarter as in the third, suffered impairments on funds bought back from clients. Asset management reported a pre-tax loss of SFr247 million on the back of value reductions of SFr774 million in the period.

Brady Dougan, chief executive, commended the bank’s strong foundation for 2008, its good business and geographical mix and its strong risk management capabilities. He added these strengths make me confident in our ability to deliver a superior performance over market cycles.

At the end of last month, the bank announced it was to shed some 500 jobs within its bond trading unit as a result of a slowdown in earnings in the sector from the sub-prime mortgage crisis.

Over the last few months, at least 25,000 jobs have been trimmed in financial institutions globally as a result.

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