Credit Suisse profit drops

August 29, 2001 Posted: 0731 GMT

LONDON (CNN) -- Dwindling numbers of mergers and acquisitions dented profit at Credit Suisse Group, which posted a 23 percent drop in quarterly earnings.

Credit Suisse, like rivals UBS and Deutsche Bank, has struggled amid weak equity markets and economic slowdown. Their highly paid investment bankers rely on advising companies on deals like takeovers and share offers.

But the Zurich-based company's second-quarter net profit, at 1.29 billion Swiss francs ($775 million), held up better than analysts expected. Forecasts averaged 1.12 billion francs, according to a Reuters poll.

Earnings per share fell to 1.07 francs from 1.53 francs a year earlier. The net profit figure included a 300 million franc charge linked to the acquisition of U.S. brokerage Donaldson, Lufkin & Jenrette late last year.

Profit from the investment banking business, Credit Suisse First Boston, tumbled 65 percent to 169 million francs.

"Year-on-year, the industry's dollar volume of merger and acquisition activity declined 56 percent," the company said.

Declines in equity markets and the value of stocks pushed CSFB's Private Equity business, which provides funding and invests in private companies, to a pretax loss of $129 million. The unit set aside 100 million francs to cover possible future write-downs of the value of investments it owns.

"Going forward, we expect the world's economic climate and the situation in the global financial markets to be difficult in the third and fourth quarters, affecting our core activities in the areas of asset gathering and investment banking," Chief Executive Officer Lukas Muehlemann said.

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