Credit Suisse about to report strong performance

According to analysts polled by Dow Jones Newswire, Credit Suisse is expected to post higher earnings season for European banks with another strong performance from its investment banking, and in particular from fixed-income trading. The group is expected to report a net profit of 1.44 billion Swiss francs ($1.35 billion) for the second quarter, which would represent an 18% increase from the equivalent quarter a year ago as strong trading income from the investment banking operations offset lower fees and commissions.

However, Matthew Clark, an analyst at Keefe, Bruyette & Woods said that Credit Suisse will likely book a 300 million franc charge in the second quarter as the price of its debt has rebounded in recent months. Besides, it will take a pretax charge of around 400 million francs to cover the settlement of a court case with chemicals group Huntsman Corp. announced in late June.

Credit Suisse will be the first major European bank to report second quarter earnings following strong numbers from several big U.S. firms, including J.P. Morgan Chase & Co. and Goldman Sachs Group. In addition, it has outperformed European rival such as UBS during the crisis. Its shares have dropped 48% from a high in mid 2007, while UBS has fallen 80% after having to take government aid.

But KBW's Clark cautioned that the bank's strengths are now widely recognized and priced into the shares.