(updating with details on net new money, segments, background)
ZURICH (Thomson Financial) - Credit Suisse Group reported a lower third quarter net profit of 1.302 bln sfr, down 11 pct year-on-year, right in the middle of the group's recent guidance, and said it sees 'encouraging signs of activity in the credit markets increasing'.
The group's weaker quarterly performance was due to lower results in the investment banking and asset management segments, Credit Suisse said, adding that private banking remained strong.
Analysts had forecast net profit to reach a range of 1.100-1.434 bln sfr, or an average of 1.285 bln sfr.
Credit Suisse had said on Oct 1 2007 that it expects third quarter net profit to be within the range of 20 pct more or less than 1.3 bln sfr, citing the effects of the US subprime mortgage market crisis.
The Zurich-based bank also said that it recorded an outflow of net new assets of 9.7 bln sfr, compared to an inflow of 31.1 bln sfr last year and a consensus forecast of 26.0 bln sfr inflow.
While the wealth management business generated net new assets of 9.7 bln sfr, the asset management business reported an outflow of 20.9 bln sfr.
Its total assets under managed stood at 1.571 trln at the end of the third quarter, down from 1.629 trln at the end of the second quarter and also missing the consensus forecast of 1.623 trln sfr.
Thus far Credit Suisse has seen less negative impact from the subprime market crisis than rival UBS AG, which posted a third quarter pre-tax loss of 726 mln sfr earlier this week.
However, analysts had praised UBS's solid net new money inflow of 38.3 bln sfr, while Credit Suisse' new business did disappoint.
In terms of segments, investment banking reported income from continuing operations before taxes of 6 mln sfr, down from 758 mln, with the performance impacted by the weakness in the structured products and credit markets, which led to a sharp downturn in fixed income.
Total operating expenses in the segment fell by 40 pct on the third quarter as compensation expenses decline in line with lower revenues, the bank said.
But private banking, reported an income from continuing operations before taxes of 1.289 bln sfr, up 26 pct year-on-year, with wealth management driving growth in the segment.
In Asset Management, Credit Suisse reported income from continuing operations before taxes of 45 mln sfr, a decrease of 113 mln sfr from last year.
The drop was mainly due to fair value reductions on securities and lower private equity and other investment related gains.
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