By Elena Logutenkova July 23 (Bloomberg) -- Credit Suisse Group AG, the biggest Swiss bank by market value, said second-quarter profit rose 29 percent as revenue from trading stocks and bonds doubled. Net income increased to 1.57 billion Swiss francs ($1.47 billion), or 1.18 francs a share, from 1.22 billion francs, or 97 centimes, a year earlier, the Zurich-based company said in a statement today. Earnings matched the median estimate of 14 analysts surveyed by Bloomberg. Chief Executive Officer Brady Dougan announced 5,300 job cuts in December, closed unprofitable businesses at the investment bank and reduced risk-taking to return Credit Suisse to profit this year. Swiss competitor UBS AG, the European bank with the biggest losses from the credit crisis, said in June it will probably report a second-quarter loss next month. The bank’s securities unit “has been less disrupted than peers, allowing Credit Suisse to take advantage of the improved trading environment,” Citigroup Inc. analyst Andrew Coombs, who rates the shares “hold,” said in a note to clients before the earnings release. Credit Suisse is the eighth-biggest gainer this year on the 63-company Bloomberg Europe Banks and Financial Services Index, climbing 72 percent in Swiss trading. UBS declined 4.9 percent in the period. Of 36 analysts following Credit Suisse, 18 recommend investors buy the shares and 15 have a “hold” rating, data compiled by Bloomberg show. Goldman Sachs “We expect the global economic environment to remain challenging and uneven business conditions to persist,” Dougan, 49, said in a statement. “If markets continue to improve we expect to see further momentum across our businesses, and if markets become more difficult we believe that Credit Suisse is positioned to perform well.” Bank of America Corp., JPMorgan Chase & Co. and Citigroup, the three biggest U.S. lenders, last week reported a total of $10.2 billion in profits for the second quarter, relying on investment banking and asset sales to counter widening losses on consumer loans. Goldman Sachs Group Inc., which gets almost none of its revenue from retail banking, had a record quarter, reporting earnings of $3.44 billion. Morgan Stanley, the biggest U.S. brokerage, reported yesterday a second-quarter loss from continuing operations of $159 million, a bigger shortfall than analysts estimated, on costs to repay the U.S. government and charges from an improvement in the firm’s own debt. Trading Revenue Credit Suisse’s securities unit had a pretax profit of 1.66 billion francs, compared with 304 million francs a year earlier. Sales and trading revenue more than doubled to 5.37 billion francs, while fees from advising companies and underwriting of stocks and bonds fell 12 percent to 704 million francs. Earnings at the wealth management and retail banking division fell 23 percent to 935 million francs. Asset management saw a 56 percent drop in profit to 55 million francs. Investment-banking head Paul Calello told investors in May that Credit Suisse is winning market share and boosting revenue in areas such as global rates, cash equities and prime services. After exiting securities businesses that last year lost 14.6 billion francs and returning to profit in the first quarter, earnings at the division are expected to be “quite sustainable,” he said. The bank increased its market share in cash equities trading in Europe and the U.S. to 11 percent in the first quarter from 9 percent in 2008, Calello said. Credit Suisse also boosted market share in prime services to about 10 percent in 2008 from about 6 percent the previous year, he estimated. Wealth Management Deutsche Bank AG, based in Frankfurt, may report on July 28 a 56 percent increase in second-quarter net income to 1.01 billion euros ($1.43 billion) because of a rebound in debt trading and fewer writedowns, according to the median estimate of nine analysts surveyed by Bloomberg News. UBS, the biggest Swiss bank by assets, said last month its quarterly loss was mainly tied to reorganization costs and charges on the company’s own debt, while clients withdrew funds from all its money-managing units. Unlike UBS, Credit Suisse declined to accept government assistance when credit markets froze following the collapse of Lehman Brothers Holdings Inc. last year, and instead raised 10 billion francs from investors in October. Credit Suisse’s wealth management unit saw a net inflow of 8.5 billion francs in the quarter, compared with 15.4 billion francs in the year-earlier period. Analysts had estimated net new money of 6.5 billion francs. The bank’s profit was reduced by a 1.1 billion-franc charge on the company’s own debt and 483 million francs in costs to settle a lawsuit by Huntsman Corp., which was cushioned by about 400 million francs in tax benefits. To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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