Credit Suisse bank plunged into its first quarterly loss for five years today, reporting heavy extra writedowns because of the sub-prime home-loan crisis in the US.
But the bank's chief executive assured the situation had 'stabilised' in April, and that the group was well-positioned to navigate in difficult market conditions.
The bank reported a net loss of 2.148 billion Swiss francs (€1.330 billion) for the first three months of the year. Writedowns in leveraged finance and structured products reached 5.3 billion Swiss francs for the three months, the bank said.
The bank had already written down 3.2 billion Swiss francs, but posted a profit for 2007 of 7.76 billion Swiss francs.
It has so far fared better than fellow Swiss banking giant UBS, which has posted writedowns exceeding $37 billion as well as its first-ever full-year loss in 2007. UBS is the biggest Swiss bank, and Credit Suisse the second biggest.
A writedown is a reduction of the previously estimated value of an asset because prospects for its performance are acknowledged to have been seriously reduced for the foreseeable future.
However, Credit Suisse said there had been a 'continued significant reduction' in its risk exposure. '
Our first-quarter results are clearly unsatisfactory. However, during the quarter, we substantially reduced our exposures to affected areas and we will continue to do so in a disciplined fashion,' the bank's CEO Brady Dougan said.
While reiterating that the bank has cut its risk exposures, Dougan said it remains 'hard to predict' if further write-downs would be made.
The bank's investment banking unit, which has been most exposed to the sub-prime crisis, posted losses before taxes of 3.46 billion Swiss francs for the quarter.
'This decline was due in large part to the impact of the mortgage and credit market dislocations on the fixed income businesses,' the bank said. Its asset management unit was also affected, as it posted a loss after securities that it bought from its money market funds fell in value.
