Credit Suisse First Boston narrowed its loss in the first quarter and saw a 19% sequential rise in revenue amid aggressive cost-cutting. But its parent company,
Credit Suisse Group
, disappointed investors with earnings that were at the low end of expectations.
CSFB reported a first-quarter loss of $19 million, compared with a loss of $939 million in the prior quarter. Excluding a charge related to the firm's purchase of Donaldson, Lufkin & Jenrette in 2000, the firm recorded operating profit of $155 million compared with a loss of $114 million in the fourth quarter.
Sales reached $3.3 billion, up 19% sequentially but down 27% from the same period last year due to weakness in the capital markets.
"At Credit Suisse First Boston, we saw a substantial improvement in results due in large part to the business unit's cost reduction efforts," said Credit Suisse Group chairman and chief executive Lukas Muhlemann.
Operating expenses fell 26% from the same period last year.
CSFB said profits at its investment banking unit rose 27% from the prior quarter to $2.7 billion due to strength in all businesses, particularly fixed income. But the company noted that M&A activity is "lumpy," and said it expects to see some erosion in equity research when the Institutional Investor poll comes out because competitors have taken very aggressive actions to poach analysts.
The CSFB financial services segment, which includes Credit Suisse Asset Management, Pershing and Private Client Services, reported a 10% sequential drop in operating profits to $536 million due to the sale of CSFBdirect.
"The group continues to expect revenue levels at Credit Suisse First Boston to be lower than in 2001 and earnings at Credit Suisse Financial Services not to exceed 2001 levels," the firm said in a press release. "However, the group is confident about the long-term prospects for its core businesses and will continue to focus on controlling costs and achieving growth in key markets."
Credit Suisse Group, CSFB's parent, posted a net profit of 368 million Swiss francs, or $228.3 million, from a loss of 830 million francs in the fourth quarter. But profits were well below an average forecast of 563 million francs. The firm said the weakness was largely due to a drop in equity valuations in the firm's insurance portfolio in 2001.