Rising investment banking profits boosted last year´s profits at three of Europe´s largest banks - Credit Suisse, Barclays and Société Générale. The lenders were also buoyed by lower bad debts and rising demand for credit, fuelled by low interest rates.
Credit Suisse, Switzerland´s second-largest bank, yesterday said it had turned a record SFr3.3bn net loss in 2002 into a net profit of SFr5.2bn ($4.2bn) last year.
The bank benefited from hefty cost-cutting and strong investment returns at its once-ailing insurance arm, but also enjoyed a strong performance from its investment bank, Credit Suisse First Boston.
Having lost SFr1.8bn in 2002, CSFB reported a net profit of SFr1.2bn for last year, boosted by healthy fixed-income and equity markets. John Mack, group co-chief executive, said: '2003 was clearly a critical turning point for CSFB. We set out to be consistently profitable, and we were.'
As a mark of confidence, Credit Suisse is paying shareholders SFr0.50 a share after paying a dividend of just SFr0.10 a year earlier.
Barclays, Britain´s third-largest bank, reported a 20 per cent surge in 2003 pre-tax profits to £3.84bn ($7.2bn) from £3.2bn a year earlier.
The performance was underpinned by falling bad-debt provisions and by strong performances at Barclaycard and Barclays Capital, its debt-focused investment bank.
BarCap´s pre-tax profit jumped 35 per cent to £783m. This division, together with Barclays Global Investors, the fund management arm headed by BarCap´s chief executive Bob Diamond, contributed 44 per cent of the bank´s growth last year.
The two divisions´ contribution to group earnings has almost doubled since 1999.
At Société Générale, chairman Daniel Bouton hailed his corporate and investment bank as 'one of the most profitable, if not the most profitable' in Europe. It more than doubled its net profits to €1.08bn ($1.38bn) last year, helping the French bank to report a 78.4 per cent rise in profits to €2.49bn.
SG underlined its confidence in its outlook for 2004 by proposing a 19 per cent rise in its dividend to €2.50, after keeping the pay-out to shareholders stable last year. However, shares in the three banks fell as investors took profits.
Barclays, whose shares have gained 50 per cent during the last year, lost 20¼p at 495p. SG fell €2.25, or 3 per cent, to €72.65 and Credit Suisse, whose stock has risen more than 80 per cent during the last year, dropped 4 per cent to SFr47.45.
Source: Financial Times