Sharp improvement for Credit Suisse Credit Suisse narrowly escaped a loss in the first quarter as charges on its own debt pushed the bank's net profit down 96 per cent to SFr44m. Switzerland's second largest bank by market value beat analysts" expectations with a slim return on equity of 0.5 per cent in the first three months, as a sharp rise in the price of its own debt depressed pre-tax earnings by SFr1.55bn. Excluding the debt revaluation, the Swiss banking group's return on equity fell from almost 20 per cent in the first quarter of the year before to 12.4 per cent. This marked a sharp recovery from a loss in the fourth quarter as cost cuts paid off and as investment banking revenues bounced back from the very low level at the end of last year. Brady Dougan, chief executive, said: "We have strong client momentum and at the same time exceeded our risk and cost reduction targets." He echoed US banking executives when he indicated that market conditions had so far been less favourable in the first few weeks of the second quarter. Mr Dougan said the bank might exceed its cost cutting target of SFr2bn by the end of 2013 as it was already running ahead of its plan. In its investment bank, which Credit Suisse is scaling back by cutting 3,500 jobs and reducing risk, it has shed a further SFr38bn of risk-weighted assets in the first quarter, which already brought it within striking distance of the SFr190bn goal set for the year end. It comes as investment banks around the world are faced with structurally lower revenues and much tougher regulatory capital demands. Revenues in fixed income sales & trading, one of the best performing areas in the overall market in the first quarter, dropped by 21 per cent to SFr2bn. This compares with a rise of 9 per cent at the five largest US investment banks, all of which reported much larger absolute fixed income revenues. Christopher Wheeler, analyst at Mediobanca said: "This is a big recovery [from the fourth quarter] but it is kind of proving that they are a second tier player." The bank's overall net revenues dropped by more than 17 per cent to SFr7.25bn compared with the first three months of the year before. Pre-tax income in the private banking unit fell by more than a quarter to SFr625m. In its wealth management division, the gross margin remained at 1.09 percentage points, on the same low level as in the final quarter of last year as client activity remained subdued. Credit Suisse's share price dropped by more than 2 per cent to SFr23.04 on the results, compared with a 2 per cent rise of the FTSE Eurofirst 300 banking index. Investors and analysts had been hoping for the bank to announce more drastic cost cuts to further improve its efficiency. Credit Suisse had a cost income ratio of almost 99 per cent in the first quarter, which trails its US rivals" efficiency. Mr Dougan said there were no plans for additional cost cuts.