Credit Suisse surprised investors on Thursday with a sharp move into profit in the first quarter as investment banking restructuring began to bite and private banking earnings remained robust.

The net profits of SFr2bn ($2.6bn) followed buoyant earnings at many US rivals and pointed to a growing return to normality in frozen credit markets.

However, Credit Suisse’s performance contrasted with the SFr2bn first-quarter loss revealed last week by rival UBS ahead of its full results.

Brady Dougan, Credit Suisse chief executive, was careful to avoid calling an end to the credit crisis and warned that earnings could remain volatile this year. But he expressed cautious optimism for 2009, saying positive trends seen in the first quarter had continued into April.

“We remain optimistic about the prospects for Credit Suisse, particularly in the context of the overall industry …While we may still be affected by continued volatility and market disruptions if difficult conditions persist, we believe that we are in a position to weather the storms.”

The group’s already high tier one ratio – a measure of financial strength – rose to 14.1 per cent at the end of March, against 13.3 per cent in December.

Investment banking earned SFr2.41bn before tax, in spite of net writedowns of SFr1.4bn on holdings in commercial mortgage-backed securities. In contrast, Credit Suisse booked a positive valuation adjustment of SFr413m on its residential paper.

The writedown reduced the group’s CMBS holdings to SFr7bn at the end of March, compared with SFr8.8bn last December, while holdings of residential mortgages and subprime collateralised debt obligations virtually halved to SFr2.7bn.

“One good quarter does not make a transformation, but Credit Suisse has demonstrated what can be achieved with an investment bank focused on flow business and it is reassuring that wealth management has not been contaminated by UBS’s many problems,” said Peter Thorne of Helvea, a Swiss brokerage.

In private banking, pre-tax profits fell a quarter to SFr992m, reflecting lower fees because of shrunken client portfolios and leaner business.

But net new money amounted to a healthy SFr11.4bn, or SFr9bn excluding the Swiss retail and business banking operation.

Credit Suisse shares closed up 8.82 per cent at SFr43.20.

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