Credit Suisse 2003 profit down

Credit Suisse unveiled a huge but largely expected drop in 2003 profits on Tuesday as it restated past earnings in a switch from Swiss to US accounting rules which will make it more comparable with key rivals.
The bank, Europe's 11th biggest by market value, said it earned a net 770 million Swiss francs ($587 million) last year according to US accounting rules, reducing its previously reported figure under Swiss rules by 4.2 billion.
While the difference was bigger than most analysts had forecast, CS shares rose two percent amid relief that the impact of the restatement on its future earnings appeared to be small.
The bulk of the difference between the two 2003 profit figures stems from a change in the way CS values its Winterthur insurance unit, acquired in 1997 for around 14 billion francs.
CS took a one-off hit from the accounting switch by reducing the Winterthur-related goodwill on its books to 1.3 billion francs from 4.5 billion.
Including a net 700 million francs change resulting from a revaluation of securities, the total Winterthur impact on 2003 results was a negative 3.9 billion.
Goodwill is the excess price paid for a company above the value of its assets to cover intangibles such as its brand.
But at the same time, the changes boosted shareholder equity to 34 billion francs from 31.7 billion under the old rules.
"These results are pretty much a relief," said a senior banking analyst in London who declined to be named.
"The changes to the insurance division were quite massive, as expected. All the other items seem pretty much the same or slightly better."
"If you leave aside all Winterthur-related effects, positive and negative accounting effects almost cancel out," said ZKB banking analyst Christoph Ritschardt.
"Future results will not diverge too much from current forecasts, which is positive."
COMPARISON MADE EASY: The switchover makes CS's results easier to compare with those of key rivals and puts it on a level footing with competitors such as Deutsche Bank AG, Goldman Sachs Group Inc, or Merrill Lynch & Co Inc.
"The switchover allows greater comparability to the most important rivals," CS spokeswoman Claudia Kraaz said, adding: "US GAAP has no influence on our business strategy."
Analysts expect US GAAP to cause more volatility in CS's results going forward, not least because the accounting standard is based on clear rules that allow the bank less room for interpretation, and which may be adapted from year to year.
CS decided to switch to US GAAP after the Swiss bourse required Swiss-listed companies to adopt either US GAAP or International Financial Reporting Standards (IFRS) from 2005.
CS is due to report first-quarter results according to US GAAP on May 5. It will give a sneak preview of the key numbers ahead of its annual shareholder meeting on Friday.