Credit Suisse Group reported higher first quarter net income Wednesday, but warned that the outlook for the second quarter is not as bright.

The Zurich-based firm recorded net income of 1.9 billion Swiss Francs for the first quarter of 2005, up marginally from CHF1.86 billion posted in the first quarter of 2004. A continued strong performance from private banking and a record quarter for corporate and retail banking contributed to this result, the firm said.

Net income from wealth and asset management was largely unchanged compared to the first quarter of 2004. The institutional securities division reported lower net income and had a mixed quarter, with increased revenue in fixed-income trading and lower results in equity underwriting and trading as well as in debt underwriting and advisory services. Credit Suisse Group’s overall return on equity was 20.6% for the first quarter.

“With solid revenues and good net income, Credit Suisse Group has made a strong start to 2005. Private banking had another excellent quarter and corporate and retail banking reported a record result,” said Oswald Grübel, CEO of Credit Suisse Group, in a release.

“While showing an improvement over the previous quarter and gaining market share in some key businesses, the results from institutional securities were mixed. Wealth & asset management achieved some progress but still has the potential to improve further. We will continue to implement our strategy, which is designed to rebuild a leadership position in these businesses,” he said.

However, the firm said it expects to see market activity slow considerably in the second quarter. “These less buoyant market conditions are likely to result in more subdued client activity — bringing with it a corresponding decrease in business volumes,” it notes. However, it expects market conditions to improve in the second half of 2005.

Credit Suisse Group also said it has received approval from the Swiss Federal Banking Commission to merge its two Swiss banks, Credit Suisse and Credit Suisse First Boston. As previously announced, the merged bank will be operational as of May 16, and will continue to use the Credit Suisse, Credit Suisse First Boston and Credit Suisse Asset Management brands.

“We continue to focus on improving performance and on the integration of our banking businesses and we still have more work to do. My management team and I strongly believe that by creating an integrated bank, we will be able to further improve client service, generate revenue growth and improve efficiency. This will help us to build our position as a leading global financial services provider,” Grubel said.