Credit Suisse's investment banking division swung back into profit in the second quarter as the Swiss bank comfortably outperformed UBS, its rival.

Credit Suisse's investment bank turned a pre-tax loss of SwFr3.5 billion (£1.7 billion) in the first quarter into pre-tax profits of SwFr281 million for the three months to the end of June.

Investors cheered the strong performance, sending the shares as much as 7 per cent higher. They closed at SwFr52.75, more than 5 per cent ahead, valuing Switzerland's second-largest bank at SwFr61.3 billion.

Quarterly revenues in fixed-income and equity trading were lower than the second quarter last year but the investment bank avoided the substantial writedowns that forced the group to post a heavy loss in April.

Then, a SwFr5.3 billion writedown in leveraged finance and structured products pushed Credit Suisse into a net group loss of SwFr2.1 billion. Yesterday, the bank, led by Brady Dougan, the chief executive, said that it was making solid progress and was pleased with its operating performance between April and the end of June.

Writedowns on leveraged products were just SwFr22 million and the bank booked a SwFr503 million fair-value hit on its debt because of price changes.

Mr Dougan said: “We are pleased with our second-quarter results, which reflect the resilience and earnings power of our integrated business model and our continued focus on risk and cost management.”

Net revenues for the quarter at the investment bank stood at SwFr3.7 billion, half the level of a year ago, just before the credit crisis began.

The Credit Suisse group reported net second-quarter profits of SwFr1.2 billion and said all three of its divisions — private banking, investment banking and wealth management — were profitable.

Credit Suisse has suffered less from its exposure to toxic mortgage debt securities than UBS, its arch-rival, which has written off about $38 billion (£19.1 billion).

The bank, for years accused of operating a set of disparate financial fiefdoms, has successfully folded its investment bank into the group. It sold its Winterthur insurance arm to AXA of France and continued to build its private banking and wealth management divisions.

Asset management posted pre-tax profits of SwFr167 million in the second quarter, against losses of SwFr468 million over the previous three months.

Profits at the private bank dropped 8 per cent, from SwFr1.3 billion to SwFr1.2 billion.

Analysts at Keefe, Bruyette & Woods said: “[Wealth management] inflows substantially beat expectations and these results should be well received in our view.”

However, they said there remained “substantial regulatory uncertainty” for Swiss investment banks and kept the bank on a “market perform” recommendation, noting that Mr Dougan said market uncertainty would continue over the medium term.

Isabel Schauerte, analyst at Celent, the research and consulting firm, said: “Credit Suisse has reclaimed its status as a survivor of the credit crisis. Positive results in the investment banking segment, while humble, underscore that the one-bank model has a future at Credit Suisse.”

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