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Rich customers buoy Credit Suisse while risk burdens UBS

* C. Suisse's healthy inflows a boost to CEO Thiam

* CEO says halfway on 'difficult journey'

* UBS capital slips, disappointing investors

ZURICH, July 28 (Reuters) - A steady stream of new money from the world's wealthiest citizens drove up quarterly profits at Credit Suisse and UBS as they benefited from Switzerland's reputation as a safe haven for investors.

Both banks reported a rise in profits for the three months to June, buoyed by their wealth management divisions. Credit Suisse said it had seen an annual growth pace in net new assets of more than 6 percent, while UBS reported 5.4 percent growth.

The lenders thrived in the Asia Pacific region which includes China, home to a new generation of millionaires and billionaires.

However, their results cast them in a starkly different light.

Credit Suisse, which has struggled with multi-billion-franc losses, positively surprised investors. But its bigger rival UBS, which reassessed risks and the potential cost, disappointed.

Credit Suisse's net profit jumped 78 percent as it shifted emphasis towards managing wealth, and away from volatile and costly investment banking.

The results are a boost for Chief Executive Tidjane Thiam, whose tenure since mid-2015 has been marred by losses following a legal penalty over toxic debt and a trading blunder as well as a shareholder protest on management pay.

He said the performance showed his three-year strategy to turn around the group was working. Investors appeared convinced, and Credit Suisse's share price was up 2.5 percent at 1113 GMT.

After the financial crash, UBS switched its focus to banking for the rich, while Credit Suisse kept investment banking at the heart of its business. It has since changed tack, taking a similar approach to its bigger rival.

"We are in no way claiming victory," Thiam told analysts in a phone call. "It has been a difficult journey. We're just halfway."

CLOSING GAP

UBS too reported an unexpected rise in second-quarter net profit, boosted by its flagship wealth management business.

The world's largest wealth manager made 1.174 billion Swiss francs ($1.21 billion), up 14 percent from a year earlier.

But the bank, which typically outshines its Zurich neighbour, surprised investors when it reassessed the risks in its business, a costly move that reduced its capital cushion. Its shares were down 2.6 percent at 1113 GMT.

UBS's core tier 1 ratio, a key measure of a bank's financial strength which the bank uses as a benchmark for its dividend, slipped to 13.5 percent.

Credit Suisse, on the other hand, was able to score an important point by strengthening its capital buffer, having raised fresh money from investors, closing the gap on UBS.

UBS put the fall down to stricter rules for calculating risks introduced by Switzerland's financial watchdog, predicting that it would have a 6 billion franc increase in risk-weighted assets in the second half of the year.

Vontobel analyst Andreas Venditti described this as a "big surprise".

(Writing by John O'Donnell; Editing by Pravin Char)