Credit Suisse's net earnings rose 45% in the second quarter as robust wealth management and three-month payout for its traders counteracted a slump in traditional investment banking.
The bank said Wednesday that its net profit for the period was 937 million Swiss francs. Group revenue of CHF 5.5 billion is equal to a year ago, but the lack of restructuring costs helped lift the profit figure.
Credit Suisse returned to the black for the first time in four years in 2018, after the quarter ended. restructuring during the year, resulting in thousands of sales and trading jobs being cut in London and New York and a shift towards wealth management. The international wealth business led to a pre-tax profit increase of 2.5% to CHF 444 million in the second quarter.
Tian Tiam, CEO of Credit Suisse, stated: "These results, delivered in a challenging environment, show that our bank has emerged. from three years of restructuring with a strong franchise and efficient platform that allows us to support our clients and generate increasing returns for our shareholders, with 1
The results are likely to ease the pressure on Tiam to make further reductions in Credit Suisse's sales and trading department, which outperformed its competitors during the quarter, increasing revenues for both fixed income and equities. This led to a 141% increase in pre-tax profit for the Bank's global market units to 357 million Swiss francs.
Credit Suisse noted that its trading results have not been lifted, as it has been at many Wall Street banks, since the sale of a stake in the Tradeweb bond trading platform in April.
Investment banks' trading bureaus are facing a challenging 2019, many of them – including Citigroup, Deutsche Bank and HSBC – being forced to cut staff in expensive units.
In June, Tiam told attendees of the European Goldman Sachs Financing Conference in Paris that he has resisted the pressure to make more cuts on his investment bank workforce at the end of 2018, as trading earnings decrease.
Analysts continue to believe that Credit Suisse has more fat to reduce, it wants to completely revitalize its investment bank, focusing more on mergers and acquisitions and underwriting advice.
However, Credit Suisse's more traditional banking business, however, became difficult in the second quarter. Pre-tax profits from investment banking and the capital markets division fell 94% year-on-year to just 6 million Swiss francs, as a 40% drop in advisory fees and a 22% drop in capital markets revenue offset small profits in the shares.
In a statement, the bank described this as "lower customer activity because the investor is concerned about global trade negotiations and slowing GDP growth."
Tiam added in a call for results: "We had a higher share of trades canceled than other players, that's all that happened. These movements can happen. We don't read in this issue … and we don't see anything broken here … this franchise is absolutely vital. "
To contact the author of this story with feedback or news, send an email to Nell Mackenzie