C Suisse in profit surprise

Tidjane Thiam

Credit Suisse, the Swiss bank which is in the middle of major restructuring, reported a surprise profit for the second quarter of 2016 on Thursday.

With net income of 170 million Swiss francs ($172.4 million), it beat expectations for a 192 million Swiss franc loss in a Reuters poll.

The quarterly profit compared to a net loss attributable to shareholders of 302 million Swiss francs in the first quarter of 2016, but represented an 84 percent fall on net profits of just over 1 billion Swiss francs from the same period in 2015.

Even though results were better than forecast, analysts still believe the bank may need to make a fresh appeal for capital next year, as it struggles with challenging markets and increased leverage requirements under new "too big to fail" rules. Last month, the Swiss National Bank said Credit Suisse, along with rival UBS, may need to raise an extra 10 billion Swiss francs in capital to meet new leverage requirements.

"We believe CS (Credit Suisse) will still need to raise another round of capital next year," analysts at Bernstein wrote in a research note.

The Swiss banking giant said it made a group pre-tax income of 199 million Swiss francs in the three months to June 30, an improvement on the pre-tax loss of 484 million Swiss francs reported in the first quarter.

Net revenues for the quarter came in at 5.4 billion Swiss francs, up 6 percent on 5.1 billion Swiss francs in the first quarter, but down 16 percent against 6.5 billion Swiss francs in the same period a year ago.

Tidjane Thiam, the recently appointed chief executive of Credit Suisse, said the bank had been able to improve its performance in the second quarter in order to return to profit, despite the volatile environment.

It was helped by significant wealth management asset inflows and a profitable quarter with increased market share at the investment banking and capital markets business.

"Markets were particularly challenging towards the end of 2Q16 in connection with the U.K. referendum on EU membership," Thiam said in a statement.

In a letter to shareholders, Thiam and Urs Rohner, Credit Suisse's chairman, said that they remained cautious in their outlook for the second half of 2016 "in view of the uncertainty created by significant geopolitical and macroeconomic concerns."

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