C Suisse profits jump as end of restructuring pain draws nearer

Credit Suisse Canary Wharf

Profits at Credit Suisse surged during the second quarter as it approaches the end of a painful restructuring process.

Shares in the Swiss bank rose by 0.85 per cent at the time of writing to reach their highest point since the end of May.

The figures

Net income attributable to shareholders doubled compared to the second quarter of 2017, reaching SFr647m (£498m).

The bank’s adjusted measure of profits before tax rose 88 per cent year-on-year to SFr1.3bn, driven by what the firm described as an “excellent performance” in its giant wealth management business as well as its Swiss universal bank.

Revenues rose by seven per cent year-on-year during the quarter to SFr5.6bn, with wealth management leading the way – although revenues rose appreciably across all segments. However, return on tangible equity, a key measure of shareholder profitability, was only 6.9 per cent, below the first quarter of the year.

Meanwhile, costs fell by two per cent year-on-year, down to SFr4.5bn, in spite of a 24 per cent increase in expenses in the investment banking and capital markets arm.

Why it's interesting

The bank is now 10 quarters into its efforts to reshape and fend off the attentions of activist investors who are seeking to carve out the investment bank.

Chief executive Tidjane Thiam has given an increasingly confident message to investors over the course of 2018. He now has two quarters left in his plan, during which he says the bank will continue to grow its wealth management business.

The bank also warned that investors are in for a bumpy ride during the rest of the year thanks to "geopolitical developments and growing tensions surrounding global trade, as well as the impact of monetary policy changes".

The US Federal Reserve is leading a period of monetary policy across the globe's major central banks, while the trade disputes started by US President Donald Trump threaten to damage markets and growth. A broad sell-off in assets could particularly damage Credit Suisse's large wealth management business, in spite of the trading desk's boost from volatility.

What Credit Suisse said

Thiam said the bank gave a "strong performance" during the quarter, with profits "driven by strong revenue growth of seven per cent, and continued positive operating leverage supported by strict cost discipline.

We have continued to increase the collaboration between our global markets and wealth management divisions, while maintaining our strict capital, cost and risk discipline.

He added: "For the remainder of 2018, we will continue to focus on growing our wealth management franchise and completing the last two quarters of our restructuring successfully."

Full story: Credit Suisse profits jump as end of restructuring pain draws nearer: City A.M.

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