Credit Suisse's net profit rose 45% in the second quarter as robust asset management results and a three-month period for its traders countered a decline in traditional investment banking.
The bank said on Wednesday that the net profit for the period was Swiss francs of 937m. Group revenues of CHF 5.5 billion were flat, compared to a year ago, but the absence of restructuring costs helped lift profits.
Credit Suisse returned to the black market for the first time in four years in 2018 after completing a three-year restructuring that saw it cut thousands of sales and trading jobs in London and New York and focus on asset management. The international wealth business delivered a pre-tax profit increase of 2.5% to CHF444m in the second quarter.
Tidjane Thiam, CEO of Credit Suisse, said: “These results, delivered in a challenging environment, indicate that our bank has emerged from three years of transition with a strong franchise and an effective platform, so we can support our customers and generate increasing returns for our shareholders, with CHF 1[ads1].3 billion of capital returned to investors to date. "
The results are likely to ease pressure on Thiam to make further cuts to Credit Suisse's sales and trading division, which outperformed rivals in the quarter by increasing both interest and equity income. This resulted in a 141% pre-tax profit at the bank's global market unit to CHF 357 million.
Credit Suisse noted that trading profits had not been raised, as it was in many Wall Street banks, by selling a stake in the bond trading platform Tradeweb in April.
challenging 2019, where many – including Citigroup, Deutsche Bank and HSBC – have been forced to cut staff in the expensive divisions.
In June, Thiam told attendees at a Goldman Sachs European Financials Conference in Paris that he had resisted pressure to make more cuts in the workforce in the labor market at the end of 2018 as trade revenues
Analysts continue to believe that Credit Suisse has more fat to trim if it wants to revitalize its investment bank by focusing more on mergers and acquisitions and insurance advice.
However, Credit Suisse's more traditional banking business struggled in the second quarter. Profit before tax from the Investment Banking and Capital Markets Division fell 94% from the previous year to just CHF 6 million, as a 40% drop in advisory costs and a 22% decline in debt capital markets wiped out small gains in the stock markets.
In a statement, the bank lowered this to "lower customer activity as the investor worries about global trade negotiations and slows GDP growth."
Thiam added a results interview: "We had a higher proportion of offers canceled than other players, that's all that happened. These moves can happen. We don't read that number … and don't see anything broken here .. This franchise is absolutely crucial. "
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