A host of U.S. banks posted second-quarter results on recent days which were surprisingly robust in key areas of investment banking. What does this mean for Credit Suisse and UBS?

U.S. banks including Goldman Sachs, J.P. Morgan, Citigroup and Morgan Stanley reported better-than-expected results from key areas of their investment bank. Much to investors' surprise, fixed income was a surprisingly sound performer.

This is exactly the area that UBS and Credit Suisse are at different stages of ramping down as a result of more stringent capital burdens. So should investors harbor hope for results expected next week from Swiss banks, which are among Europe's worst performing stocks? 

Quarter of Contrasts

The quarter promises to be one of contrasts: it is only the third that Credit Suisse has reported under a new structure which splits out Switzerland and Asia, after two consecutive quarterly losses under CEO Tidjane Thiam

More importantly, the second quarter comes against the backdrop of immense public scrutiny on Credit Suisse, as the bank implements a strategy laid out by Thiam last October. 

CEO's Style

Thiam's efforts to lower Credit Suisse's risk-weighted assets will also make comparisons difficult after an open war between the CEO and an influential faction of largely New York-based investment bankers has broken out, which has led a top shareholder to intervene.

Questions of style are relevant because Thiam cannot afford to alienate his investment banking base; he desperately needs motivated and savvy traders to unwind and offload Credit Suisse's riskier positions – a key part of a capital drive – without incurring major losses.

Time-Honored Tradition

In a time-honored tradition, bank CEOs usually informally steer investors at brokerage conferences held throughout spring. This year, UBS sent its new U.S. head Tom Naratil to speak at the most recent of these conferences, hosted by Deutsche Bank in May.

Naratil's presentation focused largely on the U.S. and not on the bank's overall business. Credit Suisse also attended the conference, but in an understandable move for a bank in the midst of an elaborate restructuring, didn't present to investors publicly.

Better Than Predicted

A comparison to the U.S. banks, where the quarter was far better than informal and qualitative guidance by top executives, lends a bit of hope to the Swiss and Deutsche Bank, which is run by former UBS finance chief John Cryan.

That disconnect between said and delivered likely means that the banks got a later-quarter boost that they hadn't originally expected in otherwise dismal conditions for capital markets activities like stock- and bond-issuing, initial public offerings, and credit products.  

UBS FX

One major area of focus for banks is foreign exchange, which was likely responsible for a spike in the quarter when Britain conducted a highly-anticipated vote on whether to leave the European Union.

This is particularly relevant for UBS, which is ranked third in market share of forex trading according to a widely-respected «Euromoney» compilation. Credit Suisse is ranked sixth, so presumably didn't see as dramatic of an effect as major forex players as big players UBS, Citi, and J.P. Morgan.

Bet on U.S. vs Europe

Another factor clouding the comparison is that U.S. banks are highly geared to the North American market, where UBS and Credit Suisse are more diversified, with more exposure to Europe and Asia.

Credit Suisse's traditional strength is securitized products, but U.S. banks were divided on the quarter. Of the four U.S. banks to strip out or mention securitized products, two posted lower revenue and two posted a boost – a murky picture which makes it difficult to predict what investors might expect from Credit Suisse securitized products arm.

Rate products were a bright spot in Goldman's results, which could benefit Credit Suisse. 

Asian Equities

Could Asia, where both Swiss banks have considerable operations, save the day for the Swiss banks? Probably not: Goldman, Citi, Bank of America and Morgan Stanley all complained of a drop or even «significantly lower» revenue in Asian equities – a key area for both UBS and Credit Suisse.

Credit Suisse, which reports the quarter on Thursday, will illustrate the region's development more clearly under the new organizational setup which reports Asia separately from the wider investment bank.

Private Banking Crisis

The Swiss banks' saving grace – their extensive and highly profitable private banking operations – isn't likely to salvage the quarter for them either.

Anecdotal evidence shows that wealthy clients are still sitting on historically high piles of cash, reluctant to enter a volatile financial market with little hope of finding a haven. 

Economies across Asia are showing signs of slowing, which could hit the Swiss banks squarely in their regional private banking operations.