The tide has turned, or so it seems: after tough months, Credit Suisse comes up with a quarterly result that exceeds analysts’ expectations significantly. How come?
Credit Suisse (CS), Switzerland’s second-largest bank, had a profit of 596 million Swiss francs in the first three months of the year, according to a statement today. Analysts on average expected profit of 401 million. Last year, CS had a loss of 302 million francs in the same period.
The strong performance is mainly attributable to earnings from debt-underwriting and a substantial inflow of net new money at the wealth management division.
Cancellation of Swiss IPO
The positive results in the first three months contributed to the bank’s decision to cancel a planned partial IPO of its Swiss unit. The bank instead will raise 4 billion francs through a rights offering.
CS said that the first quarter and the two weeks of the second quarter since have confirmed the positive development mainly at its Swiss division, in international wealth management and in Asia Pacific.
Strong Start to the Year
The bank in the first three months of 2017 had group net revenues of 5.5 billion francs, up 19 percent from a year ago, and total operating expenses of 4.6 billion francs. Pretax profit amounted to 670 million francs, compared with a loss of 484 million in the year-earlier period.
«We have had a strong start to 2017,» said CS CEO Tidjane Thiam in a statement. He added a word of caution: «We still have a lot of work ahead of us but we are executing with discipline and making progress on the key aspects of our strategy. We are delivering strong growth, are ahead of our cost reduction targets and are increasing our operating leverage.»
Zurich-based Credit Suisse seems to be making significant progress in its strategy of being a wealth manager with strong investment banking capabilities.
