Credit Suisse protected quarterly profits from a fall in revenue by slashing costs. The Swiss bank's underachiever? Its Swiss unit, where profits crumpled. The standouts? Private banking and Asia, which benefited from major job cuts.
Zurich-based Credit Suisse said its third-quarter profit surged to 244 million Swiss francs from 41 million last year, when it had still booked restructuring and other costs against its profits.
Credit Suisse's wealth management unit, at the center of Chief Executive Tidjane Thiam's three-year restructuring, lifted its profits by nearly half, as revenue climbed 17 percent.
«In a challenging context, our wealth management-connected activities had a very strong quarter alongside resilient performance in global markets and investment banking and capital markets. These results further emphasize the value of our diversified franchise,» Thiam said in a statement.
Cool on Break-Up
His remarks represent a thinly-veiled reference to a small activist hedge fund which is proposing a break-up of Credit Suisse in order to reap more value out of the bank's various parts. The bank has reacted coolly to the idea. Its largest shareholder, U.S. fund house Harris Associates, has urged the bank to examine some aspects of the plan.
At its private bank, clients entrusted Credit Suisse with another 3.6 billion francs in the quarter, which translates to a growth rate of 4 percent against its existing assets, just within its target range.
The surprising underachiever in Credit Suisse's quarterly results was its Swiss unit, which normally delivers solid and reliable profits. There, profits crumpled by 44 percent after revenue collapsed and the unit was stuck with a rigid spending base. The bank said its business with Swiss corporates was hit by a shortfall in mandates, some external asset managers leaving, and less revenue from trading services.
Asia Boost
Business in Asia wasn't exactly booming, but the bank benefited from massive cost cuts by regional head Helman Sitohang earlier this year: profits rose by 43 percent even as revenue slipped 3 percent.
The bank's wider trading arm wrestled with a drop in revenue by also slashing costs, shielding from a more dramatic profit drop. Credit Suisse has tapped shareholders for roughly 10 billion Swiss francs in the last two years in order to replenish its capital, which now stands at 13.2 percent.
