Despite reporting a 38 per cent drop in its net profit for the third quarter, Credit Suisse expressed strong conviction that looking ahead, its wealth management and investment banking divisions will be bolstered by expected volatile market conditions.
For the three months to the end of September, the company reported its net income attributable to shareholders at 546 million Swiss francs ($600 million) which as lower than what was being expected for the metric by analysts, according to Reuters Eikon, hich as at 679 million Swiss francs.
That meant the company had reported a 38 per cent year on year drop for the third quarter even though the sale of its InvestLab fund platform to the Allfunds Group had providd some benefit to the bank’s results during that period.
Net income for the bank was at 1.16 billion Swiss francs in the second three months of 2020.
It was a “decent quarter”, said Thomas Gottstein, CEO of Credit Suisse in a television interview.
During the quarter, the bank also reported net revenue drop of 2 per cent year on year to 5.2 billion Swiss francs compared to 5.3 billion Swiss francs for the same period a year ago. The bank’s CET 1 ratio (a measure of bank solvency) also reached 13 per cent compared to 12.4 per cent in the same period in the previous year.
There was disappointing performance in Credit Suisse’s wealth management division where lower fees and net interest income more than offset the strong transaction-based revenues generated by the bank. There was a 10 per cent year on year drop in revenue at the closely-watched division.
In contrast, the performance of the bank’s investment banking as better during the third quarter as there as an 11 per cent year on year growth in net revenues driven by “constructive” market conditions and higher client activity, mainly in Asia.
“Revenues in Asia, they are now 20% of our overall revenues globally, which is one of the highest of our peers … it is very clear that Asia is much stronger than the rest of the world right now,” Gottstein told the media.
While equity sales and trading revenues increased by 5 per cent, fixed income sales and trading revenues grew by 10 per cent year on year.
It would support its customers “through the persisting COVID-19 pandemic and the resultant economic challenges” going forward, the Swiss bank said.
“We would expect this environment to continue to result in elevated levels of transactional and trading activity, across both our wealth management and investment banking businesses, as our clients respond to the macroeconomic uncertainties,” the bank said in a statement.
The bank plans to restart its share buyback program in January as the bank aims to repurchase between 1 and 1.5 billion Swiss francs of shares for the full year, Credit Suisse added. It also said that it was contemplating making payments for the second tranche of its 2019 dividend.
(Adapted from CNBC.com)