Credit Suisse’s net profit rose by a third in the second quarter from a year ago, broadly meeting forecasts, as strong trading in stocks and bonds bolstered its investment banking business.
The bank said on Thursday it generated net income of 1.045 billion Swiss francs (HK$8.7 billion) for the quarter, compared to 1.017 billion francs seen by analysts in a Reuters poll.
Mirroring a strong performance by Wall Street rivals, Credit Suisse more than doubled pre-tax profits at its investment banking division from a year ago when trading was badly hit by the euro-zone crisis. Compared to the previous quarter, typically the strongest period for capital markets activity, pre-tax profit was down 42 per cent.
Pre-tax profit at Credit Suisse’s private banking and wealth management division rose just 4 per cent on the quarter and fell 6 per cent year on the year
A spike in bond yields in the latter part of the second quarter, amid fears the US Federal Reserve would taper its quantitative easing efforts, led to higher market volatility and in turn hurt Credit Suisse client activity in June and into July. Despite that, the bank said it had seen recent signs of stabilisation in its major markets.
“In the longer term, the transition to higher rates will benefit our business, both our global Private Banking & Wealth Management franchise and our client-focused, capital-efficient investment banking business,” chief executive Brady Dougan said in a statement.
Credit Suisse said it is on track to lower spending by 4.4 billion francs by the end of 2015 after cutting 2.7 billion francs when estimated for the full year.
The bank said it reduced its leverage exposure towards a 4.5 per cent target by year-end. Last month, Switzerland’s central bank said UBS and Credit Suisse must cut debt levels, though the central bank welcomed both banks’ capital measures, which make them among the best capitalised in the world.
Domestic rival UBS on Monday disclosed a profit for the quarter that will beat estimates, even after charges to settle a lawsuit with the US housing regulator over the mis-selling of mortgage-backed bonds.
Both banks have cut risk and raised capital to meet stricter rules spawned by the global financial crisis, but Credit Suisse is sticking with its investment bank while UBS is abandoning the fixed-income activities that soak up costly capital, cutting 10,000 jobs in the process.