Credit Suisse reports third-quarter results, missed analysts’ expectations

Credit Suisse on Thursday posted below-expectations results for its third quarter. The firm saw a 38% fall in the quarter’s net profit due to the impact of the coronavirus on the investment banking sector and failure to offset the decline in wealth management.

In the period that ended September the Swiss bank had a profit of 546 million Swiss francs ($600 million), compared to 17 analysts’ consensus estimate of 572 million Swiss francs, as compiled by Credit Suisse.

Here’s how Credit Suisse performed in the third quarter:

  • Net revenue: fell 2% to 5.2 billion Swiss francs from 5.3 billion francs in the same period a year ago;

  • CET 1 ratio: up 13% from 12.4% in the same period a year ago.

A year ago, the Swiss bank received 327 million francs in revenue from the sale of its InvestLab fund business.

In a Thursday statement, Credit Suisse said it's committed to supporting clients “through the persisting COVID-19 pandemic and the resultant economic challenges. We would expect this environment to continue to result in elevated levels of transactional and trading activity.”

“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 statement carried.

In July, the bank’s chief executive, Thomas Gottstein said there would be a broad round of cost cuts which would include merging the global markets trading division and the investment banking and capital markets division. He also called the quarter a “decent quarter’

The newly merged division’s pre-tax profit rose to 370 million Swiss francs, capital markets and advisory revenue rose 33%, while equity and fixed income sales and trading revenues rose 5% and 10%, respectively. Its international wealth management division saw a drop that was far below what analysts expected.

Credit Suisse’s investment banking division performed better as net revenues rose by 11% in the third quarter from a year ago due to “constructive” market conditions and increased client activity in its global branches, especially 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 CNBC.

The bank said it plans to pay out the second set of its 2019 dividend and resume its share buyback program by January 2021. It aims to repurchase between 1 and 1.5 billion Swiss francs of shares for the year.

Credit Suisse shares are down by nearly 30% for the year.

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