Profits at Credit Suisse surged in the first quarter to deliver the Swiss bank's strongest quarter in almost three years, beating analyst expectations.
Pre-tax income rose by 57 per cent year-on-year to hit SFr1.1bn (£800m), according to an update published today, while profits rose by 36 per cent adjusting for one-off charges – the sixth consecutive year of profits growth.
Revenues grew to SFr5.6bn, with net income of SFr694m beating the SFr689 consensus. Costs fell to their lowest level in five years, with the bank hailing savings of SFr200m.
The group's wealth management arm increased profits by 45 per cent in spite of "currency headwinds" for the Swiss franc, although investment banking and capital markets revenues fell by eight per cent year-on-year as mergers and acquisitions activity and debt offerings stuttered for the bank. The bank warned its pipeline, while "strong", "remains dependent on constructive market conditions".
Volatility on equity markets helped income at the global markets arm to rise by six per cent even after a "very strong" comparable period in 2017.
The Swiss universal bank, which includes private and corporate banking, delivered its strongest performance since 2015, with income up 15 per cent year-on-year at SFr554m.
Why it's interesting
Tidjane Thiam, Credit Suisse chief executive, had been under pressure to turn around the bank since after joining from Prudential in 2015. The bank has been undergoing an intensive programme of cost cutting, including closing a Canary Wharf office as it tries to trim its London headcount and a move away from trading which could expose it to market volatility.
The bank has attracted activist interest from a Swiss hedge fund, RBR Capital Advisors, who have previously proposed breaking up the bank, with a focus particularly on the value of the wealth management arm. Information technology costs have also been a major concern.
However, the last two quarters have seen an improvement which has eased the pressure on Thiam, with analysts greeting signs the restructuring is bearing fruit. Shares rose by more than four per cent today as other European banks fell, in contrast to Swiss rival UBS, which retreated after results earlier this week.
What Credit Suisse said
Thiam said: "2017 was a year of stabilization and consolidation of the business, and we had planned 2018 to be a year of acceleration in our performance."
We are nearing pre-restructuring levels of absolute profit, with a higher-quality, more capital-efficient business mix that can generate growing amounts of capital organically with higher capital velocity and a higher return on capital through the cycle, while consuming less risk capital per unit of income.
"We have reshaped Credit Suisse in less than three years," he said. "We see significant opportunity to drive further profitable, quality growth."