Credit Suisse CEO: We can handle rate rises
Credit Suisse CEO Brady Dougan on Thursday tried to reassure investors that a transition to higher interest rates will be positive for the group, and said second quarter earnings offered encouragement for the remainder of the year.
There are concerns that the group's bond portfolio could take a hit when rates rise, but Dougan was relatively sanguine.
"We do have $1.3 trillion in client assets in our private banking wealth management business. The impact of increased interest rates there is going to be pretty significant and that's going to have a big impact on our overall results," he told CNBC.
"But I think on the investment banking side, we run a much more capital-efficient banking model, a much more inventory-like model, so our hope is that we'll be able to manage through those rises in interest rates in terms of their impact on inventories, reasonably well."
On Thursday, Credit Suisse reported that net profit for the second quarter rose nearly 33 percent on the year, on a rise in both stock and bond trading from its investment bank.
The Zurich-based bank beat analyst estimates with a 1.045 billion Swiss francs ($1.12 billion) net profit for the quarter, compared to 1.017 billion francs seen by analysts in a Reuters poll.
Dougan said it was "strong result" and boded well for the rest of the year. "There's a lot of business to be done so the pipelines are pretty strong, assuming that you've got markets to actually execute that into and we've seen some signs of stability..but the second half is a long period to predict."
He said a rise in interest rates would "benefit the bank" through the impact on client flow. How active the markets would be following an increase was yet to be seen.
(Read more: CIT posts profit as interest expense drops 60%)
UBS on Monday disclosed a profit for the quarter that will beat estimates, even after charges to settle a lawsuit with the U.S. housing regulator over the mis-selling of mortgage-backed bonds.
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