Earnings

Credit Suisse misses analyst expectations with a 38% fall in net profit

Key Points
  • Speaking to CNBC on Thursday, Thomas Gottstein, CEO of Credit Suisse, said it was a "decent quarter."
  • Net revenues in its investment banking division rose by 11% in the third quarter from a year ago, on "constructive" market conditions and higher client activity, mainly in Asia.
  • However revenue at its closely-watched wealth management division fell 10% year-on-year.
VIDEO5:1005:10
Credit Suisse CEO says Asia outperforming rest of the world

LONDON — Credit Suisse on Thursday posted a 38% slide in net profit for the third quarter, but said it expected volatile market conditions to bolster its wealth management and investment banking divisions looking ahead.

Net income attributable to shareholders came in at 546 million Swiss francs ($600 million) for the three months to the end of September, below the 679 million Swiss francs that analysts had expected, according to Reuters Eikon.

It marks a 38% slide from net income in the third quarter of last year, although the bank's results during that period were bolstered by the sale of its InvestLab fund platform to the Allfunds Group.

In the second three months of 2020, net income was 1.16 billion Swiss francs.

Speaking to CNBC on Thursday, Thomas Gottstein, CEO of Credit Suisse, said it was a "decent quarter."

Other highlights for the quarter:

  • Net revenue dropped 2% to 5.2 billion Swiss francs from 5.3 billion Swiss francs a year ago;
  • CET 1 ratio (a measure of bank solvency) reached 13% from 12.4% a year ago.

Performance in Credit Suisse's wealth management division disappointed, with strong transaction-based revenues being more than offset by lower fees and net interest income. Revenue at the closely-watched division fell 10% year-on-year.

The bank's investment banking division fared better, however, with net revenues rising by 11% in the third quarter from a year ago, on "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 CNBC's Geoff Cutmore.

Fixed income sales and trading revenues grew by 10% year-on-year, while equity sales and trading revenues increased by 5%.

Going forward, the Swiss bank said it would support its customers "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, across both our wealth management and investment banking businesses, as our clients respond to the macroeconomic uncertainties," the bank said in a statement.

Credit Suisse added that it was planning to pay out the second tranche of its 2019 dividend and resume its share buyback program in January, with the aim of repurchasing between 1 and 1.5 billion Swiss francs of shares for the full year.

Shares of Credit Suisse are down by about 30% since the start of the year.