Credit Suisse hails cost discipline as net profit jumps 45 per cent
ZURICH: Credit Suisse (CSGN.S) posted its highest quarterly earnings in four years on Wednesday, hailing frugal cost management as paying off in a tough environment. Switzerland’s second-biggest bank raised earnings 45 per cent in the second quarter through June, well beyond expectations, as costs continued to come down half a year after it wrapped up a three-year overhaul.
“Part of our strategy has been to reduce our fixed costs very heavily, and I think we did that at the right time,” Chief Executive Tidjane Thiam said.
“Our view from the start was that it’s always going to be a stagnant industry, so we had to take our cost down very severely,” Thiam told Bloomberg TV.
“We’re also lucky because we came out with that new platform just at the time when many others are restructuring, and we’re benefiting from that,” Thiam added.
Credit Suisse shares, which had dropped on Tuesday to their lowest in a month, rose 5 per cent by 0829 GMT, with analysts noting a clear beat in Global Markets, the capitalheavy trading division which the bank downsized during its overhaul, and solid inflows of fresh client money, an indicator of future earnings for private banks.
“We view these as strong results,” Citi analysts wrote in a note. “Global Markets has been the main cause of consensus earnings downgrades over the past 18 months, but has now shown signs of recovery for a second consecutive quarter.”
The Zurich-based lender’s revenue remained largely flat during the quarter, with a jump in trading income helping offset a slide in its corporate advisory business.