Credit Suisse delivers best quarter since Thiam's revamp

[April 25, 2018]   By Brenna Hughes Neghaiwi

ZURICH (Reuters) - Credit Suisse delivered its best quarterly results on Wednesday since Chief Executive Tidjane Thiam launched his restructuring plan for Switzerland's second-biggest bank in 2016, driven by its wealth management business.

After 6.6 billion Swiss francs ($6.7 billion) of losses in 2015 and 2016, and a big tax writedown that wiped out gains last year, Credit Suisse posted 694 million francs in first-quarter net income, beating expectations.

The results showed the bank gaining from Thiam's three-year plan to focus on wealth management over investment banking and settle legal cases.

Net new money inflows - a closely watched indicator of future earnings in wealth management - totaled 14.4 billion francs across its three wealth management businesses, the highest in seven years.

"With these first-quarter results, we got off to a good start in our third and final year of restructuring, and we are looking ahead to the future with confidence in our new business model and in our execution capabilities," Thiam said in a statement.

The bank's shares were up 4.9 percent at 16.985 francs in early trade as markets welcomed the results. The stock still trades well below the level when Thiam took over, but has been steadily recovering from a low of 9.4 francs in mid-2016.

"Market estimates are not particularly demanding and, in our view, will be revised upwards each time the bank proves to reap fruits from all the self-help measures," Baader Helvea analyst Tomasz Grzelak said in a note.

ADVICE SOUGHT

Gains in Credit Suisse's core business catering for the world's wealthy came amid a spike in market volatility and a slowdown in corporate deals, as a changing geopolitical landscape has made investors cautious and hit investment banks.

Chief Executive Tidjane Thiam of Swiss bank Credit Suisse speaks during the Forum 100 conference in Lausanne, Switzerland May 19, 2016. REUTERS/Denis Balibouse/File Photo

Thiam said the need for advice had measurably risen among its private banking clients, who were seeking more contact with their relationship managers as the bank helped wealthy families diversify their assets.

Confirming its 2018 targets, the bank flagged periods of heightened volatility amid geopolitical uncertainty, global trade tensions and monetary policy tightening. "Client activity levels remain sensitive to these factors, specifically within our more market dependent activities," it said.

Swiss rival UBS on Monday posted 1.5 billion francs in quarterly net profit as its investment bank navigated volatility better than Wall Street peers, snatching up a bigger share of corporate deals and placements within a declining market.

Credit Suisse saw revenues fall 8 percent in its investment banking and capital markets division, but said it had a strong pipeline of prospective deals that remained "dependent on constructive market conditions".

Earnings at its global markets trading unit, which has been the focus of Thiam's cuts and the source of billions of dollars in losses over recent years, rose to 295 million francs. Thiam had flagged a slowdown in the division's revenues since equities markets plunged in mid-February.

($1 = 0.9811 Swiss francs)

(Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields and Mark Potter)

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