Credit Suisse says profitability in Q1 2020 continues year-on-year improvement trend

Maria Nikolova

In Credit Suisse’s Wealth Management businesses, overall private banking revenues have risen so far this quarter compared to the same period last year, on the back of higher transaction revenues.

Credit Suisse today issued a trading update prior to entering the close of the period for its first quarter results on March 31, 2020.

In the face of the COVID-19 pandemic and the resultant volatile market environment, profitability in the first quarter of 2020 has so far continued the strong year-on-year improvement trend, Credit Suisse said.

In the Wealth Management segment, overall private banking revenues so far this quarter are up compared to the same period last year, on the back of higher transaction revenues. The teams across Credit Suisse’s Markets businesses have done an excellent job in these volatile markets, the company says, and, as a consequence, sales and trading revenues are significantly higher quarter to date compared to the same period in the first quarter of 2019.

This so far has offset the negative impact of the market environment on the execution of Credit Suisse’s primary capital markets pipeline. The return on tangible equity is above 10% for the first two months of the year, and the pre-tax income for the same period exceeds the CHF 1.06 billion reported for the whole of the first quarter of 2019.

Credit Suisse says it continues to benefit from the strengthening of its capital base since it started its restructuring in the third quarter of 2015, the rebalancing of its business towards wealth management and from the disciplined approach to costs, resources and capital management.

The impact of the pandemic on Credit Suisse’s financial results going forward remains difficult to assess at this stage and the company continues to monitor its credit exposures prudently in light of these conditions.

“However, we are very satisfied with how the teams have so far navigated the increased volatility, including in areas such as share-backed lending”, Credit Suisse says.

Let’s recall that, for 2019, Credit Suisse posted net income of CHF 3.4 billion, up 69% from 2018 levels. Net revenues for 2019 amounted to CHF 22.5 billion, up 7% from the previous year.

The final quarter of 2019 included major litigation provisions of CHF 326 million. For the full year 2019, the provision was CHF 389 million.

Including these litigation provisions, total operating expenses for 2019 were CHF 17.4 billion, compared to CHF 17.3 billion in 2018. This translates into a rise of 1%.

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