By John Letzing
ZURICH--Credit Suisse Group AG said it swung to a profit in the
second quarter and provided some cushion for the Swiss lender's
newly-minted chief executive, despite a lackluster result for its
investment bank.
Zurich-based Credit Suisse said on Thursday that net income was
1.05 billion Swiss francs ($1.09 billion) in the quarter, compared
with a loss of 700 million francs in the same period last
year--when the results were undercut by Credit Suisse's agreement
to pay $2.6 billion as part of a settlement with U.S. regulators
and plead guilty to aiding American tax evasion.
Analysts had expected Credit Suisse to report net income of 703
million francs.
Net revenue rose 8% to 6.94 billion francs, the bank said.
Credit Suisse is entering a new era under incoming CEO Tidjane
Thiam, a former CEO of U.K. insurer Prudential PLC who took over at
the beginning of this month. The results published on Thursday
reflect a period when the bank was still being run by Mr. Thiam's
predecessor, Brady Dougan.
Leading up to Mr. Dougan's departure, Credit Suisse faced
increasing calls for a scaling down of its relatively costly
investment bank, which is still far larger than that of Swiss rival
UBS Group AG. Many analysts expect that, like UBS, Credit Suisse
might seek to increase its focus on its wealth management
business.
Another challenge facing Mr. Thiam: Further bolstering the
bank's capital cushion.
Credit Suisse said on Thursday that its key capital ratio rose
to 10.3%, from 10% in the prior, first quarter. The measure is
closely watched by both regulators gauging the bank's stability,
and by investors assessing its potential to attempt significant
acquisitions--a prospect that some analysts see as more likely now
with Mr. Thiam in place as CEO.
Mr. Thiam said on Thursday that he is conducting an "in-depth
strategic review" of the bank, and intends to offer up details of
his plans before the end of the year. The CEO said his new strategy
should "address some of the pressures apparent" in the bank's most
recent quarterly results, while noting that its investment bank saw
a decline in profit during the period because of increased
costs.
Credit Suisse said pretax income at its investment bank fell 18%
compared with the same quarter last year, to 615 million francs.
Net revenue at the business rose 1%. Debt, or fixed income, sales
and trading revenue fell 5%, while equity sales and trading revenue
rose 18%.
Credit Suisse's investment banking results reflect a period that
saw some market tumult, as a result of ongoing uncertainty about
Greece's relationship with its European creditors.
Pretax income at Credit Suisse's private banking & wealth
management unit was 937 million francs in the quarter, compared
with a loss in the period last year, while net revenue rose 3%. Net
new assets for the business amounted to 14.2 billion francs, an
increase from 10.1 billion francs reported in the same period last
year, due in part to significant inflows from clients in Asia, the
bank said.
Write to John Letzing at john.letzing@wsj.com
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