Credit Suisse quarterly profit rises despite coronavirus turmoil
Credit Suisse said it was on course to deliver strong results for the first quarter despite market volatility related to the coronavirus pandemic.
In a trading update released this morning, the Swiss banking giant said profits for the quarter would comfortably beat the 1.06bn Swiss Francs (£940m) it reported before tax for the first quarter of 2019.
“Notwithstanding the Covid-19 pandemic and the resultant volatile market environment, profitability in the first quarter has so far continued the strong year-on-year improvement trend,” the lender said.
Credit Suisse said its private banking business had recorded improved revenues compared to the same period a year ago, benefitting from higher transaction revenues as the market rout led some of its high net worth clients to offload assets.
Trading and sales revenues at Switzerland’s second-biggest bank were also “significantly higher”, it said, helping to offset the impact of the negative market environment on its primary capital markets pipeline.
The bank’s return on tangible equity — a key measure of financial health — was above 10 per cent during the first quarter, it said.
Credit Suisse said it was difficult at this stage to assess the impact of the coronavirus outbreak on its financial results and it was monitoring its credit exposures prudently. It conceded that the global market rout had already taken a toll, and said the outlook for the full year was uncertain.
Negative interest rates are already damaging the business models of many large European lenders, with margins likely to come under even more pressure as rates are slashed even lower in a bid to combat the economic impact of coronavirus.
Credit Suisse said that restructuring efforts in recent years had strengthened its capital base, while increased focus on wealth management and lower exposure to leveraged finance and the oil and gas sector had made it more resilient to the impact of the virus and resulting market volatility.