Credit Suisse shares have slumped after its results failed to meet expectations despite the Swiss bank edging closer to its first annual profit in four years.
The bank said its net profit for the third quarter rose 74 per cent year-on-year to Sfr 424m (£327m) and revenue was Sfr 4.9bn – down 1.6 per cent from Sfr 4.97bn the previous year.
Analysts had forecast net profit of Sfr 449m for the Swiss lender, which confirmed on Thursday it would make a profit for 2018 for the first time in four years, following a three-year restructuring programme.
The bank's trading division, which has been the focus of cuts, posted a pre-tax loss of Sfr 96m as market conditions hit client activity and chief executive Tidjane Thiam ditched the $6bn net revenue target for its global markets unit.
Credit Suisse shares dropped four per cent in early trading before recouping some of those losses.
Chief executive Tidjane Thiam said the environment in the summer was “challenging” due to volatile emerging markets, trade tensions and political uncertainties, leading to a drop in client activity, which compounded the expected summer slowdown.
But he said the bank's third quarter performance, its eighth consecutive quarter of profit increase, was notable given the challenges faced.
The bank said it was on course to achieve its cost savings target of Sfr 4.2bn for 2018 but warned the negative sentiment that impacted the third quarter to continue to the end of the year.
Analysts at Citi said the reaction and dramatic share drop was over the top.
They said: “We understand the poor sentiment towards Credit Suisse today on the weakness in global markets [division], but this needs to be put into the perspective of the achievements at the wider group," keeping a "buy" rating on the stock.