ZURICH (Reuters) - Credit Suisse (CSGN.S) more than doubled net profit in the second quarter as it grew its wealth management business, despite the weakness which has hit private banking rivals and as it reaped gains from the last stage of a three-year overhaul.
Global geopolitical uncertainty has dragged on wealth managers as rich clients shy away from potentially risky investments, but Credit Suisse was confident it can deliver gains in its main business line this year.
“The growth potential of our Wealth Management-related businesses of Switzerland, Asia Pacific and International Wealth Management remains intact and we expect them to continue to benefit from broad-based, client-led growth in the second half of 2018,” Credit Suisse said in a statement on Tuesday.
Switzerland’s second-biggest bank said its net income attributable to shareholders from April through June rose 114 percent year on year to 647 million Swiss francs ($656 million), beating expectations as it further pared back costs and grew business banking the world’s wealthy.
Credit Suisse shares were up 1.3 percent at 0824 GMT.
It said it was on track to meet targets for 2018, the final year of a turnaround plan to focus on wealth management over investment banking and settle legal cases, as well as to achieve a return on tangible equity of 10-11 percent for 2019.
UBS (UBSG.S) and Julius Baer (BAER.S), Credit Suisse’s largest listed Swiss rivals, were cautious over concerns that ongoing geopolitical tensions and escalating trade wars would continue hampering client activity.
Julius Baer saw net inflows dip during the first six months of 2018 due to clients deleveraging their portfolios, while UBS registered 1.2 billion francs in second-quarter net outflows.
Chief Executive Tidjane Thiam said Credit Suisse saw similar trends in clients removing risk, but had managed to make up for this by providing them with other services.
Net new money inflows, a closely watched indicator of future earnings in wealth management, totaled 9.1 billion francs across Credit Suisse’s three wealth management businesses during the second quarter. Six-month inflows accelerated by 3 percent over those recorded in the first half of 2017.
“We continue to believe that 2018 is set to be a year in which Credit Suisse should be able to deliver turnaround benefits from the large-scale restructuring program,” Baader Helvea analyst Tomasz Grzelak said in a note.
Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields and Alexander Smith