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Credit Suisse hit despite profit rise
Tuesday, April 21, 2015 - 01:59
Speculation that incoming Credit Suisse Chief Executive Tidjane Thiam could raise cash to boost the bank's balance sheet overshadows a forecast-beating increase in first-quarter net profit. But as Hayley Platt reports the Swiss bank's generally positive results are thought to be the start of trend in the European banking sector .
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It's the first European investment bank to report quarterly earnings this year and they're pretty good. Profits at Credit Suisse were up 23 percent, comfortably beating expectations. Net profit rose to just over 1 billion Swiss Francs Up from 850 million francs last year. Switzerland's second-largest bank put it down to gains in its securities trading and wealth management divisions. The resurgence in dealing revenues echoes a similar trend on Wall Street. But will it last? Rabobank's Jane Foley. SOUNDBITE: Jane Foley, Senior Currency Strategist, Rabobank, saying (English): "It will continue this year, maybe not at the pace that we've seen in the first few month. But I think always when you're at a year when there is so much uncertainty, particularly with respect to the Federal and its interest rate cycle. When we have this sort of turn then I think volatility in prices is likely to remain at a fairly heightened level." Despite the gains, shares fell. Investors concerned over what lies ahead under a new CEO. Tidjane Thiam, currently head of British insurer Prudential, will join the bank in June. And it's thought he may have to raise cash to boost the bank's balance sheet. SOUNDBITE: Jane Foley, Senior Currency Strategist, Rabobank, saying (English): "Sometimes the markets get accustomed to a certain way of moving forward, when you introduce somebody new at the helm it increases uncertainty. The markets are nervous about which direction the bank could take and perhaps a movement away from investment banking to so." New capital rules and more electronic trading are putting banks like Credit Suisse under pressure. Revenue's from FX, currencies and commodities trading are being squeezed. And banks are choosing which activities will bring in the most profit. Credit Suisse is clearly making some of the right choices. But it's still struggling to rein in costs and has warned it may need another 1.8 billion francs for future legal bills
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Credit Suisse hit despite profit rise
Tuesday, April 21, 2015 - 01:59
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