ZURICH (Reuters) - Credit Suisse (CSGN.S) reported strong third-quarter profits on Wednesday, helped by the Swiss bank’s wealth management and global markets businesses, giving a boost to CEO Tidjane Thiam as he tries to move on from a spying scandal.
Credit Suisse benefited from a 327 million Swiss franc revenue boost from the spin-off of fund platform InvestLab to Spain’s Allfunds Group. Excluding the InvestLab transaction, pre-tax income rose 21%.
“We have continued, in a challenging environment, to grow our wealth management franchises, increasing our revenues and gathering record net new assets of 72 billion Swiss francs across the Group year to date,” Chief Executive Tidjane Thiam said in a statement.
But Switzerland’s second-biggest bank also said it expected headwinds from the challenging geopolitical environment, notably the U.S.-China trade dispute and Brexit, to persist.
“This is likely to lead to more cautious capital expenditure and investment decisions, specifically looking forward to 2020 and 2021.”
Credit Suisse’s shares were down 2.6% compared with a 1.4% fall in Europe’s bank stock index [.SX7P] by 0927 GMT.
J.P.Morgan Cazenove analysts said in a note: “Overall ... results are mixed, with the WM (wealth management) divisions broadly inline while the main positive delta is Global Markets.”
The bank brought in 3.6 billion francs in new client money in its international wealth management business - its only standalone wealth unit - as it hired relationship managers during the quarter.
Thiam was cleared earlier this month of spying on star wealth manager Iqbal Khan after he left the bank for rival UBS (UBSG.S), a scandal which rocked the staid Swiss banking establishment.
Credit Suisse has increased its overall number of client advisers by 60 in International Wealth Management, adding staff particularly in Latin America and in Central and Eastern Europe, and by 25 in Asia-Pacific since the start of the year, a bank spokesman said, adding it would look to add more advisers as it seeks to grow more in wealth management.
Group net profit of 881 million francs exceeded analyst expectations, thanks largely to a beat in the Global Markets trading division.
Revenue in the bank’s global markets business was up 34%, fueled by the strong fixed income performance. However its investment banking and capital markets business posted a 6% drop in revenue, hit by a sharp drop in advisory fees for M&A work.
Fixed income revenues rose 72% while equity sales and trading revenues were up 11%, outperforming most of Wall Street.
The bank’s return on tangible equity—a key profitability metric—stood at 9%.
The group aims to reach a 10-11% return this year but in July stressed this represented more of an ambition than a target, based on flat revenues and linked to market conditions.
Reporting by Brenna Hughes Neghaiwi, editing by John Revill, Rachel Armstrong and Jane Merriman