Credit Suisse, the second-biggest Swiss bank, increased its profit in the second quarter of 2019 as investors took heart from expectations that the U.S. and China would seal a trade agreement. Return on equity improved both in the quarter and from a year ago.
Zurich-based Credit Suisse had net income of 937 million Swiss francs in the second quarter, up 25 percent from the first and 45 percent from the same period a year ago, according to a statement released by the bank on Wednesday. Return on tangible equity was 10 percent, up from 8 percent in the first quarter and 7 percent in the same period a year ago.
Global Markets had pretax income of $359 million in the three months through June, up 141 percent from a year ago, with total revenues rising 8 percent. The increase came despite tougher market conditions. Fixed income sales and trading revenues of $901 million increased 11 percent year on year, with a strong performance of securitized products and higher revenues in global credit products. Equity sales and trading revenues were up 3 percent to $510 million.
Swiss Bank's Strong Performance
The Swiss Universal Bank performed strongly in the second quarter, contributing 654 million francs in pretax income, the bank said. Private clients generated pretax income of 356 million francs, an increase by a third from a year ago. Corporate and institutional clients generated pretax income of 298 million, up 5 percent from a year earlier. Net new assets in this segment added 8.9 billion francs due in large part by the pension fund business.
Credit Suisse, as other banks too, still suffers from the effects of the negative interest rate environment in Switzerland.
Record Assets Under Management
Net new assets in Wealth Management amounted to 9.5 billion francs, compared with 9.6 billion francs in the first quarter. Assets under management reached a record 797 billion, Credit Suisse said.
«Following the headwinds we saw in the first quarter, the latter half of the second quarter provided a more supportive revenue environment as a result of growing expectations around a Sino-U.S. trade agreement and dovish central bank statements improving investor sentiment and leading to higher activity levels among clients sequentially,» the bank stated.
Healthy Outlook
The third quarter proved healthy so far in respect to client activity with the usual holiday-related seasonal slowdown in revenues expected.
Overall, the bank expects global GDP to show continued positive growth for the balance of the year, albeit at lower levels than previously expected, with market sentiment continuing to be impacted by geopolitical uncertainty and punctuated by periods of lower client activity.
