Credit Suisse Reports Considerable Earnings Jump in Q2

The strong results coincide with the Wall Street bank’s plans to move its London staff to Madrid ahead of Brexit.

Multinational investment bank Credit Suisse has released its second-quarter earnings today. The results show a positive year-on-year jump in revenues for the Swiss bank and marked the seventh consecutive quarter of profit growth.

Adjusted pre-tax income for the Wall Street bank jumped by an impressive 88% year-on-year to CHF 1.3 billion in the second quarter of this year. This was the highest result in the past 12 quarters for the firm.

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In the second quarter of 2018, group revenues were also up by seven percent coming in at CHF 5.6 billion. This was supported by a decline in operating expenses, which were down five percent from the same quarter in 2017.

Tidjane Thiam, Credit Suisse CEO
Tidjane Thiam
Source: Bloomberg

Commenting on the results, Tidjane Thiam, Chief Executive Officer of Credit Suisse, said: “2Q18 was a period of continued strong performance as we achieved our highest adjusted* pre-tax income in the last 12 quarters and our seventh consecutive quarter of year-on-year profit growth.

“For the remainder of 2018, we will continue to focus on growing our wealth management franchise and completing the last two-quarters of our restructuring successfully.”

“Looking to 2019 and beyond, we will continue to deliver improved profitability, higher returns and growing shareholder value.”

Credit Suisse’s Global Markets

For its global markets, according to the statement, the bank maintained its strict capital, cost, and risk discipline in the second quarter. As a result, it was able to reduce its main capital constraint, leverage exposure, by seven percent year-on-year.

This allowed revenues to remain strong despite difficult conditions. The growth of the firm’s equities revenues was mainly driven by equity derivatives. This was because the bank benefited from investments in the business and a rebound in volatility.

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Fixed income revenues, on the other hand, saw a decline in the second quarter. This was in part due to a decrease in securitized products revenues. 

Credit Suisse prepares for Brexit

Although the firm has maintained a positive global economic outlook for the second half of 2018, it does warn that global trade and monetary policy decisions from central banks may trigger periods of “heightened uncertainty” for the remainder of the year.

Over time, the bank warns, this could have a negative impact on a wide range of asset classes and activities.

The financial results and economic outlook coincide with a report released by Reuters yesterday, which claims the Swiss bank is planning to move about 50 jobs from London to Madrid as part of its efforts to continue doing business in the European Union (EU) post Brexit.

The report, which quotes a source close to the matter, said Credit Suisse is in the process of alerting its staff based in London to the changes. The changes will affect its main divisions, in particular, its investment banking, wealth management, and asset management segments.

Following the moves, the firm expects its headcount in the Spanish capital to be around 300 employees. Madrid will also serve as a hub for the bank’s South American operations as it attempts to expand its client network in the region.

The Swiss Bank will also be relocating its London-based staff to other offices around the EU. However, despite the moves, the bank still expects London to play an important role in its operations after Brexit.

The move from Credit Suisse is not surprising. With slow progress being made with Brexit negotiations in Brussels, multiple regulators have warned banks, brokers and other financial companies to be prepared for a hard Brexit. This has seen multiple large banks such as Barclays looking to relocate its staff out of London.

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