Credit Suisse Q2 2020 earnings

Credit Suisse Q2 2020 earnings

Credit Suisse posted Thursday a 24% increase in net income and made additional provisions amid a “challenging economic environment.”

The Swiss bank also announced several structural changes. This will include the setting up of a global investment bank unit — which will combine its global markets and investment banking divisions — and a savings program of about 400 million Swiss francs per year, from 2022 onward.

“The measures we outline today are the right ones to further strengthen our integrated model, being a global leader in wealth management with strong global investment banking capabilities,” Thomas Gottstein, the chief executive officer, said in a statement.

Among the changes, Credit Suisse decided to promote Brian Chin to head its investment bank and David Miller is stepping down from the executive board.

Quarterly results

Credit Suisse reported net income of 1.16 billion Swiss francs ($1.27 billion) in the second quarter of 2020, up 24% for the same period last year. Analysts had expected net profit of 838.9 million Swiss francs for the three-month period through to the end of June, according to Refinitiv. 

At the end of the first quarter, the bank had set aside 568 million Swiss francs to deal with potential loan losses and said it had added another 296 million Swiss francs during the second quarter.

In a statement, the Swiss bank said its credit losses’ provision at the end of the first half of 2020 were 12 times higher than the average of the last 10 years in the same period.

Speaking to CNBC, Gottstein said the bank was “very satisfied with the second quarter.” 

He added that “in theory we should expect lower credit provisions going forward unless of course the macroeconomic assumptions change to the worse, which we all hope will not happen.”

Other metrics at the end of the quarter:

  • CET 1 ratio stood at 12.5, versus 12.1% at the end of the first quarter.
  • Revenues rose to 6.2 billion Swiss francs, vs. 5.58 billion Swiss francs a year ago.
  • Return on tangible equity 11%, vs. 9.7% a year ago.

The bank affirmed a commitment to reach a return on tangible equity between 10% and 12% in the medium term and a CET 1 ratio of about 12%. Both metrics shed light on the health of the bank’s balance sheet. The stock is down about 27% since the start of the year.

 

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