Credit Suisse Authors Strong Q1 Earnings, Alleviating Investor Concerns

Following the earlier positive Q1 earnings releases from US lenders, many were wondering whether or not their European counterparts would follow suit. Credit Suisse today reported its Q1 2017 earnings, which did not disappoint, helping placate an uneasy investor base that had seen a number of different setbacks over the past year.

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Credit Suisse has been facing a rough stretch, not unlike other European lenders. However, while Q4 2016 proved to be a troubling quarter for banks, Q1 2017 has thus far been far more kind.

Just three months removed from a $2.4 billion loss for the 2016 fiscal year, Credit Suisse has largely reversed its fortunes, reporting a number of metrics all pointed higher across its business segments. In terms of its net revenues, the group saw a figure of CHF 5.5 billion ($5.5 billion) in Q1 2017, up 19.0 percent year-over-year from Q1 2016.

Nowhere was the reversal more evident than across Credit Suisse’s pre-tax income, having yielded CHF 670.0 million ($674.0 million) in Q1 2017 – this erased the CHF 484.0 million ($486.7 million) incurred back in Q1 2016. One of the paramount drivers of this trend was the Wealth Management unit's strong performance which had been flagged as one of the worst performers over the past six months.

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Q1 2017 was a different picture, with the division up 24.0 percent year-over-year from the year prior, responsible for CHF 12.0 billion ($12.1 billion). Furthermore, the group also saw a strong reduction in adjusted total operating expenses due to FX rates, accounting for CHF 4.6 billion, which represented the lowest level of expenses in a quarter since 2013.

According to Urs Rohner, Chairman of the Board of Credit Suisse, in a statement on the earnings: “We have undertaken a thorough review of our options regarding the next stage of our capital plan and have asked our CEO and management team to make a recommendation to the Board of Directors.”

“During those discussions, we carefully weighed the options of proceeding with the partial IPO of Credit Suisse (Schweiz) AG and raising capital through a rights offering to existing shareholders. The CEO and management team have proposed proceeding with a capital raise instead of a partial IPO, and this has been unanimously approved by the Board of Directors,” he added.