Credit Suisse saw second quarter net profits rise by a third to CHF1.05 billion ($1.1 billion) from the same period last year, but the Swiss bank’s solid results failed to match the stellar performances of global peers, analysts said.
Share prices dipped slightly, following several months of solid gains, despite news that Credit Suisse had attracted CHF7.5 billion in net new money from wealthy clients and had doubled investment banking pre-tax profits.
«Our business model is performing well and we continue to make progress in reducing our cost base and balance sheet,» chief executive Brady Dougan said in a statement, referring to the bank’s efforts to meet Swiss regulatory demands to reduce its exposure to risky trades.
The extra burden of the enhanced «Swiss Finish» regulations, which go beyond international standards in forcing banks to reduce risk, have impaired Credit Suisse’s capacity to take advantage of a recent uptick in trading activity, according to Bank Vontobel analyst Teresa Nielsen.
«Swiss banks are much more heavily impacted by regulations that require them to reduce balance sheets, which lowers their trading potential,» Nielsen told swissinfo.ch. «All the US banks have come out with better-than-expected results because they haven’t had to decrease their trading books as much.»
Past disputes
Earlier this week, Credit Suisse rival UBS announced that it is on track to beat market expectations when it announced its Q2 results on Tuesday. UBS also said it had settled a long-term dispute with the US Federal Housing Finance Agency (FHFA) over the sale of mortgage-related securities.
Credit Suisse is also among the 18 global banks being sued by the FHFA, and has yet to find a solution, although the bank has put aside far less money to settle legal claims than UBS, suggesting it is less involved in the dispute than its rival.
«We believe that we have acted responsibly,» Dougan said at the bank’s Q2 results press conference on Thursday.
In line with other Swiss banks, Credit Suisse results were also hit by a charge to settle past tax evasion issues with Britain under the terms of a tax treaty between the two countries. Credit Suisse said it had paid CHF100 million to Britain, and Dougan hoped the bank would finally settle outstanding tax evasion issues with the US by the end of the year.
The Zurich-based bank said it was on track to cut costs by 4.4 billion francs by the end of 2015 and had trimmed staff to 46,300 in the second quarter, down almost four per cent from 48,200 a year earlier.