Zurich: Credit Suisse won new wealthy clients’ money faster than in any quarter since 2005 and said it saw opportunities to boost market share in investment banking, even as the competition in the segment toughens up.
The bank said net new money inflows from wealthy clients had improved from the previous quarter despite expectations by some analysts the franchise could have been damaged by a German tax evasion investigation into 1,100 of its clients.
“The new net money result is fantastic,” said a banking analyst. “Fixed-income results are also good, but in line with expectations.”
Credit Suisse, Switzerland’s second-largest bank behind UBS , posted a first quarter net profit of 2.1 billion Swiss francs ($1.97 billion) on Thursday, largely driven by fixed-income trading profit, against analysts’ expectations of 2 billion francs.
“Market conditions in the second quarter to date have remained similar to those in the first quarter and we are confident that our business model will enable us to continue to generate high-quality results in good as well as in more challenging market conditions,” chief executive Brady Dougan said in a statement.
“We believe that we will further improve our profitability in Private Banking when markets and the demand for comprehensive solutions recover,” he also said. Credit Suisse was able to emerge quickly and without state aid from the financial crisis and cashed in strong trading gains throughout 2009 while many US and European rivals struggled.
But a year on, several competitors are back in the fray. Along with JP Morgan and Goldman Sachs, Morgan Stanley, Citi and Bank of America all beat analysts expectations with strong trading-driven first quarter earnings, setting the bar higher for European players.
And even domestic rival UBS, which was hit hard by the subprime crisis, is competitive in areas such as forex trading and fixed income and said last week its first quarter pretax profit would be 2.5 billion francs.
Credit Suisse said in its financial report income before taxes would be 2.9 billion francs.
Credit Suisse shares had hit their highest level in nearly five months on Friday on the back of improved earnings expectations, traders said.
Credit Suisse’s private banking division, which accounted for one third of 2009 group revenues, manages more than 900 billion Swiss francs of assets and serves over two million wealthy clients around the globe. The bank was able to attract 41.6 billion of net new private banking assets in 2009 and improve margins and market share while UBS lost billions of client money as it was hit by the fallout of the credit crisis and a US tax fraud probe.