Credit Suisse Steps Up – US-FOREX.US
So far this season with write-downs mostly behind them, banks with large investment banking operations have been falling into two categories: banks like Goldman Sachs saw revenues rising across the board, whileothers such as JP Morgan have seen their successes fall mainly in the fixed income category. Despite a still sluggish equities market, Credit Suisse fell firmly into camp of Goldman Sachs, the former bulge bracket that found new life as a bank holding company in 2008.
Credit Suisse
surprised the market with a profit for the June quarter that was 29% above last year, driven mostly by investment banking, though its asset management division also returned to profitability. Investment banking pre-tax profits came in at 1.7 billion Swiss francs , 43% above consensus estimates and nearly seven times the figure a year ago. Despite cutting headcount in the investment banking division 11% since last year, Credit Suisse has been targeting its existing strengths to build on, including in algorithmic – program- trading, prime brokerage, and on the fixed income side in currency and treasury products.”In the prime brokerage business they are putting a lot of focus on technology rather than hiring the big bonus golden boys,” remarked Jean Sassus, a European banking analyst at Raymond James Equities in Paris. Shares of Credit Suisse
soared 5.8%, to 51.80 Swiss francs , in Zurich on Thursday. One of the most positive surprises was the reduction in the bank’s risk-weighted assets which lifted its core tier 1 ratio to 15.5%, from 14.1% in the previous quarter.
Shares of rival UBS
also rose on Thursday off the back of the Credit Suisse figures, but the read across isn’t obvious. UBS has been making a concerted effort to separate out its three arms – investment banking, asset management and private banking in the wake of multi-billion dollar losses. By contrast Credit Suisse has, according to Sassus, “benefited from being able to cross sell products between investment and private banking. That’s their strategy.”