Credit Suisse ends string of losses in trading

Bloomberg

Credit Suisse Group AG’s troubled trading business is finally bringing some much needed to relief to Chief Executive Officer Tidjane Thiam.
The global markets unit — a focus of painful cuts and a perennial headache for the CEO — did better than top Wall Street banks in a period that rival UBS Group AG described as one of the worst in recent history. Wealth management, which Thiam built up to balance volatile trading, benefited from an influx of new money, leaving the investment bank as the main weak spot of the quarter.
It’s “probably the first time time I smile while talking about” the trading business, Thiam said in an interview with Bloomberg TV’s Francine Lacqua. “There was a lot of pressure at the end of last year to say, you need to restructure global markets again. Our view was no, give them a chance.”
While a single quarter can’t answer the question how sustainable the notoriously volatile trading results are, the figures give a boost to Thiam as he seeks shareholder approval for a 30 percent pay increase. For two years in a row, the CEO had agreed to cut his bonus amid surprise trading losses and painful job cuts, as he pivoted the bank away from volatile investment banking and towards the more stable business of wealth management. Last year, the bank posted its first annual profit in four years.
Credit Suisse rose as much as 4.7 percent in Zurich trading, leading European lenders higher, as the bank said it’s “cautiously optimistic” as client confidence returns and the positive momentum in March continues into April. Even after an almost 30 percent gain this year, the stock is still down more than 40 percent since Thiam took over in 2015.
The figures give the first detailed indication how European banks have fared at the start of the year. Sergio Ermotti, Thiam’s counterpart at UBS, has warned that the first quarter was “one of the worst” in recent history, pushing revenue at its investment bank down by a third.
Credit Suisse didn’t entirely brush of the difficult environment, with its advisory unit posting a bigger-than-expected loss. Investment banking and capital markets, which helps clients issue stocks and bonds and advises them in merger situations, saw steep declines in those businesses, which the bank attributed to weaker market activity.
And even in securities trading, the bank still suffered revenue declines. But compared to peers, that business held up well, which Credit Suisse in part attributed to a push — central to Thiam’s strategy — to sell investment banking products to wealth
management clients.