Credit Suisse has cut more than 1,000 jobs in London this year as part of chief executive Tidjane Thiam's turnaround plan, which showed signs of progress last quarter as he cut costs, risks and the size of the investment bank. Credit Suisse on Thursday reported a surprise profit in the second quarter and Thiam said progress had been made to reduce costs and risks, "rightsize" the investment bank, improve capital and generate growth.
"I never want to declare victory after two quarters," Thiam told reporters on a conference call. "All we're saying is things are moving in the right direction and we're fixing a lot of problems that developed over a long period of time." Credit Suisse reported pre-tax income of SFr199m for the second quarter, swinging from a loss of SFr484m in the previous quarter, but down 88% from a SFr1.66bn profit in the second quarter of 2015.
The bank's shares rose at the open, but were down 2% by midday, in line with a weak European banking sector. The results marked the first green shoots for Thiam's strategy, who took over a year ago and aims to slim down the investment bank, focus more on wealth management and cut at least SFr4.3bn in costs. The global markets unit made a pre-tax profit of SFr154m in the quarter, from a SFr198m loss in the first quarter but down from SFr391m a year ago. Its revenues fell 15% from a year ago to SFr1.63bn.
Investment banking and capital markets (IBCM) made a pre-tax profit of SFr135m, compared with a SFr62m loss the previous quarter and a SFr145m profit last year. Its revenues fell 4% from a year ago to SFr543m. In Asia-Pacific, the bank's income before tax of SFr206m was down 22% on the first quarter and down 44% year-on-year. Asia-Pacific investment banking revenues, which are reported separately, were SFr574m, down 2% on the previous quarter after a one-third drop in fixed income sales and trading business, which the bank blamed on lower demand for rates products. Underwriting and advisory revenues rebounded 39% on the quarter to SFr100m, up 22% on the year.