Credit Suisse Group AG yesterday said that business in the fourth quarter so far has continued the trend of the previous three months, when the lender got a boost from advising on deals while trading revenue trailed peers.
The investment bank “continues to perform well,” with revenue higher than in last year’s fourth quarter, Credit Suisse said in a statement on its investor day.
In wealth management, stronger transactional business especially in Asia is offsetting headwinds from the stronger Swiss franc and negative interest rates, it said.
The bank confirmed a target for a return on tangible equity of 10 to 12 percent in the medium-term and for capital distributions, while cautioning that reaching that goal next year would depend on provisions for bad loans.
Credit Suisse chief executive Thomas Gottstein is seeking to turn the corner after a series of setbacks overshadowed his first year in office, from loan losses to questionable dealings for a large client.
While he simplified the organizational setup, including at the securities unit, and started a review of the asset management business, he has been unable to stop a constant flow of bad news.
In the latest hit, an impairment on a hedge fund stake and potentially surging legal provisions threaten to affect fourth-quarter earnings.
Since Gottstein combined the investment banking and trading activities in one unit, the business has shown mixed results, with advisory doing well in the third quarter, while fixed-income trading — the largest revenue contributor — trailed peers.
The bank did not give any details on its trading performance so far this quarter.
The heads of the two largest US lenders, JPMorgan Chase & Co and Bank of America Corp, last week told investors that their investment-banking and trading divisions would notch a strong performance in the fourth quarter as economic activity stayed fairly resilient.
At Deutsche Bank AG, fixed-income trading grew 10 percent in October and 23 percent last month.
The COVID-19 pandemic also exposed some weaknesses in Credit Suisse’s asset management model, a business that is typically a source of stable income with little risk for the bank, but which suffered a number of fund implosions this year as well as a scandal involving one of its largest clients, Softbank Group Corp.
Credit Suisse said that it expects a significant turnaround at the unit next year.
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