Credit Suisse Q3 Pre-tax Profit Climbs; Sees Net Loss In Q4; To Exit Prime Services

(RTTNews) - Swiss lender Credit Suisse reported Thursday weak net profit in its third quarter, while profit before tax climbed on good revenue growth. Looking ahead, the company said it expects a net loss in the fourth quarter, and a further reduction in market volumes for the remainder of 2021 as the trading environment normalizes.

Separately, Credit Suisse announced its Group strategy, with a clear focus on strengthening, simplifying and investing for growth. The company plans to reshape the Investment Bank by reducing more than $3 billion, or around 25 percent, of capital by exiting majority of Prime Services over 2021 to 2022.

The exit from the majority of Prime Services is expected to also reduce Equity Sales & Trading revenues.

Further, the company would redeploy additional capital of approximately 3 billion Swiss francs to the Wealth Management division by 2024, a 25 percent increase.

The company said, "In Wealth Management, we expect recurring commissions and fees to continue to benefit from higher levels of AuM as well as increased levels of mandate penetration. With regard to transaction-based revenues in Wealth Management and the Investment Bank, we would expect revenue performance to reflect the normalization of trading conditions as well as the usual seasonal slowdown in market activity."

For the third quarter, net income attributable to shareholders fell 21 percent to 434 million Swiss francs from last year's 546 million francs.

Pre-tax income was 1.01 billion francs, a growth of 26 percent from prior year's 803 million francs.

On an adjusted basis, excluding significant items and Archegos, pre-tax income was 1.36 billion francs, compared to 1.09 billion francs.

Net revenues for the quarter grew 5 percent to 5.44 billion francs from last year's 5.20 billion francs. Adjusted net revenues went up 6 percent from last year to 5.50 billion francs.

Wealth Management-related revenues went up 3 percent from last year to 3.27 billion francs. Investment Bank revenues were $2.47 billion, up 10 percent from the prior year.

Group Assets under management or AuM was over 1.6 trillion francs at the end of the third quarter, up approximately 10 percent year on year. Wealth Management AuM of 843 billion francs grew approximately 9 percent year on year, supporting recurring commissions and fees' growth of 14 percent.

In Switzerland, Credit Suisse shares were trading at 9.95 francs, up 0.53 percent. In pre-market activity on the NYSE, the shares were gaining around 0.7 percent to trade at $10.86.