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Credit Suisse profit down as trading revenue falls
Swiss bank Credit Suisse (Swiss Exchange: CSGN-CH) on Wednesday reported a 34 percent drop in first-quarter net profit from the same period last year, worse than analysts had expected, as fixed income sales and trading revenue declined.
The group, Switzerland's second-largest bank by market capitalization, said it would continue to focus on resolving the tax issues the bank is facing in the U.S. and its intention remains to deliver cash returns to shareholders above 2013 levels.
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Net profit for the first quarter came in at 859 million Swiss francs ($975 million), below the 1.155 billion forecast in a Reuters poll.
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Fixed income sales and revenue trading were hit by "substantially reduced" client activity and challenging trading conditions, the bank said in a statement.
JPMorgan recently downgraded Credit Suisse shares, saying the bank needs to cut dependence on it investment bank's fixed income business. But Chief Executive Brady Dougan dismissed the criticism.
"Well we look at it, 21 percent return on capital on our investment banking business, that's a really good return. That's probably a best in class return in the industry. I think if we can deliver those kind of returns then I think that is a great business and one we should be in," he told CNBC.
The group also said it made progress on the winding down of its non-strategic unit, with the non-strategic arms reporting a loss before tax of 297 million Swiss francs, down from 1.03 billion Swiss francs in the final quarter of last year.
Dougan said there was continued momentum with clients across many of the bank's key businesses, including "the highest net asset inflows in our strategic businesses since the first quarter of 2011 and a meaningful increase in the share of assets under management from ultra-high-net-worth clients."
"At the same time, we maintained resilient leverage and capital positions and remain on track to meet our long term targets, notwithstanding methodology changes which increased risk weighted assets in the quarter. We also made good progress toward resolving legacy litigation matters," he said in a statement.
Read More NY regulator subpoenas Credit Suisse in tax probe: Source
Overall, Dougan said the quarter was a "very good one for us".
Last week, the New York Department of Financial Services subpoenaed Credit Suisse as the regulator's tax evasion probe of the firm widens, a source told CNBC on Tuesday.
The subpoena sought e-mails, personnel files, travel records, expenses and other materials of employees of the company's New York office, the source said.
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