Credit Suisse Group AG, Switzerland’s second-biggest bank, reported its fifth straight quarterly profit and the biggest gain in net new client money in more than four years.
Net income rose to 2.06 billion Swiss francs ($1.92 billion), from 2.01 billion francs a year earlier, the Zurich- based bank said today. That beat the 1.99 billion-franc median estimate of 13 analysts surveyed by Bloomberg.
Chief Executive Officer Brady Dougan is hiring sales people for the bank’s debt trading unit to gain market share in the business that helped lift first-quarter earnings at Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp. and Morgan Stanley. The Swiss bank attracted 18.6 billion francs in new assets from wealthy clients, the most since the third quarter of 2005, while rival UBS AG has seen eight consecutive quarters of withdrawals.
“At present Credit Suisse is a second-tier participant in fixed income,” JPMorgan analysts, led by London-based Kian Abouhossein, wrote in a note to clients before today’s release. Credit Suisse “lags significantly” in commodities and foreign exchange and closing those gaps would diversify the bank’s revenue base, the analysts said.
Credit Suisse has climbed 5.8 percent this year in Zurich trading, beating the 2.5 percent gain in the 52-company Bloomberg Europe Banks and Financial Services Index.
“Market conditions in the second quarter to date have remained similar to those in the first quarter,” Dougan, 50, said in the statement. “We will redouble our efforts to drive our market share higher.”
JPMorgan and Bank of America beat analysts’ estimates for first-quarter earnings last week, helped by debt trading revenue as client demand picked up. Goldman Sachs said revenue from fixed-income, currencies and commodities trading rose 13 percent in the first quarter to a record $7.39 billion. UBS posted pretax profit of at least 2.5 billion francs, the most in almost three years, due in part to a recovery at its fixed-income unit.
Credit Suisse said debt trading revenue rose to 2.66 billion francs in the first quarter, from 815 million francs reported in the previous three months. That missed analysts’ estimates for 2.8 billion francs and was down 34 percent from the record 4.02 billion francs recorded a year earlier.
The bank last year earned about $6 billion less in revenue from fixed-income, currencies and commodities than the average of its top three rivals, according to the JPMorgan analysts.
The fixed-income unit plans to hire about 130 sales people this year to help it boost revenues as competitors return to the market, which is normalizing after the credit crisis, David Mathers, chief operating officer of the investment bank, told investors at a conference on March 23.
Credit Suisse plans a 34 percent expansion of the sales force of its rates business, the single biggest revenue contributor at the investment bank in 2009, Mathers said. Those 40 new hires will be matched in emerging markets, while it will also add 30 people in foreign exchange and 20 in leveraged finance, he said.
Pretax profit at the investment bank fell 26 percent to 1.79 billion francs from a year earlier, while the private bank posted a 10 percent decline in earnings to 892 million francs. Credit Suisse’s asset management unit reported a pretax profit of 166 million francs, after a loss of 490 million francs a year ago.
Credit Suisse said that, based on information German authorities have provided to some of its clients, the bank has “reason to believe” that it has been a victim of data theft. The bank is conducting an internal review and has filed criminal charges against the individuals, currently unknown, who committed the theft.
Credit Suisse last month said it was limiting travel by its private bankers to Germany after the European neighbor opened investigations into 1,100 suspected cases of tax evasion. German officials in the western state of North Rhine-Westphalia have begun a nationwide probe based on information gleaned from a stolen CD containing data on Swiss bank accounts.
The bank said today that it has no reason to believe that it’s being investigated by German authorities.