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Credit Suisse says profits down in third quarter

Credit Suisse, Switzerland’s second-biggest bank, published a 38-percent drop in its third-quarter net profit Thursday amid a slowing of its international wealth management activities, missing analyst expectations.

But it acknowledged that its net profit during the third quarter had slumped by more than a third to 546 million Swiss francs ($599 million, 510 million euros).

It stressed though that the comparative quarter in 2019 had been boosted by a 327-million-franc windfall from the sale of its InvestLab fund platform to the Allfunds Group.

The bank’s net revenue was down two percent at 5.2 billion Swiss francs.

The results were well below the expectations of analysts polled by Swiss financial news agency AWP, who had anticipated seeing a net profit of 620 million Swiss francs on 5.3 billion in revenues during the quarter.

Following the news, the bank saw its share price plunge 5.36 percent to 8.63 Swiss francs in late morning trading as the Swiss stock exchange’s main SMI index inched up 0.34 percent.

Credit Suisse’s results were especially dragged down by its international wealth management business, which saw its revenues plunge 20 percent from a year earlier, due to a drop in investment revenues and “adverse foreign exchange and interest rate movements.”

The investment banking sector meanwhile saw revenues swell 11 percent year-on-year as activities picked up again, especially in Asia.

And the bank’s capital markets segment saw a 52-percent jump as initial public offerings resumed pace, it said.

“Despite the COVID-19 pandemic and significant foreign exchange headwinds due to the strong Swiss franc, our performance in the first nine months of this year has been strong,” chief executive Thomas Gottstein said in the statement.

The bank said the economic challenges posed by the coronavirus crisis were expected to continue through the fourth quarter and into 2021.

“We would expect this environment to continue to result in elevated levels of transactional and trading activity, across both our wealth management and investment banking businesses, as our clients respond to the macroeconomic uncertainties,” it said.

While the path through the pandemic remained “uncertain”, the bank stressed that it had a significant cash buffer, and said it planned to move forward paying shareholders the second half of the 2019 dividend.

It also said it aimed to resume a large-scale share buyback programme early next year.