Credit Suisse Convinces With Strong Wealth Management: Analysts

(Bloomberg) -- Credit Suisse shares gain the most in more than five months after first-quarter earnings beat estimates, with net new money coming in at CHF14.4b -- the highest quarterly level in seven years. A strong wealth management business offsets somewhat weaker equity trading revenue than reported by U.S. peers and UBS. Some analysts point out that consensus estimates have been lowered since a “soft profit warning” mid-March.

Credit Suisse Convinces With Strong Wealth Management: Analysts

Vontobel, Andreas Venditti

(Hold, PT CHF17)

  • Pretax profit above consensus, which has been lowered by almost a quarter since the “profit warning” of mid-March
  • Adj. pretax in line with Vontobel estimate, represents only 26% of FY18E estimate
  • As proportion of annual earnings made in 1Q is usually “way above” this level (1Q17: 35%), Vontobel might consider lowering its estimates

Goldman Sachs, Jernej Omahen and Marco di Matteo

(Buy, PT CHF 21.80)

  • Good set of results, pretax profit beat, strong net new money; in investment banking, equities revenues underperformed U.S. peers and UBS
  • All operating divisions better than expected except for IBCM
  • CET1 ratio at 12.9% above consensus

Morgan Stanley, Magdalena Stoklosa

(Overweight, PT CHF20)

  • Results strong in “absolute and relative” terms
  • “Very strong” net new money across global wealth management, with margins up across all regions
  • Costs reduced by 6% shows continued delivery and focus

Zuercher Kantonalbank, Javier Lodeiro

(Outperform)

  • Most units have performed “surprisingly well”, mainly driven by lower costs
  • Costs set to decline further, making net income less dependent on earnings growth
  • Expect shares to outperform UBS

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