Credit Suisse Sees Lower Investment Bank Revenue as Markets Slow

Credit Suisse Group AG expects the flurry on financial markets that’s delivered bumper revenue for investment banks to ebb.

“We would expect market volumes to return to lower and more normal levels in the coming quarters,” Chief Executive Officer Thomas Gottstein said. “For the investment bank, we would expect the second quarter to reflect the slowdown in market activity as well as an impact from the resizing of our prime services business.”

Global investment banks have profited from the turmoil of the pandemic as market swings see investors trade more while companies and governments issue debt to shore up their finances. For Credit Suisse, the added revenue has helped absorb some of the cost from a series of charges, notably from the collapse of Greensill Capital and implosion of Archegos Capital Management.

Excluding the impact of Archegos, the Swiss bank saw debt trading revenue surge 29% in the first quarter from a year earlier while income from equities rose 23%, according to results released on Thursday. Still, those earnings were wiped out when Credit Suisse took a 4.4 billion Swiss franc ($4.8 billion) charge as result of its exposure to Archegos, the U.S. hedge fund.

The bank will also see a hit of about 600 million Swiss francs on Archegos in the second quarter after having exited over 97% of the related positions, Gottstein said on a call with analysts.

In Credit Suisse’s wealth management business should see “broadly stable net interest and improving recurring commissions and fees” benefiting from higher assets under management, Gottstein said.

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