On balance, better than expected – and a rare chance for Credit Suisse to outshine its larger Swiss peer, UBS. The bank rounded off a week of disappointment from the European banks with a 1 per cent drop in third quarter net income on the back of falling revenues and profit within its investment bank.
But after reports that the Swiss bank had taken a $120m derivatives trading loss during the quarter investors were braced for a more serious negative surprise from the investment banking division.
Equity trading revenues, which dropped 45 per cent between the first and second quarter on disappointing proprietary trading, fell a further 7 per cent in the third quarter, and 21 per cent on the year. No mention of the bank’s reported derivatives loss – only that the falling revenues were attributed to “significantly lower results in derivatives.”
But the numbers may not help to stem the rumours of an outbreak of bonus-related panic at the Swiss bank, reported by Dealbreaker.
Despite falling revenues from its advisory business, and in equity underwriting, Credit Suisse said its pipeline was looking strong for the rest of the year and that it is well-positioned to deliver record numbers this year.
But the money set aside for compensation as a percentage of revenue – traditionally seen as a weakness of the bank’s by analysts and presumably a strength by those who work there – fell to 53.5 per cent – 2 percentage points below the level for the whole of 2005.