CS Credit Suisse Group

By Pietro Lombardi and Brian Blackstone 

Credit Suisse Group AG on Wednesday posted a strong rise in first-quarter net profit, beating expectations and bolstering evidence that the Swiss lender's yearslong restructuring has put it back on track to growth.

Net profit grew 16% to 694 million Swiss francs ($709.1 million) as revenue rose 1.8% to 5.64 billion francs. Analysts had expected Credit Suisse to report net profit of 653 million francs on revenue of 5.49 billion francs.

The results kick off a crucial year for Credit Suisse, which reported its third consecutive annual loss in 2017 after a charge related to U.S. tax reform hit its fourth-quarter results. The bank is in the last year of a three-year overhaul, shifting its emphasis toward wealth management and away from investment banking, which can be profitable but is also volatile and costly to run.

Chief Executive Tidjane Thiam, who launched the restructuring after joining the bank in the middle of 2015, said the revamp laid the foundation for last quarter's results. "What you are seeing today is the impact of what we did in 2016," he said.

"The big idea for growth is wealth management," he said, calling investment banking a "flat industry."

Investors welcomed the results, with shares in the bank up 3.8% in late-morning trading.

"We continue to believe that 2018 is set to be a year in which [Credit Suisse] should be able to deliver turnaround benefits from the large-scale restructuring program," said analysts at Baader Helvea Equity Research.

In a sign of the shares' upside potential, crosstown rival UBS Group AG's first-quarter results on Monday also mostly beat expectations -- albeit not as clearly as Credit Suisse's did -- yet its shares dropped around 4% in the following hours.

In the first quarter, Credit Suisse's international wealth-management division reported a 45% increase in adjusted pretax income. The Swiss universal bank and Asia-Pacific operations reported a double-digit increase in adjusted pretax income. The investment-banking and capital-markets division reported lower net revenue "in a quarter characterized by muted client activity," the bank said.

Credit Suisse warned that financial markets would be exposed to periods of heightened volatility due to global trade negotiations, monetary policy tightening and other geopolitical events.

"Client activity levels remain sensitive to these factors, specifically within our more market dependent activities," Credit Suisse said.

Write to Pietro Lombardi at Pietro.Lombardi@dowjones.com and Brian Blackstone at brian.blackstone@wsj.com

(END) Dow Jones Newswires

April 25, 2018 09:26 ET (13:26 GMT)

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