Credit Suisse announced that profit momentum remained steady despite the challenges of a coronavirus pandemic, ahead of a presentation at the annual Morgan Stanley European Financials Conference in London.

«Notwithstanding the COVID-19 pandemic and the resultant volatile market environment, profitability in 1Q 2020 has so far continued the strong year-on-year improvement trend as already noted in our 4Q 2019 Earnings Release,» the bank said in a rare mid-quarter statement.

Credit Suisse’s chief financial officer David Mathers will be making a presentation alongside chief executive Thomas Gottstein who had several days ago suggested co-establishing a $20 billion lending fund for small Swiss businesses with rival UBS.

Wealth Management Still Up

Credit Suisse attributes stability to profits in the current environment to an effective rebalancing of its business towards wealth management. Adverse conditions in its primary capital markets pipeline were offset by stronger sales and trading due to higher transactional revenue from Credit Suisse’s wealth arm. 

According to the statement, return on tangible equity in the first two months of 2020 is above 10 percent and pre-tax income has already exceeded the CHF1.06 billion reported for the whole of the first quarter last year. 

Strong Balance Sheet

The bank also reassured balance sheet strength, highlighting cumulative growth to a stable deposit alongside lower exposure to areas such as averaged finance as well as the oil and gas sector. 

«[T]his has substantially increased our resilience and preparedness for the impact of the spread of COVID-19 and the consequent market and economic volatility,» Credit Suisse said.

Trading Boom

Increased trading activity from Credit Suisse's wealth clients mirrors that of its competitors especially in Asia where private banks observed strong investor demand for downside protection or income. Nonetheless, Credit Suisse stays wary of near-term headwinds.

«The impact of the pandemic on our financial results going forward remains difficult to assess at this stage and we continue to monitor our credit exposures prudently in light of these conditions,» the bank added, ahead of its first quarter results scheduled for announcement on April 23.

«However, we are very satisfied with how the teams have so far navigated the increased volatility, including in areas such as share-backed lending.»