Credit Suisse rose as much as 4.8 percent in Swiss trading, and was 3.1 percent higher at 17.09 francs by 10:45 a.m. local time. The Zurich-based company commented on earnings in an e- mailed statement today after Swiss newspaper Tages-Anzeiger reported the bank was profitable in the quarter.
Net income in the first quarter was 44 million francs ($46.1 million) after the company booked charges related to its own debt and costs for 2011 bonuses. Net income in the second quarter may amount to 519.3 million francs, according to the mean estimate of three analysts surveyed by Bloomberg.
“The second quarter hasn’t been great but also certainly not as bad as some of the crisis quarters we’ve seen previously,” said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets who has a “reduce” rating on Credit Suisse. “I would have been shocked if they weren’t profitable.”
Credit Suisse shares are down 10 percent since the Swiss central bank said in its annual financial stability report on June 14 that the company has to boost capital “substantially” this year. Pressure on earnings from low client activity in the markets is making it harder for the bank to accumulate capital to prepare for stricter requirements from regulators.
The bank’s board said after a regular meeting last week it was “comfortable” with the progress made toward meeting Basel III capital requirements and is “confident” in management’s plans to further build up capital. The board includes representatives from the bank’s two biggest shareholders, Olayan Group of Saudi Arabia and sovereign-wealth fund Qatar Holding LLC, which participated in Credit Suisse’s 10 billion-franc capital increase in October 2008.
The bank is in discussions with shareholders in Saudi Arabia and Qatar about bringing forward the planned issuance of contingent convertible bonds from October 2013 to this year, Tages-Anzeiger also reported. The move would increase the bank’s capital sooner than previously planned.
Credit Suisse spokesman Marc Dosch declined to comment on the newspaper report beyond the company’s statement.
“From an economic point of view, it wouldn’t make a difference if the bank brings forward CoCos,” Becker said. “If it helps the sentiment, they should do it.”
Credit Suisse has no plans to sell shares, Chief Executive Officer Brady Dougan told SonntagsZeitung in an interview published on June 17. Credit Suisse’s common equity and contingent convertible bonds, known as CoCos, amounted to about 5.9 percent of risk-weighted assets under Basel III at the end of March, the central bank said. That ratio stood at 7.5 percent for UBS AG, the country’s biggest bank, it said.
Had the SNB included CoCos to be issued next year in its calculations, Credit Suisse’s capital ratio would have been 7.9 percent, Dougan told SonntagsZeitung. CoCos convert into shares when the bank’s capital ratio falls below a predefined level.
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