Credit Suisse Sees ‘Difficult’ Macro Business in Quarter

Credit Suisse Group AG Chief Financial Officer David Mathers said the bank’s macro business, which combines interest rates, foreign-exchange and commodities trading, remained “difficult” in the second quarter.

“The patterns we see in terms of current trading are very similar in the second quarter to what we saw in the first quarter,” Mathers said in an investor presentation in New York today. “So that is definitely macro and rates being more difficult, and credit and securitized products being very much at the strong end of spectrum,” with emerging markets “somewhere in the middle,” he said.

Credit Suisse’s trading revenue in U.S. dollars so far this quarter is down by a “mid-teens” percentage, similar to what other banks are seeing and reflecting the trends in the macro business this year, Mathers said. The rates business is going through a transformation because of the move to central clearing, while change to the structure of the foreign exchange business “doesn’t seem unlikely” because of regulatory probes in that area, Mathers said.

“It’s difficult not to conclude from the change in the market structure that the rates business will never be as profitable for banks in the future as it has been in the past,” he said, adding that a steepening of the yield curve would improve profitability somewhat.

Switzerland’s second-biggest bank is “pleased” that it decided last year to scale down the macro business and is now accelerating the runoff of those assets, said Mathers, 49.

Credit Suisse said last week it will cut 14 billion Swiss francs ($15.6 billion) of risk-weighted assets this year to help boost its capital ratio to 10 percent after a $2.6 billion fine to settle the U.S. tax investigation reduced equity.

The bank is eliminating jobs in its foreign-exchange team as part of an effort to shrink the fixed-income division, people with knowledge of the matter said this month.

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