ZURICH Credit Suisse (CSGN.S) predicted on Tuesday financial markets would remain tough, after the Swiss bank started the year with a quarterly loss for the first time since 2008 amid a major restructuring.
The result, which comes as Chief Executive Tidjane Thiam makes sweeping cost cuts and implements a new strategy, received a guarded welcome from analysts and investors, who had expected the 302 million Swiss franc ($311 million) loss to be steeper.
But Thiam cautioned of an uncertain future. “While we saw tentative signs of a pick-up in … March and then in April, subdued market conditions and low levels of client activity are likely to persist in the second quarter of 2016 and possibly beyond,” he said in a statement.
Earlier warnings from Thiam that 2016 would be a difficult year had prepared investors for the worst. The average forecast from nine analysts polled by Reuters was for a 424 million franc loss.
Credit Suisse shares jumped more than 4 percent in early trade.
Nonetheless, the result is further sobering news for shareholders of the bank, whose chief executive recently faced criticism following his admission that he had been unaware of the size of positions behind a $1 billion plus writedown.
Thiam’s vision for more stable earnings through higher revenues in wealth management and less reliance on investment banking have received support from major investors.
He is also looking to cut costs by more than 3 billion francs by 2018 and to reduce the bank’s global headcount by 6,000.
The bank said it was confident it could meet or beat its 1.7 billion franc target of cost savings by the end of the year. More than 1,000 jobs were cut in its restructuring of its ‘global markets’.
Thiam, 53, has said he expects restructuring to cost 1 billion francs in 2016.
However, tough markets have hampered Thiam, who took over in July and outlined his blueprint for Switzerland’s second-biggest bank in October.
The bank’s share price has languished amid doubts about whether Credit Suisse will achieve 2018 profit targets as well as concerns over its capital position.
At the end of the first quarter, Credit Suisse’s common equity tier 1 capital ratio, a measure of its financial strength, held steady at 11.4 percent of risk-weighted assets, within its target of 11-12 percent for 2016 but far behind the 14 percent at rival UBS (UBSG.S).
(Reporting by Joshua Franklin- Editing by John O’Donnell and Mark Potter)
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