Credit Suisse's investment bank has a few problems. At 94% of revenues in the third quarter, costs in the global markets division still look out of control, even though the bank says it's finished cost-cutting. Meanwhile, the equities trading business seems to be going down the pan and the fixed income trading business isn't too hot after Thiam closed the rates trading desks which powered other banks in the third quarter.
In a note out today, Deutsche's banking analysts highlight the issues at their Swiss competitor. Credit Suisse's investment bank is "sub-par" compared to other investment banks, says Deutsche. It lags peers, and - in a third quarter when most other investment banks did relatively well - the under-performance of Credit Suisse's investment bank is a cause for concern. Deutsche says poor profitability at Credit Suisse's investment bank will likely be a drag on returns across the Credit Suisse group in future, which sounds ominous for jobs at the Swiss bank long term.
One area of CS's investment banking business is doing well, however. This is highlighted in the chart from Deutsche below.
Credit Suisse's primary origination business did exceptionally well in the third quarter. All else floundered.
If you work for Credit Suisse's investment bank, therefore, equity capital markets and debt capital markets look like the places to be. In ECM in particular, Credit Suisse achieved a 42% hike in revenues year-on-year in the third quarter. At Goldman and JPM revenues rose a mere 19% and 38%.
Revenue trends in the third quarter, Credit Suisse vs. rival banks: