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Credit Suisse finally began to reverse its free-falling share price on Tuesday after a solid performance from its private bank lifted first-quarter results above the Swiss group’s grim guidance.

Switzerland’s second-largest bank reported better than expected margins and inflows at its private bank, which is the key beneficiary of a restructuring designed to make the group’s earnings less volatile.

Its global markets and investment banking divisions both performed worse than analysts expected as unpredictable markets led to “drastically reduced” client activity, a phenomenon that also drove low earnings at rivals in the first quarter.

Credit Suisse had warned in March that its sales and trading revenues would be down 40-45 per cent for the first quarter — a trend that prompted the bank to announce an extra 2,000 job cuts to its global markets division and an extra SFr800m ($820m) of annual cost cuts.

Credit Suisse shares rose as much as 6 per cent in early trading on Tuesday, closing up 5 per cent at SFr14.10. They are still down more than 40 per cent in the past year.

“We knew that the investment bank was always going to be very challenging,” said Kinner Lakhani, banks analyst at Deutsche Bank. “Therefore the focus [today] was always going to be on the private bank.”

Tidjane Thiam, the chief executive appointed last July to restore Credit Suisse’s fortunes, warned that “subdued market conditions and low levels of client activity are likely to persist in the second quarter of 2016 and possibly beyond”.

Credit Suisse had been “punished very harshly several times. This market is very nervous and can flip at any time,” Mr Thiam told the Financial Times.

Mr Thiam reported “good progress” in cost cutting and driving growth in its wealth management businesses. The group said it had already implemented 3,500 out of 6,000 job cuts targeted for the full year and had downsized its balance sheet by selling SFr7bn of assets from its non-core division in the quarter.

“The accelerating of cost cutting and running off the non-core is obviously welcome,” said Huw van Steenis, banks analyst at Morgan Stanley. “In the elements that Credit Suisse controls it’s trying . . . to offset the pain elsewhere in the franchise.”

He added, however, that there were some “troubling” trends in the results, particularly in equities, where Morgan Stanley’s data show Credit Suisse has dropped from the fourth-biggest global operator to the sixth biggest since the new strategic plan was announced last October.

“The collateral damage from the dramatic change programme is that they appear to have also ceded significant share in equities, a business they wanted to nurture.”

Credit Suisse declined to respond to questions on the equities performance. Official industry figures on the first quarter market share will not be published until early June.

Mr Lakhani said that while the private banking progress was “being viewed encouragingly”, the jury “is still out” on whether Credit Suisse’s strategy will win plaudits from investors.

UBS invoked a similar strategy in late 2012 — slashing its investment bank and prioritising wealth management.

Andrew Coombs, analyst at Citi, pointed out that the valuation gap between Credit Suisse and UBS has “never been wider post the financial crisis”, with Credit Suisse trading on about 0.7 times its tangible book value and UBS trading at 1.2 times tangible book.

Credit Suisse reported a pre-tax loss of SFr484m in the first quarter, compared with a SFr1.51bn profit in the same period in 2015. Analysts had expected on average a loss of SFr626m. The latest result followed a pre-tax loss of SFr6.4bn in the last quarter of last year, largely the result of goodwill write-offs.

Mr Thiam said he was sticking to a target of SFr6.5bn in pre-tax profits in 2018 across Credit Suisse’s wealth management and Swiss businesses. “The numbers are starting to come and prove the strategy,” he said.

Separately, the bank on Tuesday named Eric Varvel as the new head of its $400bn asset management division. Mr Varvel, who has spent more than 25 years at the Swiss bank, will start as the global head of Credit Suisse Asset Management in New York on June 1. He succeeds Robert Jain, who is leaving to join hedge fund Millennium Management.

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