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Credit Suisse Logs Q3 Wealth Management New Money

Tom Burroughes, Group Editor , 30 October 2020

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Although some of the figures for its wealth businesses were mixed in the quarter, net new money inflows showed strong momentum, the group said. Overall, and when one-off effects are stripped out, the Credit Suisse group logged a rise in profit.

Credit Suisse yesterday reported positive momentum in its wealth management business arms, logging net new assets in the third quarter of this year and a record inflow in its international business. However, revenue and profit figures were mixed at the Swiss Universal Bank, International Wealth Management and Asia-Pacific businesses.

Within the international wealth management business, adjusted net revenue fell by 12 per cent year-on-year in the third quarter to SFr1.42 billion ($1.56 billion); pre-tax income fell by 30 per cent on a year to SFr268 million, the Zurich-listed bank said in a statement. At the Suisse Universal Bank, adjusted pre-tax income was flat in the quarter, at SFr471 million; net revenue inched higher by 1 per cent reaching SFr 1.294 billion. In Asia-Pacific, adjusted pre-tax income rose by 4 per cent, at SFr179 million and net revenues rose by 7 per cent, at SFR728 million. 

Asia-Pacific
Within its Asia numbers, the Swiss banking group, which like many peers has increased exposure to this region, said that it gathered net new assets of SFr2.2 billion and achieved record client assets of SFr294 billion, with AuM of SFr219 billion and custody assets of SFr75 billion. APAC client assets represent 30 per cent of wealth management client assets. 

Swiss Universal Bank
Going into further detail, Credit Suisse said that its SUB division’s private clients segment recorded adjusted pre-tax income, excluding significant items, of SFr236 million in Q3, up by 4 per cent year-on-year. Adjusted net revenues, excluding significant items, increased by 1 per cent, driven by higher transactional revenues, partially offset by lower recurring commissions and fees primarily from its investment in Swisscard.

Assets under management of SFr205 billion increased by 2 per cent from the second quarter of 2020. This division logged “solid” net new assets of SFr2.0 billion in the quarter.

IWM
At the international wealth side, adjusted pre-tax income, stripping out one-off items, fell, as previously mentioned, by 30 per cent This was mainly due to lower investment income as well as adverse foreign exchange and interest rate movements. Adjusted total operating costs of SFr862 million fell by 5 per cent on a year earlier. 

The IWM business logged net new assets of SFr11.9 billion. IWM recorded client assets of SFr880 billion, with assets under management of SFr791 billion and custody assets SFr89 billion. Private banking recorded adjusted pre-tax income, excluding significant items, of SFr236 million in Q3, falling by 13 per cent year-on-year, amid lower interest rates and foreign exchange impacts. 

Group figures
Across the Credit Suisse group as a whole, net income attributable to shareholders fell by 38 per cent in the three months to end-September from a year earlier, at SFr546 million; pre-tax income fell by 30 per cent to SFr803 million and net revenue dipped by 2 per cent to SFr5.198 billion. The profit drop was mainly caused by last year’s gain from the InvestLab transaction, which brought Credit Suisse SFr327 million. When that impact is stripped out, pre-tax income actually rose by 29 per cent, to SFr1.087 billion.

Among other figures, Credit Suisse said that it booked strong revenue growth in its global trading solutions business line of 28 per cent, delivering “institutional-style solutions” to wealth management clients. 

The bank said that it has also successfully carried out previously-announced initiatives such as making gross savings of about SFr400 million to SFr450 million from 2022 onwards.

Credit Suisse said its Common Equity Tier 1 ratio – a standard international yardstick of a bank’s capital buffer – was 13 per cent at the end of September. As a result, “we now believe that it is appropriate to pay our shareholders the second half of the 2019 dividend, to continue to accrue for our 2020 dividend payment and to resume the share buyback programme next January”.

“We intend to resume our share buyback programme in January 2021 with a target repurchase of up to SFr1.5 billion of shares and a minimum of at least SFr1.0 billion for the full year,” Thomas Gottstein, group chief executive, said.

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