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Adjusted Wealth-Related Revenues Rise At Credit Suisse

Tom Burroughes, Group Editor , 19 February 2021

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When significant items and one-off costs are taken out, the bank said underlying results for the group and its divisions were strong. Higher provisions, such as those made for the pandemic impact and certain other costs, dented the reported result in 2020.    

(An earlier version of this news item appeared on WealthBriefing, sister news service to this one.)

Credit Suisse logged total wealth management-related net revenues, on a reported basis, of SFr13.6 billion ($15.1 billion), down by 8 per cent on a year earlier, driven by higher transaction-based revenues, although offset by lower recurring commissions and fees.

Adjusted total wealth management-related net revenues, excluding significant items and at constant foreign currency rates, came in at SFr13.9 billion, rising by 2 per cent on a year before, helped by stronger transaction-based revenues. 

The Zurich-listed bank recorded strong net new assets of SFr42.0 billion across its businesses, with SFr7.8 billion in Swiss Universal Banking, SFr32.2 billion in international wealth management and SFr8.6 billion in Asia-Pacific. 

Segments
At the Swiss Universal Bank (SUB) division, Credit Suisse said it logged pre-tax income of SFr2.104 billion in 2020, down by 18 per cent year-on-year; net revenues fell by 5 per cent to SFr5.615 billion; provision for credit losses – driven by the pandemic – stood at SFr270 million, from no comparable figure in 2019. Within its private clients business, it made adjusted pre-tax income, on an adjusted basis, of SFr922 million, stable from a year ago.

At the international wealth management arm, pre-tax income slumped by almost half (-49 per cent) to SFr1.052 billion in 2020; provision for credit losses rose to SFr110 million from SFr49 million. Net revenues weakened by 17 per cent to SFr4.837 billion. On an adjusted basis, when significant items are removed, pre-tax income fell by 30 per cent to SFr1.187 billion, Credit Suisse said. 

In Asia-Pacifc, the bank reported a 10 per cent year-on-year fall in pre-tax income of SFr828 million; net revenues rose by 4 per cent to SFr3.155 billion; provision for credit loss rose to SFr236 million from SFr55 million. 

Group results
Across the whole of Credit Suisse – Switzerland’s second-largest bank – it logged adjusted pre-tax income, excluding significant items, of SFr4.4 billion, rising by 6 per cent on a year earlier. On a reported basis, pre-tax income fell by 27 per cent, mainly caused by its having to set aside more money for credit losses and major litigation provisions. 

“We delivered a strong underlying performance, driven by our global investment banking activities, and experienced several items in 2020 that had a considerable impact on the reported numbers. These items included major litigation provisions primarily related to legacy RMBS [residential mortgage-backed securities] cases of SFr988 million, restructuring and real estate disposal expenses of SFr208 million, a net adverse impact on our pre-tax income of SFr287 million from FX moves, as well as a number of significant items, including an impairment to the valuation of the non-controlling interest in York Capital Management (York) of SFr414 million and a gain related to the transfer of InvestLab of SFr268 million,” the bank said.

At the end of last year, Credit Suisse logged a Common Equity Tier 1 ratio of 12.9 per cent compared with 13.0 per cent at the end of the third quarter of 2020.

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