Credit Suisse Reports Strong 2019 Results

Tom Burroughes

13 February 2020

, which, as reported last week, has a new chief executive after Tidjane Thiam announced he was stepping down in the wake of a spying scandal, today said that it had logged SFr3.419 billion ($3.5 billion) in income attributable to shareholders for 2019, surging by 69 per cent from the year before. Net revenues rose by 7 per cent to SFr22.484 billion.

Within the overall figure, wealth management-related revenues rose by 9 per cent to SFR14.398 billion, the Zurich-listed bank said.

Return on tangible equity rose to 9 per cent in 2019, up by 4 percentage points.

Investors may be struck by the irony of how, about four years after taking up the post to turn around its financial fortunes, Thiam is leaving as CEO. As reported, Thiam is succeeded by Thomas Gottstein. The bank was rocked last year by a spying scandal that had raised questions about Credit Suisse's corporate culture. Thiam had come under pressure when it emerged that a former top wealth management figure, Iqbal Khan, was followed by people employed by the bank after he had left to work for UBS. The bank said last year that its former human resources chief Peter Goerke had been put under observation, in addition to spying on Khan.

An investigation had absolved Thiam for being responsible for the spying affair. Its chief operating officer resigned for authorising the surveillance.

“I am proud of what Credit Suisse has achieved during my tenure. We have turned Credit Suisse around, and our 2019 results show we can be sustainably profitable,” Thiam said in today’s statement about the Zurich-listed firm’s results.

Credit Suisse said it attracted group net new assets of SFr79.3 billion last year, a record since 2013, taking its total asset base to a record of SFr1.5 billion in assets under management.

When total provisions for litigation are included, total operating costs stood at SFr17.4 billion, up a touch from SFr17.3 billion in 2018, it said.

Swiss Universal Bank
The Swiss Universal Bank division reported pre-tax income of SFr2.7 billion, up by 27 per cent year-on-year. Excluding the InvestLab transfer and Swiss stock market (SIX) revaluation gains, pre-tax income would have been SFr2.3 billion, up by 8 per cent year-on-year.

Switzerland’s banks are challenged by the country’s official negative interest rates, which Credit Suisse said creates a “challenging” position. However, it said increased client activity and higher recurring commissions and fees in the fourth quarter of 2019 had a positive effect on its revenues, supported by a strong rebound in net interest income versus the third quarter of 2019, and driven by initiated deposit pricing measures.

Assets under management in this division hit a record level of SFr654 billion, up by 20 per cent since the end of 2018.

International Wealth Management
The IWM division reported pre-tax income of SFr2.1 billion rising by 25 per cent year-on-year. This reflected a 9 per cent increase in net revenues and steady costs.

Net new assets were SFr11 billion in 2019, a growth rate of 3 per cent, with positive contributions from emerging markets and Western Europe. During the year, NNA improved from a slow start in the first quarter and amounted to SFr500 million in the fourth quarter.

Asia-Pacific
Credit Suisse said its Asia-Pacific business chalked up pre-tax income of SFr902 million in 2019, rising by 36 per cent from 2018. Pre-tax income was driven by positive operating leverage, with revenues up by 6 per cent and operating expenses falling by 2 per cent.

The firm said that its Asia business delivered record private banking revenues in 2019, with higher net interest income and transaction-based revenues; recurring commission and fees revenues were stable year-on-year. For 2019, it achieved record AuM of SFr220 billion and generated net new assets of SFr8.7 billion.