Credit Suisse 2Q15 results boosted by strong performance in Asia Pacific
(27 July 2015 – Switzerland) Credit Suisse reported an improvement in profits, with a reported net income of CHF1.1 billion (A$1.57 billion) for the second quarter, up 17 percent from a year earlier.
The performance was boosted by strong performances in Asia Pacific across both its Private Banking & Wealth Management and Investment Banking divisions.
Credit Suisse increased net interest income, margins and client activity in Private Banking & Wealth Management; with net new assets of CHF14.2 billion.
Investment Banking revenues were driven by higher performance in equities and advisory, while offset by weaker fixed income; higher expenses primarily due to investment in risk, regulatory and compliance infrastructure
The report detailed further significant leverage reduction in Investment Banking; leaving the company on track to meet targets.
Tidjane Thiam, chief executive, said: “Effective collaboration and alignment between our Private Banking and Investment Banking franchises have led to excellent growth in profits in Asia Pacific.
“Overall, our wealth management activities produced an improved performance and generated a good return on regulatory capital as a few initiatives are bearing fruit, particularly in Asia Pacific and in Switzerland.
“During the quarter, we launched our new advisory offering, Credit Suisse Invest, in Switzerland, following the Asia Pacific launch of the digital private banking platform in the first quarter,” Thiam said.
“In our investment banking activities, profits declined in spite of a better performance in equities and advisory due to an increase in costs.
“We reduced our leverage exposure in the investment bank during the quarter and that process must continue.”
He added: “The management team and I have begun to evaluate how to best evolve the bank through an in-depth strategic review.
“Before the end of the year, we will set out a strategy and business model that will allow us to achieve profitable and sustainable growth.
“Our strategy and business model should ensure that our performance is less volatile and that the performance of our chosen portfolio of businesses is resilient, even in the most challenging environment.
“The new strategy should address some of the pressures apparent in our 2Q results. We will look to optimize our portfolio of businesses to make it less capital intensive and ensure that we generate excess capital and maximize value for our shareholders through an economic cycle,” Thiam said.
David Mathers, chief financial officer, said: “Credit Suisse delivered improved pre-tax income of CHF1,646 million in the quarter.
“In Wealth Management Clients, we attracted CHF9.0 billion of net new assets and reported an 18 percent increase in pre-tax profit, driven by improved net interest income and higher client activity.”
He added: “We saw continued progress on capital and leverage.
“Our look-through CET1 ratio stood at 10.3 percent at the end of the quarter, up from 10.1 percent at the end of 2014.
“In 2Q, we benefited from solid quarterly profitability and higher take-up than assumed for the 2014 scrip dividend. We achieved US$81 billion in leverage reduction in Investment Banking in the first half of the year, with our look-through BIS tier 1 leverage ratio increasing to 3.7 percent, and we remain on track to meet our year-end targets.”
On the outlook, Mathers said: “So far in the third quarter, we have seen continued momentum in Asia Pacific, Wealth Management Clients and Equities.
“However, the weaker trends in the fixed income markets that we saw in June have continued into July, and the third quarter normally sees some seasonal weakness.”