Private Banking, Wealth Arm Of Credit Suisse Logs Big Rise In Pre-Tax Income

Tom Burroughes

8 February 2013

The private banking and wealth management arm of Credit Suisse logged pre-tax income of SFr911 million (around $1.0 billion) in the fourth quarter of 2012, up sharply from SFr532 million a year before, the Zurich-listed bank said today.

Net revenues in this business segment, at SFr3.334 billion in Q4, were stable from the previous quarter of last year, reflecting a “significant” rise in transaction and performance-based revenues, offset by declines in other revenue sources, the bank said in a statement. Net interest income and recurring commissions and fees were flat.

Pre-tax income among the wealth management clients unit was SFr490 million, down 2 per cent on the previous quarter; net revenues were stable at SFr2.209 billion.

On the asset management side, pre-tax income fell 18 per cent quarter-on-quarter to SFr183 million.

There were net new assets in the private and wealth management arm of SFr6.8 billion in Q4, with wealth management clients contributing net new assets of SFr2.9 billion, particularly from emerging markets and from the ultra high net worth individual client segment, partially offset by outflows in Western Europe.

Corporate and institutional clients contributed net new assets of SFr1.1 billion; asset management contributed net new assets of SFr2.5 billion, with inflows in credit, index strategies and alternative investments partially offset by outflows from fixed income products.

“We generated good top-line results due to solid transaction- and performance-based revenues, despite continued client risk aversion. In the fourth quarter, we also took organisational steps to better manage the alignment of the products, advice and services that we deliver to clients. We are confident that this will further increase our productivity and efficiency,” Brady Dougan, chief executive at Credit Suisse, said.

Group results

Across the whole of Credit Suisse in 2012 the Swiss banking group logged an underlying core pre-tax income of SFr5.0 billion, up from SFr2.371 billion in 2011.

Dougan reiterated that the bank has significantly cut its risk-weighted assets across the bank and improved the firm’s capital strength.

The bank said it has a “look-through Swiss Core Capital ratio” of 9.4 per cent on a pro forma basis in line with targets and is on course to exceed an end-2018 requirement of 10 per cent by mid-2013. On its balance sheet, total assets have declined by SFr99 billion since end of the third quarter of 2012 to SFr924 billion, substantially ahead in progress toward the bank’s target of below SFr900 billion by the end of 2013.

Dougan added that 21 per cent of group-wide net revenues were generated by collaboration across all business division, demonstrating the benefits of the integrated bank model that Credit Suisse adopts.