Wealth management drives CS’s earnings

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The wealth management business at Credit Suisse, like at rival banks, has been the bright spot on the balance sheet.

Credit Sussie reported that Asia-Pacific pre-tax income rose 40% year-on-year in the third quarter of 2019, to CHF 247m ($250m), driven by higher revenues of CHF 886m, up 9% year-on-year.

“These results were supported by stronger performance in our private banking business within wealth management & connected (WM&C) and were largely driven by a gain of CHF 98m from the Invest-Lab transfer,” according to a statement by the firm.

“Excluding that gain, pre-tax income would have been down 15% year on year at CHF 149m and net revenues would have been down 3% at CHF 788m.”

The statement added that “strong private banking revenues were partially offset by lower revenues in our markets and advisory, financing and underwriting businesses, as economic uncertainty and geopolitical risks continued to weigh on market sentiment. Apac delivered a return on regulatory capital of 17% for the third quarter.”

Credit Suisse has focussed on growing its wealth management business since the arrival of Tidjane Thiamas as chief executive in 2015. Many surveys have identified Apac, and in particular China, as a growth areas for wealth accumulation and hence for private banking services, despite a recent deterioration in sentiment among regional bankers caused by the Sino-US trade conflict and the summer of protests in Hong Kong.

In June this year, Credit Suisse announced the combination of its third party investment fund platform – Credit Suisse Invest-Lab with Spain’s Allfunds Group, according to a statement from the firm.

“Excluding the Invest-Lab gain, WM&C’s net revenues would have been CHF 575m, up 3% year on year, and pre-tax income would have been CHF 183m, up 2%. Private banking revenues, excluding the gain on the Invest-Lab transfer, were up 13% year on year,” the report said.

Across the whole firm, the bank reported net income of CHF 881m, up 108% year on year, with a record net new assets of CHF 72bn year-to-date.

However, the Swiss firm also noted that they “expect headwinds from the ongoing challenging geopolitical environment, most notably the US-China trade dispute and Brexit, to persist.

“This is likely to lead to more cautious capital expenditure and investment decisions, specifically looking forward to 2020 and 2021,” the statement added.

Wealth management driver 

Recent results from UBS showed that wealth management in Asia provided a boost to earnings.

“Apac achieved a record high of $420bn, and attracted $10.9bn of the new money — about two-thirds of the total,” a spokesperson told FSA earlier.

On Monday, HSBC also released its financial results of the third quarter. and said in the statement it intends to invest in its wealth management business in Asia.

Revenue for the first nine months of the year in Hong Kong rose 7%, despite five months of protests and the prospect of the first recession for a decade in the territory, FSA previously reported.


Credit Sussie Q3 tally

Source: Credit Suisse

 

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