The inexorable shift in the centre of gravity of global wealth towards the east was ramped up one more notch yesterday as Credit Suisse announced their latest quarterly results. The Asian operations contributing significantly to the healthy second quarter numbers,
The latest set of results were produced BTT, (Before Tidjane Thiam), from here on out though the market will be watching with intense interest as the new CEO begins to shape and most likely trim the flab from Switzerland’s second largest bank. Many commentators have called for a leaner and more agile model going forward, and some hints may have been offered up by the CEO.
Tidjane Thiam, Chief Executive Officer, said: “Credit Suisse reported improved profits in the second quarter. Asia Pacific delivered a strong performance. 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.”
In 2Q15, Private Banking and Wealth Management reported net revenues of CHF 3,152 million and pre-tax income of CHF 937 million. The strategic businesses of Private Banking and Wealth Management generated pre-tax income of CHF 1,001 million with a strong contribution from Wealth Management Clients and Corporate & Institutional Clients. The cost/income ratio improved to 67%.
Private Banking and Wealth Management recorded strategic net new assets of CHF 15.4 billion in 2Q15. Wealth Management Clients contributed net new assets of CHF 9.0 billion with continued strong inflows from Asia Pacific, driven by Greater China.
In the last paragraph of their report however the goals are clear, a target of CHF500 million cost savings are to be eked out before the end of the year, and Investment Banking gets a warning shot across its bows.
By the end of 2Q15, Credit Suisse had achieved cost savings of approximately CHF 3.5 billion since the start of the expense reduction program in 2011. In Private Banking & Wealth Management and in the infrastructure cost program, Credit Suisse is on track to meet its year-end target. However, Investment Banking has faced headwinds resulting in higher direct costs due to increased indirect tax expense and revenue-related expenses. Credit Suisse continues to work towards delivering further cost savings over the balance of the year, reaching an aggregate of approximately CHF 4.0 billion by the end of 2015.
