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Its cost-income ratio stood at 96.4 percent, illustrating how the trading arm is just eking out a profit. CEO Thiam emphasized that the unit's revenue is less volatile and risks under control, but conceded that the markets arm is shrinking business.

UBS Investment Bank Isn't the Problem

The message investors are taking away: Credit Suisse is still putting too many resources towards intransparent activities prone top risk, for very little in return. By contrast, Credit Suisse's mergers-and-acquisitions and capital markets business performed well, but seems to have been largely ignored by investors.

Over at UBS, the investment bank managed to hold its cost-income ratio at 80 percent, with a return on equity of 16 percent – markedly better than its rival. Of course, UBS also took a hit and posted a lost in the fourth quarter.

It Doesn't Earn Enough Money

The pride of UBS, the global wealth management business, is what keeps investors shying away from buying the company's stock. UBS prides itself for being the world's biggest and best private bank, catering to billionaires and other extremely rich citizens.

But the mantra of private banking generating stabile and sustainable returns through fees and commissions doesn't bite anymore. The reason: as a wealth manager or private bank, UBS doesn't earn enough money per client.

Paltry by Comparison

A simple analysis and comparison with cross-town rival Credit Suisse reveals: UBS had a pretax profit of $3.99 billion in wealth management in 2018. With assets under management in that division totaling $2.4 trillion, it means that the bank earned 0.17 cent per client dollar.

Credit Suisse had a pretax of 1.7 billion Swiss francs ($1.69 billion) in the same period at its comparable unit – International Wealth Management. With 389 billion francs in assets managed by the unit, the bank generated 0.44 centime per 1 franc. In private banking, the profitability is even higher, with 0.5 centime.

For sure, such a comparison works only to a degree and may not be entirely fair given the different markets and the structure of the income generated. The point however is that Credit Suisse earns more on the money it manages than its bigger rival – in fact more than double as much.

Are Credit Suisse Bankers More Active?

We can only speculate about why this is so. It is well known, that Credit Suisse grants more loans to its private-banking clients than UBS, which is more risk averse. Also, the richest of clients tend to yield lower margins for their banks because they are in a stronger position to get a better deal from the bank.

It seems that Credit Suisse has the more active private bankers and relationship managers, able to sell more products and services to their clients than those of bigger rival UBS.

Measures to Be Taken

Hence, if UBS and Credit Suisse mean to boost their share prices, they will have to adopt altogether different measures. UBS needs to boost its efficiency in the wealth management business and to help its clients become more active – and maybe it will also have to wield the cost ax, something that CEO Ermotti is known to dislike.

Credit Suisse by contrast will have to evaluate the future of the trading arm in the Global Markets division. Retaining an oversized business that will likely shrink in the medium term makes little sense from the shareholder perspective.