Credit Suisse announces 1Q16 results Dienstag, 10. Mai 2016 - 07:10
Credit Suisse announces 1Q16 results
Information for Media
Group Corporate Communications, Media Relations, Credit Suisse
T : +41 844 33 88 44
E : media.relations@credit-suisse.com
Information for Investors
Group Investor Relations, Credit Suisse
T : +41 44 333 71 49
E : investor.relations@credit-suisse.com
1Q16 financial performance
- Group reported pre-tax loss of CHF 484 million (adjusted*: CHF 173 million), compared to reported pre-tax income of CHF 1,511 million (adjusted*: CHF 1,357 million) in 1Q15.
- Core reported pre-tax income of CHF 240 million (adjusted*: CHF 470 million), compared to CHF 1,894 million (adjusted*: CHF 1,740 million) in 1Q15.
- Group reported total operating expenses of CHF 4,972 million (adjusted*: CHF 4,717 million), down 3% from 1Q15 and down 53% from 4Q15.
- Look-through CET1 ratio of 11.4%.
- Look-through CET1 leverage ratio of 3.3%.
- Board of Directors has set the discount for the scrip dividend for the financial year 2015 at 10%.
Disciplined execution in challenging market conditions
- Accelerated cost savings program to mitigate impact of adverse market conditions.
- In 1Q16, we achieved – on an annualized basis – more than half of the CHF 1.4 billion of net cost savings we are targeting for 2016; confident to meet or exceed CHF 1.7 billion gross cost savings target by year-end 2016.
- Global Markets Accelerated Restructuring (‘GMAR’) moving at pace; actioned more than 1,0001 of targeted headcount reduction of 3,500 by end-2016 and reduced business complexity through business exits and new organizational structure.
- Significantly de-risked Global Markets (‘GM’) activities; distressed debt exposure down 79%2 from 4Q15 following the sale of credit assets, including a part of the distressed debt portfolio of USD 1.27 billion to TSSP on May 3, 2016, coupled with substantial reductions in collateralized loan obligations (CLO) positions, down 81% from 4Q15, enabling GM to achieve target of reducing maximum quarterly loss in an adverse scenario by about 50%.
- Material progress in SRU wind-down, with CHF 7 billion reduction of risk-weighted assets (RWA) in 1Q16.
Profitable growth
Asia Pacific (APAC)
- Adjusted* return on regulatory capital of 20%.
- CHF 4.3 billion of net new assets with gross margin of 81 basis points.
- Continued success in recruiting quality Relationship Managers (RMs): after 40 new hires in 4Q15, 40 new hires were made in 1Q16, taking the total number of RMs to 630 from 530 at end-1Q15.
International Wealth Management (IWM)
- CHF 6.9 billion of net new assets3 for the division with a gross margin of 109 basis points for Private Banking.
- Initiated hiring of 90 RMs, including committed new joiners, with two-thirds focused on covering emerging markets.
- Adjusted4 return on regulatory capital of 24%.
- Mandates penetration and loan penetration both increased in Private Banking year on year.
Swiss Universal Bank
- Adjusted* pre-tax income of CHF 466 million, up 12% compared to 1Q15, with adjusted*4 return on regulatory capital of 16%.
- Stable gross margin of 139 basis points in Private Banking.
- Mandates penetration increased to 27% from 15% in 1Q15.
Investment Banking & Capital Markets (IBCM) pivoting successfully towards M&A and ECM
- M&A revenues doubled year on year in USD and top 4 ranking5 in completed M&A deals in the Americas.
Reduced look-through RWA from approximately USD 290 billion to approximately USD 280 billion, despite USD 7 billion of regulatory-driven RWA increases.
Capital position stable in difficult markets with look-through CET1 ratio at 11.4% through disciplined capital management and cost control.
Tidjane Thiam, Chief Executive Officer of Credit Suisse, stated: “In the first three months of the year, we have remained focused on executing our strategy with three clear priorities: accelerating our cost and headcount reduction efforts, delivering profitable growth in wealth management focused divisions and maintaining our strong capital position. We have been able to make good progress in all of these areas against an extremely challenging market backdrop.
- Our Group-wide delivery of cost reductions is moving at pace: As of May 10, we have actioned 3,5001, or 58%, of our full-year 2016 headcount reduction target of 6,000. In 1Q16, we achieved – on an annualized basis – more than half of the CHF 1.4 billion of net cost savings we are targeting for 2016.
- In GM, where we announced an accelerated restructuring (GMAR) on March 23, 2016, we made progress in reducing fixed costs and have actioned more than 1,0001 of our headcount reduction as of May 10, 2016.
- Through GMAR, we will achieve material RWA and leverage reductions in GM, positioning the business well for future regulatory developments.
- We have substantially de-risked our GM portfolio of activities. Our USD 1.24 billion sale of distressed debt to TSSP, coupled with substantial reductions in CLO positions, down 81% from 4Q15, enabling GM to achieve its target of reducing its maximum quarterly loss in an adverse scenario by about 50%.
- Successful delivery by the Strategic Resolution Unit (SRU) is crucial to the achievement of our strategic and financial objectives. We are making good progress with a CHF 7 billion reduction of RWA in the SRU in 1Q16.
In the challenging 1Q16 environment, all of our wealth management focused divisions performed strongly, generating profitable growth. Together, these divisions generated approximately CHF 1 billion of adjusted* pre-tax income. APAC, IWM and Swiss UB attracted CHF 4.3 billion, CHF 6.9 billion3 and CHF 3.0 billion of net new assets, respectively.
We remain focused on profitable growth: margins were stable year on year in APAC, where net new assets grew by 11% and margins in IWM increased to their highest level since 2011. This illustrates the quality of our customer base and the strength of our relationships as well as the increased availability of capital to lend.
We maintained our momentum in hiring RMs across our wealth management focused divisions. In APAC, we have added 100 RMs year on year, bringing the total number of RMs to 630 by end-1Q16 compared to 530 a year ago.
Facing a sharp fall in client activity levels and lower market volumes, we have used a number of key levers – cost control and RWA and leverage reduction – to deliver a stable look-through common equity tier 1 capital ratio of 11.4%. We aim to operate within a range of 11% to 12% in 20166.
In the first quarter of 2016 and particularly in January and February, we operated in some of the most difficult markets on record with volumes and client activity drastically reduced. While we saw tentative signs of a pick-up in activity in March and then in April, subdued market conditions and low levels of client activity are likely to persist in the second quarter of 2016 and possibly beyond.
We remain convinced that we face attractive long-term opportunities in our wealth management focused divisions, supported by distinct investment banking capabilities, and that our strategy will, over time, create value for our clients and shareholders.
We remain focused on executing our plan – cutting costs, investing selectively in profitable growth and managing capital – with discipline.”
The complete 1Q16 Financial Report and Results Presentation Slides are available for download today at: www.credit-suisse.com/results
* Adjusted results are non-GAAP financial measures. For a reconciliation of the adjusted results to the most directly comparable US GAAP measures, see the Appendix of this media release for reconciliations of adjustment items.
1 Includes headcount that have left and headcount that have been notified.
2 Includes the sale of distressed portfolio on May 3, 2016 at a minimal discount of USD 99 million to result in ~USD 1.24 billion reduction in inventory.
3 IWM net new assets represent net new assets for Private Banking and Asset Management together and not adjusted for assets managed across businesses.
4 Based on (adjusted) returns after tax assuming a tax rate of 30% for all periods and capital allocated based on the worst of 10% of average RWA and 3.5% of average leverage exposure.
5 Dealogic.
6 Making no provision for significant litigation expenses.
Cautionary statement regarding forward-looking information
This media release contains statements that constitute forward-looking statements. In addition, in the future we, and others on our behalf, may make
statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to the
following:
- our plans, objectives or goals;
- our future economic performance or prospects;
- the potential effect on our future performance of certain contingencies; and
- assumptions underlying any such statements.
Words such as “believes,” “anticipates,” “expects,” “intends” and “plans” and similar expressions are intended to identify forward-looking statements but
are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required
by applicable securities laws.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions,
forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of
important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forwardlooking
statements. These factors include:
- the ability to maintain sufficient liquidity and access capital markets;
- market volatility and interest rate fluctuations and developments affecting interest rate levels;
- the strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations, in particular
the risk of continued slow economic recovery or downturn in the US or other developed countries in 2016 and beyond;
- the direct and indirect impacts of deterioration or slow recovery in residential and commercial real estate markets;
- adverse rating actions by credit rating agencies in respect of us, sovereign issuers, structured credit products or other credit-related exposures;
- the ability to achieve our strategic objectives, including improved performance, reduced risks, lower costs and more efficient use of capital;
- the ability of counterparties to meet their obligations to us;
- the effects of, and changes in, fiscal, monetary, exchange rate, trade and tax policies, as well as currency fluctuations;
- political and social developments, including war, civil unrest or terrorist activity;
- the possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations;
- operational factors such as systems failure, human error, or the failure to implement procedures properly;
- actions taken by regulators with respect to our business and practices and possible resulting changes to our business organization, practices and
policies in countries in which we conduct our operations;
- the effects of changes in laws, regulations or accounting policies or practices in countries in which we conduct our operations;
- competition or changes in our competitive position in geographic and business areas in which we conduct our operations;
- the ability to retain and recruit qualified personnel;
- the ability to maintain our reputation and promote our brand;
- the ability to increase market share and control expenses;
- technological changes;
- the timely development and acceptance of our new products and services and the perceived overall value of these products and services by users;
- acquisitions, including the ability to integrate acquired businesses successfully, and divestitures, including the ability to sell non-core assets;
- the adverse resolution of litigation, regulatory proceedings and other contingencies;
- the ability to achieve our cost efficiency goals and cost targets; and
- our success at managing the risks involved in the foregoing.
We caution you that the foregoing list of important factors is not exclusive. When evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, including the information set forth in “Risk factors” in I – Information on the company in our
Annual Report 2015.
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