Corporate Earning Release
Credit Suisse announces profitable 3Q16
- Group reported PTI of CHF 222 million, up 12% compared to 2Q16
- Group adjusted* PTI of CHF 327 million, up 13% compared to 2Q16
- Combined reported PTI of CHF 1,155 million (adjusted* CHF 847 million) for APAC, SUB and IWM
- Adjusted* non-compensation expenses down 12% at constant FX rates compared to 3Q15; as of November 3, 2016, headcount1 reduced by 5,400 of the 6,000 targeted for FY16
- Net income attributable to shareholders of CHF 41 million
Wealth Management NNA of CHF 30.9 billion for 9M16 in challenging markets
- Wealth Management NNA of CHF 9.2 billion for 3Q16
- Cumulative Wealth Management NNA for 9M16 of CHF 30.9 billion, up 40% compared to 9M15
- 9M16 Wealth Management AuM of CHF 725 billion, up 9% compared to 9M15
IBCM and GM profitable
- Strong revenue contribution in IBCM with outperformance in debt and equity underwriting
- Positive momentum in GM from core Credit franchise
Strengthening of capital position and leverage ratio
- Look-through CET1 ratio of 12%, up 180 bp compared to 3Q15; includes a gain on the sale of real estate of CHF 346 million and litigation provisions of CHF 357 million
- Look-through CET1 leverage ratio of 3.4%, up 60 bp compared to 3Q15
- SRU reduced leverage exposure by USD 29 billion and RWA by USD 3 billion compared to 2Q16, contributing to Group’s improved capital position and look-through CET1 leverage ratio
Tidjane Thiam, Chief Executive Officer of Credit Suisse, stated: “In 3Q16, we remained focused on implementing our strategy with discipline. The hard work of our teams across our divisions has allowed us to confirm the positive trends that were visible in our 2Q16 results.
We have remained focused on reducing our cost base, with our total adjusted* operating cost base at constant FX rates decreasing by 2% compared to 3Q15. At constant FX rates, adjusted* non-compensation expenses decreased 12%, reflecting our restructuring efforts beyond straight headcount reductions. In parallel, as of November 3, 2016, our headcount1 was reduced by 5,400. We estimate that the annualized equivalent of the net adjusted cost savings achieved in 9M16 is CHF 1.5 billion2: we are on track to beat our end-2016 target.
APAC, SUB and IWM were all profitable with combined adjusted* PTI of CHF 847 million and generated CHF 9.2 billion of Wealth Management NNA. Cumulative Wealth Management NNA of CHF 30.9 billion in 9M16 were up 40% compared to 9M15. Our IBCM division achieved a 16% increase in USD net revenues in 3Q16 compared to 3Q15 and our Global IBCM franchise achieved a 22% increase in 3Q16 revenues year on year. In our restructured GM division, RWA are down 16% and revenues are down 14% compared to 3Q15. Thanks to our focus on costs, GM was profitable for the second consecutive quarter with particular strength in Global Credit Products. We continued to make progress in the SRU, reducing leverage exposure by USD 78 billion and RWA by USD 20 billion compared to 3Q15. Over the same period, SRU costs have decreased by USD 310 million or 47%.
In APAC, net revenues for the division totaled CHF 917 million in 3Q16, representing an increase against both 2Q16 and 3Q15. Wealth Management produced record net revenues of CHF 346 million. NNA were strong at CHF 4.6 billion, and we reached record AuM of CHF 169 billion, driven by increased momentum with UHNWI and entrepreneur clients. Our integrated coverage model in these segments is continuing to gain traction as we deliver bespoke financing, underwriting and advisory services to this target client base.
SUB delivered solid adjusted* PTI of CHF 431 million in 3Q16. In Wealth Management, we recorded outflows of CHF 0.5 billion and CHF 0.4 billion as we exited a number of EAM relationships and in relation to ongoing regularization measures, respectively, resulting in NNA of CHF 0.2 billion. Compared to 2Q16, we generated stable NII, offset by seasonally lower transaction volumes.
IWM continued to attract strong NNA in Wealth Management, which totaled CHF 4.4 billion in 3Q16. Our 2016 growth initiatives, including the launch of the Strategic Client Partners unit with a dedicated coverage team, have allowed us to create further value for our UHNWI clients. In 3Q16, strong NII reflected higher loan volumes and higher margins, offsetting seasonally weaker transaction volumes that remained adversely affected in a challenging market environment.
In IBCM, we generated USD 55 million of adjusted* PTI in 3Q16. Overall, IBCM net revenues were up 16% from 3Q15, with Equity and Debt Underwriting up 40% and 13%, respectively, contributing to our top 5 position3 across key products. In Advisory, we continued to leverage the strength of our global franchise, with a number of marquee transactions exceeding USD 10 billion4 announced during 3Q16.
GM delivered adjusted* PTI of USD 150 million, a result achieved by a combination of our focus on cost reduction and the strong performance in Credit compared to 3Q15. Global Credit Products delivered its best third quarter performance since 2013 as our teams stayed close to clients across high yield and investment grade markets. This was offset by a weaker contribution from our equities businesses, particularly in equity derivatives and equities trading in Europe. In the US, our Equities franchise held up well and we maintained our strong positions with our core clients across Cash and Prime Services. We continue to make progress in creating operating leverage in GM and expect to approach our end-2018 cost target of USD 5.4 billion by end-2016.
Compared to 3Q15, the SRU delivered further reductions in leverage exposure of USD 78 billion and in RWA of USD 20 billion. Over the same period, SRU adjusted* costs have decreased by USD 310 million or 47%. The progress in the SRU is central to the restructuring of the Group as it contributes to generating the resources we need to invest in APAC, IWM, SUB and IBCM, where we expect to produce higher returns.
We further strengthened our capital position with a CET1 ratio of 12% on a look-through basis as of end-3Q16, including the impact of litigation provisions of CHF 357 million.
During 3Q16, we continued to make progress in implementing our strategy. We have reduced costs significantly and continued to grow profitably in our chosen markets, with cumulative NNA across Wealth Management up 40% year on year. Disciplined capital management, organic capital generation and the disposal of assets and businesses announced in March 2016 have allowed us to continue to invest in higher return areas.
Looking ahead, we expect market activity to continue to be influenced by geopolitical and macro-economic uncertainty over the next several quarters and the outlook to remain challenging.
We still have a long way to go in our journey but we are fully mobilized to deliver in challenging market conditions on our key commitments to reduce cost, strengthen our capital base and drive profitable business growth.”
The complete 3Q16 Financial Report and Results Presentation Slides are available for download today at: www.credit-suisse.com/results