Corporate Press Release

Press Release

Credit Suisse Group reports 1Q14 results

Credit Suisse 1Q14 Core pre-tax income of CHF 1,940 million for strategic businesses; reported Core pre-tax income of CHF 1,400 million

Return on equity of 14% for strategic businesses; reported return on equity of 8%

Strong performance in Private Banking & Wealth Management with increased pre-tax income of CHF 1,012 million; lower expenses and substantial asset inflows with strategic net new assets of CHF 16 billion and total net new assets of CHF 13.7 billion

Solid returns in Investment Banking with pre-tax income of CHF 827 million; strong performance in key businesses

Credit Suisse Group reports 1Q14 results

Improved profitability in Private Banking & Wealth Management:
- Total reported pre-tax income of CHF 1,012 million; good profitability in strategic businesses with pre-tax income of CHF 965 million, up 28% compared to 1Q13, and a return on capital of 33%
- Significantly increased cost efficiency, with improved cost/income ratio of 68% compared to 72% in 1Q13
- Improved Wealth Management Clients net margin to 29 basis points from 23 basis points in 4Q13
- Strong net new assets from strategic businesses of CHF 16.0 billion and total net new assets of CHF 13.7 billion in Private Banking & Wealth Management, with continued strong inflows in Wealth Management Clients from Asia Pacific and Switzerland, and in Asset Management in alternative investments and index strategies

Solid returns in Investment Banking:
- Total reported pre-tax income of CHF 827 million amid challenging market conditions
- Strategic businesses with pre-tax income of CHF 1,124 million; strategic return on capital of 21%
- Strong performance in key businesses including securitized products, credit, underwriting and advisory and solid equities results, offset by significantly reduced first quarter seasonal contribution from rates and certain emerging markets than experienced in previous years

Resilient capital base and leverage ratio:
- Look-through Basel III CET1 ratio at 10.0% as of the end of 1Q14; Look-through Basel III total capital ratio at 15.1% as of end of 1Q14; strong capital position notwithstanding impact of progress in resolving litigation matters in 4Q13 and external methodology uplifts to risk-weighted assets of CHF 13.5 billion in 1Q14
- Leverage exposure at CHF 1,140 billion as of end of 1Q14; phase-in Swiss leverage ratio of 4.8% as of the end of 1Q14; Look-through Swiss leverage ratio of 3.7% as of end of 1Q14, within reach of the 2019 requirement of 4%

Continued progress toward cost reduction targets:
- Delivered CHF 3.4 billion of adjusted annualized savings; maintaining momentum towards target of over CHF 4.5 billion by end 2015

On track to achieve targeted run-off of non-strategic units:
- Leverage reduction of CHF 11 billion and risk-weighted asset reduction of CHF 4 billion for the non-strategic portfolio, excluding adjustments for methodology changes
- Progress in resolving key legacy litigation issues in 2014 to date; continued focus on resolving the US tax matter with the United States Department of Justice

Brady W. Dougan, Chief Executive Officer, said: “For the first quarter, we achieved a return on equity of 14% in our strategic businesses, well within reach of our 15% through-the-cycle target. This strong performance was driven by significantly improved profitability in Private Banking & Wealth Management, solid returns in Investment Banking and continued effective cost and capital management. We saw continued momentum with clients across many of our key businesses, including the highest net asset inflows in our strategic businesses since the first quarter of 2011 and a meaningful increase in the share of assets under management from ultra-high-net-worth clients.”

Commenting on Private Banking & Wealth Management, he said: “We substantially improved the profitability of our strategic businesses in the quarter, with an increase in pre-tax income of 28% compared to the prior-year quarter. The Wealth Management Clients business increased its net margin to 29 basis points from 23 basis points in the prior-year quarter and increased the share of assets under management from ultra-high-net-worth clients to 46% in the first quarter from 43% a year ago. Corporate & Institutional Clients continued to make a strong contribution to the division’s overall performance, and Asset Management more than doubled its pre-tax income compared to the first quarter of 2013 as a result of its more focused approach. In Private Banking & Wealth Management, we recorded net new assets from strategic businesses of CHF 16.0 billion in the quarter. These inflows reflect our strength in key emerging markets within Asia Pacific, which grew at a 17% annualized rate, Latin America and the Middle East, our strong position in our Swiss home market as well as significant inflows in alternative investments and index strategies within our Asset Management business.”

Commenting on Investment Banking, he said: “Our Investment Banking results demonstrate the strength of our diversified franchise, with our strategic businesses reporting a return on capital of 21%. We saw strong performance in securitized products, credit and underwriting and advisory, as well as solid results in equities. At the same time, the first quarter seasonal contribution from our rates and certain emerging markets businesses was significantly lower compared to prior years. We further expanded our strong market share position in equities and saw good momentum with clients in our underwriting and advisory franchises.”

Commenting on strategic progress, he added: “We continued to optimize resource allocation to grow our high-returning businesses, particularly in Private Banking & Wealth Management, and made progress in winding down positions in our non-strategic units. At the same time, we maintained resilient leverage and capital positions and remain on track to meet our long-term targets, notwithstanding methodology changes which increased risk-weighted assets in the quarter. We also made good progress toward resolving legacy litigation matters and on increasing the efficiency of our operations. Given all of these positive developments and progress in our strategy execution, our intention remains to deliver cash returns to our shareholders at or above 2013 levels.”

The full Earnings Release is available in PDF .