Corporate Press Release
Credit Suisse Group reports 2Q14 and 6M14 results
Credit Suisse 2Q14 results: Core pre-tax income of CHF 1,767 million for strategic businesses and return on equity of 13%; reported Core pre-tax loss of CHF 370 million, reflecting the previously announced CHF 1,618 million charge relating to the final settlement of all outstanding US cross-border matters
Credit Suisse Group reports 1Q14 and 6M14 results
Credit Suisse 6M14 results: Core pre-tax income of CHF 3,707 million for strategic businesses and return on equity of 13%; reported Core pre-tax income of CHF 1,030 million
Look-through CET1 ratio of 9.5% as of the end of 2Q14; on track to exceed 10% by year-end 2014
Resilient 2Q14 performance of Private Banking & Wealth Management’s strategic businesses with strong net new assets of CHF 11.8 billion
2Q14 Investment Banking results reflect strong origination activity, continued strong performance in credit and securitized products and improved capital efficiency
Private Banking & Wealth Management strategic performance reflecting lower revenues but continued efficiency gains:
- 2Q14 resilient profitability in strategic businesses with pre-tax income of CHF 882 million, down 13% from a very strong 2Q13, and a return on capital of 28%
- 2Q14 total reported pre-tax loss of CHF 749 million, including the previously announced CHF 1,618 million charge relating to the final settlement of all outstanding US cross-border matters
- Further increased cost efficiency of strategic businesses in 6M14 with cost/income ratio of 68%, improved from 71% in 6M13
- Increased Wealth Management Clients net margin to 28 basis points for 6M14, supported by significant progress on cost reduction
- Wealth Management Clients 2Q14 gross margin at 99 basis points, down five basis points compared to 1Q14, reflecting an increase in assets under management, a change in client mix, lower fee-based revenues and slightly lower net interest income
- Strong 2Q14 net new assets from strategic businesses of CHF 11.8 billion with annualized growth rate of 4%, notwithstanding continued outflows of CHF 2.9 billion from Western European cross-border business due to substantial progress on regularization of asset base; total net new assets of CHF 10.1 billion with total Western European cross-border outflows of CHF 4.1 billion
Investment Banking performance reflecting stability of diversified strategic franchise:
- Strategic businesses with pre-tax income of CHF 1,034 million and return on capital of 18%; strong performance from fixed income yield franchises and underwriting businesses, partly offset by less favorable trading conditions for equity sales and trading and continued weakness in global macro products
- Total reported pre-tax income of CHF 752 million with strong performance in key businesses and acceleration in the wind-down of the non-strategic unit
- Strong 6M14 return on capital in Investment Banking, with 20% from strategic businesses and solid 13% in total reported results
- Restructuring of macro business, including exit from commodities trading, to further enhance capital and operating efficiencies targeting approximately USD 200 million in expense savings, USD 8 billion in risk-weighted asset reduction and USD 25 billion in leverage exposure reduction by the end-state
Resilient capital base and leverage ratio as of the end of 2Q14, notwithstanding the settlement of the US cross-border matter:
- Look-through BIS CET1 ratio of 9.5%, progress in executing capital measures expected to fully mitigate impact of litigation settlement and on track to exceed 10% CET1 ratio by year-end, including continued accrual of cash dividend for 2014; Look-through Swiss total capital ratio at 15.3%
- Leverage exposure at CHF 1,156 billion; Phase-in Swiss leverage ratio of 4.8%; Look-through Swiss leverage ratio of 3.7% within reach of the 2019 requirement of 4%
On track to reach cost reduction targets:
- Delivered CHF 3.4 billion of adjusted annualized savings compared to the annualized expense run rate for 6M11; maintaining momentum towards target of over CHF 4.5 billion by end-2015
Wind-down of non-strategic units and progress in resolving legacy litigation issues:
- Wind-down ahead of schedule with Swiss leverage exposure reduction of USD 3 billion and risk-weighted asset reduction of USD 6 billion in the Investment Banking non-strategic unit
- Significant progress in resolving key legacy litigation issues in 2014 to date
Brady W. Dougan, Chief Executive Officer, said: "Our reported results for the second quarter and the first half of 2014 were impacted by the resolution of our most significant legacy litigation issue. During the quarter, we continued to see good momentum with clients, while at the same time making further progress in winding-down our non-strategic units. Our strategic results were solid, demonstrating the resilience of our business model, notwithstanding subdued client trading activity in certain areas which impacted both Private Banking & Wealth Management and Investment Banking."
He continued: "With the final settlement of all outstanding US cross-border matters as announced in May, we brought to a close the most significant and longstanding litigation issue for Credit Suisse. I want to reiterate that we deeply regret the past misconduct that led to this settlement and that we take full responsibility for it. The continued trust and support of our clients helped us mitigate the impact of the settlement on our business. We are executing our capital measures and are on track to improve our Look-through CET 1 ratio to above 10% by the end of the year. This includes the continued accrual for a cash dividend for 2014. Once we reach 10%, and as we continue to accrete capital towards our 11% long-term target, we intend to return approximately half of our earnings to shareholders through our annual distributions."
Commenting on Private Banking & Wealth Management, he said: "We generated strong net new assets of CHF 11.8 billion in the second quarter from our strategic businesses, driven by growth in Asia Pacific and Switzerland – two of our key markets. This strong growth more than offset outflows from our Western European cross border business, where we are taking proactive steps to regularize our asset base. This is part of the secular transformation of the cross border wealth management business. During the quarter, we further improved the efficiency of our strategic businesses with lower operating expenses, which helped us mitigate the impact of the subdued transaction activity and the continued low interest rate environment on our results."
Commenting on Investment Banking, he said: "Investment Banking delivered solid results for the second quarter of 2014, reflecting strong origination activity, continued momentum in our yield franchises and improved capital efficiency compared to the first quarter. The restructuring of our macro business, including the exit from commodities trading, is expected to drive further capital, leverage and expense reductions. Our strategic businesses reported a return on capital of 18% for the second quarter and 20% for the first half of 2014, demonstrating the stability of our diversified strategic franchise."
The full Earnings Release is available in PDF