Press ReleasePress Release including tables
Credit Suisse Group reports 2Q10 net income of CHF 1.6 billion, return on equity of 17.8%, net new assets of CHF 14.5 billion, tier 1 ratio of 16.3%
1H10 net income of CHF 3.7 billion, return on equity of 20.1%, net new assets of CHF 40.5 billion
Resilient results overall in 2Q10 in difficult environment
- Continued positive market share momentum across divisions
Good performance in Private Banking
- Pre-tax income of CHF 0.9 billion, net revenues of CHF 3.0 billion
- Strong net new assets of CHF 13.8 billion, especially in international businesses
- Strong performance in Corporate & Institutional Clients business with good net new assets and market share gains
Resilient performance in Investment Banking
- Pre-tax income of CHF 0.8 billion, net revenues of CHF 4.1 billion
- Net revenues impacted by volatile market conditions
- Lower fixed income sales and trading results
- Strong equity sales and trading results with market share gains
- Resilient underwriting and advisory performance with fees up 41% vs. 2Q09
- Continued disciplined risk deployment: risk-weighted assets decreased slightly to USD 142 billion vs. 1Q10; average one-day, 99% Value-at-Risk (VaR) in CHF increased 13% vs. 1Q10
Asset Management continues to make progress executing on its plan
- Asset inflows over the past four quarters
- Net new assets in 2Q10 of CHF 1.3 billion
- Pre-tax income of CHF 22 million, net revenues of CHF 0.5 billion
Zurich, July 22, 2010 Credit Suisse Group reported net income attributable to shareholders of CHF 1.6 billion in 2Q10 and core net revenues of CHF 8.4 billion. The return on equity attributable to shareholders was 17.8% in 2Q10 and diluted earnings per share were CHF 1.15. The tier 1 ratio was 16.3% at the end of 2Q10.
Brady W. Dougan, Chief Executive Officer, said: “This was a resilient performance during a difficult second quarter for the banking sector. The continued strong flow of net new assets we achieved in Private Banking and our market share momentum, particularly in Investment Banking and in our Swiss institutional business, reflect the strength of our franchise.”
He added: “Our strong capital and liquidity base positions us well to meet changing regulatory requirements. We are actively contributing to industry efforts to build a more robust and stable financial system by helping clients in adverse market conditions and engaging in an open and constructive dialog with regulators to promote a coordinated global approach to banking supervision.”
He concluded: “Despite the continuing macroeconomic uncertainty, in the first half of 2010 we achieved a return on equity of 20% while making further substantial progress developing our businesses. We remain confident that our strategy is appropriate and resilient in the face of an uncertain and challenging economic and market environment.”
Private Banking, which comprises the global Wealth Management Clients business and the Swiss Corporate & Institutional Clients business, reported solid income before taxes of CHF 874 million in 2Q10, down 7% compared to 2Q09, as stable net revenues of CHF 2,991 million were more than offset by a 9% rise in total operating expenses. Private Banking recorded net new assets of CHF 13.8 billion in 2Q10, benefiting especially from strong inflows in the international businesses.
The Wealth Management Clients business reported income before taxes of CHF 633 million in 2Q10, down 17% compared to 2Q09. Net revenues remained stable at CHF 2,516 million. Recurring revenues were higher, driven by an increase in recurring commissions and fees and higher net interest income. This was offset by a decrease in transaction-based revenues, which was primarily due to significantly lower integrated solutions revenues compared to a strong 2Q09. The gross margin on assets under management was 120 basis points in 2Q10, a decrease of 15 basis points compared to 2Q09, as average assets under management increased 12.8% and net revenues remained stable. Of Private Banking’s total net new assets, the Wealth Management Clients business contributed CHF 11.9 billion, corresponding to an annualized net new asset growth rate of 5.8%. CHF 10.3 billion were acquired in the international businesses, with strong inflows in emerging markets.
The Corporate & Institutional Clients business reported income before taxes of CHF 241 million in 2Q10, up 37% from 2Q09, benefiting from a 6% increase in net revenues to CHF 475 million and net releases of provisions for credit losses of CHF 13 million in 2Q10, compared to net provisions of CHF 59 million in 2Q09. The net releases from credit provisions reflect the quality of the loan book and the continued recovery of the Swiss economy. The results included lower fair value losses related to Clock Finance, a synthetic collateralized loan portfolio, of CHF 1 million, compared to losses of CHF 32 million in 2Q09. The Corporate & Institutional Clients business achieved strong market share momentum in the institutional business with good net new assets of CHF 1.9 billion in 2Q10.
Investment Banking continued to execute its client-focused, capital-efficient strategy in 2Q10 and maintained market share momentum across most products and regions. Income before taxes was CHF 784 million compared to CHF 1,655 million in 2Q09. Net revenues were CHF 4,099 million, down 32% from 2Q09, primarily reflecting weaker fixed income sales and trading revenues. These declines were partially offset by strong equity sales and trading and underwriting and advisory revenues as market share gains largely compensated the impact of an industry-wide decline in debt and equity issuance.
Fixed income sales and trading results were driven by solid revenues in the US residential mortgage- backed securities trading and global rates and foreign exchange businesses, despite the challenging market environment. Revenues in the credit businesses were adversely impacted by difficult market conditions, including widening credit spreads. Revenues in the emerging markets trading and corporate lending businesses were adversely impacted by client risk aversion and widening credit spreads.
Equity sales and trading revenues were strong despite difficult market conditions and reduced client activity, reflecting sustained market share gains across most products. Revenues declined compared to a strong 2Q09, but increased slightly compared to 1Q10, and reflected strong revenues in cash equities and prime services and solid revenues in the derivatives business.
Investment Banking’s results also reflected fair value losses on Credit Suisse debt of CHF 62 million compared to net fair value losses of CHF 269 million in 2Q09.
The pre-tax income margin was 19.1% in 2Q10, compared to 27.5% in 2Q09. The pre-tax return on average utilized economic capital was 15.8% in 2Q10 compared to 32.2% in 2Q09.
Total operating expenses were CHF 3,298 million, 20% lower than in 2Q09.
Risk-weighted assets of USD 142 billion declined slightly from 1Q10 as Investment Banking continues to reallocate capital from exit businesses to support growth in client-focused businesses. Average one-day, 99% VaR of CHF 117 million increased 13% compared to 1Q10.
Asset Management reported income before taxes of CHF 22 million in 2Q10, compared to CHF 55 million in 2Q09. Net revenues totaled CHF 502 million, an increase of 16% compared to 2Q09. Net revenues benefited from unrealized investment-related gains of CHF 46 million in private equity and credit-related investments, compared to losses of CHF 28 million in 2Q09, and from gains of CHF 36 million from the sale of the remaining securities purchased from Credit Suisse’s money markets funds. Total operating expenses increased 27% from 2Q09, due to higher compensation and benefits, general and administrative expenses and commission expenses. The increase in compensation and benefits was mainly due to higher deferred compensation from prior-year awards and increased base salaries, partially offset by lower performance-based compensation. Net new assets of CHF 1.3 billion included net inflows of CHF 1.1 billion in alternative investments and of CHF 0.2 billion in traditional investments mainly in the Swiss advisory business.
Income before taxes in the Corporate Center was CHF 126 million, primarily reflecting fair value gains on Credit Suisse debt of CHF 922 million and significantly higher expense including CHF 447 million of compensation expenses due to the UK levy on variable compensation and CHF 216 million of litigation provisions. Credit Suisse also recorded a tax credit of CHF 522 million resulting from a legal entity merger.
Benefits of the integrated bank
Credit Suisse generated CHF 1.2 billion in collaboration revenues from the integrated bank in 2Q10, compared to CHF 1.5 billion in 2Q09.
Capital and liquidity
Credit Suisse’s capital position remains very strong. The tier 1 ratio was 16.3% at the end of 2Q10, compared to 15.5% at the end of 2Q09 and 16.4% at the end of 1Q10.
Credit Suisse entered the credit and financial market dislocation with a strong liquidity position, which it has maintained and strengthened through open market funding ever since, incurring significant additional costs as a result. This positioned Credit Suisse well to meet the new rules for quantitative and qualitative liquidity management announced by the Swiss financial market regulatory authority, FINMA, which became effective at the end of 2Q10.
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- Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 49,200 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
Cautionary statement regarding forward-looking information and non-GAAP information
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. 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 forward-looking statements. These factors include:
– the ability to maintain sufficient liquidity and access capital markets;
– market and interest rate fluctuations;
– 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 a continued US or global economic downturn in 2010 and beyond;
– the direct and indirect impacts of continuing deterioration of subprime and other real estate markets;
– further adverse rating actions by credit rating agencies in respect of structured credit products or other credit-related exposures or of monoline insurers;
– the ability of counterparties to meet their obligations to us;
– the effects of, and changes in, fiscal, monetary, trade and tax policies, and 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 in one or more of the countries in which we conduct our operations;
– the effects of changes in laws, regulations or accounting policies or practices;
– competition 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 and other contingencies;
– the ability to achieve our cost efficiency goals and other 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, as well as the information set forth in our Annual Report 2009 under IX – Additional information – Risk Factors.
This press release contains non-GAAP financial information. Information needed to reconcile such non-GAAP financial information to the most directly comparable measures under GAAP can be found in the Credit Suisse Financial Release 2Q10.