Credit Suisse reaps wealth management rewards as assets soar

ZURICH: Tidjane Thiam is reaping the rewards of Credit Suisse Group AG’s pivot to wealth management after the bank attracted new assets at the fastest pace in seven years.

Net new assets at the combined wealth management businesses were 14.4 billion francs in the first quarter, beating analyst estimates, with key contributions from the Asia-Pacific and international wealth management divisions.

Profit at the latter rose 66% to 484 million francs, while overall both profit and revenue at the bank did better than expected.

Thiam is entering the final stages of a threeyear turnaround plan that included tapping shareholders for more than 10 billion francs of fresh capital and paring back investment banking.

The bank has slashed expenses and cut thousands of jobs – mostly at the trading operations in New York and London – to reduce the reliance on volatile businesses. It’s also exited some operations, including private banking in the US.

“We’ve now completed nine quarters of our 12-quarter restructuring programme,” Thiam, who’s led the Zurich-based bank for three years, said in a statement.

“2017 was a year of stabilisation and consolidation of the business and we has planned 2018 to be a year of acceleration in our performance.”

That’s starting to look the case in the bank’s wealth management business at least, with Thiam, a former insurance executive, betting on rising emerging-market affluence to help drive earnings in Asia and Latin America.

The CEO is boosting collaboration between the firm’s wealth units and pared down trading businesses.

He’s also putting deal-makers alongside private bankers in client meetings with the aim of devising financing ideas for their companies as well as topics such as their personal wealth and succession plans.

Credit Suisse soared on the results, rising as much as 4.7% to 16.96 francs before paring gains slightly to trade 4.3% higher as of 9:07am local time in Zurich yesterday.

While wealth managers have been under pressure from negative interest rates and generally higher cash holdings of investors since the financial crisis, Swiss banks – including Credit Suisse’s key competitors Julius Baer and UBS Group AG – have sought to offset the challenges through cost cuts, recruiting initiatives and increasing loans to wealth individuals.

In Switzerland, Credit Suisse said it added the most net new assets so far, though the Asia-Pacific region led the way with the fresh addition of about 6.2 billion francs.

While growth in net new assets of 7.5% is faster than at UBS, its rival is still far bigger. UBS added 19 billion francs of net new money in the first quarter and has about 2 trillion under management, compared with 776 billion francs at Credit Suisse. — Bloomberg