Credit Suisse's Swiss bank is under enormous pressure: it is the only division not to have its three-year target, 2.3 billion francs in pretax profit, trimmed in 2016. At the end of last year, the unit stood at 1.9 billion francs – far short of the goal.
Led by investment banker Thomas Gottstein, the Swiss bank managed a breakout first quarter, with profit up 17 percent, net new money rising nearly one-third to 2.7 billion francs, and managed assets climbing more than 4 percent to 206.7 billion francs – more, incidentally, than the 4 percent growth that the Swiss private banking market currently offers up.
The values show Credit Suisse's bank to be more competitive than heavyweight UBS. While the units are not directly comparable, UBS' personal and corporate banking division's pretax profit fell 10 percent. UBS did take in 6.3 percent more net new money against existing assets, but its Swiss wealth management arm posted «just» 1.6 billion francs in net new money.
At least in the first quarter, Credit Suisse has left UBS in its dust.
3. Investment Banking: Dealmaker UBS
Credit Suisse's history is steeped in investment banking First Boston roots – but this quarter, the bank has to bow to its larger Swiss rival. UBS' investment bank, led by Andrea Orcel, posted bumper results and even elicited pre-crisis memories with a 25 percent return-on-equity.
By contrast, Credit Suisse's investment banking and capital markets division, IBCM, struggled with lackluster client activity. Revenue sank 13 percent on the year, while its cost-income ratio surged to 88 percent from 74 percent. Credit Suisse, currently selling itself as the entrepreneur's bank which can build bridges between wealth management and corporate-style services, needs to care about this reversal.
4. More Spending Pressure
Thiam has proven himself as the more ruthless restructurer than Ermotti: Credit Suisse slashed spending overall by 6 percent in the first quarter, while UBS pruned by 2 percent. Both banks posted a 2 percent fillip in revenue.
UBS is still dragging a bigger cost base than Credit Suisse, meaning the larger bank is more vulnerable to income swings – not a great place to be given the meager prospects for revenue growth in the financial services industry.
5. «Bad Bank»: Credit Suisse Ahead
