Credit Suisse is looking to ramp up growth in wealth management-related businesses as it looks to meet its profit target amid Covid-19 headwinds.
In an investor update, Credit Suisse’s new CEO Thomas Gottstein said that the bank anticipates growth in wealth-related pre-tax income from CHF4bn ($4.5bn) in the first nine months of 2020 to CHF5-5.5bn by 2023.
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This represents a compound annual growth rate of nearly 10%.
Plans for wealth management-related businesses include expanding coverage base through initiatives like selective strategic relationship manager hires and team lift-outs, as well as deepening UHNW proposition focused on sustainable solutions and private markets.
The bank also aims to strengthen onshore presence in faster growing markets and speed up onshore China build-out.
In Asset Management, the bank anticipates a significant turnaround next year with focus on expanding alternatives and private market offerings and accelerating the ESG focus, among other things.
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By GlobalDataThe bank said that its performance has continued the year-on-year trends as the third quarter of this year.
The wealth management businesses is seeing stronger year-on-year transactional business driven by Asia, which is outweighing the adverse impact from the stronger Swiss Franc and pressure on net interest income.
In Investment Bank, revenues are ahead of the fourth quarter last year, noted the bank.
Credit Suisse had earlier flagged two charges – one related to a stake in alternative investment firm York Capital Management and the other over a legal dispute in the US.
These are said to affect its fourth quarter performance.
The bank aims to deliver return on regulatory capital (RoRC) of 20% to 25% in wealth management-related businesses in the mid-term, over 40% in asset management, and 10% to 15% in investment bank.
Priorities for investment bank include investing in onshore China platform, expanding investment bank markets proposition for sophisticated UHNW clients, among others.
Gottstein noted: “We continue to believe wealth management is one of the most attractive segments in financial services, notably in Asia Pacific, and we also expect to further expand the connectivity between our Investment Bank and the Wealth Management-related divisions.
“Together, these initiatives should allow us to deliver on our medium-term ambition of an RoTE of 10% to 12% in a normalised environment, subject to market and economic conditions, while maintaining a strong Page 1 balance sheet.”
Sustainability is key to the agenda of the bank, which intends to make sustainable investment solutions the core of its offering to wealth management and institutional clients.
Other priorities include upgrading its IT platforms across international markets, further standardising core platforms, and making investments in cloud and automation.
