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July 28, 2011updated 04 Apr 2017 3:49pm

Credit Suisse 2Q results dip, job cuts likely

Currency fluctuations led to Credit Suisse reporting drops in pre-tax income, assets under management (AuM) and gross margins with net new money inflows remaining strong despite a 27% drop over the second quarter. Credit Suisse wealth management business saw a 4% quarter-on-quarter decline in pre-tax income to CHF595m ($743m) as at 30 June 2011, from CHF623m three months earlier.

By Ilya Timofeyev

Currency fluctuations led to Credit Suisse reporting drops in pre-tax income, assets under management (AuM) and gross margins with net new money inflows remaining strong despite a 27% drop over the second quarter.

Credit Suisse’ wealth management business saw a 4% quarter-on-quarter decline in pre-tax income to CHF595m ($743m) as at 30 June 2011, from CHF623m three months earlier.

The wealth division’s pre-tax income also declined on a year-on-year basis by 6% from CHF633m in June 2010.

 

Job cuts in wealth management?

Credit Suisse also announced a 4% cut in its global workforce across the bank, which represents around 2000 jobs worldwide.

The bank told PBI that the cuts will happened across all business divisions, however declined to disclose whether the cuts will affect the private banking force.

The spokesperson added that it would be wrong to assume that private banker and wealth managers were safe despite the recent increase in their numbers.

 

New assets down in Asia and EMEA

Net new money (NNM) also dropped to CHF11.5bn as at 30 June 2011, representing a 27% quarter-on-quarter decline from CHF15.7bn as at the end of March.

NNM also declined on a year-on-year basis by 3% from CHF11.9bn as at 30 June 2010.

The biggest drop in new assets came from the Asia Pacific region, where NNM almost halved on a quarterly basis to CHF2.5bn. The EMEA region also saw a decrease in the quarterly inflows of new assets – by a third, to CHF2.9bn.

 

Sliding AuM blamed on low client activity

Credit Suisse’s AuM saw a marginal quarterly decline of 3.8% to CHF1,233.3bn as at 30 June 2011, from CHF1,282.4bn three months earlier.

AuM also saw a 0.7% decline on a year-on-year basis from CHF1,242.6bn as of 30 June 2010.

The bank said that the decline in net revenues comes from “very low levels” of client investment activity among other factors.

While lower net interest income and transaction volumes lead to gross margin of 115 basis points in the wealth division – a 5bps year-on-year drop.

 

Leadership changes

The bank’s board of directors appointed Hans-Ulrich Meister and Walter Berchtold, as chief executive officer and chairman respectively to its private banking business, effective from 1 August.

Berchtold will focus on further growing the bank’s business with ultra high net worth clients globally and expanding its presence.

 

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