• April 25, 2017
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Credit Suisse releases Q1 2017 results

Our strategy of being a leading wealth manager with strong investment banking capabilities delivered a significant profit increase in 1Q17. Group reported pre-tax income of CHF 670 million and Group adjusted* pre-tax income of CHF 889 million. On an adjusted* basis, our five operating divisions delivered pre-tax income of CHF 1.4 billion, partially offset by an adjusted* SRU pre-tax loss of USD 502 million. Continued strong performance in Wealth Management, with NNA across all divisions up 24% at CHF 12 billion1. Record AuM, up 14% year on year to CHF 712 billion1, and adjusted* pre-tax income of CHF 1 billion2, up 13% year on year, with returns substantially above the cost of capital.

Global Markets delivered adjusted* pre-tax income of USD 338 million in 1Q17, an improvement of USD 436 million against an adjusted* pre-tax loss of USD 98 million in 1Q16. Adjusted* return on regulatory capital of 10% in 1Q17, net revenues of USD 1.6 billion, up 29% year on year; adjusted* non-compensation operating expenses down 11%, and continued capital discipline, with RWA down 12% compared to 1Q16. Excellent quarter in Credit (net revenues up 133%) and resilient performance in Equities (net revenues down 2%3)

Investment Banking & Capital Markets delivered best first quarter net revenue performance in the past four years, up 54% year on year with particularly strong performance in equity and debt underwriting. IBCM adjusted* pre-tax income up USD 183 million year on year and adjusted* return on regulatory capital of 23% in 1Q17. Maintaining capital discipline with look-through CET1 ratio of 11.7% and look-through CET1 leverage ratio of 3.3%

Raising capital by way of a fully underwritten rights offering for which the net proceeds are expected to amount to approximately CHF 4 billion4 and retaining full ownership of Swiss bank. Proposal to move to all cash dividend in the future, removing dilution associated with scrip dividend

Urs Rohner, Chairman of the Board of Credit Suisse, stated:

“We have undertaken a thorough review of our options regarding the next stage of our capital plan and have asked our CEO and management team to make a recommendation to the Board of Directors. During those discussions, we carefully weighed the options of proceeding with the partial IPO of Credit Suisse (Schweiz) AG and raising capital through a rights offering to existing shareholders. The CEO and management team have proposed proceeding with a capital raise instead of a partial IPO, and this has been unanimously approved by the Board of Directors.

We believe that keeping 100% of our valuable Swiss bank, while raising capital through a rights offering with preemption rights, is the right course of action and will result in significant value creation for shareholders over time. Regarding our current dividend policy, where we have experienced a high scrip take up over the past several years, the Board of Directors has also decided to move to proposing an all cash dividend for the financial year 2017 and beyond. This will mitigate the dilution associated with the option to elect for scrip dividends and will help reverse the decline in our tangible book value per share, which is a consequence of this structure. We expect that for the financial year 2017, the recommended cash dividend amount will be broadly similar, on a per share basis, to recent years. Our goal is to increase our payout ratio over time as Group profitability improves.

This is clearly an important period in the transformation of Credit Suisse. Our results in the first quarter of 2017 reflect the significant momentum that we have across our businesses and the attractive model that provides wealth management and investment banking services to our clients.

We believe that by raising capital now, we are able to maintain our profitable growth trajectory and seize compelling opportunities for our business, complete our restructuring plans, bolster our capital ratios and protect the bank against unforeseen market volatility.”

Tidjane Thiam, Chief Executive Officer of Credit Suisse, stated:

“We have had a strong start to 2017, achieving profitability both on a reported and an adjusted* basis for the Group. This is an important step in the execution of our strategy that we started to implement in October 2015 a year ago. We are making good progress in our strategy of being a wealth manager with strong investment banking capabilities thanks to the continued trust of our clients and the hard work of our teams.

Our Wealth Management businesses attracted net new assets of CHF 12.0 billion1, up 24% year on year, and assets under management increased by CHF 90 billion to a record CHF 712 billion1 over the past 12 months. Within our investment banking businesses, we have delivered a strong performance overall, most notably in Global Markets, with net revenues of USD 1.6 billion, driven by a 133% increase in Credit year on year, and in Investment Banking & Capital Markets, with revenues of USD 608 million, up 54% compared to 1Q16, with particular strength in equity and debt underwriting. For both of these divisions, we have seen strong growth in profitability compared to 1Q16 and maintained our leading franchises across our key product lines5.

We still have a lot of work ahead of us but we are executing with discipline and making progress on the key aspects of our strategy. We are delivering strong growth, are ahead of our cost reduction targets and are increasing our operating leverage. We are investing significantly in our compliance and controls across the bank to ensure that we generate quality, compliant growth. In parallel, we have reduced capital consumption in our markets businesses in Global Markets and Asia Pacific, disposed of non-core businesses and reallocated capital resources to our growth businesses. We have also made significant progress in resolving legacy issues.

In this context, the Board of Directors has decided to raise capital through a rights offering and to retain full ownership of our operations in Switzerland. This capital raise will allow us (i) to continue to invest in growth at highly attractive returns; (ii) to strengthen balance sheet resilience for our clients and other stakeholders; and (iii) to afford the costs associated with our ongoing restructuring plans.

The decisions we have made and are announcing today on capital will allow us to grow our tangible book value per share and accrete capital, enhancing returns to our shareholders. Our operating performance combined with the strengthening of our capital base, leaves us well positioned to increase our profitability and generate value for our shareholders and our clients.”

Re-disseminated by The Asian Banker