Bangkok--4 May--Asian Banker
Income from continuing operations grew 17% in the first quarter of 2007 compared to the first quarter of 2006. The return on equity improved to 25.2% in the first quarter of 2007, from 24.4% in the same period of 2006. Diluted earnings per share were CHF 2.42 in the first quarter of 2007, compared to CHF 2.21 in the first quarter of 2006. Credit Suisse generated net new assets of CHF 15.2 billion in Wealth Management and CHF 29.0 billion in Asset Management.
"Our results for the first quarter of 2007 demonstrate the continued progress of our integrated business model," stated Oswald J. Gr?bel, CEO of Credit Suisse.
He added: "We have achieved a great deal over recent years and I am convinced that under the leadership of Brady Dougan, the new CEO, Credit Suisse will continue to grow and strengthen its profitability."
Core results of the integrated bank
With effect from the first quarter of 2007, Credit Suisse Group is also presenting its results on a core results basis. Core results include the results of the Investment Banking, Private Banking and Asset Management segments and the Corporate Center. However, they exclude revenues and expenses in respect of minority interests in which Credit Suisse does not have a significant economic interest in such revenues and expenses. In the first quarter of 2007, Credit Suisse reported income from continuing operations before taxes on a core results basis of CHF 3,576 million, up 16% compared to the first quarter of 2006. Net revenues grew 11% to CHF 10,669 million compared to the first quarter of 2006. Total operating expenses increased 6% to CHF 7,040 million compared to the first quarter of 2006.
Investment Banking
The Investment Banking segment reported income from continuing operations before taxes of CHF 1,990 million for the first quarter of 2007, up 27% compared to the first quarter of 2006. Net revenues increased 14% in the first quarter of 2007, mainly reflecting record revenues in debt underwriting, equity and fixed income trading. Provisions for credit losses increased compared to the first quarter of 2006 but remained low in the generally stable credit environment. Total operating expenses rose 7% in the first quarter of 2007 compared to the same period of the previous year, due primarily to higher performance-related compensation expenses reflecting higher revenues. The compensation/revenue ratio was 51.5% in the first quarter of 2007, compared to 53.5% in the first quarter of 2006. The pre-tax income margin rose to 30.2% in the quarter, compared to 27.2% in the first quarter of 2006.
Private Banking
The Private Banking segment, which comprises the Wealth Management and Corporate & Retail Banking businesses, reported income from continuing operations before taxes of CHF 1,439 million for the first quarter of 2007, up 10% compared to the first quarter of 2006.
The Wealth Management business reported income from continuing operations before taxes of CHF 988 million for the first quarter of 2007, up 3% compared to the first quarter of 2006. Net revenues rose 7%, driven mainly by increased net interest income, as well as by higher management fees from managed assets as a result of the increased asset base. The 10% increase in total operating expenses during the quarter was attributable to higher compensation and benefits related to the international expansion in strategic growth markets and higher other expenses mainly due to infrastructure costs associated with the expansion of the integrated banking organization. The pre-tax income margin was 41.5% in the first quarter of 2007, compared to 43.2% in the first quarter of 2006.
The Corporate & Retail Banking business reported a 31% rise in income from continuing operations before taxes to CHF 451 million for the first quarter of 2007 compared to the first quarter of 2006. Net revenues rose 12%, mainly reflecting higher net interest income. Total operating expenses remained unchanged at CHF 546 million in the first quarter of 2007 compared to the first quarter of 2006. The pre-tax income margin was 45.7% in the first quarter of 2007, compared to 39.1% in the first quarter of 2006.
Asset Management
The Asset Management segment reported income from continuing operations before taxes of CHF 257 million for the first quarter of 2007, a rise of 10% compared to the first quarter of 2006. Net revenues increased 3% to CHF 776 million compared to the first quarter of 2006, which was positively impacted by a CHF 85 million gain arising from the sale of assets in an emerging market investment fund. Total operating expenses were virtually unchanged compared to the first quarter of 2006, as the decline in general and administrative expenses offset higher compensation and benefits and commission expenses. The pre-tax income margin improved to 33.1% in the first quarter of 2007 from 31.0% in the first quarter of 2006. As of March 31, 2007, assets under management totaled CHF 708.6 billion, an increase of 5.8% from December 31, 2006.
Net New Assets
The Wealth Management business generated net new assets of CHF 15.2 billion in the first quarter of 2007, representing an annualized quarterly growth rate of 7.8%. This reflected strong contributions from all strategic markets, especially Asia, the US and Europe. The Asset Management business reported strong net new assets of CHF 29.0 billion in the first quarter of 2007, mainly reflecting money market assets of CHF 18.3 billion and alternative investment assets of CHF 8.0 billion. Total assets under management were CHF 1,551.5 billion as of March 31, 2007, an increase of 4.5% from December 31, 2006.
Outlook
Credit Suisse's business pipeline remains robust and it is optimistic about its long-term growth prospects in Investment Banking, Private Banking and Asset Management in view of the healthy macroeconomic environment. Credit Suisse believes that market corrections cannot be excluded in the coming months and expects an increase in market volatility.
--www.theasianbanker.com (May 3 2007)--