Brady Dougan, Chief Executive Officer of Credit Suisse, is scheduled to present at the Merrill Lynch Banking & Insurance CEO Conference on Wednesday, October 8 at 9.30 am (BST).
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Brady Dougan, Chief Executive Officer of Credit Suisse, is scheduled to present at the Merrill Lynch Banking & Insurance CEO Conference on Wednesday, October 8 at 9.30 am (BST).

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Brady Dougan, Chief Executive Officer of Credit Suisse, is scheduled to present at the Merrill Lynch Banking & Insurance CEO Conference on Wednesday, October 8 at 9.30 am (BST). Presentation Transcript

  • 1. Merrill Lynch Banking & Insurance Conference October 8, 2008 London Brady W. Dougan, Chief Executive Officer
  • 2. Cautionary statement Cautionary statement regarding forward-looking and non-GAAP information This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties, and we might not be able to achieve the predictions, forecasts, projections and other outcomes we describe or imply in forward-looking statements. A number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions we express in these forward-looking statements, including those we identify in quot;Risk Factorsquot; in our Annual Report on Form 20-F for the fiscal year ended December 31, 2007 filed with the US Securities and Exchange Commission, and in other public filings and press releases. We do not intend to update these forward-looking statements except as may be required by applicable laws. This presentation contains non-GAAP financial information. Information needed to reconcile such non-GAAP financial information to the most directly comparable measures under GAAP can be found in Credit Suisse Group's second quarter report 2008. Merrill Lynch Banking & Insurance Conference Slide 1
  • 3. Remaining focused in challenging environment Credit Suisse positioned to benefit when markets turn Challenging third quarter operating environment Continue to implement our focused business strategy Positioned to create long-term value and seize opportunities that arise from market dislocation Merrill Lynch Banking & Insurance Conference Slide 2
  • 4. Competitive strengths of Credit Suisse’s strategy Strong capital position Strong balance sheet – Substantial deposit base strong risk reduction Secure funding profile Competitive funding costs Continue to reduce risk exposures Merrill Lynch Banking & Insurance Conference Slide 3
  • 5. Competitive strengths of Credit Suisse’s strategy Strong balance sheet – strong risk reduction Good mix of stability and growth potential Integrated model well suited to Private Banking: strong net new asset new competitive environment flows – attracting best talent Investment Banking continues to transform – good geographic diversification Greater focus on strengths in Asset Management Continued contribution from integrated bank activities Merrill Lynch Banking & Insurance Conference Slide 4
  • 6. Competitive strengths of Credit Suisse’s strategy Strong balance sheet – strong risk reduction Integrated model well suited to new competitive environment Strong net new assets in Private Banking Capitalizing on Good client flows in Investment Banking growth opportunities Exceptional opportunities to hire new talent Merrill Lynch Banking & Insurance Conference Slide 5
  • 7. Volatile market conditions during 3Q08 S&P 500 index 10-day volatility CDX investment grade index in basis points 80 250 70 200 +48% 60 +283% in 3Q08 50 in 3Q08 150 40 30 100 4-year average 10-year average 20 50 10 Jul-01 Jul-15 Jul-29 Aug-12 Aug-26 Sep-09 Sep-23 Jul-01 Jul-15 Jul-29 Aug-12 Aug-26 Sep-09 Sep-23 EUR/USD one-month implied volatility DJ AIG commodity index 30-day volatility 15 35 +48% +80% 30 13 in 3Q08 in 3Q08 25 11 20 10-year average 10-year average 9 15 7 10 Jul-01 Jul-15 Jul-29 Aug-12 Aug-26 Sep-09 Sep-23 Jul-01 Jul-15 Jul-29 Aug-12 Aug-26 Sep-09 Sep-23 Source: Bloomberg, all data through September 30, 2008 Merrill Lynch Banking & Insurance Conference Slide 6
  • 8. Credit Suisse has maintained strong capital position BIS Tier 1 ratio (Basel II) Strong capital base as competitive advantage 10.2% 10.0% 9.8% Continue to prudently manage our balance sheet, exposures and capital Our Tier 1 ratio of 10.2% makes us one of the best capitalized banks in the world 4Q07 1Q08 2Q08 Merrill Lynch Banking & Insurance Conference Slide 7
  • 9. Solid funding structure Asset and liabilities by category Long-term debt and term CD issuance CHF bn at end of 2Q08 USD bn 1,230 1,230 Full-year CD Long-term debt long-term 29 debt goal 29 25 Full-year 13 CD goal CHF 14 541 bn 11 Full year Year-to-date Capital and Assets 2007 2008 liabilities Merrill Lynch Banking & Insurance Conference Slide 8
  • 10. Funding mix: strong and stable deposit base Retail and private banking deposits Debt and deposit funding by type Total: CHF 541bn at end of 2Q08 CHF bn Adverse exchange rate movements of CHF 14bn 286 276 273 272 267 261 Institutional deposits 3) 21% Retail & private banking deposits 1) Long-term debt 2) 50% 29% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 1) Time, demand and saving deposits 2) Structured notes, long-term bonds and subordinated debt 3) Bank deposits, CDs, corporates Merrill Lynch Banking & Insurance Conference Slide 9
  • 11. Credit Suisse CDS spreads are at the low end of peers 5-year CDS spreads (senior debt) as of October 3, 2008 Basis points 939 400 393 350 286 279 248 175 163 145 106 Peer 0 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Credit Suisse Source: Bloomberg Merrill Lynch Banking & Insurance Conference Slide 10
  • 12. Risk management discipline – Most rapid reduction of exposures among peers CHF bn Leveraged finance Commercial mortgages 59 36 (58)% Origination- (76)% 26 based 35 19 15 21 (exposures 14 shown gross) Funded Unfunded 3Q07 4Q07 1Q08 2Q08 3Q07 4Q07 1Q08 2Q08 Residential mortgages 1) CDO trading (US subprime related) 2) 4.6 16 (76)% Trading- (67)% 3.9 based 1.9 9 1.6 1.1 (exposures 6 5 0.8 1.1 shown net) Subprime Subprime Other 3Q07 4Q07 1Q08 2Q08 4Q07 1Q08 2Q08 1) All non-agency business, including higher quality segments (Alt-A and prime) 2) 2Q08 long positions are CHF 5.2 bn and short positions of CHF 4.1 bn Merrill Lynch Banking & Insurance Conference Slide 11
  • 13. Strong, stable balance sheet position Capital Deposit base Funding profile and spreads Asset quality All among the best in the industry Merrill Lynch Banking & Insurance Conference Slide 12
  • 14. We benefit from positive long-term growth trends in global Private Banking Rise of emerging markets Long-term growth prospects for wealth Generational transfers of wealth managers remain intact quot;Private investment bankingquot; Global presence and brand We are well positioned to face challenges and Strong balance sheet and capital outperform competition Unique integrated bank approach Merrill Lynch Banking & Insurance Conference Slide 13
  • 15. Private Banking resilient through the cycle Private Banking pre-tax income Gross margin on AuM in Wealth Mgmt CHF m basis points Transaction-based Recurring 1,381 1,377 117 117 116 1,324 113 112 1,289 1,220 32 30 34 30 38 75 82 83 85 86 2Q07 3Q07 4Q07 1Q08 2Q08 2Q07 3Q07 4Q07 1Q08 2Q08 AuM = client Assets under Management Merrill Lynch Banking & Insurance Conference Slide 14
  • 16. Wealth Management maintains strong NNA growth in 2008 Net new assets (NNA) 7%* 6% 8% 7% 6% growth on AuM * Annualized CHF bn 21 2H Net new assets in 51 43 31 29 29 Wealth Management 1H 2004 2005 2006 2007 1H08 CHF bn 839 784 774 693 AuM in 568 +9% Wealth Management CAGR 2004 2005 2006 2007 June-08 AuM = client Assets under Management Merrill Lynch Banking & Insurance Conference Slide 15
  • 17. Private Banking: ongoing global diversification Continued investment in Accelerated Continued turnaround Eastern Europe & Russia growth in Western and growth in the US Europe China onshore established India onshore launched Gulf: Leverage Japan onshore in Mexico onshore in integrated bank preparation preparation Relationship managers (RMs) at year-end Expanded presence 4,100 in Brazil (Hedging- 3,140 Griffo) Australia onshore 2,540 launched Goal 2004 2007 2010 Merrill Lynch Banking & Insurance Conference Slide 16
  • 18. Private Banking: our flagship franchise Results have shown resilience despite market dislocation Strong asset gathering and hiring trends across all regions Continue to invest in business and implement international growth strategy Private Banking offers unique growth prospects within the financial services industry Merrill Lynch Banking & Insurance Conference Slide 17
  • 19. Investment Banking strategy in the new environment Ongoing diversification of revenues leading to reduction in volatility Continued focus on diversifying business and increasing client-based revenues – progress in equity cash, prime services and equity derivatives Increasing capital efficiency and reducing risk capital – down 15 percent from the end of 2007 Continued focus on efficiency and expense management We will continue to aggressively and dynamically transform the business model Merrill Lynch Banking & Insurance Conference Slide 18
  • 20. Growth of less correlated and innovative businesses Prime services quarterly revenue growth Equity derivatives quarterly revenue growth +7% +68% 2Q07 3Q07 4Q07 1Q08 2Q08 2Q07 3Q07 4Q07 1Q08 2Q08 Electronic trading quarterly revenue growth Life finance quarterly revenue growth +47% +201% 2Q07 3Q07 4Q07 1Q08 2Q08 2Q07 3Q07 4Q07 1Q08 2Q08 Merrill Lynch Banking & Insurance Conference Slide 19
  • 21. Reallocation of headcount to less correlated growth businesses Correlation of Med. Low High Med. High High Med. Low revenues 1) Life % change in Finance headcount from Com- 2Q07 to 2Q08 modities Equity 102% Derivs. Prime 57% Svcs. 27% 12% (23%) (40%) (52%) (68%) Lev. Finance CMBS CDOs RMBS 1) Based on historic results and long-term expectations Merrill Lynch Banking & Insurance Conference Slide 20
  • 22. Focus on growing client revenues Client revenues from 1Q06 to 2Q08 +39% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Client revenues = Estimates of the client-related value inherent in trading and sales transactions as well as fees and other amounts which can be directly associated with client activity. Merrill Lynch Banking & Insurance Conference Slide 21
  • 23. Market dislocation has created opportunities Example: Significant market share increase in RMBS agency business US mortgage-backed securities – Residential Federal Credit Agencies 2007 Volume Market Year-to-date 2008 Volume Market Company (USD bn) Rank share (%) Company (USD bn) Rank share (%) JP Morgan Chase 43.1 1 18.2 Credit Suisse 14.3 1 14.5 Lehman Brothers 35.1 2 14.8 JP Morgan Chase 13.2 2 13.4 Merrill Lynch 22.7 3 9.6 Barclays Capital 13.1 3 13.3 Morgan Stanley 21.9 4 9.3 Lehman Brothers 10.3 4 10.5 RBS 21.0 5 8.9 Merrill Lynch 8.8 5 8.9 Credit Suisse 18.0 6 7.6 RBS 7.4 6 7.5 Banc of America 15.4 7 6.5 Banc of America 7.3 7 7.4 Citigroup 15.3 8 6.5 Deutsche Bank 7.0 8 7.1 UBS 13.7 9 5.8 Citigroup 5.6 9 5.7 Deutsche Bank 11.2 10 4.7 UBS 5.2 10 5.3 Source: Thomson Financial Merrill Lynch Banking & Insurance Conference Slide 22
  • 24. Rebalancing Investment Banking ERC ERC change by business from year-end 2007 to June 30, 2008 % change from year-end 2007 ERC = Economic Risk Capital 100% -9.9% (15)% -7.4% +2.2% +1.5% +0.2% -2.0% -1.6% -1.2% +2.8% 2007 LevFin CM BS Prop CDOs ABS / Comm. Equity Life Other June 08 Trading Conduits Derivatives Finance Merrill Lynch Banking & Insurance Conference Slide 23
  • 25. Credit Suisse Investment Banking headcount amongst the lowest in peer group Investment Banking headcount at 30 June 2007 Investment Banking headcount at 30 June 2008 30,000 30,000 25,000 25,000 Peer average Peer average 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 0 0 CS Peer Peer Peer Peer Peer Peer Peer Peer CS Peer Peer Peer Peer Peer Peer 1 2 3 4 5 6 7 1 3 6 5 4 2 7 Note: Based on Credit Suisse estimates Merrill Lynch Banking & Insurance Conference Slide 24
  • 26. Disciplined cost management in Investment Banking Other operating expenses General & Administration expenses per head 1) CHF m CHF 000's 2,286 2,178 1) 2,044 172 (5)%1) 149 (13)% 6M07 6M08 6M07 6M08 1) Excluding net litigation credit of CHF 134 m in 2Q08 Merrill Lynch Banking & Insurance Conference Slide 25
  • 27. Investment Banking strategy in the new environment Long standing strategy to reduce volatility Diversifying revenues and increasing client-based revenues Increasing capital efficiency and reducing ERC Continued focus on efficiency and expense management We will continue to aggressively and dynamically transform the business model Merrill Lynch Banking & Insurance Conference Slide 26
  • 28. Continued geographic diversification 1) Credit Suisse 2007 net revenues by region Global Footprint in CHF bn and up/down in % vs. 2006 Kazakhstan -25% Russia +15% Ukraine Czech Republic 10.4bn 9.6bn Wroclaw Frankfurt Toronto Zurich Montreal London Paris San Francisco Boston Milan Tokyo Chicago Los Angeles Madrid New York Beijing Irvine Atlanta Shanghai 4.0bn Dallas Miami Hong Kong Houston Nassau +23% 11.1bn Bangkok Monterrey Cayman Islands Karachi New Philippines Mexico City Delhi U.A.E. Malaysia Bogotá Mumbai Qatar Singapore +11% Kuala Lumpur Jakarta Rio de Janeiro Sydney São Paulo Perth Montevideo Melbourne South Africa Buenos Aires Santiago Switzerland APAC EMEA Americas APAC = Asia / Pacific, EMEA = Europe, Middle East and Africa 1) Based on Core Results before Corporate Center Merrill Lynch Banking & Insurance Conference Slide 27
  • 29. Continue to focus on achieving integration benefits; 2010 target collaboration revenues of over CHF 10 bn Core and collaboration revenues Collaboration revenues share (%) 1) CHF bn Core revenues 1) (different scale) 37.9 16% 16% Collaboration 15% revenues 34.9 5.9 14% 4.9 16.2 2.5 2006 2007 6M08 Avg. qtr Avg. qtr 1Q08 2Q08 2006 2007 1) Excludes valuation reductions and fair value gains/losses on own debt of total CHF 3.0 bn and CHF 5.4 bn in 2007 and 1H08, respectively Merrill Lynch Banking & Insurance Conference Slide 28
  • 30. Competitive strengths of Credit Suisse’s strategy Strong balance sheet – good risk reduction Business model well suited to new competitive environment Capitalizing on growth opportunities Positioned to create long-term value and seize opportunities that arise from market dislocation Merrill Lynch Banking & Insurance Conference Slide 29
  • 31. Merrill Lynch Banking & Insurance Conference Slide 30