2009-01-16 Bank am Bellevue Conference


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2009-01-16 Bank am Bellevue Conference

  1. 1. Bank am Bellevue “The perfect business model?!” Renato Fassbind, Chief Financial Officer Flims, 16th January 2009
  2. 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 third quarter report 2008. Slide 1
  3. 3. Key messages Accelerated implementation of strategic plan Resilient Private Banking performance and continued global expansion Repositioning the Investment Bank and further risk reduction Strength of capital and liquidity position Continued implementation of the integrated bank strategy Slide 2
  4. 4. Accelerated implementation of strategic plan Continued commitment to integrated business model; growth of Private Banking globally and Swiss businesses Accelerated repositioning of the Investment Banking business portfolio with a reduction in risk, volatility and costs Continue to focus Asset Management business and align it with the bank’s other businesses Positions Credit Suisse strongly with reduced risk, lower costs and strong capital to enable us to weather the continuing market challenges, capture opportunities, and prosper when markets improve Slide 3
  5. 5. Adjusting capacity Efficiency improvements Headcount Credit Suisse (period end) ! Reduction in headcount by 5,300, or 11% 50,300 44,600 44,900 48,100 ! Nearly 50% of − plus an additional reduction of 1,400 headcount reduction contractors by year-end, with ! CHF 2 billion cost reduction, representing 9% remainder sche- of the bank’s 9M08 annualized cost base, most duled during 1H09 of which is to be implemented by mid-2009 2005 2006 2007 3Q08 Headcount Investment Banking (period end) 20,600 21,300 17,300 18,700 17,500 ! Approx. 2/3 of total headcount reduction relates to Investment Banking, including Shared Services personnel 2005 2006 2007 3Q08 2009E Slide 4
  6. 6. Attractive long-term growth trends in Private Banking… Long-term growth prospects for wealth Private Banking pre-tax income managers remain intact CHF bn ! Rise of emerging markets 5,486 ! Generational transfers of wealth ! quot;Private investment bankingquot; 4,596 3,643 1) 3,966 3,717 3,333 We are well positioned to face challenges and outperform competition ! Global presence and brand ! Strong balance sheet and capital ! Unique integrated bank approach 2004 2005 2006 2007 9M08 1) Excluding provisions of CHF 310 m relating to settlement agreements for auction rate securities Slide 5
  7. 7. ..with an increased presence in new markets… Continued ! 18 new offices in 4 new investment in markets since 2007 Eastern Europe Accelerated and Russia growth in Western ! 40% of asset inflows from Continue turnaround in Europe hires made over last 3 years the US China onshore established Implementing India onshore Gulf: leverage integrated bank Japan onshore in Mexico onshore in preparation preparation Relationship managers (RMs) at year-end 4,100 Expanded presence 3,510 3,140 in Brazil (Hedging- 2,540 Griffo) +370 Australia onshore +200 p.a. launched Goal 2004 2007 11M08 2010 Slide 6
  8. 8. Repositioning the Investment Bank Challenging market environment… Credit Suisse strategic response ! Weaker macroeconomic trends leading to ! Reduce volatility and improve capital volatile markets efficiency ! More conservative behavior from market ! Focus on client and flow-based businesses participants leading to lower financial leverage (e.g. building on strength in algorithmic and reduced demand for complex products trading, cash equities, prime services, rates, FX and high grade credit) …but some positive trends for Credit Suisse ! Cuts in origination cost base and risk limits ! Investor preference for strong counterparties for complex credit and structured products ! Increased demand for exchange-based ! Reduction in risk capital usage, including exit products – structural growth in electronic from certain proprietary and principal trading trading across products activities and aligning lending with customer ! Positive outlook for Rates and FX given fiscal franchises and macro trends ! Investment Banking will remain a valuable ! Fewer competitors and better pricing contributor to the integrated bank with lower volatility and attractive risk returns Slide 7
  9. 9. Repositioning the Investment Bank: Robust earnings and returns over the cycle with lower volatility Investment Banking revenue (USD bn) ! Proforma analysis of repositioned As reported Proforma Investment Bank demonstrates robust 16.4 15.7 14.4 revenues and earnings, and lower volatility 12.4 11.5 10.9 9.4 of this business model over the last four years 0.4 YTD Nov 2005 2006 2007 2008 Investment Banking pre-tax income (USD bn) ! Average margins and returns should be higher through the cycle Proforma 3.7 2.0 2.0 0.5 ! Significantly lower risk capital usage in YTD Nov 2005 2006 2007 Investment Bank resulting in a more 2008 balanced capital allocation across Proforma risk-weighted assets (USD bn) Credit Suisse 99 129 161 135 Slide 8
  10. 10. Strong growth in client businesses in Investment Banking Global rates/FX revenues 1) Electronic trading revenues Prime services client balances CHF m CHF m CHF bn 369 1,080 335 +108% +52% +74% 1Q 2Q 3Q 4Q 2Q 3Q 1Q 2Q 3Q 4Q 2Q 3Q 1Q 2Q 3Q 4Q 2Q 3Q 1Q 1Q 1Q 2007 2008 2007 2008 2007 2008 ! Record volumes set in September ! Record results in 3Q08 due to ! Strong growth in client balances and high volatility with wider bid/offer new client mandates ! Credit Suisse's CrossFinder spreads and significant ! Credit Suisse viewed as strong product is the #2 dark pool trading rebalancing by clients counterparty and “safe haven” tool in the U.S. (more than 160 ! Remain selective; 40% acceptance rate ! Significant profits in intraday million shares/day crossed) trading with minimal risk and client ! Trend for increasing number of crossing financial products will move to electronic trading platforms 1) Excluding derivative rate exposures Slide 9
  11. 11. Substantial reduction in exposure to affected asset classes Leveraged finance Commercial mortgages RMBS and CDO trading CHF bn CHF bn CHF bn Funded Subprime related 59 36 Other Unfunded 13.3 (64)% (49)% 26 (80)% 35 6.2 19 7.4 6.8 6.5 15 13 21 3.0 2.1 1.9 14 12 3Q07 4Q07 1Q08 2Q08 3Q08 3Q07 4Q07 1Q08 2Q08 3Q08 4Q07 1Q08 2Q08 3Q08 Slide 10
  12. 12. Further risk reduction in Investment Banking Continued risk reduction Investment Banking RWAs (period end in USD bn) ! On a consistent methodology basis, risk- 236 230 214 weighted assets (RWAs) expected to decline to 193 170 135 − USD 170 bn at year-end 2008, and (12%) (21%) (18%) − USD 135 bn by year-end 2009 2007 1Q08 2Q08 3Q08 2008E 2009E Investment Banking average 1-Day VaR (Period end in USD m) 186 Dataset / 174 ! Underlying 1-day Value-at-Risk (VaR) declined methodology effect 158 Positioning 124 − 33% vs. 3Q08 average 96 (quarter-on-quarter) 89 78 − 55% vs. 2007 average 72 63 52 (year-on-year) 35 Nov 30 1) 2006 2007 1Q08 2Q08 3Q08 1) VaR on November 30, 2008 Slide 11
  13. 13. Continue to streamline Asset Management division ! Asset Management business to focus on core competencies and alignment with integrated bank ! Exit parts of long-only traditional asset management business that lack scale Multi-asset class solutions Alternative Investments Global Investors ! CHF 153 bn AuM ! CHF 170 bn AuM ! CHF 157 bn AuM, mostly managed in Switzerland ! 37 bps gross margin ! 67 bps gross margin ! Traditional long-only equity and ! Active asset allocation ! Private equity, real estate, credit fixed income mandates strategies and solutions across and hedge fund strategies all asset classes ! Integrated into other businesses ! Continue to expand fee-based ! Key product offering for Private to gain further efficiencies businesses Banking clients (discretionary ! Despite challenging markets, Sold to Aberdeen in 4Q08 mandates) investment opportunities persist ! CHF 75 bn assets managed outside Switzerland ! Receive stake of up to 24.9% in Aberdeen (GBP 250 m) Slide 12
  14. 14. Capital strength as competitive advantage Tier 1 capital and tier 1 capital ratio ! Have taken pro-active steps by raising CHF 10 bn of capital (CHF bn and %) 13.7% ! 3Q08 proforma positions is 10.2% 10.4% Tier 1 exceeding SFBC’s 2013 capital 9.8% capital ratio targets and leverage requirements 42.2 ! Strongly positioned to continue 32.2 30.8 building client franchises and take 29.4 Hybrid tier 1 advantage of targeted growth capital opportunities Core tier 1 capital 1Q08 2Q08 3Q08 3Q08 proforma SFBC = Swiss Federal Banking Commission Slide 13
  15. 15. Solid funding structure Asset and liabilities by category Private banking and other customer deposits CHF bn at end of 3Q08 CHF bn 1,394 1,394 288 Reverse 379 Repo 338 261 repo +10% Trading 187 Trading 515 and liquid Short-term 114 assets Long-term 165 debt Private 288 Loans 239 banking & other 121% deposits coverage Other 263 Other 261 Equity 39 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Assets Capital & liabilities Slide 14
  16. 16. Continue to focus on achieving integration benefits; 2010 target collaboration revenues of over CHF 10 bn Core and collaboration revenues Gross margin with Wealth Management clients CHF bn in bps 1) Core revenues 130 (different scale) 129 37.9 Collaboration 16 14 revenues Referred 34.9 5.9 to IB/AM 19.3 4.9 4.0 115 114 Booked in Wealth Management 9M07 9M08 2006 2007 9M08 1) Excludes valuation reductions and fair value gains/losses on own debt of total CHF 2.9 bn and CHF 5.3 bn in 2007 and 9M08, respectively Slide 15
  17. 17. Slide 16