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).
Similar to 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).
Similar to 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). (20)
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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).
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
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
SĂŁo 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