Credit Suisse Group ( CS ) reported
first-quarter 2013 adjusted net income attributable to shareholders
of CHF 1,462 million ($1,572 million) compared with the
year-ago income of CHF 1,055 million ($1,144 million).CREDIT SUISSE (CS): Free Stock Analysis ReportDEUTSCHE BK AG (DB): Free Stock Analysis ReportMITSUBISHI-UFJ (MTU): Free Stock Analysis
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Amid an uncertain macroeconomic environment, cost-savings
initiatives were successful as operating expenses decreased.
Further, a strong capital position and reduced provision for credit
losses were the headwinds. However, decline in top line remains a
matter of concern.
Including one-time items, Credit Suisse's reported net income came
in at CHF 1,303 million ($1,401 million) in the reported quarter.
This was substantially higher than CHF 44 million ($48 million) in
the prior-year quarter.
Quarter in Detail
Adjusted net revenue came in at CHF 7.2 billion ($7.7 billion),
down 1.4% from the prior-year quarter. The decline reflected lower
interest and dividend income along with reduced other revenues.
These were partially mitigated by increased commissions and fees
income as well as elevated trading revenues.
Reported net interest income stood at CHF 1.8 billion ($1.9
billion), falling 5.3% from the prior-year quarter. However,
commissions and fees reached CHF 3.3 billion ($3.5 billion), up
3.1% year over year.
Provision for credit losses came in at CHF 22 million ($24
million), down from CHF 34 million ($37 million) in the prior-year
Core Segment Performances
Private Banking & Wealth Management segment reported net
revenue of CHF 3.3 billion ($3.5 billion), decreasing 5% from the
prior-year period. The dip was mainly driven by the partial sale of
an investment in Aberdeen Asset Management (Aberdeen) in the
prior-year quarter and lower net interest income, partially
mitigated by higher recurring commissions and fees.
The Investment Banking unit reported net revenues of CHF 3.9
billion ($4.2 billion), almost in line with the prior-year quarter.
The stable results reflect elevated revenues in fixed income sales
and trading along with underwriting and advisory, offset by reduced
equity sales and trading results.
Adjusted total operating expenses were recorded at CHF 5.2 billion
($5.6 billion), down 8.8% from the prior-year quarter. The decline
was primarily attributable to reduced compensation and benefits
expenses, partially offset by increased commission expenses and a
rise in general and administrative expenses.
In the reported quarter, business realignment costs of CHF 92
million ($99 million) were incurred in the Corporate Center
Credit Suisse continued with its expense run-rate reduction
initiatives. As of Mar 31, 2013, the company recorded cost savings
of CHF 2.5 billion, excluding certain significant items. Therefore,
with this achievement, Credit Suisse remains on track to attain its
total run-rate reduction target of CHF 4.4 billion by
Capital and Funding
As of Mar 31, 2013, Credit Suisse's Look-through Swiss Core
Capital ratio came in at 9.8%. Based on current data, it is
expected that the company will exceed the Swiss end-2018
requirement of 10% by the middle of 2013. Notably, a look-through
ratio considers the risk weightings of assets, which are not
directly held by the bank.
Effective Jan 1, 2013, the Basel III framework has been
implemented in Switzerland. As of Mar 31, 2013, Credit Suisse
reported a Basel III common equity tier 1 ratio of 14.6%, up from
14.2% reported in the prior quarter. The increase in ratio reflects
elevated tier 1 capital and a rise in risk-weighted assets.
Notably, in Oct 2012, the company announced measures to reduce
total balance sheet assets by 13% or CHF 30 billion to below CHF
900 billion by the end of 2013 on a foreign-exchange neutral
As of Mar 31, 2013, total balance sheet assets were recorded at
CHF 947 billion, up 2.5% sequentially. The company's Swiss leverage
ratio stood at 3.8%, down from 5.8% in the prior quarter.
In our viewpoint, given the stressed operating environment,
earnings of Credit Suisse will remain under pressure in the
upcoming quarters. However, prudent business model changes can
improve the company's efficiency and bolster its competitive
Amid the uncertain regulatory environment and the Eurozone debt
crisis, Credit Suisse will focus on generating capital. Its
restructuring initiatives are also encouraging. We believe that
such efforts would improve the company's operating efficiency in
Credit Suisse carries a Zacks Rank #4 (Sell). Among other foreign
banks, UBS AG ( UBS ) and
Deutsche Bank AG ( DB ) are expected to
announce March-quarter end results on Apr 30, 2013, while
Mitsubishi UFJ Financial Group, Inc. ( MTU ) is anticipated to
announce results on May 7, 2013.