Credit Suisse's Wealth Management Recovery to Support Stock


Credit Suisse ( CS ) wealth management accounts for about 47% of the $46.25 price estimate for Credit Suisse , which is slightly ahead of the current market price. The wealth management division of CS competes with of other banks like Morgan Stanle y ( MS ), UBS ( UBS ) and Goldman Sachs ( GS ).

The total Assets Under Management (AUM) for the wealth management division of Credit Suisse was $840 billion compared to $1.3 trillion in 2009 for UBS and $1.5 trillion for Morgan Stanley. The Wealth Management division for CS is divided into three main regions, based on assets managed for clients in those regions. These are the international clients, Swiss and corporate clients. We recently discussed the upside from improving profit margins in CS Wealth Management in one of our articles: Credit Suisse Could Find Upside in Restored Wealth Management Profit Margins .

The asset management division provides retail investors with a full range of mutual fund and alternative investment products, and institutional clients with a fully integrated asset management offering. On the other hand, wealth management serves the needs of high net-worth individuals as well as institutional investors with full range of financial services.

Wealth Management Competitors

The above bar chart compares the change in wealth management assets for UBS, Credit Suisse and Morgan Stanley between 2006 and 3Q 2010. Though strong global economic growth fueled an increase in the assets managed by these firms in 2007, they saw a significant decline in their assets managed in 2008 due to the global financial crisis. However, with global economic environment improving, these firms have increased their assets managed largely due to an increase in risk appetite and investment activity by clients and as a consequence of returns across most major asset classes improving. Morgan Stanley in particular has been scaling up its wealth management operations, expanding its business significantly and entered into a joint venture with Citi's Smith Barney, which should help growth this business further.

We estimate that the international clients segment was the most valuable at around 29% to its stock price estimate with Swiss clients and Institutional clients contributing nearly 10% and 8% respectively.

Profit Margins for Wealth Management

The Wealth Management international operating margin decreased from an estimated 48% in 2006 to 26% in 2008 due to the financial crisis. However, with the economic environment getting slightly better we expect this to recover to 31% in 2012. By the end of the Trefis forecast period, we expect this to reach around 45%. You can modify the chart below to make your own forecast.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: CS , GS , MS , UBS



More from Trefis:

Related Videos

Spot the Dropout RRC
Spot the Dropout RRC                
Power on/Power Off
Power on/Power Off                  
Spot the Dropout IPC
Spot the Dropout IPC                




Most Active by Volume

  • $10.62 ▲ 1.14%
  • $113.7899 ▲ 0.44%
  • $16.305 ▼ 0.34%
  • $5.91 ▲ 2.25%
  • $10.45 ▲ 1.46%
  • $2.607 ▲ 9.08%
  • $29.01 ▲ 2.08%
  • $16.575 ▲ 3.85%
As of 8/31/2015, 01:29 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by