Credit Suisse anounces results for the second quarter of 2011

Credit Suisse Group reported underlying pre-tax income of CHF 1.2 billion, underlying net income of CHF 835 million and an underlying return on equity of 10% for 2Q11.

Including business realignment costs of CHF 142 million and net fair value gains of CHF 41 million on own debt and stand-alone derivatives relating to own funding liabilities, pre-tax income was CHF 1.1 billion, net income attributable to shareholders was CHF 768 million and core results net revenues were CHF 6.3 billion. The return on equity attributable to shareholders was 9.7% and diluted earnings per share totaled CHF 0.48. The Basel II tier 1 ratio was 18.2% at the end of 2Q11. 

Brady W. Dougan, Chief Executive Officer, said: “The strength of our business model is underscored by an underlying return on equity of 15% for the first half of 2011 despite a disappointing performance in the second quarter. Asset Management showed a strong performance in the quarter, and Private Banking recorded solid results despite significant market headwinds and maintained its strength in gathering net new assets. However, our performance in Investment Banking was below our expectations.” He continued: “In order to ensure attractive returns in the face of an uncertain and challenging economic and market environment, we continue to be proactive about seeking cost efficiencies across the bank.

The ability to take concerted actions to achieve efficiencies while at the same time investing in client-focused businesses, continuing to grow our assets under management and winning market share, is confirmation of the strength of our business model.” 

He concluded: “We have adapted early to the new regulatory landscape, we are taking action to adjust the cost base of our business, and our platform will provide us with substantial upside potential when economic and market conditions improve.” 

Walter Berchtold to assume role of Chairman of Private Banking; Hans-Ulrich Meister appointed Chief Executive Officer of Private Banking Effective August 1, the Board of Directors has appointed Walter Berchtold Chairman Private Banking and Hans-Ulrich Meister Chief Executive Officer Private Banking thereby assuming responsibility for our Private Banking business in addition to his role as Chief Executive Officer Credit Suisse Switzerland.

In his new position Walter Berchtold will focus on further growing our strategically important business with UHNWI clients globally, and will work closely with divisional and regional CEOs helping build our integrated model and expanding our global footprint. Walter Berchtold and Hans-Ulrich Meister are members of the Executive Board of Credit Suisse and report to Brady Dougan. 

Brady W. Dougan, Chief Executive Officer, said: “Walter Berchtold and his team have built the premier Private Banking franchise globally. Since 2008 we recorded more than CHF 150 billion in net new assets with wealth management clients alone, almost three times the result of our closest competitor, and we have consistently reported the highest margins in the industry. Recognizing early on that our international clients require multishore capabilities, during Walter Berchtold’s tenure we have built a strong network of booking platforms around the world thereby growing our international business significantly.

Our strong track record of providing superior advice and services globally and attracting best in class people has been recognized by our clients and also through various industry awards. Since joining Credit Suisse in 2008 Hans-Ulrich Meister has proven outstanding leadership capabilities in a period that presented us with significant challenges. We are very pleased that with his appointment we can ensure a smooth succession in this critically important business.” 

Cost adjustments

To position the Group to perform well in the continued challenging market, a number of fficiency enhancements are being implemented that target CHF 1 billion in cost savings and resulting reductions in the expense run-rate during 2012. This program includes targeted headcount reductions of approximately  4% of the total headcount across the Group. The initiatives will involve implementation costs in 2011 of CHF 400 million to CHF 450 million, of which CHF 142 million were recognized in 2Q11, with further amounts to be recognized during the rest of the year. As a result of these implementation costs the program will provide for limited net savings in 2011 with the full benefits of the initiatives expected to be realized during 2012.