Reuters logo
Fitch: Credit Suisse's 4Q15 Results Demonstrate Restructuring Challenges
2016年2月5日 / 上午9点44分 / 2 年前

Fitch: Credit Suisse's 4Q15 Results Demonstrate Restructuring Challenges

(The following statement was released by the rating agency) FRANKFURT/LONDON, February 05 (Fitch) Fitch Ratings says that Credit Suisse AG's (Credit Suisse, A/Positive /a) 4Q15 results show the challenges the bank is facing to resize its capital market activities in a difficult market environment, despite improved revenues from its Swiss and Asian franchises. Credit Suisse reported lower revenues on both a quarter-on-quarter (q-o-q) as well as a year-on-year (y-o-y) basis, increased litigation charges and increased losses in its Strategic Resolution Unit (SRU), which manages Credit Suisse's legacy assets. Its fully-applied Basel III Common Equity Tier 1 (CET1) ratio also fell by about 80bps q-o-q to 11.4%. The results have no immediate effect on Credit Suisse's ratings. Credit Suisse reported a pre-tax loss of CHF6.4bn in 4Q15, including goodwill impairments (CHF3.8bn), litigation charges (CHF0.6bn), restructuring charges (CHF0.4bn) and increased losses at the SRU as a result of new transfers from Credit Suisse's core businesses. Excluding these items and also a loss from fair value of own debt (FVOD, CHF0.7bn) and some minor non-recurring gains (CHF0.1bn), the adjusted core pre-tax loss for 4Q15 would have been CHF0.4bn. For the full year, Credit Suisse reported a pre-tax loss of CHF2.4bn. Excluding goodwill impairment, non-recurring gains, CHF2.1bn SRU losses, CHF0.8bn litigation charges, restructuring charges and an FVOD gain of CHF0.3bn, adjusted core pre-tax profit fell 33% yoy to CHF4.2bn. Credit Suisse's Swiss Universal Bank was the bank's strongest positive contributor to overall results, with pre-tax profits of CHF367m falling 7% q-o-q (and 48% y-o-y). The segment includes Private Banking as well as Corporate & Institutional Banking activities. The result was underpinned by stronger revenues (up 11% q-o-q) and delivered improved reported pre-tax profits q-o-q and y-o-y adjusted for restructuring charges (CHF39m) in 4Q15 and non-recurring revenues from real estate gains (CHF414m) in 4Q14. Credit Suisse's Asia Pacific segment, which includes Private and Investment Banking activities, is the segment management targets to deliver the highest earnings growth, and was the second strongest positive contributor to Credit Suisse's adjusted core pre-tax results, excluding goodwill impairment (CHF756m), restructuring expenses (CHF3m) and litigation expenses (CHF6m). The segment's adjusted pre-tax result was down 9% (q-o-q) but up 21% y-o-y, especially due to better fixed income sales and trading results. International Wealth Management (IWM), comprising Private Banking outside Switzerland and Asia Pacific and Asset Management, showed increased revenues q-o-q (+9%) but falling y-o-y (-15%). Fitch did not expect a decline in adjusted pre-tax profits q-o-q (-5%) and y-o-y (-35%) in this segment and we will be monitoring earnings from the segment in the coming quarters particularly closely, because we generally consider it to be a more reliable earnings contributor. IWM's fall in pre-tax profits was largely driven by weak results in asset management, where pre-tax income fell by 71% y-o-y (excluding the impact of the change in fund management to Verde Asset Management in 4Q14) to CHF39m in 4Q15, mainly resulting from a 40% fall in transaction and performance-based revenues. IWM's private banking results were more resilient as the adjusted net margin increased from 23bps in 4Q14 to 26bps in 4Q15, but the quarter saw net new asset outflows of CHF4.2bn, largely as a result of regularisation outflows. The worst performing segment in the quarter was Global Markets (GM), which incurred a strong fall in revenues q-o-q (-33% in USD terms) and y-o-y (-39%) and an adjusted pre-tax loss of CHF664m for 4Q15, excluding CHF2.7bn goodwill impairments and CHF156m other expenses. Credit Suisse's main challenge remains the resizing of this segment. In Fitch's view, performance was significantly negatively affected by Credit Suisse's reliance on a limited number of fixed income franchises. A deteriorating credit environment contributed to mark-to-market losses, predominantly in the bank's distressed portfolio, but also in securitised products, including collateralized loan obligations. This suggests that risks in GM have actually increased despite a CHF39bn leverage exposure reduction in 4Q15, which we view positively. While a reduction in inventory levels for these positions should ultimately reduce earnings volatility, further mark-to-market losses are in our view likely, partly as a result of the illiquidity of certain assets. The performance of Credit Suisse's Investment Banking & Capital Markets (IB&CM) segment was also weak in 4Q15. The segment reported an adjusted core pre-tax loss of CHF97 reflecting especially lower revenues in debt underwriting and inflexible operating expenses. Credit Suisse's SRU reported a pre-tax loss of CHF1.1bn in 4Q15 impacted by restructuring expenses, litigation expenses and expenses relating to US cross border matters. Risk-weighted assets were flat q-o-q, but leverage was reduced by 6%. As a result of the net loss for the quarter, the group's fully-applied Basel III CET1 ratio fell sharply to 11.4% at end-2015, compared with a proforma 12.2% at end-3Q15, which includes the impact of the CHF6bn capital increase. The latter's effect was diluted by about CHF1.8bn due to operating losses, and a further CHF0.6bn negative impact largely related to the revaluation of the Swiss pension fund. The fully-applied Basel III CET1 and Tier 1 leverage ratios also fell in 4Q15 by about 30bps and 20bps, respectively, to 3.3% and 4.5%. We expected that the capital raising would be consumed to some extent by Credit Suisse's restructuring and re-balancing of its business mix, but we understand that the bulk of the planned restructuring charges of CHF1.3bn and SRU exit costs are still to come in the next 12-18 months. In light of the weak performance of Credit Suisse's IBCM and GM activities and the second year of falling revenues in its International Wealth Management segment, we view Credit Suisse's acceleration of its efforts to reduce its compensation expenses, including reducing variable remuneration by 11% and deferrals of compensation in 2015, as necessary for maintaining the ratings. The Positive Outlook on the Long-term Issuer Default Ratings of Credit Suisse and Credit Suisse New York branch is unlikely to be maintained without improvement of adjusted revenues and earnings in 1H16. The Positive Outlook on Credit Suisse's Long-term IDR reflects our expectation that following the capital increase, Credit Suisse's common equity capitalisation is sufficiently strong to support its 'a' VR without considering the significant subordinated debt layers Credit Suisse has built up in recent years. This means that the subordinated debt layer would be available to support a one-notch uplift of Credit Suisse's Long-term IDR relative to its VR. However, capitalisation and any potential rating uplift are considered in the context of the bank being able to stabilise and restore core underlying earnings retention as it implements its restructuring plan. Contact: Michael Dawson-Kropf Senior Director +49 69 76 80 76 113 Fitch Deutschland GmbH Neue Mainzer Strasse 46-50 60311 Frankfurt am Main Bridget Gandy Managing Director +44 20 3530 1095 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: Additional information is available on ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below