philipp wehle, head finance, international wealth ... · 16-05-2018 · 3 from 2003 through 2017...
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International Wealth Management
May 16, 2018
Philipp Wehle, Head Finance, International Wealth Management
Disclaimer
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 2
This material does not purport to contain all of the information that you may wish to consider. This material is not to be relied upon as such or used in substitution for the exercise of independent judgment.
Cautionary statement regarding forward-looking statements
This presentation contains forward-looking statements that 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 "Risk factors” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2017 and in the “Cautionary statement regarding forward-looking information" in our 1Q18 Financial Report, published on May 3, 2018 and 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.
In particular, the terms “Estimate”, “Illustrative”, “Ambition”, “Objective”, “Outlook” and “Goal” are not intended to be viewed as targets or projections, nor are they considered to be Key Performance Indicators. All such estimates, illustrations, ambitions, objectives, outlooks and goals are subject to a large number of inherent risks, assumptions and uncertainties, many of which are completely outside of our control. These risks, assumptions and uncertainties include, but are not limited to, general market conditions, market volatility, interest rate volatility and levels, global and regional economic conditions, political uncertainty, changes in tax policies, regulatory changes, changes in levels of client activity as a result of any of the foregoing and other factors. Accordingly, this information should not be relied on for any purpose. We do not intend to update these estimates, illustrations, ambitions, objectives, outlooks or goals.
We may not achieve the benefits of our strategic initiatives
We may not achieve all of the expected benefits of our strategic initiatives. Factors beyond our control, including but not l imited to the market and economic conditions, changes in laws, rules or regulations and other challenges discussed in our public filings, could limit our ability to achieve some or all of the expected benefits of these initiatives.
Estimates and assumptions
In preparing this presentation, management has made estimates and assumptions that affect the numbers presented. Actual results may differ. Annualized numbers do not take account of variations in operating results, seasonality and other factors and may not be indicative of actual, full-year results. Figures throughout this presentation may also be subject to rounding adjustments. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information. This information is subject to change at any time without notice and we do not intend to update this information.
Statement regarding non-GAAP financial measures
This presentation also contains non-GAAP financial measures, including adjusted results. Information needed to reconcile such non-GAAP financial measures to the most directly comparable measures under US GAAP can be found in this presentation in the Appendix, which is available on our website at www.credit-suisse.com.
Statement regarding capital, liquidity and leverage
As of January 1, 2013, Basel III was implemented in Switzerland along with the Swiss “Too Big to Fail” legislation and regulations thereunder (in each case, subject to certain phase-in periods). As of January 1, 2015, the Bank for International Settlements (BIS) leverage ratio framework, as issued by the Basel Committee on Banking Supervision (BCBS), was implemented in Switzerland by FINMA. Our related disclosures are in accordance with our interpretation of such requirements, including relevant assumptions. Changes in the interpretation of these requirements in Switzerland or in any of our assumptions or estimates could result in different numbers from those shown in this presentation.
Unless otherwise noted, leverage exposure is based on the BIS leverage ratio framework and consists of period-end balance sheet assets and prescribed regulatory adjustments. The look-through tier 1 leverage ratio and CET1 leverage ratio are calculated as look-through BIS tier 1 capital and CET1 capital, respectively, divided by period-end leverage exposure. Swiss leverage ratios are measured on the same period-end basis as the leverage exposure for the BIS leverage ratio.
Sources
Certain material in this presentation has been prepared by Credit Suisse on the basis of publicly available information, internally developed data and other third-party sources believed to be reliable. Credit Suisse has not sought to independently verify information obtained from public and third-party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information.
1
2
An Attractive Business with a Strong Market Position
Successfully Executing our Strategy
Appendix
International Wealth Management
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 3
IWM is a major contributor to Credit Suisse's growth strategy
with low consumption of resources & risks
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix 1 Group Results excluding Strategic Resolution Unit
24%
21.8 bn
Adjusted
revenues
5.1 bn 38 bn
238 bn
Risk-
weighted
assets
16%
1.5 bn
32%
4.6 bn
Adjusted
pre-tax
income
99 bn
12%
857 bn
Leverage
exposure
Swiss
Universal
Bank
Credit Suisse
IWM Contribution to Credit Suisse Core Results in 20171
International
Wealth Management
Private Banking
Asset Management
International
Wealth
Management
Other
Divisions
Legend:
Asia
Pacific
Global
Markets
Investment
Banking &
Capital
Markets
Corporate Center
Strategic Resolution
Unit
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 4
in CHF
IWM with significant international PB franchise and
a global AM footprint
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 5
Private Banking Asset Management
1
Swiss Fund
Market Provider5
Global Alternative
Asset manager6
PB
ranking
Emerging
markets2 Europe
CHF ~219 bn AuM
(~70% from strategic and other UHNW clients)
CHF ~148 bn AuM4
(~45% from strategic and other UHNW clients)
Traditional investments:
CHF ~217 bn AuM
Alternative investments:
CHF ~122 bn AuM
AM
ranking
~85% from Institutional & 3rd Party clients ~15% from Credit Suisse Private Banking clients
~7% CAGR regional wealth
growth to 20253
~4% CAGR regional wealth
growth to 20253
2 7
Note: AuM data as of end 2017 1 Euromoney 2017 Survey for 'Best Private Banking Services Overall‘, tied first rank based on average ranking in Europe, Central & Eastern Europe, Middle East & Africa, Latin America and Caribbean 2 Middle East & Africa, Emerging Europe and Latin America 3 Credit Suisse and McKinsey Wealth Pools 2017 4 Including International Private Clients business 5 Swiss Funds & Asset Management Association media release March 2017 6 Willis Towers Watson Global Alternatives Survey 2017, company filings
Across
our regions1
1
2
An Attractive Business with a Strong Market Position
Successfully Executing our Strategy
Appendix
International Wealth Management
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 6
Delivering a step change in profitability and on track
to 2018 PTI target
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 7
Adjusted return on
regulatory capital† 22% 29% 23%
268 308 327 474
2015 2016 2017
2Q to 4Q
2018
1Q
1,016 1,109
1,497
+47%
IWM adjusted
pre-tax income
in CHF mn
35% in 1Q
+45%
1.8 bn target
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix † See Appendix
Successful execution of the priorities presented at Investor
Day 2016…
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 8
Grow PTI by around
CHF 150 mn in
Europe
Grow leading
franchises in Middle
East & Africa and
Emerging Europe
Balance transition
with growth ambition
in Latin America
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix Revenues and PTI growth: 2017 vs. 2016, NNA annualized growth during 2017 1 Shown as absolute as the business turned to profitability and percentage change is therefore not meaningful
Grow adjusted PTI by
over CHF 200 mn in
Asset Management
11% Net revenues growth
14% Net revenues growth
5% Net revenues growth
22% Management fees growth
8% NNA growth rate
8% NNA growth rate
(2)% NNA growth rate
6% NNA growth rate
Clear
progress
Clear
progress
Clear
progress
Clear
progress
33% Pre-tax income growth
34% Pre-tax income growth
32% Adj. pre-tax income
growth
>130 mn Pre-tax income growth1
How we executed in 2017 against our end 2018 goals:
…while consistently delivering on our client focused strategy
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 9
Leverage our Investment Engine
Capitalize on AM’s product expertise
Enhance lending capabilities
Grow Strategic Clients franchise
Strategic RM hiring
Develop footprint
Develop digital service model
Efficiency, automation &
accountability
Strengthen compliance & risk
Deliver
Client
Value
Enhance
Client
Proximity
Increase
Client
Time
CHF 15 bn mandates sales; 3-year outperformance1
PB channel drives ~40% of AM NNA2
CHF 2.8 bn net loan growth at 9 bps higher loan margin3
Strategic clients revenues up 30%; ~55% of PB NNA4
Double digit growth in RM productivity
Built-out capabilities in UK & Lux. hubs and Mexico onshore
Launched digital client collaboration tools & e-onboarding
Streamlined account opening; accelerated time-to-market
Further enhanced compliance & risk oversight
2017 achievement (examples)
1 Asset Risk Consultants PCI Report 4Q17 2 Excluding NNA from Investments & Partnerships 3 Loan margin 2017 vs 2016 4 Revenues growth 2017 vs. 2016; share of IWM PB NNA in 2017
Objectives
Successful house view performance rewarded by strong
mandate inflows
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 10
Investment performance relative to peers 3-year period from end 2014 through end 20171
Mandates penetration at 31%3; aim to increase to >40%
2016 2017
Mandates net sales momentum in CHF bn
Advisory2
Discretionary
15.3
1.7
Income Balanced Growth Equities
USD EUR
2%
4%
6%
8%
10%
One market view across the firm
House View outlook
Single and bank-wide House
View, combining PB and GM economic & market analysis capabilities
Consolidating our research
and strategy teams even further
Continued roll out of GM equity research into our
global WM franchise
1 Asset Risk Consultants PCI Report 4Q17 2 Credit Suisse Invest 3 As of end 2017
12%
Loan growth at increasing margins and strong credit risk
history
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 11
48.4 51.1
2016 2017
Credit volume1 in CHF bn Gross loan revenue margin2 in basis points
1 2016 restated from prior disclosure to reflect transfer of exposures from APAC to IWM 2 Client rate net of reference rate over average loan volume 3 From 2003 through 2017 for mortgages, from 2006 through 2017 for aviation finance, from 2001 through 2017 for export finance and from 2002 through 2017 for ship finance and lombard lending
Avg. annual loss rate
through the cycle3 ~10 bps
160 169
2016 2017
Net new
lending in CHF bn
2.8 4.1
+6% 9
Addressing financing needs of our wealth management clients
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 12
Entrepreneurial growth down 4%-points
Investment & asset allocation up 5%-points
Life-Style down 1%-point
Lombard lending2 Real Estate
Aviation/Yacht
finance
Ship
finance
Export finance
(ECA2 backed)
Client
needs
54% 57%
10% 12% 7% 6%
23% 20%
6% 5%
Credit
volume
share1
End 2016 End 2017
1 2016 restated from prior disclosure to reflect transfer of exposures from APAC to IWM 2 Including structured lending of 1.2% and 1.8% at end 2016 and end 2017, respectively 3 Export Credit Agency
2.91
3.19
2016 2017
284
325
2016 2017
AuM per RM Adjusted net revenues per RM
Targeted rebalancing and upgrading of talent base…
Number of RM
…drives strong RM productivity improvements
in CHF mn
520 470
Net: (50)
+30
(80)
+14% +10%
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix 1 Including International Private Clients business area, which services lower wealth band clients, predominantly from Europe 2 Including RM not allocated to regional business areas
Quality hiring in targeted growth markets, leading to higher
productivity
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 13
Europe1
Emerging
markets2
2016 Hires Leavers 2017
620 660
Net: +40
+160
(120)
Year-on-year revenue growth per RM Revenue growth in IWM 2017 vs. 2016
~70% of RMs with positive revenue growth
RMs by revenue growth
More systematic advice via advisory mandates and support of investment specialists
Continued implementation of House View
to optimize client portfolios’ risk/return profile for a large part of advisory relationships
Streamline processes front to back to
free up advisor time
Leverage cross-divisional capabilities to meet untapped client demand
Simplified
Amplify Activate
Re-energize
& consolidate
Continue to broaden individual producer contribution
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 14
Leveraging GM capabilities to meet untapped client demand
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 15
Currently low AuM penetration and supportive market environment
FX exposure an embedded, but
insufficiently addressed investment risk in many of our client's wealth structures
Clients seeking investment diversification
and yield-enhancement
Referrals of PB's entrepreneurial client
base into GM/ITS
Significant client demand capacity Successful ITS business model ITS capabilities
Note: ITS refers to International Trading Solutions
Structured
Solution
Foreign
Exchange
Financing
Solution
Bespoke
Transactions
CIO-led House View
Sophisticated client demand
Bespoke structured solutions
Global distribution channel
Syndicated risk offset in wholesale market
Win-win solutions for clients and the franchise,
generating high-quality fee income
Utilizing lending to transform local concentration into global
diversification
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 16
Client profile and needs
UHNWIs in the region typically
have a majority of their net worth
invested locally
Low-return of local investments
fosters client to seek:
yield enhancement via…
asset diversification with…
global investment opportunities
...without divesting local holdings
Primary banker for Clients in the Region …
…providing bespoke solutions and delivery
Consolidation of local holdings with Credit Suisse
Monetization with our Structured Lending capabilities
Loan proceeds reinvested with Credit Suisse into global portfolio of diversified, best-in-class solutions (e.g. AM,
Structured Solutions)
Client subsequently transferred additional financial
investments from other institutions to Credit Suisse
One-stop destination offering both Local and International
Capabilities catering to Lending and Investment needs
Offering holistic bespoke solutions to UHNW clients
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 17
Yield enhancement
as lender against
single stock position
Discretionary and Advisory
Mandates, Opportunistic
Investment Solutions,
Family Governance,
Succession Planning
Debt capital market
support as bond issuance coordinator
Equity capital
market support as co-leading IPO
arranger
As Private Individual As Entrepreneur
Asset / Equity
side
Liability side
Holistic bespoke solutions
Client profile and needs
European based UHNW
client with several billion
of wealth
Entrepreneurial
activities in different
industries
One-stop-shop offering
360° integrated solutions
in wealth
management,
structuring, financing
and capital raising
360°
services
House View and ITS capabilities delivering value-add solutions
for clients
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 18
An exclusive solution…
Protected Note on a
financial credit fund
Full capital protection
Full upside participation
Exclusively available for Credit Suisse clients
Research conviction call
(House View)
Financials offering the best
risk/return reward in credit market
ITS structuring capabilities
Distinctive fund-linked solution
made available to PB clients
through dedicated one-stop
organization
RM & IC engagement
Promoting and explaining the
solution in a House-View-linked
portfolio context
USD 490 mn AuM
(capped)
Allocated within 1 week
(over-subscribed)
More than 100 clients
Distributed in
8 EU locations
…delivered via
front-to-back collaboration… …generating significant impact
Note: ITS refers to International Trading Solutions RM refers to Relationship Manager IC refers to Investment Consultant
1
2
An Attractive Business with a Strong Market Position
Successfully Executing our Strategy
Appendix
International Wealth Management
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 19
International Wealth Management Strong profit progression and NNA growth
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 20
PB
1Q18 4Q17 1Q17 Δ 4Q17 Δ 1Q17
Adj. net margin in bps 42 30 32 12 10
Net new assets 5.5 2.7 4.7
Number of RM 1,130 1,130 1,120 0% 1%
Net loans 51 50 46 2% 12%
Net new assets AM 9.0 1.4 15.0
Risk-weighted assets 38 38 36 (2)% 5%
Leverage exposure 94 99 94 (5)% 0%
Key metrics in CHF bn
Key messages Adjusted key financials in CHF mn
1Q18 4Q17 1Q17 Δ 4Q17 Δ 1Q17
Net revenues 1,367 1,392 1,221 (2)% 12%
o/w Private Banking 1,006 923 883 9% 14%
o/w Asset Management 361 469 338 (23)% 7%
Provision for credit losses (1) 14 2
Total operating expenses 894 968 892 (8)% 0%
Pre-tax income 474 410 327 16% 45%
o/w Private Banking 382 275 262 39% 46%
o/w Asset Management 92 135 65 (32)% 42%
Cost/income ratio 65% 70% 73%
Return on regulatory capital† 35% 31% 26%
Significant progress in providing institutional-like solutions to higher net worth clients
Continued strict cost control resulting in flat expenses
PTI of CHF 474 mn with continued momentum towards 2018 target
RoRC† of 35% and cost/income ratio of 65%
Private Banking
PTI up 46% vs. 1Q17 and up 39% vs. 4Q17
14% higher revenues with increases across all major revenue categories, including notably higher client activity also reflecting proactive client advice in a more volatile environment
Successful house view implementation reflected by CHF 4.8 bn net mandate sales
NNA of CHF 5.5 bn at an annualized growth rate of 6% with strong inflows across emerging markets and Europe
Asset Management
PTI up 42% vs. 1Q17 and down from seasonally higher 4Q17
Continued growth in management fees (up 10%) at resilient recurring margins (down 1 bp)
NNA of CHF 9.0 bn, 2/3 from traditional and alternative investments
Note: All financial numbers presented and discussed are adjusted, unless otherwise stated. Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in this presentation. All percentage changes and comparative descriptions refer to year on year measurements unless otherwise indicated † See Notes
International Wealth Management Private Banking and Asset Management
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 21
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in this presentation
Private Banking Adjusted key financials in CHF mn Asset Management Adjusted key financials in CHF mn
Key metrics in CHF bn Key metrics in CHF bn
1Q18 4Q17 1Q17 Δ 4Q17 Δ 1Q17
Net interest income 388 380 342 2% 13%
Recurring commissions & fees 307 308 290 0% 6%
Transaction- and perf.-based 311 235 250 32% 24%
Other revenues 0 0 1
Net revenues 1,006 923 883 9% 14%
Provision for credit losses (1) 14 2
Total operating expenses 625 634 619 (1)% 1%
Pre-tax income 382 275 262 39% 46%
Cost/income ratio 62% 69% 70%
1Q18 4Q17 1Q17 Δ 4Q17 Δ 1Q17
Adj. net margin in bps 42 30 32 12 10
Net new assets 5.5 2.7 4.7
Assets under management 370 367 336 1% 10%
Mandates penetration 31% 31% 29%
Net loans 51 50 46 2% 12%
Number of RM 1,130 1,130 1,120 0% 1%
1Q18 4Q17 1Q17 Δ 4Q17 Δ 1Q17
Management fees 267 263 243 2% 10%
Performance & placement rev. 27 159 40 (83)% (33)%
Investment & partnership inc. 67 47 55 43% 22%
Net revenues 361 469 338 (23)% 7%
Total operating expenses 269 334 273 (19)% (1)%
Pre-tax income 92 135 65 (32)% 42%
Cost/income ratio 75% 71% 81%
1Q18 4Q17 1Q17 Δ 4Q17 Δ 1Q17
Net new assets 9.0 1.4 15.0
Assets under management 391 386 367 1% 7%
International Wealth Management Strong finish to a successful year – Full year PTI up 35% with a return on capital of 29%
PB
4Q17 3Q17 4Q16 2017 2016
Adj. net margin in bps 30 31 24 32 27
Net new assets 2.7 3.6 0.4 15.6 15.6
Number of RM 1,130 1,130 1,140 1,130 1,140
Net loans 50 48 45 50 45
Net new assets AM 1.4 1.1 (4.4) 20.3 5.6
Risk-weighted assets 38 37 35 38 35
Leverage exposure 99 93 94 99 94
Key metrics in CHF bn
Key messages Adjusted key financials in CHF mn
4Q17 3Q17 4Q16 2017 2016
Net revenues 1,392 1,262 1,245 5,139 4,644
o/w Private Banking 923 870 864 3,603 3,317
o/w Asset Management 469 392 381 1,536 1,327
Provision for credit losses 14 3 6 27 20
Total operating expenses 968 877 939 3,615 3,515
Pre-tax income 410 382 300 1,497 1,109
o/w Private Banking 275 272 192 1,116 822
o/w Asset Management 135 110 108 381 287
Cost/income ratio 70% 69% 75% 70% 76%
Return on regulatory capital† 31% 29% 24% 29% 23%
2017 PTI of CHF 1.5 bn vs. CHF 1.1 bn in 2016
Sustained strong PB NNA of CHF 15.6 bn, a growth rate of 5%; AM NNA increased to CHF 20.3 bn at a 6% growth rate
PB net margin improved to 32 bps in 2017
Private Banking
2017 PTI up 36% and 4Q17 PTI up 43% vs. 4Q16
Delivered operating leverage in 2017 on 9% higher revenues and stable expenses; cost increase vs. 3Q17 due to IT investments and higher regulatory and marketing costs
4Q17 and 2017 with increase across all major revenue lines, including significantly higher client activity
Successful house view performance reflected by CHF 15.3 bn net mandate sales in 2017; penetration up 3 percentage points to 31%
Asset Management
PTI up 33% vs. 2016 and up 25% vs. 4Q16
Continued double digit growth in management fees at resilient recurring margins
Strong investment performance during the year resulted in 105% higher performance fees vs. 4Q16 (up 66% vs. 2016); also resulted in higher performance-related compensation expenses
Note: All financial numbers presented and discussed are adjusted, unless otherwise stated. Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in this presentation. All percentage changes and comparative descriptions refer to year on year measurements unless otherwise indicated † See Notes
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 22
International Wealth Management Private Banking and Asset Management
Private Banking Adjusted key financials in CHF mn Asset Management Adjusted key financials in CHF mn
Key metrics in CHF bn Key metrics in CHF bn
4Q17 3Q17 4Q16 2017 2016
Net interest income 380 367 353 1,449 1,308
Recurring commissions & fees 308 300 277 1,200 1,093
Transaction- and perf.-based 235 203 235 953 922
Other revenues 0 0 (1) 1 (6)
Net revenues 923 870 864 3,603 3,317
Provision for credit losses 14 3 6 27 20
Total operating expenses 634 595 666 2,460 2,475
Pre-tax income 275 272 192 1,116 822
Cost/income ratio 69% 68% 77% 68% 75%
4Q17 3Q17 4Q16 2017 2016
Adj. net margin in bps 30 31 24 32 27
Net new assets 2.7 3.6 0.4 15.6 15.6
Assets under management 367 355 323 367 323
Mandates penetration 31% 30% 28% 31% 28%
Net loans 50 48 45 50 45
Number of RM 1,130 1,130 1,140 1,130 1,140
4Q17 3Q17 4Q16 2017 2016
Management fees 283 278 228 1,084 891
Performance & placement rev. 173 63 108 310 208
Investment & partnership inc. 13 51 45 142 228
Net revenues 469 392 381 1,536 1,327
Total operating expenses 334 282 273 1,155 1,040
Pre-tax income 135 110 108 381 287
Cost/income ratio 71% 72% 72% 75% 78%
4Q17 3Q17 4Q16 2017 2016
Net new assets 1.4 1.1 (4.4) 20.3 5.6
Assets under management 386 376 322 386 322
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in this presentation
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 23
Reconciliation of adjustment items
Adjusted results are non-GAAP financial measures that exclude goodwill impairment and certain other revenues and expenses included in our reported results. Management believes that adjusted results provide a useful presentation of our operating results for purposes of assessing our Group and divisional performance consistently over time, on a basis that excludes items that management does not consider representative of our underlying
performance. Provided below is a reconciliation of our adjusted results to the most directly comparable US GAAP measures.
IWM in CHF mn
1Q18 4Q17 3Q17 1Q17 4Q16 2017 2016 2015
Net revenues reported 1,403 1,364 1,262 1,221 1,299 5,111 4,698 4,552
Real estate gains - - - - (54) - (54) -
(Gains)/losses on business sales (36) 28 - - - 28 - (11)
Net revenues adjusted 1,367 1,392 1,262 1,221 1,245 5,139 4,644 4,541
Provision for credit losses (1) 14 3 2 6 27 20 5
Total operating expenses reported 920 1,010 904 928 962 3,733 3,557 3,824
Restructuring expenses (26) (11) (16) (36) (16) (70) (54) (36)
Major litigation provisions - (31) (11) - (7) (48) 12 (268)
Total operating expenses adjusted 894 968 877 892 939 3,615 3,515 3,520
Pre-tax income/(loss) reported 484 340 355 291 331 1,351 1,121 723
Total adjustments (10) 70 27 36 (31) 146 (12) 293
Pre-tax income/(loss) adjusted 474 410 382 327 300 1,497 1,109 1,016
in CHF mn Core
2017
Net revenues reported 21,786
Real estate gains -
(Gains)/losses on business sales 51
Net revenues adjusted 21,837
Provision for credit losses 178
Total operating expenses reported 17,680
Restructuring expenses (398)
Major litigation provisions (224)
Expenses related to business sales (8)
Total operating expenses adjusted 17,050
Pre-tax income/(loss) reported 3,928
Total adjustments 681
Pre-tax income/(loss) adjusted 4,609
IWM PB in CHF mn IWM AM in CHF mn
1Q18 4Q17 3Q17 1Q17 4Q16 2017 2016 1Q18 4Q17 3Q17 1Q17 4Q16 2017 2016
Net revenues reported 1,043 923 870 883 918 3,603 3,371 360 441 392 338 381 1,508 1,327
Real estate gains - - - - (54) - (54) - - - - - - -
(Gains)/losses on business sales (37) - - - - - - 1 28 - - - 28 -
Net revenues adjusted 1,006 923 870 883 864 3,603 3,317 361 469 392 338 381 1,536 1,327
Provision for credit losses (1) 14 3 2 6 27 20 - - - - - - -
Total operating expenses reported 643 673 615 642 684 2,552 2,510 277 337 289 286 278 1,181 1,047
Restructuring expenses (18) (8) (9) (23) (11) (44) (47) (8) (3) (7) (13) (5) (26) (7)
Major litigation provisions - (31) (11) - (7) (48) 12 - - - - - - -
Total operating expenses adjusted 625 634 595 619 666 2,460 2,475 269 334 282 273 273 1,155 1,040
Pre-tax income/(loss) reported 401 236 252 239 228 1,024 841 83 104 103 52 103 327 280
Total adjustments (19) 39 20 23 (36) 92 (19) 9 31 7 13 5 54 7
Pre-tax income/(loss) adjusted 382 275 272 262 192 1,116 822 92 135 110 65 108 381 287
Throughout the presentation rounding differences may occur
Unless otherwise noted, all CET1 ratio, Tier-1 leverage ratio, risk-weighted assets and leverage exposure figures shown in this presentation are as
of the end of the respective period and on a “look-through” basis
Gross and net margins are shown in basis points
Gross margin = adj. net revenues annualized / average AuM; net margin = adj. pre-tax income annualized / average AuM
Mandates penetration reflects advisory and discretionary mandates as percentage of total AuM
General notes
† Regulatory capital is calculated as the worst of 10% of RWA and 3.5% of leverage exposure. Return on regulatory capital is calculated using (adjusted)
income / (loss) after tax and assumes a tax rate of 30% and capital allocated based on the worst of 10% of average RWA and 3.5% of average leverage
exposure. Adjusted return on regulatory capital is calculated using adjusted results, applying the same methodology to calculate return on regulatory capital.
Specific notes
Notes
May 16, 2018 Philipp Wehle, Head Finance, International Wealth Management 25
Adj. = Adjusted; AM = Asset Management; AuM = Assets under Management; bps = basis points; CAGR = Compound Annual Growth Rate;
FINMA = Swiss Financial Market Supervisory Authority; FX = Foreign Exchange; IWM = International Wealth Management; NNA = Net new assets;
PB = Private Banking; PTI = Pre-tax income; RM = Relationship Manager(s); RWA = Risk-weighted assets; UHNWI = Ultra High Net Worth
Individuals; WM = Wealth Management
Abbreviations