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Banking & Finance

Credit Suisse claims strong Asia-Pacific M&A pipeline after reporting record quarterly wealth management and advisory revenues

Swiss investment bank’s Q1 Asia-Pacific income before tax is 234 million francs (US$239.1 million), on net revenues of 991 million francs

PUBLISHED : Wednesday, 25 April, 2018, 10:43pm
UPDATED : Wednesday, 25 April, 2018, 10:43pm

Credit Suisse’s CEO for Asia-Pacific says the regional business has a strong pipeline of mergers and acquisitions (M&A) advisory, and capital markets underwriting, after reporting record quarterly revenue for its wealth management and advisory businesses, although earnings remained flat.

Helman Sitohang said while the bank recorded stronger fees from M&As during the quarter, which will continue for the “foreseeable future”, the investment bank’s top official in the region said he also expects a broad-based pickup from its fixed income and equity underwriting businesses, as Asian companies and entrepreneurs seek fresh funding to expand their businesses.

Total Asia-Pacific income before tax came in at 234 million francs (US$239.1 million) during the quarter ending March, on net revenues of 991 million francs.

Pre-tax income was up a strong 59 per cent compared with a year ago, or 33 per cent on the previous quarter (Q4, 2017).

Asia accounted for about a quarter of the Swiss institution’s total pre-tax income, at 1.054 billion francs.

“During the first quarter, Credit Suisse was the adviser for Alibaba’s acquisition of a 33 per cent stake in Ant Financial [Alibaba’s financial offshoot].

“Our underwriting business was also helped by the US$2.3 billion convertible bond issue by China Evergrande,” said Indonesian-born Sitohang, for which it was one of the joint bookrunners.

He now expects “broad-based” growth in both advisory and underwriting, adding the caveat, however, that still “all depends on market conditions”.

The turnaround in our markets business, and growth in our private banking and advisory during the first quarter reflected increasing activities from ultra-high-net-worth individuals, companies and entrepreneurs in Asia
Helman Sitohang, Credit Suisse’s CEO for Asia-Pacific

Despite what Sitohang called the “best quarterly performance” by its wealth management and connected businesses – incorporating private banking, M&A advisory, and its underwriting and financing – which fuelled 87 per cent of its Asian operations on account of a 13 per cent rise in net revenue, pre-tax profit practically flatlined at 205 million francs, and dropped a tenth on Q4 2017.

Credit Suisse to replicate Asia business model eventually after integration almost tripled income

Its Asia-Pacific private banking income enjoyed a robust 50 per cent rise from last quarter to 170 million francs, with asset under management growing to 199.1 billion francs. But that in turn was offset by litigation costs of 48 million francs, which Sitohang refused to detail.

Its markets business – equities and fixed income sales and trading, and prime brokerages – swung back into profitability, with pre-tax income of 29 million francs, compared with a pre-tax loss of 54 million francs a year-ago at this stage, and a loss of 53 million francs in Q4 2017.

The Swiss bank is into the final year of a three-year restructuring, started in 2016, to prioritise wealth management and cut back on its capital-intensive global markets business.

The bank’s group CEO Tidjane Thiam told SCMP in March that the bulk of the restructuring has been completed.

Sitohang said on Wednesday: “The turnaround in our markets business, and growth in our private banking and advisory during the first quarter reflected increasing activities from ultra-high-net-worth individuals, companies and entrepreneurs in Asia.”

Credit Suisse reported total group net profit of 694 million francs for the period under review, a 16 per cent rise.

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