Credit Suisse Group (CS)
Q3 2009 Earnings Call Transcript
October 22, 2009 4:00 a.m. ET

Executives

Brady W. Dougan - Chief Executive Officer
Renato Fassbind - Chief Financial Officer

Analysts

Huw Van Steenis - Morgan Stanley
Kian Abouhossein - JPMorgan
Derek de Vries - Banc of America/Merrill Lynch
Jacques-Henri Gaulard - Autonomous Research LLP
Jernej Omahen - Goldman Sachs
Fiona Swaffield - Execution Limited
Philipp Zieschang - UBS
Christopher Wheeler - MainFirst Bank AG
Jon Peace - Nomura
Matthew Clark - Keefe, Bruyette & Woods
Jaap Meijer - Evolution Securities
Elad Ben-Am - Bank am Bellevue
Georg Kanders - WestLB
Kilian Maier - NZB Neue Zürcher Bank
Chris Malmer - Arrowgrass
Daniel Zolo - Basler Zeitung

Presentation

Brady W. Dougan

Thanks very much. Welcome, everybody, to our third quarter results call. I''m joined by our CFO, Renato Fassbind. I''m going to make a brief introduction. Renato will then, as usual, take you through the detail of the results and then I''ll sum up and we''ll open it up to questions.

Credit Suisse has responded to the changes in the industry over the past two years with the accelerated implementation of our client focused capital-efficient strategy and reduced risk business model. I want to stress four main points.

First, we are happy with the quality of our third quarter performance, which with the very strong return on equity of 25% complements the strong first half and shows that our strategic approach is working well. Second, these returns were achieved in the context of our industry-leading capital position and with 30% lower risk-weighted assets compared to the third quarter of last year.

Third, taken together these results demonstrate that our differentiated strategy and business model provide the foundation for sustainable, high quality, lower volatility earnings. And fourth, we believe that we are well positioned for growth in the new competitive landscape.

Turning to slide three. Just looking at the left hand side of this chart, I wanted to highlight our focused areas over the past couple of years. First, we have continued to invest counter cyclically in our Private Banking business. We have repositioned the Investment Bank towards less volatile, more capital-efficient, client-focused businesses. And Asset Management has been more closely aligned with the integrated bank and focused on our core strengths in asset allocation, the Suisse business and alternatives.

Second, we have placed great emphasis on active risk management. This led to a rapid reduction of risky assets and to a lending portfolio which is well diversified, most of which is year hedged, mark-to-market or collateralized.

Third, we have focused on our competitive strengths. At a time of enormous change and market disruption, our consistent strategy, leadership and client coverage have all helped us achieve gains in market share across our businesses, in particular having client focus at the heart of our strategy has helped deliver sustainable results.

The benefits of our differentiated model are clear. We''ve delivered very strong results for the first nine months of 2009 with net income of almost 6 billion Swiss francs. Our return on equity for the year-to-date is over 21% and we generated net new asset flows across the Bank of 17 billion Swiss francs in the third quarter and over 31 billion for the first nine months. All of this has been achieved with lower risk-weighted assets.

Looking ahead in Private Banking, our business model means that we can deliver our unique expertise to a scalable global platform, which will enable us to benefit from a market recovery. Wealth Management is a very attractive growth market and while client activity has picked up in selected areas, risk appetite has improved only moderately. However, we remain confident that overall levels of demand for comprehensive investment solutions will recover in the medium-term.

We will, therefore, continue to invest in both our international expansion and our Suisse home market, where our integrated model is yielding strong results and where we are also actively contributing to economic recovery. For instance, our loan balances for Suisse corporate and institutional clients are unchanged over the first nine months of the year and we remain steadfast in our commitment to the Suisse market.

In the Investment Bank, we continue to be disciplined about risk and capital allocation and we expect to see sustained revenues with potential growth across a number of businesses in the portfolio, which Renato will cover in more detail shortly. Our industry-leading Tier 1 ratio of 16.4% gives us a very solid capital position. Our capital strength combined with our capital-efficient strategy, gives us the flexibility to grow the business and deliver attractive returns for shareholders.

We are confident about our business model and our competitive position and while we''re only three weeks into the fourth quarter, so far market conditions are consistent with the third quarter. If markets remain constructive we expect to be able to maintain our momentum and even if markets become more difficult, we believe that Credit Suisse is still positioned to perform well.

And with that, I''ll turn it over to Renato.