Credit Suisse has achieved the “highest RM growth” of any private bank operating in Asia, according to APAC CEO Helman Sitohang. But while its wealth unit continues to expand, the Swiss firm has pared back Asian revenue targets for its investment bank.
Credit Suisse’s Asian headcount of relationship managers increased to 650 in Q3 this year, from 550 in Q3 2015.
Sitohang, speaking at the Credit Suisse investor day on Wednesday, said none of the firm’s competitors hired more private bankers over the same period.
Although the new recruits “came with some cost”, Sitohang said recent months have been a “critical opportunity” to take on new talent as other banks were “retrenching” in Asia.
Barclays, Coutts, ANZ and ABN AMRO have all pulled out of Asian wealth management.
But what effect are these new RMs having on the bottom line? Sitohang said some are onboarding their clients – that can take “a few months” – so not all their assets have been brought over to Credit Suisse yet.
However, he pointed out that “RM productivity” has still increased. At the end of Q3 AUM per private banker at Credit Suisse in Asia stood at CHF260m, up from CHF253m a year earlier. And net new assets in Asia grew 22% (to CHF169bn) year-on-year in the first nine months of 2016.
In explaining this performance, Sitohang said he was “very confident” that Credit Suisse was achieving greater collaboration between private banking and investment banking – a policy set out in October last year aimed at better serving entrepreneurial clients.
The integration is not yet producing stellar results for APAC investment banking, however. Compared with 2015, APAC equities and fixed income revenues for the first nine months fell by 21% at Credit Suisse.
Sitohang pinned this on general market conditions – APAC equity trading volumes were down 47% in the year to December 2, for example – and said the investment bank’s 2016 revenues were still on par with 2014, despite stronger economic headwinds currently.
Greater China took the biggest revenue hit at CS, while markets income from elsewhere in the region actually increased. Sitohang said this highlighted the importance of having a “diverse” strategy in Asian investment banking and not relying on a single market.
Credit Suisse has now been forced to revise its APAC income targets for 2018, from its original CHF2.1bn projection (set only last year) to a new goal of CHF1.6bn. Wealth management revenue remains unchanged at CHF0.7bn, however, with markets income expected to decline.
Sitohang did not say whether the revenue downgrade could lead to job cuts in equities and fixed income, but he did indirectly offer some reassurance: “Even in a difficult market we have managed to maintain our headcount.”
He also didn’t touch upon the private bank’s previously announced target of having 800 RMs in Asia – 150 more than today – by 2018. But he did say its Asian wealth management “footprint” would continue to expand.
Sitohang also made several bullish comments on the potential for his RMs to capture more wealthy Asian clients. Asia now has the highest number of billionaires globally, and many of them are just the type of first and second-generation entrepreneurs that Credit Suisse is targeting, he said.
The region is also seriously underserviced by global private banks. So far the top-20 private banks have only captured a 16% share of assets held by Asia’s millionaires and billionaires.
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