Credit Suisse reported strong inflows at its private bank and wealth arm for the third quarter, with Asia a part of that story.

The private banking and wealth management arm of Credit Suisse, Switzerland’s second-largest bank, logged net new assets of SFr8.8 billion ($9.22 billion) in the third quarter of 2014, with strong growth from emerging markets, especially in the Asia-Pacific region, it said yesterday.

In the third quarter, the unit logged pre-tax income of SFr943 million and net revenue of SFr3.125 billion; in its strategic businesses, private banking and wealth management logged pre-tax income of SFr872 million and net revenue of SFr2.939 billion, it said in a statement.

Compared to the same quarter of last year, pre-tax income increased 8 per cent, mainly driven by lower operating expenses reflecting continued cost efficiency gains. Net revenues were stable compared to a year ago as higher transaction - and performance-based revenues and improved other revenues were offset by lower net interest income.

In its non-strategic businesses, private banking and wealth management reported income before taxes of SFr71 million, which included a SFr109 million gain on the sale of the domestic private banking business booked in Germany. (That business has been sold, as completed recently, to Bethmann, the German private bank that is part of ABN AMRO.)

Cost ratio
In an encouraging move for the firm's private banking and wealth arm, its cost/income ratio has fallen dramatically to 69 per cent as at the end of the third quarter, compared with 123.8 per cent in the second quarter. It is, however, a touch higher than in the same quarter of last year, at 68.3 per cent, the statement showed.

The Swiss bank said it had assets under management of SFr1.366.1 trillion, up by SFr36.4 billion compared to the end of the second quarter of 2014, driven mainly by favourable foreign exchange-related movements resulting from the appreciation of the US dollar, positive market movements and net new assets.

Group results
For Credit Suisse as a whole, it logged pre-tax income of SFr1.301 billion increased 89 per cent year-on-year, reflecting a 20 per cent increase in net revenues, partially offset by a 10 per cent increase in total operating expenses. In the strategic businesses, net revenues increased 10 per cent to SFr 6.287 billion compared to a year ago, primarily reflecting higher net revenues in investment banking and stable net revenues in private banking and wealth management.

“We delivered a good performance, with our strategic businesses generating returns on equity of 11 per cent for the quarter and 13 per cent for the first nine months of this year, Brady Dougan, group CEO, said.

Commenting on the private banking and wealth unit, Dougan said: “Our profitability benefitted from ongoing cost discipline, although margins remain subdued and revenues continue to be impacted by the low interest-rate environment. We generated net new assets of SFr8.8 billion in our strategic businesses, driven by strong growth in emerging markets, particularly in Asia Pacific. This was partly offset by continued outflows from the Western European cross-border business due to the importance that we have placed on the regularization of our asset base. We saw sustained growth in our ultra-high-net-worth individual lending initiative and increased collaboration revenues across both divisions, which we view as a competitive advantage, particularly with this client segment.”