Credit Suisse’s APAC wealth management franchise gathered US$5.4 billion in net new money and delivered an almost 60% jump in wealth management-related pre-tax incomes during 1Q21, highlighting the resilience of the Asia division as the group contends with the fallout from the Archegos and Greensill affairs.
In all, APAC wealth management activities in 1Q21 contributed CHF 482 million in pre-tax income, well up from the CHF 193 million total a year earlier.
Adjusted client business volume (CBV) — a metric that combines AUM, custody assets and net loans — in APAC reached a record US$419 billion, up 41% YoY, or 38% YoY excluding FX impact. That’s higher than the Swiss Universal Bank private client business (+10%) and the International Wealth Management private banking business (24%), again excluding FX impact.
This growth easily surpassed the bank’s previously set goal of double-digital growth, the group CEO Thomas Gottstein said in a media briefing.
AUM for APAC WM stood at US$257 billion, a 26% YoY increase. The new money contribution was ” mainly driven by Greater China”, the bank added.
Adjusted net revenue for the group’s wealth management business was up 7% YoY, at CHF 3.5 billion. This was bolstered by the 18% increase in transaction and performance-based income, with APAC playing a featuring role. Recurring commissions and fees have been recovering steadily since 2Q20. In 1Q21, YoY growth reverted to positive territory.
As for the APAC franchise, adjusted revenues reached US$1.6 billion, up 39% YoY. The recently singled out business division now represents a notable 19% of total group revenues.
Gottstein highlighted the show of resilience across the WM business: “It is (…) important to recognise that our underlying 1Q21 financial performance, across all divisions, was strong — supported by solid results in Switzerland, and strong growth in APAC and investment banking.”
His comments came on the back of the suspension of the Greensill supply chain finance funds and a major write-down linked to hedge fund Archegos Capital’s crash. The group warned of hefty losses for the broader business. The group-level results for 1Q21 already took a hit, recording a net loss of CHF 252 million. Gottstein noted that a residual impact by Archegos of around CHF 0.6 billion would ensue into 2Q21.
“Within wealth management,” said Gottstein, “we anticipate broadly stable net interest income and improving recurring commissions and fees benefiting from higher levels of AUM.” He added that the bank expects market volumes to return to lower and more normal levels in the coming quarters.