Published by Channel Newsasia – 2nd March 2017
ZURICH: Credit Suisse expects higher lending to the world’s wealthiest individuals will help its big bet on wealth management pay off.
Around a third of the 30.2 billion Swiss francs (US$29.8 billion) of net new assets taken in last year at its International Wealth Management (IWM) and Asia Pacific (APAC) divisions came via lending, according to Chief Financial Officer David Mathers, who believes this could go even higher.
“As we mature our wealth management offering outside of Switzerland, we certainly think that lending has to be a core part of our offering,” Mathers told Reuters in an interview.
“Therefore I would expect it to grow … This growth in our lending and in our net new assets is driving our net interest income which has increased by 26 percent, 16 percent and 8 percent in IWM, APAC and SUB (Swiss Universal Bank) respectively.”
Lending can prove to be a virtuous circle as wealthy clients reinvest the borrowed money with the private bank which can then count this as new money. Net new money is an important indicator of future earnings in private banking.
Cross-town rival UBS does not give a breakdown of how it generates its net new money.
Keeping losses on the loans to a minimum is crucial and Mathers said the bank was adding more staff in supervisory positions to keep an eye on quality.
“As we’ve grown our lending in these divisions, we’ve made parallel investments in our risk and compliance infrastructure,” Mathers said, declining to give exact figures.
Under Chief Executive Tidjane Thiam, Credit Suisse has shifted the bank’s business towards wealth management and put less emphasis on investment banking.
It is the world’s fourth-biggest private bank behind UBS, Bank of America Merrill Lynch and Morgan Stanley , according to a league table by Scorpio Partnership.
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