Credit Suisse Group AG (NYSE:CS) Q3 2019 Earnings Conference Call - Final Transcript

Oct 30, 2019 • 05:15 am ET


Credit Suisse Group AG (NYSE:CS) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning. This is the conference operator. Welcome, and thank you for joining the Credit Suisse Group's Third Quarter 2019 Results Conference Call for Analysts and Investors. [Operator Instructions]

I will now turn the conference over to Adam Gishen, Group Head of Investor Relations and Corporate Communications. Please go ahead, Adam.

Adam Gishen

Okay. Thank you, operator. Before we begin, let me remind you of the important cautionary statements on Slide 2, including the statements on non-GAAP financial measures and Basel III disclosures. For a detailed discussion of our results, we refer you to the Credit Suisse third quarter 2019 financial report.

With that, I will now hand over to Tidjane, who will run through the numbers.

Tidjane Thiam

Thank you, Adam, and good morning, everyone, and thank you all for joining our call. With me, I have the Executive Board of Credit Suisse. Together, David Mathers, our Chief Financial Officer, and I will present Credit Suisse's results for the third quarter and the first nine months of 2019. We look forward to answering your questions at the end of the session and discussing our results in more detail as we go.

So let's start with our key messages. After three years of deep restructuring from 2015 to 2018, it was our belief that during 2019 you would be able to see a continued improvement in performance across our key metrics. We believe that our 2019 results year-to-date support this assertion notwithstanding the fact that Q3 is, for us, typically a seasonally weak quarter.

So in Q3, we generated pre-tax income of CHF1.1 billion, up 70%, 70%, and net income of CHF881 million, up 108% year-on-year, leading us to a return on tangible equity, an RoTE of 9%, double the RoTE of the same quarter one year ago which was 4.5%.

We have been able to grow our tangible book value, and we have continued our share buyback program, leading to an increase in tangible book value per share, and more on that later. But first, let's look at the context in which we operated during the third quarter on the next slide.

The interest rate environment, on the left here, has continued to be a headwind for some of our clients and has weighed, on the one hand, negatively on market sentiment and investment decisions whilst being, on the other hand, supportive of debt refinancing and debt issuance. Credit spreads, on the right, have remained at somewhat elevated levels, whilst we saw continued lower activity levels in ECM, Equity Capital Markets, and leveraged finance, products where we have historically enjoyed a leading market position.

In 3Q, going into some of the geographies, we have seen a slowdown in Asia primary and M&A activity, primarily in Greater China with one of the lowest-activity quarters in the last five years in terms of market fee pool. We have taken, in that context, a number of proactive measures across the Board to engage with our clients in this period, which we will highlight later in this presentation.