Credit Suisse — Investor Day (October 2022)
47 slides from Credit Suisse's investor day presentation, Oct 27, 2022
Slide 1: Credit Suisse 2022 Strategy Update
Credit Suisse 2022 Strategy Update October 27, 2022
Slide 2: Agenda
Credit Suisse 2022 Strategy Update Agenda 4 Time (GMT) Theme Presenter Duration 09:30 am Welcome and agenda Kinner Lakhani, Head of Group Strategy and Investor Relations 5’ 09:35 am Chairman’s Perspectives Axel P. Lehmann, Chairman of the Board of Directors 10’ 09:45 am Strategic Perspectives Ulrich
Slide 3: Strategic Perspectives
Credit Suisse 2022 Strategy Update Strategic Perspectives Ulrich Körner Chief Executive Officer October 27, 2022
Slide 4: Disclaimer (1/2)
Disclaimer (1/2) Credit Suisse has not finalized restated historical information according to its intended future structure and Credit Suisse's independent registered public accounting firm has not reviewed such information. Accordingly, the preliminary information contained in this presentation is
Slide 5: Disclaimer (2/2)
Disclaimer (2/2) ‘Statement regarding non-GAAP financial measures Our estimates, ambitions, objectives, aspirations and targets often include metrics that are non-GAAP financial measures and are unaudited. A reconciliation of the estimates, ambitions, objectives, aspirations and targets to the neare
Slide 6: Creating a new Credit Suisse
Creating a new Credit Suisse Build on a respected franchise and a blue-chip client base A simpler, more focused and more stable bank centered around Wealth Management and our Swiss home market supported by strong capabilities in Asset Management and Markets Led by a new team with very relevant exper
Slide 7: Addressing our key challenges
Addressing our key challenges 7 Volatile and sub-par Group and Investment Bank returns Insufficient capital discipline with underperforming/non-strategic/marginal businesses Inflexible, high-cost operating model Recurrence of litigation and reputational issues Broad business portfolio, partially fra
Slide 8: Taking decisive action to re-focus Credit Suisse
Taking decisive action to re-focus Credit Suisse 8 Engaging with our Stakeholders Delivering on strategic priorities Restructure the Investment Bank Accelerate cost transformation Restore trust Provide compelling proposition to clients and employees Strong risk management Stable earnings Leading pos
Slide 9: New Credit Suisse is focused on connected, leading franchises
New Credit Suisse is focused on connected, leading franchises New Credit Suisse CS First Boston Capital Release Unit Securitized Products Other divestments Non-Core Unit Top 2 global wealth manager outside the US1 Leading universal bank in Switzerland Differentiated and aligned capabilities in Asset
Slide 10: Our leading franchises
10 Our leading franchises Attractive markets Leading positions Strong track record Wealth Management Growing above GDP Low capital intensity High barriers to entry #2 Wealth Manager outside the US (UHNW, HNW)1 Top 3 in Europe, Asia, Middle East2 14% avg. RoRC†, 3 Swiss Bank Very resilient economy Ve
Slide 11: Investment Bank: ~40% reduction in RWA and LE
Investment Bank: ~40% reduction in IB RWA and LE in USD bn; illustrative 28% Markets Connected market access & solutions 3Q22RWA CS First Boston Independent Capital Markets &Advisory bank 22 Securitized Products Market-leading, but unconnected to remaining business Non-Core Unit Non-strategic/low re
Slide 12: Markets: Leading provider of market access and solutions
Markets: Leading provider of market access and solutions 12 Key strategic actions Enable platform growth, scalability and innovation Best in class Investor Products for Wealth Management (own and third party) Create flexible and lower cost base Provider of leading cross-asset Investor Products, Equi
Slide 13: CS First Boston: Independent Capital Markets and Advisory bank
CS First Boston: Independent Capital Markets and Advisory bank 13 Objectives and financial metrics Premium standing with clients and talent Sustainably creating economic value through the cycle Creates strategic optionality for the Group Rooted in strong positions in North America, largest and most
Slide 14: Capital Release Unit
Capital Release Unit 14 3Q22, in USD bn Rationale Non-Core Unit (wind-down) History of poor / volatile returns Marginal connection to core businesses Will unlock cost savings Market leading franchise, but capital / funding intensive Marginal connection to core businesses and to CS First Boston Value
Slide 15: Allocate more capital to our higher return businesses
Allocate more capital to our higher return businesses 1 Based on current structure pre-GTS and pre-AFG pay-away 2 Including Basel III reforms 3 Includes Fixed income sales and trading, Equity sales and trading, Capital markets revenues and Advisory and other fees 4 Includes Wealth Management, Swiss
Slide 16: Targeting Group CET1 ratio of >13.5% pre-B3R in 2025
Targeting Group CET1 ratio of >13.5% pre-B3R in 2025 1 ~14.0% Illustrative CET1 ratio developmentIn % Minimum requirement of 10.2%3 Note: Estimates and assumptions are based on currently available information and beliefs, expectations and opinions of management and include all known facts and decisi
Slide 17: Reducing cost by 15%
Reducing cost by 15% 1 Adjusted operating expenses at constant 2022 FX rates and on constant perimeter, before impact of Securitized Products transaction and other divestments 17 Selected cost levers Non-core rundown and business descoping – less work in non-core or unprofitable business Organizatio
Slide 18: Summary – Financial targets to unlock value
18 Nominal dividend 2022-2024;meaningful distribution from 2025 onwards Cost base1 CHF ~14.5 bn Core Return on Tangible Equity‡>8% Group Return on Tangible Equity‡~6% CET1 ratio>13.5% pre-B3R 2025 Financial Targets Restructure the Investment Bank Strengthen and reallocate capital Accelerate cost tra
Slide 19: Execution roadmap
Execution roadmap 19 2025 onwards onwards Stabilize and re-shape portfolio, secure capital Deliver sustainable returns and grow core business 2023-24 Stabilize and re-shape portfolio, secure capital Transform into new Credit Suisse and CS First Boston and improve cost efficiency Immediate Stabilize
Slide 20: What is different this time
What is different this time 20 Radically restructuring the Investment Bank Clear near-term accountability for each milestone of our targets New Executive Board with significant relevant experience, strong track record of execution Strongly capitalized to deliver on our targets Resolving legacy issue
Slide 21: What the new Credit Suisse means for our stakeholders
What the new Credit Suisse means for our stakeholders 21 Clients Investors Employees Regulators We are focused on… Building a stronger bank around the needs of our clients Restoring a reputation as a sustainable, responsible and stable bank Simplifying business model for growth and profitability Ens
Slide 22: CREDIT SUISSE WS
CREDIT SUISSE WS
Slide 23: Notes
Notes 42 General notes Throughout this presentation rounding differences may occur Results excluding certain items included in our reported results are non-GAAP financial measures Our cost base target is measured using adjusted operating expenses at constant 2022 FX rates and on constant perimeter,
Slide 24: Financial Perspectives
Dixit Joshi Chief Financial Officer October 27, 2022 Credit Suisse 2022 Strategy Update Financial Perspectives
Slide 25: Disclaimer (1/2)
Disclaimer (1/2) Credit Suisse has not finalized restated historical information according to its intended future structure and Credit Suisse's independent registered public accounting firm has not reviewed such information. Accordingly, the preliminary information contained in this presentation is
Slide 26: Disclaimer (2/2)
Disclaimer (2/2) ‘Statement regarding non-GAAP financial measures Our estimates, ambitions, objectives, aspirations and targets often include metrics that are non-GAAP financial measures and are unaudited. A reconciliation of the estimates, ambitions, objectives, aspirations and targets to the neare
Slide 27: Our strategic priorities
Our strategic priorities 23 Investment Bank capital reduction1 of ~40% from wind-down of the Non-Core Unit and capital release from Securitized Products Ambition to attract external capital in CS First Boston Restructure the Investment Bank CET1 ratio of >13.5% pre-B3R CET1 ratio expected to remain
Slide 28: Risk reduction: Credit Suisse divisional structure
Risk reduction 24 Credit Suisse divisional structure Illustrative 3Q22, in CHF bn (unless otherwise stated) Note: Historical information presented according to the new divisional structure is a preliminary estimate based on management accounts and subject to change 1 Markets and CS First Boston 2 Be
Slide 29: Investment Bank capital cost: Markets, CS First Boston, Securitized Products
25 Markets Cross Asset Investor Products Equities Focused FX Align & streamline Exposure reduction Note: Historical information presented according to the new divisional structure is a preliminary estimate based on management accounts and subject to change1 Ex-China, India and Brazil 2 Ex-Wealth Man
Slide 30: Transform Credit Suisse into a capital-light model
26 Transform Credit Suisse into a capital-light model Investment Bank RWA expected at <1/5th of Group by 2025 vs. 1/3rd at 3Q22 Wealth Management, Swiss Bank and Asset Management Investment Bank Corporate Center2 Capital Release Unit3 Corporate Center CS First Boston 3Q22 RWA1 2025E RWA2 Note: Estim
Slide 31: Drive a more stable business mix
Drive a more stable business mix 27 Revenue mix1 Based on adjusted net revenues, in % Sales & Trading NewCredit Suisse Markets CS First Boston Investment Banking & Capital Markets Net interest & recurring income Transaction & other Investment Bank Wealth Management, Swiss Bank and Asset Management N
Slide 32: Decisive actions to strengthen capital
Decisive actions to strengthen capital 28 12.6% ~1.4% ~14.0% 1 Note: Estimates and assumptions are based on currently available information and beliefs, expectations and opinions of management and include all known facts and decisions as of October 27, 2022. Actual results may differ 1 Assuming imme
Slide 33: Overview of proposed capital raises
Overview of proposed capital raises 29 Proposed capital raises Indicative timeline for proposed capital raises Structure Non preemptive placement (“NPP”) with selected investors and firm underwritten rights issue1 Size of capital raises (gross proceeds) CHF ~4.0 bn2 o/w non preemptive placement CHF
Slide 34: Overview of proposed Securitized Products transaction
Overview of proposed Securitized Products transaction 30 Note: Estimates and assumptions are based on currently available information and beliefs, expectations and opinions of management and include all known facts and decisions as of October 27, 2022. Actual results may differ Transaction highlight
Slide 35: Establish Non-Core Unit to release capital
31 Establish Non-Core Unit to release capital Governance Key Priorities Structure Non-Core Unit incorporates Asset Resolution Unit Experienced team with a track record of winding down assets while maintaining strong controls Accelerate reduction of assets to release capital and reduce risk Eliminate
Slide 36: Non-Core Unit Composition
Non-Core Unit Composition 32 Risk-weighted assets Leverage exposure Asset composition Illustrative, as of 3Q22 in USD bn 6 35 Operational Risk 132 Credit, Emerging Markets, Corporate Derivatives Fixed Income Trading Equity swaps Equities Interest rate swaps, cross currency swaps, options, swaptions
Slide 37: Accelerated wind down of Non-Core Unit
Accelerated wind down of Non-Core Unit 6 20 35 6 2023 3Q22 6 2025 Target ~25 ~17 2025 Target 3Q22 ~61 132 Lower by ~(55)% Lower by ~(60)% ex. Operational Risk 33 Risk-weighted asset progression1 Illustrative, in USD bn Leverage exposure progression Illustrative, in USD bn ~20 2024 6 ~92 ~71 2023 202
Slide 38: Targeting Group CET1 ratio of >13.5% pre-B3R in 2025
Targeting Group CET1 ratio of >13.5% pre-B3R in 2025 1 CET1 ratio targeted to remain at least 13.0%pre-B3R through transformation3 ~14.0% Illustrative CET1 ratio developmentIn % Minimum requirement of 10.2%4 Note: Estimates and assumptions are based on currently available information and beliefs, ex
Slide 39: Regulatory capital inflation significantly reduced by our strategic actions
Regulatory capital inflation significantly reduced by our strategic actions 35 Estimated RWA increase from Basel III reformsIn CHF bn FRTB CVA FRTB R-IRB R-IRB Net impact ~15 Basel III reform impact Reduced CVA impact primarily driven by exposure reduction Reduced Operational Risk RWA impact from Gr
Slide 40: Initiated CHF ~2.5 bn cost reduction program
Initiated CHF ~2.5 bn cost reduction program 36 Group cost base1 in CHF bn ~(2.5) bn Actions already mandated represent 2/3rd of 2023 savings: 2,700 FTE reduction or 5% of FTE base already underway 50% reduction on consultancy spend initiated in 2H22 30% reduction in contractor spend initiated in 2H
Slide 41: Relentless focus on driving down our cost base
Relentless focus on driving down our cost base through key transformation initiatives 37 Reshaped Investment Bank enables direct cost reduction and rationalization of related Group infrastructure Descoping of unprofitable activities with more focused business footprint, reduced legal entities, reduc
Slide 42: Restructuring charges and impairments
38 Restructuring charges and impairments 2.9 2.5 Estimated total restructuring charges, software and real estate impairments vs. cost savingsin CHF bn Estimated upfront costs to execute our strategyin CHF bn Impairment of Deferred Tax Assets 3.7 0.3 1.6 ~48 bps CET1 ratio impact2 1 Note: Estimates a
Slide 43: Targeting a core RoTE of >8% and Group RoTE of ~6%
We are targeting a core RoTE of >8% and a Group RoTE of ~6% by 2025 39 Group Return on Tangible Equity Illustrative development, based on CHF Note: Results excluding certain items in our reported results are non-GAAP financial measures. See the appendix of this presentation for detailed information
Slide 44: Disciplined execution of our strategy: 2025 Financial Targets
We are focused on the disciplined execution of our strategy 40 Note: Estimates and assumptions are based on currently available information and beliefs, expectations and opinions of management and include all known facts and decisions as of October 27, 2022. Actual results may differ 1 Based on RWAs
Slide 45: CREDIT SUISSE WS
CREDIT SUISSE WS
Slide 46: Notes
Notes 42 General notes Throughout this presentation rounding differences may occur Results excluding certain items included in our reported results are non-GAAP financial measures Our cost base target is measured using adjusted operating expenses at constant 2022 FX rates and on constant perimeter,
Slide 47: Footnotes are an integral part of this presentation
Footnotes are an integral part of this presentation. See slides • in the appendix of this presentation for detailed information, including important presentation and other information relating to non-GAAP financial measures, and defined terms. 43 SIGNATURES Pursuant to the requirements of the Securi