Credit Suisse says its private banking business suffered during the second quarter as China carried on with financial deleveraging
The outlook for the second half remains positive, according to Helman Sitohang, chief executive for Credit Suisse Asia Pacific
The head of Credit Suisse Asia Pacific said its private banking business has been negatively affected in the second quarter as China pushed ahead with efforts to reduce leverage within its financial system, underscoring the drag on its Asia’s wealth management unit during the first half of 2018.
Helman Sitohang, chief executive for the bank’s Asia-Pacific operations, said during a media call following the results release on Tuesday that the ongoing deleveraging in the Chinese banking sector has meant that some clients at its private banking and wealth management division are taking on less investment risk.
The pre-tax income for the bank’s wealth management unit, a division which encompasses Asian private banking, mergers and acquisitions advisory, underwriting and financing businesses, dropped 6 per year-on-year for the first half to 373 million Swiss francs (US$376.22 million). This unit accounted for as much as 83 per cent of the entire Asia-Pacific pre-tax income.
Still, pre-tax income for the entire Asia-Pacific business was up 35 per cent on year in the first half to 451 million Swiss francs, thanks in part to the turnaround of its markets business, which includes equities and fixed income sales and trading, and prime brokerages. Its markets business swung to a 78 million swiss francs profit from a loss of 62 million Swiss francs a year ago. Unlike most global investment banks, Credit Suisse’s Asia business is organised as an regional entity with its own balance sheet and division head.
“However, as long as the [economic] fundamentals are strong, clients will look to reposition their portfolios and this will be an opportunity for us. I’m comfortable with the deleveraging story, even though it’s ongoing,” said Sitohang.
