Credit Suisse - Hammer Partners

Equity Research Independent European Research
22 April 2015
Credit Suisse Rating
BUY
Solid Q1 2015 results Target price
CHF31
Credit Suisse posted solid results driven by revenue growth and costcutting, better investment banking performance and higher trading gains. Solid results driven by revenue growth and cost-­‐cutting Credit Suisse reported net profit of CHF1.1bn for Q1 2015 versus consensus of
CHF970m and our estimate of CHF985m. NII came in at CHF2.1bn, +1%
QOQ, while loans were down 1% QOQ and NII spread +2% QOQ.
Commissions were down 7% QOQ on P&WM inflows of CHF17bn with 3%
NNA growth, while investment banking revenues from FICC and equity trading
beat peers. Trading revenues jumped 384% QOQ to CHF1.4bn, +118% YOY.
Total revenues were CHF6.6bn, up 4% QOQ, due mainly to strong trading
gains. Opex was CHF5.1bn in Q1 2015, -6% QOQ, as much as CHF4.25bn in
cost savings by the end of this year, comps -14% QOQ (with FTE at 46,400
+1,3% QOQ). Pretax profit was CHF1.5bn +69% QOQ. CET1 ratio was
stronger at 10% in Q1 2015 from 10.1% in Q4 2014. BV -1% QOQ.
Enrico Racioppi
+41 91 92 40160
enrico.racioppi@
hammer-partners.com
.racioppi@
hammer-partners.com
Pan-European
Sales Desk
+41 91 92 40160
sales@
hammer-partners.com
Robust investment banking driving divisional growth Private & wealth management results were weaker than expected. Revenues
were -8% QOQ at CHF2.9bn and operating cost were lower, so pretax profit
was CHF834m (-5% QOQ). Net new assets were solid with CHF17bn in Q1
2015, AUM rose 6% YOY to CHF1.3trn. WM gross margins was 100bp +1bp
vs. 99bp in Q4 2014. Investment banking beat strongly on total revenues of
CHF3.6bn, up 44% QOQ and +4% YOY; FICC reached CHF1.6bn +12% YOY.
Equities trading revenues came in at CHF1.3bn, up 14% YOY, while A&U
revenues climbed 25% YOY to CHF617m. Outlook: Q2 2015 is currently tracking
Q1 2015 amid stronger advisory and underwriting performance.
BUY rating confirmed; EPS +3% Conclusions: our EPS 2015E/EPS16E will change from a mix point of view.
The marginally lower contribution from private banking and higher contribution
from IB will blend to an EPS increase of 3%. We still prefer Credit Suisse
(trading at 0.93x PBV 2015E) to UBS (at 1.35x PBV 2015E).
Key financials and ratio (Eurm) Revenues Net profit EPS PE adj DPS DY BVPS PBV ROE 2014A 25882 1875 1,17 22,9 0,70 2,6% 27,35 0,98 4,3% 2015E 27053 3225 2,01 13,3 0,85 3,2% 28,76 0,93 7,0% 2016E 28276 4318 2,69 9,9 1,13 4,2% 30,37 0,88 8,8% 2017E 29565 5449 3,39 7,9 1,39 5,2% 32,40 0,82 10,5% Closing price CHF26.7 Market cap CHF42.7bn Bloomberg CSGN:VX www.hammer-­‐partners.com 1 Financials overview
Credit Suisse (P&L) FY12 FY13 FY14 FY15e FY16e FY17e FY18e CAGR 14e-­‐
18e NII 7146 8100 9039 9320 9600 9888 10184 3,0% Comm & fee 12945 13249 13052 13705 14390 15109 15865 5,0% Trading 1177 2819 2018 2220 2442 2686 2955 10,0% Other 2353 1115 1773 1808 1845 1882 1919 2,0% Revenues 23621 25283 25882 27053 28276 29565 30923 4,5% Personnel -­‐12449 -­‐11234 -­‐11318 -­‐11092 -­‐10870 -­‐10652 -­‐10439 -­‐2,0% Other -­‐9025 -­‐9433 -­‐11094 -­‐10872 -­‐10655 -­‐10442 -­‐10233 -­‐2,0% Costs -­‐21474 -­‐20667 -­‐22412 -­‐21964 -­‐21524 -­‐21094 -­‐20672 -­‐2,0% Op profit 2147 4616 3470 5089 6752 8471 10251 31,1% Provisions -­‐170 -­‐155 -­‐186 -­‐197 -­‐202 -­‐208 -­‐215 3,7% Taxes -­‐480 -­‐1490 -­‐1405 -­‐1664 -­‐2227 -­‐2809 -­‐3412 24,8% Other -­‐148 98 -­‐4 -­‐4 -­‐4 -­‐4 -­‐4 1,0% Net ear 1349 3069 1875 3225 4318 5449 6620 37,1% EPS dil 1,04 1,92 1,17 2,01 2,69 3,39 4,12 n shares dil 1294 1595 1607 1607 1607 1607 1607 Credit Suisse (capital) FY12 FY13 FY14 FY15e FY16e FY17e FY18e CAGR 14e-­‐
18e Total sh eq 35498 42907 43959 46217 48808 52077 56049 6,3% Pref. and Hybrid -­‐8781 -­‐3095 -­‐11316 -­‐11316 -­‐11316 -­‐11316 -­‐11316 0,0% Common sh eq 26717 39812 32643 34901 37492 40761 44733 8,2% Goodwill and intangible -­‐8632 -­‐8209 -­‐8893 -­‐8893 -­‐8893 -­‐8893 -­‐8893 0,0% TCE 18085 31603 23750 26008 28599 31868 35840 10,8% TCE ps 14,0 19,8 14,8 16,2 17,8 19,8 22,3 www.hammer-­‐partners.com 2 Assets and margins FY12 FY13 FY14 FY15e FY16e FY17e FY18e Loans 242223 247065 272551 280728 289149 297824 306759 NIM (bps) 2,95% 3,28% 3,32% 3,32% 3,32% 3,32% 3,32% cost to income 91% 82% 87% 81% 76% 71% 67% LLP (bps) 0,1 0,1 0,1 0,1 0,1 0,1 0,1 Tax rate -­‐24% -­‐33% -­‐43% -­‐34% -­‐34% -­‐34% -­‐34% Employees 47400 46000 45800 44884 43986 43107 42244 P.s data and multiples FY12 FY13 FY14 FY15e FY16e FY17e FY18e ROE 3,8% 7,2% 4,3% 7,0% 8,8% 10,5% 11,8% EPS 1,0 1,9 1,2 2,0 2,7 3,4 4,1 PE 6 3 6 13 10 8 6 BV ps 27,4 26,9 27,4 28,8 30,4 32,4 34,9 PBV ps 1,0 1,0 1,0 0,9 0,9 0,8 0,8 PTCE ps 1,9 1,3 1,8 1,6 1,5 1,3 1,2 Credit Suisse (pre tax profit by division Eur m) FY12 FY13 FY13 FY15e FY16e FY17e FY18e PB&WM 2021 2059 2088 2130 2172 2216 2260 CiC 944 965 917 1009 1110 1221 1343 Asset Management 2021 612 549 604 664 731 804 IB 2002 2243 1830 2105 2420 2783 3201 Corporate Centre -­‐3948 -­‐1320 -­‐2104 -­‐958 179 1308 2425 Group 1829 4559 3280 4889 6545 8258 10032 www.hammer-­‐partners.com 3 DISCLAIMER
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