With All Eyes on Trading, a Credit Suisse Metric Looks Weak

(Bloomberg) -- As Tidjane Thiam highlighted the recent recovery in Credit Suisse Group AG’s trading business, sending the shares up the most in more than two months on Wednesday, one key metric for the wealth management business that’s been front and center of his turnaround plan looked a little soft.

Net new money from rich clients declined in all of the lender’s three wealth management operations in the final months of the year from the previous quarter, with the Swiss unit not attracting any inflows at all. Analysts at Citigroup Inc. and Mirabaud Securities said while the issue had been flagged at the bank’s investor day in November, the new assets were “weak” or “low.”

Just don’t tell Thiam.

“I think there is an excessive focus on it, and it’s a perverse incentive,” Thiam said about net new asset growth at a press conference, after being asked to comment on the figures. “All you need to do is pay an unreasonable amount for deposits, and the deposits will come in.”

Investors look at net new money for clues about the future growth of the business and whether a firm is gaining or losing market share. With interest rates still near zero or even negative, however, more assets can be a burden if clients don’t invest them. Thiam said his bank’s new money is “high quality” and can stand up to external scrutiny.

Net New Asset Growth Conundrum

Net new asset growth in the biggest of Credit Suisse’s three private banking units, international wealth management plus Asian private banking, stood at 3 percent in the fourth quarter, compared with more than 5 percent at UBS Group AG’s biggest wealth unit, which last quarter didn’t include the bank’s Americas business.

All of Credit Suisse’s private-banking divisions recorded collective net new money growth of 2.1 percent, the bank said. UBS’s net new money grew 2.5 percent in the same period for its combined businesses. Goldman Sachs Group Inc. analysts wrote in a note to clients that Credit Suisse’s net new money fell short of consensus estimates because of weaker growth in Asia.

To be sure, all of Credit Suisse’s wealth-management units increased profits in the final quarter of the year, beating analysts’ expectations. UBS posted a net-new money growth rate of 2.3 percent for its European and emerging-markets division, according to Bloomberg calculations.

“This quarter in Asia is a bit lower. It’s better to explain it and take it on the chin than try to explain numbers which are not real,” Thiam said at the press conference.
“I know what some of our competitors do - if we did it like that our NNA would be double what it is.”

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