The Credit Suisse bankers in Asia expecting good 2019 bonuses

Private bankers within Credit Suisse’s APAC division are outperforming their investment banking and trading colleagues in the region, the firm’s third-quarter results reveal.

Private banking – which is one part of Asia’s Wealth Management and Connected (WM&C) unit, alongside investment banking – generated 60% (CHF534m) of Credit Suisse’s Asian revenues in Q3. Moreover, this figure was up 13% year-on-year (excluding a gain from the spin-off of Credit Suisse’s Invest-Lab fund platform) as private banking benefited from more interest, commission, and transaction-based revenue.

Credit Suisse has not been on a recruitment spree in Asian private banking – its Q3 headcount of 610 Asia-based relationship managers, many of whom work in Singapore and Hong Kong, is only 10 higher than a year previously. But regional assets under management (AUM) are up 7% year-on-year to a record CHF222.4bn. RMs in Asia are also becoming more productive, which bodes well for their bonuses. They are managing AUM of about CHF365m each on average, compared with CHF346m per head in Q3 2018.

You may not be feeling so optimistic about your bonus if you work in the other (much smaller) part of the WM&C unit: the snappily named ‘advisory, underwriting and financing’ team (i.e. the Asian investment bank ‘connected’ to the Asian private bank). Revenues decreased 18% year-on-year in Q3, primarily due to lower fees from M&A transactions and lower equity underwriting revenues.

Credit Suisse’s investment bankers didn’t necessarily underperform those at other banks, however. CEO Tidjane Thiam, speaking at the release of Credit Suisse’s earnings report, noted that Greater China suffered one of its lowest activity quarters for fees in the last five years. The Swiss firm ranks in second place for APAC (international and ex-Japan) IB revenue by bank for the first nine months of 2019, according to Dealogic. “The revenues have gone down but much less so than the market, and we actually gained share of wallet,” said Thiam.

Meanwhile, if you work in Markets (Credit Suisse’s second APAC unit, which is separate from WM&C and focuses on equities and fixed income trading), your third quarter wasn’t so rosy. Revenues were down 16% to CHF213m, mainly due to fixed income sales and trading revenues plummeting 51% to just CHF18m. Equity revenues also decreased 10%. These declines meant Markets in Asia made a CHF34m loss last quarter. In contrast, Credit Suisse’s Global Markets division (i.e. trading outside of APAC) performed well over the same period.

This doesn’t necessarily mean that Credit Suisse traders in Asia should be worried about their jobs. Thiam said having a sales and trading capability in Asia is a “core part” of the bank’s long-term strategy in Asia, despite the region’s recent “weakness in trading volumes” that has affected all banks. Moreover, Thiam said markets employees in Asia bring in clients to other business lines, so they make an undisclosed but “very material” contribution to the firm that can’t be seen in the quarterly results. Thiam said he is also a longtime advocate of bringing the securitisation function to Asia.

Meanwhile, Credit Suisse’s results also show that it added 560 Asia-based employees in the year to end-September, taking its regional workforce to 7,860. However, pay per head in Asia (i.e. headcount divided by compensation and benefits costs) fell from CHF51k (US$51k) in Q3 2018 to CHF46k (US$46k) in Q3 this year, suggesting that many of the new staff members are based in lower-cost Asian markets such as India.

Image credit: Getty

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