The duel CS against UBS

UBS looked up in the financial crisis into the abyss. the Credit Suisse showed resistance and they came out relatively strongly from the crisis. However, with the Acquisition by CEO Sergio Ermotti, and in 2011 initiated a new focus on asset management, the favorites has changed the role abruptly: The future belonged to UBS. The business model of Credit Suisse is no longer considered dinosaurs, the capital-intensive investment banking that you are forced to continue to fit into the new regulatory environment. Not only inefficient, but also the capital of the gorge, Credit Suisse, therefore, came in these years. Hard to imagine how they get out of this cul-de-SAC would be able to.

in 2015, came Tidjane Thiam as the new CEO, Credit Suisse. He raised the capital in two steps to 10 billion Swiss francs, and it set the Bank on a new footing: The market-dependent investment banking, he was shocked. On drastic austerity measures, the profit was lowered threshold, and Thiam was also at Credit Suisse asset management to the centre. This model promised to be both more efficiency and more reliable profits. This brought a new impetus in the title, initially – after that, the Bank was a lot of scepticism whether the project would succeed.

capital and profits CS 2017

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The three-year restructuring phase, billion brought losses. For 2018, will now be sought for the first time, a gain in the amount of 3.2 to 3.4 billion Swiss francs. For 2019 and 2020, a Surplus is the result of 9 to 10 billion Swiss francs, predicts Thiam. Half of which is via dividends and share repurchases distributed to investors. The self-help measures of Credit Suisse are exhausted after the completion of the restructuring. As in the case of UBS for quite some time, the future profit development of the markets depends, now at Credit Suisse.

UBS with a higher level of Profit

The difference is that The profit level of UBS is higher. Since the realignment in 2012, UBS's own strength has strengthened the capital of 9 billion Swiss francs 14 billion Swiss francs, distributed and nearly 9 billion for litigation spent. CEO Ermotti estimates that UBS will generate in the next three years, now nearly as much capital available as in the last six years. The excess capital will also flow in the case of UBS, shareholders – how much exactly, however, is still open.

capital and profits, UBS, 2017

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the crux of The matter is that UBS assets in their parade discipline of management has grown in recent years. In view of the UBS now flickering succession considerations, it is expected that the next strategic pulse of your page will come up. The Central task of the successor of Ermotti will be to give asset management a new impetus: There is the strength of the UBS, currently your Problem is, but in the future, the hope.

output and efficiency

In the ten-year development of earnings by Credit Suisse and UBS during the financial crisis suffered incision is clearly visible. Only imagine, however, that both banks have achieved in spite of a recovery to the pre-crisis level. At UBS, this is due to the removal of the investment banking. The focus on wealth management in 2012, although new growth. For the past three years, the earnings performance of the UBS, however, is stagnating.

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Credit Suisse restructured as of 2015, what is manifested on the one hand, in the since then, declining income, on the other hand, the increase in the cost-income Ratio to over 100 percent. Credit Suisse is in the loss zone, from of the you from 2018 to find out. UBS brought the cost-income Ratio according to the Neusausrichtung under control – has reached the for the period's target of 75 percent.

earnings and dividend

the profit of The UBS is almost 7 francs per share to a loss of more than 7 Swiss francs per share in the financial crisis subsided. Since 2010, UBS holds, with the exception of 2012 in the profit zone, but at a level of 1 Swiss franc per share. Reasons for profit erosion, decline in revenues, higher cost of equity and increased expenses for other regulatory requirements. Per share of the decline in profits is so strong, because the number of titles has doubled in the ten-year comparison.

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Dramatically, the profit decline at Credit Suisse: almost 7 francs, earnings per share, ten years ago, today it is in the loss zone. Reason for the late-initiated restructuring, the wegfrass in the last three years, the profits. The dividends decreased in the case of two big banks – UBS has suspended distributions, in part, Credit Suisse has been able to support the dividend claims, in part only with the issue of new shares.

assets under management and Net new money

The loss of confidence in the UBS during the financial crisis led to the outflow of more than 200 billion francs in client funds. In the meantime, the UBS Wealth Management assets under management decreased by Credit Suisse reported value. Meanwhile, UBS has been fighting the top of the world's largest asset management banks – this is especially true taking into account of the billion-dollar US asset management business, which in the graph is not taken into account.

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UBS has combined the two areas will only start in 2018 in the new super division of Global Wealth Management. In terms of new money exceeded Credit Suisse's rival, UBS, in the ten-year period when new money by a factor of 3 – despite the separation of the US operations in 2015. With nearly 800 billion Swiss francs in assets under management, she oversees global to multiple regions and divisions spread, it is in the area behind UBS.

market capitalization and shares outstanding

more than 100 billion Swiss francs before the financial crisis, the market capitalization of UBS the end of the year 2018 fell to less than 50 billion Swiss francs that the market value of the Bank in these years would have increased the Credit Suisse under 30 billion Swiss francs, The Drama is particularly clear when you consider that UBS from 2008 to 2010, took 40 billion Swiss francs of additional capital – and without that. It is a dilution of just under 80 percent.

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the realignment has recovered, the market capitalization of UBS as of 2012. By the end of 2018, however, was again close to the level of 2011. The market capitalization of Credit Suisse rose with the 2015 restructuring hardly – although 10 billion Swiss francs were pumped fresh capital into the Bank. The practice of bonuses and Dividend rights with the shares to pay for, has led it to the slow creation of additional 400 million shares, which is the CS-shareholders were diluted in ten years, by more than 140 percent.

profitability and valuation

Before the financial crisis, Credit Suisse and UBS are achieved thanks to 50 times the Leverage of the equity returns of more than 25 percent. Now the lever on the regulator is limited to around half. UBS is aiming for a 15 percent return on equity. Credit Suisse wants to come in 2019 at a yield of 10 to 11 percent. In recent years, both banks, however, are significantly behind this target.

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Parallel to the lower returns on the stock valuation contracted to 2011, in Relation to book value Before the crisis, Credit Suisse were trading at Twice the book value, then the price-to-book ratio (KBV) commuted to 1. The restructuring has decoupled the evaluation of the Credit Suisse performance. The KBV of the UBS declined from close to 3 to 1. With its realignment, the rating increased from 2012 over book value. In 2018, the ratings of both banks fell below book value, and thus the Confidence that Credit Suisse and UBS shareholder value.

key data and Capital buffers

After the restructuring of Credit Suisse, UBS, is now really the larger Bank. Although it has always been regarded as the Primus. But this also has to do with the different accounting, the balance sheet total of the Credit Suisse appear to be smaller than that of the UBS. Measured in terms of the definition of a regulatory commitment (Leverage), Total, Credit Suisse was in the last few years, becoming bigger and bigger. This is true today for the risk-weighted Assets.

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as Measured by the regulatory capital (CET1) UBS accordingly, the thicker capital cushion. Including hybrid capital (Tier 1) and in relation to the Total exposure to Credit Suisse there is a Tick sound. The assessment of the Credit Suisse cut in half, as measured by the price-to-earnings ratio on a one-year period, reflecting the completion of the restructuring: The profit of Credit Suisse is expected to rise in 2019 by leaps and bounds.

(financial and economic)

Created: 15.01.2019, 17:23 PM