EX-99 3 a180503-ex99_1.htm 99.1 CREDIT SUISSE FINANCIAL REPORT 1Q18 99.1 Credit Suisse Financial Report 1Q18











Key metrics
   in / end of % change
1Q18 4Q17 1Q17 QoQ YoY
Credit Suisse (CHF million, except where indicated)   
Net income/(loss) attributable to shareholders 694 (2,126) 596 16
Basic earnings/(loss) per share (CHF) 0.27 (0.83) 0.27 0
Diluted earnings/(loss) per share (CHF) 0.26 (0.83) 0.26 0
Return on equity attributable to shareholders (%) 6.7 (19.5) 5.7
Effective tax rate (%) 34.3 11.6
Core Results (CHF million, except where indicated)   
Net revenues 5,839 5,340 5,740 9 2
Provision for credit losses 48 40 29 20 66
Total operating expenses 4,328 4,704 4,502 (8) (4)
Income before taxes 1,463 596 1,209 145 21
Cost/income ratio (%) 74.1 88.1 78.4
Assets under management and net new assets (CHF billion)   
Assets under management 1,379.9 1,376.1 1,304.2 0.3 5.8
Net new assets 25.1 3.1 24.4 2.9
Balance sheet statistics (CHF million)   
Total assets 809,052 796,289 811,979 2 0
Net loans 283,854 279,149 276,370 2 3
Total shareholders' equity 42,540 41,902 41,702 2 2
Tangible shareholders' equity 37,661 36,937 36,669 2 3
Basel III regulatory capital and leverage statistics   
CET1 ratio (%) 12.9 13.5 12.7
Look-through CET1 ratio (%) 12.9 12.8 11.7
Look-through CET1 leverage ratio (%) 3.8 3.8 3.3
Look-through tier 1 leverage ratio (%) 5.1 5.2 4.6
Share information   
Shares outstanding (million) 2,539.6 2,550.3 2,083.6 0 22
   of which common shares issued  2,556.0 2,556.0 2,089.9 0 22
   of which treasury shares  (16.4) (5.7) (6.3) 188 160
Book value per share (CHF) 16.75 16.43 20.01 2 (16)
Tangible book value per share (CHF) 14.83 14.48 17.60 2 (16)
Market capitalization (CHF million) 40,871 44,475 31,139 (8) 31
Number of employees (full-time equivalents)   
Number of employees 46,370 46,840 46,640 (1) (1)
See relevant tables for additional information on these metrics.





Financial Report 1Q18




For purposes of this report, unless the context otherwise requires, the terms “Credit Suisse,” “the Group,” “we,” “us” and “our” mean Credit Suisse Group AG and its consolidated subsidiaries. The business of Credit Suisse AG, the direct bank subsidiary of the Group, is substantially similar to the Group, and we use these terms to refer to both when the subject is the same or substantially similar. We use the term “the Bank” when we are only referring to Credit Suisse AG and its consolidated subsidiaries.
Abbreviations are explained in the List of abbreviations in the back of this report.
Publications referenced in this report, whether via website links or otherwise, are not incorporated into this report.
In various tables, use of “–” indicates not meaningful or not applicable.







Credit Suisse at a glance
Credit Suisse
Our strategy builds on Credit Suisse’s core strengths: its position as a leading global wealth manager, its specialist investment banking capabilities and its strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets. Founded in 1856, we today have a global reach with operations in about 50 countries and 46,370 employees from over 150 different nations. Our broad footprint helps us to generate a geographically balanced stream of revenues and net new assets and allows us to capture growth opportunities around the world. We serve our clients through three regionally focused divisions: Swiss Universal Bank, International Wealth Management and Asia Pacific. These regional businesses are supported by two other divisions specializing in investment banking capabilities: Global Markets and Investment Banking & Capital Markets. The Strategic Resolution Unit consolidates the remaining portfolios from the former non-strategic units plus additional businesses and positions that do not fit with our strategic direction. Our business divisions cooperate closely to provide holistic financial solutions, including innovative products and specially tailored advice.
Swiss Universal Bank
The Swiss Universal Bank division offers comprehensive advice and a wide range of financial solutions to private, corporate and institutional clients primarily domiciled in our home market Switzerland, which offers attractive growth opportunities and where we can build on a strong market position across our key businesses. Our Private Clients business has a leading franchise in our Swiss home market and serves ultra-high-net-worth individuals, high-net-worth individuals, affluent and retail clients. Our Corporate & Institutional Clients business serves large corporate clients, small and medium-sized enterprises, institutional clients, external asset managers and financial institutions.
International Wealth Management
The International Wealth Management division through its Private Banking business offers comprehensive advisory services and tailored investment and financing solutions to wealthy private clients and external asset managers in Europe, the Middle East, Africa and Latin America, utilizing comprehensive access to the broad spectrum of Credit Suisse’s global resources and capabilities as well as a wide range of proprietary and third-party products and services. Our Asset Management business offers investment solutions and services globally to a broad range of clients, including pension funds, governments, foundations and endowments, corporations and individuals.
Asia Pacific
In the Asia Pacific division, our wealth management, financing and underwriting and advisory teams work closely together to deliver integrated advisory services and solutions to our target ultra-high-net-worth, entrepreneur and corporate clients. Our Wealth Management & Connected business combines our activities in wealth management with our financing, underwriting and advisory activities. Our Markets business represents our equities and fixed income trading business in Asia Pacific, which supports our wealth management activities, but also deals extensively with a broader range of institutional clients.
Global Markets
The Global Markets division offers a broad range of financial products and services to client-driven businesses and also supports Credit Suisse’s global wealth management businesses and their clients. Our suite of products and services includes global securities sales, trading and execution, prime brokerage and comprehensive investment research. Our clients include financial institutions, corporations, governments, institutional investors, such as pension funds and hedge funds, and private individuals around the world.
Investment Banking & Capital Markets
The Investment Banking & Capital Markets division offers a broad range of investment banking services to corporations, financial institutions, financial sponsors and ultra-high-net-worth individuals and sovereign clients. Our range of products and services includes advisory services related to mergers and acquisitions, divestitures, takeover defense mandates, business restructurings and spin-offs. The division also engages in debt and equity underwriting of public securities offerings and private placements.
Strategic Resolution Unit
The Strategic Resolution Unit was created to facilitate the immediate right-sizing of our business divisions from a capital perspective and includes remaining portfolios from former non-strategic units plus transfers of additional exposures from the business divisions. The unit’s primary focus is on facilitating the rapid wind-down of capital usage and costs to reduce the negative impact on the Group’s performance. Repositioned as a separate division, this provides clearer accountability, governance and reporting.
2




Credit Suisse results
Operating environment
Credit Suisse
Swiss Universal Bank
International Wealth Management
Asia Pacific
Global Markets
Investment Banking & Capital Markets
Strategic Resolution Unit
Corporate Center
Assets under management

3



Operating environment
In 1Q18, global economic growth eased from strong levels and inflation showed signs of increasing. Global equity markets ended the quarter lower, with European bank stocks underperforming and volatility strongly increasing. Major government bond yields were stable and the US dollar generally weakened against most major currencies. Commodities ended the quarter higher.
Economic environment
Global growth moderated during 1Q18 after its best short-term performance in years. A range of business confidence surveys and economic data eased from previously strong levels. Core inflation showed signs of increasing, with particularly strong wage growth in January. In the euro area, business sentiment declined from extremely high levels, but underlying fundamentals remained strong enough to support continued robust growth. In emerging markets, the Brazilian economic recovery gathered strength, while relatively tight monetary and fiscal policies weighed on growth in Russia.
The US Federal Reserve (Fed) raised interest rates 25 basis points at its March meeting. The European Central Bank (ECB) left policy rates unchanged. The Swiss National Bank (SNB) kept policy rates unchanged, while expressing concern about the strength of the Swiss franc. The Bank of England (BoE) suggested there could be an interest rate increase in May. Among major emerging markets, policy rates were cut in Brazil and Russia.
After a very strong start in January, global equities finished the quarter lower for the first time in two years as volatility returned to markets. The Chicago Board Options Exchange Market Volatility Index (VIX) spiked in 1Q18 far above the highs from last year (refer to the charts under "Equity markets"). Among regions, emerging market and US equities outperformed global stocks as they benefitted from the US dollar weakening, while equities in the UK and Switzerland lagged by comparison. Among sectors, IT continued to outperform despite coming under pressure at the end of the quarter. The telecommunication, energy and consumer staples sectors were the main underperformers in 1Q18. The Credit Suisse Hedge Fund Index increased 1.4% in 1Q18.
In fixed income, the US Treasury curve was flat compared to the beginning of the year, with the market repricing an anticipated Fed interest rate increase and expectations of continued subdued long-term inflation. Bond index returns turned positive for non-US dollar markets in March, impacted by the market reassessment of the ECB's and the Fed’s monetary policy actions as well as the trade dispute between the US and China. In euro rates, the German Bund curve was stable. In credit markets, corporate bond spreads widened from the historically tight level at the beginning of 1Q18. Emerging market hard-currency sovereign bond spreads also widened. Emerging market local currency bonds outperformed various investment grade and high yield segments. Refer to the charts under “Yield curves” and “Credit spreads” for further information.
4

The US dollar generally weakened in 1Q18, despite continued tightening of US monetary policy, as markets expected yields to catch up in other parts of the world. In addition, concerns about trade disputes have been an additional drag along with rising US budget deficits. The euro had a slightly positive performance in 1Q18 against the US dollar as the economic data for the single currency region remained robust. The Swiss franc also gained against the US dollar, but continued to depreciate slightly against the euro. The British pound continued its positive trend in 1Q18, recovering from undervalued levels and benefitting from solid economic data. In major emerging markets, the Mexican peso, the Colombian peso and the South African rand performed the best while the Turkish lira was among the currencies that depreciated the most against the US dollar in 1Q18.
The Credit Suisse Commodities Benchmark gained 2.8% in 1Q18 due to gains in energy and agriculture. Organization of Petroleum Exporting Countries production discipline helped keep oil prices elevated. Agriculture prices rose due to weather concerns in key regions. Industrial metal prices slipped during the first quarter amid fears that trade disputes would negatively impact demand. Precious metals were mixed with generally stronger gold prices versus lower prices for silver.
5

Market volumes (growth in %)
   Global Europe
end of 1Q18 QoQ YoY QoQ YoY
Equity trading volume 1 15 13 11 14
Announced mergers and acquisitions 2 4 46 37 63
Completed mergers and acquisitions 2 (2) (7) (9) (16)
Equity underwriting 2 (10) (14) (29) (33)
Debt underwriting 2 10 (7) 46 3
Syndicated lending – investment grade 2 (13) 26
1
London Stock Exchange, Borsa Italiana, Deutsche Börse and BME. Global also includes ICE and NASDAQ.
2
Dealogic.
Sector environment
Bank stocks in aggregate underperformed global stocks in 1Q18, mainly due to the underperformance of European bank stocks, and ended the quarter more than 3% lower.
In private banking, market conditions remained challenging in light of political and economic uncertainty and the persistence of the low interest rate environment. The sector continues to face significant structural pressure as it adapts to industry-specific regulatory changes. Despite challenging equity markets, the industry maintained a long-term fundamental growth trend and saw the continued pursuit of new opportunities and efficiencies arising from digital technology.
In investment banking, equity trading volumes and announced mergers and acquisitions (M&A) increased globally and in Europe compared to 4Q17 and 1Q17. Completed M&A decreased globally and in Europe compared to 4Q17 and 1Q17. Global and European equity underwriting volumes were lower compared to 4Q17 and 1Q17. Global debt underwriting volumes were higher compared to 4Q17, but lower compared to 1Q17. European debt underwriting was higher compared to 4Q17 and 1Q17. Compared to 4Q17 and 1Q17, total US fixed income trading volumes were higher, mainly driven by an increase in treasury volumes.
6

Credit Suisse
In 1Q18, we recorded net income attributable to shareholders of CHF 694 million. Diluted earnings per share were CHF 0.26 and return on equity attributable to shareholders was 6.7%. As of the end of 1Q18, our BIS CET1 ratio was 12.9% on a look-through basis.
Results
   in / end of % change
1Q18 4Q17 1Q17 QoQ YoY
Statements of operations (CHF million)   
Net interest income 1,585 1,565 1,633 1 (3)
Commissions and fees 3,046 3,104 3,046 (2) 0
Trading revenues 578 186 574 211 1
Other revenues 427 334 281 28 52
Net revenues  5,636 5,189 5,534 9 2
Provision for credit losses  48 43 53 12 (9)
Compensation and benefits 2,538 2,568 2,705 (1) (6)
General and administrative expenses 1,508 1,935 1,601 (22) (6)
Commission expenses 344 365 368 (6) (7)
Restructuring expenses 144 137 137 5 5
Total other operating expenses 1,996 2,437 2,106 (18) (5)
Total operating expenses  4,534 5,005 4,811 (9) (6)
Income before taxes  1,054 141 670 57
Income tax expense 362 2,234 78 (84) 364
Net income/(loss)  692 (2,093) 592 17
Net income/(loss) attributable to noncontrolling interests (2) 33 (4) (50)
Net income/(loss) attributable to shareholders  694 (2,126) 596 16
Statement of operations metrics (%)   
Return on regulatory capital 9.1 1.2 5.7
Cost/income ratio 80.4 96.5 86.9
Effective tax rate 34.3 11.6
Earnings per share (CHF)   
Basic earnings/(loss) per share 0.27 (0.83) 0.27 0
Diluted earnings/(loss) per share 0.26 (0.83) 0.26 0
Return on equity (%, annualized)   
Return on equity attributable to shareholders 6.7 (19.5) 5.7
Return on tangible equity attributable to shareholders 1 7.6 (22.0) 6.5
Balance sheet statistics (CHF million)   
Total assets 809,052 796,289 811,979 2 0
Risk-weighted assets 2 271,015 271,680 263,737 0 3
Leverage exposure 2 932,071 916,525 935,911 2 0
Number of employees (full-time equivalents)   
Number of employees 46,370 46,840 46,640 (1) (1)
1
Based on tangible equity attributable to shareholders, a non-GAAP financial measure, which is calculated by deducting goodwill and other intangible assets from total equity attributable to shareholders as presented in our balance sheet. Management believes that the return on tangible equity attributable to shareholders is meaningful as it allows consistent measurement of the performance of businesses without regard to whether the businesses were acquired.
2
Disclosed on a look-through basis.
7

Results summary
In 1Q18, Credit Suisse reported net income attributable to shareholders of CHF 694 million compared to a net loss attributable to shareholders of CHF 2,126 million in 4Q17 and net income attributable to shareholders of CHF 596 million in 1Q17.
Net revenues of CHF 5,636 million increased 9% compared to 4Q17, primarily reflecting higher net revenues in Global Markets, Swiss Universal Bank and Asia Pacific, partially offset by lower net revenues in Corporate Center. The increase in Global Markets was driven by growth across most businesses, particularly in its International Trading Solutions (ITS) franchise. The increase in Swiss Universal Bank was mainly due to significantly higher transaction-based revenues and a gain on the sale of its investment in Euroclear. The increase in Asia Pacific was driven by higher revenues in its Markets business across all revenue categories and higher revenues in its Wealth Management & Connected business, reflecting higher Private Banking revenues, partially offset by lower advisory, underwriting and financing revenues. The decrease in the Corporate Center primarily reflected negative treasury results, partially offset by higher other revenues.
Net revenues increased 2% compared to 1Q17, primarily reflecting increased net revenues in International Wealth Management, Asia Pacific and Swiss Universal Bank, partially offset by lower net revenues in Corporate Center, Investment Banking & Capital Markets and Global Markets. The increase in International Wealth Management reflected higher revenues across all revenue categories. The increase in Asia Pacific was driven by higher revenues in its Wealth Management & Connected business, reflecting higher Private Banking revenues and higher advisory, underwriting and financing revenues, and higher revenues in its Markets business across all revenue categories. The increase in Swiss Universal Bank was mainly driven by the gain on the sale of its investment in Euroclear, higher transaction-based revenues and higher recurring commissions and fees. The decrease in the Corporate Center primarily reflected movements in treasury results. The decrease in Investment Banking & Capital Markets was due to lower revenues from advisory and other fees and debt underwriting activity. The decrease in Global Markets was due to a decline in underwriting and fixed income sales and trading.
Provision for credit losses in 1Q18 was CHF 48 million, primarily related to net provisions of CHF 34 million in Swiss Universal Bank and CHF 10 million in Asia Pacific.
Total operating expenses of CHF 4,534 million decreased 9% compared to 4Q17, mainly reflecting a 22% decrease in general and administrative expenses, primarily due to lower professional services fees and lower litigation provisions.
Total operating expenses decreased 6% compared to 1Q17, primarily reflecting a 6% decrease in compensation and benefits, mainly relating to lower deferred compensation expenses from prior-year awards and lower discretionary compensation expenses, and a 6% decrease in general and administrative expenses, mainly relating to lower professional services fees.
In 1Q18, we incurred CHF 144 million of restructuring expenses in connection with the implementation of our strategy, of which CHF 103 million were compensation and benefits-related expenses.
Income tax expense of CHF 362 million recorded in 1Q18 mainly reflected the impact of the geographical mix of results and the impact of a re-assessment of deferred tax assets in Switzerland, partially offset by the impact of tax benefits on the resolution of a tax litigation matter. Overall, net deferred tax assets decreased CHF 361 million to CHF 4,767 million during 1Q18, mainly driven by earnings, a foreign exchange impact and the re-assessment of deferred tax assets in Switzerland. Deferred tax assets on net operating losses decreased CHF 167 million to CHF 2,046 million during 1Q18. The Credit Suisse effective tax rate was 34.3% in 1Q18.
8

Overview of Results 

in / end of

Swiss
Universal
Bank

International
Wealth
Management



Asia Pacific


Global
Markets
Investment
Banking &
Capital
Markets


Corporate
Center


Core
Results

Strategic
Resolution
Unit


Credit
Suisse
1Q18 (CHF million)   
Net revenues  1,431 1,403 991 1,546 528 (60) 5,839 (203) 5,636
Provision for credit losses  34 (1) 10 4 1 0 48 0 48
Compensation and benefits 487 587 411 617 316 55 2,473 65 2,538
Total other operating expenses 347 333 336 630 152 57 1,855 141 1,996
   of which general and administrative expenses  258 254 259 453 121 37 1,382 126 1,508
   of which restructuring expenses  28 26 6 42 30 1 133 11 144
Total operating expenses  834 920 747 1,247 468 112 4,328 206 4,534
Income/(loss) before taxes  563 484 234 295 59 (172) 1,463 (409) 1,054
Return on regulatory capital (%) 17.9 35.7 16.9 8.5 8.1 13.4 9.1
Cost/income ratio (%) 58.3 65.6 75.4 80.7 88.6 74.1 80.4
Total assets 217,179 89,313 107,851 239,432 15,380 109,734 778,889 30,163 809,052
Goodwill 603 1,518 1,473 451 622 0 4,667 0 4,667
Risk-weighted assets 1 70,558 37,580 33,647 57,990 20,866 28,135 248,776 22,239 271,015
Leverage exposure 1 246,997 93,921 115,709 282,778 38,731 110,767 888,903 43,168 932,071
4Q17 (CHF million)   
Net revenues  1,318 1,364 885 1,163 565 45 5,340 (151) 5,189
Provision for credit losses  15 14 7 8 (1) (3) 40 3 43
Compensation and benefits 484 575 394 645 324 81 2,503 65 2,568
Total other operating expenses 386 435 308 705 135 232 2,201 236 2,437
   of which general and administrative expenses  321 357 217 490 119 222 1,726 209 1,935
   of which restructuring expenses  (2) 11 23 71 14 2 119 18 137
Total operating expenses  870 1,010 702 1,350 459 313 4,704 301 5,005
Income/(loss) before taxes  433 340 176 (195) 107 (265) 596 (455) 141
Return on regulatory capital (%) 13.5 25.2 13.3 (5.5) 15.0 5.6 1.2
Cost/income ratio (%) 66.0 74.0 79.3 116.1 81.2 88.1 96.5
Total assets 228,857 94,753 96,497 242,159 20,803 67,591 750,660 45,629 796,289
Goodwill 610 1,544 1,496 459 633 0 4,742 0 4,742
Risk-weighted assets 1 65,572 38,256 31,474 58,858 20,058 23,849 238,067 33,613 271,680
Leverage exposure 1 257,054 99,267 105,585 283,809 43,842 67,034 856,591 59,934 916,525
1Q17 (CHF million)   
Net revenues  1,354 1,221 881 1,609 606 69 5,740 (206) 5,534
Provision for credit losses  10 2 4 5 6 2 29 24 53
Compensation and benefits 483 571 424 690 348 101 2,617 88 2,705
Total other operating expenses 457 357 306 597 103 65 1,885 221 2,106
   of which general and administrative expenses  325 267 220 438 101 43 1,394 207 1,601
   of which restructuring expenses  52 36 19 20 2 1 130 7 137
Total operating expenses  940 928 730 1,287 451 166 4,502 309 4,811
Income/(loss) before taxes  404 291 147 317 149 (99) 1,209 (539) 670
Return on regulatory capital (%) 12.7 23.0 10.9 9.0 23.1 11.4 5.7
Cost/income ratio (%) 69.4 76.0 82.9 80.0 74.4 78.4 86.9
Total assets 232,334 89,927 96,291 242,745 19,997 69,045 750,339 61,640 811,979
Goodwill 616 1,580 1,522 468 645 0 4,831 0 4,831
Risk-weighted assets 1 65,639 35,794 33,077 52,061 18,602 17,180 222,353 41,384 263,737
Leverage exposure 1 257,397 93,629 106,474 287,456 44,018 64,219 853,193 82,718 935,911
1
Disclosed on a look-through basis.
9

US tax reform – Tax Cuts and Jobs Act
The US tax reform enacted on December 22, 2017 resulted in a reduction of the federal corporate income tax rate from 35% to 21%, effective as of January 1, 2018.
The reform also introduced the base erosion and anti-abuse tax (BEAT), effective as of January 1, 2018. It is broadly levied on tax deductions created by certain payments, e.g. for interest and services, to affiliated group companies outside the US, in the case where the calculated tax based on a modified taxable income exceeds the amount of ordinary federal corporate income taxes paid. The tax rates applicable for banks are 6% for 2018, 11% for 2019 until 2025 and 13.5% from 2026 onward. On the basis of the current analysis of the BEAT tax regime, we continue to regard it as more likely than not that the Group will not be subject to this regime in 2018. However, there are significant uncertainties in the application of BEAT and this interpretation will be subject to review once further guidance has been issued by the US Department of Treasury.
Regulatory capital
As of the end of 1Q18, our Bank for International Settlements (BIS) common equity tier 1 (CET1) ratio was 12.9% and our risk-weighted assets were CHF 271.0 billion, both on a look-through basis.
As previously disclosed, the Swiss Financial Market Supervisory Authority FINMA (FINMA) imposed regulatory changes in 1Q18, primarily in respect of credit multipliers and banking book securitizations, which resulted in additional risk-weighted assets relating to credit risk of CHF 2.0 billion.
As a result of the significant reduction in the size of the Strategic Resolution Unit over the last two years, in 1Q18 we agreed with FINMA on a change to the methodology for the allocation of risk-weighted assets relating to operational risk to our businesses to reflect the changed portfolio in the Strategic Resolution Unit. Such risk-weighted assets relating to operational risk were reduced in the Strategic Resolution Unit by CHF 8.9 billion and allocated primarily to the Corporate Center, Global Markets, Investment Banking & Capital Markets and Asia Pacific.
As previously disclosed, Credit Suisse approached FINMA with a request to review the appropriateness of the level of the risk-weighted assets relating to operational risk in the Strategic Resolution Unit, given the progress in exiting businesses and reducing the size of the division over the last two years, with the aim of aligning reductions to the accelerated closure of the Strategic Resolution Unit by the end of 2018. In 1Q18, we concluded discussions with FINMA and reduced the level of risk-weighted assets relating to operational risk by CHF 2.5 billion, primarily in connection with the external transfer of our US private banking business, which was reflected in the Corporate Center.
With respect to leverage exposure, in 1Q18 we increased our centrally held balance of high-quality liquid assets (HQLA) by CHF 7.6 billion, which are allocated to the Corporate Center. In addition, in 1Q18 we have realigned the allocation of HQLA to the divisions to match their actual business usage in line with our internal risk management guidelines. Any excess HQLA held by legal entities above those levels for local regulatory purposes or economic requirements are allocated to the Corporate Center. HQLA allocated to the Corporate Center and Asia Pacific increased CHF 43.2 billion and CHF 5.0 billion, respectively, as a result of these measures and decreased CHF 13.8 billion, CHF 12.6 billion, CHF 6.7 billion, CHF 6.2 billion and CHF 1.2 billion in Swiss Universal Bank, Strategic Resolution Unit, International Wealth Management, Investment Banking & Capital Management and Global Markets, respectively.
> Refer to “Capital management” in II – Treasury, risk, balance sheet and off-balance sheet for further information.
Accounting developments
In 1Q18, the Group adopted Accounting Standard Update 2014-09 “Revenue from Contracts with Customers”, a new US GAAP standard pertaining to revenue recognition, which was implemented using the modified retrospective approach with a transition adjustment reducing retained earnings by CHF 45 million, net of tax, without restating comparative periods. The new revenue recognition criteria require a change in the gross and net presentation of certain revenues and expenses, including in relation to certain underwriting and brokerage transactions, with most of the impact reflected in our Investment Banking & Capital Markets, Global Markets and Asia Pacific divisions. Both revenues and expenses increased CHF 15 million in Investment Banking & Capital Markets and CHF 8 million in Global Markets and decreased CHF 7 million in Asia Pacific.
In 1Q18, the Group also adopted a new US GAAP standard pertaining to the presentation of net periodic benefit costs of pension and other post-retirement costs, which was implemented retrospectively by restating comparative periods. The new presentation criteria require the service cost component of the net periodic benefit cost to be presented as a compensation expense while other components are to be presented as non-compensation expenses.
Core Results
In 1Q18, Core Results net revenues of CHF 5,839 million increased 9% compared to 4Q17, primarily reflecting higher net revenues in Global Markets, Asia Pacific and Swiss Universal Bank, partially offset by lower net revenues in Corporate Center. Provision for credit losses was CHF 48 million, primarily related to a net provision for credit losses of CHF 34 million in Swiss Universal Bank and CHF 10 million in Asia Pacific. Total operating expenses of CHF 4,328 million decreased 8% compared to 4Q17, mainly reflecting a 20% decrease in general and administrative expenses. The decrease in general and administrative expenses was primarily related to the Corporate Center, International Wealth Management and Swiss Universal Bank.
Core Results net revenues increased 2% compared to 1Q17, primarily reflecting increased net revenues in International Wealth Management, Asia Pacific and Swiss Universal Bank, partially offset by lower net revenues in Corporate Center, Investment Banking & Capital Markets and Global Markets. Total operating expenses decreased 4% compared to 1Q17, primarily reflecting a 6% decrease in compensation and benefits. The decrease in compensation and benefits primarily related to Global Markets, the Corporate Center and Investment Banking & Capital Markets.
10

Reconciliation of adjusted results
Adjusted results referred to in this earnings release are non-GAAP financial measures that exclude goodwill impairment and certain other revenues and expenses included in our reported results. Management believes that adjusted results provide a useful presentation of our operating results for purposes of assessing our Group and divisional performance consistently over time, on a basis that excludes items that management does not consider representative of our underlying performance. Provided below is a reconciliation of our adjusted results to the most directly comparable US GAAP measures.

in

Swiss
Universal
Bank

International
Wealth
Management


Asia
Pacific


Global
Markets
Investment
Banking &
Capital
Markets


Corporate
Center


Core
Results

Strategic
Resolution
Unit


Credit
Suisse
1Q18 (CHF million)   
Net revenues  1,431 1,403 991 1,546 528 (60) 5,839 (203) 5,636
   Real estate gains  0 0 0 0 0 0 0 (1) (1)
   (Gains)/losses on business sales  (37) (36) 0 0 0 0 (73) 0 (73)
Net revenues adjusted  1,394 1,367 991 1,546 528 (60) 5,766 (204) 5,562
Provision for credit losses  34 (1) 10 4 1 0 48 0 48
Total operating expenses  834 920 747 1,247 468 112 4,328 206 4,534
   Restructuring expenses  (28) (26) (6) (42) (30) (1) (133) (11) (144)
   Major litigation provisions  0 0 (48) 0 0 0 (48) (37) (85)
Total operating expenses adjusted  806 894 693 1,205 438 111 4,147 158 4,305
Income/(loss) before taxes  563 484 234 295 59 (172) 1,463 (409) 1,054
   Total adjustments  (9) (10) 54 42 30 1 108 47 155
Adjusted income/(loss) before taxes  554 474 288 337 89 (171) 1,571 (362) 1,209
Adjusted return on regulatory capital (%) 17.6 34.9 20.8 9.8 12.4 14.4 10.5
4Q17 (CHF million)   
Net revenues  1,318 1,364 885 1,163 565 45 5,340 (151) 5,189
   (Gains)/losses on business sales  0 28 0 0 0 0 28 0 28
Net revenues adjusted  1,318 1,392 885 1,163 565 45 5,368 (151) 5,217
Provision for credit losses  15 14 7 8 (1) (3) 40 3 43
Total operating expenses  870 1,010 702 1,350 459 313 4,704 301 5,005
   Restructuring expenses  2 (11) (23) (71) (14) (2) (119) (18) (137)
   Major litigation provisions  (7) (31) 0 0 0 (127) (165) (90) (255)
   Expenses related to business sales  0 0 0 (8) 0 0 (8) 0 (8)
Total operating expenses adjusted  865 968 679 1,271 445 184 4,412 193 4,605
Income/(loss) before taxes  433 340 176 (195) 107 (265) 596 (455) 141
   Total adjustments  5 70 23 79 14 129 320 108 428
Adjusted income/(loss) before taxes  438 410 199 (116) 121 (136) 916 (347) 569
Adjusted return on regulatory capital (%) 13.7 30.5 15.0 (3.3) 16.9 8.6 5.0
1Q17 (CHF million)   
Net revenues  1,354 1,221 881 1,609 606 69 5,740 (206) 5,534
   (Gains)/losses on business sales  0 0 0 0 0 23 23 (38) (15)
Net revenues adjusted  1,354 1,221 881 1,609 606 92 5,763 (244) 5,519
Provision for credit losses  10 2 4 5 6 2 29 24 53
Total operating expenses  940 928 730 1,287 451 166 4,502 309 4,811
   Restructuring expenses  (52) (36) (19) (20) (2) (1) (130) (7) (137)
   Major litigation provisions  (27) 0 0 0 0 0 (27) (70) (97)
Total operating expenses adjusted  861 892 711 1,267 449 165 4,345 232 4,577
Income/(loss) before taxes  404 291 147 317 149 (99) 1,209 (539) 670
   Total adjustments  79 36 19 20 2 24 180 39 219
Adjusted income/(loss) before taxes  483 327 166 337 151 (75) 1,389 (500) 889
Adjusted return on regulatory capital (%) 15.1 25.8 12.3 9.6 23.4 13.1 7.5
11

Core Results by business activity 
in    1Q18 4Q17 1Q17

Swiss
Universal
Bank

International
Wealth
Management



Asia Pacific


Global
Markets
Investment
Banking &
Capital
Markets


Corporate
Center


Core
Results


Core
Results


Core
Results
Related to private banking (CHF million)   
Net revenues 762 1,043 455 2,260 2,040 2,005
   of which net interest income  428 388 159 975 955 923
   of which recurring  206 307 111 624 616 577
   of which transaction-based  109 311 185 605 468 504
Provision for credit losses 10 (1) 4 13 31 18
Total operating expenses 487 643 281 1,411 1,448 1,448
Income before taxes  265 401 170 836 561 539
Related to corporate & institutional banking   
Net revenues 669 669 592 643
   of which net interest income  303 303 301 313
   of which recurring  174 174 159 165
   of which transaction-based  190 190 146 180
Provision for credit losses 24 24 5 (2)
Total operating expenses 347 347 366 402
Income before taxes  298 298 221 243
Related to investment banking   
Net revenues 536 1,546 528 2,610 2,222 2,685
   of which fixed income sales and trading  85 860 945 570 924
   of which equity sales and trading  243 490 733 614 722
   of which underwriting and advisory  208 1 288 531 1,027 1,117 1,102
Provision for credit losses 6 4 1 11 7 11
Total operating expenses 466 1,247 468 2,181 2,240 2,200
Income/(loss) before taxes  64 295 59 418 (25) 474
Related to asset management   
Net revenues 360 360 441 338
Total operating expenses 277 277 337 286
Income before taxes  83 83 104 52
Related to corporate center   
Net revenues (60) (60) 45 69
Provision for credit losses 0 0 (3) 2
Total operating expenses 112 112 313 166
Loss before taxes  (172) (172) (265) (99)
Total   
Net revenues 1,431 1,403 991 1,546 528 (60) 5,839 5,340 5,740
Provision for credit losses 34 (1) 10 4 1 0 48 40 29
Total operating expenses 834 920 747 1,247 468 112 4,328 4,704 4,502
Income/(loss) before taxes  563 484 234 295 59 (172) 1,463 596 1,209
Certain transaction-based revenues in Swiss Universal Bank and certain fixed income and equity sales and trading revenues in Asia Pacific and Global Markets relate to the Group’s global advisory and underwriting business. Refer to “Global advisory and underwriting revenues” in Investment Banking & Capital Markets for further information.
1
Reflects certain financing revenues in Asia Pacific that are not included in the Group’s global advisory and underwriting revenues.
12

employees and other HEADCOUNT
There were 46,370 Group employees as of the end of 1Q18, a decrease of 470 compared to 4Q17, mainly relating to the impact of our cost efficiency initiatives, primarily in Swiss Universal Bank, Global Markets, International Wealth Management and Investment Banking & Capital Markets. The number of outsourced roles, contractors and consultants decreased by 560 compared to 4Q17.
Employees and other headcount
end of 1Q18 4Q17 1Q17
Employees (full-time equivalents)   
Swiss Universal Bank 12,420 12,600 12,740
International Wealth Management 10,170 10,250 10,010
Asia Pacific 7,270 7,230 7,080
Global Markets 11,610 11,740 11,600
Investment Banking & Capital Markets 3,120 3,190 3,210
Strategic Resolution Unit 1,480 1,530 1,690
Corporate Center 300 300 310
Total employees  46,370 46,840 46,640
Other headcount   
Outsourced roles, contractors and consultants 20,950 21,510 22,800
Total employees and other headcount  67,320 68,350 69,440
Information and developments
Format of presentation
In managing our business, revenues are evaluated in the aggregate, including an assessment of trading gains and losses and the related interest income and expense from financing and hedging positions. For this reason, specific individual revenue categories in isolation may not be indicative of performance.
Certain reclassifications have been made to prior periods to conform to the current presentation.
International Trading Solutions
As previously disclosed, effective July 1, 2017 the Global Markets division entered into an agreement with Swiss Universal Bank and International Wealth Management whereby it provides centralized trading and sales services to private and institutional clients across the three divisions. These services are now managed as a single business within the Global Markets division, referred to as ITS. ITS is expected to provide aligned market strategies, significant cost synergies and enhanced client focus. In exceptional circumstances the agreement may be modified by a formal Executive Board decision and notification to the Audit Committee and Board of Directors.
Effective in 1Q18, the agreement calls for sharing the economic outcome of the business among the three divisions, including fixed minimum payment amounts to the International Wealth Management and Swiss Universal Bank divisions for each financial reporting period.
Return on regulatory capital
Credit Suisse measures firm-wide returns against total shareholders’ equity and tangible shareholders’ equity. In addition, it also measures the efficiency of the firm and its divisions with regard to the usage of capital as determined by the minimum requirements set by regulators. This regulatory capital is calculated as the worst of 10% of risk-weighted assets and 3.5% of leverage exposure. Return on regulatory capital is calculated using income/(loss) after tax and assumes a tax rate of 30% and capital allocated based on the worst of 10% of average risk-weighted assets and 3.5% of average leverage exposure. These percentages are used in the calculation in order to reflect the 2019 fully phased in Swiss regulatory minimum requirements for Basel III CET1 capital and leverage ratio. For Global Markets and Investment Banking & Capital Markets, return on regulatory capital is based on US dollar denominated numbers. Adjusted return on regulatory capital is calculated using adjusted results, applying the same methodology used to calculate return on regulatory capital.
13

Fair valuations
Fair value can be a relevant measurement for financial instruments when it aligns the accounting for these instruments with how we manage our business. The levels of the fair value hierarchy as defined by the relevant accounting guidance are not a measurement of economic risk, but rather an indication of the observability of prices or valuation inputs.
As of the end of 1Q18, 37% and 24% of our total assets and total liabilities, respectively, were measured at fair value.
The majority of our level 3 assets are recorded in our investment banking businesses. As of the end of 1Q18, total assets at fair value recorded as level 3 decreased CHF 1.8 billion to CHF 14.8 billion compared to the end of 4Q17, primarily reflecting net purchases, mainly in trading assets, and net settlements, mainly in loans.
As of the end of 1Q18, our level 3 assets comprised 2% of total assets and 5% of total assets measured at fair value, unchanged from 4Q17.
We believe that the range of any valuation uncertainty, in the aggregate, would not be material to our financial condition; however, it may be material to our operating results for any particular period, depending, in part, upon the operating results for such period.
> Refer to “Fair valuations” in II –Operating and financial review – Credit Suisse and “Note 1 – Summary of significant accounting policies” and “Note 34 – Financial instruments” in VI – Consolidated financial statements – Credit Suisse Group in the Credit Suisse Annual Report 2017 for further information on fair valuations, fair value hierarchies and models.
Regulatory developments and proposals
Government leaders and regulators continued to focus on reform of the financial services industry, including capital, leverage and liquidity requirements, changes in compensation practices and systemic risk.
Since March 2018, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated a number of Russian business people, Russian government officials and certain related companies as specifically designated nationals (SDNs), blocking their assets and prohibiting further dealings within US jurisdiction with the newly designated SDNs and their direct and indirect subsidiaries. Those measures respond to Russia’s activities in Ukraine, Syria and cyberspace. OFAC issued two new general licenses concurrently with the designations to reduce unintended consequences of these sanctions by providing a limited time period to wind down pre-existing contracts and divest or withdraw from business relationships with some of the newly sanctioned persons. Further sanctions are possible, and the possible effects of related disruptions may include an adverse impact on our businesses.
> Refer to “Regulation and supervision” in I – Information on the company in the Credit Suisse Annual Report 2017 for further information and “Regulatory framework” and “Regulatory developments and proposals” in II – Treasury, risk, balance sheet and off-balance sheet – Liquidity and funding management and Capital management, respectively, for further information.
14

Swiss Universal Bank
In 1Q18, we reported income before taxes of CHF 563 million and net revenues of CHF 1,431 million. Income before taxes was 30% and 39% higher compared to 4Q17 and 1Q17, respectively. Adjusted income before taxes increased 26% and 15% compared to 4Q17 and 1Q17, respectively.
results summary
1Q18 results
In 1Q18, we reported income before taxes of CHF 563 million and net revenues of CHF 1,431 million. Compared to 4Q17, net revenues were 9% higher, mainly due to significantly higher transaction-based revenues and a gain of CHF 37 million on the sale of our investment in Euroclear reflected in other revenues. Provision for credit losses was CHF 34 million compared to CHF 15 million in 4Q17. Total operating expenses were 4% lower compared to 4Q17, primarily reflecting significantly lower general and administrative expenses, partially offset by higher restructuring expenses.
Compared to 1Q17, net revenues were 6% higher, mainly driven by the gain on the sale of our investment in Euroclear reflected in other revenues, higher transaction-based revenues and higher recurring commissions and fees. Provision for credit losses was CHF 34 million compared to CHF 10 million in 1Q17. Total operating expenses were 11% lower compared to 1Q17, primarily reflecting significantly lower general and administrative expenses, significantly lower restructuring expenses and lower commission expenses.
Adjusted income before taxes of CHF 554 million was 26% and 15% higher compared to 4Q17 and 1Q17, respectively.
Capital and leverage metrics
As of the end of 1Q18, we reported risk-weighted assets of CHF 70.6 billion, an increase of CHF 5.0 billion compared to the end of 4Q17, driven by changes in certain synthetic loan portfolio securitizations, methodology and policy changes mainly reflecting the phase-in of the Swiss mortgage multipliers and business growth. Leverage exposure was CHF 247.0 billion, reflecting a decrease of CHF 10.1 billion compared to the end of 4Q17, driven by the realignment of our HQLA allocations, partially offset by business growth.
Divisional results
   in / end of % change
1Q18 4Q17 1Q17 QoQ YoY
Statements of operations (CHF million)   
Net revenues  1,431 1,318 1,354 9 6
Provision for credit losses  34 15 10 127 240
Compensation and benefits 487 484 483 1 1
General and administrative expenses 258 321 325 (20) (21)
Commission expenses 61 67 80 (9) (24)
Restructuring expenses 28 (2) 52 (46)
Total other operating expenses 347 386 457 (10) (24)
Total operating expenses  834 870 940 (4) (11)
Income before taxes  563 433 404 30 39
Statement of operations metrics (%)   
Return on regulatory capital 17.9 13.5 12.7
Cost/income ratio 58.3 66.0 69.4
Number of employees and relationship managers   
Number of employees (full-time equivalents) 12,420 12,600 12,740 (1) (3)
Number of relationship managers 1,850 1,840 1,870 1 (1)
15

Divisional results (continued)
   in / end of % change
1Q18 4Q17 1Q17 QoQ YoY
Net revenue detail (CHF million)   
Private Clients 762 726 711 5 7
Corporate & Institutional Clients 669 592 643 13 4
Net revenues  1,431 1,318 1,354 9 6
Net revenue detail (CHF million)   
Net interest income 731 729 726 0 1
Recurring commissions and fees 380 367 362 4 5
Transaction-based revenues 299 235 280 27 7
Other revenues 21 (13) (14)
Net revenues  1,431 1,318 1,354 9 6
Provision for credit losses (CHF million)   
New provisions 47 32 38 47 24
Releases of provisions (13) (17) (28) (24) (54)
Provision for credit losses  34 15 10 127 240
Balance sheet statistics (CHF million)   
Total assets 217,179 228,857 232,334 (5) (7)
Net loans 166,537 165,041 166,078 1 0
   of which Private Clients  112,033 111,222 110,190 1 2
Risk-weighted assets 70,558 65,572 65,639 8 7
Leverage exposure 246,997 257,054 257,397 (4) (4)
Net interest income includes a term spread credit on stable deposit funding and a term spread charge on loans. Recurring commissions and fees includes investment product management, discretionary mandate and other asset management-related fees, fees for general banking products and services and revenues from wealth structuring solutions. Transaction-based revenues arise primarily from brokerage and product issuing fees, fees from foreign exchange client transactions, trading and sales income, equity participations income and other transaction-based income. Other revenues include fair value gains/(losses) on synthetic securitized loan portfolios and other gains and losses.
Reconciliation of adjusted results
   Private Clients Corporate & Institutional Clients Swiss Universal Bank
in 1Q18 4Q17 1Q17 1Q18 4Q17 1Q17 1Q18 4Q17 1Q17
Adjusted results (CHF million)   
Net revenues  762 726 711 669 592 643 1,431 1,318 1,354
   Gains on business sales  (19) 0 0 (18) 0 0 (37) 0 0
Adjusted net revenues  743 726 711 651 592 643 1,394 1,318 1,354
Provision for credit losses  10 10 12 24 5 (2) 34 15 10
Total operating expenses  487 504 538 347 366 402 834 870 940
   Restructuring expenses  (22) 1 (47) (6) 1 (5) (28) 2 (52)
   Major litigation provisions  0 (2) 0 0 (5) (27) 0 (7) (27)
Adjusted total operating expenses  465 503 491 341 362 370 806 865 861
Income before taxes  265 212 161 298 221 243 563 433 404
   Total adjustments  3 1 47 (12) 4 32 (9) 5 79
Adjusted income before taxes  268 213 208 286 225 275 554 438 483
Adjusted return on regulatory capital (%) 17.6 13.7 15.1
Adjusted results are non-GAAP financial measures. Refer to "Reconciliation of adjusted results" in Credit Suisse for further information.
16

Private clients
Results
In 1Q18, income before taxes of CHF 265 million was 25% higher compared to 4Q17, with higher net revenues and lower total operating expenses. Compared to 1Q17, income before taxes increased 65%, primarily reflecting higher net revenues and lower total operating expenses. Adjusted income before taxes of CHF 268 million increased 26% and 29% compared to 4Q17 and 1Q17, respectively.
Net revenues
Compared to 4Q17, net revenues of CHF 762 million were 5% higher, mainly driven by significantly higher transaction-based revenues and a gain of CHF 19 million on the sale of our investment in Euroclear reflected in other revenues. Transaction-based revenues of CHF 109 million were 22% higher, mainly due to significantly increased revenues from ITS and significantly higher brokerage and product issuing fees. Net interest income of CHF 428 million was stable with stable loan margins and higher deposit margins on stable average loan and deposit volumes. Recurring commissions and fees of CHF 206 million were stable. Adjusted net revenues of CHF 743 million were slightly higher compared to 4Q17.
Compared to 1Q17, net revenues increased 7% reflecting higher revenues across all revenue categories, including the gain on the sale of our investment in Euroclear. Net interest income was 4% higher with slightly higher loan margins on slightly higher average loan volumes and higher deposit margins on higher average deposit volumes. Recurring commissions and fees increased 5%, primarily due to increased investment advisory fees, higher discretionary mandate management fees and slightly higher security account and custody services fees. Transaction-based revenues were 9% higher, mainly driven by higher fees from foreign exchange client business and higher brokerage and product issuing fees. Adjusted net revenues were 5% higher compared to 1Q17.
Provision for credit losses
The Private Clients loan portfolio is substantially comprised of residential mortgages in Switzerland and loans collateralized by securities and, to a lesser extent, consumer finance loans.
In 1Q18, Private Clients recorded provision for credit losses of CHF 10 million compared to CHF 10 million in 4Q17 and CHF 12 million in 1Q17. The provisions were primarily related to our consumer finance business.
Results - Private Clients
   in / end of % change
1Q18 4Q17 1Q17 QoQ YoY
Statements of operations (CHF million)   
Net revenues  762 726 711 5 7
Provision for credit losses  10 10 12 0 (17)
Compensation and benefits 277 275 264 1 5
General and administrative expenses 162 200 181 (19) (10)
Commission expenses 26 30 46 (13) (43)
Restructuring expenses 22 (1) 47 (53)
Total other operating expenses 210 229 274 (8) (23)
Total operating expenses  487 504 538 (3) (9)
Income before taxes  265 212 161 25 65
Statement of operations metrics (%)   
Cost/income ratio 63.9 69.4 75.7
Net revenue detail (CHF million)   
Net interest income 428 428 413 0 4
Recurring commissions and fees 206 208 197 (1) 5
Transaction-based revenues 109 89 100 22 9
Other revenues 19 1 1
Net revenues  762 726 711 5 7
Margins on assets under management (annualized) (bp)   
Gross margin 1 147 140 146
Net margin 2 51 41 33
Number of relationship managers   
Number of relationship managers 1,310 1,300 1,330 1 (2)
1
Net revenues divided by average assets under management.
2
Income before taxes divided by average assets under management.
17

Total operating expenses
Compared to 4Q17, total operating expenses of CHF 487 million were slightly lower mainly reflecting significantly lower general and administrative expenses, partially offset by higher restructuring expenses. General and administrative expenses of CHF 162 million were 19% lower, primarily due to lower advertising and marketing expenses and lower professional and contractor services fees. Restructuring expenses increased CHF 23 million to CHF 22 million. Compensation and benefits of CHF 277 million were stable with higher deferred compensation expenses from prior-year awards and higher discretionary compensation expenses, offset by lower allocated corporate function costs and lower salary expenses. Adjusted total operating expenses of CHF 465 million decreased 8% compared to 4Q17.
Compared to 1Q17, total operating expenses decreased 9%, reflecting significantly lower restructuring expenses, lower commission expenses and lower general and administrative expenses, partially offset by higher compensation and benefits. General and administrative expenses were 10% lower, primarily due to decreased allocated corporate function costs and lower professional and contractor services fees. Compensation and benefits were 5% higher, primarily reflecting higher deferred compensation expenses from prior-year awards and a lower release of Swiss holiday accruals in 1Q18. Adjusted total operating expenses decreased 5% compared to 1Q17.
margins
Gross margin
Our gross margin was 147 basis points in 1Q18, seven basis points higher compared to 4Q17, mainly driven by higher transaction-based revenues and the gain on the sale of our investment in Euroclear on stable average assets under management. Compared to 1Q17, our gross margin increased one basis point, with higher revenues across all revenue categories mostly offset by a 6.5% increase in average assets under management. On the basis of adjusted net revenues, our gross margin was 143 basis points in 1Q18, three basis points higher compared to 4Q17 and three basis points lower compared to 1Q17.
> Refer to “Assets under management” for further information.
Net margin
Our net margin was 51 basis points in 1Q18, ten basis points higher compared to 4Q17, reflecting higher net revenues and lower total operating expenses on stable average assets under management. Compared to 1Q17, our net margin was 18 basis points higher, primarily due to higher net revenues and lower total operating expenses, partially offset by the 6.5% higher average assets under management. On the basis of adjusted income before taxes, our net margin was 52 basis points in 1Q18, eleven basis points higher compared to 4Q17 and nine basis points higher compared to 1Q17.
Assets under management
As of the end of 1Q18, assets under management of CHF 206.7 billion were CHF 1.6 billion lower compared to the end of 4Q17, mainly driven by unfavorable market movements, partially offset by net new assets of CHF 2.7 billion. Net new assets reflected positive contributions from all businesses.
18

Assets under management – Private Clients
   in / end of % change
1Q18 4Q17 1Q17 QoQ YoY
Assets under management (CHF billion)   
Assets under management 206.7 208.3 198.2 (0.8) 4.3
Average assets under management 207.8 208.0 195.2 (0.1) 6.5
Assets under management by currency (CHF billion)   
USD 30.3 30.5 29.8 (0.7) 1.7
EUR 23.1 22.9 19.5 0.9 18.5
CHF 143.2 145.0 140.4 (1.2) 2.0
Other 10.1 9.9 8.5 2.0 18.8
Assets under management  206.7 208.3 198.2 (0.8) 4.3
Growth in assets under management (CHF billion)   
Net new assets 2.7 0.0 2.0
Other effects (4.3) 2.2 4.0
   of which market movements  (3.6) 2.5 4.8
   of which foreign exchange  (0.4) 0.8 (0.6)
   of which other  (0.3) (1.1) (0.2)
Growth in assets under management  (1.6) 2.2 6.0
Growth in assets under management (annualized) (%)   
Net new assets 5.2 0.0 4.2
Other effects (8.3) 4.3 8.3
Growth in assets under management (annualized)  (3.1) 4.3 12.5
Growth in assets under management (rolling four-quarter average) (%)   
Net new assets 2.7 2.4 1.0
Other effects 1.6 6.0 5.7
Growth in assets under management (rolling four-quarter average)  4.3 8.4 6.7
Corporate & institutional clients
Results
In 1Q18, income before taxes of CHF 298 million was 35% higher compared to 4Q17, reflecting higher net revenues and lower total operating expenses, partially offset by higher provision for credit losses. Compared to 1Q17, income before taxes increased 23%, primarily due to lower total operating expenses and higher net revenues, partially offset by higher provision for credit losses. Adjusted income before taxes of CHF 286 million increased 27% and 4% compared to 4Q17 and 1Q17, respectively.
Net revenues
Compared to 4Q17, net revenues of CHF 669 million were 13% higher with higher revenues across all revenue categories. Transaction-based revenues of CHF 190 million were 30% higher, primarily due to increased revenues from ITS, higher revenues from our Swiss investment banking business and increased client activity. The increase in other revenues reflected a gain of CHF 18 million on the sale of our investment in Euroclear. Recurring commissions and fees of CHF 174 million were 9% higher, mainly due to increased wealth structuring solution fees and higher fees from lending activities. Net interest income of CHF 303 million was stable, with stable loan margins on stable average loan volumes and higher deposit margins on lower average deposit volumes. Adjusted net revenues of CHF 651 million increased 10% compared to 4Q17.
Compared to 1Q17, net revenues were 4% higher, reflecting the gain on the sale of our investment in Euroclear reflected in other revenues, higher transaction-based revenues and higher recurring commissions and fees, partially offset by slightly lower net interest income. Transaction-based revenues increased 6%, mainly due to higher fees from foreign exchange client business. Recurring commissions and fees increased 5%, primarily reflecting increased wealth structuring solution fees and higher investment product management fees, partially offset by lower fees from lending activities. Net interest income decreased slightly with slightly higher loan margins on slightly lower average loan volumes, partially offset by higher deposit margins on lower average deposit volumes. Adjusted net revenues were stable compared to 1Q17.
19

Results – Corporate & Institutional Clients
   in / end of % change
1Q18 4Q17 1Q17 QoQ YoY
Statements of operations (CHF million)   
Net revenues  669 592 643 13 4
Provision for credit losses  24 5 (2) 380
Compensation and benefits 210 209 219 0 (4)
General and administrative expenses 96 121 144 (21) (33)
Commission expenses 35 37 34 (5) 3
Restructuring expenses 6 (1) 5 20
Total other operating expenses 137 157 183 (13) (25)
Total operating expenses  347 366 402 (5