How Does Deutsche Bank’s Asset Management Business Compare With Swiss Peers UBS and Credit Suisse?

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Deutsche Bank (NYSE: DB) is one of the world’s leading asset managers with $780 billion in assets under management (AUM). Although the bank’s business model has changed considerably over the years, its asset management business has remained more or less stable. The largest Swiss bank UBS (NYSE: UBS) also has a similar-sized asset management arm with more than $780 billion in AUM, although its asset management business shrunk considerably immediately after the 2008 recession. In comparison to these two banking giants, Credit Suisse (NYSE: CS) has a notably smaller asset management business.

Trefis captures trends in the Asset Management operations for the European Banks Deutsche Bank, UBS and Credit Suisse in an interactive dashboard, parts of which are summarized below.

 

Deutsche Bank has the highest Asset Management revenues among these banks

  • Deutsche Bank’s asset management revenue in 2018 stood at $2.6 billion, nearly 40% more than that of UBS’s $1.9 billion and 70% more than Credit Suisse’s $1.5 billion.
  • Although Deutsche Bank’s scale is larger than that of the Swiss banks, Deutsche Bank’s revenues have declined over the last few years. Deutsche Bank’s revenues have declined at an average rate of 8.3% since 2015, falling from $3.4 billion in 2015 to $2.6 billion in 2018.
  • UBS’s revenues have also declined over this period.
  • Credit Suisse’s asset management business is the only one to seem some improvement in revenues over recent years, as it has added nearly $150 million to total revenues between 2015 and 2018.

 

Asset management contributes nearly 10% to Deutsche Bank’s total revenues while the contribution of Swiss Banks is around 7%

Additional details regarding how the contribution of the asset management business to the top line of the European Banks has trended over the years are available in our interactive dashboard.

UBS And Deutsche Bank Manage 2x More Client Assets Than Credit Suisse
  • UBS and Deutsche Bank are two of the largest asset managers in the world, with both the banks managing more the $780 billion of client assets.
  • On the other hand, Credit Suisse’s scale is smaller, with the bank managing half of its rival banks’ assets of around $390 billion.
  • However, Credit Suisse’s client assets have steadily increased over the years while the assets of Deutsche Bank have steeply declined
The Swiss Banks’ Asset Management Business Is More Profitable Than Deutsche Bank’s
  • UBS’s asset management business is the most profitable among these banks. Despite having the lowest average fees, the bank’s Asset Management division’s pre-tax margin has remained around 25% over the last few years.
  • Credit Suisse’s pre-tax margin of 24.4% in 2018 was similar to that of UBS
  • Deutsche Bank’s operating margin has been highly volatile ranging from -7% in 2016 to more than 28% in 2017. The division’s margin was negative in 2016 due to €500 million of impairment charges resulting from the transfer of certain businesses from Asset Management to Sales & Trading division. The figure was 16.8% in 2018.

 

Conclusion

  • UBS’s asset management division manages nearly $800 billion of client assets which is similar to the assets managed by its German counterpart, Deutsche Bank.
  • However, the bank’s operating margin of 24% is much higher than Deutsche Bank’s 17%.
  • Although Credit Suisse’s profitability is similar to that of UBS, it manages only half of UBS’s client assets.
  • However, Deutsche Bank’s operating margin of 28% was the highest achieved by the European banks in the last few years. Given the bank’s increasing focus on its retail and asset management business, Deutsche Bank is in a strong position to gain ground in the European asset management business, which is currently led by UBS.

 

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