20080724-Citi-Credit Suisse (CSGN.VX)

Dougan Delivers
 Strongly Positioned In Private Banking — The Private Bank continues to deliver
impressive net new money, which is set to continue as Credit Suisse further
invests in client advisers and expanding the wealth management platform.
Meanwhile, HNWI clients’ appetite to transact appears relatively resilient in the
face of the credit crisis.
 Negligible Net Markdowns — Credit Suisse booked almost negligible net
markdowns taken in 2Q08, which is substantially better than the global peers
that have reported 2Q results thus far. Although we can not extrapolate this for
future quarters (or to other banks), for now it suggests that Credit Suisse has
managed its exposures more effectively than peers.
 Confident on Capital — With a better-than-expected capital position, the Credit
Suisse balance sheet appears to be weathering the credit crisis better than
most. Although leverage ratios for the industry appear stretched, management
appears confident on the impact of any overhaul of the regulatory regime.
 Buy The Shares — We are underweight European IBs, expecting weak revenues
and more de-leveraging. Within this CS remains our preferred play, with the
strongest balance sheet, better placed on risk exposures, superior business
mix, strategy and momentum. We raise our price target to SFr63, increasing
our target 2009E PE from 8.5x to 9.5x to reflect increased comfort on risk
exposures and capital as well as the recent re-rating of the global peer group.