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While UBS decided to expand its wealth management unit and do away with large parts of its investment banking division – shrinking its fixed-income business to a fraction of its original size – Credit Suisse opted to retain a full-scale investment bank and announced its decision to refocus its wealth management operations only in more profitable markets. Below we compare the banks’ respective business models and take a look at their effectiveness, and discuss which model has a better outlook for the future.

See our complete analysis for UBS | Credit Suisse

The chart above breaks down our price estimate for UBS’s stock into each of its operating divisions. The focus on wealth management is immediately evident, with almost 50% of the total value coming from the bank’s geographically diversified wealth management presence. The impact of the downsizing in fixed-income trading operations also stands out from the fact that it contributes less than 4% of the total share value, even as equities trading is responsible for almost 15%. The bank’s total investment banking operations – trading, advisory and underwriting – contribute less than 30% of UBS’s total share value.

In contrast, Credit Suisse’s wealth management business contributes less than 30% of the bank’s total share value according to our analysis, followed by about 21% for fixed-income trading. Taken together, the bank’s investment banking operations are the source of more than 50% of Credit Suisse’s total share value.

To get a clear picture of which model is has a better outlook, we compare them based on three parameters: revenue potential, return on equity and risk profile.