Credit Suisse Sees End of Restructuring in 2018 and Targets 50% Payout -- Update
By Pietro Lombardi
Credit Suisse Group AG (CSGN.EB) said on Thursday it plans to complete its group restructuring in 2018 and gave new targets for coming years.
The bank anticipates that it will meet its 2018 target of 700 million Swiss francs ($710.9 million) in adjusted pretax profit at its wealth-management and connected business in Asia-Pacific by the end of 2017, prompting it to raise its 2018 target to CHF850 million.
For the group, Credit Suisse set targets of its return on tangible equity, expecting between 10% and 11% in 2019, and 11% and 12% in 2020.
Credit Suisse has in recent years pursued a strategic shift, putting greater emphasis on its wealth-management operations and streamlining its investment banking unit. Earlier this month, two years into the overhaul, Credit Suisse reported a sharp rise in third-quarter profit on strong growth in wealth management. Assets under management hit a record high last quarter of CHF751 billion.
"The biggest opportunity we see today is wealth management," Chief Executive Tidjane Thiam said at the company's investor day on Thursday. "Our focus on wealth-management is paying off as the franchise has delivered strong broad-based and profitable growth."
The company expects to outdo its 2017 goal of costs below CHF18.5 billion. It now expects a total cost base of about CHF18 billion and confirmed its 2018 target of less than CHF17 billion in costs. This should decline to between CHF16.5 billion and CHF17 billion in 2019 and 2020, it said.
"We also aim to increase returns to shareholders and plan to distribute 50% of net income earned to them primarily through share buybacks or special dividends," the bank said.
Credit Suisse said it is confident it will complete the wind-down of its strategic resolution unit, designed to wind down unwanted assets. The company cut its 2019 adjusted pretax loss target for the unit to about $500 million from $800 million.
"The scale of our legacy business activities in the Strategic Resolution Unit and the related drag on earnings have been significantly reduced," it said.
Credit Suisse said trading conditions in the fourth quarter in its more market-dependent businesses are broadly similar to those in the previous quarter. Low volatility and some recent widening of spreads in the high-yield market "weighs negatively on the performance" of the bank's global markets business and APAC markets, it said.
Credit Suisse confirmed its 2018 targets for its Switzerland-based operations, its international wealth-management unit and other divisions.
Write to Pietro Lombardi at email@example.com
(END) Dow Jones Newswires
November 30, 2017 05:47 ET (10:47 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.