Credit Suisse targets 50% payout plan
This comes as bank’s turnaround quickens
ZURICH: Credit Suisse Group AG plans to return half its net income to shareholders through buybacks or special dividends as it seeks to reward investors who stumped up capital to bolster the bank’s finances.
The lender confirmed its 2018 profit targets for key divisions including the Swiss Universal Bank, International Wealth Management and Investment Banking & Capital Markets and Global Markets businesses, it said in an emailed release ahead of its investor day in London. It stopped short of confirming a target at its Asia-Pacific unit after losses at its markets unit.
After tapping shareholders for more than 10 billion francs in recent years, cutting thousands of jobs and selling risky assets, Credit Suisse is entering the final year of its restructuring. It’s outlining a payout target – which may not happen before 2019 or 2020 – to reward shareholders who’ve stayed with the bank.
Chief executive officer Tidjane Thiam said earlier this week that he was “painfully aware” of the tough times shareholders have endured, and in the interview with Bloomberg Television, had signalled he was weighing returns.
“Our focus on wealth management is paying off as the franchise has delivered strong broad-based and profitable growth,” Thiam said in the statement. “We have made strong progress towards our ambition of being a leading wealth manager with strong investment banking capabilities.”
The bank’s more market-dependent businesses continued to see trading conditions in the fourth quarter that were “broadly similar” to those in the third, with volatility remaining at historically low levels and some recent widening of spreads in the high-yield market.
This is weighing negatively on the performance of both its Global Market and APAC markets, with the bank saying it expects an adjusted pre-tax loss in its APAC markets business broadly in line with that of the prior quarter. Thiam, a former insurance executive, has made cost cuts a major pillar of his strategy, focusing the restructuring on trading operations in New York and London where he’s cut positions and reduced capital allocation to a markets division which today focuses on equities and credit trading.
The bank said it may beat a target for its cost base of below 18.5 billion francs for this year on an adjusted basis and confirmed its ambition to reach a level lower than 17 billion francs for 2018. For 2019 and 2020, Credit Suisse sees a total cost base of between 16.5 billion francs and 17 billion francs. — Bloomberg