Given the challenging market conditions that Credit Suisse is facing in the industry, the bank is reducing targets for markets and trading in APAC and for asset management and international wealth management.

Zurich-based Credit Suisse (CS) is confirming its medium-term 2018 pre-tax income (PTI) target for the affluent, mature Swiss market and is also confirming its wealth management targets both in the emerging markets of Asia Pacific and other emerging economies, grouped in the international wealth management (IWM) division, according to its investor day held on Wednesday in London.

But given the challenging market conditions that CS is facing in the industry, the bank is walking back on targets related to markets and trading activities in APAC and to the asset management activities in the international wealth management division.

Increasing Cost-Savings Target

In parallel, CS is increasing its bank-wide cost savings target, designed to make the bank more resilient through the cycle and providing significant potential upside for shareholders when conditions improve.

The bank plans to lower its cost base for 2018 from less than 18 billion Swiss francs to less than 17 billion francs. At the same time CS is increasing its total net cost savings target from 3.2 billion francs to more than 4.2 billion francs by end-2018 as the bank targets further cost saving measures.

Continued Investments

In parallel with these cost-cutting initiatives, the bank is continuing to make investments in people and in technology to strengthen its client franchises in all divisions.

Credit Suisse cited two developments which caused the bank to rethink its 2018 targets since last year’s investor day:

  • since CS started operating under its new divisional structure, the bank has been able to develop many new growth and efficiency initiatives at a granular level
  • CS has seen major changes in the market environment and political outlook, which have hit the portion of its targets which rely on financial markets

Reassessing Certain Targets

This has led the bank to reassess certain targets originally set for 2018. CS is reaffirming its targets across the Wealth Management businesses for 2018, together with return targets for Global Markets (GM), while cutting the targets for activities most impacted by reduced trading flows and lower levels of market activity.

For the Strategic Resolution Unit (SRU), CS is updating its 2018 guidance and providing guidance for 2019.

  • APAC: PTI target adjusted to 1.6 billion francs, with Wealth Management target unchanged at 0.7 billion francs and APAC Investment Banking PTI target adjusted downwards to reflect the impact of lower market volumes and capital markets activity.
  • SUB: After a strong performance in 9M16, PTI target of 2.3 billion francs confirmed for 2018.
  • IWM: PTI target adjusted to 1.8 billion francs to reflect lower performance fees in Asset Management.
  • GM: 10-15 percent return on regulatory capital confirmed for 2018.
  • IBCM: 15-20 percent return on regulatory capital for 2018.
  • SRU: Pre-tax loss of $1.4 billion by 2018 and $0.8 billion by 2019.

More to follow.