Credit Suisse wants to break even in the final round of the turnaround. And CEO Tidjane Thiam explains for the first time on Investor Day, why the shareholders can look forward to the future.
Tidjane Thiam will soon ring in the final spurt of his three-year «strategy adjustment» to investors in London. Unlike last year in the same place, the CEO of Credit Suisse (CS) does not have to take back targets. On the contrary.
According to a statement from the second-largest Swiss bank, CS will even be able to surpass various landmarks - especially when it comes to saving. The bank wants to undercut the cost base target of 18.5 billion francs for 2017; In 2018, spending is therefore expected to fall below the targeted CHF 17 billion.
Between 2019 and 2020, Thiam wants to deal with a cost base of 16.5 to 17 billion francs, as the bank announced. However investors crave to know what comes after the turnaround.
The CS CEO knows only too well and gave further information: There is no talk of a splitting of the bank - «our strategy works,» as Thiam says. CS will hold on to the pillars of investment banking and asset management, the latter business in the future will receive 20 percent of the accumulated capital as reinvestment.
Special Dividends and Share Buybacks
Another 30 percent is to flow into the stabilization of the balance sheet, while the remaining 50 percent should benefit the shareholders, primarily via special dividends and share buybacks.
Between 2018 and 2020, CS also aims for a core capital ratio of 12.5 percent on a transitional basis in order to comply with the Basel III rules valid at the end of 2019, as it already said.
For the coming year, Chief Thiam also demands the following from his divisions:
• The International Wealth Management division is maintaining its pre-profit target of CHF 1.8 billion. On the occasion of the strategy adjustment of October 2015, Thiam originally targeted CHF 2.1 billion.
• In the key growth region Asia-Pacific, the pre-tax profit target remains at 1.6 billion Swiss francs. While the profit target for local asset management is raised from 700 to 850 million Swiss francs.
• The trading business Global Markets confirms a 10 to 15 percent return on regulatory capital.
• In the Investment Banking & Capital Markets division, a return on regulatory capital of 15 to 20 percent is targeted.
• The pre-tax loss in the Settlement Unit (SRU) is expected to fall significantly again after 2018, from 0.8 to 0.5 billion dollars.
• The profit target of the Swiss Universal Bank will remain at 2.3 billion francs at the end of 2018, even though the sector has recently lost significantly more pace.
