The top executives of Credit Suisse today will be optimistic in their outlook at the investor day in London. But the bank looks to have missed delivering fully on one of its previous promises.
In the run-up to today’s event in London reports in the media suggested that Credit Suisse had missed its target of 10 percent return on tangible equity. The bank today confirmed that it didn’t achieve this target, according to a statement released on Wednesday. It expects a rate of 8 percent for 2019.
Tidjane Thiam, the chief executive of Credit Suisse, now hopes to reach the return on tangible equity target in 2020, and to maybe achieve even a rate of 11 percent, if business goes well.
Dividends and Buybacks
In the meantime, the shareholders will be kept sweet through dividend payments and share buybacks. The bank will spend at least half of its net profit on dividends and share buybacks in 2020; Credit Suisse expects buybacks alone of at least 1 billion Swiss francs ($1 billion) in the coming year.
While not quite reaching the return on equity target this year, the bank still won’t resort to large-scale job cuts, which will come as a relief to its staff. However, the company pledged to maintain a sustained cost discipline to further improve operating efficiency.
Fourth-Quarter Improvement
Thiam expects the pressure to lessen in 2020 and reported that business had already improved in the fourth quarter as compared with the previous year.
International Wealth Management had a stable development, while the business in Asia and the Global Markets unit were doing clearly better than a year ago.
Interest Woes
The Swiss business suffered from a negative interest rate environment. The bank tried to offset the impact by getting rid of real estate. Credit Suisse expects the investment bank to return a loss for 2019.
