Three years after he unveiled his new strategy, the Credit Suisse CEO believes he has delivered on his targets. But now, Tidjane Thiam has to show that the bank can survive in a more challenging environment.
Credit Suisse emphasized it had met the targets set in its restructuring program in 2015. At today’s presentation of the third-quarter result, the management displayed a powerpoint slide with lots of green dots (see table), showing where and how the bank cut its costs and improved the controls.
Wobbly Markets
Still, the economic outlook has been clouded over recently, as CEO Tidjane Thiam emphasized, a development that impairs the sentiment among the bank’s clientele.
In Switzerland and in Asia, the reluctance to trade has left an indent in the transactions business of the bank. Only the International Wealth Management division led by Iqbal Khan (pictured above) reported that its clients had kept busy in the markets. The transactions remained at a similar level compared with last years.
Where Will Growth Come From?
Today’s report showed that the largest proportion of the increase in profit came about as a result of lower costs. Thiam aspires to a spending limit of 17 billion Swiss francs ($17 billion); he now says that the 4 billion the bank has been able to cut in spending since the end of 2015 meant the bank had lived up to his target to 96 percent.
Thiam has been lauded for keeping a tight reign on Credit Suisse spending. But the next step in its progress must mean that he manages to boost revenue in its core business.
Qatar Loan Boost
Two years ago, Switzerland’s second-largest bank adjusted the earlier profit targets set for the divisions. Those new targets should be within reach. Only the Swiss Universal Bank (SUB), which needs to contribute 2.3 billion francs to the company’s annual profit, may struggle to quite make it.
What's more, next year, Credit Suisse will start profiting from lower interest payments, after it paid back a huge loan to Qatar. It will remove 700 million from the bill.
Chin Stands to Profit
Brian Chin, the head of the Global Markets division, may profit from this, having had to report a surprise loss on Thursday. His cost base will be reduced by some 250 million francs.
The bank today kept a rather more low profile on how it intends to boost earnings. More detail has been promised for December 12, when Thiam will present his growth strategy to investors.
