Credit Suisse said it will buy back $1.51 billion of its shares and flagged a full-year profit. The Swiss bank warned that its trading business in Asia has taken a downturn.
The Zurich-based bank said it will repurchase 1.5 billion Swiss francs ($1.51 billion) of its own shares next year, as well as launch a similar program for 2020, in a statement on Wednesday. For the next two years, it will distribute at least half of its net profit to shareholders, Credit Suisse said, as well as lift payouts by 5 percent every year.
The avowal is music in the ears of shareholders, who have seen CEO Tidjane Thiam through two cash calls totally 10 billion francs in a grueling three-year restructuring of Credit Suisse and replenishment of the bank's severely depleted capital.
The bank said it will lower its spending to 16.9 billion francs this year, which is 100 million francs less than its target. It will also said it will post profit before tax of up to 3.4 billion francs, and shutter a «bad bank» set up to offload its undesirable assets by year-end.
Asian Trouble
The statement follows through from pledges made last year to appease shareholders, following an embarrassing reversal on bonus plans amid massive resistance from shareholders. Under Thiam, Credit Suisse has pruned its once-mighty investment bank in favor of more stable and reliable business with wealthy clients.
The bank said its return on tangible equity – a measure of profits to shareholder equity – would hit 10 percent this year (the measure stood at 6.3 percent after nine months). Thiam didn't release any other more specific targets.
Despite the good news for shareholders, Credit Suisse warned that net revenues in its Asian trading arm would drop by as much as 10 percent on the year. The bank's efforts in Asia, where it has poured enormous resources, have been a tightrope walk: the mood among investors and clients in the region has been anything but euphoric.
