NEW YORK (TheStreet) -- Shares of Credit Suisse Group (CS) - Get Report are up 6.41% to $25.05 in pre-market trading today after the Swiss bank named Tidjane Thiam as its new CEO, replacing Brady Dougan, who will step down at the end of June after eight years as the chief executive.
Tidjane Thiam is currently Group Chief Executive of Prudential plc (PUK) - Get Report, a London-based international financial services group with operations in the U.S., Asia, Europe and Latin America.
"With Tidjane Thiam, a strong and distinguished leader with an impressive track record in the global financial services industry will take the helm of our bank. His extensive international experience, including in wealth and asset management and in the successful development of new markets, provides a firm foundation for leading Credit Suisse. As CEO, he led Prudential to great success in challenging times," Credit Suisse Chairman Urs Rohner said.
From 2002 until 2008, Tidjane Thiam had leading roles at Aviva plc (AV) insurance company, prior to joining Prudential as their CFO. In 2009, he became Prudential's CEO.
Investors appeared to welcome the news of leadership change at Credit Suisse this morning, as shares surge.
"Given Thiam's background, we think Credit Suisse's strategy could shift even more towards asset/wealth management. An acceleration of this strategy could also make sense against the backdrop of likely higher leverage ratio requirements and 'RWA inflation'. Whether the management change and a potentially changed strategy could result in a capital increase, remains uncertain," UBS analyst Daniele Brupbacher told the Journal.
One challenge likely to be faced soon by Thiam is a stronger Swiss franc, which was abruptly allowed to gain value because of a January decision by theSwiss National Bank, the Journal noted, adding, like other Swiss banks, Credit Suisse reports much of its costs in francs, but derives much of its income in dollars and euros.
Last month, Credit Suisse said it would cut hundreds of millions of francs in costs, in a bid to grapple with the strong franc, the Journal added.
Separately, TheStreet Ratings team rates CREDIT SUISSE GROUP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate CREDIT SUISSE GROUP (CS) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CS has underperformed the S&P 500 Index, declining 24.48% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, CREDIT SUISSE GROUP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- CS, with its decline in revenue, slightly underperformed the industry average of 13.1%. Since the same quarter one year prior, revenues fell by 22.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- CREDIT SUISSE GROUP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CREDIT SUISSE GROUP reported lower earnings of $1.14 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $1.14).
- The gross profit margin for CREDIT SUISSE GROUP is rather high; currently it is at 53.20%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.56% trails the industry average.
- You can view the full analysis from the report here: CS Ratings Report