Credit Suisse AG (CS) rose to the top of the market in Switzerland after announcing a plan to boost investor payouts to half of net profits while re-tooling its wealth management and investment banking divisions amid activist pressure.
Ahead of the bank's annual investor day in London, Credit Suisse said it would likely deliver the payouts through share buybacks and special dividends and confirmed its previously-published earnings targets of SFr2.3 billion in pre-tax income by the end of next year as well as an adjusted return on regulatory capital of between 10% and 15% in 2019.
"Our teams remain strongly focused on driving value for our clients and shareholders through 2018, and our objective is to achieve a group-reported return on tangible equity of between 10% and 11% for 2019 and between 11% and 12% for 2020," said CEO Tidjane Thiam. "We expect this to be driven in large part by strong cost control, the wind-down of the strategic resolution unit and significant reductions in our cost of funding, all elements which are largely within our control."
Thiam also said that the bank's focus "on wealth management is paying off as the franchise has delivered strong broad-based and profitable growth."
Earlier this month, Thiam said it was prepared to meet with activist investor Rudolf Bohli, who runs RBR Capital, amid speculation the bank could split into three groups focused on private wealth management, asset management and investment banking.
The Zurich-based lender, Switzerland's second-largest, also said net profit for the three months ending in September was Sfr244 million ($245 million), short of the Street consensus of Sfr264 million but ahead of the bank's own estimate of Sfr185 million. New customer investments through its wealth management increased to Sfr10.4 billion, the company said, an 8% increase from the same period last year that took total assets under management to a record Sfr751 billion.
Credit Suisse has risen nearly 6% since the Swiss-based activist investor confirmed it had taken a stake in the investment bank and was speaking to management about potential changes to structure and strategy.
"As with all our shareholdings, we are in direct contact with the Executive Board and the Board of Directors," RBR told TheStreet. "We have discussed various strategic alternatives for successful further development with the company. RBR will shortly be explaining its views to the capital market and the public in detail."
Credit Suisse climbed 3.8% higher in early Zurich trading to Sfr16.96 each, the highest in nearly two years and extending its three-month advance to around 19%.
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