ZURICH- Credit Suisse expects to hit a return on tangible equity (RoTE) above 8% this year, below its previous ambition of 10-11% for 2019, Switzerland’s second-biggest bank said on Wednesday as it also lowered its profitability aims for next year.
“If markets are constructive and support revenue growth, we would expect our year-end 2020 RoTE to be approximately 11%,” the bank said in a statement ahead of its investor day. “Conversely, should markets remain challenging in 2020, we have identified up to 50 basis points of additional cost measures in order to protect our RoTE ambition of approximately 10%.”
Credit Suisse previously aimed to achieve 11-12% RoTE in 2020.
The bank will present its first investor update since completing a three-year restructuring in 2018 which cut back its investment banking activities, boosted cooperation with wealth management, and whittled down costs.
While performance at its Global Markets trading division, the focus of previous criticism, has picked up in 2019, revenues have fallen in its investment banking and capital markets business due to floundering M&A activity. Credit Suisse now expects the division to make a loss this year.
The bank last month appointed new leadership to the division and aims to bolster its M&A activity by adding more bankers to advise deals in growth industries including technology and healthcare.
“Looking ahead to 2020, we are working on actions that will reinvigorate the division, building on a strongly improving pipeline, which we expect will put us in a more advantageous position compared to 2019,” it said on Wednesday.
The Swiss lender said it expected to distribute at least 50% of net income to shareholders looking ahead to 2020 by growing its dividend at least 5% annually, and through a share buyback of 1-1.5 billion Swiss francs (780 million-1.2 billion pounds).
(Content and photos syndicated via Reuters)