Credit Suisse Follows UBS With $1.65 Billion Buyback Pledge

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Credit Suisse Group AG joined rivalUBS Group AG in pledging to boost shareholders returns next year, saying it’s targeting as much as 1.5 billion francs ($1.65 billion) of stock repurchases as it benefits from increased trading and transaction levels.

The bank will buy back at least 1 billion francs of shares for 2021 and expects to see “elevated levels” of activity by clients at both its wealth management and investment banking business because of the uncertainty surrounding the global economy. Overall, the lender reported mixed results for the third quarter, with lower-than-expected net income of about 546 million francs offset by stronger capital and investment-banking income.

Chief Executive Officer Thomas Gottstein is simplifying the bank’s complicated structure and partially rolling back initiatives taken under his predecessor Tidjane Thiam to boost efficiency and growth. He’s combined the capital markets and advisory units with trading into a single investment bank division and merged risk and compliance.

The issue of dividends and share buybacks has become a heated one in Europe. A few of the stronger banks in the region have started to lobby for a resumption of payouts again, led by the Swiss wealth managers as they seek to help revive flagging share prices. The European Central Bank — which regulates rivals such as Societe Generale SA and Deutsche Bank AG — has still to make a decision on when to allow banks to resume payments.

Here are some other key figures from Credit Suisse’s third quarter:

  • Loan loss provisions CHF94m vs CHF243m estimate
  • Swiss Universal Bank pre-tax profit CHF430m vs CHF474m estimate.
  • Investment Bank pretax profit CHF370m vs CHF222 million estimate
  • Net revenue CHF5.2b vs 5.3b estimate
  • Common equity Tier 1 ratio 13% vs 12.5% estimate

Credit Suisse earlier this monthtapped a former top rainmaker at Bank of America Corp. as it vies with UBS for ways to get more business out of the richest customers. The Swiss bank hired Christian Meissner to co-run a newly created group connecting entrepreneurs who are clients of its international wealth management unit with the services offered by the investment bank.

Like UBS and Julius Baer, Credit Suisse plans to diverge from most European lenders by distributing the second half of its dividend after an extraordinary general meeting next month. The bank is planning a 5% annual growth in the dividend and is accruing funds for next year.

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