Monday , September 26 2022

Credit Suisse forecast: quarterly profit of 740 million Swiss francs expected


Zurich (awp) – Credit Suisse Bank Group publishes its results on Wednesday in the second quarter of 2019. Six analysts have played the forecast game:

T2 2019E
(in millions of Swiss francs) AWP consensus estimate T1 19A T2 rating 18A

operating income 5 & # 39; 286 5 & # 39; 144 - 5 & # 39; 445 5 & # 39; 387 5 & # 39; 595 6
net profit 740 535 - 845 749 647 5

income before taxes 1 & # 39; 134 1 & # 39; 080 - 1 & # 39; 207 1 & # 39; 062 1 & # 39; 052 4
- Swiss UB 552 522 - 573 550 553 4
- IWM 431 374 - 470 523 433 4
- APAC 209 201 - 225 183 217 4
- Global Markets 250 173 - 329 282 204 5
- IBCM 0 -45 - 32 -93 141 5

Focus: Given competition and market conditions, Credit Suisse's second half should not be the easiest. After a difficult start to the year, the bank reported a recovery at the end of the first quarter, a trend that is clearly continuing.

Vontobel recalls that in the second quarter of 2018, used as a benchmark, its results were reduced by high restructuring fees. It is also no secret that the Swiss bank number two is still profiting in 2019 from particularly lucrative financing costs.

Last week, competitor UBS reported the second quarter of mixed results. His main business, wealth management, remained below expectations due to interest rates, while the investment bank was better than expected.

Major US banks have seen their trading activities suffer as a result of investor retention, crippled by trade war and economic turmoil. M&A activities also coughed.

In early June, the head of the two-lane bank, Tidjane Thiam, confirmed its target return on material capital (RoTE) of at least 10% for the current year. To achieve this, Credit Suisse was sentenced to improve its performance from the first partial and to grow by the end of the year.

Credit Suisse's costs will also be considered after the formal completion – by the end of 2018 – of the restructuring program, which started three years earlier. At the end of 2018, savings were around CHF 4 billion compared to base in 2015. The bank now hopes to keep costs at that level.

The purpose of the restructuring was to focus on asset management activities and drastically reduce the size of the investment bank in order to reduce dependence on market conditions.

OBJECTIVES: By presenting its first quarter results in April, Credit Suisse confirmed its medium-term goals, which include:

, Return on Material Capital (RoTE):
10-11% in 2019, 11-12% in 2020,> 12% in 2021 (T1: 7.8%)

, operating expenses for 2019 and 2020:
between CHF 16.5 billion and 17 billion (end of 2018: CHF 16.5 billion)

, capital ratio for 2018-2020:
hard capital (CET1, review)> 12.5% ​​(end of Q1: 12.6%)
CET1 Leverage Ratio> 3.5% (Ende Q1: 4.1%)
Tier 1 leverage ratio> 5.0%

, 2019 and 2020 capital management:
return of at least 50% of the shareholders' net income
dividend increase of at least 5% annually (2018: CH6 0.2625 / share)
redemption of shares up to 1.5 billion Swiss francs in 2019 and of the same type in 2020

, an effective tax rate of approximately 30% in 2019
, a targeted 2-3% increase in efficiency


MANAGEMENT: In early July, Credit Suisse announced the unexpected departure of IWM chief Iqbal Khan. After six years in the service of Swiss bank number two, the one that was then regarded as a possible successor to Tijan Tiam, decided to give a new impetus to his career outside the group, according to the formula.

Philip Wele, previously CFO of the division, was appointed to succeed him. In an interview with Handelszeitung, the new head of wealth management said he wanted to focus his efforts on sub-Saharan Africa, Central Asia and Brazil, not to mention the Middle East and Arabia in particular. Arabia.

DECREASE IN SHARES: Credit Suisse is on track to meet or exceed the 1 billion Swiss franc target it has set as a minimum. As of July 26, 44.9 million shares were purchased for a total of 565.5 million Swiss francs.

DISTRIBUTIONS: The company has sold its InvestLab fund platform to the Allfunds Group, which should have a positive impact on the return on equity for the current year. The indicator by which a bank measures its profitability can increase by 50 basis points (bps) thanks to the transaction.

REGULATION: During the most recent stress tests conducted by major banks in the United States, Credit Suisse received only the green light conditioned by its capital allocation plan.

The Federal Reserve (Fed) has "no objection" to dividend payments or share repurchase plans for 18 banks, but requests Credit Suisse Holding USA to "address the limited weaknesses" associated with the bank's projected losses would suffer in its commercial activities in the event of a crisis.

The regulator set a deadline of October 27 to change the "capital allocation process". In response, the bank expressed its intention to "completely correct this problem" within the time allowed. In the meantime, it may distribute the same dividends as in 2018, and as soon as it is adjusted it will be able to increase that distribution according to its plans.

COURSE OF ACTION: Following the publication of the first half, Credit Suisse's registered name climbed to its highest point of the year with 14.14 Swiss francs. Since then, it has depreciated somewhat and is currently developing (Monday afternoon) around 12.06 CHF, up 12% from the end of 2018. Last year, the title lost nearly 40% of its value.

JL / YS / uh / Butch / RP

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