Credit Suisse to buy back as much as $4.1b of shares

ZURICH • Credit Suisse Group, Switzerland's second-largest bank, plans to buy back as much as 3 billion francs (S$4.1 billion) of shares in the next two years, while increasing the dividend by at least 5 per cent a year, it said in a statement ahead of its investor day.

While it is on track to deliver on a pledge to boost payouts to investors, that has not stopped a 37 per cent slump in the stock this year.

Chief executive Tidjane Thiam has pivoted the bank from more volatile trading in favour of wealth management, slashing thousands of jobs and tapping shareholders for billions of francs of funding.

With his restructuring almost over, he can point to private banking gains even as it grapples with surprise losses and falling trading revenue.

The bank warned that Asia-Pacific markets revenue will decline this year and earnings at the global markets business will be lower than expected.

"The capital distribution plans are a bit lower than expected, the dividend increase in particular," said Mr Daniel Regli, an analyst at Mainfirst Schweiz.

While Credit Suisse is far from being the only European lender to suffer this year, it is one of the worst performers. It has abandoned some targets and continues to suffer from surprise trading losses.

Still, there are signs the revamp will bear fruit. Funding costs are set to decline after the bank bought back expensive funding instruments held by Saudi Arabia and Qatar, while it is also set to complete the wind-down of its bad bank.

Credit Suisse is pledging to pay out at least 50 per cent of earnings to shareholders over the next two years.

It paid out a dividend of 0.25 franc per share last year and 0.70 franc the year before.

It warned yesterday that revenue from its Asia-Pacific markets business may be 8 to 10 per cent lower this year than last year.

"Persistent challenging market conditions have not changed our positive long-term outlook, however we are mindful of the short-term headwinds," the bank said.

Mr Thiam has made cost cuts a major pillar of his strategy, focusing on trading operations in New York and London.

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A version of this article appeared in the print edition of The Straits Times on December 13, 2018, with the headline 'Credit Suisse to buy back as much as $4.1b of shares'. Print Edition | Subscribe