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Credit Suisse lowers profitability target, to end coal financing

Credit Suisse Group AG's new goals for 2020 include a lower profitability target and a new plan to move away from coal projects.

Ahead of its Dec. 11 investor day, the Zurich-based banking group said it now aims to achieve a return on tangible equity of roughly 10% in 2020, against a previous guidance of 11% to 12%. The actual figure could reach about 11% "if markets are constructive and support revenue growth," the bank noted, adding that it has identified up to 50 basis points of additional cost measures to hold the figure at around 10%.

For the 2019 full year, the bank expects its reported ROTE to be above 8%. On this, Credit Suisse expects a 175-basis-point increase to achieve its 2020 goal. In December 2018, the bank was expecting a 2019 ROTE of at least 10%. For the third quarter, the group's ROTE was 9%.

The bank also adopted a new policy to discontinue financing projects related to the development of new coal-fired power plants. The policy will also cover financing transactions where the majority of the proceeds would be used for new coal-fired power plants or new greenfield thermal coal mines.

Credit Suisse added that it will continue a two-year share buyback program announced in December 2018. For 2020, the group aims to repurchase ordinary shares of up to CHF1.5 billion, subject to market and economic conditions.

The bank noted that its fourth-quarter performance has been showing improvements compared to that in the same period in 2018. Ongoing pressures in the Swiss universal banking unit due to negative interests are being offset by real estate sales while the international wealth management segment is currently showing "a stable performance." The investment banking and capital markets unit also saw improvements but is still expected to be loss making for 2019.

Meanwhile, Credit Suisse affirmed its target of distributing at least 50% of its net income through dividends and share buybacks and increase its ordinary dividend by at least 5% every year.