Credit Suisse predicts lending increase after smaller-than-expected loss in fourth quarter
Swiss credit (CSGN.S) Thursday, said he planned to increase lending volumes and capitalize on a boom in stock quotes to shore up income, after low interest rates and legal fees tipped the bank into the bank. red in the fourth quarter.
Switzerland’s second-largest lender posted a net loss of 353 million Swiss francs ($ 392.8 million) in the last quarter after posting 757 million francs in legal fees, beating analysts’ forecasts for a loss of 566 million francs but leaving annual profit down 22%.
The bank is now looking to strengthen its wealth management business by strengthening its onshore presence in China and expanding elsewhere in Asia-Pacific, CFO David Mathers told Reuters in an interview. Read more
It is also looking to allocate more capital to its international wealth management division outside Asia to increase its lending, and said it saw net interest income start to stabilize after interest rates hit. put pressure on the company last year.
The bank’s shares were down 0.8% as of 10:45 a.m. GMT, with analysts reporting mixed results.
Profits cap a tumultuous year for Credit Suisse, which began with the ouster of Tidjane Thiam as chief executive following a spy scandal, then the start of the pandemic as his replacement Thomas Gottstein took the helm.
Wealth managers have largely benefited from exceptional exchanges and client demand for more advice during the COVID-19 pandemic, helping rivals UBS Group AG (UBSG.S) and Julius Baer Gruppe AG (BAER.S) after windfall gains.
Credit Suisse suffered setbacks in its core business last year, however, everywhere except Asia. Read more
Outside of Asia, only Credit Suisse investment bank managed to boost profits in 2020, as higher expected credit losses, negative interest rate headwinds and a strong Swiss franc weighed on on profits.
In the fourth quarter, fixed income trading revenues fell 8% year-on-year to CHF 713 million, while equity sales and trading profits fell 5% to CHF 498 million Switzerland, underperforming the significant gains of some other investment banks.
Barclays (BARC.L) Thursday reported a strong year for investment banking, with solid income from its equity and fixed income businesses, in line with its US peers. Read more
Credit Suisse said it started 2021 with its best January in a decade, with rising pre-tax profit across all divisions and investment banking and trading activities showing particular strength.
Excluding one-off gains that boosted results in 2019 and brought them back into 2020, he said he would have seen a 6% profit before tax for last year.
The Zurich-based bank is targeting 10% annual profit growth in its wealth management business over the next three years. Read more
REVERSAL OF FORTUNES
Gottstein, who became chief executive last February as the novel coronavirus raged in China, is reconfiguring Credit Suisse’s investment banking business and is targeting branch closures and a digital overhaul of its home business to cut costs.
Its stand-alone international wealth management unit, which covers wealthy clients outside of Asia and Switzerland, saw its net income fall by 17% in 2020 as one-off trades failed to offset the impact of the decline. interest rates and a depressed US dollar.
The division was also hit by a fourth quarter depreciation of CHF 414 million on a hedge fund stake, which impacted its distressed asset management business.
Its private client business in Switzerland, covering both high net worth domestic clients and the bank’s only retail accounts, saw its pre-tax profit decline 16% due to lower income and higher provisions for the bank. loan losses.
Its activities in Asia-Pacific, meanwhile, saw their revenues increase by 4% thanks to higher transaction fees and a better recovery of the region after the pandemic. However, that did not offset an increase in loan provisions, resulting in a 10% drop in profits.
In a twist of fortune, Credit Suisse’s investment bank, which has undergone overhaul efforts over the past five years, saw its revenues increase in 2020, helping the company register its second year consecutive profit gains.
The bank proposed a dividend of 0.2926 francs per share, up 5.4%, and said it began a buyout in January as part of a total of 1.0 billion to 1.5 billion francs of redemptions it aims for this year.
($ 1 = 0.8987 Swiss francs)
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