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Bloomberg
Credit Suisse Group AG rose in Zurich trading, leading European bank shares higher, as Chief Executive Officer Tidjane Thiam pledged to cut
an additional 1 billion Swiss francs
($1 billion) in expenses and lowe-
red profit targets that were seen as too ambitious.
Thiam, who was updating investors after cutting more than 6,000 jobs this year as part of his year-old turnaround plan, declined to give details on further job cuts. Lower fees from asset management and a slump in investment banking prompted the bank to reduce profit goals in Asia and international wealth management, which analysts had viewed as too optimistic.
Credit Suisse rose as much 8.7 percent, the biggest gainer in the Bloomberg Europe 500 Banks and Financial Services Index.
It’s the second time Thiam is adjusting his plan to reorganize the company along geographical lines, downsize the investment bank in favor of wealth management, and hold an initial public offering of the Swiss business. In March, he stepped up job cuts for this year after unexpected losses at the global markets unit. Thiam on Wednesday confirmed targets for the wealth management operations, including in Asia, and said the coming year will be about generating more revenue.
“We see significant self-help potential via a combination of wealth management expansion and investment bank restructuring, where most of the heavy lifting has already been completed,†Citigroup Inc. analysts Andrew Coombs and Nicholas Herman wrote in an e-mailed report. “These new financial targets will be well received, with greater focus on costs rather than revenues.â€
Credit Suisse gained 7.8 percent in Zurich, paring losses this year to 29 percent. The Bloomberg Europe 500 Banks and Financial Services Index rose 1.5 percent and is down 8 percent for the year.
New Targets
The Zurich-based bank lowered 2018 pretax income targets for its international wealth management business and its Asian division to 1.8 billion francs and 1.6 billion francs respectively. Both had previously targeted 2.1 billion francs in profit. The bank is aiming for an operating cost base of less than 17 billion Swiss francs by 2018, down from an earlier goal of below 18 billion francs.