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Credit Suisse targets more cost cuts, sets 2019 and 2020 yield goals

Key Points
  • Credit Suisse said it is aiming for a return on tangible equity of 10-11 percent in 2019 and 11-12 percent in 2020
  • This is the first time it has announced such goals since Thiam's restructure
Credit Suisse CEO Tidjane Thiam delivers a speech during the annual shareholders' meeting of the Swiss banking group on April 28, 2017 in Zurich.

Credit Suisse on Thursday announced plans to boost shareholder returns as Chief Executive Tidjane Thiam looks to complete a restructuring of Switzerland's second-biggest bank in 2018.

In a statement ahead of its investor day, Credit Suisse announced new 2019 and 2020 yield targets and a plan to distribute 50 percent of net profit to shareholders primarily through share buybacks or special dividends.

"Our teams remain strongly focused on driving value for our clients and shareholders through 2018 and our objective is to achieve a group reported return on tangible equity of between 10 percent and 11 percent for 2019 and between 11 percent and 12 percent for 2020," Thiam said.

"We expect this to be driven in large part by strong cost control, the wind-down of the strategic resolution unit and significant reductions in our cost of funding, all elements which are largely within our control."

This is the first time it has announced ROTE goals since Thiam's revamp -- which has refocused the bank more towards wealth management and less on volatile investment banking -- began in late 2015. It represents a major rise from the 4.1 percent return posted in the first nine months of 2017.

The bank said it aims to operate at a cost base between 16.5 billion and 17 billion Swiss francs ($16.8-17.3 billion) in 2019 and 2020, compared to the 2018 target for a total cost base below 17 billion francs.

It confirmed 2018 targets, including pre-tax income goals for its Asia Pacific, International Wealth Management and Swiss Universal Bank divisions.

It said it was confident about completing the wind-down of its so-called Strategic Resolution Unit, a huge source of losses which is winding down businesses the bank no longer wants to operate.

Its shares were indicated 1.5 percent higher in pre-market activity.