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Credit Suisse announces up to $1.51 billion share buyback

Key Points
  • Credit Suisse has announced a share buyback scheme for 2019.
  • The share buyback will be worth up to $1.51 billion.
  • It comes at the end of a three year revamp under CEO Tidjane Thiam.
The logo of Swiss banking giant Credit Suisse is seen on October 17, 2017 in Zurich.
Fabrice Coffrini | AFP | Getty Images

Credit Suisse on Wednesday announced a share buyback of up to 1.5 billion Swiss francs ($1.51 billion) in 2019 and plans to increase its dividend by at least 5 percent from 2019 onward, confirming its strategy as it wraps up a three-year revamp under Chief Executive Tidjane Thiam.

"The actions taken during the restructuring mean the bank is now more resilient in the face of market turbulence," Thiam said in a statement ahead of the bank's investor day.

Switzerland's second-biggest bank last year announced new 2019 and 2020 yield targets and a plan to distribute half of net profit to shareholders primarily through share buybacks or special dividends, saying it had made strong progress in an ambitious quest to become a leading wealth manager with strong investment banking capabilities.

By attracting a growing number of entrepreneurs especially in Asia to its client base, Credit Suisse hopes to increase profitability over coming years even as it faces headwinds from shaky markets and a hit to investor mood.

"We believe that global wealth will continue to grow, with ultra-high net worth and high net worth being the most attractive segments in wealth management," the bank said. "Both emerging and mature markets have attractive growth dynamics, while industry-wide trading revenue pools continue to decline."

The bank has cut thousands of jobs over recent years and reduced its financing costs.

It aims to operate at a cost base of between 16.5 billion and 17 billion Swiss francs in 2019 and 2020, compared to the 2018 target for a base below 17 billion francs.

The bank on Wednesday said it expects to achieve pre-tax income of 3.2 - 3.4 billion francs in 2018, anticipating a full-year profit for the first time since Thiam took over in 2015.

Its goal to achieve a group reported return on tangible equity (ROTE) of between 10 percent and 11 percent for 2019 and between 11 percent and 12 percent for 2020 places its estimated earnings at 4.2 - 4.6 billion francs in 2019 and 5 - 5.5 billion francs in 2020.

"As a result of known actions that are under our control, we expect to achieve at least a 10 percent ROTE in 2019," Thiam said on Wednesday.