Credit Suisse posts a 69% jump in annual net profit despite spying scandal

Key Points
  • Credit Suisse's latest numbers came in above expectations.
  • The bank surprised investors last week when announcing that CEO Tidjane Thiam is leaving the top position.
  • The resignation came after a drawn-out spying scandal at the bank.
Tidjane Thiam, chief executive officer of Credit Suisse, speaks during an earnings news conference in Zurich, Switzerland, on April 24, 2019.
Stefan Wermuth | Bloomberg | Getty Images

Credit Suisse beat market expectations with its latest earnings on Thursday, posting a 69% increase in annual net income despite the spying scandal that emerged during 2019.

The Swiss lender reported a net income of 3.4 billion Swiss francs ($3.48 billion) for 2019. For the final quarter of the year, the Swiss bank posted a net income of 852 million Swiss francs.

Analysts had estimated a net income of 838.5 million Swiss francs for the fourth quarter and 3.2 billion Swiss francs for the year.

Here are some other highlights for the year:

  • Net revenues reached 22.4 billion Swiss francs, vs 20.9 billion Swiss francs in 2018.
  • Operating expenses rose 1% from 2018 to 17.4 billions Swiss francs.
  • Return on tangible equity hit 9% in 2019, vs 5% in 2018.
  • Its CET1 ratio stood at 12.7%, vs 12.6% at the end of 2018.

"We have started the year strongly across all of our divisions, and as a result, are cautiously optimistic about the prospects for the year ahead," the bank said in a statement.

Credit Suisse also said it wants to grow its revenues in wealth management in 2020, increase profitability further and keep "cost discipline."

The bank is proposing a cash dividend of 0.2776 Swiss francs per share for the financial year of 2019. Credit Suisse shares are up by 12% over the past year.

Thiam's farewell

The Swiss bank surprised investors last week when announcing that CEO Tidjane Thiam is leaving the top position, effective from Friday. His resignation came after a drawn-out spying scandal at the bank.

A former Credit Suisse executive, Iqbal Khan, was followed by private contractors in a bid to establish whether he was poaching colleagues and clients to join him at UBS.

Credit Suisse machine is working, analyst says
Credit Suisse machine is working, analyst says

An internal investigation by law firm Homburger said there was "zero evidence" that Thiam had been involved in the surveillance scheme. Nonetheless, this probe led to the exit of Pierre-Oliver, the bank's chief operating officer, and raised questions as to how Thiam was unaware of the surveillance on Khan. Swiss regulator FINMA is still investigating the incident.

Reports suggest there's a power struggle between the bank's chairman, Urs Rohner, and Thiam. Whereas shareholders seem to have supported the work of Thiam as CEO, Credit Suisse's board voted unanimously to keep Rohner.

Speaking to CNBC last week, Vontobel Senior Analyst Andreas Venditti said the announcement would likely help to "calm things down" but went "totally against" the "very explicit support statements" from shareholders.

Thomas Gottstein, who's been leading the Swiss unit of Credit Suisse, will take over as CEO. Thiam said in a statement Thursday. "I am proud of what Credit Suisse has achieved during my tenure. We have turned Credit Suisse around, and our 2019 results show we can be sustainably profitable."

He later spoke on why he resigned at a press conference: "We discussed it with the board, if the board decides there should be a change in leadership, it's my duty to make it happen."