Credit Suisse May Delay Key Profitability Target, Citigroup Says

(Bloomberg) -- Credit Suisse Group AG may tell investors next month that it won’t reach key profitability goals as quickly as planned, according to analysts at Citigroup Inc.

The Swiss bank could use a Dec. 11 investor presentation to adjust its target of a return on tangible equity -- a key profitability metric -- of between 10% and 11% this year, according to the U.S. bank. The measure will likely be at about 8.4% this year and Citigroup said it also expects the bank to trim its forecast for 2020.

Credit Suisse Chief Executive Officer Tidjane Thiam concluded a grueling overhaul last year, only to be confronted with the headwinds of a slowing economy and lower interest rates in 2019. While the bank’s trading unit made “great strides” this year, its other main divisions will probably report flat or lower pretax profits because of lower rates and a “weak” level of transactions in the Asia Pacific and investment banking segments, Citigroup said.

Credit Suisse declined to comment

The analysts said some divisions have limited flexibility as regards staff bonuses and that they’re seeking more information on Credit Suisse’s investment and resourcing plans. The bank should also detail its sensitivity to interest rates.

Still, Citigroup reaffirmed its recommendation that investors buy Credit Suisse shares, citing its discount to tangible book value and an expectation that the Swiss bank will reiterate plans to buy back more than 1 billion Swiss francs ($1 billion) of stock.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, James Hertling

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