Credit Suisse Sees Capital Slipping Below Target This Quarter

(Bloomberg) -- Credit Suisse Group AG’s key capital ratio will probably drop to a level slightly below the bank’s target in the first quarter as the bank sets aside assets to meet regulatory requirements and spends more on growth.

The measure may slide as to as low as 12.3 percent from its current 12.6 percent, Chief Financial Officer David Mathers said in a telephone interview. The bank’s target at least 12.5 percent, a level he expects the to meet for the full year, he said.

Increases in risk-weighted assets to satisfy regulators may reduce the ratio by as much as 10 basis points, with the rest supporting growth in the wealth-management business, he said. The CET1 ratio fell by 30 basis points in the fourth quarter compared with the prior three months.

Credit Suisse completed a three-year restructuring plan and is now seeking to build on growth at its wealth units, which have been a focus for Chief Executive Officer Tidjane Thiam as he moves the bank away from more volatile trading operations.

Mathers also gave some further detail on the bank’s cost estimates for this year.

Costs may drop below 16.5 billion francs ($16.4 billion), the bottom end of the bank’s target for this year, “as we continue to drive for continued efficiencies of two to three percent a year,” Mathers said. “But this will be offset, at least in part, by investment growth.”

Credit Suisse shares fell as much as 3.2 percent on Thursday after the bank provided a cautious outlook and weaker results in its trading businesses. Analysts at Citigroup attributed the bank’s share price decline to a lack of guidance on costs. After exceeding its target for cuts last year, there’s less room for more reductions. Credit Suisse has lowered annual costs by more than 4 billion francs over the last three years.

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