Credit Suisse shares rise as chief exec Tidjane Thiam cuts costs and lowers profit targets

 
Courtney Goldsmith
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Credit Suisse's cost saving measures and lowered profit targets have been announced (Source: Getty)

Credit Suisse shares have risen more than six per cent in early trading after it announced more than 1bn Swiss francs (£785.4m) in extra cost cuts.

It is just over a year since chief executive Tidjane Thiam set out his restructuring strategy for the bank to focus on markets in Switzerland and Asia and ditch investment banking for wealth management, but challenging conditions have persisted for the lender.

Analysts have expected a loss for Switzerland's second-biggest bank after it posted its first annual loss in eight years in February.

Read more: Boom: Credit Suisse profits smash expectations

"Given the unsupportive market conditions we are facing, the realisation of our profit objectives plan is now more geared to the delivery of cost reductions, over which we have greater control than revenue growth," Credit Suisse said in a statement ahead of its investor day.

Credit Suisse's operating cost base target for next year was lowered to below SFr17bn from below SFr18bn, and the target for planned net cost savings was increased to SFr4.2bn by the end of 2018, up SFr1bn.

Read more: Now Credit Suisse chief Tidjane Thiam sounds alarm on European banks

Pre-tax income targets for its Asia Pacific and international wealth management divisions were lowered to SFr1.6bn and SFr1.8bn respectively, each down from Sfr2.1bn.

For its Credit Suisse (Schweiz) business, which it plans to partially list next year, a target of SFr2.3bn for 2018 was confirmed.

Read more: The annus horribilis continues for Deutsche Bank and Credit Suisse

The lender's end-2018 target common equity Tier 1 capital ratio, a measure of balance sheet strength, was lowered to 11-12 percent from approximately 13 percent.

However, Credit Suisse is confident its strategy is working and said in 2016 it has "taken a number of difficult but important steps that lay the foundations for a stronger, more resilient Credit Suisse in the future".

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