Credit Suisse boss laments strong franc

City A.M. Reporter
THE strong Swiss franc and low interest rates are pressuring Credit Suisse’s revenue but the bank is still confident of reaching a key profitability target, its chief executive said yesterday.

Chief executive Brady Dougan said Switzerland’s second-biggest bank, which like many of its rivals has seen sluggish performance in investment banking in recent months, was on track to achieve a return-on-equity target of 15 per cent in the medium to longer term despite turbulent markets.

“The low interest rates and the strong franc are currently hitting revenues,” Dougan told Luzerner Zeitung, a German-language Swiss regional newspaper. “We’re clearly bracing for a longer period of volatility.”

He added: “Because of the strong franc the costs are higher and the income lower. In investment banking there is also a currency exchange problem. Most of the income and costs are in dollars, but we must translate the profit into francs.”

Unlike UBS, Credit Suisse did not take state aid during the financial crisis, and the Swiss government is now proposing the two banks hold more capital than their foreign rivals.

Dougan said Credit Suisse’s low-risk business, strong capitalisation and good liquidity meant it could weather tougher times well.

Meanwhile, Dougan said the market was being too bearish on interest rates, which he said would rise before 2013.

He added: “I believe that economic growth will be stronger again in the second half of the year. I am more optimistic than the majority.”