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By Brenna Hughes Neghaiwi
ZURICH (Reuters) – Credit Suisse (SIX:) posted a 69% rise in annual net profit on Thursday in a bittersweet swan song for outgoing Chief Executive Tidjane Thiam.
Thiam quit after a spying scandal at the bank sparked a boardroom revolt and will leave formally on Friday. He will be replaced by company veteran Thomas Gottstein.
Gottstein said the group remained committed to its strategy and previously announced targets.
Net income rose to 3.419 billion Swiss francs ($3.50 billion) for the year. Analysts had on average expected Credit Suisse to generate 3.5 billion francs, according to a consensus of 13 analysts compiled by the bank.
Thiam spent much of his four and a half years at Credit Suisse trying to put the lender on a more stable footing – slashing costs and exiting riskier and more capital-intensive investment banking activities.
But his legacy will be defined by the spying controversy which saw Credit Suisse, one of the most high-profile names in European banking, admit to snooping on two former executives. The bank blamed the espionage on a rogue operation run by one of Thiam’s closest lieutenants. Credit Suisse and Thiam have said the CEO knew nothing of the activities.
Even with the restructuring undertaken by Thiam, Credit Suisse is facing a tough operating environment with more competitors now focusing on wealth management, ultra-low interest rates and the threat from passive investing.
The bank lowered its 2019 and 2020 profitability targets in December, blaming a drop in dealmaking, negative interest rates and global trade tensions for the climbdown.
At 9%, the bank’s return on tangible equity (RoTE) for 2019 matched the lowered expectation of above 8% it flagged in December. It had previously targeted 10-11%.
Over Thiam’s tenure, operating costs have fallen by more than 20% while net revenue has shrunk nearly 13% since 2014, the last full-year before Thiam’s arrival in July 2015.
For 2019, the group reached a cost/income ratio of 77.6%, its best since 2010.
The only divisions to have grown revenue since the former Prudential (LON:) boss announced an overhaul in late 2015 has been International Wealth Management, a standalone unit managing money for the rich outside Asia and Switzerland, and the Swiss business previously under Gottstein.
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