(Bloomberg) -- Credit Suisse Group AG is targeting 2 billion francs ($2 billion) in pretax profit for 2019 in its key wealth-management unit, seeking a fourth consecutive year of profit growth for the division, according to people with knowledge of the matter.
Iqbal Khan, head of international wealth management, told staff at an internal company event last week that he’s aiming to boost pretax profit from 1.8 billion francs last year, the people said, asking not to be identified as the meeting was private. Earnings at the level he’s targeting would exceed estimates: analysts polled by the bank predict profits to be little changed.
International Wealth Management has been one of the bright spots during a three-year restructuring in which Chief Executive Officer Tidjane Thiam shrank the trading unit in a pivot to private banking that mirrored a similar move by cross-town rival UBS Group AG. With market volatility returning and the global economy slowing amid trade tensions, even that relatively stable business isn’t immune as falling stock markets erode revenues.
Credit Suisse’s shares have lost about 30 percent in the past year, compared with a 29 percent drop at UBS.
Khan plans to give greater powers to the regions and boost collaboration with other units at the bank, such as the advisory business in the investment bank, the people said, asking not to be identified in disclosing internal communications.
Credit Suisse said that the bank has only one financial target, which is a return on tangible equity for 2019 of 10 percent to 11 percent. That number stood at 5.5 percent for 2018, still being dragged down by restructuring and high funding costs. JPMorgan Chase & Co. analysts led by Kian Abouhossein have said that Credit Suisse may not reach that target in 2019.
While Thiam has over-delivered on cutting the bank’s cost base the “ongoing” under-performance of its investment-banking strategy remains a drag on valuations, they said.
Khan’s division increased pretax profit by more than half between 2016 and 2018. A former consultant and CFO of Credit Suisse’s wealth unit, Khan is seen as a potential successor to Tidjane Thiam.
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