Credit Suisse May Cut Cash Dividend 75%, Morgan Stanley Says
(Bloomberg) — Credit Suisse Group AG, Switzerland’s second-biggest bank, may cut its cash dividend for 2014 to build up capital faster as lawmakers study tougher leverage rules, Morgan Stanley analysts forecast.
The Zurich-based bank will probably cut its dividend by 75 percent or pay that part in shares “to hit new Swiss capital ratios whilst giving itself enough flexibility to navigate further litigation,” according to the analysts led by London- based Huw van Steenis.
Credit Suisse will probably need to improve the ratio of its common equity to total assets, a measure of the losses a bank can sustain before shareholder funds are wiped out, to at least 3 percent from 2.3 percent at the end of September, Morgan Stanley analysts forecast. A Swiss government-appointed panel last month recommended strengthening capital requirements for Credit Suisse and UBS Group AG, the country’s biggest bank.
The bank paid investors 70 centimes (69 cents) a share for 2013 and may reduce that to 65 centimes a share according to the average estimate of 29 analysts surveyed by Bloomberg.
Officials for Credit Suisse weren’t immediately available to comment.
By contrast, UBS may raise its dividend to about 57 centimes a share for 2014, according to the average estimate of 30 analysts, from 25 centimes a share for the previous year.
“We think UBS’s current trajectory is consistent with our base case for new leverage rules in Switzerland,” Morgan Stanley analysts wrote, reiterating their overweight rating on Zurich-based UBS. They rate Credit Suisse equal-weight.
Credit Suisse shares rose as much as 1.1 percent to 23.75 Swiss francs as of 11:40 a.m. in Zurich, and UBS gained 1.1 percent to 16.83 francs.
To contact the reporter on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net Simone Meier
