Credit Suisse to buy back up to $3bn of shares as restructuring comes to an end

Banking giant Credit Suisse plans to buy back up to Sfr 3bn (£2.4bn) of shares after signalling it was on track to successfully complete its three-year restructuring.

The Swiss bank also confirmed plans to increase its dividend by at least five per cent annually from next year in a bid to reward shareholders who have suffered heavy losses in recent years.

Chief executive Tidjane Thiam said the restructuring had been a success and shareholders would reap the benefits in 2019.

“We think the strategy is working – the actions taken during the restructuring mean the bank is now more resilient in the face of market turbulence,” Thiam said at the bank's investor day in London.

He added that the bank had reallocated capital away from its more volatile markets activities and into its “more stable” and profitable wealth management division, while also strengthening its capital position.

The bank said it would buy back Sfr 1bn in each of the next two years and could repurchase a further Sfr 1bn if market conditions are favourable.

The Swiss lender also confirmed its target of a 10-11 per cent return on tangible equity for 2019, rising to above 12 per cent by 2021, compared to 6 percent expected for this year.

It expects to report a pre-tax income of Sfr 3.2-3.4bn in 2018, hitting an annual profit for the first time since 2015.

Last month the Swiss lender said its third quarter net profit rose 74 per cent year-on-year to Sfr 424m, further signalling the restructuring was turning around its fortunes.

"We welcome the decision to start buybacks, albeit we had hoped for more, and would note the 2019 return on tangible equity target is prudently based on flat year-on-year revenue developments, which suggests there is still room to beat this target in our view," Citi analysts said in a note.