Credit Suisse Plans $4 Billion Share-Capital Increase -- 2nd Update
April 26 2017 - 3:28AM
Dow Jones News
By Brian Blackstone
ZURICH-- Credit Suisse Group AG said it planned to raise 4
billion Swiss francs ($4.02 billion) in fresh capital and abandon
plans for a partial sale of its Swiss unit as the banking giant
reported a first-quarter profit that topped analyst
expectations.
Credit Suisse on Wednesday posted net income of 596 million
Swiss francs, compared with a year-earlier net loss of 302 million
francs, on strong performance in its wealth-management and
global-markets divisions. Analysts had forecast net income of 332
million francs. Revenue rose 19% to 5.5 billion francs, in line
with expectations.
The Swiss banking giant said it would sell 4 billion francs of
new shares to bolster its finances, boosting its key core capital
ratio to 13.4%. "I think this does take the capital issue off the
table for Credit Suisse," Chief Financial Officer David Mathers
said on a call with reporters. Shareholders will consider the
proposal at a meeting on May 18.
Credit Suisse also said it was dropping a plan to spin off its
Swiss banking unit. The bank will now retain full ownership of the
subsidiary, which it had previously planned to partially float
through an initial public offering in the second half of the
year.
The Swiss unit posted adjusted pretax income of 483 million
francs, the fifth consecutive quarter of pretax growth on an annual
basis. The bank's international wealth-management unit reported 4%
growth in net revenue compared with last year, while revenues in
the credit and securitized-products division more than doubled on
the year.
Credit Suisse endured a bumpy 2016 as it shifted from the
volatile investment-banking business toward wealth management. Last
year ended with a $5.3 billion settlement to resolve a financial
crisis-era mortgage backed securities case with the U.S.
The bank posted a 2.4 billion franc loss last year.
Credit Suisse had previously signaled that 2017 had gotten off
to a strong start particularly in its investment banking and
wealth-management units because of the rosier mood in financial
markets following the U.S. presidential election.
Yet the bank faces some new uncertainties that have emerged
since the start of the year. The bank's offices in Amsterdam,
London and Paris were targeted last month by authorities in a tax
investigation, though it remains unclear how serious an issue this
is for Credit Suisse.
Mr. Mathers said the investigation had no financial impact
during the first quarter and that Credit Suisse has a "zero
tolerance approach to untaxed money."
Write to Brian Blackstone at brian.blackstone@wsj.com
(END) Dow Jones Newswires
April 26, 2017 03:13 ET (07:13 GMT)
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