ZURICH, Jan 29 (Reuters) - Credit Suisse looks set to post its first full-year loss since 2008 next week, with a write-down at its investment bank adding to pressure on Chief Executive Tidjane Thiam to show his turn-around plan is achievable.
Thiam, who became CEO in July, wants to focus more on managing the fortunes of the world’s wealthy, especially in emerging markets, while shrinking the investment bank.
But with analysts estimating a 2015 loss of 729 million Swiss francs ($712 million) in its Feb. 4 earnings, the question is whether Thiam can win investors’ patience.
By contrast, rival UBS is forecast to set a more positive tone when it reports on Feb. 2, with an average analyst estimate for 2015 net profit of 5.75 billion Swiss francs.
“The (Credit Suisse) numbers are not that important,” said Zuercher Kantonalbank analyst Andreas Brun, who has a “market perform” rating on the stock. “What is more important is that Credit Suisse can reassure the market that they are on track to achieve their goals.”
UBS led the way in 2012 with a similar strategy overhaul to Credit Suisse and is now the world’s biggest private bank and market leader in Asia Pacific.
Credit Suisse is the fourth-biggest private bank and the third-largest in Asia Pacific and four months on from Thiam’s strategy announcement, many doubt it can hit growth targets, which include more than doubling Asia Pacific pre-tax income by 2018.
China’s stuttering economic growth has fuelled concerns that Asian private wealth could be slowing.
“In October, I already said the targets are ambitious,” said Vontobel analyst Andreas Venditti, who has a “hold” rating on Credit Suisse’s stock.
“Looking at where we stand today, with lower AuM (assets under management) and probably weaker outlook for some global trends, I find (the targets) even more difficult.”
“SUBSTANTIAL IMPAIRMENT CHARGE”
Credit Suisse had a nine-month net profit of 2.9 billion francs, but finance chief David Mathers warned in October of a “substantial impairment charge” on the investment bank’s 6.3 billion francs in goodwill in the fourth quarter.
This looks set to be compounded by a weak quarter for fixed-income, commodities and currencies (FICC) at Credit Suisse.
Goldman Sachs and Morgan Stanley both reported drops in FICC in the fourth quarter.
Investors will also look for any sign that Credit Suisse faces rising risks of loan losses from low oil prices.
UBS investors are focused mainly on its dividend. It has promised to pay out at least half its net profits if capital targets are met.
“UBS is a dividend play,” said ZKB’s Brun, who rates the stock “overperform”. “If it disappoints on this then I put a question mark on the whole investment case.” ($1 = 1.0239 Swiss francs) (Editing by Alexander Smith)