Credit Suisse Shares Drop Even As Company Reports Massive Profit In A Turbulent Year

The shares of Credit Suisse Group AG CS dropped in early trade in Switzerland on Thursday, even as the company surprised with a significant annual profit for the financial year 2019.

What Happened

Credit Suisse reported a net profit of $3.5 billion, up 69% from the $2 billion net profit reported in the financial year 2018.

The company reported diluted earnings per share of $1.35, up 71.4% year-on-year compared to 2018's EPS of $0.79.

The bank reported a return on tangible equity of 9%. It had reported a RoTE of 5% in 2018 and strives for around 10% in 2020.

The average cost to income ratio was 77.6% for 2019, which is the best the Swiss banking giant has posted since 2010, as noted by Reuters.

For the fourth quarter alone, Credit Suisse reported net revenue of $6.3 billion, up 16% quarter-on-quarter, and 29% year-on-year.

Why It Matters

This is the last time that Credit Suisse is reporting its earnings under the leadership of CEO Tidjane Thiam, who steps down a day later on Friday.

Thiam's resignation was announced last week, as the bank took massive criticism over two spying scandals involving former employees.

Thiam was formally cleared by the bank's internal investigations in the matter, as all blame went to former chief operating officer Pierre-Olivier Bouee.

"[Our] performance in 2019, the first full year post restructuring, illustrates how much the bank has changed since 2015," Thiam said in a statement on the earnings report.
"I am proud of what Credit Suisse has achieved during my tenure," he added.
"We have turned Credit Suisse around, and our 2019 results show we can be sustainably profitable. I will be an enthusiastic supporter of my colleagues, as they continue to build momentum in the business."

Price Action

Credit Suisse shares traded 0.82% lower at $13.26 in Zurich at press time on Thursday. The shares lost 0.66% in the pre-market, trading at $13.54 on Wednesday at press time.

Photo Credit: Public domain image via Wikimedia.