30th January 2020
Olivier Aeschlimann, Senior Financial Analyst
The big Swiss bank published a disappointing set of results for the financial year 2019. Net income contracted by 4.7% at USD 4.30 billion. The company invokes the impact of very low interest rate to explain its loss of profitability. Indeed, the return on Tier 1 capital (RoCET1) was 12.4%, well below the target of 15%. In addition, the bank is also struggling to lower its costs. The cost/income ratio stayed relatively high at à 78.9%, while the objective was to bring it down to 77%. Finally, the strategic wealth management division did also not meet expectations and even suffered money outflows of up to USD 4.7 billion. This difficult context led the bank to revise its targets downwards, with a cost/income ratio now expected between 75 and 78%, and return on Tier1 capital between 12 and 15%.