Credit Suisse Plans $4 Billion Share-Capital Increase -- 2nd Update

By Brian Blackstone Features Dow Jones Newswires

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.

Continue Reading Below

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.

Continue Reading Below

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)