Credit Suisse Group AG, Switzerland’s second-biggest bank, rose in Swiss trading after it was raised to a buy rating from neutral by a UBS AG analyst, who cited the company’s “solid” capital ratios and dividend outlook.
Credit Suisse gained as much as 3.6 percent, and was 2.3 percent higher at 25.57 francs by 10:16 a.m. The stock has climbed 27 percent in the past six months.
“Credit Suisse is, in our view, well advanced in its multi-year transition program,” UBS analyst Daniele Brupbacher wrote in a note. “It is one of the first large banks to operate under a Basel 3-compliant business model. Credit Suisse will soon start to accrue a meaningful cash dividend.”
Credit Suisse Chief Financial Officer David Mathers said last month the bank plans to make “significant cash distributions” once its core capital ratio under Swiss rules surpasses 10 percent, which the company expects to happen around the middle of this year. The bank proposed to pay 10 centimes in cash and 65 centimes in shares as its dividend for 2012 after letting shareholders choose the previous year whether they wanted 75 centimes a share in cash or in stock to help the company build up capital ratios.
Brupbacher raised earnings estimates for Zurich-based Credit Suisse by 2 percent, 8 percent and 7 percent for 2012 and the following two years and also increased the price target for the shares to 34 francs from 27.5 francs previously.