Prepared and filed by St Ives Burrups

FORM 6–K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer
Dated November 14, 2002

Pursuant to Rule 13a–16 or 15d–16
of the Securities Exchange Act of 1934

For the month of November 14, 2002

Commission File Number 001–15244

CREDIT SUISSE GROUP
(Translation of registrant's name into English)

Paradeplatz 8, P.O. Box 1, CH–8070 Zurich, Switzerland
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F        Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):       

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):       

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes        No  

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-       



Contents

Press Release
CV of Leonhard Fischer
Q3 Report
Slide Presentation
Supplements to the Third Quarter Results Presentation

 


 

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Media Relations

CREDIT SUISSE GROUP
P.O. Box 1
CH-8070 Zurich

Telephone +41-1-333 8844
Fax             +41-1-333 8877

e-mail media relations@csg

 

 

Credit Suisse Group Reports Net Operating Loss of CHF 1.8 Billion and Net Loss of CHF 2.1 Billion for the Third Quarter
 
Significant Insurance Losses Impact Results by CHF 1.4 Billion –
Insurance Results Expected to Recover in Fourth Quarter 2002
 
Legacy Costs and Credit Provisions at CSFB, Exceptional Items in Private Banking and Lower Revenues due to Current Market Conditions Partially Offset by Further Cost Reductions
 
Board of Directors Appoints Leonhard Fischer – Former Member of the Boards of Management of
Allianz AG and Dresdner Bank AG –
New Chief Executive Officer of Winterthur Group
 

 

Zurich, November 14, 2002 – In the third quarter of 2002, Credit Suisse Group recorded a net operating loss, which excludes the amortization of acquired intangible assets and goodwill as well as exceptional items, of CHF 1.8 billion. This compared with a net operating loss of CHF 285 million in the second quarter of 2002 and a net operating profit of CHF 21 million in the third quarter of 2001. The Group’s net loss for the third quarter of 2002 amounted to CHF 2.1 billion, versus a net loss of CHF 579 million in the second quarter of 2002 and a net loss of CHF 299 million in the third quarter of 2001.

 

 


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Credit Suisse Group’s third quarter 2002 result is largely attributable to further significant net operating losses in the insurance units due to low investment income, which negatively impacted the Group’s performance by CHF 1.4 billion. Other factors contributing to the Group’s result included a net operating loss of CHF 426 million at Credit Suisse First Boston due to legacy costs, higher credit provisions and reduced revenues due to poor market conditions. Private Banking posted a lower net operating profit before exceptional items and minority interests of CHF 303 million, and Swiss Corporate & Retail Banking continued to perform well with a net operating profit before minority interests of CHF 102 million. The Group recorded an additional write-down of CHF 206 million on its investment in Swiss Life. Credit Suisse Group’s net loss includes exceptional items of CHF 119 million recognized in connection with the realignment of the European Private Banking offering.

For the first nine months of 2002, the Group recorded a net operating loss, which excludes the amortization of acquired intangible assets and goodwill as well as exceptional items, of CHF 1.4 billion and a net loss of CHF 2.4 billion, versus a net operating profit of CHF 3.4 billion and a net profit of CHF 2.4 billion for the first nine months of 2001.

In September 2002, Oswald J. Grübel, Chief Executive Officer of Credit Suisse Financial Services, and John J. Mack, Chief Executive Officer of Credit Suisse First Boston, were appointed Co-CEOs of the Group, in addition to their current roles leading their respective business units. They are moving ahead with an accelerated agenda of


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measures in an effort to restore the Group’s earnings strength in the coming quarters.

Oswald J. Grübel stated, “I am very pleased that the Board of Directors has appointed Leonhard Fischer the new Chief Executive Officer of Winterthur Group. Leonhard Fischer is a former Member of the Boards of Management of Allianz AG and of Dresdner Bank AG, where he was Head of the Corporate Client business and Investment Banking. Under his leadership, we will continue realigning Winterthur’s strategy, premium structure, cost base and investment policy so that it will again be profitable in an environment where investment income will remain at a much lower level than in previous years.”

He added, “To further strengthen our Private Banking franchise, we have begun realigning our European offering to substantially reduce costs, and we will continue to concentrate on enhancing client solutions and innovation.”

John J. Mack said, “Credit Suisse First Boston’s revenues declined across all businesses due to challenging conditions in the third quarter, but our core businesses remain strong, as demonstrated by our ability to maintain or improve market share and rankings in key areas. We will continue aggressively adapting our cost structure to the current environment and have launched an initiative to save another USD 500 million, in addition to the USD 2.4 billion achieved already.”

He continued, “Additional measures to improve our financial performance include the disposal of legacy asset portfolios associated with non-continuing businesses, as well as the contractual run-off of remaining incentive compensation guarantees and retention awards related to the acquisition


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of DLJ. The implementation of these measures should enable Credit Suisse First Boston to achieve a return to profitability in 2003.”

John J. Mack and Oswald J. Grübel concluded, “Credit Suisse Group’s third quarter results were clearly unsatisfactory. While the Group’s core businesses remain strong, our financial performance must improve. We are working together closely to enhance our bottom line, restore profitability in 2003 and build long-term value for the Group’s shareholders, clients and employees.”

Capital Base Remains Adequate

As of September 30, 2002, the Group’s consolidated BIS tier 1 ratio stood at 9.0%, versus 9.2% at the end of the second quarter. The capital ratios for the Group’s individual businesses are well within the target ranges set by the Group and in line with industry peers: the BIS tier 1 ratio for the Group’s banking business stood at 9.4%, up from 9.3% at the end of the second quarter. The BIS tier 1 ratios for the operating entities Credit Suisse and Credit Suisse First Boston remained strong at 7.0% and 11.9%, respectively, compared with 7.4% and 12.6%, respectively, in the second quarter of 2002. Winterthur’s solvency margin, calculated in line with the EU directive, stood at 155%, up from 123% at the end of the second quarter.

As the Group expects to report a loss for the full-year 2002, it is lowering dividend estimates to CHF 0.10 per share. The Board of Directors will submit the dividend proposal to the Annual General Meeting of Shareholders on April 25, 2003, based on the 2002 consolidated results.


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Throughout the year, Credit Suisse Group has demonstrated its ability to maintain adequate capital resources to support its businesses. Going forward, additional measures to strengthen the Group’s capital base, if appropriate opportunities arise, could include a capital-qualifying financing, including equity-linked debt instruments, balance sheet securitizations and potential divestitures of non-core businesses. The likelihood as well as the amount and timing of such measures will depend on the market environment.

Net New Assets Affected by Weak Market Conditions

Credit Suisse Financial Services reported net new assets of CHF 1.5 billion in the third quarter of 2002, which included net new assets of CHF 3.4 billion in Private Banking and CHF 0.4 billion in Life & Pensions. These were largely offset, however, by CHF 2.3 billion in net outflows from Corporate & Retail Banking, due primarily to seasonality in the account balances of corporate clients. Credit Suisse First Boston reported net asset outflows of CHF 15.2 billion, of which CHF 12.2 billion was attributable to its Institutional Asset Management business and was caused by foreign exchange impacts and performance issues, primarily from a single fixed income product. A CHF 3.0 billion outflow from the Investment Banking segment due to the divestiture of the global opportunities fund also contributed to Credit Suisse First Boston’s results. For Credit Suisse Group, an overall net asset outflow of CHF 13.7 billion resulted in the third quarter, versus an inflow of CHF 4.2 billion in net new assets in the second quarter. For the first nine months of 2002, the Group reported net new assets of CHF 4.0 billion, compared with CHF 49.0 billion for the first nine months of 2001. The Group’s total assets under management stood at CHF 1,221.8


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billion as of September 30, 2002, corresponding to a decline of 5.5% versus June 30, 2002.

Business Unit Results

The Credit Suisse Financial Services business unit reported a net operating loss, which excludes the amortization of acquired intangible assets and goodwill as well as exceptional items, of CHF 1.0 billion in the third quarter of 2002. This compared with a net operating loss of CHF 271 million in the second quarter of 2002 and a net operating profit of CHF 738 million in the third quarter of 2001. The decline of CHF 1.8 billion versus the third quarter of 2001 is primarily attributable to much lower investment income from the insurance units as a result of the income statement recognition of lower equity valuations and the realization of losses when reducing the equity exposure of the investment portfolio. The business unit’s net loss of CHF 1.2 billion in the third quarter of 2002 includes exceptional items of CHF 119 million recognized in connection with the realignment of the European Private Banking offering.

The Private Banking segment reported a net operating profit before exceptional items and minority interests of CHF 303 million in the third quarter of 2002, down 38% versus the second quarter of 2002. Operating income fell 16% versus the second quarter due to seasonal weakness, investor passivity and significantly lower revenues from the sale of structured products. Operating expenses fell 8% quarter-on-quarter due to reduced bonus accruals reflecting the lower results, as well as the implementation of cost reduction measures and the realization of synergies. Going forward, Private Banking expects good growth, particularly from Asia, the Middle East and Latin America.


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The Corporate & Retail Banking segment posted a net operating profit before minority interests of CHF 102 million in the third quarter of 2002, up 7% on the second quarter of 2002 and up 29% on the third quarter of 2001. The growth in net operating profit versus the second quarter of 2002 is primarily attributable to a 7% decrease in operating expenses. Operating income declined 2% quarter-on-quarter. The operating cost/income ratio stood at 67.6% in the third quarter of 2002, compared with 69.8% in the second quarter of 2002. The return on average allocated capital increased to 10.5%, from 9.5% in the second quarter of 2002. Credit Suisse will, in the future, focus its online banking services in Switzerland on “Direct Net”, and will further expand this platform. The online brokerage “youtrade” will be discontinued as of January 31, 2003, due to the significant decline in trading volumes and revenues.

The Life & Pensions segment reported a net operating loss before minority interests of CHF 1.5 billion in the first nine months of the year, versus a net operating profit before minority interests of CHF 500 million in the first nine months of 2001. This result reflects a CHF 3.0 billion decline in investment income compared with the first nine months of 2001. Life & Pensions recorded an increase in gross premiums written of 18% in the first nine months of 2002 versus the first nine months of 2001. Adjusted for acquisitions and divestitures, premiums rose 17% on a local currency basis. The expense ratio for the first nine months of 2002 stood at 9.3%, excluding write-downs of deferred acquisition costs of CHF 235 million, which were recognized as a result of lower long-term investment return expectations. After taking account of these write-downs, the expense ratio stood at 10.9% in the first nine months of 2002 and was thus still below the expense ratio of 11.5%


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in the first nine months of 2001, reflecting cost management efforts.

Due to lower investment income, the Insurance segment reported a net operating loss before minority interests of CHF 998 million in the first nine months of 2002, compared with a net operating profit before minority interests of CHF 500 million in the first nine months of 2001. Net premiums earned increased by 4% in the first nine months of 2002, compared with the first nine months of 2001, to CHF 11.7 billion. Adjusted for acquisitions and divestitures, the segment reported growth of approximately 8% on a local currency basis. The combined ratio improved by 2.9 percentage points against the first nine months of 2001, to 103.5% in the first nine months of 2002.

Both insurance units further reduced the equity exposure of their investment portfolios in the third quarter of 2002, in an effort to mitigate the impact of equity market volatility on their capital.

The Credit Suisse First Boston business unit reported a net operating loss, which excludes the amortization of acquired intangible assets and goodwill, of USD 255 million (CHF 426 million) in the third quarter of 2002, compared with a net operating profit of USD 229 million (CHF 371 million) in the second quarter of 2002 and a net operating loss of USD 103 million (CHF 170 million) in the third quarter of 2001. A net loss of USD 425 million (CHF 679 million) was recorded in the third quarter of 2002, compared with a net profit of USD 61 million (CHF 101 million) in the preceding quarter and a net loss of USD 281 million (CHF 472 million) in the third quarter of 2001. The decline in results versus the second quarter of 2002 was mainly attributable to lower operating income, which was down 24% on the second quarter


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to USD 2.6 billion (CHF 3.9 billion), and to higher provisions and charges associated with commercial lending and legacy items, including losses for non-continuing real estate, distressed assets and private equity. The third quarter of 2002 also included a USD 65 million (CHF 104 million) provision related to excess office facilities. As a result of cost reduction measures, third quarter 2002 operating expenses fell 18% versus the second quarter of 2002 and 29% versus the third quarter of 2001 to USD 2.2 billion (CHF 3.2 billion). In the first nine months of 2002, Credit Suisse First Boston has reduced expenses by USD 2.4 billion or 25% (CHF 4.8 billion or 29%) versus the first nine months of 2001, and it has launched an initiative in October 2002 with a view to achieving an additional USD 500 million (approximately CHF 770 million) in savings.

The Investment Banking segment reported third quarter 2002 operating income of USD 2.1 billion (CHF 3.1 billion), down 27% compared with the second quarter of 2002, reflecting declines in all divisions, and down 27% on the third quarter of 2001. As a result of cost reduction measures, third quarter 2002 operating expenses were USD 1.8 billion (CHF 2.6 billion), down 21% compared with the second quarter of 2002 and down 33% compared with the third quarter of 2001.

The CSFB Financial Services segment reported operating income of USD 501 million (CHF 742 million) for the third quarter of 2002, reflecting a decline of 9% compared with the second quarter of 2002 and of 7% compared with the third quarter of 2001. Operating expenses were down 11% compared with the third quarter of 2001 due to cost reduction measures and the sale of CSFBdirectand Autranet reported earlier this year.


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Accounting Policy

The Group is considering changing its accounting policy to allow for capitalization of deferred tax assets on net operating losses, as well as changing its estimation methodology with respect to inherent credit losses. The related impacts would be reflected in the fourth quarter 2002 results.

Outlook – Restored Profitability in 2003

Credit Suisse Group remains cautious in its outlook for its fourth quarter 2002 results given the continued challenging market environment. However, the Group anticipates that the fourth quarter should see a recovery in results at Winterthur, as the impact of lower equity valuations on the investment portfolio is expected to be significantly reduced. The Group expects that the measures being implemented will restore sound profitability in 2003.

Enquiries

Credit Suisse Group, Media Relations Telephone +41 1 333 8844

Credit Suisse Group, Investor Relations Telephone +41 1 333 4570

Additional information on Credit Suisse Group’s third quarter results (Q3 Report; slide presentation) can be found on the Internet at www.credit-suisse.com.


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Credit Suisse Group

Credit Suisse Group is a leading global financial services company headquartered in Zurich. The business unit Credit Suisse Financial Services provides private clients and small and medium-sized companies with Private Banking and financial advisory services, banking products, and Pension and Insurance solutions from Winterthur. The business unit Credit Suisse First Boston, an Investment Bank, serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group’s registered shares (CSGN) are listed in Switzerland and Frankfurt, and in the form of American Depositary Shares (CSR) in New York. The Group employs around 80,000 staff worldwide. As of September 30, 2002, it reported assets under management of CHF 1,221.8 billion.

Cautionary statement regarding forward-looking information

This press release contains statements that constitute forward-looking statements. In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to our plans, objectives or goals; our future economic performance or prospects; the potential effect on our future performance of certain contingencies; and assumptions underlying any such statements.

Words such as “believes,” “anticipates,” “expects,” intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable laws. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include (i) market and interest rate fluctuations; (ii) the strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations in particular; (iii) the ability of counterparties to meet their obligations to us; (iv) the effects of, and changes in, fiscal, monetary, trade and tax policies, and currency fluctuations; (v) political and social developments, including war, civil unrest or terrorist activity; (vi) the possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations; (vii) the ability to maintain sufficient liquidity and access capital markets; (viii) operational factors such as systems failure, human error, or the failure to properly implement procedures; (ix) actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations; (x) the effects of changes in laws, regulations or accounting policies or practices; (xi) competition in geographic and business areas in which we conduct our operations; (xii) the ability to retain and recruit qualified personnel; (xiii) the ability to maintain our reputation and promote our brands; (xiv) the ability to increase market share and control expenses; (xv) technological changes; (xvi) the timely development and acceptance of our new products and services and the perceived overall value of these products and services by users; (xvii) acquisitions, including the ability to integrate successfully acquired


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businesses; and (xviii) our success at managing the risks involved in the foregoing.

We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, as well as the risks identified in our most recent Form 20-F and reports on Form 6-K furnished to the US Securities and Exchange Commission.


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Today’s Presentation of the Results
 
Speakers
Oswald J. Grübel, Chief Executive Officer of Credit Suisse Financial Services and Co-Chief Executive Officer of Credit Suisse Group as of 2003
John J. Mack, Chief Executive Officer of Credit Suisse First Boston and Co-Chief Executive Officer of Credit Suisse Group as of 2003
Philip K. Ryan, Chief Financial Officer of Credit Suisse Group
Richard E. Thornburgh, Chief Financial Officer of Credit Suisse First Boston
 
Analysts’ presentation, Zurich (English)
November 14, 2002, 8.00 am CET / 7.00 am GMT / 2.00 am EST at the Credit Suisse Forum St. Peter, Zurich
Internet:
  Live broadcast at www.credit-suisse.com/results
  Video playback available approximately 3 hours after the event
  Telephone:
  Live audio dial-in on +41 91 610 4111 (Europe), +44 207 866 4111 (UK), or +1 412 858 4600 (USA), ask for “Credit Suisse Group quarterly results”; please dial in 10 minutes before the start of the presentation 
  Telephone replay available approximately 1 hour after the event on
+41 91 612 4330 (Europe), +44 207 866 4300 (UK) or +1 412 858 1440 (USA), conference ID 600#
 
Media conference, Zurich (English/German)
  November 14, 2002, 10.00 am CET / 9.00 am GMT / 4.00 am EST at the Credit Suisse Forum St. Peter, Zurich
  Internet:
  Simultaneous interpreting: German – English, English – German
  Live broadcast at www.credit-suisse.com/results
  Video playback available approximately 3 hours after the event
   Telephone:
  Live audio dial-in on +41 91 610 4111 (Europe), +44 207 866 4111 (UK), or +1 412 858 4600 (USA), ask for “Credit Suisse Group quarterly results”; please dial in 10 minutes before the start of the presentation
     

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  Telephone replay available approximately 1 hour after the event on +41 91 612 4330 (Europe), +44 207 866 43 00 (UK) or +1 412 858 1440 (USA), conference ID 846# (English)or 951# (German)

 


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Curriculum vitae

Leonhard H. Fischer

Born 1963

As of January 1, 2003

Member of the Executive Board of Credit Suisse Financial Services and Chief Executive Officer of Winterthur Group

Professional experience

2001 – 2002 Allianz AG, Member of the Management Board of Allianz Holding, Head of Corporates and Markets
   
1999 Dresdner Bank AG, Frankfurt, Member of the Executive Board, Head of Investment Banking
   
1998 Dresdner Bank AG, Deputy Member of the Executive Board, Head of Global Markets and Asia
   
1995 – 1997 Dresdner Bank AG, Frankfurt, Head of Treasury and Proprietary Trading
   
From 1992 JP Morgan, Frankfurt, Member of the Executive Board
   
1991 – 1994 JP Morgan, Frankfurt, Head of Annuity and Interest Rate Trading Frankfurt / Head of Annuity Options Trading, Europe
   
1987 – 1995 JP Morgan, Frankfurt
   
   
Education  
   
1987 MA in Finance, University of Georgia
   
Until 1987 Business Management degree, University of Bielefeld



 

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CREDIT SUISSE GROUP qUARTERLY REPORT 2002 / Q3



INDEX

Editorial
Financial highlights Q3/2002
An overview of Credit Suisse Group
Credit Suisse Financial Services
Credit Suisse First Boston
Consolidated results Credit Suisse Group
Consolidated income statement
Consolidated balance sheet
Selected notes
Risk Management
Information for investors



Cautionary statement regarding forward-looking information
This Quarterly Report contains statements that constitute forward-looking statements.In addition,in the future we,and others on our behalf,may make statements that constitute forward-looking statements.Such forward-looking statements may include,without limitation,statements relating to our plans,objectives or goals;our future economic performance or prospects;the potential effect on our future performance of certain contingencies;and assumptions underlying any such statements. Words such as "believes," "anticipates," "expects," "intends" and "plans" and similar expressions are intended to identify forward--looking statements but are not the exclusive means of identifying such statements.We do not intend to update these forward-looking statements except as may be required by applicable laws. By their very nature,forward-looking statements involve inherent risks and uncertainties,both general and specific,and risks exist that predictions,forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved.We caution you that a number of important factors could cause results to differ materially from the plans,objectives,expectations,estimates and intentions expressed in such forward-looking statements.These factors include (i)market and interest rate fluctuations;(ii)the strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations in particular;(iii)the ability of counterparties to meet their obligations to us;(iv)the effects of,and changes in,fiscal,monetary,trade and tax policies,and currency fluctuations;(v)political and social developments,including war,civil unrest or terrorist activity;(vi)the possibility of foreign exchange controls,expropriation,nationalization or confiscation of assets in countries in which we conduct our operations;(vii)the ability to maintain sufficient liquidity and access capital markets;(viii)operational factors such as systems failure,human error,or the failure to properly implement procedures;(ix)actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations;(x)the effects of changes in laws,regulations or accounting policies or practices;(xi)competition in geographic and business areas in which we conduct our operations;(xii)the ability to retain and recruit qualified personnel;(xiii)the ability to maintain our reputation and promote our brands;(xiv)the ability to increase market share and control expenses;(xv)technological changes;(xvi)the timely development and acceptance of our new products and services and the perceived overall value of these products and services by users;(xvii)acquisitions,including the ability to integrate successfully acquired businesses;and (xviii)our success at managing the risks involved in the foregoing. We caution you that the foregoing list of important factors is not exclusive;when evaluating forward-looking statements,you should carefully consider the foregoing factors and other uncertainties and events,as well as the risks identified in our most recently filed Form 20-F and reports on Form 6-K furnished to the US Securities and Exchange Commission.


 
EDITORIAL


Dear shareholders, clients and colleagues

Credit Suisse Group’s performance in the third quarter of 2002 was clearly unsatisfactory. While the Group maintained its market position in its core businesses, results were impacted by low investment income from the insurance business, weak revenues due to current market conditions, and the legacy costs at Credit Suisse First Boston incurred in connection with non-continuing businesses. Although these factors were partially offset by cost reductions, the Group reported a net operating loss of CHF 1.8 billion and a net loss of CHF 2.1 billion for the third quarter.

We are pursuing a number of measures to restore the full earnings strength of the Group and are confident that we will return to sound profitability in 2003. At the same time, we have implemented measures to maintain an adequate capital position. As of September 30, 2002, the BIS tier 1 ratio for the Group’s banking business stood at 9.4%, and Winterthur’s solvency margin was 155%. These capital ratios are well within the target ranges set by the Group and are in line with industry peers.

As we expect to report a loss for the full-year 2002, we have lowered dividend estimates to CHF 0.10 per share. The Board of Directors will submit the dividend proposal to the Annual General Meeting of Shareholders on April 25, 2003, based on the 2002 consolidated results.

At Winterthur, realized losses in the equity portfolio and growth in premium volumes in the third quarter of 2002 gave rise to increased capital requirements. The Group responded with a CHF 2.0 billion capital contribution to strengthen the capital base of the insurance units. This transaction was financed with excess liquidity from the Group and did not impact the banking capital ratios. Winterthur also reduced its equity exposure in the third quarter to the targeted level going forward. Winterthur is now focusing on further adapting its premium structure, cost base and investment strategy to achieve profitability in an environment in which investment income is expected to be significantly lower than in previous years.

While Corporate & Retail Banking continued to record strong results, in Private Banking seasonal weakness, investor passivity and lower revenues from the sale of structured products negatively impacted operating income in the third quarter. In order to further reduce costs, we began refocusing the distribution network and infrastructure of our European offering in the third quarter. Going forward, Credit Suisse Financial Services will also concentrate on strengthening its private banking franchise in terms of client solutions, innovation and profitability.

Credit Suisse First Boston succeeded in maintaining its market shares and rankings in the third quarter, although market conditions – particularly for equity and investment banking-related businesses – continued to decline. The business unit moved actively to address legacy items, including negotiating agreements for sale covering certain non-continuing real estate, distressed assets and private equity investments. The cost reduction program initiated in 2001 continued to generate significant decreases in operating expenses of a total of USD 2.4 billion in the first nine months of 2002, corresponding to a decline of 25% compared with the same period in 2001. We have initiated further cost reductions to bring the cost structure in line with the current market opportunities. The assets and market position of Credit Suisse Group’s core businesses remain strong. However, our financial performance must improve and, as the designated CEOs of Credit Suisse Group, we are both strongly focused on the bottom line.

We look forward to working closely with our new Chairman Walter Kielholz to deliver value to our shareholders, clients and employees.

John J. Mack Oswald J. Grübel
Chief Executive Officer Credit Suisse First Boston Chief Executive Officer Credit Suisse Financial Services

November 2002

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CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q3/2002


Consolidated income statement        
     ChangeChange  Change
  in % fromin % from9 monthsin % from
in CHF m3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Operating income5'6667'6478'720(26)(35)21'64330'993(30)
Gross operating profit3141'0791'490(71)(79)3'2257'606(58)
Net operating profit 1)   (1'752)(285)21(1'351)3'358
Net profit(2'148)(579)(299)271(2'359)2'417

Return on equity (ROE)        
    ChangeChange  Change
 in % fromin % from9 monthsin % from
in %3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Reported ROE(26.9)(6.6)(3.0)308(9.2)8.0
Operating ROE 1)   (22.8)(3.2)0.2(5.6)10.9

Consolidated balance sheet        
       ChangeChange
       in % fromin % from
in CHF m   30.09.0230.06.0231.12.01 30.06.02 31.12.01
Total assets   999'158987'5851'022'5131(2)
Shareholders' equity   32'46136'45838'921(11)(17)
Minority interests in shareholders' equity   3'0712'8923'1216(2)

Capital data        
       ChangeChange
       in % fromin % from
in CHF m   30.09.0230.06.0231.12.01 30.06.02 31.12.01
BIS risk-weighted assets    218'700220'467222'874(1)(2)
BIS tier 1 capital   19'66920'18721'155(3)(7)
of which non-cumulative perpetual preferred securities   2'2182'0152'076107
BIS total capital   33'64734'17434'888(2)(4)
Solvency capital Winterthur   10'1277'9078'5552818

Capital ratios                  
in %             30.09.02 30.06.02 31.12.01
BIS tier 1 ratio Credit Suisse           7.0 7.4 6.9
  Credit Suisse First Boston 2)           11.9 12.6 12.9
  Credit Suisse Group 3)   9.0 9.2 9.5
  Credit Suisse Group (banking) 4)   9.4 9.3 8.8
BIS total capital ratio Credit Suisse Group     15.4 15.5 15.7
EU solvency margin Winterthur           155.1 122.9 128.6

Assets under management/client assets 5)         
       ChangeChange
       in % fromin % from
in CHF bn   30.09.0230.06.0231.12.01 30.06.02 31.12.01
Advisory assets under management   606.3638.6723.5(5)(16)
Discretionary assets under management   615.5654.6707.1(6)(13)
Total assets under management   1'221.81'293.21'430.6(6)(15)
Client assets    1'821.01'936.92'138.2(6)(15)

Net new assets 5)         
    ChangeChange  Change
in % fromin % from9 monthsin % from
in CHF bn3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Net new assets(13.7)4.27.24.049.0(92)
1) Excluding amortization of acquired intangible assets and goodwill as well as exceptional items.
2) Ratio is based on a tier 1 capital of CHF 13.3 bn (30.06.02: CHF 13.9 bn; 31.12.01: CHF 15.2 bn), of which non-cumulative perpetual preferred securities is CHF 1.1 bn (30.06.02: CHF 1.0 bn; 31.12.01: CHF 1.1 bn).
3) Ratio is based on a tier 1 capital of CHF 19.7 bn (30.06.02: CHF 20.2 bn; 31.12.01: CHF 21.2 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (30.06.02: CHF 2.0 bn; 31.12.01: CHF 2.1 bn) .
4) Ratio is based on a tier 1 capital of CHF 20.2 bn (30.06.02: CHF 20.2 bn; 31.12.01: CHF 19.4 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (30.06.02: CHF 2.0 bn; 31.12.01: CHF 2.1 bn) .
5) Certain reclassifications have been made to conform to the current presentation.

Number of employees            
          Change Change
          in % from in % from
    30.09.02 30.06.02 31.12.01 30.06.02 31.12.01
Switzerland banking          21'700 21'646 21'794 0  0
 insurance          7'169 6'990 6'849 3  5
Outside Switzerland banking          26'586 26'828 28'415 (1)  (6)
 insurance 24'982 24'856 23'103 1 8
Total employees Credit Suisse Group 80'437 80'320 80'161 0 0

Share data          
        Change Change
        in % from in % from
  30.09.02 30.06.02 31.12.01 30.06.02 31.12.01
Shares issued 1'189'348'956 1'197'049'884 1'196'609'811 (1) (1)
Shares repurchased1)   0 7'730'000 7'730'000
Shares outstanding 1'189'348'956 1'189'319'884 1'188'879'811 0 0
Share price in CHF 28.90 47.25 70.80 (39) (59)
Market capitalization in CHF m 34'372 56'195 84'173 (39) (59)
Book value per share in CHF 24.71 28.04 29.92 (12) (17)

Share price                
        Change Change     Change
in % from in % from 9 months in % from
in CHF 3Q2002 2Q2002 3Q2001 2Q2002 3Q2001 2002 2001 2001
High 48.85 63.50 75.88 (23) (36) 73.60 87.00 (15)
Low 26.80 41.65 44.80 (36) (40) 26.80 44.80 (40)

Earnings per share                
        Change Change     Change
in % from in % from 9 months in % from
in CHF 3Q2002 2Q2002 3Q2001 2Q2002 3Q2001 2002 2001 2001
Basic earnings per share (1.81) (0.49) (0.25) 269 (1.98) 2.02
Basic earnings per share - operating1)   (1.47) (0.24) 0.02 (1.14) 2.81
Diluted earnings per share (1.81) (0.48) (0.25) 277 (1.98) 2.00
Diluted earnings per share - operating1)   (1.47) (0.24) 0.02 (1.13) 2.79
1) Excluding amortization of acquired intangible assets and goodwill as well as exceptional items.
 


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AN OVERVIEW OF CREDIT SUISSE GROUP

Credit Suisse Group recorded a net operating loss of CHF 1.8 billion in the third quarter of 2002, excluding the amortization of acquired intangible assets and goodwill as well as exceptional items at Credit Suisse Financial Services, and a net loss of CHF 2.1 billion. This unsatisfactory result is largely attributable to the realization of further substantial losses in the Group’s insurance business due to falling equity market values. In Private Banking, results declined versus the previous quarter mainly as a result of market conditions and seasonal weakness. Swiss Corporate & Retail Banking achieved a good performance. Credit Suisse First Boston’s results were impacted by lower revenues, higher provisions and legacy costs, partially offset by further progress in the reduction of costs. The Group is implementing measures to return to sound profitability in 2003, while preserving an adequate capital base.

In addition to seasonal weakness, the third quarter of 2002 was characterized by a further substantial deterioration in equity market conditions. Against this backdrop, Credit Suisse Group’s insurance business realized additional losses on its investment portfolio and recorded further lower equity valuations. The resulting significant net operating losses in the insurance units negatively impacted the Group’s overall performance by CHF 1.4 billion in the third quarter. At Credit Suisse First Boston, a net operating loss of CHF 426 million was recorded, due mainly to reduced revenues, higher provisions and legacy costs. After accounting for the Corporate Center, which includes a further writedown on the Group’s investment in Swiss Life of CHF 206 million, Credit Suisse Group reported a net operating loss, excluding the amortization of acquired intangible assets and goodwill as well as exceptional items at Credit Suisse Financial Services, of CHF 1.8 billion in the third quarter. This compared with a net operating loss of CHF 285 million in the previous quarter and a net operating profit of CHF 21 million in the third quarter of 2001. The Group reported a net loss of CHF 2.1 billion in the third quarter, compared with a net loss of CHF 579 million in the previous quarter and a net loss of CHF 299 million in the third quarter of 2001. The third quarter 2002 net loss includes exceptional items of CHF 119 million recognized in connection with the realignment of the European offering at Private Banking. For the first nine months of the year, the Group recorded a net operating loss of CHF 1.4 billion and a net loss of CHF 2.4 billion, versus a net operating profit of CHF 3.4 billion and a net profit of CHF 2.4 billion for the first nine months of 2001.

Equity capital
As of September 30, 2002, the Group’s consolidated BIS tier 1 ratio stood at 9.0%, down from 9.2% at the end of the second quarter. However, Credit Suisse Group continues to believe that to obtain an accurate indication of the Group’s capital situation, it is necessary to focus on the capital ratios for the Group’s individual businesses, which are well within the target ranges set by the Group and in line with industry peers: the BIS tier 1 ratio for the Group’s banking business stood at 9.4%, up from 9.3% at the end of the second quarter. The BIS tier 1 ratios for the operating entities Credit Suisse and Credit Suisse First Boston remained strong at 7.0% and 11.9%, respectively. Winterthur’s solvency margin (calculated in line with the EU directive) stood at 155%, up from 123% at the end of the second quarter.

Winterthur further reduced the equity exposure of its investment portfolio in the third quarter to mitigate the impact of international equity market volatility on its solvency capital.

Net new assets
Credit Suisse Financial Services reported net new assets of CHF 1.5 billion in the third quarter, whereby net new assets of CHF 3.4 billion in Private Banking and of CHF 0.4 billion in Life & Pensions were offset by net outflows of CHF 2.3 billion from Corporate & Retail Banking due primarily to volatility in the account balances of corporate clients. Credit Suisse First Boston reported net asset outflows of CHF 15.2 billion, attributable mainly to a CHF 12.2 billion outflow from its institutional asset management business, as well as to a CHF 3.0 billion outflow from the investment banking segment. The outflows from the institutional asset management business relate to performance issues, primarily from a single fixed income product, and the loss of private client assets in the US. For Credit Suisse Group, an overall net asset outflow of CHF 13.7 billion resulted in the third quarter, versus an inflow of CHF 4.2 billion in net new assets in the second quarter. For the first nine months of 2002, the Group reported net new assets of CHF 4.0 billion. The Group’s total assets under management stood at CHF 1,221.8 billion as of September 30, 2002, corresponding to a decline of 5.5% versus June 30, 2002.

Operating income and expenses
The Group’s operating income stood at CHF 5.7 billion in the third quarter, down 26% from the previous quarter and down 35% versus the third quarter of 2001. Credit Suisse Financial Services reported a 16% decrease in operating income to CHF 2.3 billion versus the second quarter, reflecting a 38% decline in operating income in the insurance business and a 12% decline in operating income in the banking business. In particular, Private Banking revenues were adversely impacted by the seasonally weak third quarter and negative developments on the international equity markets. At Credit Suisse First Boston, operating income was down 24% quarter-on-quarter to USD 2.6 billion (CHF 3.9 billion). This was attributable to revenue declines across all divisions, in particular in the Investment Banking division – which was impacted by reduced business volumes in line with the industry – as well as in the Fixed Income division, which recorded revenues well below previous levels.

The Group’s third quarter operating expenses decreased 19% versus the previous quarter, to CHF 5.4 billion, and were down 26% on the third quarter of 2001. Credit Suisse Financial Services recorded a 4% reduction in operating expenses in the third quarter versus the previous quarter. Strict cost control and the realization of synergies were among the factors contributing to this decrease. At Credit Suisse First Boston, third quarter operating expenses fell 18% in US dollar terms versus the second quarter and were down 29% on the corresponding period of 2001, due primarily to a decrease in incentive compensation costs, as well as headcount reductions and a drop in other operating expenses.

Valuation adjustments, provisions and losses
In the third quarter of 2002, valuation adjustments, provisions and losses rose 73% to CHF 973 million versus the previous quarter. This increase was related primarily to Credit Suisse First Boston and was mainly attributable to weakness in the large corporate credit markets and provisions on its legacy asset portfolios.

Senior management changes
As announced on September 19, 2002, the Board of Directors has appointed Walter B. Kielholz its new Chairman, effective January 1, 2003. Walter Kielholz is currently a Member of the Board of Directors of Credit Suisse Group, as well as a Member of the Board of Directors and Chief Executive Officer of Swiss Re. Oswald J. Grübel, Chief Executive Officer of Credit Suisse Financial Services, and John J. Mack, Chief Executive Officer of Credit Suisse First Boston, will become Co-Chief Executive Officers of the Group as of January 2003, in addition to their roles as CEOs of the respective business units. Lukas Mühlemann will step down as Chairman and Member of the Board of Directors and as Chief Executive Officer of Credit Suisse Group at the end of 2002.

Key priorities going forward
The new Co-CEOs are moving ahead with an accelerated agenda of measures to restore the Group’s core earnings strength in the coming quarters. Credit Suisse Financial Services will focus on strengthening its private banking franchise in terms of client solutions, innovation and profitability. Additionally, it has initiated the realignment of the European offering at Private Banking in order to substantially reduce costs. Winterthur will focus on adapting its strategy, premium structure, cost base and investment policy in line with the altered market environment, in which investment income is expected to be significantly lower than in previous years.

Credit Suisse First Boston has succeeded in preserving the strength of its core businesses, as demonstrated by its ability to maintain or improve its market share and rankings in key areas. It has initiated further cost reductions to bring the cost structure in line with current market opportunities. In the fourth quarter, the business unit has launched an additional cost reduction initiative, aimed at achieving annual savings of approximately USD 500 million (approximately CHF 770 million). Lower costs will be realized primarily via headcount reductions. Additional initiatives include the accelerated disposal of legacy asset portfolios associated with non-continuing businesses and the termination of existing incentive compensation guarantees within the investment banking business. In addition, DLJ retention awards will largely terminate in June 2003. It is anticipated that the implementation of the above cost reduction measures should enable Credit Suisse First Boston to achieve a return to profitability.

Outlook
Credit Suisse Group remains cautious in its outlook for its fourth quarter results given the continued challenging market environment. However, the Group anticipates that the fourth quarter should see a recovery in results at Winterthur, as the impact of lower equity valuations on the investment portfolio is expected to be significantly reduced. The Group expects that the measures being implemented will restore sound profitability in 2003.

Overview of business unit results            
Credit Suisse Financial ServicesCredit Suisse First BostonAdjust. incl. Corporate CenterCredit Suisse Group
in CHF m3Q20022Q20023Q20013Q20022Q20023Q20013Q20022Q20023Q20013Q20022Q20023Q2001
Operating income2'2892'7183'4983'7575'4405'676(380)(511)(454)5'6667'6478'720
Personnel expenses1'4901'4741'4722'1793'2583'72512484793'7934'8165'276
Other operating expenses8849098201'1571'1721'633(482)(329)(499)1'5591'7521'954
Operating expenses2'3742'3832'2923'3364'4305'358(358)(245)(420)5'3526'5687'230
Gross operating profit(85)3351'2064211'010318(22)(266)(34)3141'0791'490
Depreciation of non-current assets1) 289217195209185227946480592466502
Amortization of acquired intangible assets and goodwill314622308330367(2)(2)(2)337374387
Valuation adjustments, provisions and losses9195848674203411547228973562653
Profit before extraordinary items and taxes (496)(23)905(963)75(617)(129)(375)(340)(1'588)(323)(52)
Extraordinary income/(expenses), net 6216(1)26(13)(136)6313(131)1106
Taxes(692)(380)(192)2850158(3)(37)(83)(410)(417)(117)
Net profit before minority interests (1'182)(382)719(679)101(472)(268)(349)(410)(2'129)(630)(163)
Minority interests1785(3)000(36)(34)(133)(19)51(136)
Net profit (1'165)(297)716(679)101(472)(304)(383)(543)(2'148)(579)(299)
          
Reconciliation to net operating profit        
Amortization of acquired intangible assets and goodwill2) 272622308330367(2)(2)(2)333354387
Exceptional items1190000000011900
Tax impact(1)00(55)(60)(65)00(2)(56)(60)(67)
Net operating profit (1'020)(271)738(426)371(170)(306)(385)(547)(1'752)(285)21

The Group’s consolidated results are prepared in accordance with Swiss GAAP while the Group's segment reporting principles are applied for the presentation of the business unit results. For a detailed description of the Group’s segment reporting principles, please refer to our Annual Report 2001, which is available on our website www.credit-suisse.com, and to the footnotes to the business unit results. This presentation of the business unit results is provided to assist in evaluating the operating performance of the business units, which should be considered in the context of the Group's consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
1) Includes amortization of Present Value of Future Profits (PVFP) from the insurance business within Credit Suisse Financial Services.
2) Excluding a CHF 20 m write-off in 2Q2002 relating to a participation within Credit Suisse Financial Services.

Assets under management/client assets         
       ChangeChange
       in % fromin % from
in CHF bn   30.09.0230.06.0231.12.01 30.06.02 31.12.01
Credit Suisse Financial Services       
Private Banking       
Assets under management   494.5517.3546.8(4.4)(9.6)
of which discretionary   123.8128.7131.5(3.8)(5.9)
Client assets   526.7550.0583.3(4.2)(9.7)
Corporate & Retail Banking       
Assets under management   47.852.955.9(9.6)(14.5)
Client assets   63.168.973.3(8.4)(13.9)
Life & Pensions       
Assets under management (discretionary)   113.0113.5115.2(0.4)(1.9)
Client assets   113.0113.5115.2(0.4)(1.9)
Insurance       
Assets under management (discretionary)   31.129.630.55.12.0
Client assets   31.129.630.55.12.0
Credit Suisse Financial Services
Assets under management   686.4713.3748.4(3.8)(8.3)
of which discretionary   269.2273.4278.9(1.5)(3.5)
Client assets   733.9762.0802.3(3.7)(8.5)
Credit Suisse First Boston
Investment Banking       
Assets under management   35.238.541.7(8.6)(15.6)
of which Private Equity on behalf of clients (discretionary)   24.727.229.3(9.2)(15.7)
Client assets   86.8103.0121.7(15.7)(28.7)
CSFB Financial Services       
Assets under management   500.2541.4640.5(7.6)(21.9)
of which discretionary   313.8346.1393.6(9.3)(20.3)
Client assets   1'000.31'071.91'214.2(6.7)(17.6)
Credit Suisse First Boston
Assets under management   535.4579.9682.2(7.7)(21.5)
of which discretionary   346.3381.2428.2(9.2)(19.1)
Client assets   1'087.11'174.91'335.9(7.5)(18.6)
Credit Suisse Group
Assets under management   1'221.81'293.21'430.6(5.5)(14.6)
of which discretionary   615.5654.6707.1(6.0)(13.0)
Client assets   1'821.01'936.92'138.2(6.0)(14.8)

Net new assets        
    ChangeChange  Change
in % from in % from9 monthsin % from
in CHF bn3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Credit Suisse Financial Services      
Private Banking3.45.65.1(39.3)(33.3)18.227.1(32.8)
Corporate & Retail Banking(2.3)0.31.1(3.4)0.4
Life & Pensions0.41.30.1(69.2)300.04.73.246.9
Credit Suisse Financial Services1.57.26.3(79.2)(76.2)19.530.7(36.5)
Credit Suisse First Boston      
Investment Banking(3.0)1.41.9
CSFB Financial Services1) (12.2)(4.4)0.9177.3(17.4)18.3
Credit Suisse First Boston(15.2)(3.0)0.9406.7(15.5)18.3
Credit Suisse Group(13.7)4.27.24.049.0(91.8)

Certain reclassifications have been made to conform to the current presentation.

 

 

 

 

 

 

 

 

 
1) Net new discretionary assets for institutional asset management.

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REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES

Credit Suisse Financial Services recorded a net operating loss, excluding the amortization of acquired intangible assets and goodwill as well as exceptional items, of CHF 1.0 billion and a net loss of CHF 1.2 billion in the third quarter of 2002. This loss is primarily attributable to low investment income from the insurance units. In Private Banking, revenues declined versus the previous quarter mainly as a result of market conditions and seasonal weakness. The Corporate & Retail Banking segment recorded good results. Credit Suisse Financial Services is implementing measures to return to profitability, such as adapting Winterthur’s strategy, premium structure, cost base and investment policy to the altered market environment, and reducing cost levels in banking, particularly in European private banking.
 
Credit Suisse Financial Services business unit income statement         
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in CHF m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Operating income1) 2'2892'7183'498(16)(35)8'31311'800(30)
Personnel expenses 1'4431'4741'472(2)(2)4'3604'395(1)
Other operating expenses 845909820(7)32'5682'621(2)
Operating expenses 2'2882'3832'292(4)06'9287'016(1)
Gross operating profit 13351'206(100)(100)1'3854'784(71)
Depreciation of non-current assets 141174122(19)1647736331
Amortization of Present Value of Future Profits (PVFP) 11943731776320515929
Valuation adjustments, provisions and losses 919584(4)8285335(15)
Net operating profit before extraordinary items, exceptional items and taxes  (350)239274183'927(89)
Extraordinary income/(expenses), net  6216(71)0241741
Taxes2) (693)(380)(192)82261(1'193)(962)24
Net operating profit before exceptional items and minority interests (1'037)(336)741209(751)2'982
Amortization of acquired intangible assets and goodwill (27)(46)(22)(41)23(102)(64)59
Exceptional items (119)00(119)0
Tax impact 10021100
Net profit before minority interests  (1'182)(382)719209(970)2'919
Minority interests 1785(3)(80)100(91)
Net profit  (1'165)(297)716292(870)2'828
          
Reconciliation to net operating profit         
Amortization of acquired intangible assets and goodwill3) 272622423826428
Exceptional items 119001190
Tax impact (1)00(2)(1)100
Net operating profit  (1'020)(271)738276(671)2'891

For further information on the presentation of business unit results, please refer to the "Overview of business unit results" on page 4/5. Certain reclassifications have been made to conform to the current presentation. The operating basis income statement differs from the presentation of the Group's consolidated results in a) excluding acquisition-related costs of amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses and b) excluding exceptional items from personnel expenses, other operating expenses, depreciation of non-current assets and amortization of goodwill. Acquisition-related costs and exceptional items are reported separately in the income statement.









1) For the purpose of the consolidated financial statements, operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
2) Excluding tax impact on amortization of acquired intangible assets and goodwill.
3) Excluding a CHF 20 m write-off in 2Q2002 relating to a participation.

 

Credit Suisse Financial Services business unit key information         
 9 months
     3Q20022Q20023Q200120022001
Cost/income ratio (operating)1) 2)    106.1%94.1%69.0%89.1%62.5%
Cost/income ratio (operating), banking1)    69.4%64.5%64.3%63.3%60.3%
Return on average allocated capital    (38.9%)(12.7%)21.6%(10.5%)27.3%
Return on average allocated capital (operating)1)    (34.1%)(11.9%)22.3%(8.4%)27.9%
Average allocated capital in CHF m    12'16112'01613'31112'29514'244
Growth in net operating profit1)    (32.0%)(15.5%)
Growth in assets under management    (3.8%)(5.7%)(8.5%)(8.3%)(3.1%)
of which net new assets    0.2%1.0%0.8%2.6%4.2%
of which market movement and structural effects    (4.1%)(6.7%)(9.2%)(10.6%)(7.8%)
of which acquisitions/(divestitures)    0.1%(0.1%)(0.3%)0.5%
of which discretionary    (0.6%)(1.5%)(2.1%)(1.3%)n/a
          
       30.09.0230.06.0231.12.01
Assets under management in CHF bn      686.4713.3748.4
Number of employees       54'21853'81251'668
1) Excluding amortization of acquired intangible assets and goodwill as well as exceptional items.
2) Excluding amortization of PVFP from the insurance business within Credit Suisse Financial Services.


Credit Suisse Financial Services reported a net operating loss, excluding the amortization of acquired intangible assets and goodwill as well as exceptional items, of CHF 1.0 billion in the third quarter of 2002. This decline of CHF 1.8 billion versus the third quarter of the previous year is attributable in particular to low investment income from the insurance units and to reduced revenues in the Private Banking segment. The marked decrease in investment income reported by the insurance business was a result of the sharp deterioration in the equity markets during the first nine months of the year, represented by a 25% drop in the Swiss market index. After the reduction of the equity exposure of the investment portfolio and the income statement recognition of lower equity valuations, an investment income of CHF 1.0 billion was recorded, compared to CHF 5.8 billion for the first nine months of 2001. The corresponding impact of the lower investment income on net operating profit for the first nine months of 2002 is approximately CHF 3.3 billion (CHF 1.8 billion for Life & Pensions and CHF 1.5 billion for Insurance). In the third quarter, the net operating result was affected by the fact that losses were concentrated in countries where the investment risk is mainly borne by the company and not by the policyholders. In addition, exceptional items of CHF 119 million were recognized in the third quarter of 2002 in connection with the focusing of the European initiative on private banking clients, to cover restructuring costs.

Credit Suisse Financial Services recorded a net loss of CHF 1.2 billion in the third quarter of 2002. The business unit’s operating income fell 16% in the third quarter (banking business: down 12%; insurance business: down 38%) compared with the second quarter and operating expenses decreased 4% quarter-on-quarter. In the first nine months of the year, operating income declined 30% (banking business: down 7%; insurance business down 67%) and operating expenses fell 1% versus the corresponding 2001 period.

As a result of financial market weakness, assets under management declined 3.8% to CHF 686.4 billion in the third quarter and were down 8.3% versus end-2001. Net new assets totaled CHF 1.5 billion in the third quarter versus CHF 7.2 billion in the second quarter, and amounted to CHF 19.5 billion for the first nine months of the year (first nine months 2001: CHF 30.7 billion), corresponding to 3.5% of assets under management on an annualized basis.

As announced on October 2, 2002, Credit Suisse Group strengthened Winterthur’s capital base with CHF 2.0 billion in the third quarter. As of September 30, 2002, Winterthur’s solvency margin (calculated in line with the EU directive) stood at 155%, up from 123% at the end of the second quarter. In order to protect Winterthur’s capital base going forward, the equity exposure of the investment portfolio was reduced from 18% at the start of 2002 to 8% (6% excluding the market value of hedges and equity participations) at the end of the third quarter.

 

Overview of business unit Credit Suisse Financial Services      
      Credit
   Corp. &  Suisse
  PrivateRetailLife & Financial
3Q2002, in CHF m BankingBankingPensionsInsuranceServices
Operating income1) 1'440615(168)4022'289
Personnel expenses 5762372523781'443
Other operating expenses 352152140201845
Operating expenses 9283893925792'288
Gross operating profit 512226(560)(177)1
Depreciation of non-current assets 8227725141
Amortization of Present Value of Future Profits (PVFP) 1181119
Valuation adjustments, provisions and losses 217091
Net operating profit before extraordinary items, exceptional items and taxes  409129(685)(203)(350)
Extraordinary income/(expenses), net  24006
Taxes2) (108)(31)(396)(158)(693)
Net operating profit before exceptional items and minority interests 303102(1'081)(361)(1'037)
Amortization of acquired intangible assets and goodwill     (27)
Exceptional items     (119)
Tax impact     1
Net profit before minority interests      (1'182)
Minority interests     17
Net profit      (1'165)
       
Reconciliation to net operating profit      
Amortization of acquired intangible assets and goodwill     27
Exceptional items     119
Tax impact     (1)
Net operating profit      (1'020)
       
Average allocated capital 3'5993'8934'669 12'161

For further information on the presentation of business unit results, please refer to the "Overview of business unit results" on page 4/5. The operating basis income statement differs from the presentation of the Group's consolidated results in a) excluding acquisition-related costs of amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses and b) excluding exceptional items from personnel expenses, other operating expenses, depreciation of non-current assets and amortization of goodwill. Acquisition-related costs and exceptional items are reported separately in the income statement.






1) Operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
2) Excluding tax impact on amortization of acquired intangible assets and goodwill.
       
   



Private Banking
In the third quarter of 2002, the Private Banking segment reported a net operating profit before exceptional items and minority interests of CHF 303 million, down 38% versus the previous quarter. Operating income fell 16% versus the second quarter due to seasonal weakness, investor passivity and significantly lower revenues from the sale of structured products. Operating expenses fell 8% quarter-on-quarter due to reduced bonus accruals on account of the weaker results, as well as to the implementation of cost reduction measures and the realization of synergies. In the first nine months of the year, operating expenses decreased 4% versus the corresponding period of the previous year. Net new assets of CHF 3.4 billion were recorded in the third quarter, corresponding to 2.6% of assets under management on an annualized basis. The segment has recorded a decrease in assets under management of 9.6% to CHF 494.5 billion versus end-2001, due to market performance and foreign exchange impacts.

A net operating profit before exceptional items and minority interests of CHF 1.4 billion was recorded in the first nine months of the year. This represented a 17% decrease versus the first nine months of 2001. The net margin stood at 35.7 bp in the first nine months of 2002, compared with 41.9 bp in the corresponding 2001 period. Net new assets of CHF 18.2 billion were recorded in this period, corresponding to 4.4% of assets under management on an annualized basis, versus CHF 27.1 billion in the first nine months of the previous year.

The European initiative was realigned during the third quarter to focus on private banking clients and thus concentrate on core competencies, as well as to reduce the high cost rate. While the business unit is providing top-tier private banking services in Italy, Spain, Germany, France and the UK, the market environment no longer supports the expansion of distribution networks targeting affluent clients in these markets. Exceptional items of CHF 119 million were recorded in the third quarter to cover restructuring costs. In Asia, the Middle East and Latin America, the business unit achieved above-average growth.


Private Banking income statement         
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in CHF m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Net interest income 400437458(8)(13)1'2771'476(13)
Net commission and service fee income  9551'0961'075(13)(11)3'2843'459(5)
Net trading income 72150139(52)(48)377487(23)
Other ordinary income  132710(52)304688(48)
Operating income 1'4401'7101'682(16)(14)4'9845'510(10)
Personnel expenses 576628654(8)(12)1'8281'932(5)
Other operating expenses 352386346(9)21'0831'102(2)
Operating expenses 9281'0141'000(8)(7)2'9113'034(4)
Gross operating profit 512696682(26)(25)2'0732'476(16)
Depreciation of non-current assets 825648467119111665
Valuation adjustments, provisions and losses1) 212914(28)5064116(45)
Net operating profit before extraordinary items, exceptional items and taxes  409611620(33)(34)1'8182'244(19)
Extraordinary income/(expenses), net  2212(90)0214425
Taxes (108)(146)(121)(26)(11)(416)(526)(21)
Net operating profit before exceptional items and minority interests 303486501(38)(40)1'4231'722(17)
          
Increased/(decreased) credit-related valuation adjustments1) 16(12)(10)  6(19) 

Certain reclassifications have been made to conform to the current presentation. The presentation of segment results differs from the presentation of the Group's consolidated results in a) excluding acquisition-related costs of amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses and b) excluding exceptional items from personnel expenses, other operating expenses, depreciation of non-current assets and amortization of goodwill. Acquisition-related costs, exceptional items and minority interests are reported separately at the business unit level only.









1) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions.
   


Private Banking balance sheet information         
        ChangeChange
        in % fromin % from
in CHF m    30.09.0230.06.0231.12.01 30.06.02 31.12.01
Total assets    174'881164'221170'36463
Due from customers    38'35631'91431'4102022
Mortgages    44'12642'92642'00835


Private Banking key information         
 9 months
     3Q20022Q20023Q200120022001
Cost/income ratio (operating)1)    70.1%62.6%62.3%62.2%57.2%
Average allocated capital in CHF m    3'5993'7083'3533'5413'260
Pre-tax margin (operating)1)    28.5%37.0%37.0%36.9%40.8%
Fee income/operating income     66.3%64.1%63.9%65.9%62.8%
Net new assets in CHF bn    3.45.65.118.227.1
Growth in assets under management    (4.4%)(7.2%)(9.9%)(9.6%)(4.1%)
of which net new assets    0.7%1.0%0.9%3.3%5.0%
of which market movement and structural effects    (5.1%)(8.2%)(11.0%)(12.9%)(10.0%)
of which acquisitions/(divestitures)    0.2%0.9%
Net operating profit before exceptional items and minority interests/average AuM1)    24.0 bp36.0 bp36.9 bp35.7 bp41.9 bp
          
       30.09.0230.06.0231.12.01
Assets under management in CHF bn      494.5517.3546.8
Number of employees       15'24915'17414'818
1) Excluding amortization of acquired intangible assets and goodwill as well as exceptional items.



Corporate & Retail Banking
The Corporate & Retail Banking segment posted a net operating profit before minority interests of CHF 102 million in the third quarter, up 7% on the previous quarter and up 29% on the third quarter of 2001. The growth in net operating profit versus the previous quarter is primarily attributable to a 7% decrease in operating expenses. Operating income declined 2% quarter-on-quarter. Corporate & Retail Banking’s net interest margin increased to 238 bp, up from 231 bp in the second quarter. In the third quarter, assets under management declined by CHF 5.1 billion to CHF 47.8 billion, versus the previous quarter. The CHF 2.3 billion net asset outflow is mainly attributable to volatility in the account balances of corporate clients, of which CHF 1.1 billion resulted from the conversion of time deposits into sight deposits, which are not included in assets under management.

A net operating profit before minority interests of CHF 317 million was reported in the first nine months of the year, corresponding to an increase of 22% on the first nine months of 2001. The operating cost/income ratio stood at 66.0%, compared with 69.9% in the corresponding period of the previous year. The return on average allocated capital increased 1.8 percentage points compared with the first nine months of 2001, to 10.7%.

Corporate & Retail Banking recorded a 1% increase in mortgage volumes in the third quarter of 2002. The functionality of the segment’s Internet offering was extended to include bonds, options, futures and market-neutral products from Private Banking in the Portfolio Tracker and Watch List.  

The overall quality of the credit portfolio was maintained at the same level as in the previous quarter and, in particular, the proportion of longstanding non-performing loans was further reduced in the third quarter of 2002. The provisions recorded were slightly above the statistical valuation adjustments due in particular to additional provisions on account of the anticipated liquidation of certain positions.


Corporate & Retail Banking income statement         
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in CHF m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Net interest income 423405412431'2541'2451
Net commission and service fee income  12612891(2)383763537
Net trading income 667459(11)121931902
Other ordinary income  0226372737
Operating income 615629568(2)81'8601'8152
Personnel expenses 237245257(3)(8)705765(8)
Other operating expenses 152175121(13)264594590
Operating expenses 389420378(7)31'1641'224(5)
Gross operating profit 22620919081969659118
Depreciation of non-current assets 2719214229644542
Valuation adjustments, provisions and losses1) 706670602212191
Net operating profit before extraordinary items and taxes  1291249943041132726
Extraordinary income/(expenses), net  4040313(77)
Taxes2) (31)(29)(24)729(97)(80)21
Net operating profit before minority interests 102957972931726022
          
Increased/(decreased) credit-related valuation adjustments1) 152026  2931 

Certain reclassifications have been made to conform to the current presentation. The presentation of segment results differs from the presentation of the Group's consolidated results in excluding acquisition-related costs of amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses. Acquisition-related costs and minority interests are reported separately at the business unit level only.









1) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions.
2) Excluding tax impact on amortization of acquired intangible assets and goodwill.


Corporate & Retail Banking balance sheet information         
        ChangeChange
        in % fromin % from
in CHF m    30.09.0230.06.0231.12.01 30.06.02 31.12.01
Total assets    72'65869'74772'37240
Due from customers    27'48328'63528'889(4)(5)
Mortgages    35'59235'31634'27914
Due to customers in savings and investment deposits    17'58617'64917'63100
Due to customers, other    26'68626'97229'218(1)(9)


Corporate & Retail Banking key information         
 9 months
     3Q20022Q20023Q200120022001
Cost/income ratio (operating)1)    67.6%69.8%70.2%66.0%69.9%
Return on average allocated capital (operating)1)    10.5%9.5%8.0%10.7%8.9%
Average allocated capital in CHF m    3'8933'9913'9643'9333'905
Pre-tax margin (operating)1)    21.6%19.7%18.1%22.3%18.7%
Personnel expenses/operating income    38.5%39.0%45.2%37.9%42.1%
Net interest margin    238 bp231 bp224 bp234 bp226 bp
Loan growth    (1.4%)(2.0%)(4.2%)(0.1%)(1.6%)
Net new assets in CHF bn    (2.3)0.31.1(3.4)0.4
          
       30.09.0230.06.0231.12.01
Deposit/loan ratio       70.2%69.8%74.2%
Assets under management in CHF bn      47.852.955.9
Number of employees       6'8186'7926'898
Number of branches       223224227
1) Excluding amortization of acquired intangible assets and goodwill.



Life & Pensions
In the first nine months of 2002, the Life & Pensions segment recorded a strong increase in gross written premiums of 18% versus the corresponding period of 2001, 17% adjusted for acquisitions, divestitures and exchange rate impacts. The units in Switzerland, the UK, Italy and Belgium were the main contributors to this significant growth. Overall, the shift in the portfolio mix towards single premium and unit-linked business compared with 2001 continued.

The expense ratio for the first nine months stood at 9.3%, excluding write-downs of deferred acquisition costs of CHF 235 million, which were recognized as a result of lower investment return expectations in the long term. After taking account of these write-downs, the expense ratio stood at 10.9%, and was thus still below the expense ratio of 11.5% in the corresponding period of 2001, reflecting strict cost management. Net new assets amounted to CHF 4.7 billion for the first nine months, versus CHF 3.2 billion in the corresponding period of 2001.

As a result of low investment income, Life & Pensions recorded a net operating loss before minority interests of CHF 1.5 billion in the first nine months of the year. This was attributable to the income statement recognition of lower equity valuations and the realization of losses when reducing the equity exposure of the investment portfolio, which had a CHF 3.0 billion impact on investment income and a CHF 1.8 billion impact on net operating profit before minority interests compared with the first nine months of 2001.

In the third quarter of 2002, Life & Pensions continued to pursue its strategy to diversify its product portfolio for private clients in Europe and thereby increase synergies with Private Banking.

During the third quarter of 2002, Life & Pensions accelerated its cost reduction program with the aim of achieving further substantial savings in administration costs in 2003 despite additional growth. Measures include realigning the product portfolio to increase the offering of non-traditional capital-light products, and a greater focus on key markets. Further targeted capital management measures are being implemented to reduce capital requirements and improve profitability. The aim is for Life & Pensions to be able to operate profitably from current investment income only.


Life & Pensions income statement         
          
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in CHF m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Gross premiums written 4'5433'4963'138304514'80112'51418
Reinsurance ceded  171(101)(91)(26)(149)(83)
Net premiums written 4'7143'3953'047395514'77512'36519
Change in provision for unearned premiums  8(2)1(33)(10)230
Net premiums earned 4'7223'3933'048395514'74212'35519
Death and other benefits incurred (2'672)(2'834)(2'560)(6)4(9'319)(8'933)4
Change in provision for future policyholder benefits (technical) (2'506)(1'071)(766)134227(6'866)(4'513)52
Change in provision for future policyholder benefits (separate account)1) 1'1046871'31961(16)1'6501'767(7)
Dividends to policyholders incurred 207678(114)(69)1'020(745)
Operating expenses, net (including commissions paid) (691)(495)(463)4049(1'610)(1'416)14
Investment income general account 3094943(67)1'1054'103(73)
Investment income separate account1) (1'104)(687)(1'319)61(16)(1'650)(1'767)(7)
Interest received on deposits and bank accounts 192725(30)(24)696211
Interest on bonuses credited to policyholders (29)(47)(27)(38)7(105)(99)6
Other interest paid (49)(23)(35)11340(122)(134)(9)
Other income/(expenses) (including foreign exchange impact) 58711(94)(55)98(55)
Net operating profit before taxes and minority interests (685)(281)62144(988)625
Taxes (396)(146)4171(505)(125)304
Net operating profit before minority interests (1'081)(427)66153(1'493)500

The presentation of segment results differs from the presentation of the Group's consolidated results as it reflects the way the insurance business is managed, which is in line with peers in the insurance industry. Amortization of goodwill is excluded from net operating expenses. Acquisition-related costs and minority interests are reported separately at the business unit level only.









1) This represents the market impact for separate account (or unit-linked) business, where the investment risk is borne by the policyholder.


Life & Pensions key information         
 9 months
     3Q20022Q20023Q200120022001
Expense ratio1)    14.6%14.6%15.2%10.9%11.5%
Growth in gross premiums written    44.8%9.7%17.7%18.3%11.5%
Return on invested assets (excluding separate account business)         
Current income    3.6%4.5%3.9%4.0%4.4%
Realized gains/losses and other income/expenses    (2.4%)(4.4%)(2.5%)1.2%
Total return on invested assets2)    1.2%0.1%3.9%1.5%5.6%
Net new assets in CHF bn3)    0.41.30.14.73.2
Total sales in CHF m4)    5'2404'4844'41117'50716'333
          
       30.09.0230.06.0231.12.01
Assets under management in CHF bn5)      113.0113.5115.2
Technical provisions in CHF m      108'098107'226108'326
Number of employees       7'9277'6347'755
1) Operating expenses/net premiums earned.
2) Total investment return on invested assets includes depreciation on real estate and investment expenses as well as investment income and realized gains and losses.
3) Based on change in technical provisions for traditional business, adjusted for technical interests, net inflow of separate account business and change in off-balance sheet business such as funds.
4) Includes gross premiums written and off-balance sheet sales.
5) Based on savings-related provisions for policyholders plus off-balance sheet assets.



Insurance
The Insurance segment increased its net premiums earned by 4% in the first nine months of 2002, compared with the same period of 2001, to CHF 11.7 billion. Adjusted for acquisitions, divestitures and exchange rate impacts, the segment reported healthy growth of approximately 8% due, in particular, to considerable increases in premium rates and solid growth rates in the UK, Spain, Switzerland and North America.

The combined ratio improved by 2.9 percentage points to 103.5% in the first nine months of 2002. This improvement is attributable in particular to significant progress in motor insurance, resulting in a 6 percentage point decrease in the combined ratio to just over 100%.

In the first nine months of 2002, Winterthur Insurance’s claims ratio improved 2.7 percentage points to 74.7% versus the corresponding 2001 period. Significant progress was achieved in North America, Spain and the UK. Claims ratios in Switzerland and Germany deteriorated slightly in 2002 as a result of weather-related claims. The overall expense ratio improved by 0.2 percentage points to 28.8% compared with the first nine months of 2001.

The combined ratio continued to show a clear improvement on a quarterly basis, reflecting the positive development of both the claims and expense ratios. In the third quarter of 2002, the combined ratio stood at 102.8%, versus 103.7% in the previous quarter and 103.8% in the third quarter of 2001.

Despite a further improvement to its underwriting result of CHF 568 million versus the previous year, the Insurance segment reported a net operating loss before minority interests of CHF 998 million in the first nine months of 2002, as a result of lower investment income due to the income statement recognition of lower equity valuations and the realization of losses when further reducing the equity exposure of the investment portfolio. The impact on net operating profit before minority interests as a result of lower investment income was approximately CHF 1.5 billion compared to the first nine months of 2001.

Strict cost management led to a reduction in administration costs versus the previous quarter. Insurance has continued to implement further measures to improve underwriting results and to increase earnings strength, including a further significant reduction in administration costs; ongoing rate increases across lines of business and markets; continued improvements to claims management procedures and selective underwriting. The aim is for the Insurance segment to be able to operate profitably from current investment income only.


Insurance income statement        
    ChangeChange  Change
in % fromin % from9 monthsin % from
in CHF m3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Gross premiums written3'7554'1223'614(9)414'54514'727(1)
Reinsurance ceded (232)(204)(317)14(27)(851)(1'363)(38)
Net premiums written3'5233'9183'297(10)713'69413'3642
Change in provision for unearned premiums and in provision for future policy benefits (health) 414654111(2'023)(2'152)(6)
Net premiums earned3'9373'9833'708(1)611'67111'2124
Claims and annuities incurred, net(2'920)(2'976)(2'817)(2)4(8'715)(8'672)0
Dividends to policyholders incurred, net(53)117(78)(32)(3)(261)(99)
Operating expenses, net (including commissions paid)(1'126)(1'157)(1'033)(3)9(3'360)(3'254)3
Underwriting result, net(162)(33)(220)391(26)(407)(975)(58)
Net investment income110(266)360(69)(69)1'714
Interest received on deposits and bank accounts479(43)(56)2733(18)
Interest paid(40)(35)(25)1460(94)(92)2
Other income/(expenses) (including foreign exchange impact)(115)(104)2211(280)51
Net operating profit before taxes and minority interests(203)(431)146(53)(823)731
Taxes(158)(59)(51)168210(175)(231)(24)
Net operating profit before minority interests(361)(490)95(26)(998)500

The presentation of segment results differs from the presentation of the Group's consolidated results as it reflects the way the insurance business is managed, which is in line with peers in the insurance industry. Amortization of goodwill is excluded from net operating expenses. Acquisition-related costs and minority interests are reported separately at the business unit level only.

 

 

 

 

 

 

 

 

 

Insurance key information         
9 months
    3Q20022Q20023Q200120022001
Combined ratio (excluding dividends to policyholders)   102.8%103.7%103.8%103.5%106.4%
Claims ratio   74.2%74.7%76.0%74.7%77.4%
Expense ratio   28.6%29.0%27.8%28.8%29.0%
Return on invested assets       
Current income   4.1%5.0%3.9%4.3%4.8%
Realized gains/losses and other income/expenses   (2.5%)(8.8%)0.6%(4.6%)2.4%
Total return on invested assets1)    1.6%(3.8%)4.7%(0.3%)7.2%
         
      30.09.0230.06.0231.12.01
Assets under management in CHF bn     31.129.630.5
Technical provisions in CHF m     29'70629'72927'738
Number of employees      24'22424'21222'197
1) Total investment return on invested assets includes depreciation on real estate and investment expenses as well as investment income and realized gains and losses.

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REVIEW OF BUSINESS UNITS | CREDIT SUISSE FIRST BOSTON

Credit Suisse First Boston posted a third quarter 2002 net operating loss of USD 255 million (CHF 426 million), excluding the amortization of acquired intangible assets and goodwill, compared with a net operating profit of USD 229 million (CHF 371 million) in the second quarter of 2002 and a net operating loss of USD 103 million (CHF 170 million) in the third quarter of 2001. Market conditions, particularly for equity and banking-related businesses, resulted in lower revenues. The cost reduction program initiated in 2001 generated another quarter of decreased expenses: these were down USD 2.4 billion (CHF 4.8 billion) in the first nine months of 2002, compared with the same period in 2001.

For the third quarter of 2002, Credit Suisse First Boston reported a net loss of USD 425 million (CHF 679 million), compared with a net profit of USD 61 million (CHF 101 million) in the preceding quarter and a net loss of USD 281 million (CHF 472 million) in the third quarter of 2001.

Operating income in the third quarter decreased 24% from the second quarter to USD 2.6 billion (CHF 3.9 billion), reflecting declines across all divisions. The Investment Banking division, which was unfavorably impacted by reduced volumes, experienced the most significant decline, followed by the Fixed Income business within the Securities division. Third quarter 2002 operating income decreased 24% compared with the third quarter of 2001, reflecting declines in the Fixed Income business, principally due to lower revenues in the developed markets rates business.

As a result of Credit Suisse First Boston’s commitment to cost reduction, third quarter 2002 operating expenses were USD 2.2 billion (CHF 3.2 billion), reflecting a 29% decline compared with the same period in 2001. Headcount at the end of September 2002 was down 16% from a year earlier. Compared with the same period in 2001, third quarter personnel expenses, including incentive compensation, and other operating expenses decreased 34% and 20%, respectively, in part due to the sale of non-core operations. Compared with the second quarter of 2002, third quarter operating expenses decreased 18%, principally due to a reduction in incentive compensation costs. In October 2002, Credit Suisse First Boston announced a further cost reduction initiative with the goal of reducing annual operating expenses by approximately USD 500 million (approximately CHF 770 million). The majority of the cost savings are expected from headcount reductions of 5% to 7%. Such reductions are intended to enable the business unit to adapt to the current market conditions. Any costs associated with the implementation of this initiative will be reflected in the fourth quarter.

Assets under management, including private equity, totaled USD 359.2 billion (CHF 535.4 billion) as of September 30, 2002, down 7.7% on a US dollar basis from June 30, 2002, due to unfavorable market performance and net asset outflows. Discretionary assets under management as of September 30, 2002, were USD 232.3 billion (CHF 346.3 billion), a 9.2% decrease from June 30, 2002, on a US dollar basis. Advisory assets under management as of September 30, 2002, were USD 126.9 billion (CHF 189.1 billion), down 4.8% on a US dollar basis from June 30, 2002.

Credit Suisse First Boston has put in place a number of measures intended to return the business to profitability in the current market environment. These measures include bringing down costs in line with market conditions; the resolution of various legacy asset portfolios to largely eliminate their impact on future earnings; further reducing the amount of guaranteed compensation going into 2003; and completing the amortization of the DLJ retention awards, which will largely terminate in June 2003. The business unit’s key priority is to focus on its clients in order to preserve and grow its strong core franchise, which is evidenced by its primary and secondary market shares in all its core lines of business.

 

Credit Suisse First Boston business unit income statement         
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in USD m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Operating income 2'6383'4933'483(24)(24)9'40812'191(23)
Personnel expenses 1'3941'9212'104(27)(34)5'1237'001(27)
Other operating expenses 7757349716(20)2'2842'836(19)
Operating expenses 2'1692'6553'075(18)(29)7'4079'837(25)
Gross operating profit 469838408(44)152'0012'354(15)
Depreciation of non-current assets 139116136202378405(7)
Valuation adjustments, provisions and losses1) 5602602021151771'022435135
Net operating profit before extraordinary items, acquisition-related costs and taxes  (230)462706011'514(60)
Extraordinary income/(expenses), net  016(8)16(10)
Taxes2) 84(111)(17)(108)(365)(70)
Net operating profit before acquisition-related costs (146)367455091'139(55)
Acquisition interest (68)(99)(106)(31)(36)(266)(389)(32)
Amortization of retention payments (100)(112)(113)(11)(12)(319)(352)(9)
Amortization of acquired intangible assets and goodwill (207)(206)(216)0(4)(626)(640)(2)
Tax impact 96111109(14)(12)319360(11)
Net profit  (425)61(281)51(383)118
          
Reconciliation to net operating profit         
Amortization of acquired intangible assets and goodwill 2072062160(4)626640(2)
Tax impact (37)(38)(38)(3)(3)(114)(114)0
Net operating profit  (255)229(103)148129644(80)

See page 18 for footnotes.










Credit Suisse First Boston business unit income statement         
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in CHF m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Operating income 3'8565'5985'853(31)(34)14'95920'481(27)
Personnel expenses 2'0313'0783'536(34)(43)8'14611'762(31)
Other operating expenses 1'1571'1721'633(1)(29)3'6314'765(24)
Operating expenses 3'1884'2505'169(25)(38)11'77716'527(29)
Gross operating profit 6681'348684(50)(2)3'1823'954(20)
Depreciation of non-current assets 20918522713(8)601681(12)
Valuation adjustments, provisions and losses1) 8674203411061541'625731122
Net operating profit before extraordinary items, acquisition-related costs and taxes  (408)7431169562'542(62)
Extraordinary income/(expenses), net  (1)26(13)(92)25(15)
Taxes2) 143(178)(27)(172)(614)(72)
Net operating profit before acquisition-related costs (266)591768091'913(58)
Acquisition interest (99)(158)(177)(37)(44)(424)(653)(35)
Amortization of retention payments (148)(180)(189)(18)(22)(507)(592)(14)
Amortization of acquired intangible assets and goodwill (308)(330)(367)(7)(16)(995)(1'076)(8)
Tax impact 142178185(20)(23)507605(16)
Net profit  (679)101(472)44(610)197
          
Reconciliation to net operating profit         
Amortization of acquired intangible assets and goodwill 308330367(7)(16)9951'076(8)
Tax impact (55)(60)(65)(8)(15)(181)(192)(6)
Net operating profit  (426)371(170)1512041'081(81)

For further information on the presentation of business unit results, please refer to the "Overview of business unit results" on page 4/5. Certain reclassifications have been made to conform to the current presentation. The operating basis income statement differs from the presentation of the Group's consolidated results in a) including brokerage, execution and clearing expenses as part of other operating expenses in line with certain US competitors, rather than netted against operating income, b) reporting contractor costs as part of other operating expenses instead of personnel expenses, c) excluding acquisition-related costs of acquisition interest from operating income, amortization of retention payments from personnel expenses and amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses and d) deducting expenses related to certain redeemable preferred securities classified as minority interests from operating income. Acquisition-related costs are reported separately in the income statement.









1) The amount in 3Q2001 includes valuation adjustments taken at Group level of CHF 82 m (USD 49 m), resulting from the difference between the statistical and the actual credit provisions (9 months 2001: CHF 82 m (USD 49 m)). As of 01.01.02, no such adjustments are recorded within Credit Suisse First Boston and the amounts reported in 2002 reflect actual credit provision.
2) Excluding tax impact on acquisition-related costs.


Credit Suisse First Boston business unit key information              
  9 months
based on CHF amounts       3Q2002 2Q2002 3Q2001 2002 2001
Cost/income ratio (operating)1) 2) 3)       88.1% 79.2% 92.2% 82.7% 84.0%
Return on average allocated capital       (18.8%) 2.7% (11.5%) (5.5%) 1.6%
Return on average allocated capital (operating)3)       (11.8%) 9.9% (4.1%) 1.9% 9.0%
Return on average allocated capital (operating, excluding amortization of retention payments, net of tax)2) 3)       (9.2%) 13.1% (1.1%) 4.8% 12.2%
Average allocated capital in CHF m       14'437 14'958 16'440 14'675 16'032
Pre-tax margin       (25.0%) 1.8% (10.8%) (6.3%) 1.0%
Pre-tax margin (operating)3)       (17.0%) 7.7% (4.5%) 0.3% 6.3%
Pre-tax margin (operating, excluding acquisition interest and amortization of retention payments)1) 2) 3)       (10.6%) 13.7% 1.8% 6.6% 12.3%
Personnel expenses/operating income1) 2)       52.7% 55.0% 60.4% 54.5% 57.4%
              
          30.09.02 30.06.02 31.12.01
Number of employees          24'961 25'265 27'302
1) Excluding acquisition interest.
2) Excluding amortization of retention payments.
3) Excluding amortization of acquired intangible assets and goodwill.


Investment Banking segment
The Investment Banking segment reported third quarter operating income of USD 2.1 billion (CHF 3.1 billion), down 27% compared with the second quarter of 2002, reflecting declines in all divisions, and down 27% compared with the third quarter of 2001. As a result of cost reduction measures, third quarter operating expenses of USD 1.8 billion (CHF 2.6 billion) were down 33% compared with the third quarter of 2001 and down 21% compared with the previous quarter.

The trend in corporate credits remained unfavorable. Third quarter credit provisions of USD 403 million (CHF 630 million) related to commercial lending. Credit provisions of USD 49 million (CHF 72 million), which related to non-continuing real estate lending activity, declined significantly compared with the second quarter of 2002. Compared with the previous quarter, non-performing counterparty exposure increased USD 507 million (CHF 756 million) to USD 2.2 billion (CHF 3.2 billion), with two counterparties accounting for USD 456 million (CHF 680 million) of this quarter-on-quarter increase. Impaired assets increased USD 462 million (CHF 689 million) to USD 3.3 billion (CHF 4.9 billion). Separately, the third quarter of 2002 includes a USD 54 million (CHF 86 million) provision related to excess office facilities .

Fixed Income operating income for the third quarter of 2002 was down 13% compared with the second quarter, to USD 1.1 billion (CHF 1.6 billion). The decline was primarily attributable to the developed credit products business, which experienced a decrease in corporate bond prices with widening credit spreads and reduced liquidity, resulting in a significant decline in principal trading results. Despite the decline, Credit Suisse First Boston was ranked number one globally in asset-backed securitizations, with a 12% market share for the first nine months of the year. Operating income from the leveraged and bank finance business also declined due to decreased new issuances and deteriorating markets; however, Credit Suisse First Boston continued to rank number one in high-yield new issuances, with a market share of 17% for the first nine months of the year. Operating income from the emerging markets business increased compared with the prior quarter, primarily benefiting from the division’s operations in Brazil, although net exposure there was reduced. Credit Suisse First Boston improved its North American fixed income research position and was ranked second. Compared with the same period a year ago, third quarter 2002 operating income was down 34%, most significantly in the interest rate products business. This business includes government bonds, mortgage bond options and non-emerging markets interest rate derivatives, and operated in a more favorable environment of rate reductions during the third quarter of 2001 .

Equity operating income decreased 6% compared with the second quarter of 2002, to USD 718 million (CHF 1.1 billion). The decline was primarily related to reduced volumes in US new issuance and cash customer businesses. The US equity market remained challenging, as evidenced by the double-digit negative percentage declines posted by the S&P 500 and the NASDAQ Composite in the third quarter. Despite the difficult environment, Credit Suisse First Boston maintained or improved its market shares and rankings. It ranked fourth in global equity new issues and second in European and non-Japan Asia research, as well as first in Latin America research. The decline in third quarter operating income was partially offset by an increase in the derivatives business, particularly in index arbitrage. Compared with the third quarter of 2001, Equity operating income increased 8% in the third quarter of 2002, with the Latin America business significantly improved.

The   Investment Banking division’s third quarter 2002 operating income, which includes private equity, decreased 44% compared with the preceding quarter to USD 485 million (CHF 693 million). The decrease was spread broadly across most business lines within the division; however, fees from merger and acquisition activity (M&A) and equity new issuances were affected most significantly. Over the past year, the value of worldwide merger transactions fell 36%. Third quarter 2002 underwriting fees for the industry were down 45% from the previous quarter, and global underwriting volume fell nearly 25% from the second quarter. In total, all US issuers filed only seven IPOs during the quarter, the lowest number since 1980. Investment Banking’s operating income from private equity also decreased, principally due to larger write-downs recorded in the third quarter compared with the second quarter.

For the third quarter of 2002, operating income decreased 19% compared with the same period in 2001 as a result of reduced M&A fee income, partially offset by better private equity results. For the first nine months of 2002, Credit Suisse First Boston was ranked second in global M&A in terms of dollar volume of announced transactions, compared with a ranking of third in 2001 and first at mid-2002.

Private equity net gains (realized gains adjusted for unrealized gains and unrealized losses) were USD 12 million (CHF 14 million) in the third quarter, compared with net gains of USD 93 million (CHF 152 million) in the second quarter of 2002 and net losses of USD 99 million (CHF 167 million) in the third quarter of 2001. These amounts include gains from the sale of an investment in Swiss Re of USD 114 million (CHF 182 million) in the second quarter and USD 96 million (CHF 141 million) in the third quarter of 2002. The remaining stake in Swiss Re was sold in the fourth quarter of 2002. Management and performance fees were USD 56 million (CHF 83 million) in the third quarter, USD 57 million (CHF 91 million) in the previous quarter and USD 77 million (CHF 130 million) in the third quarter of 2001. The book value of the private equity investments was USD 1.9 billion (CHF 2.8 billion) and fair value was USD 2.0 billion (CHF 2.9 billion) as of September 30, 2002. As announced earlier in the year, Credit Suisse First Boston is exploring the sale of certain private equity investments, including investments in mature third-party leveraged buyout funds. The aggregate amount of losses reported against operating income for these private equity investments, which are included above, totaled USD 70 million (CHF 107 million) for the third quarter and USD 152 million (CHF 242 million) for the first nine months of 2002.

An operating loss of USD 169 million (CHF 268 million) for the third quarter was reported in “Other” within the Investment Banking segment, compared with gains in the second quarter of 2002 and third quarter of 2001, due to losses generated from the non-continuing real estate and distressed asset portfolios. Real estate-related assets that are under contract for sale were reflected at USD 483 million (CHF 719 million) in the September 30, 2002, balance sheet. Excluding the assets under contract for sale, the net exposure – including unfunded commitments – of the non-continuing real estate portfolio was USD 1.6 billion (CHF 2.4 billion) as of September 30, 2002. This is down from USD 2.2 billion (CHF 3.3 billion) as of June 30, 2002. As of September 30, 2002, the amount of impaired assets in the non-continuing real estate portfolio totaled USD 833 million (CHF 1.2 billion) after write-downs and provisions, compared with USD 1.0 billion (CHF 1.5 billion) as of June 30, 2002. As of September 30, 2002, the carrying amount of distressed portfolio assets totaled USD 626 million (CHF 934 million) compared with USD 849 million (CHF 1.3 billion) as of June 30, 2002 and USD 1.3 billion (CHF 2.1 billion) as of September 30, 2001. The aggregate amount of charges related to these non-continuing businesses in the first nine months totaled USD 648 million (CHF 1.0 billion), of which USD 486 million (CHF 773 million) were netted against operating income and USD 162 million (CHF 258 million) were included in provisions.


Overview of business unit Credit Suisse First Boston        
 in USD m in CHF m
   CSFB   CSFB 
  InvestmentFinancialCredit Suisse InvestmentFinancialCredit Suisse
3Q2002 BankingServicesFirst Boston BankingServicesFirst Boston
Operating income 2'1375012'638 3'1147423'856
Personnel expenses 1'1402541'394 1'6523792'031
Other operating expenses 613162775 9162411'157
Operating expenses 1'7534162'169 2'5686203'188
Gross operating profit 38485469 546122668
Depreciation of non-current assets 11623139 17534209
Valuation adjustments, provisions and losses 54911560 85017867
Net operating profit before extraordinary items, acquisition-related costs and taxes  (281)51(230) (479)71(408)
Extraordinary income/(expenses), net  000 (1)0(1)
Taxes1) 98(14)84 163(20)143
Net operating profit before acquisition-related costs (183)37(146) (317)51(266)
Acquisition interest   (68)   (99)
Amortization of retention payments   (100)   (148)
Amortization of acquired intangible assets and goodwill   (207)   (308)
Tax impact   96   142
Net profit    (425)   (679)
         
Reconciliation to net operating profit        
Amortization of acquired intangible assets and goodwill   207   308
Tax impact   (37)   (55)
Net operating profit    (255)   (426)
         
Average allocated capital 9'3296609'685 13'90698414'437

For further information on the presentation of business unit results, please refer to the "Overview of business unit results" on page 4/5. The operating basis income statement differs from the presentation of the Group's consolidated results in a) including brokerage, execution and clearing expenses as part of other operating expenses in line with certain US competitors, rather than netted against operating income, b) reporting contractor costs as part of other operating expenses instead of personnel expenses, c) excluding acquisition-related costs of acquisition interest from operating income, amortization of retention payments from personnel expenses and amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses and d) deducting expenses related to certain redeemable preferred securities classified as minority interests from operating income. Acquisition-related costs are reported separately in the income statement.








1) Excluding tax impact on acquisition-related costs.


Investment Banking income statement         
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in USD m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Fixed Income1) 1'1031'2631'661(13)(34)3'6354'772(24)
Equity 718760666(6)82'3333'195(27)
Investment Banking 485871596(44)(19)2'0512'190(6)
Other1) (169)4619(201)238
Operating income 2'1372'9402'942(27)(27)7'81810'395(25)
Personnel expenses 1'1401'6621'830(31)(38)4'3526'060(28)
Other operating expenses 6135707758(21)1'8012'235(19)
Operating expenses 1'7532'2322'605(21)(33)6'1538'295(26)
Gross operating profit 384708337(46)141'6652'100(21)
Depreciation of non-current assets 11693109256311326(5)
Valuation adjustments, provisions and losses 5492521981181771'000427134
Net operating profit before extraordinary items, acquisition-related costs and taxes  (281)363303541'347(74)
Extraordinary income/(expenses), net  016016(1)
Taxes 98(83)(7)(39)(345)(89)
Net operating profit before acquisition-related costs (183)296233311'001(67)

See footnotes below.









 
 


Investment Banking income statement         
     ChangeChange  Change
 in % fromin % from9 monthsin % from
in CHF m 3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Fixed Income1) 1'6272'0212'791(19)(42)5'7808'017(28)
Equity 1'0621'2111'119(12)(5)3'7105'368(31)
Investment Banking 6931'4011'002(51)(31)3'2613'680(11)
Other1) (268)8031(320)399
Operating income 3'1144'7134'943(34)(37)12'43117'464(29)
Personnel expenses 1'6522'6653'075(38)(46)6'92010'181(32)
Other operating expenses 9169081'3031(30)2'8633'755(24)
Operating expenses 2'5683'5734'378(28)(41)9'78313'936(30)
Gross operating profit 5461'140565(52)(3)2'6483'528(25)
Depreciation of non-current assets 17514918217(4)495548(10)
Valuation adjustments, provisions and losses 8504063331091551'589717122
Net operating profit before extraordinary items, acquisition-related costs and taxes  (479)585505642'263(75)
Extraordinary income/(expenses), net  (1)26025(1)
Taxes 163(134)(12)(62)(581)(89)
Net operating profit before acquisition-related costs (317)477385271'681(69)

Certain reclassifications have been made to conform to the current presentation. The presentation of segment results differs from the presentation of the Group's consolidated results in a) including brokerage, execution and clearing expenses as part of other operating expenses in line with certain US competitors, rather than netted against operating income, b) reporting contractor costs as part of other operating expenses instead of personnel expenses, c) excluding acquisition-related costs of acquisition interest from operating income, amortization of retention payments from personnel expenses and amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses and d) deducting expenses related to certain redeemable preferred securities classified as minority interests from operating income. Acquisition-related costs are reported separately at the business unit level only.









1) Reflects the movement of the results of certain non-continuing real estate and distressed assets from Fixed Income to Other.
 


Investment Banking key information         
 9 months
based on CHF amounts    3Q20022Q20023Q200120022001
Cost/income ratio (operating)1) 2)    88.1%79.0%92.3%82.7%82.9%
Average allocated capital in CHF m    13'90614'38215'52714'04715'180
Pre-tax margin (operating, excluding acquisition interest and amortization of retention payments)1) 2)    (15.4%)13.0%1.0%4.7%13.0%
Personnel expenses/operating income1)    53.1%56.5%62.2%55.7%58.3%
          
       30.09.0230.06.0231.12.01
Number of employees       17'72817'99019'094
1) Excluding acquisition interest and amortization of retention payments.
2) Excluding amortization of acquired intangible assets and goodwill.


Investment Banking balance sheet information         
in CHF m      30.09.0230.06.0231.12.01
Total assets       621'578614'824648'455
Total assets in USD m      416'970412'495387'045
Due from banks      200'921192'783198'806
of which securities lending and reverse repurchase agreements      155'968155'036159'784
Due from customers      122'368103'555118'007
of which securities lending and reverse repurchase agreements      62'10546'75159'806
Mortgages      16'49813'35016'348
Securities and precious metals trading portfolios      171'957204'949204'907
Due to banks      292'418319'466344'091
of which securities borrowing and repurchase agreements      106'551117'024137'731
Due to customers, other      119'100103'580108'470
of which securities borrowing and repurchase agreements      77'43565'21562'136



CSFB Financial Services
CSFB Financial Services reported operating income of USD 501 million (CHF 742 million) for the third quarter of 2002, reflecting a decrease of 9% compared with the second quarter of 2002 and of 7% compared with the third quarter of 2001. Client assets totaled CHF 1,000.3 billion at the end of the third quarter, down 6.7% from the second quarter and 17.6% since the beginning of the year. The lower levels were the result of the continuing negative economic and financial market conditions, as well as a net outflow of assets mainly due to performance issues, primarily from a single fixed income product. Operating expenses were down 11% compared with the third quarter of 2001 due to cost reduction measures and the sales of CSFB dire ct and Autranet reported earlier this year.

Third quarter 2002 operating income for   Credit Suisse Asset Management declined from the second quarter as a result of the difficult markets and lower fees associated with the net outflow of assets, particularly in the US. Discretionary institutional assets fell CHF 29.9 billion, or 9.3%, during the third quarter and CHF 72.2 billion, or 19.8%, in the first nine months of the year. The decline in assets under management was attributable to market declines, foreign exchange movements and to a performance-related net asset outflow of CHF 12.2 billion in the third quarter. Third quarter 2002 operating income decreased compared with the third quarter of 2001, mainly reflecting declining assets, again primarily in the US. This decrease was partially offset by the operating income of the former Sun Life of Canada UK asset management business acquired in December 2001, and the impact of the weaker US dollar on Swiss franc-denominated operating income .

Pershing’s third quarter operating income was comparable to that of the second quarter of 2002 and the third quarter of 2001. Pershing client assets totaled CHF 500.1 billion as of September 30, 2002. These periods all reflected low transaction volumes which adversely impacted trading and commission income. Trades per day averaged 121,000 for the third quarter, compared with 126,000 per day for the second quarter and 135,000 per day for the third quarter of 2001. This level is comparable to the second and third quarters of 1998. Interest continued to decline as debit balances averaged USD 4.4 billion for the third quarter, compared with USD 5.0 billion for the second quarter and USD 6.1 billion for the third quarter of 2001 .

Private Client Services’ third quarter 2002 operating income was lower compared with the second quarter, reflecting the weak equity markets environment – including the decline in new issuance activity and customer trading – and reduced customer margin balances. The equity market environment also negatively impacted third quarter 2002 operating income as compared with the third quarter in 2001. Private Client Services’ net new assets amounted to CHF 5.3 billion for the first nine months of the year, with no change during the third quarter.

CSFB Financial Services income statement                
        Change Change     Change
in % from in % from 9 months in % from
in USD m 3Q2002 2Q2002 3Q2001 2Q2002 3Q2001 2002 2001 2001
Net interest income 56 68 67 (18) (16) 173 257 (33)
Net commission and service fee income 406 447 435 (9) (7) 1'291 1'417 (9)
Net trading income 26 32 33 (19) (21) 89 115 (23)
Other ordinary income 13 6 6 117 117 37 7 429
Operating income 501 553 541 (9) (7) 1'590 1'796 (11)
Personnel expenses 254 259 274 (2) (7) 771 941 (18)
Other operating expenses 162 164 196 (1) (17) 483 601 (20)
Operating expenses 416 423 470 (2) (11) 1'254 1'542 (19)
Gross operating profit 85 130 71 (35) 20 336 254 32
Depreciation of non-current assets 23 23 27 0 (15) 67 79 (15)
Valuation adjustments, provisions and losses 11 8 4 38 175 22 8 175
Net operating profit before extraordinary items, acquisition-related costs and taxes 51 99 40 (48) 28 247 167 48
Extraordinary income/(expenses), net 0 0 (8) 0 (9)
Taxes (14) (28) (10) (50) 40 (69) (20) 245
Net operating profit before acquisition-related costs 37 71 22 (48) 68 178 138 29

Certain reclassifications have been made to conform to the current presentation. The presentation of segment results differs from the presentation of the Group's consolidated results in a) reporting contractor costs as part of other operating expenses instead of personnel expenses and b) excluding acquisition-related costs of acquisition interest from operating income, amortization of retention payments from personnel expenses and amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses. Acquisition-related costs are reported separately at the business unit level only.

 

 

 

 

 

 

 

 

 

CSFB Financial Services income statement        
    ChangeChange  Change
in % fromin % from9 monthsin % from
in CHF m3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Net interest income84109113(23)(26)275431(36)
Net commission and service fee income 600715731(16)(18)2'0522'381(14)
Net trading income385256(27)(32)142194(27)
Other ordinary income 209101221005911436
Operating income742885910(16)(18)2'5283'017(16)
Personnel expenses379413461(8)(18)1'2261'581(22)
Other operating expenses241264330(9)(27)7681'010(24)
Operating expenses620677791(8)(22)1'9942'591(23)
Gross operating profit122208119(41)353442625
Depreciation of non-current assets343645(6)(24)106133(20)
Valuation adjustments, provisions and losses17148211133614157
Net operating profit before extraordinary items, acquisition-related costs and taxes 7115866(55)839227941
Extraordinary income/(expenses), net 00(13)0(14)
Taxes(20)(44)(15)(55)33(110)(33)233
Net operating profit before acquisition-related costs5111438(55)3428223222

Certain reclassifications have been made to conform to the current presentation. The presentation of segment results differs from the presentation of the Group's consolidated results in a) reporting contractor costs as part of other operating expenses instead of personnel expenses and b) excluding acquisition-related costs of acquisition interest from operating income, amortization of retention payments from personnel expenses and amortization of acquired intangible assets and goodwill from depreciation, valuation adjustments and losses. Acquisition-related costs are reported separately at the business unit level only.

 

 

 

 

 

 

 

 

 

CSFB Financial Services key information        
9 months
based on CHF amounts   3Q20022Q20023Q200120022001
Cost/income ratio (operating)1) 2)    88.1%80.6%91.9%83.1%90.3%
Average allocated capital in CHF m   9841'0981'0381'041972
Pre-tax margin (operating, excluding acquisition interest and amortization of retention payments)1) 2)    9.6%17.9%5.8%15.5%8.8%
Personnel expenses/operating income1)    51.1%46.7%50.7%48.5%52.4%
Net new assets institutional asset management in CHF bn   (12.2)(6.5)(0.8)(22.6)7.2
Net new assets Private Client Services in CHF bn   2.21.75.311.1
Growth in assets under management   (7.6%)(10.7%)(15.4%)(21.9%)(12.4%)
Growth in discretionary institutional assets under management   (9.3%)(10.5%)(14.7%)(19.8%)(11.7%)
of which net new assets   (3.8%)(1.8%)(0.2%)(6.2%)2.0%
of which market movement and structural effects   (5.5%)(8.7%)(14.5%)(13.6%)(13.7%)
of which acquisitions/(divestitures)   
Growth in net new assets Private Client Services   2.3%1.5%5.5%10.3%
         
      30.09.0230.06.0231.12.01
Assets under management in CHF bn     500.2541.4640.5
of which institutional asset management     423.8457.5508.8
of which Private Client Services     74.181.597.1
Discretionary assets under management in CHF bn     313.8346.1393.6
of which institutional asset management     292.0321.9364.2
of which mutual funds distributed     108.4117.6132.4
of which Private Client Services     21.724.229.4
Advisory assets under management in CHF bn      186.4195.3246.9
Number of employees      7'2337'2758'208
1) Excluding acquisition interest and amortization of retention payments.
2) Excluding amortization of acquired intangible assets and goodwill.

 

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CONSOLIDATED RESULTS | CREDIT SUISSE GROUP

 
Consolidated income statement        
    ChangeChange  Change
in % fromin % from9 monthsin % from
in CHF m3Q20022Q20023Q2001 2Q2002 3Q2001200220012001
Interest and discount income4'2334'6267'014(8)(40)13'51123'560(43)
Interest and dividend income from trading portfolios2'4952'6103'412(4)(27)7'75310'028(23)
Interest and dividend income from financial investments298172168737757738151
Interest expenses(4'945)(5'232)(8'599)(5)(42)(15'731)(28'823)(45)
Net interest income2'0812'1761'995(4)46'1105'14619
Commission income from lending activities152207240(27)(37)559622(10)
Commission income from securities and investment transactions2'9253'9213'696(25)(21)10'75912'771(16)
Commission income from other services399431308(7)301'3151'04726
Commission expenses(174)(200)(249)(13)(30)(599)(704)(15)
Net commission and service fee income 3'3024'3593'995(24)(17)12'03413'736(12)
Net trading income408891'956(96)(98)2'1458'061(73)
Premiums earned, net8'6727'3676'756182826'50223'56712
Claims incurred and actuarial provisions(6'853)(5'381)(5'014)2737(22'365)(21'356)5
Commission expenses, net(708)(575)(454)2356(1'727)(1'581)9
Investment income from the insurance business(636)(932)16(32)(486)4'093
Net income from the insurance business4754791'304(1)(64)1'9244'723(59)
Income from the sale of financial investments38126540644(6)8951'090(18)
Income from investments in associates(1)242583107(22)
Income from other non-consolidated participations2154(87)(50)24240
Real estate income765748335816412234
Sundry ordinary income2841841215413573063016
Sundry ordinary expenses(974)(801)(1'134)22(14)(2'466)(2'646)(7)
Other ordinary income/(expenses), net(232)(256)(530)(9)(56)(570)(673)(15)
Operating income5'6667'6478'720(26)(35)21'64330'993(30)
Personnel expenses3'7934'8165'276(21)(28)13'44617'265(22)
Other operating expenses1'5591'7521'954(11)(20)4'9726'122(19)
Operating expenses5'3526'5687'230(19)(26)18'41823'387(21)
Gross operating profit3141'0791'490(71)(79)3'2257'606(58)
Depreciation of non-current assets1) 59246650227181'5391'4873
Amortization of acquired intangible assets162173197(6)(18)528590(11)
Amortization of goodwill175201190(13)(8)5685464
Valuation adjustments, provisions and losses from the banking business97356265373492'0061'30354
Depreciation, valuation adjustments and losses1'9021'4021'54236234'6413'92618
Profit before extraordinary items, taxes and minority interests(1'588)(323)(52)392(1'416)3'680
Extraordinary income(5)121712059103
Extraordinary expenses(126)(11)(1)(146)(31)371
Taxes(410)(417)(117)(2)250(914)(1'024)(11)
Net profit before minority interests (2'129)(630)(163)238(2'356)2'684
Minority interests(19)51(136)(86)(3)(267)(99)
Net profit (2'148)(579)(299)271(2'359)2'417

Certain reclassifications have been made to conform to the current presentation.

 

 

 

 

 

 

 

 

 
1) Includes amortization of Present Value of Future Profits (PVFP) from the insurance business.

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Consolidated balance sheet     
    ChangeChange
    in % fromin % from
in CHF m30.09.0230.06.0231.12.01 30.06.02 31.12.01
Assets    
Cash and other liquid assets3'3864'6433'092(27)10
Money market papers24'62127'97932'027(12)(23)
Due from banks201'045195'686203'7853(1)
Receivables from the insurance business9'93211'49711'823(14)(16)
Due from customers195'762171'589186'151145
Mortgages96'18791'56492'65554
Securities and precious metals trading portfolios179'645211'546208'374(15)(14)
Financial investments from the banking business37'00737'32637'306(1)(1)
Investments from the insurance business134'129128'015131'29152
Non-consolidated participations1'6321'7211'846(5)(12)
Tangible fixed assets8'6838'8229'422(2)(8)
Intangible assets19'57920'15522'850(3)(14)
Accrued income and prepaid expenses15'89916'79718'095(5)(12)
Other assets71'65160'24563'7961912
Total assets999'158987'5851'022'5131(2)
Subordinated assets2'4961'7401'5784358
Receivables due from non-consolidated participations850992276(14)208
     
Liabilities and shareholders' equity    
Money market papers issued19'87615'90319'252253
Due to banks293'456314'372335'932(7)(13)
Payables from the insurance business7'2509'26111'864(22)(39)
Due to customers in savings and investment deposits39'39738'80038'54722
Due to customers, other277'046254'704261'75296
Medium-term notes (cash bonds)2'8313'0173'019(6)(6)
Bonds and mortgage-backed bonds89'64489'24481'505010
Accrued expenses and deferred income18'82618'28225'5123(26)
Other liabilities68'79359'50856'4931622
Valuation adjustments and provisions9'9569'14811'3629(12)
Technical provisions for the insurance business139'622138'888138'35411
Total liabilities966'697951'127983'5922(2)
Reserve for general banking risks2'3192'3192'31900
Share capital1'1893'5913'590(67)(67)
Capital reserve19'46019'45919'44600
Revaluation reserves for the insurance business1'28538174923772
Reserve for own shares1'9502'4692'469(21)(21)
Retained earnings5'5465'5585'6400(2)
Minority interests3'0712'8923'1216(2)
Net profit (2'359)(211)1'587-(249)
Total shareholders' equity32'46136'45838'921(11)(17)
Total liabilities and shareholders' equity999'158987'5851'022'5131(2)
Subordinated liabilities20'70020'72220'8920(1)
Liabilites due to non-consolidated participations1'3719801'0984025

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Off-balance sheet and fiduciary business        
in CHF m      30.09.0231.12.01
Credit guarantees in form of bills of exchange and other guarantees1)       28'31629'789
Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees      4'7105'056
Irrevocable commitments in respect of documentary credits      3'1173'257
Other contingent liabilities      4'8555'484
Contingent liabilities      40'99843'586
Irrevocable commitments       98'781129'864
Liabilities for calls on shares and other equity instruments      666794
Confirmed credits      5176
Total off-balance sheet      140'496174'320
Fiduciary transactions      34'47141'448
1) Including credit guarantees of securities lent as arranger: 30.09.02: CHF 20,549 m (31.12.01: CHF 21,148 m).

Derivative instruments