FORM 6-K
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report
of Foreign Private Issuer
Dated February 25, 2003
Pursuant
to Rule 13a-16 or 15d-16
of the Securities
Exchange Act of 1934
For the
month of February 25, 2003
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-
|
e-mail media.relations@csg.ch |
| CREDIT SUISSE GROUP ANNOUNCES RESULTS FOR FOURTH QUARTER AND FULL YEAR 2002 |  |
| Reports Net Loss of CHF 950 Million for the | |
| Fourth Quarter And Net Loss of CHF 3.3 Billion for the Full Year 2002 | |
| Reports Progress in Implementation of Key Measures | |
| To Restore Profitability in 2003 | |
| Zurich,
February 25, 2003 – Credit Suisse
Group today announced a net loss of CHF 950 million for the fourth quarter
and a net loss of CHF 3.3 billion for the full year 2002, in line with
the Group’s preliminary outlook announced on January 21, 2003. Fourth
quarter 2002 results were influenced by the continuing financial market
weakness, a number of exceptional items and a change in accounting principles
to allow for the recognition of deferred tax assets. Winterthur’s
results recovered in the fourth quarter 2002. Private Banking reported
CHF 18.7 billion in net new assets for the full year 2002. Credit Suisse
First Boston continued to achieve significant cost reductions, while maintaining
strong market positions in its key businesses. Credit Suisse Group is
entering 2003 with a stronger balance sheet and an improved capital base.
The Group's Board of Directors will propose a dividend of CHF 0.10 per
share to the Annual General Meeting on April 25, 2003. |
Oswald J. Grübel, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse Financial Services, stated, "We have made significant progress in implementing key measures announced in the third quarter to restore the Group's core earnings strength. At Credit Suisse Financial Services, we continued to realign the European initiative to focus on private banking clients, thus generating considerable savings in terms of infrastructure, IT and personnel expenses. At Winterthur, results recovered due to a satisfactory operating performance and the positive impact of a change in accounting principles, and we are actively pursuing initiatives to reduce costs and withdraw from markets and businesses with unsatisfactory results in order to position us for a return to profitability in 2003."
John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse First Boston, said, "At Credit Suisse First Boston, we continued progress on cost reduction efforts in the fourth quarter, achieving a 14% decrease in operating expenses compared to the previous quarter and, at the same time, improved our global market rankings for 2002 in key businesses. In the fourth quarter, we also initiated a further cost reduction program to reduce annual operating expenses by an additional USD 500 million and accelerated the disposal of legacy asset portfolios that were hindering our financial performance and flexibility. In addition, we made substantial progress in resolving key regulatory issues facing Credit Suisse First Boston. As we move forward in 2003, we remain intensively focused on returning to profitability."
Fourth Quarter 2002 Group Results
Credit Suisse Group’s results for the fourth quarter of 2002 were influenced by the continuing financial market weakness, a number of exceptional items and a change in accounting
principles to allow for the recognition of deferred tax assets. For the quarter, the Group reported a net loss of CHF 950 million, compared with a net loss of CHF 2.1 billion in the third quarter 2002 and a net loss of CHF 830 million in the fourth quarter of 2001. The Group’s operating income stood at CHF 6.4 billion in the fourth quarter 2002, up 13% on the previous quarter but down 22% on the fourth quarter of 2001. Including restructuring charges presented as exceptional items at the business units, the Group’s operating expenses decreased 5% versus the third quarter to CHF 5.1 billion, and were down 26% on the fourth quarter 2001.
Full Year 2002 Group Results
For the full year 2002, the Group reported a net loss of CHF 3.3 billion, compared with a net profit of CHF 1.6 billion for the previous year. The Group’s operating income stood at CHF 28.0 billion for 2002, down 28% on
the previous year. The Group’s full year operating expenses declined 22% versus 2001 to CHF 23.5 billion, primarily as a result of job reductions, a significant decrease in bonuses and the sale of non-core businesses. Earnings per share for
2002 amounted to a loss of CHF 2.78 versus a profit of CHF 1.33 for 2001, and the Group’s return on equity was -10.0%, versus 4.1% in 2001.
Exceptional Items and Recognition of Deferred
Tax Assets On
Net Operating Losses in the Fourth Quarter 2002
Exceptional items recorded in the fourth quarter at Credit Suisse First Boston included a pre-tax charge of USD 450 million (CHF 702 million) for private litigation involving research analyst independence, certain IPO
allocation practices, Enron and other related litigation; a pre-tax charge of USD 150 million (CHF 234 million) for the agreement in principle with various US regulators involving
research analyst independence and the allocation of IPO shares to executive officers; an after-tax loss of USD 250 million (CHF 390 million) in connection with the sale of Pershing; and a pre-tax restructuring charge of USD 204 million (CHF 319 million) in connection with its USD 500 million cost reduction program. At Credit Suisse Financial Services, exceptional items of CHF 73 million were recorded in the fourth quarter in connection with the focusing of the European initiative on private banking clients. Exceptional items for the Group in the fourth quarter 2002 totaled CHF 1.5 billion before tax and CHF 1.3 billion after tax.
The previously announced change in the Group’s accounting principles to allow for the recognition of deferred tax assets with respect to net operating losses, which is reflected in the fourth quarter, resulted in a positive cumulative effect for the Group of CHF 520 million from prior years and CHF 1.3 billion for the financial year 2002.
Business Unit Results
The Credit
Suisse Financial Services business unit reported
a net profit of CHF 705 million in the fourth quarter and a net loss of CHF
165 million for the full year 2002. This compared with a net loss of CHF 1.2
billion in the third quarter 2002 and a net profit of CHF 3.6 billion for 2001.
Fourth quarter net profit benefited from the recognition of deferred tax assets
on net operating losses as a result of the change in accounting principles in
the amount of CHF 472 million for the financial year 2002, as well as the cumulative
effect of CHF 266 million from prior years, primarily at Winterthur. Credit
Suisse Financial Services reported a 54% increase in operating income to CHF
3.5 billion versus the third quarter, reflecting a CHF 1.2 billion increase
in operating income in the insurance business and stable operating income in
banking. Fourth
quarter operating expenses remained stable quarter-on-quarter and year-on-year despite expansion in certain markets.
Private Banking reported a segment profit (net operating profit before the above-mentioned exceptional items, the cumulative effect of a change in accounting principles and minority interests) of CHF 339 million in the fourth quarter 2002, up 12% versus the third quarter. Operating income rose 3% quarter-on-quarter but remained below the average of the previous quarters due to investor inactivity and a reduced asset base. Fourth quarter operating expenses increased 2% quarter-on-quarter, due mainly to project costs. For the full year 2002, Private Banking reported a segment profit of CHF 1.8 billion, down 23% versus the previous year.
Corporate & Retail Banking posted a segment profit (net operating profit before the cumulative effect of a change in accounting principles and minority interests) of CHF 46 million in the fourth quarter 2002, down 55% compared to the third quarter. Operating income declined 7% quarter-on-quarter, due, in particular, to a decrease in transaction-related commission income. Fourth quarter operating expenses rose 8% versus the third quarter, mainly as a result of project costs. For the full year 2002, Corporate & Retail Banking recorded a 19% increase in its segment profit, to CHF 363 million, versus 2001. The cost/income ratio was 68.7% in 2002, compared with 71.1% in 2001.
Life & Pensions recorded a segment profit (net operating profit before the cumulative effect of a change in accounting principles and minority interests) of CHF 93 million in the fourth quarter and a segment loss of CHF 1.4 billion for the full year 2002. Fourth quarter investment income was up 8% to CHF 333 million versus the previous
quarter. The full year loss reflects a CHF 3.3 billion decline in investment income, with an impact on the segment result of CHF 1.6 billion compared with the previous year. Life & Pensions reported a 9% increase in gross premiums written. Adjusted for acquisitions, divestitures and exchange rate impacts, premiums rose 10%. Operating expenses, comprising acquisition and non-deferrable costs, were up CHF 311 million year-on-year. This increase reflected the strong premium growth and additional DAC (deferred acquisition costs) and PVFP (present value of future profits) writedowns of CHF 292 million due to a change in the long-term assumptions regarding investment income. Excluding these writedowns, the expense ratio for 2002 was 9.9%, down from 10.9% in the prior year. Including these writedowns, the expense ratio for 2002 was 11.5%.
Insurance reported a segment profit (net operating profit before the cumulative effect of a change in accounting principles and minority interests) of CHF 6 million in the fourth quarter and a segment loss of CHF 992 million for the full year 2002. Fourth quarter investment income amounted to CHF 59 million. The full year loss reflects a CHF 2.2 billion decline in investment income, with an impact on the segment result of CHF 1.7 billion compared to 2001. For the full year 2002, net premiums earned rose 5% versus 2001. Adjusted for acquisitions, divestitures and exchange rate impacts, the segment reported a 9% increase in net premiums earned. The combined ratio improved by 2.2 percentage points, to 103.4%, compared with 2001.
As announced by Winterthur today, the Insurance and Life & Pensions units will be brought together under a joint management structure, effective March 1, 2003. The combination of the head offices in Winterthur is expected to result in a reduction of approximately 350 jobs. Programs to
increase efficiency will also be initiated in the countries in which Winterthur operates. The financial results of the two units will continue to be reported as separate segments.
In addition, given the continuing financial markets weakness and global uncertainty, Credit Suisse Financial Services has decided to implement a plan designed to further reduce costs in its banking business by approximately CHF 300 million, including a reduction of approximately 900 jobs. A series of measures to accompany the reduction in jobs has been formulated in conjunction with Credit Suisse Group’s staff council in Switzerland.
The Credit Suisse First Boston business unit reported a net loss of USD 811 million (CHF 1.3 billion) for the fourth quarter and a net loss of USD 1.2 billion (CHF 1.9 billion) for the full year 2002, including after-tax exceptional items of USD 813 million (CHF 1.3 billion) described above. This compares to a net loss of USD 425 million (CHF 679 million) in the previous quarter and a net loss of USD 821 million (CHF 1.4 billion) for the full year 2001. The fourth quarter net result benefited from the recognition of deferred tax assets on net operating losses as a result of a change in accounting principles in the amount of USD 556 million (CHF 868 million) for the financial year 2002, as well as a positive cumulative effect of USD 162 million (CHF 254 million) from prior years. Fourth quarter operating income was down 11% on the previous quarter in US dollar terms, primarily due to reduced revenues in the Institutional Securities segment. The business unit reduced operating expenses in the fourth quarter by 14% in US dollar terms versus the third quarter 2002, as part of continued efforts to adapt the business unit’s cost structure to the current environment.
The Institutional Securities segment reported a decrease in operating income of 12% quarter-on-quarter, reflecting declines in the Fixed Income and Equity businesses. The segment reduced operating expenses in the fourth quarter 2002 by 16% compared with the third quarter, primarily through reductions in incentive compensation. For the full year 2002, the segment's operating income declined 23% and operating expenses fell 24% versus the previous year. In 2002, the Institutional Securities segment succeeded in maintaining or improving its market rankings. The Fixed Income business ranked number one in high yield and asset-backed new issuances and improved its overall global debt issuance position to second. The Equity division ranked fourth in global equity new issuances in 2002, tied for first place in global equity research, ranked first in pan-European and Latin American research and second in non-Japan Asia research. Furthermore, in investment banking, Credit Suisse First Boston ranked third in terms of US dollar volume of announced M&A transactions for 2002.
Operating income in the CSFB Financial Services segment decreased 3% quarter-on-quarter. Fourth quarter 2002 operating expenses declined 4% compared to the third quarter, reflecting the impact of a number of cost reduction initiatives. In January 2003, Credit Suisse First Boston announced an agreement to sell its Pershing unit, as outlined below. For the full year 2002, operating income decreased 13% and operating expenses were down 15% compared to 2001.
Capital Base
Credit Suisse Group’s consolidated BIS tier 1 ratio stood at 9.7% as of December 31, 2002, up from 9.0% at the end of the third quarter of 2002. This increase was attributable to the issuance by the Group of Mandatory
Convertible Securities in
the amount of CHF 1.25 billion in December 2002, as well as to a reduction in risk-weighted assets and the currency translation effect of the lower US dollar versus the Swiss franc. The Mandatory Convertible Securities issue qualifies as equity capital and, accordingly, as tier 1 capital under BIS rules. The BIS tier 1 ratio for the Group’s banking business stood at 10.0% as of December 31, 2002, up from 9.4% at the end of the third quarter. Winterthur’s solvency margin (calculated in line with the EU directive) increased to 167% as of December 31, 2002, compared with 155% as of September 30, 2002.
The sale of Pershing to The Bank of New York, expected to close in the first half of 2003 subject to certain regulatory and other conditions, will increase the regulatory capital of Credit Suisse First Boston and Credit Suisse Group through the elimination of USD 500 million (CHF 695 million) of goodwill and a USD 1.6 billion (CHF 2.2 billion) reduction in risk-weighted assets. Furthermore, the sale will result in the elimination of USD 900 million (CHF 1.3 billion) of acquired intangible assets before tax, or USD 585 million (CHF 813 million) after tax.
Net New Assets
In the fourth quarter 2002, Credit Suisse Financial Services reported a net asset outflow of CHF 0.6 billion, with net inflows of CHF 0.5 billion at Private Banking and CHF 0.2 billion at Corporate & Retail Banking offset
by a net outflow of CHF 1.3 billion from Life & Pensions. At Private Banking, net new assets declined versus the third quarter due mainly to the impact of increased attention surrounding Credit Suisse Group’s financial performance in the
course of 2002. Credit Suisse First Boston reported a net asset outflow of CHF 6.0 billion in the fourth quarter, as a CHF 2.7 billion net inflow of private client assets was offset
by a net outflow of CHF 8.7 billion from Credit Suisse Asset Management related primarily to performance issues. For Credit Suisse Group, an overall net asset outflow of CHF 6.6 billion was recorded in the fourth quarter, versus a net outflow of CHF 13.7 billion in the third quarter 2002.
For the full year 2002, the Group reported a net asset outflow of CHF 2.6 billion, with CHF 18.9 billion in net new assets at Credit Suisse Financial Services – related primarily to Private Banking – offset by outflows of CHF 21.5 billion from Credit Suisse First Boston. The Group’s total assets under management stood at CHF 1,195.3 billion as of December 31, 2002, corresponding to a decline of 2.2% versus September 30, 2002, and a decrease of 16.4% versus December 31, 2001.
Valuation Adjustments, Provisions and Losses
Fourth quarter valuation adjustments, provisions and losses include a charge of CHF 778 million relating to an adjustment in the method of estimating inherent losses related to lending activities. This previously announced
adjustment was considered necessary to better reflect in the loan provision the continued deterioration of the credit markets. The impact on the income statement of this charge, after tax, was offset by a release from the reserve for general banking
risks, which was recorded as extraordinary income. Excluding the provision for inherent loan losses, credit provisions were CHF 637 million in the fourth quarter 2002, down 22% versus the third quarter, and were CHF 2.3 billion for the full year
2002, up 34% versus 2001, reflecting the deterioration in the credit environment globally. Overall, total valuation adjustments, provisions and losses were CHF 2.4 billion in the fourth quarter, reflecting the provision for inherent loan losses, US
legal provisions, and increased valuation adjustments and losses.
Dividend Proposal
The Group’s Board of Directors has decided to propose a dividend of CHF 0.10 per share to the Annual General Meeting on April 25, 2003. This compares to a par value reduction of CHF 2 per share for the financial year
2001. If approved by the Annual General Meeting on April 25, 2003, this dividend will be paid out on May 2, 2003.
Termination of Share Buyback Program
Credit Suisse Group is terminating the share buyback program launched in March 2001, under which it purchased the equivalent of 15,330,000 shares with a par value of CHF 1 each. The value of the shares repurchased was CHF 1.1
billion, and the Group's share capital was reduced by this amount. The second trading line for shares on virt-x will be closed with immediate effect.
Advisory Board
Credit Suisse Group will streamline its Swiss and International Advisory Boards to create a single Advisory Board that will concentrate on the Group's main activities in Switzerland and Europe, with a special focus on Credit Suisse Financial Services. The new Advisory Board
will comprise approximately 20 members, effective as of 2003.
Outlook
Credit Suisse Group remains cautious in its outlook for 2003 given the continued challenging market environment and global uncertainty. The Group continues to expect that the measures taken during 2002, as well as those being
implemented in 2003, will restore its profitability in 2003. Additionally, the Group is entering 2003 with a stronger balance sheet and an improved capital base.
Enquiries
Credit Suisse Group, Media Relations Telephone +41 1 333 8844
Credit Suisse Group, Investor Relations Telephone +41 1 333 4570
For further information relating to Credit Suisse Group’s results for the fourth quarter and full year 2002, please refer to the Quarterly Report Q4 2002, including the reconciliation contained therein of the business unit results to Credit Suisse Group’s reported results. The Quarterly Report Q4 2002 as well as the slide presentation to analysts and the media are available on our website at: www.credit-suisse.com/results/docu
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 78,000 staff
worldwide. As of December 31, 2002, it reported assets under management of CHF 1,195.3 billion.
Cautionary Statement Regarding Litigation
The legal reserve charge relating to private litigation
represents management’s current estimate after consultation with counsel
of the probable aggregate costs associated with such matters. Credit Suisse
First Boston believes that it has substantial defenses in these private litigation
matters, which are at an early stage. Given that it is difficult to predict
the outcome of these matters, where claimants seek large or indeterminate damages
or where the cases present novel theories or involve a large number of parties,
Credit Suisse First Boston cannot state with confidence what the timing or eventual
outcome will actually be. The legal reserve may be subject to revision in the
future.
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
businesses; (xviii) the adverse resolution of litigation and other contingencies;
and (xix) 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.
Today’s Presentation of the Results
| Speakers | |||
| • | Oswald J. G | ||
| Analysts’ presentation, Zurich (English) | |||
| • | February 25, 2003, 10.00 am CET / 9.00 am GMT / 4.00 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 5600 (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 091# | |||
| Media conference, Zurich (English/German) | ||
| • | February 25, 2003, 12.00 noon CET / 11.00 am GMT / 6.00 am EST at the Credit Suisse Forum St. Peter, Zurich | |
| • | Simultaneous interpreting: German – English, English – German | |
| • | 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 5600 (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 43 00 (UK) or +1 412 858 1440 (USA), conference ID 139# (English) or 241# (German) | ||
| Speakers | |
| • | Oswald J. Grübel, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse Financial Services |
| • | John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse First Boston (via videoconference) |
| • | Philip K. Ryan, Chief Financial Officer of Credit Suisse Group |
Winterthur media release
Winterthur streamlines its management structures
Winterthur, February 25, 2003 – Winterthur, a subsidiary of Credit Suisse Group, is realigning its organizational structure. The Insurance and Life & Pensions divisions will be brought together under a joint management structure within Winterthur Group, headed by CEO Leonhard Fischer, and will have a single Executive Board. The streamlining of these central management structures is aimed at achieving a significant increase in efficiency and will entail a reduction of approximately 350 jobs at the Winterthur head office. The new organizational framework and the measures already initiated will provide Winterthur with a solid basis from which to increase its profitability and strengthen its position in the insurance market.
As a result of the new organizational structure, the two Winterthur units – Insurance (property and liability business) and Life & Pensions (life insurance and retirement provision) – will be combined within Germany, Italy, Spain and Belgium. In Switzerland, however, life and non-life insurance will continue to be managed separately due to the substantial size of both of these units. They will work together very closely and increasingly exploit their synergies. In the UK, these two units will also remain separate because their business models are very different and synergies are minimal.
In the wake of the reorganization, the head offices of the two units will be brought together in Winterthur. The reorganization of the head office in Winterthur is expected to entail a reduction of approximately 350 jobs, including some redundancies. A series of measures to accompany the reduction in jobs has been formulated in conjunction with Credit Suisse Group's staff council in Switzerland. In addition, Winterthur Group's asset management unit will be integrated in the new organization. Financial results will continue to be reported separately. Markus Dennler, the current CEO of Winterthur Life & Pensions, will take on new responsibilities within Credit Suisse Group, and Manfred Broska, the current CEO of Winterthur Insurance, will retire.
Winterthur is committed to significantly improving its efficiency. "Ambitious cost management, operational excellence and qualitative growth are therefore our priorities," stated Leonhard Fischer with regard to the company’s strategic orientation. Programs already initiated in order to improve efficiency will continue and will be integrated in the new organization. The management of all Swiss and foreign Market Units has been charged with the task of launching additional initiatives to boost productivity. Duplications in support functions both in Switzerland and in companies outside Switzerland will be reduced. The cost savings which are realized will have a substantial impact on Winterthur Group’s administration costs.
The aim is to concentrate on those markets in which the Winterthur Group operates profitably, or in which it can achieve profitability in a foreseeable period of time. Winterthur aims to have a
business model targeting sustainable profitability for each of its markets. In markets where this is not possible, the respective companies will be sold.
Oswald J. Grübel, Co-CEO of Credit Suisse Group and CEO of Credit Suisse Financial Services, stated: "We are facing a fundamental change in the insurance sector, as companies must henceforth be profitable despite much lower investment income. With the timely implementation of the new organizational structure as well as the measures already initiated, Winterthur has created an excellent basis from which to operate in a more competitive market environment."
Leonhard Fischer, CEO of Winterthur Group, said: "Thanks to its excellent employees and its strong brand, Winterthur has - in the longer term - all the prerequisites to achieve a leading position in the insurance business in terms of profitability, productivity and quality."
| For questions, please contact: | |
| Winterthur, media relations | Tel. +41 52 261 61 04 |
| Internet: www.winterthur.com | |
Winterthur Group
Winterthur Group is a leading Swiss insurance company with head office in Winterthur and, as an international company, ranks among the top five insurers in Europe. The Group's products include a broad range of property and liability insurance products, as well as insurance solutions in life and pensions that are tailored to the individual needs of private and corporate clients. With approximately 32,000 employees worldwide, Winterthur Group achieved a premium volume of CHF 37.4 billion in 2002 and managed CHF 133.7 billion in assets.
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 78,000 staff worldwide. As of December 31, 2002, it reported assets under management of CHF 1,195.3 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 businesses; (xviii) the adverse resolution of litigation and other contingencies; and (xix) 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 Credit Suisse Group’s most recently filed Form 20-F and reports on Form 6-K furnished to the US Securities and Exchange Commission.
An overview of Credit Suisse Group
Credit Suisse Financial Services
Reconciliation of operating to consolidated results
Consolidated results Credit Suisse Group
Credit Suisse
Group is a leading global financial services company headquartered in Zurich.
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. Credit Suisse First Boston, the 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 78,000 staff worldwide.
1 Editorial
2 Financial highlights Q4/2002 4 An overview of Credit Suisse Group 9 Risk Management
12 Review of business units 12 Credit Suisse Financial Services 22 Credit Suisse
First Boston 33 Reconciliation of operating to consolidated results 37 Consolidated
results Credit Suisse Group 37 Consolidated income statement 38 Consolidated
balance sheet 44 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; (xviii)
the adverse resolution of litigation and other contingencies; and (xix) 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
Oswald
J. Grübel
Co-CEO Credit
Suisse Group
Chief Executive
Officer Credit
Suisse Financial Services
John
J. Mack
Co-CEO Credit
Suisse Group
Chief Executive
Officer Credit
Suisse First Boston
Dear shareholders,
clients and colleagues
Credit Suisse
Group‘s performance in the fourth quarter and full year 2002 was not satisfactory.
To position the Group for profitability in 2003, we took aggressive steps during
the year to address investment losses in our insurance business, set aside provisions
for regulatory and litigation matters, reduce our exposure to legacy assets
in our investment banking business and reduce costs across the Group. While
we have taken these actions, our core businesses continued to hold leadership
positions in key markets.
In the fourth
quarter of 2002, the Group reported a net loss of CHF 950 million, compared
with a net loss of CHF 2.1 billion in the third quarter. For the full year 2002,
the Group posted a net loss of CHF 3.3 billion, compared with a net profit of
CHF 1.6 billion in 2001.
The business
unit Credit Suisse Financial Services reported a net profit of CHF 705 million
in the fourth quarter, including exceptional items of CHF 73 million recognized
as a result of focusing the European initiative on private banking clients,
and a net loss of CHF 165 million for the full year.
Private
Banking delivered a slightly higher profit than in the third quarter, despite
project costs and low transaction-based income. Corporate & Retail Banking‘s
profit was down quarter-on-quarter but up for the full year.
Despite
continuing weakness in the financial markets, both Life & Pensions and Insurance
returned to profitability in the fourth quarter. This was attributable to a
satisfactory operating performance and the positive impact of a change in accounting
principles. Winterthur is continuing to focus on achieving profitability for
2003 by concentrating on core markets, right pricing and the reduction of administration
costs, with less reliance on investment income than in the past.
The business
unit Credit Suisse First Boston recorded a net loss for the fourth quarter of
USD 811 million (CHF 1.3 billion), including a number of after-tax exceptional
items totaling USD 813 million (CHF 1.3 billion), and a net loss of USD 1.2
billion (CHF 1.9 billion) for the year 2002.
Credit Suisse
First Boston faced deteriorating conditions in the equity and investment banking
businesses throughout the year but succeeded in maintaining its market shares
and rankings, while implementing a cost reduction program and reducing its exposure
to certain legacy private equity, real estate and distressed debt assets. Revenues
declined 21% in 2002 compared with the previous year. Full year operating expenses
at Credit Suisse First Boston were down 23% compared with 2001. Credit Suisse
First Boston also reached an agreement in principle with certain US regulators
in the fourth quarter to settle US investigations relating to research analyst
independence and IPO allocations.
The Group‘s
consolidated BIS tier 1 ratio stood at 9.7% as of December 31, 2002, up from
9.0% at the end of the third quarter, while the banking BIS tier 1 ratio rose
to 10.0%. Winterthur‘s solvency margin stood at 167% at the end of the fourth
quarter, compared with 155% as of September 30, 2002. Through the issuance of
Mandatory Convertible Securities, the prudent management of risk-weighted assets,
provisioning for inherent loan losses and litigation in the US, and the future
impact on capital of the Pershing sale, we are entering 2003 with a stronger
balance sheet and an improved capital base.
As Credit
Suisse Group emerges from an unusually difficult year, we – together with the
Group‘s entire management team – are focusing intensively on
restoring the Group to profitability in the year ahead, to create value for
our shareholders, clients and employees.
Oswald
J. Grübel John J. Mack
February
2003
CREDIT
SUISSE GROUP FINANCIAL HIGHLIGHTS Q4/2002
| Consolidated income statement | ||||||||||
| Change | Change | Change | ||||||||
| in % from | in % from | 12 months | in % from | |||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | ||
| Operating income | 6'395 | 5'666 | 8'161 | 13 | (22) | 28'038 | 39'154 | (28) | ||
| Gross operating profit | 1'284 | 314 | 1'264 | 309 | 2 | 4'509 | 8'870 | (49) | ||
| Net profit/(loss) | (950) | (2'148) | (830) | (56) | 14 | (3'309) | 1'587 | – | ||
| Return on equity | ||||||||||
| Change | Change | Change | ||||||||
| in % from | in % from | 12 months | in % from | |||||||
| in % | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | ||
| Return on equity | (13.0) | (26.9) | (9.3) | (52) | 40 | (10.0) | 4.1 | – | ||
| Consolidated balance sheet | ||||||||||
| Change | Change | |||||||||
| in % from | in % from | |||||||||
| in CHF m | 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | |||||
| Total assets | 955'656 | 999'158 | 1'022'513 | (4) | (7) | |||||
| Shareholders‘ equity | 31'394 | 32'461 | 38'921 | (3) | (19) | |||||
| Minority interests in shareholders‘ equity | 2'878 | 3'071 | 3'121 | (6) | (8) | |||||
| Capital data | ||||||||||
| Change | Change | |||||||||
| in % from | in % from | |||||||||
| in CHF m | 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | |||||
| BIS risk-weighted assets | 201'466 | 218'700 | 222'874 | (8) | (10) | |||||
| BIS tier 1 capital | 19'544 | 19'669 | 21'155 | (1) | (8) | |||||
| of which non-cumulative perpetual preferred securities | 2'162 | 2'218 | 2'076 | (3) | 4 | |||||
| BIS total capital | 33'290 | 33'647 | 34'888 | (1) | (5) | |||||
| Solvency capital Winterthur | 10'528 | 10'127 | 8'555 | 4 | 23 | |||||
| Capital ratios | ||||||||||
| in % | 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| BIS tier 1 ratio | Credit Suisse | 7.4 | 7.0 | 6.9 | ||||||
| Credit Suisse First Boston | 1) | 10.3 | 11.9 | 12.9 | ||||||
| Credit Suisse Group | 2) | 9.7 | 9.0 | 9.5 | ||||||
| Credit Suisse Group (banking) | 3) | 10.0 | 9.4 | 8.8 | ||||||
| BIS total capital ratio | Credit Suisse Group | 16.5 | 15.4 | 15.7 | ||||||
| EU solvency margin | Winterthur | 167.5 | 155.1 | 128.6 | ||||||
| Assets under management/client assets 4) | ||||||||||
| Change | Change | |||||||||
| in % from | in % from | |||||||||
| in CHF bn | 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | |||||
| Advisory assets under management | 605.1 | 606.3 | 723.5 | 0 | (16) | |||||
| Discretionary assets under management | 590.2 | 615.5 | 707.1 | (4) | (17) | |||||
| Total assets under management | 1'195.3 | 1'221.8 | 1'430.6 | (2) | (16) | |||||
| Client assets | 1'793.2 | 1'821.0 | 2'138.2 | (2) | (16) | |||||
| Net new assets 4) | ||||||||||
| Change | Change | Change | ||||||||
| in % from | in % from | 12 months | in % from | |||||||
| in CHF bn | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | ||
| Net new assets | (6.6) | (13.7) | 18.5 | (52) | – | (2.6) | 67.5 | – | ||
| 1) Ratio is based on a tier 1 capital of CHF 10.6 bn (30.09.02: CHF 13.3 bn; 31.12.01: CHF 15.2 bn), of which non-cumulative perpetual preferred securities is CHF 1.0 bn (30.09.02: CHF 1.1 bn; 31.12.01: CHF 1.1 bn). | ||||||||||
| 2) Ratio is based on a tier 1 capital of CHF 19.5 bn (30.09.02: CHF 19.7 bn; 31.12.01: CHF 21.2 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (30.09.02: CHF 2.2 bn; 31.12.01: CHF 2.1 bn). | ||||||||||
| 3) Ratio is based on a tier 1 capital of CHF 19.7 bn (30.09.02: CHF 20.2 bn; 31.12.01: CHF 19.4 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (30.09.02: CHF 2.2 bn; 31.12.01: CHF 2.1 bn). | ||||||||||
| 4) Certain reclassifications have been made to conform to the current presentation. | ||||||||||
| Number of employees | |||||||||||||
| Change | Change | ||||||||||||
| in % from | in % from | ||||||||||||
| 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | |||||||||
| Switzerland | banking | 21'270 | 21'700 | 21'794 | (2) | (2) | |||||||
| insurance | 7'063 | 7'169 | 6'849 | (1) | 3 | ||||||||
| Outside Switzerland | banking | 25'057 | 26'586 | 28'415 | (6) | (12) | |||||||
| insurance | 25'067 | 24'982 | 23'103 | 0 | 9 | ||||||||
| Total employees Credit Suisse Group | 78'457 | 80'437 | 80'161 | (2) | (2) | ||||||||
| Share data | |||||||||||||
| Change | Change | ||||||||||||
| in % from | in % from | ||||||||||||
| 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | |||||||||
| Shares issued | 1'189'891'720 | 1'189'348'956 | 1'196'609'811 | 0 | (1) | ||||||||
| To be issued upon conversion of MCS 1) | 40'413'838 | 0 | 0 | – | – | ||||||||
| Shares repurchased 2) | 0 | 0 | 7'730'000 | – | – | ||||||||
| Shares outstanding | 1'230'305'558 | 1'189'348'956 | 1'188'879'811 | 3 | 3 | ||||||||
| Share price in CHF | 30.00 | 28.90 | 70.80 | 4 | (58) | ||||||||
| Market capitalization in CHF m | 36'909 | 34'372 | 84'173 | 7 | (56) | ||||||||
| Book value per share in CHF | 23.18 | 24.71 | 29.92 | (6) | (23) | ||||||||
| 1) Maximum number of shares related to Mandatory Convertible Securities (MCS) issued by Credit Suisse Group Finance (Guernsey) Ltd. | |||||||||||||
| 2) Shares cancelled on 09.08.02, as previously approved by the Annual General Meeting. | |||||||||||||
| Share price | |||||||||||||
| Change | Change | Change | |||||||||||
| in % from | in % from | 12 months | in % from | ||||||||||
| in CHF | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |||||
| High (closing price) | 35.70 | 48.85 | 71.30 | (27) | (50) | 73.60 | 87.00 | (15) | |||||
| Low (closing price) | 20.60 | 26.80 | 51.60 | (23) | (60) | 20.60 | 44.80 | (54) | |||||
| Earnings per share | |||||||||||||
| Change | Change | Change | |||||||||||
| in % from | in % from | 12 months | in % from | ||||||||||
| in CHF | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |||||
| Basic earnings per share | (0.80) | (1.81) | (0.70) | (56) | 14 | (2.78) | 1.33 | – | |||||
| Diluted earnings per share | (0.80) | (1.81) | (0.69) | (56) | 16 | (2.77) | 1.32 | – | |||||
AN
OVERVIEW OF CREDIT SUISSE GROUP
Credit
Suisse Group reported a net loss of CHF 950 million in the fourth quarter of
2002, compared with a net loss of CHF 2.1 billion in the third quarter of 2002.
Credit Suisse Financial Services reported a net profit of CHF 705 million in
the fourth quarter. Credit Suisse First Boston recorded a net loss of USD 811
million (CHF 1.3 billion) in the fourth quarter, including after-tax exceptional
items totaling USD 813 million (CHF 1.3 billion). For the full year 2002, the
Group posted a net loss of CHF 3.3 billion, compared with a net profit of CHF
1.6 billion in 2001. In spite of this unsatisfactory result, the Group is entering
2003 with a stronger balance sheet and an improved capital base.
Continuing
financial market weakness and a number of exceptional items impacted Credit
Suisse Group‘s results in the fourth quarter of 2002.
Winterthur's
results recovered in the fourth quarter, with both Life & Pensions and Insurance
returning to profitability due to a satisfactory operating performance and the
positive impact of a change in accounting principles. Private Banking recorded
a slightly higher profit than in the third quarter, despite project costs and
low transaction-based income. Corporate & Retail Banking‘s profit was down
versus the third quarter but up for the full year. Credit Suisse Financial Services
reported a net profit of CHF 705 million in the fourth quarter, including exceptional
items of CHF 73 million recognized in connection with the focusing of the European
initiative on private banking clients. This compared with a net loss of CHF
1.2 billion in the third quarter 2002.
Credit Suisse
First Boston posted a fourth quarter net loss of USD 811 million (CHF 1.3 billion),
compared to a net loss of USD 425 million (CHF 679 million) in the previous
quarter. This result reflects a pre-tax charge of USD 450 million (CHF 702 million)
for private litigation involving research analyst independence, certain IPO
allocation practices, Enron and other related litigation; a pre-tax charge of
USD 150 million (CHF 234 million) for the agreement in principle with various
US regulators involving research analyst independence and the allocation of
IPO shares to executive officers; an after-tax loss of USD 250 million (CHF
390 million) in connection with the sale of Pershing; and a pre-tax restructuring
charge of USD 204 million (CHF 319 million) in connection with Credit Suisse
First Boston‘s USD 500 million cost reduction program. These combined items
had a total pre-tax impact of USD 890 million (CHF 1.4 billion), or USD 813
million (CHF 1.3 billion) after tax, in the fourth quarter.
Credit Suisse
Group announced a change in its accounting principles in the fourth quarter
of 2002 to allow for the recognition of deferred tax assets with respect to
net operating losses, resulting in a positive cumulative effect of CHF 520 million
from prior years and CHF 1.3 billion for the financial year 2002. Additionally,
CHF 778 million of the increase in loan loss provisions recorded by the Group
in the fourth quarter relates to an adjustment in the method of estimating inherent
losses related to lending activities, to better reflect the current credit environment.
This was offset by a release of the reserve for general banking risks, which
was reported as extraordinary income. After accounting for the Corporate Center,
which includes writedowns on the Group‘s investments in Swiss International
Airlines and Warburg Pincus Private Equity of CHF 112 million and CHF 134 million,
respectively, Credit Suisse Group reported a net loss of CHF 950 million for
the fourth quarter of 2002. This compared with a net loss of CHF 2.1 billion
in the third quarter 2002 and a net loss of CHF 830 million in the fourth quarter
of 2001. For the full year 2002, after accounting for the Corporate Center,
which includes writedowns on the Group‘s participation in Swiss Life of CHF
539 million, in addition to the above-mentioned writedowns in the fourth quarter,
the Group reported a net loss of CHF 3.3 billion, compared with a net profit
of CHF 1.6 billion for the previous year. Earnings per share for 2002 amounted
to a loss of CHF 2.78 versus a profit of CHF 1.33 for 2001, and the Group‘s
return on equity was -10.0% versus 4.1% in 2001.
Equity
capital
Credit Suisse
Group‘s consolidated BIS tier 1 ratio stood at 9.7% as of December 31, 2002,
up from 9.0% at the end of the third quarter of 2002. This was attributable
to the issuance by the Group of Mandatory Convertible Securities of CHF 1.25
billion in December 2002, as well as to a reduction in risk-weighted assets
and the currency translation effect of the lower US dollar versus the Swiss
franc. The Mandatory Convertible Securities issue qualifies as equity capital
and, accordingly, as tier 1 capital under BIS rules. The BIS tier 1 ratio for
the Group‘s banking business stood at 10.0% as of December 31, 2002, up from
9.4% at the end of the third quarter. Winterthur‘s solvency margin (calculated
in line with the EU directive) stood at 167% at the end of 2002, compared with
155% as of September 30, 2002.
The sale
of Pershing to The Bank of New York, expected to close in the first half of
2003 subject to certain regulatory and other conditions, will increase the regulatory
capital of Credit Suisse First Boston and Credit Suisse Group through the elimination
of USD 500 million (CHF 695 million) of goodwill and a USD 1.6 billion (CHF
2.2 billion) reduction in risk-weighted assets. Furthermore, the sale will result
in the elimination of USD 900 million (CHF 1.3 billion) of acquired intangible
assets before tax, or USD 585 million (CHF 813 million) after tax.
The Group
has strengthened its balance sheet and improved its capital base through the
issuance of Mandatory Convertible Securities, the prudent management of risk-weighted
assets, provisioning for inherent loan losses and litigation in the US, and
the future impact on capital of the Pershing sale.
Net
new assets
Credit Suisse
Financial Services reported a net asset outflow of CHF 0.6 billion in the fourth
quarter 2002, with net inflows of CHF 0.5 billion at Private Banking and of
CHF 0.2 billion at Corporate & Retail Banking offset by a net outflow of
CHF 1.3 billion from Life & Pensions. At Private Banking, net new assets
declined versus the third quarter due mainly to the impact of increased attention
surrounding Credit Suisse Group‘s financial performance in the course of 2002.
Credit Suisse First Boston reported a net asset outflow of CHF 6.0 billion in
the fourth quarter, as a CHF 2.7 billion net inflow of private client assets
was offset by a net outflow of CHF 8.7 billion from Credit Suisse Asset Management
related primarily to performance issues. For Credit Suisse Group, an overall
net asset outflow of CHF 6.6 billion was recorded in the fourth quarter, compared
with a net outflow of CHF 13.7 billion in the third quarter 2002. For the
full year 2002, the Group reported a net asset outflow of CHF 2.6 billion, as
CHF 18.9 billion in net new assets reported by Credit Suisse Financial Services – related primarily to Private Banking – were offset by outflows of CHF 21.5
billion from Credit Suisse First Boston. The Group‘s total assets under management
stood at CHF 1,195.3 billion as of December 31, 2002, corresponding to a decline
of 2.2% versus September 30, 2002, and a decrease of 16.4% versus year-end 2001.
Operating
income and expenses
The Group‘s
operating income stood at CHF 6.4 billion in the fourth quarter 2002, up 13%
on the previous quarter but down 22% on the fourth quarter of 2001. Credit Suisse
Financial Services reported a 54% increase in operating income to CHF 3.5 billion
versus the third quarter, reflecting a CHF 1.2 billion increase in operating
income in the insurance business and stable operating income in banking. At
Private Banking, operating income rose 3% to CHF 1.5 billion but remained below
the average of the previous quarters due to investor inactivity and a reduced
asset base. Corporate & Retail Banking posted a 7% decrease in operating
income quarter- on-quarter due, in particular, to a decrease in transaction-related
commission income. At Credit Suisse First Boston, fourth quarter operating income
was down 11% on the previous quarter to USD 2.4 billion (CHF 3.4 billion), mainly
reflecting revenue declines in the Fixed Income and Equity businesses, as well
as at CSFB Financial Services. For the full year 2002, the Group‘s operating
income stood at CHF 28.0 billion, down 28% on the previous year.
Including
restructuring charges presented as exceptional items at the business units,
the Group‘s operating expenses decreased 5% quarter-on-quarter to CHF 5.1 billion,
and were down 26% on the fourth quarter 2001. At Credit Suisse Financial Services,
fourth quarter operating expenses remained stable quarter-on-quarter and year-on-year
despite expansion in certain markets. At Credit Suisse First Boston, fourth
quarter operating expenses decreased 14% in US dollar terms versus the third
quarter and were down 13% on the fourth quarter of 2001, reflecting continued
efforts to adapt the business unit‘s cost structure to the current environment.
The Group‘s full year operating expenses declined 22% versus 2001 to CHF 23.5
billion, primarily as a result of headcount reductions, a significant decrease
in bonuses and the sale of non-core businesses.
Valuation
adjustments, provisions and losses
Fourth quarter
valuation adjustments, provisions and losses include a charge of CHF 778 million
relating to an adjustment in the method of estimating inherent losses related
to lending activities. This adjustment was considered necessary to better reflect
in the loan provision the continued deterioration of the credit markets. The
impact on the income statement of this charge, after tax, was offset by a release
from the reserve for general banking risks, which was recorded as extraordinary
income. Excluding the provision for inherent loan losses, credit provisions
were CHF 637 million in the fourth quarter 2002, down 22% versus the third quarter,
and were CHF 2.3 billion for the full year 2002, up 34% versus 2001, reflecting
the deterioration in the credit environment globally.
Overall,
total valuation adjustments, provisions and losses were CHF 2.4 billion in the
fourth quarter, reflecting the provision for inherent loan losses, US legal
provisions, and increased valuation adjustments and losses.
Recognition
of deferred tax assets on net operating losses
Credit Suisse
Group changed its accounting principles in the fourth quarter of 2002 to allow
for the recognition of deferred tax assets on net operating losses. As a result
of this change, a positive cumulative effect of CHF 520 million was recognized
from prior years and CHF 1.3 billion for 2002. At Credit Suisse Financial Services,
fourth quarter net profit benefited from the first-time recognition of deferred
tax assets on net operating losses in the amount of CHF 472 million for 2002,
as well as a cumulative effect of CHF 266 million from prior years, primarily
at Winterthur. At Credit Suisse First Boston, the fourth quarter net result
reflects a benefit of USD 556 million (CHF 868 million) related to 2002, as
well as a positive cumulative effect of USD 162 million (CHF 254 million) from
prior years.
Dividend
proposal
The Group‘s
Board of Directors has decided to propose a dividend of CHF 0.10 per share to
the Annual General Meeting on April 25, 2003. This compares to a par value reduction
of CHF 2 per share for the financial year 2001. If approved by the Annual General
Meeting on April 25, 2003, this dividend will be paid out on May 2, 2003.
Outlook
Credit Suisse
Group remains cautious in its outlook for 2003 given the continued challenging
market environment and global uncertainty. The Group continues to expect that
the measures taken during 2002, as well as those being implemented in 2003,
will restore its profitability in 2003. Additionally, the Group is entering
2003 with a stronger balance sheet and an improved capital base.
| Overview of business unit results 1) | ||||||||||||||||
| Credit Suisse Financial Services | Credit Suisse First Boston | Adjust. incl. Corporate Center | Credit Suisse Group | |||||||||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 4Q2002 | 3Q2002 | 4Q2001 | 4Q2002 | 3Q2002 | 4Q2001 | 4Q2002 | 3Q2002 | 4Q2001 | ||||
| Operating income | 3'517 | 2'289 | 3'582 | 3'321 | 3'757 | 4'572 | (443) | (380) | 7 | 6'395 | 5'666 | 8'161 | ||||
| Personnel expenses | 1'408 | 1'490 | 1'244 | 1'896 | 2'179 | 3'174 | 160 | 124 | 207 | 3'464 | 3'793 | 4'625 | ||||
| Other operating expenses | 896 | 884 | 1'065 | 1'184 | 1'157 | 1'747 | (433) | (482) | (540) | 1'647 | 1'559 | 2'272 | ||||
| Operating expenses | 2'304 | 2'374 | 2'309 | 3'080 | 3'336 | 4'921 | (273) | (358) | (333) | 5'111 | 5'352 | 6'897 | ||||
| Gross operating profit/(loss) | 1'213 | (85) | 1'273 | 241 | 421 | (349) | (170) | (22) | 340 | 1'284 | 314 | 1'264 | ||||
| Depreciation of non-current assets 2) | 334 | 289 | 296 | 156 | 209 | 282 | 144 | 94 | 121 | 634 | 592 | 699 | ||||
| Amortization of acquired intangible assets and goodwill | 92 | 31 | 52 | 308 | 308 | 379 | 3 | (2) | (4) | 403 | 337 | 427 | ||||
| Valuation adjustments, provisions and losses | 105 | 91 | 48 | 1'977 | 867 | 1'207 | 342 | 15 | 34 | 2'424 | 973 | 1'289 | ||||
| Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes | 682 | (496) | 877 | (2'200) | (963) | (2'217) | (659) | (129) | 189 | (2'177) | (1'588) | (1'151) | ||||
| Extraordinary income/(expenses), net | 24 | 6 | 8 | 220 | (1) | 0 | 125 | (136) | (265) | 369 | (131) | (257) | ||||
| Cumulative effect of change in accounting principle 3) | 266 | – | – | 254 | – | – | 0 | – | – | 520 | – | – | ||||
| Taxes 3) | (318) | (692) | (150) | 474 | 285 | 633 | 162 | (3) | 55 | 318 | (410) | 538 | ||||
| Net profit/(loss) before minority interests | 654 | (1'182) | 735 | (1'252) | (679) | (1'584) | (372) | (268) | (21) | (970) | (2'129) | (870) | ||||
| Minority interests | 51 | 17 | 22 | 0 | 0 | (1) | (31) | (36) | 19 | 20 | (19) | 40 | ||||
| Net profit/(loss) 3) | 705 | (1'165) | 757 | (1'252) | (679) | (1'585) | (403) | (304) | (2) | (950) | (2'148) | (830) | ||||
| 1) The Group‘s consolidated results are prepared in accordance with Swiss GAAP, while the Group‘s segment reporting principles are applied to the presentation of segment results. The business unit results reflect the results of the separate segments comprising the respective business units as well as certain acquisition-related costs and exceptional items that are not allocated to the segments. For a complete reconciliation of the business unit results to the Group‘s consolidated results and a discussion of the material reconciling items, please refer to pages 33-36. | ||||||||||||||||
| 2) Includes amortization of Present Value of Future Profits (PVFP) from the insurance business within Credit Suisse Financial Services. | ||||||||||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes in 4Q2002 would have been CHF -790 m for Credit Suisse Financial Services, CHF -394 m for Credit Suisse First Boston and CHF -1,023 m for Credit Suisse Group. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002, 3Q2002 and 4Q2001 for Credit Suisse Financial Services of CHF -635 m, CHF -593 m and CHF -209 m, respectively, for Credit Suisse First Boston of CHF 276 m, CHF 290 m and CHF 909 m, respectively, and for Credit Suisse Group of CHF -198 m, CHF -306 m and CHF 755 m, respectively. | ||||||||||||||||
| Assets under management/client assets | |||||||||
| Change | Change | ||||||||
| in % from | in % from | ||||||||
| in CHF bn | 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | ||||
| Credit Suisse Financial Services | |||||||||
| Private Banking | |||||||||
| Assets under management | 488.0 | 494.5 | 546.8 | (1.3) | (10.8) | ||||
| of which discretionary | 121.6 | 123.8 | 131.5 | (1.8) | (7.5) | ||||
| Client assets | 518.0 | 526.7 | 583.3 | (1.7) | (11.2) | ||||
| Corporate & Retail Banking | |||||||||
| Assets under management | 48.0 | 47.8 | 55.9 | 0.4 | (14.1) | ||||
| Client assets | 63.1 | 63.1 | 73.3 | 0.0 | (13.9) | ||||
| Life & Pensions | |||||||||
| Assets under management (discretionary) | 110.8 | 113.0 | 115.2 | (1.9) | (3.8) | ||||
| Client assets | 110.8 | 113.0 | 115.2 | (1.9) | (3.8) | ||||
| Insurance | |||||||||
| Assets under management (discretionary) | 30.7 | 31.1 | 30.5 | (1.3) | 0.7 | ||||
| Client assets | 30.7 | 31.1 | 30.5 | (1.3) | 0.7 | ||||
| Credit Suisse Financial Services | |||||||||
| Assets under management | 677.5 | 686.4 | 748.4 | (1.3) | (9.5) | ||||
| of which discretionary | 264.7 | 269.2 | 278.9 | (1.7) | (5.1) | ||||
| Client assets | 722.6 | 733.9 | 802.3 | (1.5) | (9.9) | ||||
| Credit Suisse First Boston | |||||||||
| Institutional Securities | |||||||||
| Assets under management | 31.3 | 35.2 | 41.7 | (11.1) | (24.9) | ||||
| of which Private Equity on behalf of clients (discretionary) | 20.9 | 24.7 | 29.3 | (15.4) | (28.7) | ||||
| Client assets | 83.9 | 86.8 | 121.7 | (3.3) | (31.1) | ||||
| CSFB Financial Services | |||||||||
| Assets under management | 486.5 | 500.2 | 640.5 | (2.7) | (24.0) | ||||
| of which discretionary | 297.2 | 313.8 | 393.6 | (5.3) | (24.5) | ||||
| Client assets | 986.7 | 1'000.3 | 1'214.2 | (1.4) | (18.7) | ||||
| Credit Suisse First Boston | |||||||||
| Assets under management | 517.8 | 535.4 | 682.2 | (3.3) | (24.1) | ||||
| of which discretionary | 325.5 | 346.3 | 428.2 | (6.0) | (24.0) | ||||
| Client assets | 1'070.6 | 1'087.1 | 1'335.9 | (1.5) | (19.9) | ||||
| Credit Suisse Group | |||||||||
| Assets under management | 1'195.3 | 1'221.8 | 1'430.6 | (2.2) | (16.4) | ||||
| of which discretionary | 590.2 | 615.5 | 707.1 | (4.1) | (16.5) | ||||
| Client assets | 1'793.2 | 1'821.0 | 2'138.2 | (1.5) | (16.1) | ||||
| Net new assets | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF bn | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Credit Suisse Financial Services | |||||||||
| Private Banking | 0.5 | 3.4 | 8.6 | (85.3) | (94.2) | 18.7 | 35.7 | (47.6) | |
| Corporate & Retail Banking | 0.2 | (2.3) | 0.9 | – | (77.8) | (3.2) | 1.3 | – | |
| Life & Pensions | (1.3) | 0.4 | 1.8 | – | – | 3.4 | 5.0 | (32.0) | |
| Credit Suisse Financial Services | (0.6) | 1.5 | 11.3 | – | – | 18.9 | 42.0 | (55.0) | |
| Credit Suisse First Boston | |||||||||
| Institutional Securities | – | (3.0) | 0.5 | – | – | 1.9 | 0.5 | 280.0 | |
| CSFB Financial Services 1) | (6.0) | (12.2) | 6.7 | (50.8) | – | (23.4) | 25.0 | – | |
| Credit Suisse First Boston | (6.0) | (15.2) | 7.2 | (60.5) | – | (21.5) | 25.5 | – | |
| Credit Suisse Group | (6.6) | (13.7) | 18.5 | (51.8) | – | (2.6) | 67.5 | – | |
Certain reclassifications have been made to conform to the current presentation. |
|||||||||
| 1) Net new discretionary assets for institutional asset management. | |||||||||
Group Executive Board, effective January 1, 2003
Oswald J. Grübel Co-CEO Credit Suisse Group; Chief Executive Officer Credit Suisse Financial Services
John J. Mack Co-CEO Credit Suisse Group; Chief Executive Officer Credit Suisse First Boston
Hans-Ulrich Doerig Vice-Chairman of the Group Executive Board; Head of Corporate Center, Credit Suisse Group
Brady W. Dougan Co-President, Institutional Securities, Credit Suisse First Boston
Brian D. Finn Co-President, Institutional Securities, Credit Suisse First Boston
David P. Frick General Counsel, Credit Suisse Group
Ulrich Körner Chief Financial Officer, Credit Suisse Financial Services
Jeffrey M. Peek Head of CSFB Financial Services, Credit Suisse First Boston
Philip K. Ryan Chief Financial Officer, Credit Suisse Group
Richard E. ThornburghChief Risk Officer, Credit Suisse Group
Stephen R. Volk Chairman, Credit Suisse First Boston
Alex W. Widmer Head of Private Banking, Credit Suisse Financial Services
RISK
MANAGEMENT
Credit
Suisse Group‘s overall position risks fell by 9% in the fourth quarter 2002
versus the previous quarter, predominantly due to further equity position reductions,
lower foreign exchange risks and a substantial reduction of exposures in Brazil.
Credit Suisse First Boston‘s average trading risks were lower as a consequence
of reduced credit spread positions. The Group‘s credit risk exposures declined
by 6% quarter-on-quarter.
Overall
risk trends
Economic
Risk Capital (ERC) is an emerging best practice tool for measuring and reporting
all quantifiable risks across a financial organization on a consistent and comprehensive
basis. It is referred to as “economic” because it treats positions solely on
an economic basis, irrespective of differences in accounting or regulatory treatment.
Credit Suisse Group has invested significant resources in developing this tool
over the last few years to achieve several objectives: to better assess the
composition and trend of our risk portfolio; to provide a benchmark for risk/return
analysis by business; to improve risk control and limits; to support a target
credit rating; and to allocate capital. ERC is defined as the economic capital
needed to remain solvent even under extreme market, business and operational
conditions, based on conservative assumptions.
Credit Suisse
Group distinguishes between three fundamental sources of risk. Position risk
ERC measures the potential unexpected loss in economic value associated with
the Group‘s portfolio of positions over a one-year horizon that is exceeded
with a given, small probability (1% for daily risk management purposes; 0.03%
for capital management purposes). Business risk ERC captures the risk related
to the Group‘s commission and fee-based activities by estimating the potential
worst-case negative margin that these activities might experience during a severe
market downturn. Operational risk ERC represents the estimated worst-case loss
resulting from inadequate or failed internal processes and systems, human error
or external events.
Position
risk ERC constitutes the most important risk category and comprises more than
80% of the overall risk profile. Total 99%, 1-year position risk ERC was down
9% in the fourth quarter 2002 compared with the previous quarter, due primarily
to further equity position reductions and reductions in the foreign exchange
and emerging markets areas. As highlighted in the table below, Credit Suisse
Group has substantially reduced its position risk profile over the course of
2002, predominantly through a significant reduction in its equity market-related
risks. Other notable developments include a substantial reduction in emerging
market risks, due mainly to lower positions in Brazil, and a material reduction
in foreign exchange rate risks, primarily due to a reduction of the foreign
exchange risks embedded in the investment portfolios of the Winterthur units.
At the end of the fourth quarter of 2002, 53% of the Group‘s position risk ERC
was with Credit Suisse First Boston, 42% with Credit Suisse Financial Services
(of which 66% was with the insurance units and 34% was with the banking units)
and 5% with the Corporate Center.
| Key Position Risk Trends | |||||
| In CHF m |
Change in % from |
Change Analysis: Brief Summary | |||
| 4Q2002 | 3Q2002 | 4Q2001 | 4Q2002 vs 3Q2002 | ||
| Interest Rate, Credit Spread & Foreign Exchange ERC | 3'666 | (15%) | (21%) | Driven by a reduction in foreign exchange risk at the Winterthur units | |
| Equity Investment ERC | 3'674 | (9%) | (65%) | Driven by the sale of strategic investments | |
| Swiss & Retail Lending ERC | 2'097 | 0% | (9%) | No material change | |
| International Lending ERC | 3'840 | (2%) | (4%) | No material change | |
| Emerging Markets ERC | 1'977 | (15%) | (26%) | Predominantly from position reductions in Brazil | |
| Real Estate ERC & Structured Asset ERC 1) | 3'953 | (8%) | (10%) | Continued reduction in legacy commercial real estate exposures in the US | |
| Insurance Underwriting ERC | 819 | (2%) | 9% | Sale of Winterthur Portugal | |
| Simple Sum across Risk Categories | 20'025 | (8%) | (32%) | Lower Equity and Emerging Markets ERC | |
| Diversification Benefit | (6'723) | (7%) | (41%) | In line with overall risk reduction | |
| Total Position Risk ERC | 13'303 | (9%) | (26%) | Lower Equity and Emerging Markets ERC | |
For a more detailed description of the Group‘s ERC model, please refer to our Annual Report 2001, which is available on our website www.credit-suisse.com. Note that comparatives have been restated for methodology changes in order to maintain consistency over time. |
|||||
| 1) This category comprises the Real Estate investments of Winterthur, CSFB‘s Commerical Real Estate exposures, CSFB‘s Residential Real Estate exposures, CSFB‘s Asset-Backed-Securities exposures as well as the Real Estate Acquired at Auction and Real Estate For Own Use in Switzerland. | |||||
Trading risks
The average 1-day, 99% VaR at Credit Suisse First Boston in the fourth quarter of 2002 was USD 39.4 million compared to USD 43.7 million during the third quarter of 2002. The VaR reduction during the fourth quarter was attributable to a reduction in overall credit spread positions. As shown in the backtesting chart, Credit Suisse First Boston had no backtesting exceptions in the fourth quarter of 2002. Over the last 12 months, Credit Suisse First Boston had one backtesting exception (on average, an accurate 1-day, 99% VaR model would have 2.5 exceptions per annum).
Credit risk exposure
Credit risk exposure declined across nearly all product areas at both business units during the fourth quarter 2002, with a total reduction for the Group of 6% quarter-on-quarter. Credit risk exposures at Credit Suisse Financial Services were slightly lower across all product areas. The decrease at Credit Suisse First Boston was due partially to a weakening of the US dollar as well as a reduction in lending products.
There was an overall increase in impaired loans for the Group versus the end of the third quarter due to a reclassification of the BZ Group exposure from a repurchase agreement to a loan. Excluding this reclassification, impaired loans across the Group declined during the fourth quarter 2002. The increase in non-performing loans at Credit Suisse First Boston was partially offset by a decrease in non-performing loans at Credit Suisse Financial Services. While coverage of non-performing loans deteriorated, coverage of impaired loans improved during the fourth quarter 2002. The quality of the Group‘s credit risk exposure remained stable during the fourth quarter 2002 versus the previous quarter and year-end 2001.
| CSFB trading exposures (99% 1-day VaR) | |||||
| in USD m | 4Q2002 | 3Q2002 | 2Q2002 | 1Q2002 | |
| Total VaR | |||||
| Period end | 41.3 | 38.9 | 59.3 | 52.5 | |
| Average | 39.4 | 43.7 | 46.4 | 49.2 | |
| Maximum | 46.5 | 57.4 | 59.3 | 61.2 | |
| Minimum | 31.9 | 37.6 | 36.8 | 40.2 | |
| in USD m | 31.12.02 | 30.09.02 | 30.06.02 | 31.03.02 | |
| VaR by risk type | |||||
| Interest rate | 48.3 | 59.3 | 54.7 | 59.7 | |
| Foreign exchange | 10.8 | 7.6 | 18.7 | 7.5 | |
| Equity | 10.1 | 12.1 | 16.5 | 17.2 | |
| Commodity | 1.0 | 1.2 | 0.5 | 0.6 | |
| Subtotal | 70.2 | 80.2 | 90.4 | 85.0 | |
| Diversification benefit | (28.9) | (41.3) | (31.1) | (32.5) | |
| Total | 41.3 | 38.9 | 59.3 | 52.5 | |
Credit Suisse First Boston computes these VaR estimates separately for each risk type and for the whole portfolio using the historical simulation methodology. Diversification benefit reflects the net difference between the sum of the 99% percentile loss for each risk type and for the total portfolio. |
|||||
| Total credit risk exposure 1) | ||||||||||||
| Credit Suisse Financial Services | Credit Suisse First Boston | Credit Suisse Group | ||||||||||
| in CHF m | 31.12.02 | 30.09.02 | 31.12.01 | 31.12.02 | 30.09.02 | 31.12.01 | 31.12.02 | 30.09.02 | 31.12.01 | |||
| Due from banks 2) | 32'752 | 34'085 | 35'560 | 44'016 | 49'626 | 40'931 | 39'469 | 44'927 | 40'084 | |||
| Due from customers and mortgages 2) | 132'353 | 134'324 | 134'796 | 82'395 | 88'676 | 87'438 | 213'206 | 221'907 | 221'108 | |||
| Total due from banks and customers, gross 2) | 165'105 | 168'409 | 170'356 | 126'411 | 138'302 | 128'369 | 252'675 | 266'834 | 261'192 | |||
| Contingent liabilities | 12'349 | 12'429 | 13'849 | 27'862 | 29'826 | 32'286 | 39'104 | 40'998 | 43'586 | |||
| Irrevocable commitments | 1'763 | 1'843 | 945 | 84'287 | 96'938 | 128'918 | 86'051 | 98'781 | 129'864 | |||
| Total banking products | 179'217 | 182'681 | 185'150 | 238'560 | 265'066 | 289'573 | 377'830 | 406'613 | 434'642 | |||
| Derivative instruments 3) | 2'375 | 1'906 | 1'635 | 54'243 | 60'967 | 51'160 | 54'757 | 61'356 | 51'029 | |||
| Securities lending – banks | 0 | 291 | 0 | 0 | 0 | 71 | 0 | 291 | 71 | |||
| Securities lending – customers | 0 | 0 | 0 | 64 | 15 | 5 | 64 | 15 | 5 | |||
| Reverse repurchase agreements – banks | 2'270 | 2'631 | 968 | 158'544 | 157'989 | 165'930 | 156'397 | 155'916 | 163'666 | |||
| Reverse repurchase agreements – customers | 13'944 | 14'976 | 7'122 | 57'571 | 62'339 | 59'801 | 71'384 | 77'315 | 66'921 | |||
| Total traded products | 18'589 | 19'804 | 9'725 | 270'422 | 281'310 | 276'967 | 282'602 | 294'893 | 281'692 | |||
| Total credit risk exposure, gross | 197'806 | 202'485 | 194'875 | 508'982 | 546'376 | 566'540 | 660'432 | 701'506 | 716'334 | |||
| Loan valuation allowances and provisions | (4'092) | (4'014) | (5'717) | (3'817) | (3'538) | (3'638) | (7'911) | (7'554) | (9'357) | |||
| Total credit risk exposure, net | 193'714 | 198'471 | 189'158 | 505'165 | 542'838 | 562'902 | 652'521 | 693'952 | 706'977 | |||
| 1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center. | ||||||||||||
| 2) Excluding securities lending and reverse repurchase transactions. | ||||||||||||
| 3) Positive replacement values considering netting agreements. | ||||||||||||
| Total loan portfolio exposure and allowances and provisions for credit risk 1) | ||||||||||||
| Credit Suisse Financial Services | Credit Suisse First Boston | Credit Suisse Group | ||||||||||
| in CHF m | 31.12.02 | 30.09.02 | 31.12.01 | 31.12.02 | 30.09.02 | 31.12.01 | 31.12.02 | 30.09.02 | 31.12.01 | |||
| Non-performing loans | 3'004 | 3'412 | 4'893 | 3'351 | 2'104 | 3'067 | 6'355 | 5'516 | 7'960 | |||
| Non-interest earning loans | 2'108 | 2'087 | 2'331 | 217 | 274 | 476 | 2'325 | 2'361 | 2'808 | |||
| Total non-performing loans | 5'112 | 5'499 | 7'224 | 3'568 | 2'378 | 3'543 | 8'680 | 7'877 | 10'768 | |||
| Restructured loans | 52 | 75 | 114 | 229 | 236 | 0 | 281 | 311 | 114 | |||
| Potential problem loans | 1'723 | 1'702 | 2'199 | 1'685 | 2'405 | 2'484 | 3'408 | 4'107 | 4'683 | |||
| Total other impaired loans | 1'775 | 1'777 | 2'313 | 1'914 | 2'641 | 2'484 | 3'689 | 4'418 | 4'797 | |||
| Total impaired loans | 6'887 | 7'276 | 9'537 | 5'482 | 5'019 | 6'027 | 12'369 | 12'295 | 15'565 | |||
| Due from banks and customers, gross | 165'105 | 168'409 | 170'356 | 126'411 | 138'302 | 128'369 | 252'675 | 266'834 | 261'192 | |||
| Valuation allowances | 4'053 | 3'999 | 5'709 | 3'647 | 3'376 | 3'553 | 7'703 | 7'377 | 9'264 | |||
| of which on principal | 3'201 | 3'092 | 4'324 | 3'416 | 3'132 | 3'227 | 6'617 | 6'224 | 7'553 | |||
| of which on interest | 852 | 907 | 1'385 | 231 | 244 | 326 | 1'086 | 1'153 | 1'711 | |||
| Due from banks and customers, net | 161'052 | 164'410 | 164'647 | 122'764 | 134'926 | 124'816 | 244'972 | 259'457 | 251'928 | |||
| Provisions for contingent liabilities and irrevocable commitments | 39 | 15 | 8 | 170 | 162 | 85 | 208 | 177 | 93 | |||
| Total valuation allowances and provisions | 4'092 | 4'014 | 5'717 | 3'817 | 3'538 | 3'638 | 7'911 | 7'554 | 9'357 | |||
| Ratios | ||||||||||||
| Valuation allowances as % of total non-performing loans | 79.3% | 72.7% | 79.0% | 102.2% | 142.0% | 100.3% | 88.7% | 93.7% | 86.0% | |||
| Valuation allowances as % of total impaired loans | 58.9% | 55.0% | 59.9% | 66.5% | 67.3% | 59.0% | 62.3% | 60.0% | 59.5% | |||
| 1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center. | ||||||||||||
REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES
Credit Suisse Financial Services recorded a net profit of CHF 705 million and a net operating profit, excluding the amortization of acquired intangible assets, goodwill, exceptional items and the cumulative effect of a change in accounting principles, of CHF 535 million in the fourth quarter of 2002. Winterthur returned to profitability due to a satisfactory operating performance and the positive impact of a change in accounting principles. Private Banking recorded a slightly higher profit than in the third quarter, despite project costs and low transaction-based income. For the full year 2002, Credit Suisse Financial Services recorded a net loss of CHF 165 million and a net operating loss of CHF 136 million.
Credit Suisse Financial Services recorded a net profit of CHF 705 million in the fourth quarter of 2002 and a net loss of CHF 165 million for the full year, versus a net profit of CHF 3.6 billion for 2001. The insurance segments reported investment income of CHF 1.4 billion in 2002, compared to CHF 7.0 billion in 2001. The lower investment income had a CHF 3.3 billion impact on net operating profit (CHF 1.6 billion for Life & Pensions and CHF 1.7 billion for Insurance) compared with 2001. In the fourth quarter of 2002, Credit Suisse Financial Services’ net profit benefited from the recognition of deferred tax assets on net operating losses as a result of a change in accounting principles in the amount of CHF 472 million for the financial year 2002, as well as the cumulative effect of CHF 266 million from prior years, primarily at Winterthur. Exceptional items of CHF 73 million were recognized in the fourth quarter of 2002 as a result of focusing the European initiative on private banking clients. For the full year 2002, exceptional items totaled CHF 192 million.
Assets under management declined 1.3% to CHF 677.5 billion in the fourth quarter 2002 and were down 9.5% versus year-end 2001 due primarily to weak equity markets and the foreign exchange impact. The business unit recorded a CHF 0.6 billion net outflow of assets in the fourth quarter of 2002. A net asset inflow in the banking units was more than offset by an outflow at Life & Pensions, reflecting selective underwriting and renewals. For the full year 2002, Credit Suisse Financial Services reported net new assets of CHF 18.9 billion, corresponding to 2.5% of assets under management.
Private Banking
In the fourth quarter of 2002, Private Banking reported a segment profit of CHF 339 million, up 12% versus the previous quarter, and of CHF 1.8 billion in 2002, down 23% versus 2001. The net margin stood at 33.7 bp in 2002, compared with 42.3 bp in 2001. Operating income rose 3% versus the third quarter to CHF 1.5 billion, but was still below the average of the previous quarters due to investor passivity and a reduced asset base. In 2002, operating income stood at CHF 6.5 billion, down 11% on 2001. Operating expenses increased 2% against the previous quarter, due mainly to project costs. In 2002, operating expenses decreased CHF 162 million or 4% versus the previous year.
Net new assets amounted to CHF 0.5 billion in the fourth quarter of 2002, impacted by increased attention surrounding Credit Suisse Group‘s financial performance in the course of 2002. In 2002, net new assets of CHF 18.7 billion were recorded, corresponding to 3.4% of assets under management, versus CHF 35.7 billion in 2001. At year-end 2002, assets under management stood at CHF 488.0 billion, down 10.8% versus year-end 2001 and down 1.3% versus September 30, 2002, due mainly to market performance and the foreign exchange impact.
Private Banking further realigned its European initiative during the fourth quarter of 2002 to focus on high-net-worth individuals and reduce the significant cost of pursuing a broader strategy. In Switzerland, the realignment of the private client business was implemented as of January 1, 2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking to better focus the Swiss platform and delivery of services. In Asia, the Middle East and Latin America, Private Banking continued to achieve above-average growth. Furthermore, Clariden Bank acquired PBS Privat Bank Schweiz in November 2002.
In the fourth quarter 2002, Private Banking again launched a number of innovative products, including its Total Performance Strategy (TOPS), which are short-term bond funds with a reduced interest rate risk, and the PODIUM note, a bear market product based on a basket of selected stocks, offering bond-like capital protection.
The lower asset base of Private Banking at year-end 2002 will negatively affect operating income in 2003. The management of costs will therefore remain a high priority for Private Banking.
Corporate & Retail Banking
Corporate & Retail Banking posted a segment profit of CHF 46 million in the fourth quarter 2002, down 55% on the previous quarter, and of CHF 363 million in 2002, up 19% versus the previous year. Operating income declined 7% quarter-on-quarter due, in particular, to a decrease in transaction-related commission income. Compared with the previous year, operating income increased by 2%.
In 2002, the net interest margin stood at 235 bp, up from 226 bp in 2001. The net asset outflow of CHF 3.2 billion in 2002 was mainly attributable to volatility in the account balances of corporate clients. Assets under management stood at CHF 48.0 billion at year-end 2002. Fourth quarter operating expenses rose 8% versus the previous quarter to CHF 421 million. This increase was mainly attributable to project costs. However, cost reduction measures resulted in lower operating expenses for the full year, down 2% to CHF 1.6 billion. The cost/income ratio stood at 68.7% in 2002, compared with 71.1% in 2001. The return on average allocated capital increased 1.5 percentage points compared to 2001, to stand at 9.3%.
The overall risk profile of the credit portfolio improved in 2002 as a result of a cautious lending policy and active credit portfolio management. However, the provisions recorded were CHF 127 million above the statistical valuation adjustments due, in particular, to exceptional additional provisions on account of the anticipated liquidation of certain positions.
The realignment of the Swiss private client business was implemented as of January 1, 2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking to better focus the Swiss platform and delivery of services. Direct Trade Finance, a platform offering efficient, centralized access to all trade finance transactions online, was launched in the fourth quarter of 2002. In the future, Credit Suisse will concentrate its online banking products and services on its core offering, Direct Net. The online brokerage service youtrade was therefore discontinued as of the end of January 2003.
Due to the prevailing weak economic environment, Corporate & Retail Banking remains cautious about its outlook for 2003. The segment does not anticipate volume growth in the corporate banking business, and higher credit losses may occur. As a consequence, Corporate & Retail Banking will continue to strictly control expenses.
Life & Pensions
Life & Pensions reported a segment loss of CHF 1.4 billion for the full year 2002 and a segment profit of CHF 93 million for the fourth quarter. The full year loss reflects a CHF 3.3 billion decline in investment income, with an impact on the segment result of CHF 1.6 billion compared to 2001. The fourth quarter investment income amounted to CHF 333 million, up 8% versus the previous quarter, and improved in particular in countries where the investment risk is mainly borne by Life & Pensions. Equity exposure was reduced from 19% as of December 31, 2001, to 8% as of December 31, 2002. A large proportion of the existing exposure reflects a direct participation by the policyholders, decreasing the impact on results and earnings volatility. The fourth quarter result benefited from the first-time recognition of deferred tax assets on net operating losses in the amount of CHF 220 million for 2002.
Life & Pensions reported gross premiums written of CHF 19.0 billion for 2002, reflecting 9% growth (10% adjusted for acquisitions, divestitures and exchange rate impacts) versus 2001. The units in Switzerland, the UK and Italy were the main contributors to this significant growth. New business accounted for 39% of the gross premiums written in 2002. Net new assets amounted to CHF 3.4 billion for the year, versus CHF 5.0 billion in 2001. The net asset outflow of CHF 1.3 billion in the fourth quarter 2002 reflects the move towards selective underwriting and renewals.
Operating expenses, comprising acquisition and non-deferrable costs, amounted to CHF 2.2 billion in 2002, up CHF 311 million versus 2001, reflecting the strong premium growth and additional DAC (deferred acquisition costs) and PVFP (present value of future profits) writedowns of CHF 292 million due to a change in the long-term assumptions regarding investment income. Excluding these writedowns, the expense ratio for 2002 was 9.9%, down from 10.9% in 2001. Including these writedowns, the expense ratio for 2002 stood at 11.5%.
In 2002, Life & Pensions finalized the divestiture of its French and Austrian operations, announced the sale of its operations in Portugal, and acquired the business of Premier Life Ltd.
The Swiss government‘s reduction of the guaranteed rate of return for the employee benefit business from 4% to 3.25%, effective January 1, 2003, will only partially alleviate the impact of the adverse business environment for group life insurers.
Life & Pensions remains exposed to the volatility of the financial markets due to the nature of its business. However, through the implementation of cost reduction measures as well as efforts to increase its share of capital-light products and to focus on its core markets, it aims to mitigate the impact of market volatility.
Insurance
Insurance reported a segment loss of CHF 992 million in 2002 and a segment profit of CHF 6 million for the fourth quarter. The full year loss reflects a CHF 2.2 billion decline in investment income, with an impact on the segment result of CHF 1.7 billion compared to 2001. Investment income amounted to CHF 59 million in the fourth quarter. Insurance reduced its proportion of equity investments from 17% as of December 31, 2001, to 7% as of December 31, 2002. The fourth quarter result benefited from the first-time recognition of deferred tax assets on net operating losses in the amount of CHF 276 million but was adversely affected by charges for discontinued and divested businesses with an impact on the segment result of CHF 90 million.
In 2002, Insurance increased its net premiums earned by 5% (9% adjusted for acquisitions, divestitures and exchange rate impacts), due in part to strong rate increases.
Insurance reported a significant improvement of CHF 720 million in its underwriting results in 2002. This improvement was due primarily to a decrease in the combined ratio of 2.2 percentage points, from 105.6% in 2001 to 103.4% in 2002. The claims ratio improved 1.9 percentage points to 74.8% in 2002, due to clear progress in North America, the UK, and Italy as well as Insurance‘s withdrawal from lines and businesses where performance was unsatisfactory. The motor insurance business produced particularly good results, with an improvement in the claims ratio of more than 6 percentage points. The claims ratio in Switzerland and Germany deteriorated in 2002 – primarily in the fourth quarter – due to storms and flooding. In 2002, the segment‘s expense ratio improved by 0.3 percentage points versus the previous year to 28.6%, following cost saving measures. Despite this progress, further measures are planned to reduce administration costs.
In 2002, Insurance finalized the divestitures of its French and Austrian operations and announced the sale of its Portuguese operations. With a favorable pricing environment in insurance markets, continuing initiatives to reduce costs and the withdrawal from businesses with unsatisfactory results, Insurance believes it is positioned to return to profitability in 2003 based on current investment income.
| Credit Suisse Financial Services business unit income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Operating income 2) | 3'517 | 2'289 | 3'582 | 54 | (2) | 11'830 | 15'382 | (23) | |
| Personnel expenses | 1'405 | 1'443 | 1'244 | (3) | 13 | 5'765 | 5'639 | 2 | |
| Other operating expenses | 897 | 845 | 1'065 | 6 | (16) | 3'465 | 3'686 | (6) | |
| Operating expenses | 2'302 | 2'288 | 2'309 | 1 | 0 | 9'230 | 9'325 | (1) | |
| Gross operating profit | 1'215 | 1 | 1'273 | – | (5) | 2'600 | 6'057 | (57) | |
| Depreciation of non-current assets | 256 | 141 | 218 | 82 | 17 | 733 | 581 | 26 | |
| Amortization of Present Value of Future Profits (PVFP) | 62 | 119 | 78 | (48) | (21) | 267 | 237 | 13 | |
| Valuation adjustments, provisions and losses | 105 | 91 | 48 | 15 | 119 | 390 | 383 | 2 | |
| Net operating profit/(loss) before extraordinary and exceptional items, cumulative effect of change in accounting principle and taxes | 792 | (350) | 929 | – | (15) | 1'210 | 4'856 | (75) | |
| Extraordinary income/(expenses), net | 24 | 6 | 8 | 300 | 200 | 48 | 25 | 92 | |
| Taxes 3) 4) | (332) | (693) | (151) | (52) | 120 | (1'525) | (1'113) | 37 | |
| Net operating profit/(loss) before exceptional items, cumulative effect of change in accounting principle and minority interests | 484 | (1'037) | 786 | – | (38) | (267) | 3'768 | – | |
| Amortization of acquired intangible assets and goodwill | (37) | (27) | (52) | 37 | (29) | (139) | (116) | 20 | |
| Exceptional items | (73) | (119) | 0 | (39) | – | (192) | 0 | – | |
| Tax impact | 14 | 1 | 1 | – | – | 16 | 2 | – | |
| Cumulative effect of change in accounting principle 3) | 266 | – | – | – | – | 266 | – | – | |
| Net profit/(loss) before minority interests | 654 | (1'182) | 735 | – | (11) | (316) | 3'654 | – | |
| Minority interests | 51 | 17 | 22 | 200 | 132 | 151 | (69) | – | |
| Net profit/(loss) | 705 | (1'165) | 757 | – | (7) | (165) | 3'585 | – | |
| 1) Certain reclassifications have been made to conform to the current presentation. The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. The exceptional items relate to focusing the European initiative on private banking clients. For a complete reconciliation of the business unit results to the Group‘s consolidated results and a discussion of the material reconciling items, please refer to pages 33-36. | |||||||||
| 2) 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. | |||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been CHF -804 m for 4Q2002. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002, 3Q2002 and 4Q2001 of CHF -649 m, CHF -594 m and CHF -210 m, respectively, and CHF-1,153 m for the 12 months 2001. | |||||||||
| 4) Excluding tax impact on amortization of acquired intangible assets and goodwill as well as exceptional items. | |||||||||
| Reconciliation to net operating profit/(loss) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Net profit/(loss) | 705 | (1'165) | 757 | – | (7) | (165) | 3'585 | – | |
| Amortization of acquired intangible assets and goodwill 1) | 37 | 27 | 52 | 37 | (29) | 119 | 116 | 3 | |
| Exceptional items | 73 | 119 | 0 | (39) | – | 192 | 0 | – | |
| Tax impact | (14) | (1) | (1) | – | – | (16) | (2) | – | |
| Cumulative effect of change in accounting principle | (266) | – | – | – | – | (266) | – | – | |
| Net operating profit/(loss) | 535 | (1'020) | 808 | – | (34) | (136) | 3'699 | – | |
| 1) Excluding a CHF 20 m write-off in 2Q2002 relating to a participation. | |||||||||
| Credit Suisse Financial Services business unit key information | |||||||||
| 12 months | |||||||||
| 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | |||||
| Cost/income ratio 1) | 75.0% | 116.3% | 72.7% | 87.6% | 65.9% | ||||
| Cost/income ratio (operating) 2) 3) | 72.7% | 106.1% | 70.5% | 84.2% | 64.4% | ||||
| Cost/income ratio (operating), banking 2) | 71.1% | 69.4% | 65.7% | 65.1% | 61.6% | ||||
| Return on average allocated capital 1) | 20.8% | (38.9%) | 24.2% | (2.6%) | 26.3% | ||||
| Return on average allocated capital (operating) 2) 4) | 15.4% | (34.1%) | 25.8% | (2.3%) | 27.1% | ||||
| Average allocated capital in CHF m | 12'600 | 12'161 | 12'170 | 12'334 | 13'883 | ||||
| Growth in assets under management | (1.3%) | (3.8%) | 5.8% | (9.5%) | 2.5% | ||||
| of which net new assets | (0.1%) | 0.2% | 1.6% | 2.5% | 5.8% | ||||
| of which market movement and structural effects | (1.3%) | (4.1%) | 3.8% | (11.8%) | (4.2%) | ||||
| of which acquisitions/(divestitures) | 0.1% | 0.1% | 0.4% | (0.2%) | 0.9% | ||||
| of which discretionary | (0.7%) | (0.6%) | 2.6% | (1.9%) | n/a | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Assets under management in CHF bn | 677.5 | 686.4 | 748.4 | ||||||
| Number of employees | 53'755 | 54'218 | 51'668 | ||||||
| 1) Based on the business unit results including certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments. Please refer to pages 33-36. | |||||||||
| 2) Based on the results of the separate segments comprising the business unit, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments. Please refer to pages 33-36. | |||||||||
| 3) Excluding amortization of PVFP from the insurance business within Credit Suisse Financial Services. | |||||||||
| 4) Excluding cumulative effect of change in accounting principle. | |||||||||
| Overview of business unit Credit Suisse Financial Services 1) | ||||||
| Credit | ||||||
| Corp. & | Suisse | |||||
| Private | Retail | Life & | Financial | |||
| 4Q2002, in CHF m | Banking | Banking | Pensions | Insurance | Services | |
| Operating income 2) | 1'477 | 575 | 909 | 556 | 3'517 | |
| Personnel expenses | 565 | 234 | 247 | 359 | 1'405 | |
| Other operating expenses | 386 | 187 | 138 | 186 | 897 | |
| Operating expenses | 951 | 421 | 385 | 545 | 2'302 | |
| Gross operating profit | 526 | 154 | 524 | 11 | 1'215 | |
| Depreciation of non-current assets | 62 | 25 | 90 | 79 | 256 | |
| Amortization of Present Value of Future Profits (PVFP) | – | – | 60 | 2 | 62 | |
| Valuation adjustments, provisions and losses | 33 | 72 | – | – | 105 | |
| Net operating profit before extraordinary and exceptional items, cumulative effect of change in accounting principle and taxes | 431 | 57 | 374 | (70) | 792 | |
| Extraordinary income/(expenses), net | 23 | 1 | 0 | 0 | 24 | |
| Taxes 3) | (115) | (12) | (281) | 76 | (332) | |
| Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests | 339 | 46 | 93 | 6 | 484 | |
| Amortization of acquired intangible assets and goodwill | (37) | |||||
| Exceptional items | (73) | |||||
| Tax impact | 14 | |||||
| Cumulative effect of change in accounting principle | 266 | |||||
| Net profit before minority interests | 654 | |||||
| Minority interests | 51 | |||||
| Net profit | 705 | |||||
| Average allocated capital 4) | 3'317 | 3'802 | 5'481 | 12'600 | ||
| 1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. The exceptional items relate to focusing the European initiative on private banking clients. For a complete reconciliation of the business unit results to the Group‘s consolidated results and a discussion of the material reconciling items, please refer to pages 33-36. | ||||||
| 2) 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. | ||||||
| 3) Excluding tax impact on amortization of acquired intangible assets and goodwill as well as exceptional items. | ||||||
| 4) Life & Pensions and Insurance segment amount represents the average shareholders‘ equity of «Winterthur» Swiss Insurance Company. | ||||||
| Private Banking income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Net interest income | 414 | 400 | 500 | 4 | (17) | 1'691 | 1'976 | (14) | |
| Net commission and service fee income | 930 | 955 | 1'060 | (3) | (12) | 4'214 | 4'519 | (7) | |
| Net trading income | 118 | 72 | 153 | 64 | (23) | 495 | 640 | (23) | |
| Other ordinary income | 15 | 13 | 22 | 15 | (32) | 61 | 110 | (45) | |
| Operating income | 1'477 | 1'440 | 1'735 | 3 | (15) | 6'461 | 7'245 | (11) | |
| Personnel expenses | 565 | 576 | 570 | (2) | (1) | 2'393 | 2'502 | (4) | |
| Other operating expenses | 386 | 352 | 420 | 10 | (8) | 1'469 | 1'522 | (3) | |
| Operating expenses | 951 | 928 | 990 | 2 | (4) | 3'862 | 4'024 | (4) | |
| Gross operating profit | 526 | 512 | 745 | 3 | (29) | 2'599 | 3'221 | (19) | |
| Depreciation of non-current assets | 62 | 82 | 99 | (24) | (37) | 253 | 215 | 18 | |
| Valuation adjustments, provisions and losses 2) | 33 | 21 | (41) | 57 | – | 97 | 75 | 29 | |
| Net operating profit before extraordinary and exceptional items, cumulative effect of change in accounting principle and taxes | 431 | 409 | 687 | 5 | (37) | 2'249 | 2'931 | (23) | |
| Extraordinary income/(expenses), net | 23 | 2 | 8 | – | 188 | 44 | 12 | 267 | |
| Taxes 3) | (115) | (108) | (116) | 6 | (1) | (531) | (642) | (17) | |
| Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests (segment result) | 339 | 303 | 579 | 12 | (41) | 1'762 | 2'301 | (23) | |
| Increased/(decreased) credit-related valuation adjustments | 2) | (13) | 16 | (6) | (7) | (25) | |||
| 1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. | |||||||||
| 2) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions. | |||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been CHF -92 m for 4Q2002. | |||||||||
| Private Banking balance sheet information | |||||||||
| Change | Change | ||||||||
| in % from | in % from | ||||||||
| in CHF m | 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | ||||
| Total assets | 169'414 | 174'881 | 170'364 | (3) | (1) | ||||
| Due from customers | 36'468 | 38'356 | 31'410 | (5) | 16 | ||||
| Mortgages | 44'832 | 44'126 | 42'008 | 2 | 7 | ||||
| Private Banking key information | |||||||||
| 12 months | |||||||||
| 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | |||||
| Cost/income ratio 1) | 68.6% | 70.1% | 62.8% | 63.7% | 58.5% | ||||
| Average allocated capital in CHF m | 3'317 | 3'599 | 3'233 | 3'461 | 3'259 | ||||
| Pre-tax margin 1) | 30.7% | 28.5% | 40.1% | 35.5% | 40.6% | ||||
| Fee income/operating income | 63.0% | 66.3% | 61.1% | 65.2% | 62.4% | ||||
| Net new assets in CHF bn | 0.5 | 3.4 | 8.6 | 18.7 | 35.7 | ||||
| Growth in assets under management | (1.3%) | (4.4%) | 6.2% | (10.8%) | 1.8% | ||||
| of which net new assets | 0.1% | 0.7% | 1.7% | 3.4% | 6.6% | ||||
| of which market movement and structural effects | (1.5%) | (5.1%) | 4.0% | (14.2%) | (6.1%) | ||||
| of which acquisitions/(divestitures) | 0.1% | – | 0.5% | 0.1% | 1.3% | ||||
| Net margin 2) | 27.2 bp | 24.0 bp | 43.6 bp | 33.7 bp | 42.3 bp | ||||
| Gross margin 3) | 118.3 bp | 114.2 bp | 130.7 bp | 123.4 bp | 133.3 bp | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Assets under management in CHF bn | 488.0 | 494.5 | 546.8 | ||||||
| Number of employees | 14'923 | 15'249 | 14'818 | ||||||
| 1) Based on the segment results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segment. | |||||||||
| 2) Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests (segment result)/average assets under management. | |||||||||
| 3) Operating income/average assets under management. | |||||||||
| Corporate & Retail Banking income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Net interest income | 418 | 423 | 413 | (1) | 1 | 1'672 | 1'658 | 1 | |
| Net commission and service fee income | 102 | 126 | 108 | (19) | (6) | 478 | 461 | 4 | |
| Net trading income | 56 | 66 | 60 | (15) | (7) | 249 | 250 | 0 | |
| Other ordinary income | (1) | 0 | 2 | – | – | 36 | 29 | 24 | |
| Operating income | 575 | 615 | 583 | (7) | (1) | 2'435 | 2'398 | 2 | |
| Personnel expenses | 234 | 237 | 235 | (1) | 0 | 939 | 1'000 | (6) | |
| Other operating expenses | 187 | 152 | 161 | 23 | 16 | 646 | 620 | 4 | |
| Operating expenses | 421 | 389 | 396 | 8 | 6 | 1'585 | 1'620 | (2) | |
| Gross operating profit | 154 | 226 | 187 | (32) | (18) | 850 | 778 | 9 | |
| Depreciation of non-current assets | 25 | 27 | 39 | (7) | (36) | 89 | 84 | 6 | |
| Valuation adjustments, provisions and losses 2) | 72 | 70 | 89 | 3 | (19) | 293 | 308 | (5) | |
| Net operating profit before extraordinary items, cumulative effect of change in accounting principle and taxes | 57 | 129 | 59 | (56) | (3) | 468 | 386 | 21 | |
| Extraordinary income/(expenses), net | 1 | 4 | 0 | (75) | – | 4 | 13 | (69) | |
| Taxes 3) | (12) | (31) | (14) | (61) | (14) | (109) | (94) | 16 | |
| Net operating profit before cumulative effect of change in accounting principle and minority interests (segment result) | 46 | 102 | 45 | (55) | 2 | 363 | 305 | 19 | |
| Increased/(decreased) credit-related valuation adjustments | 2) | 98 | 15 | 16 | 127 | 47 | |||
| 1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill not allocated to the segments are included in the business unit results. | |||||||||
| 2) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions. | |||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses, which did not have an impact on the taxes reported. | |||||||||
| Corporate & Retail Banking balance sheet information | |||||||||
| Change | Change | ||||||||
| in % from | in % from | ||||||||
| in CHF m | 31.12.02 | 30.09.02 | 31.12.01 | 30.09.02 | 31.12.01 | ||||
| Total assets | 70'951 | 72'658 | 72'372 | (2) | (2) | ||||
| Due from customers | 26'292 | 27'483 | 28'889 | (4) | (9) | ||||
| Mortgages | 35'267 | 35'592 | 34'279 | (1) | 3 | ||||
| Due to customers in savings and investment deposits | 17'952 | 17'586 | 17'631 | 2 | 2 | ||||
| Due to customers, other | 26'402 | 26'686 | 29'218 | (1) | (10) | ||||
| Corporate & Retail Banking key information | |||||||||
| 12 months | |||||||||
| 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | |||||
| Cost/income ratio 1) | 77.6% | 67.6% | 74.6% | 68.7% | 71.1% | ||||
| Return on average allocated capital 1) | 4.8% | 10.5% | 4.6% | 9.3% | 7.8% | ||||
| Average allocated capital in CHF m | 3'802 | 3'893 | 3'901 | 3'898 | 3'905 | ||||
| Pre-tax margin 1) | 10.1% | 21.6% | 10.1% | 19.4% | 16.6% | ||||
| Personnel expenses/operating income | 40.7% | 38.5% | 40.3% | 38.6% | 41.7% | ||||
| Net interest margin | 233 bp | 238 bp | 228 bp | 235 bp | 226 bp | ||||
| Loan growth | (2.4%) | (1.4%) | 0.2% | (2.5%) | (1.4%) | ||||
| Net new assets in CHF bn | 0.2 | (2.3) | 0.9 | (3.2) | 1.3 | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Deposit/loan ratio | 72.1% | 70.2% | 74.2% | ||||||
| Assets under management in CHF bn | 48.0 | 47.8 | 55.9 | ||||||
| Number of employees | 6'702 | 6'818 | 6'898 | ||||||
| Number of branches | 223 | 223 | 227 | ||||||
| 1) Based on the segment results, which exclude certain acquisition-related costs not allocated to the segment. | |||||||||
| Life & Pensions income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Gross premiums written | 4'218 | 4'543 | 4'899 | (7) | (14) | 19'019 | 17'413 | 9 | |
| Reinsurance ceded | (14) | 171 | (61) | – | (77) | (40) | (210) | (81) | |
| Net premiums written | 4'204 | 4'714 | 4'838 | (11) | (13) | 18'979 | 17'203 | 10 | |
| Change in provision for unearned premiums | 29 | 8 | (5) | 263 | – | (4) | (15) | (73) | |
| Net premiums earned | 4'233 | 4'722 | 4'833 | (10) | (12) | 18'975 | 17'188 | 10 | |
| Death and other benefits incurred | (5'373) | (2'672) | (3'234) | 101 | 66 | (14'692) | (12'167) | 21 | |
| Change in provision for future policyholder benefits (technical) | 1'116 | (2'506) | (2'059) | – | – | (5'750) | (6'572) | (13) | |
| Change in provision for future policyholder benefits (separate account) 2) | 80 | 1'104 | (652) | (93) | – | 1'730 | 1'115 | 55 | |
| Dividends to policyholders incurred | 738 | 207 | 458 | 257 | 61 | 1'758 | (287) | – | |
| Acquisition cost (incl. change in DAC/PVFP) | (160) | (358) | (141) | (55) | 13 | (716) | (556) | 29 | |
| Non-deferrable cost | (409) | (333) | (311) | 23 | 32 | (1'463) | (1'312) | 12 | |
| Investment income general account | 333 | 309 | 663 | 8 | (50) | 1'438 | 4'766 | (70) | |
| Investment income separate account 2) | (80) | (1'104) | 652 | (93) | – | (1'730) | (1'115) | 55 | |
| Interest received and paid | (39) | (30) | (67) | 30 | (42) | (92) | (139) | (34) | |
| Interest on bonuses credited to policyholders | (41) | (29) | (36) | 41 | 14 | (146) | (135) | 8 | |
| Other income/(expenses) | (24) | 5 | 2 | – | – | 74 | (53) | – | |
| Net operating profit/(loss) before cumulative effect of change in accounting principle and taxes | 374 | (685) | 108 | – | 246 | (614) | 733 | – | |
| Taxes 3) | (281) | (396) | (28) | (29) | – | (786) | (153) | 414 | |
| Net operating profit/(loss) before cumulative effect of change in accounting principle and minority interests (segment result) | 93 | (1'081) | 80 | – | 16 | (1'400) | 580 | – | |
| 1) 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. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. | |||||||||
| 2) This represents the market impact for separate account (or unit-linked) business, where the investment risk is borne by the policyholder. | |||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been CHF -501 m for 4Q2002. | |||||||||
| Life & Pensions key information | |||||||||
| 12 months | |||||||||
| 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | |||||
| Expense ratio 1) | 13.4% | 14.6% | 9.4% | 11.5% | 10.9% | ||||
| Growth in gross premiums written | (13.9%) | 44.8% | 16.0% | 9.2% | 12.7% | ||||
| Return on invested assets (excluding separate account business) | |||||||||
| Current income | 3.6% | 3.6% | 4.1% | 3.9% | 4.3% | ||||
| Realized gains/losses and other income/expenses | (2.5%) | (2.4%) | (1.6%) | (2.5%) | 0.5% | ||||
| Total return on invested assets 2) | 1.2% | 1.2% | 2.5% | 1.4% | 4.8% | ||||
| Net new assets in CHF bn 3) | (1.3) | 0.4 | 1.8 | 3.4 | 5.0 | ||||
| Total sales in CHF m 4) | 5'283 | 5'240 | 6'172 | 22'790 | 22'505 | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Assets under management in CHF bn 5) | 110.8 | 113.0 | 115.2 | ||||||
| Technical provisions in CHF m | 105'939 | 108'098 | 108'326 | ||||||
| Number of employees | 7'815 | 7'927 | 7'755 | ||||||
| 1) Operating expenses (i.e. acquisition and non-deferrable cost)/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 income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Gross premiums written | 3'846 | 3'755 | 3'685 | 2 | 4 | 18'391 | 18'412 | 0 | |
| Reinsurance ceded | (299) | (232) | (209) | 29 | 43 | (1'150) | (1'572) | (27) | |
| Net premiums written | 3'547 | 3'523 | 3'476 | 1 | 2 | 17'241 | 16'840 | 2 | |
| Change in provision for unearned premiums and in provision for future policy benefits (health) | 485 | 414 | 319 | 17 | 52 | (1'538) | (1'833) | (16) | |
| Net premiums earned | 4'032 | 3'937 | 3'795 | 2 | 6 | 15'703 | 15'007 | 5 | |
| Claims and annuities incurred, net | (3'034) | (2'920) | (2'837) | 4 | 7 | (11'749) | (11'509) | 2 | |
| Dividends to policyholders incurred, net | 109 | (53) | (50) | – | – | 106 | (311) | – | |
| Acquisition cost (incl. change in DAC/PVFP) | (647) | (630) | (584) | 3 | 11 | (2'529) | (2'391) | 6 | |
| Non-deferrable cost | (481) | (496) | (497) | (3) | (3) | (1'959) | (1'944) | 1 | |
| Underwriting result, net | (21) | (162) | (173) | (87) | (88) | (428) | (1'148) | (63) | |
| Net investment income | 59 | 110 | 503 | (46) | (88) | (10) | 2'217 | – | |
| Interest received and paid | (39) | (36) | (39) | 8 | 0 | (106) | (98) | 8 | |
| Other income/(expenses) | (69) | (115) | (216) | (40) | (68) | (349) | (165) | 112 | |
| Net operating profit/(loss) before cumulative effect of change in accounting principle and taxes | (70) | (203) | 75 | (66) | – | (893) | 806 | – | |
| Taxes 2) | 76 | (158) | 7 | – | – | (99) | (224) | (56) | |
| Net operating profit/(loss) before cumulative effect of change in accounting principle and minority interests (segment result) | 6 | (361) | 82 | – | (93) | (992) | 582 | – | |
| 1) 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. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. | |||||||||
| 2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been CHF -200 m for 4Q2002. | |||||||||
| Insurance key information | |||||||||
| 12 months | |||||||||
| 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | |||||
| Combined ratio (excluding dividends to policyholders) | 103.2% | 102.8% | 103.3% | 103.4% | 105.6% | ||||
| Claims ratio 1) | 75.2% | 74.2% | 74.8% | 74.8% | 76.7% | ||||
| Expense ratio 2) | 28.0% | 28.6% | 28.5% | 28.6% | 28.9% | ||||
| Return on invested assets | |||||||||
| Current income | 3.9% | 4.1% | 3.9% | 4.2% | 4.6% | ||||
| Realized gains/losses and other income/expenses | (3.4%) | (2.5%) | 2.4% | (4.3%) | 2.3% | ||||
| Total return on invested assets 3) | 0.5% | 1.6% | 6.3% | (0.1%) | 6.9% | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Assets under management in CHF bn | 30.7 | 31.1 | 30.5 | ||||||
| Technical provisions in CHF m | 28'745 | 29'706 | 27'738 | ||||||
| Number of employees | 24'315 | 24'224 | 22'197 | ||||||
| 1) Claims and annuities incurred, net/net premiums earned. | |||||||||
| 2) Operating expenses (i.e. acquisition and non-deferrable cost)/net premiums earned. | |||||||||
| 3) Total investment return on invested assets includes depreciation on real estate and investment expenses as well as investment income and realized gains and losses. | |||||||||
REVIEW OF BUSINESS UNITS | CREDIT SUISSE FIRST BOSTON
Credit Suisse First Boston recorded a net loss of USD 811 million (CHF 1.3 billion) for the fourth quarter and a net loss of USD 1.2 billion (CHF 1.9 billion) for the full year 2002, including after-tax exceptional items of USD 813 million (CHF 1.3 billion). In addition, this result reflects reduced revenues, against the backdrop of a protracted downturn in the markets, and charges associated with legacy assets. Operating expenses decreased 14% quarter-on-quarter and were down 23% for the full year 2002 compared with 2001. Excluding exceptional items, the cumulative effect of a change in accounting principles and the amortization of acquired intangible assets and goodwill, Credit Suisse First Boston posted a net operating profit of USD 11 million (CHF 15 million) in the fourth quarter and USD 140 million (CHF 219 million) for the full year 2002.
Credit Suisse First Boston posted a net loss of USD 811 million (CHF 1.3 billion) in the fourth quarter, including after-tax exceptional items of USD 813 million (CHF 1.3 billion). This compared with a net loss of USD 425 million (CHF 679 million) in the third quarter 2002 and a net loss of USD 939 million (CHF 1.6 billion) in the fourth quarter of 2001.
For the full year 2002, Credit Suisse First Boston posted a net loss of USD 1.2 billion (CHF 1.9 billion), compared with a net loss of USD 821 million (CHF 1.4 billion) in 2001. Results for 2002 and 2001 include pre-tax exceptional items of USD 890 million (CHF 1.4 billion) and USD 845 million (CHF 1.4 billion), respectively. A change in accounting principles allowing the recognition of deferred tax assets on net operating losses led to the recognition of tax benefits of USD 556 million (CHF 868 million) in 2002. Full year 2002 results also reflect the positive cumulative effect of the change in accounting principles of USD 162 million (CHF 254 million) from prior years.
Excluding exceptional items, the positive cumulative effect of the change in accounting principles and the amortization of acquired intangible assets and goodwill, Credit Suisse First Boston posted a net operating profit of USD 140 million (CHF 219 million) for the full year 2002, compared with USD 530 million (CHF 893 million) in 2001.
The pre-tax exceptional items of USD 890 million (CHF 1.4 billion), or USD 813 million (CHF 1.3 billion) after tax, which occurred in the fourth quarter 2002, comprise a pre-tax loss of USD 86 million (CHF 134 million), or USD 250 million (CHF 390 million) after tax, related to the sale of Pershing; a USD 150 million (CHF 234 million) pre-tax charge for the agreement in principle with US regulators involving research analyst independence and the allocation of IPO shares to executive officers; a USD 450 million (CHF 702 million) pre-tax provision for Credit Suisse First Boston‘s private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation; and a USD 204 million (CHF 319 million) pre-tax charge related to the previously announced USD 500 million cost reduction program. Expenses associated with this cost reduction program include USD 165 million (CHF 257 million) of severance-related costs, USD 21 million (CHF 33 million) of excess facilities costs, and USD 18 million (CHF 28 million) of costs associated with the sale of a 90% participation in its non-core South African equity brokerage business to a management empowerment company in South Africa.
The provision relating to private litigation represents management‘s current estimate after consultation with counsel of the probable aggregate costs associated with such matters. Credit Suisse First Boston believes that it has substantial defenses in these private litigation matters, which are at an early stage. Given that it is difficult to predict the outcome of these matters, where claimants seek large or indeterminate damages or where the cases present novel theories or involve a large number of parties, Credit Suisse First Boston cannot state with confidence what the timing or eventual outcome will actually be. The provision may be subject to revision in the future.
Fourth quarter 2002 operating income was down 11% on the third quarter to USD 2.4 billion (CHF 3.4 billion), primarily due to reduced revenues in the Institutional Securities segment (formerly the Investment Banking segment). The segment‘s Fixed Income division reported the most significant decrease, related primarily to developed markets credit and interest rate products. However, the Investment Banking division reported an increase in operating income in the fourth quarter, principally in the private equity business. Compared with the same period of 2001, the segment‘s fourth quarter operating income fell 13%, with declines across most divisions. For the full year 2002, Credit Suisse First Boston‘s operating income decreased 21% versus 2001, to USD 11.8 billion (CHF 18.4 billion).
As a result of Credit Suisse First Boston‘s continued commitment to cost savings, fourth quarter operating expenses fell 14% versus the previous quarter and were down 13% on the fourth quarter 2001. For the full year 2002, operating expenses declined by 23% or USD 2.7 billion (CHF 5.8 billion) to USD 9.3 billion (CHF 14.5 billion). Much of this cost reduction was driven by a 14% decline in headcount during 2002 and the sale of non-core businesses. Personnel expenses declined 24% compared with 2001, and other operating expenses were down 20%. As previously announced, Credit Suisse First Boston launched a further cost reduction program in the fourth quarter to reduce annual operating expenses by approximately USD 500 million by means of further headcount reductions. The business unit‘s personnel expense/revenue ratio on an operating basis improved from 54.4% in 2001 to 52.6% in 2002.
In January 2003, Credit Suisse First Boston announced a definitive agreement to sell its Pershing operation to The Bank of New York Company, Inc. for USD 2.0 billion (approximately CHF 2.8 billion) in cash, together with the repayment of a USD 480 million (CHF 667 million) subordinated loan and an additional contingent payment of up to USD 50 million (CHF 70 million) based on future performance. With this transaction, which is expected to close in the first half of 2003 subject to regulatory and other conditions, the regulatory capital of Credit Suisse First Boston and Credit Suisse Group will be increased through the elimination of approximately USD 500 million (CHF 695 million) in goodwill and a reduction of USD 1.6 billion (CHF 2.2 billion) in risk-weighted assets. The 2002 operating income and operating expenses of Pershing amounted to USD 854 million (CHF 1.3 billion) and USD 661 million (CHF 1.0 billion), respectively.
Assets under management, including private equity, totaled USD 372.5 billion (CHF 517.8 billion) as of December 31, 2002, up 3.7% on a US dollar basis from September 30, 2002. This increase reflects foreign exchange movements and a slight recovery in major market indices during the fourth quarter, but was partially offset by net asset outflows. Compared with December 31, 2001, assets under management declined 8.5% on a US dollar basis. Discretionary assets under management as of December 31, 2002, totaled USD 234.1 billion (CHF 325.5 billion) up marginally from September 30, 2002, and down 8.4% versus December 31, 2001, on a US dollar basis. Credit Suisse Asset Management continued to experience performance-related net asset outflows through the fourth quarter. The business unit‘s advisory assets under management were USD 138.3 billion (CHF 192.3 billion) as of December 31, 2002, up 9.0% from September 30, 2002, and down 8.8% versus year-end 2001 on a US dollar basis.
In response to the current market environment, Credit Suisse First Boston has implemented several measures, which include the alignment of its cost base to current conditions, including a reduction in guaranteed compensation and the reduction of the risk level associated with the legacy asset portfolios. These measures, along with the scheduled completion of the amortization of DLJ retention payments in June 2003, are expected to enhance the future results of the business unit. Credit Suisse First Boston will continue to build on the strength of its core franchise and platform.
Institutional Securities
The Institutional Securities segment reported fourth quarter operating income of USD 1.9 billion (CHF 2.7 billion), down 12% on the third quarter 2002 and down 13% versus the fourth quarter of 2001, reflecting declines in the Fixed Income and Equity businesses. For the full year 2002, the segment‘s operating income declined 23% compared with 2001, due to decreases in the Fixed Income and Equity businesses as well as writedowns related to the legacy asset portfolio. Fourth quarter 2002 operating expenses were USD 1.5 billion (CHF 2.1 billion), a decrease of 16% on the previous quarter and of 15% on the fourth quarter 2001, due primarily to reductions in incentive compensation. As a result of cost reduction measures, operating expenses for 2002 decreased 24%, with personnel expenses down USD 1.8 billion (CHF 3.7 billion), or 26%, and other operating expenses down USD 620 million (CHF 1.4 billion), or 20%, versus the previous year.
The corporate credit environment remained unfavorable in the fourth quarter. Credit provisions of USD 298 million (CHF 447 million) and USD 899 million (CHF 1.4 billion) were recorded against impaired corporate lending assets for the fourth quarter and full year 2002, respectively. This compared with provisions of USD 403 million (CHF 630 million) in the previous quarter and of USD 762 million (CHF 1.3 billion) in 2001. Additionally, a credit provision of USD 340 million (CHF 530 million) related to a change in estimate for the risk of loss inherent in the portfolio of non-impaired loans and commitments was recorded in the fourth quarter of 2002. During the fourth quarter, Credit Suisse Group released a portion of its reserve for general banking risks, allocating USD 245 million (CHF 382 million) of this release to Credit Suisse First Boston to offset the after-tax impact of the inherent loan loss; this release was reflected as extraordinary income. Credit provisions related to non-continuing real estate lending activity totaled USD 154 million (CHF 241 million) for 2002, compared with a net release of provisions of USD 38 million (CHF 64 million) in 2001, and a net release of USD 8 million (CHF 17 million) recorded in the fourth quarter of 2002. Provisions of USD 91 million (CHF 142 million) related to excess office facilities were recorded in 2002.
Fixed Income operating income for the fourth quarter of 2002 was down 47% versus the third quarter, to USD 587 million (CHF 806 million). This decline was primarily attributable to the developed markets credit products business, which was adversely impacted by reduced liquidity and continued uncertainty in the utility, airline and telecommunications sectors. Additionally, notes issued by affiliates of National Century Financial Enterprises, Inc. (NCFE), in the principal amount of USD 258 million held by Credit Suisse First Boston for its own account, were written down by USD 214 million (CHF 332 million) to 17% of their principal amount. Approximately one-half of this writedown was recorded through operating income, with the other half recorded through provisions. The fourth quarter saw a decline in the emerging markets business – which had been favorably impacted in Brazil in the third quarter – and a decline in the trading results of the interest rate products business, also including a seasonal activity decline.
Compared with the same period of 2001, fourth quarter operating income declined 30%. Declines in the developed markets credit products and interest rate products businesses in the fourth quarter 2002 were partially offset by an improvement in emerging market results, which had been adversely impacted in the fourth quarter of 2001 by difficult economic conditions in emerging markets, including Argentina.
For the full year 2002, operating income decreased 25% versus 2001, due in particular to declines in the interest rate products business, which was positively impacted by significant interest rate declines in the US and Europe in 2001. The Fixed Income business ranked number one in high yield and asset-backed new issuances for 2002 and improved its overall global debt issuance position to second.
Equity operating income decreased 22%, to USD 562 million (CHF 806 million), in the fourth quarter 2002 compared with the third quarter, due to a decline in the derivatives business. However, fourth quarter operating income from the cash businesses was stable compared with the previous quarter. Compared to the fourth quarter of 2001, operating income declined 20%, primarily as a result of declines in the US cash businesses. Operating income totaled USD 2.9 billion (CHF 4.5 billion) for the full year 2002, down 26% on 2001. The 2002 equity market was challenging, with reduced volumes in US new issuances, depressed trading volumes and reduced commission margins in the cash customer businesses. Most major market indices posted declines for the year. Operating income from convertible securities also decreased, impacted by corporate defaults, widening credit spreads, declines in the telecom and energy sectors, and reduced new issuance activity. In 2002, Credit Suisse First Boston ranked fourth in global equity new issuances, tied for first place in global equity research, ranked first in pan-European and Latin American research and second in non-Japan Asia research.
Investment Banking‘s fourth quarter 2002 operating income, which includes private equity, increased 68% versus the previous quarter to USD 813 million (CHF 1.2 billion), due principally to gains on the sale of an investment in Swiss Re and slightly higher banking results. Merger and acquisition (M&A) and equity new issuance activity remained depressed. Operating income increased 38% compared to the fourth quarter of 2001 due to gains in the private equity area, partially offset by declines as a result of lower fees from equity new issuances and M&A activity. The division‘s full year operating income increased 3% versus 2001, reflecting gains from sales and increased management fees in the private equity business. However, these gains were partially offset by reduced fee income from M&A activity. During 2002, the value of worldwide merger transactions fell 30%, with Credit Suisse First Boston ranking third in terms of US dollar volume of announced transactions for 2002.
Private equity net gains (both realized and unrealized gains and losses) were USD 230 million (CHF 355 million) in the fourth quarter 2002, compared with net gains of USD 12 million (CHF 14 million) in the third quarter 2002 and net losses of USD 97 million (CHF 167 million) in the fourth quarter of 2001. A full year net gain of USD 364 million (CHF 568 million) was recorded for 2002, compared with a net loss of USD 258 million (CHF 436 million) in 2001. These amounts include gains from the sale of an investment in Swiss Re of USD 309 million (CHF 473 million) and USD 96 million (CHF 141 million) in the fourth and third quarters of 2002, respectively. Total gains from the sale of the investment in Swiss Re amounted to USD 629 million (CHF 981 million) in 2002 and USD 148 million (CHF 251 million) in 2001; the entire stake in Swiss Re has now been sold. Management and performance fees amounted to USD 53 million (CHF 78 million) in the fourth quarter 2002, versus USD 56 million (CHF 83 million) in the previous quarter and USD 55 million (CHF 94 million) in the fourth quarter of 2001. Total management and performance fees were USD 225 million (CHF 351 million) and USD 253 million (CHF 428 million) for 2002 and 2001, respectively. The book value of the private equity investments was USD 1.9 billion (CHF 2.7 billion) and fair value was USD 2.0 billion (CHF 2.8 billion) as of December 31, 2002. As announced in 2002, Credit Suisse First Boston is exploring the sale of certain private equity investments, including investments in mature third-party leverage buyout funds. The aggregate amount of losses reported against operating income for these private equity investments totaled USD 123 million (CHF 188 million) and USD 275 million (CHF 430 million) for the fourth quarter and full year 2002, respectively.
Operating losses of USD 85 million (CHF 126 million) for the fourth quarter and of USD 286 million (CHF 446 million) for the full year 2002 were reported in “Other” within the Institutional Securities segment, and were primarily attributable to losses generated by the non-continuing real estate and distressed asset portfolios. The net exposure of the non-continuing real estate portfolio – including unfunded commitments – was USD 1.5 billion (CHF 2.1 billion) as of December 31, 2002, a decrease of USD 548 million (CHF 971 million) and USD 1.4 billion (CHF 2.8 billion) versus September 30, 2002, and December 31, 2001, respectively. As of December 31, 2002, the carrying amount of distressed portfolio assets totaled USD 512 million (CHF 712 million), a decrease of 18% versus September 30, 2002, and of 53% compared with December 31, 2001. The aggregate amount of charges related to these non-continuing legacy businesses in 2002 was USD 797 million (CHF 1.2 billion), of which USD 643 million (CHF 1.0 billion) was netted against operating income and USD 154 million (CHF 240 million) was included in provisions. In the fourth quarter 2002, charges related to non-continuing legacy businesses amounted to USD 149 million (CHF 213 million), of which USD 157 million (CHF 231 million) was netted against operating income and USD 8 million (CHF 17 million) was reflected as a reduction in provisions.
CSFB Financial Services
CSFB Financial Services reported operating income of USD 484 million (CHF 707 million) for the fourth quarter 2002, down 3% on the third quarter 2002 and 19% on the fourth quarter of 2001. Year-on-year, operating income decreased 13% to USD 2.1 billion (CHF 3.2 billion) due to net outflows of assets under management, a decline in major market indices across the globe, lower trading volumes, an overall decline in customer debit balances, and the impact of the sale of CSFB direct and Autranet. Operating expenses decreased 15% compared with 2001 due to the impact of a number of cost reduction initiatives, including a 16% reduction in headcount, greater discipline regarding discretionary spending, and the sale of CSFB direct and Autranet. Excluding divestitures, expenses were down 5% compared to 2001. Fourth quarter 2002 operating expenses were 4% and 3% lower than those in the previous quarter and the fourth quarter of 2001, respectively.
At Credit Suisse Asset Management , fourth quarter and full year 2002 operating income declined versus the fourth quarter and full year 2001 as a result of lower fees associated with the net outflow of assets – particularly in the US – and lower performance fees. Fourth quarter operating income increased 3% compared with the previous quarter, despite a 4.6% decrease in discretionary institutional assets under management. During 2002, discretionary institutional assets under management declined CHF 85.5 billion, or 23.5%, versus 2001. The decrease in assets under management was attributable to market declines, foreign exchange movements and performance-related net asset outflows. In December 2002, Credit Suisse Asset Management announced organizational changes designed to strengthen its global platform, including a focus on global rather than regional management.
Pershing‘s fourth quarter 2002 operating income was slightly below the preceding quarter and the fourth quarter of 2001. For the full year 2002, operating income declined 6% to USD 854 million (CHF 1.3 billion) versus 2001, reflecting lower transaction volumes that adversely impacted trading and commission income. Trades per day averaged 122,600 for the fourth quarter compared with 121,000 for the third quarter of 2002 and 133,100 for the fourth quarter of 2001. Average trades per day for 2002 totaled 125,800, 14% lower than the 146,100 average trades per day in 2001. Reduced customer debit balances, averaging USD 4.6 billion for 2002 compared with USD 6.2 billion in 2001, contributed to a year-on-year decline in interest income. Customer debit balances averaged USD 4.2 billion in the fourth quarter of 2002, USD 4.4 billion in the third quarter of 2002 and USD 5.3 billion in the fourth quarter of 2001. Operating expenses in 2002 amounted to USD 661 million (CHF 1.0 billion). In January 2003, Credit Suisse First Boston announced an agreement to sell Pershing, as noted above.
Private Client Services recorded a decrease in operating income in the fourth quarter 2002, compared with the previous quarter and the fourth quarter 2001. Operating income was down, reflecting the weak equity market environment, with customer trading, customer debit balances and assets under management declining. Total transactions in 2002 amounted to 1.4 million, down 14% from 1.7 million transactions recorded in 2001. Customer debit balances averaged USD 751 million in 2002 versus USD 1.2 billion in 2001. Private Client Services’ net new assets stood at CHF 8.0 billion for the full year 2002 compared with CHF 15.8 billion for 2001, with an increase of CHF 2.7 billion in the fourth quarter of 2002 compared with the third quarter of 2002.
| Credit Suisse First Boston business unit income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in USD m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Operating income | 2'361 | 2'638 | 2'757 | (11) | (14) | 11'769 | 14'948 | (21) | |
| Personnel expenses | 1'068 | 1'394 | 1'124 | (23) | (5) | 6'191 | 8'125 | (24) | |
| Other operating expenses | 802 | 775 | 1'016 | 3 | (21) | 3'086 | 3'852 | (20) | |
| Operating expenses | 1'870 | 2'169 | 2'140 | (14) | (13) | 9'277 | 11'977 | (23) | |
| Gross operating profit | 491 | 469 | 617 | 5 | (20) | 2'492 | 2'971 | (16) | |
| Depreciation of non-current assets | 107 | 139 | 157 | (23) | (32) | 485 | 562 | (14) | |
| Valuation adjustments, provisions and losses 2) | 657 | 560 | 477 | 17 | 38 | 1'679 | 912 | 84 | |
| Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes | (273) | (230) | (17) | 19 | – | 328 | 1'497 | (78) | |
| Extraordinary income/(expenses), net | 246 | 0 | 0 | – | – | 262 | (10) | – | |
| Taxes 3) 4) | 138 | 84 | 55 | 64 | 151 | 30 | (310) | – | |
| Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests | 111 | (146) | 38 | – | 192 | 620 | 1'177 | (47) | |
| Acquisition interest | (57) | (68) | (100) | (16) | (43) | (323) | (489) | (34) | |
| Amortization of retention payments | (97) | (100) | (128) | (3) | (24) | (416) | (480) | (13) | |
| Amortization of acquired intangible assets and goodwill | (209) | (207) | (222) | 1 | (6) | (835) | (862) | (3) | |
| Exceptional items | (890) | 0 | (845) | – | 5 | (890) | (845) | 5 | |
| Tax impact | 169 | 96 | 319 | 76 | (47) | 488 | 679 | (28) | |
| Cumulative effect of change in accounting principle 3) | 162 | – | – | – | – | 162 | – | – | |
| Net profit/(loss) before minority interests | (811) | (425) | (938) | 91 | (14) | (1'194) | (820) | 46 | |
| Minority interests | 0 | 0 | (1) | – | (100) | 0 | (1) | (100) | |
| Net profit/(loss) | (811) | (425) | (939) | 91 | (14) | (1'194) | (821) | 45 | |
See page 23 for footnotes. |
|||||||||
| Reconciliation to net operating profit/(loss) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in USD m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Net profit/(loss) | (811) | (425) | (939) | 91 | (14) | (1'194) | (821) | 45 | |
| Amortization of acquired intangible assets and goodwill | 209 | 207 | 222 | 1 | (6) | 835 | 862 | (3) | |
| Exceptional items | 890 | 0 | 845 | – | 5 | 890 | 845 | 5 | |
| Tax impact | (115) | (37) | (242) | 211 | (52) | (229) | (356) | (36) | |
| Cumulative effect of change in accounting principle | (162) | – | – | – | – | (162) | – | – | |
| Net operating profit/(loss) | 11 | (255) | (114) | – | – | 140 | 530 | (74) | |
| Credit Suisse First Boston business unit income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Operating income | 3'401 | 3'856 | 4'781 | (12) | (29) | 18'360 | 25'262 | (27) | |
| Personnel expenses | 1'512 | 2'031 | 1'969 | (26) | (23) | 9'658 | 13'731 | (30) | |
| Other operating expenses | 1'184 | 1'157 | 1'747 | 2 | (32) | 4'815 | 6'512 | (26) | |
| Operating expenses | 2'696 | 3'188 | 3'716 | (15) | (27) | 14'473 | 20'243 | (29) | |
| Gross operating profit | 705 | 668 | 1'065 | 6 | (34) | 3'887 | 5'019 | (23) | |
| Depreciation of non-current assets | 156 | 209 | 270 | (25) | (42) | 757 | 951 | (20) | |
| Valuation adjustments, provisions and losses 2) | 993 | 867 | 810 | 15 | 23 | 2'618 | 1'541 | 70 | |
| Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes | (444) | (408) | (15) | 9 | – | 512 | 2'527 | (80) | |
| Extraordinary income/(expenses), net | 383 | (1) | 0 | – | – | 408 | (15) | – | |
| Taxes 3) 4) | 220 | 143 | 90 | 54 | 144 | 48 | (524) | – | |
| Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests | 159 | (266) | 75 | – | 112 | 968 | 1'988 | (51) | |
| Acquisition interest | (80) | (99) | (175) | (19) | (54) | (504) | (828) | (39) | |
| Amortization of retention payments | (142) | (148) | (220) | (4) | (35) | (649) | (812) | (20) | |
| Amortization of acquired intangible assets and goodwill | (308) | (308) | (379) | 0 | (19) | (1'303) | (1'455) | (10) | |
| Exceptional items | (1'389) | 0 | (1'428) | – | (3) | (1'389) | (1'428) | (3) | |
| Tax impact | 254 | 142 | 543 | 79 | (53) | 761 | 1'148 | (34) | |
| Cumulative effect of change in accounting principle 3) | 254 | – | – | – | – | 254 | – | – | |
| Net profit/(loss) before minority interests | (1'252) | (679) | (1'584) | 84 | (21) | (1'862) | (1'387) | 34 | |
| Minority interests | 0 | 0 | (1) | – | (100) | 0 | (1) | (100) | |
| Net profit/(loss) | (1'252) | (679) | (1'585) | 84 | (21) | (1'862) | (1'388) | 34 | |
| 1) Certain reclassifications have been made to conform to the current presentation. The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. The exceptional items are discussed on page 24. Certain other items, including brokerage, execution and clearing expenses and contractor costs, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group‘s consolidated results. For a complete reconciliation of the business unit results to the Group‘s consolidated results and a discussion of the material reconciling items, please refer to pages 33-36. | |||||||||
| 2) The amount in 4Q2001 includes valuation adjustments taken at Group level of CHF 112 m (USD 66 m), resulting from the difference between the statistical and the actual credit provisions (12 months 2001: CHF 194 m (USD 115 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 provisions. | |||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been CHF -648 m (USD -418 m) for 4Q2002. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002, 3Q2002 and 4Q2001 of CHF 22 m (USD 14 m), CHF 148 m (USD 91 m) and CHF 366 m (USD 218 m), respectively, and CHF -248 m (USD -147 m) for the 12 months 2001. | |||||||||
| 4) Excluding tax impact on acquisition-related costs as well as exceptional items. | |||||||||
| Reconciliation to net operating profit/(loss) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Net profit/(loss) | (1'252) | (679) | (1'585) | 84 | (21) | (1'862) | (1'388) | 34 | |
| Amortization of acquired intangible assets and goodwill | 308 | 308 | 379 | 0 | (19) | 1'303 | 1'455 | (10) | |
| Exceptional items | 1'389 | 0 | 1'428 | – | (3) | 1'389 | 1'428 | (3) | |
| Tax impact | (176) | (55) | (410) | 220 | (57) | (357) | (602) | (41) | |
| Cumulative effect of change in accounting principle | (254) | – | – | – | – | (254) | – | – | |
| Net operating profit/(loss) | 15 | (426) | (188) | – | – | 219 | 893 | (75) | |
| Credit Suisse First Boston business unit key information | |||||||||
| 12 months | |||||||||
| based on CHF amounts | 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | ||||
| Cost/income ratio 1) | 97.4% | 94.4% | 113.8% | 90.3% | 94.3% | ||||
| Cost/income ratio (operating) 2) | 83.9% | 88.1% | 83.4% | 83.0% | 83.9% | ||||
| Return on average allocated capital 1) | (36.1%) | (18.8%) | (42.6%) | (12.9%) | (8.8%) | ||||
| Return on average allocated capital (operating) 2) 3) | 0.4% | (11.8%) | (5.0%) | 1.5% | 5.7% | ||||
| Average allocated capital in CHF m | 13'864 | 14'437 | 14'877 | 14'407 | 15'704 | ||||
| Pre-tax margin 1) | (52.0%) | (25.7%) | (48.5%) | (15.0%) | (8.2%) | ||||
| Pre-tax margin (operating) 2) | (8.3%) | (17.0%) | (8.6%) | (1.3%) | 3.5% | ||||
| Personnel expenses/operating income 1) | 57.1% | 58.0% | 69.4% | 59.1% | 63.6% | ||||
| Personnel expenses/operating income (operating) 2) | 44.5% | 52.7% | 41.2% | 52.6% | 54.4% | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Number of employees | 23'424 | 24'961 | 27'302 | ||||||
| 1) Based on the business unit results including certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments as well as certain reclassifications. Please refer to pages 33-36. | |||||||||
| 2) Based on the results of the separate segments comprising the business unit, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments and include certain reclassifications. Please refer to pages 33-36. | |||||||||
| 3) Excluding cumulative effect of change in accounting principle. | |||||||||
| Exceptional items | |||||||||
| Valuation adjust. | |||||||||
| Personnel | provisions | Extraordinary | |||||||
| expenses | and losses | expenses | Pre-tax | After-tax | Pre-tax | After-tax | |||
| in 4Q2002 and 12 months 2002 | in USD m | in USD m | in USD m | in USD m | in USD m | in CHF m | in CHF m | ||
| Provision for the regulatory agreement in principle | - | 150 | - | 150 | 124 | 234 | 193 | ||
| Loss in connection with the sale of Pershing | - | - | 86 | 86 | 250 | 134 | 390 | ||
| Restructuring | 155 | 31 | 18 | 204 | 147 | 319 | 230 | ||
| Provision for certain private litigation | - | 450 | - | 450 | 292 | 702 | 456 | ||
| Exceptional items | 890 | 813 | 1'389 | 1'269 | |||||
| Overview of business unit Credit Suisse First Boston | 1) | |||||||
| in USD m | in CHF m | |||||||
| CSFB | CSFB | |||||||
| Institutional | Financial | Credit Suisse | Institutional | Financial | Credit Suisse | |||
| 4Q2002 | Securities | Services | First Boston | Securities | Services | First Boston | ||
| Operating income | 1'877 | 484 | 2'361 | 2'694 | 707 | 3'401 | ||
| Personnel expenses | 831 | 237 | 1'068 | 1'166 | 346 | 1'512 | ||
| Other operating expenses | 641 | 161 | 802 | 947 | 237 | 1'184 | ||
| Operating expenses | 1'472 | 398 | 1'870 | 2'113 | 583 | 2'696 | ||
| Gross operating profit | 405 | 86 | 491 | 581 | 124 | 705 | ||
| Depreciation of non-current assets | 81 | 26 | 107 | 117 | 39 | 156 | ||
| Valuation adjustments, provisions and losses | 664 | (7) | 657 | 1'006 | (13) | 993 | ||
| Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes | (340) | 67 | (273) | (542) | 98 | (444) | ||
| Extraordinary income/(expenses), net | 246 | 0 | 246 | 383 | 0 | 383 | ||
| Taxes 2) | 157 | (19) | 138 | 247 | (27) | 220 | ||
| Net operating profit/(loss) before exceptional items, acquisition-related costs and cumulative effect of change in accounting principle | 63 | 48 | 111 | 88 | 71 | 159 | ||
| Acquisition interest | (57) | (80) | ||||||
| Amortization of retention payments | (97) | (142) | ||||||
| Amortization of acquired intangible assets and goodwill | (209) | (308) | ||||||
| Exceptional items | (890) | (1'389) | ||||||
| Tax impact | 169 | 254 | ||||||
| Cumulative effect of change in accounting principle | 162 | 254 | ||||||
| Net profit/(loss) | (811) | (1'252) | ||||||
| Average allocated capital | 9'327 | 483 | 9'624 | 13'438 | 701 | 13'864 | ||
| 1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. The exceptional items are discussed on page 24. Certain other items, including brokerage, execution and clearing expenses and contractor costs, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group‘s consolidated results. For a complete reconciliation of the business unit results to the Group‘s consolidated results and a discussion of the material reconciling items, please refer to pages 33-36. | ||||||||
| 2) Excluding tax impact on acquisition-related costs as well as exceptional items. | ||||||||
| Institutional Securities income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in USD m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Fixed Income 2) | 587 | 1'103 | 842 | (47) | (30) | 4'222 | 5'614 | (25) | |
| Equity | 562 | 718 | 699 | (22) | (20) | 2'895 | 3'894 | (26) | |
| Investment Banking | 813 | 485 | 589 | 68 | 38 | 2'864 | 2'779 | 3 | |
| Other 2) | (85) | (169) | 30 | (50) | – | (286) | 268 | – | |
| Operating income | 1'877 | 2'137 | 2'160 | (12) | (13) | 9'695 | 12'555 | (23) | |
| Personnel expenses | 831 | 1'140 | 901 | (27) | (8) | 5'183 | 6'961 | (26) | |
| Other operating expenses | 641 | 613 | 827 | 5 | (22) | 2'442 | 3'062 | (20) | |
| Operating expenses | 1'472 | 1'753 | 1'728 | (16) | (15) | 7'625 | 10'023 | (24) | |
| Gross operating profit | 405 | 384 | 432 | 5 | (6) | 2'070 | 2'532 | (18) | |
| Depreciation of non-current assets | 81 | 116 | 131 | (30) | (38) | 392 | 457 | (14) | |
| Valuation adjustments, provisions and losses | 664 | 549 | 469 | 21 | 42 | 1'664 | 896 | 86 | |
| Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes | (340) | (281) | (168) | 21 | 102 | 14 | 1'179 | (99) | |
| Extraordinary income/(expenses), net | 246 | 0 | 0 | – | – | 262 | (1) | – | |
| Taxes 3) | 157 | 98 | 85 | 60 | 85 | 118 | (260) | – | |
| Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result) | 63 | (183) | (83) | – | – | 394 | 918 | (57) | |
| 1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. | |||||||||
| 2) Reflects the movement of the results of certain non-continuing real estate and distressed assets from Fixed Income to Other. | |||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been USD -372 m for 4Q2002. | |||||||||
| Institutional Securities income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Fixed Income 2) | 806 | 1'627 | 1'471 | (50) | (45) | 6'586 | 9'488 | (31) | |
| Equity | 806 | 1'062 | 1'213 | (24) | (34) | 4'516 | 6'581 | (31) | |
| Investment Banking | 1'208 | 693 | 1'017 | 74 | 19 | 4'469 | 4'697 | (5) | |
| Other 2) | (126) | (268) | 52 | (53) | – | (446) | 451 | – | |
| Operating income | 2'694 | 3'114 | 3'753 | (13) | (28) | 15'125 | 21'217 | (29) | |
| Personnel expenses | 1'166 | 1'652 | 1'583 | (29) | (26) | 8'086 | 11'764 | (31) | |
| Other operating expenses | 947 | 916 | 1'421 | 3 | (33) | 3'810 | 5'176 | (26) | |
| Operating expenses | 2'113 | 2'568 | 3'004 | (18) | (30) | 11'896 | 16'940 | (30) | |
| Gross operating profit | 581 | 546 | 749 | 6 | (22) | 3'229 | 4'277 | (25) | |
| Depreciation of non-current assets | 117 | 175 | 224 | (33) | (48) | 612 | 772 | (21) | |
| Valuation adjustments, provisions and losses | 1'006 | 850 | 797 | 18 | 26 | 2'595 | 1'514 | 71 | |
| Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes | (542) | (479) | (272) | 13 | 99 | 22 | 1'991 | (99) | |
| Extraordinary income/(expenses), net | 383 | (1) | 0 | – | – | 408 | (1) | – | |
| Taxes 3) | 247 | 163 | 142 | 52 | 74 | 185 | (439) | – | |
| Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result) | 88 | (317) | (130) | – | – | 615 | 1'551 | (60) | |
| 1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. | |||||||||
| 2) Reflects the movement of the results of certain non-continuing real estate and distressed assets from Fixed Income to Other. | |||||||||
| 3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been CHF -579 m for 4Q2002. | |||||||||
| Institutional Securities balance sheet information | |||||||||
| in CHF m | 31.12.02 | 30.09.02 | 31.12.01 | ||||||
| Total assets | 588'904 | 621'578 | 648'455 | ||||||
| Total assets in USD m | 423'611 | 416'970 | 387'045 | ||||||
| Due from banks | 198'511 | 200'921 | 198'806 | ||||||
| of which securities lending and reverse repurchase agreements | 156'234 | 155'968 | 159'784 | ||||||
| Due from customers | 114'775 | 122'368 | 118'007 | ||||||
| of which securities lending and reverse repurchase agreements | 57'435 | 62'105 | 59'806 | ||||||
| Mortgages | 14'825 | 16'498 | 16'348 | ||||||
| Securities and precious metals trading portfolios | 163'480 | 171'957 | 204'907 | ||||||
| Due to banks | 292'449 | 292'418 | 344'091 | ||||||
| of which securities borrowing and repurchase agreements | 123'017 | 106'551 | 137'731 | ||||||
| Due to customers, other | 109'980 | 119'100 | 108'470 | ||||||
| of which securities borrowing and repurchase agreements | 66'864 | 77'435 | 62'136 | ||||||
| Institutional Securities key information | |||||||||
| 12 months | |||||||||
| based on CHF amounts | 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | ||||
| Cost/income ratio 1) | 82.8% | 88.1% | 86.0% | 82.7% | 83.5% | ||||
| Average allocated capital in CHF m | 13'438 | 13'906 | 13'936 | 13'814 | 14'829 | ||||
| Pre-tax margin 1) | (5.9%) | (15.4%) | (7.2%) | 2.8% | 9.4% | ||||
| Personnel expenses/operating income 1) | 43.3% | 53.1% | 42.2% | 53.5% | 55.4% | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Number of employees | 16'524 | 17'728 | 19'094 | ||||||
| 1) Based on the segment results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segment. | |||||||||
| CSFB Financial Services income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in USD m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Net interest income | 46 | 56 | 61 | (18) | (25) | 219 | 318 | (31) | |
| Net commission and service fee income | 425 | 406 | 476 | 5 | (11) | 1'716 | 1'893 | (9) | |
| Net trading income | 19 | 26 | 35 | (27) | (46) | 108 | 150 | (28) | |
| Other ordinary income | (6) | 13 | 25 | – | – | 31 | 32 | (3) | |
| Operating income | 484 | 501 | 597 | (3) | (19) | 2'074 | 2'393 | (13) | |
| Personnel expenses | 237 | 254 | 223 | (7) | 6 | 1'008 | 1'164 | (13) | |
| Other operating expenses | 161 | 162 | 189 | (1) | (15) | 644 | 790 | (18) | |
| Operating expenses | 398 | 416 | 412 | (4) | (3) | 1'652 | 1'954 | (15) | |
| Gross operating profit | 86 | 85 | 185 | 1 | (54) | 422 | 439 | (4) | |
| Depreciation of non-current assets | 26 | 23 | 26 | 13 | 0 | 93 | 105 | (11) | |
| Valuation adjustments, provisions and losses | (7) | 11 | 8 | – | – | 15 | 16 | (6) | |
| Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes | 67 | 51 | 151 | 31 | (56) | 314 | 318 | (1) | |
| Extraordinary income/(expenses), net | 0 | 0 | 0 | – | – | 0 | (9) | – | |
| Taxes 2) | (19) | (14) | (30) | 36 | (37) | (88) | (50) | 76 | |
| Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result) | 48 | 37 | 121 | 30 | (60) | 226 | 259 | (13) | |
| 1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. | |||||||||
| 2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been USD -46 m for 4Q2002. | |||||||||
| CSFB Financial Services income statement 1) | |||||||||
| Change | Change | Change | |||||||
| in % from | in % from | 12 months | in % from | ||||||
| in CHF m | 4Q2002 | 3Q2002 | 4Q2001 | 3Q2002 | 4Q2001 | 2002 | 2001 | 2001 | |
| Net interest income | 67 | 84 | 107 | (20) | (37) | 342 | 538 | (36) | |
| Net commission and service fee income | 625 | 600 | 818 | 4 | (24) | 2'677 | 3'199 | (16) | |
| Net trading income | 26 | 38 | 60 | (32) | (57) | 168 | 254 | (34) | |
| Other ordinary income | (11) | 20 | 43 | – | – | 48 | 54 | (11) | |
| Operating income | 707 | 742 | 1'028 | (5) | (31) | 3'235 | 4'045 | (20) | |
| Personnel expenses | 346 | 379 | 386 | (9) | (10) | 1'572 | 1'967 | (20) | |
| Other operating expenses | 237 | 241 | 326 | (2) | (27) | 1'005 | 1'336 | (25) | |
| Operating expenses | 583 | 620 | 712 | (6) | (18) | 2'577 | 3'303 | (22) | |
| Gross operating profit | 124 | 122 | 316 | 2 | (61) | 658 | 742 | (11) | |
| Depreciation of non-current assets | 39 | 34 | 46 | 15 | (15) | 145 | 179 | (19) | |
| Valuation adjustments, provisions and losses | (13) | 17 | 13 | – | – | 23 | 27 | (15) | |
| Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes | 98 | 71 | 257 | 38 | (62) | 490 | 536 | (9) | |
| Extraordinary income/(expenses), net | 0 | 0 | 0 | – | – | 0 | (14) | – | |
| Taxes 2) | (27) | (20) | (52) | 35 | (48) | (137) | (85) | 61 | |
| Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result) | 71 | 51 | 205 | 39 | (65) | 353 | 437 | (19) | |
| 1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. | |||||||||
| 2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 4Q2002, taxes would have been CHF -69 m for 4Q2002. | |||||||||
| CSFB Financial Services key information | |||||||||
| 12 months | |||||||||
| based on CHF amounts | 4Q2002 | 3Q2002 | 4Q2001 | 2002 | 2001 | ||||
| Cost/income ratio 1) | 88.0% | 88.1% | 73.7% | 84.1% | 86.1% | ||||
| Average allocated capital in CHF m | 701 | 984 | 1'072 | 939 | 997 | ||||
| Pre-tax margin 1) | 13.9% | 9.6% | 25.0% | 15.1% | 12.9% | ||||
| Personnel expenses/operating income 1) | 48.9% | 51.1% | 37.5% | 48.6% | 48.6% | ||||
| Net new assets institutional asset management in CHF bn | (8.7) | (12.2) | 1.9 | (31.3) | 9.2 | ||||
| Net new assets Private Client Services in CHF bn | 2.7 | – | 4.7 | 8.0 | 15.8 | ||||
| Growth in assets under management | (2.7%) | (7.6%) | 16.1% | (24.0%) | 1.7% | ||||
| Growth in discretionary institutional assets under management | (4.6%) | (9.3%) | 14.6% | (23.5%) | 1.1% | ||||
| of which net new assets | (3.0%) | (3.8%) | 0.6% | (8.6%) | 2.6% | ||||
| of which market movement and structural effects | (1.6%) | (5.5%) | 5.8% | (14.9%) | (8.8%) | ||||
| of which acquisitions/(divestitures) | – | – | 8.2% | – | 7.3% | ||||
| Growth in net new assets Private Client Services | 3.6% | – | 5.3% | 8.2% | 14.6% | ||||
| 31.12.02 | 30.09.02 | 31.12.01 | |||||||
| Assets under management in CHF bn | 486.5 | 500.2 | 640.5 | ||||||
| of which institutional asset management | 412.8 | 423.8 | 508.8 | ||||||
| of which Private Client Services | 71.7 | 74.1 | 97.1 | ||||||
| Discretionary assets under management in CHF bn | 297.2 | 313.8 | 393.6 | ||||||
| of which institutional asset management | 278.7 | 292.0 | 364.2 | ||||||
| of which mutual funds distributed | 106.5 | 108.4 | 132.4 | ||||||
| of which Private Client Services | 18.5 | 21.7 | 29.4 | ||||||
| Advisory assets under management in CHF bn | 189.3 | 186.4 | 246.9 | ||||||
| Number of employees | 6'900 | 7'233 | 8'208 | ||||||
| 1) Based on the segment results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segment. | |||||||||
RECONCILIATION OF OPERATING TO CONSOLIDATED RESULTS
Reconciliation of operating to consolidated results
The Group‘s consolidated results are prepared in accordance with Swiss GAAP, while the Group‘s segment reporting principles are applied to the presentation of segment results, including business unit results. The business unit results reflect the results of the separate segments constituting the respective business units as well as certain acquisition-related costs, exceptional items and the cumulative effect of a change in accounting principles that are not allocated to the segments. The business unit results also include certain other reclassifications that are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group‘s consolidated results.
The acquisition-related costs and exceptional items excluded from the segment results and from the business unit operating basis results shown below include, among other items, acquisition interest, amortization of retention payments, amortization of acquired intangible assets and goodwill and the exceptional items described on page 24 or in the footnotes to the reconciliation tables. The reclassifications shown for the Credit Suisse Financial Services business unit reflect the amortization of acquired intangible assets and goodwill, exceptional items related to the focusing of the European initiative on private banking clients and the cumulative effect of a change in accounting principles. The reclassifications shown in the Credit Suisse First Boston business unit reflect acquisition-related costs, exceptional items and the cumulative effect of a change in accounting principles. Acquisition-related costs and exceptional items are excluded from the business unit operating results because management believes that this enables management and investors to assess the operating results or “cash earnings” and key performance indicators of the business. The effect of the change in accounting principles has been excluded from the business unit operating results to the extent that the positive current-period tax benefits resulted from prior-period losses.
The results presented in the column “Adjustments including Corporate Center” include the parent company operations, including Group financing initiatives as well as income and expense items related to centrally managed, own-use real estate, mainly comprised of bank premises within Switzerland. In addition, the column includes consolidation adjustments and adjustments to segment accounts related to management reporting policies and the reversal of certain reclassifications made in the business units.
The adjustments made for the Credit Suisse Financial Services business unit results include valuation adjustments, provisions and losses. This adjustment reflects the difference between the expected credit provisions recorded by Credit Suisse Financial Services’ banking segments and the actual credit provisions for the year, and also includes a charge relating to an adjustment in the method of estimating inherent losses related to lending activities as discussed on page 7. The impact of this charge, after tax, was fully offset by a release from the reserve for general banking risks, which was recorded as extraordinary income at Credit Suisse Group.
The reclassifications made for the Credit Suisse First Boston business unit results include, among others, brokerage, execution and clearing expenses and contractor costs. These reclassifications reflect, among others, the deduction from other operating expenses of brokerage, execution and clearing expenses of Credit Suisse First Boston, reclassified as a reduction of operating income; the deduction from other operating expenses of contractor costs of Credit Suisse First Boston, reclassified as an addition to personnel expenses; and the addition to operating income of expenses related to certain redeemable preferred securities of Credit Suisse First Boston, reclassified as minority interests. Credit Suisse First Boston‘s brokerage, execution and clearing expenses and contractor costs are presented in a manner that brings them in line with its US competitors in the investment banking industry and makes it easier for investors to compare the Credit Suisse First Boston business unit‘s operating expenses with those of its competitors. Swiss GAAP does not permit the Group to report brokerage, execution and clearing expenses and contractor costs as part of other operating expenses. The presentation of redeemable preferred securities of Credit Suisse First Boston, issued by consolidated special purpose entities as an expense reducing its operating income, is intended to more fairly present its operating results from its core businesses.
| Credit Suisse Financial Services | Credit Suisse First Boston | |||||||||||||||
| Re- | Re- | Re- | Re- | Adjust. incl. | Credit | |||||||||||
| Operating | classifi- | classified | Operating | classifi- | classified | Corporate | Suisse | |||||||||
| 4Q2002, in CHF m | basis | cations | basis | basis | cations | basis | Center | Group | ||||||||
| Operating income | 3'517 | 3'517 | 3'401 | (80) | 1) | 3'321 | (443) | 6'395 | ||||||||
| Personnel expenses | 1'405 | 3 | 2) | 1'408 | 1'512 | 384 | 1) 3) | 1'896 | 160 | 3'464 | ||||||
| Other operating expenses | 897 | (1) | 2) | 896 | 1'184 | 1'184 | (433) | 1'647 | ||||||||
| Operating expenses | 2'302 | 2'304 | 2'696 | 3'080 | (273) | 5'111 | ||||||||||
| Gross operating profit | 1'215 | 1'213 | 705 | 241 | (170) | 1'284 | ||||||||||
| Depreciation of non-current assets | 318 | 16 | 2) | 334 | 156 | 156 | 144 | 634 | ||||||||
| Amortization of acquired intangible assets and goodwill | – | 92 | 2) 4) | 92 | – | 308 | 1) | 308 | 3 | 403 | ||||||
| Valuation adjustments, provisions and losses | 105 | 105 | 993 | 984 | 3) | 1'977 | 342 | 2'424 | ||||||||
| Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes | 792 | 682 | (444) | (2'200) | (659) | (2'177) | ||||||||||
| Extraordinary income/(expenses), net | 24 | 24 | 383 | (163) | 3) | 220 | 125 | 369 | ||||||||