credit-suisse quarterly review q1/2001
TRANSCRIPT
CREDIT SUISSE GROUP QUARTERLY REVIEW 2001
Q1
EDITORIAL
Good performance in a challenging market environment
Lukas MühlemannChairman and Chief Executive Officer
Dear shareholders, clients and fellow employees
Dear readers
Credit Suisse Group performed wellduring the first three months of theyear against a backdrop of very chal-lenging market conditions. At the sametime, it succeeded in strengthening itsposition as one of the leading globalfinancial services providers in its coreareas of business – asset managementand investment banking.
The first quarter of 2001 contrastedsharply with that of the previous year,which was characterised by very hightransaction volumes in positive equitymarkets. However, the first quarter of2001 saw a correction in global equitymarkets, growing signs of a markedeconomic slowdown, a reduction ininformation technology investments anda downward revision of profit expecta-tions. While these factors have impact-ed parts of our asset gathering andcapital markets business, our life andnon-life insurance business continuedto report strong results.
In this difficult first quarter, CreditSuisse Group increased its operatingincome by 21% over the first quarter of2000, and by 4% over the previousquarter. Donaldson, Lufkin & Jenrette(DLJ) is included in the results from 3 November 2000. The Group’s netoperating profit stood at CHF 1.7 bil-lion, corresponding to an operatingprofit of CHF 5.74 per share. The netinflow of new assets remained strong,totalling CHF 19.9 billion. Assets under
management rose 0.5% comparedwith year-end 2000.
Our expectations relating to theacquisition of DLJ have already beenlargely fulfilled. The integration pro-gressed rapidly and smoothly, and wehave succeeded in retaining a highnumber of key individuals. The full im-pact of the merger should be felt fromthe second half of the year onwards.Moreover, the sale of Winterthur’s largemultinational corporates insurancebusiness represented a further stepforward in our efforts to focus on ourcore retail insurance activities in ournon-life business. Good progress hasalso been made in the implementationof our Personal Financial ServicesEurope strategy, and launches inGermany and Spain are set to goahead on schedule later this year.
The Credit Suisse Group shareprice rose 5% in the first four monthsof 2001, performing well in comparisonwith the market and competitors.
We are well positioned to exploitthe favourable prospects for profitablegrowth in the Group’s key areas ofbusiness. We expect difficult marketconditions to persist during 2001 butremain confident that, even in this chal-lenging environment, we will make fur-ther progress towards achieving ourtargets.
Lukas MühlemannChairman and Chief Executive OfficerMay 2001
www.credit-suisse.com 1
CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q1/2001
Share dataNumber of shares issuedShares ranking for dividendMarket capitalisation in CHF mBook value per share in CHF
Share price (as of 30.4.2001: CHF 323.50)at end of reporting periodquarter/year highquarter/year low
Average numbers of sharesEarnings per share in CHFOperating earnings per share in CHF 1)
Earnings per share – diluted, in CHFOperating earnings per share – diluted, in CHF 1)
1) Excl. amortisation of acquired intangible assets and goodwill, as well as for Q4/2000 excl. restructuring provision.
Changein %
00
(11
Change in %
(1(10(5
Change vs. Q1/2000
in %
10(32(20(32(20
Q1/2001
300,474,5934.755.744.745.73
)
)))
))))
31 March 2001
300,747,196300,747,196
91,878138.25
31 March 2001in CHF
305.5348.0279.0
Q4/2000
290,534,1302.036.472.036.45
31 Dec. 2000
300,437,990300,437,990
92,535136.30
31 Dec. 2000in CHF
308.0388.5293.0
Q1/2000
272,710,3857.027.196.987.15
Financial calendar
Annual General Meeting
Distribution of par value reduction
Second quarter results 2001/half-year results 2001
Third quarter results 2001
Fourth quarter/full-year results 2001
Friday, 1 June 2001
Wednesday, 15 August 2001
Wednesday, 29 August 2001
Tuesday, 20 November 2001
Tuesday, 12 March 2002
Share performanceSwiss Market Index Credit Suisse Group
Market capitalisationas of end of reporting period (in CHF bn)
90
100
80
70
50
30
20
60
40
10
0
91 92 93 94 95 96 97 98 99 00Q1/01
400
350
300
250
200
150
100
19971996 1998 1999 2000 2001
2
derung seitQ1/2000
in %
3425
16173
4750
derung seit1.12.2000
in %
26.211.4
19.327.2
derung seit1.12.2000
in
Consolidated income statementOperating incomeGross operating profitNet operating profit 1)
Net profitCash flow
Return on equity (ROE)Credit Suisse Group: – Reported ROE
– Operating ROE 1)
Banking business: – Reported ROE– Operating ROE 1)
Insurance business: – Reported ROE– Operating ROE 1)
– Return on invested capital (ROIC)
Consolidated balance sheetTotal assetsShareholders’ equityMinority interests in shareholders’ equity
BIS dataBIS risk-weighted assets BIS tier 1 capital– of which non-cumulative perpetual preferred securitiesBIS total capital
BIS ratiosBIS tier 1 ratio
Credit Suisse Credit Suisse First Boston 2)
Credit Suisse Group 3)
BIS total capital ratio Credit Suisse Group
Assets under management/client assetsAdvisory assets under managementDiscretionary assets under managementTotal assets under managementClient assets
Net new assets
Number of employeesSwitzerlandOutside SwitzerlandTotal employees Credit Suisse Group
1) Excl. amortisation of acquired intangible assets and goodwill (Q1/2001: CHF 298 m; Q4/2000: CHF 216 m; Q1/2000: CHF 46 m), as well as excl. for Q4/2000restructuring provision of CHF 1,074 m, all net of tax.
2) Ratio is based on a tier 1 capital of CHF 18.4 bn (31 Dec. 2000: CHF 17.6 bn), of which non-cumulative perpetual preferred securities is CHF 1.1 bn (both periods).3) Ratio is based on a tier 1 capital of CHF 25.7 bn (31 Dec. 2000: CHF 27.1 bn), of which non-cumulative perpetual preferred securities is CHF 1.1 bn (both periods).
Change vs.Q1/2000
in %
21(4
(12(25(2
Change vs.Q1/2000
in %
(44(35(55(452726
(11
Change in %
81
(2
Change in %
5(51
(5
Changein %
0103
Change vs.Q1/2000 in %
(7
Changein %
132
Verän
))))
)))()
)
)
)
)
Verän3
Verän3
)
Q1/2000in CHF m
9,177 3,253 1,961 1,915 2,595
Q1/2000in %
24.925.529.330.013.213.624.4
31 Dec. 2000in CHF m
987,433 43,522 2,571
31 Dec. 2000in CHF m
239,46527,1111,102
43,565
in %
7.113.6 11.3 18.2
31 Dec. 2000in CHF bn
710.0649.5
1,359.5 2,019.5
Q1/2000in CHF bn
21.5
31 Dec. 2000
28,23552,30380,538
Q1/2001in CHF m
11,091 3,107 1,726 1,428 2,535
Q1/2001in %
13.916.713.216.616.717.221.6
Q1/2001in CHF bn
19.9
Q4/2000in CHF m
10,631 3,169 1,880
5903,308
Q4/2000in %
6.119.02.5
18.719.920.430.6
31 March 2001in CHF m
1,065,543 44,099 2,521
31 March 2001in CHF m
250,39225,6991,118
41,599
in %
6.713.0 10.3 16.6
31 March 2001in CHF bn
711.1654.6
1,365.7 2,088.7
Q4/2000in CHF bn
16.9
31 March 2001
28,41853,730 82,148
www.credit-suisse.com 3
AN OVERVIEW OF CREDIT SUISSE GROUP
11 0917 984
3 107
2382 386
(22635
1 773
298
1 475
(47
1 428
1 72
Credit Suisse Group posted a net operating profit of CHF 1.7billion in the first quarter of 2001, representing a 12% decreaseover a very strong first quarter of 2000 and an 8% decrease over the fourth quarter of 2000. The net inflow of new assetsremained strong, totalling CHF 19.9 billion.
Overview of business unit results
Q1/2001in CHF m
Operating incomeOperating expenses
Gross operating profit
Depreciation and write-offs on non-current assets 1)
Valuation adjustments, provisions and losses 2)
Profit before extraordinary items, taxes 1)
Extraordinary expenses/(income), net Taxes
Net operating profit before minority interests 1)
Amortisation of acquired intangible assets, net of tax, and goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 1)
Value added 3)
Average allocated equity capitalReturn on average equity capitalReturn on average equity capital (operating) 1)
Allocated equity capital as of 1 April 2001
1) Excl. amortisation of acquired intangible assets and goodwill. 2) Additional/(lower) credit-related valuation adjustments at Group level
resulting from the difference between the statistical and actual creditprovisions.
3) Value Added is a measure of value creation in the period under review. It is derived from Credit Suisse Group’s Value Based Analysis (VBA) and complements the per-formance metrics which are currently used, but does not replace them. The measure is aimed at enhancing the management’s awareness of value creation. For thispurpose, accounting figures are adjusted by adding back accounting distortions such as selected non-cash charges (e.g. amortisation of goodwill), and cost of equity ischarged to the business unit as well as the consolidated accounts.
4) For Winterthur Group within Credit Suisse Financial Services, average invested capital is used for the calculation of return on invested capital (ROIC). 5) Including a previously announced restructuring charge of CHF 57 million after tax for the Luxembourg-based pan-European online brokerage platform.
Credit SuisseGroup
) 11,091) 7,984
3,1075) 483) 238
) 2,386
) 5) (225) 635
) 1,773
) 298
) 1,475
) (47
) 1,428
) 1,726
) 838
)
)
)
)
)
)
)
)
)
Adjustmentsincluding
CorporateCenter
(187(255
68
121(40
(13
(2265
(56
(1
(55
(18
(73
(74
(257
CreditSuisse
FirstBoston
6,8605,650
1,210
213150
847
1187
659
263
396
0
396
659
244
16,8369.4%
15.7% 17,325
24
CreditSuisseAsset
Management
377288
89
70
82
) 113
68
19
49
) 0
49
68
34
1,331n/an/a
1,366
–
CreditSuissePrivate
Banking
1,579673
906
1142
853
) (1202
652
3
649
) (7
642
645
585
4) 3,2754) n/a4) n/a
3,513
1
CreditSuisse
FinancialServices
2,462 1,628
834
13186
617
(1168
450
14
436
(22
414
428
232
10,82316.1%16.6%13,764
(33)
4
0.9
1.9
0.7
1.5–
1.1(0.4(0.9(0.4
(1.3
Assets under management
Credit Suisse Group has adjusted itsdefinition of assets under manage-ment and, for the first time, has dis-closed a broader category, client as-sets, to reflect the emerging industrydefinition of both asset categories.
Assets under management in-clude assets which are placed withCredit Suisse Group entities for in-vestment purposes or which – inthe case of insurance business –underlie insurance contracts. Clientassets is a broader metric and alsoincludes transactional accounts andcustody, e.g. corporate liquidityfunds, wholesale custody andbroking assets. Deposits frombanks and brokers are usually ex-cluded from assets under manage-ment and client assets. Net newassets exclude interest anddividends. Previously reported fig-ures have been adjusted.
Overview of assets under management/client assets
Credit Suisse Financial ServicesAssets under management– of which discretionaryClient assets
Credit Suisse Private BankingAssets under management– of which discretionaryClient assets
Credit Suisse Asset ManagementAssets under management– of which discretionaryClient assets
Credit Suisse First Boston Assets under management– of which discretionary– of which Private EquityClient assets
Credit Suisse Group (consolidated)Assets under management– of which discretionaryClient assets
Net new assets
Credit Suisse Financial ServicesCredit Suisse Private BankingCredit Suisse Asset Management 1)
Credit Suisse First Boston
Credit Suisse Group
Changein %
0.91.90.7
1.61.81.3
(0.4(0.9(0.4
(1.310.013.38.3
0.50.83.4
Change vs.Q1/2000
in %
(1250
(34(75
(7
)))
)
)
))
)
31 Dec. 2000in CHF bn
273.8142.6289.6
456.4108.7495.6
487.2360.1487.2
142.138.131.5
747.1
1,359.5649.5
2,019.5
Q1/2000in CHF bn
5.25.6
10.3) 0.4
21.5
31 March 2001in CHF bn
276.4145.3291.7
463.6110.7502.2
485.4356.7485.4
140.341.935.7
809.4
1,365.7654.6
2,088.7
Q4/2000in CHF bn
3.44.79.3
(0.5
16.9
Q1/2001in CHF bn
4.68.46.80.1
19.9
1) Net new discretionary assets.
The first quarter of 2001 was charac-terised by a challenging market envi-ronment but reinforced Credit SuisseGroup’s strategy of being a broad-based leader in its core businesses ofasset gathering and investment bank-ing. Net operating profit for the firstquarter was CHF 1.7 billion, a de-crease of 12% over an extraordinarilystrong first quarter 2000 result of CHF2.0 billion. Compared with the resultfor the fourth quarter of 2000 of CHF1.9 billion (excluding the DLJ restruc-turing charge), net operating profit wasdown modestly, by 8%. The results forthe fourth quarter of 2000 include twomonths of the DLJ acquisition. Assets
under management increased by 0.5%compared with year-end 2000.
Operating earnings per share forthe first quarter of 2001 were CHF5.74, which included the new sharescreated in association with the DLJacquisition. This compared to CHF7.19 per share for the first quarter andCHF 6.47 per share for the fourthquarter of 2000.
Operating income amounted toCHF 11.1 billion for the first quarter of2001, corresponding to an increase of 21% over the first quarter and of4% over the fourth quarter of 2000.Operating expenses were up 35% overthe first quarter and 7% over the fourth
www.credit-suisse.com 5
AN OVERVIEW OF CREDIT SUISSE GROUP
Net operating profit contribution by business unit
CSFS
CSPB
CSAM
CSFB
Operating income composition
Balance sheet business
Commission and service fees
Trading
Insurance
Operating income contribution by business unit
CSFS
CSPB
CSAM
CSFB
36%4%
24%
36%
3%
14%
61%
22%
44%
14%14%
28%
6
quarter of 2000, to CHF 8.0 billion.Both reflect the acquisition of DLJ on 3 November 2000. Reported net profitfor the first quarter of 2001 was CHF1.4 billion, compared to CHF 1.9 billionfor the first quarter and CHF 0.6 billion(including the DLJ restructuring charge)for the fourth quarter of 2000. The dif-ference between reported net profit andnet operating profit is the exclusion ofacquisition-related non-cash items suchas amortisation of goodwill and intangi-ble assets. These items net of tax to-talled CHF 298 million (CHF 0.99 pershare) for the first quarter of 2001,compared to CHF 46 million (CHF0.17 per share) for the first quarter andCHF 216 million (CHF 0.74 per share)for the fourth quarter of 2000. The firstquarter also included a previouslyannounced restructuring charge of CHF57 million after tax for the Luxembourg-based pan-European online brokerageplatform. Excluding the restructuringcharge, net operating profit was down9% on the first quarter and down 5%on the fourth quarter of 2000.
Credit Suisse Group's operating re-turn on equity was 16.7% for the firstquarter of 2001, compared with 25.5%for the first quarter and 19.0% for thefourth quarter of 2000, reflecting thechange in market conditions. The Grouprepurchased 1.9 million shares up to 1 May 2001 for cancellation at theAnnual General Meeting on 1 June2001, in line with its previouslyannounced share repurchase pro-gramme.
Highlights in the first quarter of 2001
• The net inflow of new assets wasstrong across all business units.Credit Suisse Private Banking con-tributed CHF 8.4 billion, CreditSuisse Asset Management CHF6.8 billion and Credit SuisseFinancial Services CHF 4.6 billionto the Group’s net new assets,which totalled CHF 19.9 billion.
• The Fixed Income division at CreditSuisse First Boston reported adramatic return to profitability, re-
sulting from improved marketconditions and the first stages ofthe implementation of a new strate-gic plan. Fixed Income revenueswere up 100% over the firstquarter and 118% over the fourthquarter of 2000.
• Winterthur Life & Pensions had avery strong first quarter with growthin premiums earned at 19%,demonstrating its resilience in diffi-cult capital markets. Net operatingprofit for Winterthur Life &Pensions was up 23% on the firstquarter of last year.
• As a result of the divesture of itsinsurance business for large multi-national companies, WinterthurInsurance is now one of the veryfew solely retail non-life insurers.Net operating profit at WinterthurInsurance was up 6% over the firstquarter of 2000.
Outlook 2001
Credit Suisse Group continues tobelieve that the long-term prospects forthe financial services industry willprovide a fundamentally attractive oper-ating environment for its core activities.The Group is pleased with its perform-ance in a very difficult first quarter andwith the progress made with the DLJacquisition, where it is ahead of itsgoals in most measures. The difficultcapital markets environment is continu-ing in the second quarter, affectingboth the asset gathering and theinvestment banking units. While theGroup is confident about future busi-ness prospects, it expects 2001 willcontinue to be a very challenging year.
REVIEW OF BUSINESS UNITS
New developments in the first quarter of 2001
Credit Suisse Group announced in March that it planned a par valuereduction of CHF 8 per share in lieu of a dividend, and a 4-for-1 sharesplit resulting in a new par value of CHF 3 per share. If approved bythe Annual General Meeting on 1 June, the capital reduction of CHF 8will be paid out on 15 August 2001. The split brings the share pricemore in line with that of the Group’s international peers, and is part ofthe preparation for a listing of Credit Suisse Group’s ADR (AmericanDepositary Receipt) in the US this year.
Swiss Prime Site, the real estate investment company managed byCredit Suisse Asset Management, announced in April it was in mergertalks with Feldschloesschen-Huerlimann Holding. If approved, the dealwould create Switzerland’s largest real estate company, managing aproperty portfolio worth CHF 2.6 billion (USD 1.5 billion).
Credit Suisse First Boston continued to add market share acrosskey businesses. In Europe, it topped Institutional Investor’s Februaryequity research rankings, adding to its number one pro-forma rankingin the US. Credit Suisse First Boston also ranked number one inEuropean primary equity issuance in the first quarter of 2001. In termsof US mergers and acquisitions, it ranked number three in the firstquarter, and in fixed income was ranked third globally in debt primaryissuance and second in high yield.
Credit Suisse Private Banking introduced the Protected InvestmentNote (PIN), which offers high returns regardless of equity market per-formance – targeting around 13% p.a. based on a 10-year investmentperiod – and provides capital protection. These two features make PINhighly attractive in the current environment of stock market uncertaintyand low interest rates.
Credit Suisse Life launched the first ever unit-linked insuranceproduct in Japan. Combining the advantages of life insurance and aunit trust, this product looks set to grow rapidly in Japan, where thereis increasing concern about the capacity of the public pension system.
www.credit-suisse.com 7
REVIEW OF BUSINESS UNITS
Credit Suisse Financial Services
Thomas WellauerChief Executive Officer
Credit Suisse Financial Services report-ed a net operating profit of CHF 428million for the first quarter of 2001. This5.1% decrease on the first quarter of2000 (+5.9% compared to the fourthquarter) was attributable to increasedinvestments in the European personal
8
financial services business. Net newassets amounted to CHF 4.6 billion.
Credit Suisse Financial Servicesachieved a good start to the year despitehighly challenging market conditions.Excluding Credit Suisse PersonalFinance, which is still investing in pan-European expansion, net operating profitfor the first quarter amounted to CHF519 million, up 9.3% on the correspon-ding period of the previous year but5.4% lower than in the fourth quarter of2000. The annualised return on averageequity capital was 16.1%. Strong resultsfrom insurance operations (net operating
profit for non-life up 6% and for life up23%) demonstrate the stable source ofearnings and growth in difficult capitalmarkets. Credit Suisse Personal Financeis rapidly expanding its multi-channel of-fering in key European markets. Aspreviously announced, this move will lead to significantly higher expenditurethan in the previous year. The launch ofPersonal Finance in Spain and Germanyis planned for the second half of theyear. The pan-European online broker-age platform is, however, to be discontin-ued.
As of 1 January 2001, results willbe reported for the business units
Overview of business area Credit Suisse Financial ServicesQ1/2001in CHF m
Operating incomeOperating expenses
Gross operating profit
Depreciation and write-offs on non-current assets 2)
Valuation adjustments, provisions and losses 3)
Profit before extraordinary items, taxes 2)
Extraordinary expenses/(income), netTaxes
Net operating profit before minority interests 2)
Amortisation of acquired intangible assets and goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 2)
Average allocated equity capital Return on average equity capitalReturn on average equity capital (operating) 2)
Allocated equity capital as of 1 April 2001
Assets under management in CHF bn 5)
– of which discretionaryNet new assetsClient assets
1) Defined as premiums earned (net), less claims incurred and expenses for processing claims as well as actuarial provisions, less commissions (net), plus investment in-come from insurance business; expenses from the handling of both claims and investments are allocated to revenue; personnel expenses Winterthur Insurance: CHF103 m, Winterthur Life & Pensions: CHF 28 m; operating expenses Winterthur Insurance: CHF 51 m, Winterthur Life & Pensions: CHF 30 m.
2) Excl. amortisation of acquired intangible assets and goodwill.3) Additional/(lower) credit-related valuation adjustments at Group level resulting from
the difference between the statistical and actual credit provisions.4) For Winterthur Group, average invested capital is used for calculation of return on invested capital (ROIC).5) According to the definition of assets under management on page 5.
CreditSuisse
FinancialServices
2,4621,628
) 834
13186
) 617
(1) 168
) 450
14
) 436
(22
) 414
) 428
10,82316.1% 16.6%13,764
276.4145.3
4.6291.7
(33
)
)
)
4)
4)
4)
)
CreditSuisse
PersonalFinance
16119
(103
60
(109
) 1(19
(91
1
(92
0
(92
(91
32n/an/a35
5.82.90.45.8
) –
Credit Suisse
Banking
1) 9831) 6151) 368
3386
249
(264
187
3
184
) 0
184
187
4,42816.6%16.9%4,250
130.82.62.1
146.1
(33
Winterthur Life &
Pensions
1) 6481) 3191) 329
620
267
063
204
5
199
) (5
194
199
107.1107.1
2.1107.1
–
6,363 4)
21.6% 4)
22.3% 4)
9,479 4)
WinterthurInsurance
815575
240
300
210
060
150
5
145
(17
128
133
32.732.7n/a
32.7
–
eränderungseit
Q1/2000in %
388
42
103
17
59
15
–
10
10
70
5
19 757 -
12
Winterthur Insurance income statement (non-life business)
Gross premiums writtenReinsurance ceded
Net premiums writtenChange in provision for unearned premiums and in
provision for future policy benefits (health)
Net premiums earnedClaims and annuities incurred, netDividends to policyholders incurred, netOperating expenses, net (incl. commissions paid)
Underwriting result, net
Net investment incomeInterest received on deposits and bank accountsInterest paidOther income/(expenses) (incl. exchange rate differences) 1) 2)
Profit before extraordinary items, taxes 1)
Extraordinary expenses/(income), netTaxes
Net operating profit before minority interests 1)
Amortisation of goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 1)
1) Excl. amortisation of goodwill.2) For Q1/2001, incl. a partial recognition of CHF 43 million before tax related to the sale of Winterthur International.
Q1/2000in CHF m
4,902) (557
4,345
(1,260
3,085) (2,401) (94) (955
) (365
53223
) (34) 27
183
0) (47
136
) (4
132
) (10
122
126
Change vs.Q1/2000
in %
38) 8
42
) 103
17) 17) 19) 10
) (6
(1(70
) (2459
15
–) 28
10
) 25
10
) 70
5
6
V
)
)))
)
2 3
Q4/2000in CHF m
3,715) (422
3,293
) 251
3,544) (2,741) (94) (1,033
) (324
65827
) (34(22
305
0) (73
232
) (4
228
) (28
200
204
Q1/2001in CHF m
6,774(601
6,173
(2,556
3,617(2,799
(112(1,049
(343
5297
(2643
210
0(60
150
(5
145
(17
128
133
Winterthur Insurance key information(non-life business)
Combined ratio (excl. dividends to policyholders)
Claims ratio
Expense ratio
Assets under management in CHF bn
Technical provisions in CHF m
Number of employees
Q4/2000
106.5%
77.2%
29.3%
31 March 2001
32.7
30,122
22,244
Q1/2001
106.4%
77.4%
29.0%
Q1/2000
108.8%
77.8%
31.0%
31 Dec. 2000
32.5
26,653
21,796
www.credit-suisse.com 9
REVIEW OF BUSINESS UNITS
19991999
n Mio USD1999
n Mio USD
241
9 7535 368
Winterthur Life & Pensions income statement(life business)
Gross premiums writtenReinsurance ceded
Net premiums writtenChange in provision for unearned premiums
Net premiums earnedDeath and other benefits incurredChange in provision for future policyholder benefitsDividends to policyholders incurredOperating expenses, net (incl. commissions paid)Net investment incomeInterest received on deposits and bank accountsInterest on bonuses credited to policyholdersOther interest paidOther income/(expenses) (incl. exchange rate differences) 1)
Profit before extraordinary items, taxes 1)
Extraordinary expenses/(income), netTaxes
Net operating profit before minority interests 1)
Amortisation of goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 1)
1) Excl. amortisation of goodwill.
Q1/2000in CHF m
5,221) (95
5,126) 0
5,126) (2,350) (3,080) (711) (393
1,77222
) (29) (59) (92
206
0) (30
176
) (3
173
) (14
159
162
Change vs.Q1/2000
in %
19) (46
20–
19) 57) (32) (43) (5
(55(41
) 10) (37) (58
30
–) 110
16
) 67
15
) (64
22
23
i
i
)
)))))
))
)
Q4/2000in CHF m
4,225) (77
4,148) (1
4,147) (2,675) (1,597) (229) (470
1,32922
) (29) (61) (180
257
0) (31
226
) (4
222
) (14
208
212
Q1/2001in CHF m
6,189(51
6,138(14
6,124(3,686(2,094
(403(37279313
(32(37(39
267
0(63
204
(5
199
(5
194
199
Winterthur Life & Pensions key information (life business)
Expense ratio 1)
Net return on average technical provisions 2)
Net new assets in CHF bn 3)
Assets under management in CHF bn 4)
Technical provisions in CHF m
Number of employees
1) Operating expenses/earned premiums.2) Net profit after tax before minorities/average technical provisions.3) Based on change in technical provisions for traditional business, adjusted for technical interests; net cash flow unit-linked business; and change in off-balance sheet
business such as funds.4) Based on savings-related provisions for policyholders plus off-balance sheet assets.
Q4/2000
11.3%
21 bp
0.8
31 March 2001
107.1
107,380
7,095
Q1/2001
6.1%
19 bp
2.1
Q1/2000
7.7%
20 bp
1.4
31 Dec. 2000
104.7
105,522
6,562
10
Winterthur Insurance, Winterthur Life &Pensions, Credit Suisse Banking aswell as Credit Suisse PersonalFinance. Technology and Services aswell as Credit Suisse e-Businesssupply core services to the other CreditSuisse Financial Services businessunits, and the corresponding revenuesand expenses are included in thebusiness units served. e-brokerageactivities are included under CreditSuisse Personal Finance.
Winterthur InsuranceWinterthur Insurance posted a 17%rise in premiums earned versus the firstquarter of 2000, or a rise of 2% com-pared to the fourth quarter. Adjustedfollowing the acquisition of the UK-based company NIG, the premium in-crease was 7% on the same period ofthe previous year. At 77.4%, theclaims ratio was slightly below that ofthe first quarter of 2000, with bothfigures reflecting normal weather-related first quarter losses. Continuedmanagement focus on expense con-trol, coupled with strong growth, result-ed in a two-percentage-point decreasein the expense ratio year-on-year to29.0%. With weaker financial marketconditions, Winterthur Insurance’sinvestment return declined to 6.3%from 6.7% a year ago. Results wereparticularly strong in the UK throughthe direct business Churchill. The abilityto increase prices in the UK and otherEuropean markets contributed to im-proved results. Winterthur Insuranceachieved a net operating profit for thefirst quarter of 2001 of CHF 133 mil-lion, which was up 6% over the firstquarter of 2000 and, in the context ofanticipated seasonal factors, down35% on the previous quarter.
Winterthur Life & PensionsWinterthur Life & Pensions grew itspremiums by 19% compared with thefirst quarter of 2000, to CHF 6.1 bil-lion, and saw very positive develop-ments in premium volumes from group
life insurance business in Switzerlandand Spain. Adjusted for the acquisitionof Colonial Life UK and the largestCzech pension fund VOPF (VojenskyOtevreny Penzijni Fond), premium in-come was up 13.3%. Applying thenew definition, net new assets grew by2% (versus 1.6% in the first quarter of2000). As a result of its acquisition ofVOPF, Winterthur Life & Pensionsis now number one in the CzechRepublic’s flourishing pension fundbusiness and has a market share ofmore than 25%. Despite a reduction ofthe investment return to 6.3%, the net
operating profit for life business wasCHF 199 million, up 23% on the firstquarter of 2000.
The unit-linked products grew30% in the first quarter (5% excludingacquisitions). Although weak equitymarkets slowed their growth, thesecontinue to be a priority for WinterthurLife & Pensions as part of its strategyof achieving a balanced portfolio ofunit-linked and traditional life products.
The coming months are likely tobring slower premium growth due toseasonal factors.
www.credit-suisse.com 11
REVIEW OF BUSINESS UNITS
Credit Suisse Banking income statement
Net interest incomeNet commission and service fee incomeNet trading incomeOther ordinary income
Operating income
Personnel expensesOther operating expenses
Operating expenses
Gross operating profit
Depreciation and write-offs on non-current assets 1)
Valuation adjustments, provisions and losses 2)
Profit before extraordinary items, taxes 1)
Extraordinary expenses/(income), netTaxes
Net operating profit before minority interests 1)
Amortisation of goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 1)
1) Excl. amortisation of goodwill.2) Additional/(lower) credit-related valuation adjustments at Group level resulting from the difference
between the statistical and actual credit provisions.
Q1/2001in CHF m
614281844
983
403212
615
368
3386
249
(264
187
3
184
0
184
187
(33
Change vs. Q1/2000
in %
5(12(9
(64
(2
13(15
2
(8
230(49
11
) (9010
(1
0
(1
) –
0
0
)
)))
)
)
)
)
)
)
)
Q1/2000in CHF m
5843209211
1,007
356249
605
402
10167
225
(2158
188
3
185
(1
184
187
) (48
Q4/2000in CHF m
611285858
989
390257
647
342
45114
183
) 247
134
3
131
0
131
134
) (59
12
Credit Suisse BankingCredit Suisse Banking, the businessunit serving private and corporateclients in Switzerland, reported a netoperating profit of CHF 187 million inthe first quarter of 2001, the same asthe first quarter last year, and up 40%on the previous quarter. It succeeded inmaintaining last year’s strong first quar-ter performance, despite deterioratingconditions in the interest business andin securities. A 43% drop in incomefrom securities commissions, includinglower sales of mutual funds, led to acost/income ratio of 66.2%, slightlyhigher than in 2000. Return on equityrose marginally to 16.6%. Private clientbusiness recorded an annualisedincrease of 5% in mortgage volumes.
Net new assets amounted to CHF 2.1billion. Overall, assets under manage-ment remained stable at CHF 130.8billion despite market conditions. Incorporate client business, Credit SuisseBanking posted significant growth inthe volume of trade finance, while alsoachieving a substantial increase in rev-enues from foreign exchange business.Since end-2000, the number of DirectNet customers has risen 10% to288,590. Although the volume of elec-tronic payment orders continued to risesharply, the number of securities trans-actions executed stood at 58,000 –well below the previous year’s averageof 72,000.
Credit Suisse Banking balance sheet information
Total assets
Due from customersMortgages
Due to customers in savings and investment depositsDue to customers, other
Credit Suisse Banking key information
Cost/income ratioCost/income ratio (operating) 1)
Return on average equity capital (reported)Return on average equity capital (operating) 1)
Average allocated equity capital in CHF m
Pre-tax margin (reported)Pre-tax margin (operating) 1)
Personnel expenses/operating income
Net interest margin
Loan growth
Net new assets in CHF bn
Deposit/loan ratio
Assets under management in CHF bn
Number of branches
Number of employees
Allocated equity capital as of 1 April/1 January 2001 in CHF m
BIS tier 1 ratio 2)
1) Excl. amortisation of goodwill.2) Legal entity Credit Suisse.
Q1/2000
61.4%61.1%
16.3%16.6%
4,540
24.1%24.4%
35.4%
237 bp
1.4%
3.0
31 Dec. 2000
69.1%
130.8
235
11,438
4,605
7.1%
Q4/2000
70.3%70.0%
12.2%12.5%
4,290
18.0%18.3%
39.4%
242 bp
1.0%
2.1
31 March 2001
70.9%
130.8
234
11,576
4,250
6.7%
Q1/2001
66.2%65.9%
16.6%16.9%
4,428
25.2%25.5%
41.0%
242 bp
2.2%
2.1
31 March 2001in CHF m
102,621
30,64164,904
32,65735,063
31 Dec. 2000in CHF m
100,653
28,94064,616
33,32231,287
www.credit-suisse.com 13
REVIEW OF BUSINESS UNITS
(277778
–
40
5034
46
24
74(32
33
29
34
285
25
200
25
34 58
59
Credit Suisse Personal Finance income statement
Net interest incomeNet commission and service fee incomeNet trading incomeOther ordinary income
Operating income
Personnel expensesOther operating expenses
Operating expenses
Gross operating profit
Depreciation and write-offs on non-current assets 1)
Valuation adjustments, provisions and losses
Profit before extraordinary items, taxes 1)
Extraordinary expenses/(income), netTaxes
Net operating profit before minority interests 1)
Amortisation of goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 1)
1) Excl. amortisation of goodwill.
Q1/2001in CHF m
31120
16
4970
119
(103
60
(109
1(19
(91
1
(92
0
(92
(91
Change vs. Q1/2000
in %
50220–
23
188169
177
) 243
500–
) 252
–) 171
) 279
0
) 268
–
) 268
) 279
)
Q1/2000in CHF m
2920
13
1726
43
) (30
10
) (31
0) (7
) (24
1
) (25
0
) (25
) (24
Q4/2000in CHF m
1601
8
47143
190
) (182
71
) (190
0) (45
) (145
1
) (146
0
) (146
) (145
14
n/a6.756
Credit Suisse Personal FinanceCredit Suisse Personal Finance plans toestablish a presence in the German andSpanish markets in 2001, and prepara-tions for its launch in the second half ofthe year are well on schedule in bothcountries. With the acquisition of brokerand asset manager General de Valoresy Cambios, announced in April,Credit Suisse Personal Finance has se-cured a good starting position in Spain.In the Italian market, Credit Suisse(Italy) continued to perform well,with net new assets amounting to CHF350 million in the first quarter. Swissonline broker youtrade recorded a cus-tomer number increase of 8% to
27,267, and the volume of transactionsexecuted was only marginally below theprevious year’s average. youtrade as-sets under management declined 5.9%as a result of market conditions, whilenet new assets amounted to CHF 103million.
The results for the fourth quarter of2000 included expensing of previouslycapitalised assets and continued invest-ment in the business, hence the de-crease in operating expenses recordedin the first quarter of 2001. Given itscontinuing high level of investmentactivity, Credit Suisse Personal Financereported a first quarter operating loss ofCHF 91 million.
Credit Suisse Personal Finance key information
Personal FinanceGrowth in assets under management– of which net new assets – of which market movement and structural effects
youtradeNumber of transactions (in ’000s)
Credit Suisse Personal FinanceAverage allocated equity capital in CHF m
Personal FinanceAssets under management in CHF bnNumber of clientsNumber of advisors
youtradeAssets under management in CHF bnNumber of clients
Credit Suisse Personal FinanceNumber of employeesAllocated equity capital as of 1 April/1 January 2001 in CHF m
Q1/2000
25.9% 18.7%
) 7.2%
133
n/a
31 Dec. 2000
4.817,898
331
0.9 25,228
76429
Q4/2000
1.5% 8.4%
) (6.9%
95
n/a
31 March 2001
4.919,381
337
0.927,267
90035
Q1/2001
1.4%7.2%
(5.8%
108
32
www.credit-suisse.com 15
REVIEW OF BUSINESS UNITS
Credit Suisse Private Banking
Oswald J. GrübelChief Executive Officer
Credit Suisse Private Banking posteda net operating profit of CHF 645 mil-lion in the first quarter of 2001. Thisfigure was down 13% on the recordresults achieved in the first quarter of2000 but up 6% on the fourth quarterof 2000. Net new assets stood at CHF 8.4 billion.
16
At the end of the first quarter of 2001,Credit Suisse Private Banking reportedassets under management of CHF463.6 billion, up 1.6% on end-2000.In addition to the CHF 8.4 billion in netnew assets, CHF 3.7 billion in assetswere gained through the acquisition ofthe UK investment managementcompany JO Hambro, which areincluded here for the first time.
Total operating income decreasedby 6% versus the first quarter of 2000– a period characterised by exception-ally high transaction volumes – but were up 6% over the fourth quarter.Operating expenses climbed 8%compared with a year ago, owing to anincrease in staff numbers related
mainly to the expansion of interna-tional business and the IndependentPrivate Banks, as well as toinvestment in new technologies.
Large demand for alternativeinvestment productsCredit Suisse Private Bankinglaunched various new alternative in-vestment products in the first quarterof 2001. CS Alternative EquityPerformance Units are geared towardsinvestors seeking above-average risk-adjusted returns – primarily in theEuropean equity markets – by meansof a hedged investment strategy. Thesecond product, CS Alternative BondPerformance Units, allows investors to
12
Credit Suisse Private Banking income statement
Net interest incomeNet commission and service fee incomeNet trading incomeOther ordinary income
Operating income
Personnel expensesOther operating expenses
Operating expenses
Gross operating profit
Depreciation and write-offs on non-current assets 1)
Valuation adjustments, provisions and losses 2)
Profit before extraordinary items, taxes 1)
Extraordinary expenses/(income), netTaxes
Net operating profit before minority interests 1)
Amortisation of goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 1)
1) Excl. amortisation of goodwill.2) Additional/(lower) credit-related valuation adjustments at Group level resulting
from the difference between the statistical and actual credit provisions.
Q1/2001in CHF m
3141,024
16180
1,579
436237
673
906
1142
853
(1202
652
3
649
(7
642
645
1
Change vs. Q1/2000
in %
7(8
(36186
(6
(230
8
(14
38(35
(13
–(12
(13
50
(13
) (22
(13
(13
) –
))
)
)
)
)
)
)
)
)
)
)
)
Q1/2000in CHF m
2931,110
25128
1,682
443183
626
1,056
865
983
) 1230
752
2
750
) (9
741
743
) (9
Q4/2000in CHF m
32999315613
1,491
423281
704
787
415
768
) (8161
615
1
614
) (8
606
607
(8
According to the definition of assets under managem
exploit valuation variances on the glob-al bond markets.
The new Protected InvestmentNote (PIN), which offers attractive re-turns while protecting investors’ capitalagainst adverse stock market trends,has met with a great deal of interest.
Life Profit is a new product offeringan optimal combination of capitalutilisation and retirement income.Investors in Life Profit enjoy a regularincome and simultaneous tax benefitswithout any depletion of capital.
The Absolute investment compa-nies have provided clients with ef-fective capital protection since their
ent on page 5.
launch in 2000, in spite of slidingshare prices.
Innovations onlineThe first quarter of 2001 also sawCredit Suisse Private Banking expandits range of online services. MyCSPB,
the customised financial websitelaunched in February, met with astrong reception during the first fewweeks and has already been expandedto include additional functions. Afurther online tool, Portfolio Tracker,informs clients via e-mail or SMS iftheir predefined limits for specificstocks are reached.
Credit Suisse Private Banking balance sheet information
Total assets
Due from customers– of which secured by mortgages– of which secured by other collateral
Credit Suisse Private Banking key information
Cost/income ratioCost/income ratio (operating) 1)
Average allocated equity capital in CHF m
Pre-tax margin (reported)Pre-tax margin (operating) 1)
Fee income/operating income
Growth in assets under management– of which net new assets – of which market movement and structural effects– of which acquisition
Net profit before minority interests/average AuMNet operating profit before minority interests/average AuM 1)
Assets under management in CHF bn 2)
Number of employees
Allocated equity capital as of 1 April/1 January 2001 in CHF m
1) Excl. amortisation of goodwill.2)
31 Dec. 2000in CHF m
101,153
33,7179,206
22,621
Q1/2000
37.8%37.7%
3,027
58.3%58.4%
66.0%
) 5.3% 1.2%
) 4.1%–
64.8 bp64.9 bp
31 Dec. 2000
456.4
8,665
3,036
31 March 2001in CHF m
105,805
36,2029,184
24,404
Q4/2000
47.6%47.5%
3,189
52.0%52.0%
66.6%
(4.7% 1.0%
) (5.7%–
52.5 bp52.6 bp
31 March 2001
463.6
8,938
3,513
Q1/2001
43.5%43.3%
3,275
53.9%54.1%
64.9%
1.6%1.8%
(1.0%0.8%
56.4 bp56.7 bp
www.credit-suisse.com 17
REVIEW OF BUSINESS UNITS
Credit Suisse Asset Management
Phillip M. ColebatchChief Executive Officer
In the face of prevailing negative mar-ket trends in the first quarter, CreditSuisse Asset Management waslargely able to offset reductions in mar-ket value with strong net new businessand to build on its strategic initiatives.Discretionary net new business gainsin the first quarter totalled CHF 6.8 bil-lion, or an annualised 7.6%.
18
Assets under management fell slightly,from CHF 487 billion as of 31December 2000 to CHF 485 billion asof 31 March 2001. Discretionaryassets under management fell by 1%from CHF 360 billion to CHF 357billion. The downward trend in globalmarkets accounted for a 2.8% decline(CHF 10.2 billion) in discretionaryassets since the start of the year.However, these market losses werepartially offset by the net new assetgains of 1.9% (CHF 6.8 billion).Discretionary equity assets were themost impacted by negative marketmovement. Credit Suisse AssetManagement enjoyed particularly stronginflows in its European retail business.
Net operating profit stood at CHF68 million, down 8% compared to firstquarter last year and down 33% com-pared to the fourth quarter. Revenuesof CHF 402 million were 8% higherthan first quarter 2000, primarily dueto the DLJ acquisition of 3 November2000. Expenses were 9% higher thanfirst quarter 2000, but year-on-yearexpense savings have been achievedafter normalising for the effect of theDLJ acquisition.
Against the difficult market back-drop, the business unit reported sever-al notable achievements. Integration ofthe DLJ asset management operationwith Credit Suisse Asset ManagementAmericas was completed, with all New
Credit Suisse Asset Management income statement
Management and advisory feesNet mutual fund feesOther revenues 1)
Operating income 1)
Personnel expensesOther operating expenses
Operating expenses
Gross operating profit 1)
Depreciation and write-offs on non-current assets 2)
Valuation adjustments, provisions and losses
Profit before extraordinary items, acquisition impact, taxes 1) 2)
Extraordinary expenses/(income), netTaxes
Net operating profit before acquisition impact, minority interests 1) 2)
Acquisition interest Amortisation of acquired intangible assets and goodwill
Net profit before minority interests
Minority interests
Net profit
Net operating profit 2)
1) Excl. acquisition interest.2) Excl. amortisation of acquired intangible assets and goodwill.
Q1/2001in CHF m
25912221
402
175113
288
114
70
107
113
93
2519
49
0
49
68
Change vs. Q1/2000
in %
18(1031
8
134
9
6
40–
4
–(35
12
17873
(22
–
(22
(8
)
)
)
)
)
Q1/2000in CHF m
22013616
372
155109
264
108
50
103
020
83
911
63
0
63
74
Q4/2000in CHF m
28313043
456
188133
321
135
110
124
10
123
2218
83
0
83
101
Credit Suisse Asset Management key information
Cost/income ratioCost/income ratio (operating) 1)
Average allocated equity capital in CHF m
Pre-tax margin (reported)Pre-tax margin (operating) 1)
Personnel expenses/operating income
Growth in assets under management
Growth in discretionary assets under management– of which net new assets– of which market movement and structural effects– of which acquisition
Net profit before minority interests/average AuMNet operating profit before minority interests 1)/average AuM
Assets under management in CHF bnDiscretionary funds in CHF bn Advisory assets in CHF bn Mutual funds distributed in CHF bn
Number of employees
Allocated equity capital as of 1 April/1 January 2001 in CHF m
1) Excl. amortisation of acquired intangible assets and goodwill.
Q1/2000
75.3%72.3%
1,054
22.3%25.3%
41.7%
6.3%
6.8%3.2%
) 3.6%–
5.7 bp6.7 bp
31 Dec. 2000
487.2360.1 127.1 136.9
2,350
1,296
Q4/2000
76.8%72.8%
1,269
18.2%22.1%
41.2%
) 6.9%
) 5.0%2.7%
) (8.7%11.0%
7.0 bp8.6 bp
31 March 2001
485.4356.7128.7129.5
2,327
1,366
Q1/2001
78.1%73.4%
1,331
15.4%20.1%
43.5%
(0.4%
(0.9%1.9%
(2.8%_
4.0 bp5.6 bp
York staff now working from the samelocation. As part of this integration,DLJ mutual funds have been mergedwith the Warburg Pincus funds andrenamed the Credit Suisse WarburgPincus funds.
Credit Suisse Asset Managementintroduced several innovative productsand services in the first quarter, includ-ing the first exchange-traded fundbased on the Swiss Market Index onthe SWX Swiss Exchange. Exchange-traded funds are a fast growing prod-uct area, and Credit Suisse AssetManagement has secured the first-mover advantage with this product inthe Swiss market.
In Australia, Morningstar namedCredit Suisse Asset Management a fi-
nalist for its overall fund manager ofthe year award, recognising the grow-ing strength of its operations there. InJapan, Credit Suisse AssetManagement Ltd. was ranked tenthamong asset managers in terms ofsix-month net asset gains. In Europe,Credit Suisse Asset Managementreceived the Investment Excellenceaward for European Fixed Incomefrom Global Investor, part of theEuromoney Institutional Investor group,and won an award from Standard &Poor’s for the best UK income fund.
www.credit-suisse.com 19
REVIEW OF BUSINESS UNITS
Credit Suisse First Boston
Allen D. WheatChief Executive Officer
Credit Suisse First Boston reportedfirst quarter revenues of USD 4.3 bil-lion (CHF 7.1 billion), up 40% (CHF:43%) versus the first quarter of 2000and up 14% (CHF: 9%) on the pre-ceding quarter. The Fixed Income divi-sion, with its best quarter onrecord, was the main driving force behind the increase.
20
The Fixed Income division's turnaroundfrom the previous year is due in part toimproved market conditions in manysectors. Nearly all segments in the divi-sion reported greater revenues com-pared to the first quarter of 2000. Thelower interest rate environment and in-creased securitisation efforts of 2001have yielded strong gains in the ratesand credit groups. The high yield groupturned in a record performance, ascapital market activity in both dollar vol-ume and number of deals increasedsignificantly on the first quarter 2000.Both the high yield and securitisationactivities have benefited from the DLJmerger. The emerging markets group,with revenues comparable to the first
quarter of 2000, continues to be a keycontributor. The positive effects of thestrategic plan implemented by theFixed Income division in late 2000,which emphasises customer-drivensegments, are evident in improved in-vestor rankings, better research qualityand increased market shares in certainareas.
The Equity division produced goodresults in light of the difficult marketconditions. First quarter revenues were21% (CHF: 20%) below the recordfirst quarter 2000 revenues, but 31%(CHF: 23%) above the precedingquarter. The NASDAQ was down64% and the Dow Jones IndustrialAverage was down 16% from their
Credit Suisse First Boston income statement in CHF 1)
Fixed IncomeEquityInvestment BankingFinancial Services GroupOther income 2)
Operating income 2)
Personnel expenses 3)
Other operating expenses
Operating expenses 3)
Gross operating profit 2) 3)
Depreciation and write-offs on non-current assets 4)
Valuation adjustments, provisions and losses 5)
Profit before extraordinary items,acquisition impact, taxes
Extraordinary expenses/(income), netTaxes 6)
Net profit before acquisition impact,minority interests
Acquisition interest, net of tax 6)
Amortisation of retention payments, net of tax 6)
Amortisation of acquired intangible assets,net of tax, and goodwill 6)
Net profit before minority interests
Minority interests
Net profit
Net operating profit 4)
)
)
)
)
)
Q1/2001in CHF m
2,6202,1551,299
724305
7,103
4,1681,288
5,456
1,647
213150
1,284
1340
943
158126
263
396
0
396
659
Change vs.Q1/2000
in %
100(2026
–) –
43
4287
50
22
12921
13
–(4
21
––
–
(48
) –
(47
(15
Q1/2000in CHF m
1,3122,6781,035
0(46
4,9797) 2,941
687
3,628
1,351
93124
1,134
0355
779
00
23
756
) (2
754
777
Q4/2000in CHF m
1,2031,7552,471
447636
6,512
3,2661,358
4,624
1,888
218164
1,506
0373
1,133
114118
186
715
(1
714
900
Credit Suisse First Boston income statement in USD 1)
Fixed IncomeEquityInvestment BankingFinancial Services GroupOther income 2)
Operating income 2)
Personnel expenses 3)
Other operating expenses
Operating expenses 3)
Gross operating profit 2) 3)
Depreciation and write-offs on non-current assets 4)
Valuation adjustments, provisions and losses 5)
Profit before extraordinary items, acquisition impact, taxes
Extraordinary expenses/(income), netTaxes 6)
Net profit before acquisition impact,minority interests
Acquisition interest, net of tax 6)
Amortisation of retention payments, net of tax 6)
Amortisation of acquired intangible assets, net of tax, and goodwill 6)
Net profit before minority interests
Minority interests
Net profit
Net operating profit 4)
1) The business unit income statement differs from the Group’s legal accounts in presenting brokerage, execution and clearing expenses as part of operating expenses in common with US competitors, rather than netted against revenues.
2) Excl. acquisition interest (Q1/2001: CHF 243 m; Q4/2000: CHF 175 m).3) Excl. amortisation of retention payments (Q1/2001: CHF 194 m; Q4/2000: CHF 181 m).4) Excl. amortisation of acquired intangible assets and goodwill (Q1/2001: CHF 326 m; Q4/2000: CHF 228 m;
Q1/2000: CHF 23 m).5) Additional/(lower) credit-related valuation adjustments at Group level (Q1/2001: CHF 24 m; Q4/2000: CHF 28 m;
Q1/2000: CHF 8 m) resulting from the difference between the statistical and actual credit provisions.6) Tax impact on acquisition interest, amortisation of retention payments and amortisation of
acquired intangible assets (Q1/2001: CHF 215 m; Q4/2000: CHF 166 m).7) Incentive compensation for DLJ employees was included in DLJ results prior to the acquisition date.
These expenses were not included in Q4/2000 results.
)
)
)
)
)
Q1/2001in USD m
1,598 1,314
792 442 185
4,331
2,542 785
3,327
1,004
130 91
783
1 207
575
96 77
160
242
0
242
402
148118
198
15
131
Change vs.Q1/2000
in %
96 (21 23
– ) –
40
39 84
48
20
124 18
11
– (6
19
– –
–
(48
) –
(48
(17
Q1/2000in USD m
815 1,663
643 0
(29
3,0927) 1,827
427
2,254
838
58 77
703
0 220
483
00
14
469
(1
468
482
00
14
5
0
Q4/2000in USD m
694 1,002 1,453
268 381
3,798
1,894 797
2,691
1,107
127 95
885
0 219
666
68 71
111
416
0
416
527
105109
137
17
101
2000 highs, and equity new issuancevolume in 2001 is well below last year’slevels. As a result, the division’s cashand capital markets activities havebeen adversely affected. However, therevenues of the derivatives group haveheld steady versus the first quarter of2000 and secondary trading continuesto gain market share.
The Financial Services Group wascreated from the DLJ merger; thus,there are no comparable results for the
first quarter of 2000, and the fourthquarter of 2000 only had two monthsof activity. As with the company’s otherequities-related businesses, difficultmarkets have adversely affected firstquarter revenues.
Although the Investment Bankingdivision's first quarter revenues arehigher than the same period in 2000,they declined sharply versus the pre-ceding quarter. Industry volumes for thetwo largest businesses, equity capital
markets and mergers and acquisitions,have fallen significantly, thus contribut-ing to the 45% (CHF: 47%) decline indivisional revenues versus the fourthquarter of 2000. Additionally, thePrivate Equity group recorded severalwritedowns on its investments in thefirst quarter of 2001. Private Equityrevenues in the first quarter of bothyears are comparable.
Credit Suisse First Boston hasestablished post-DLJ integration cost
www.credit-suisse.com 21
REVIEW OF BUSINESS UNITS
Credit Suisse First Boston balance sheet information
Total assets
Total assets (in USD m)
Due from banks– of which securities lending and reverse repurchase agreementsDue from customers– of which securities lending and reverse repurchase agreementsMortgages Securities and precious metals trading portfolio
Due to banks– of which securities borrowing and repurchase agreementsDue to customers, other– of which securities borrowing and repurchase agreements
Credit Suisse First Boston key information (based on CHF amounts)
Cost/income ratio 2) 3)
Cost/income ratio (operating) 1) 2) 3)
Return on average equity capital (reported)Return on average equity capital (operating) 1)
Return on average equity capital (operating, excl. amortisation of retention payments, net of tax) 1) 2)
Average allocated equity capital in CHF m
Pre-tax margin (reported) Pre-tax margin (operating) 1)
Pre-tax margin (operating, excl. amortisation of retention payments) 1) 2)
Personnel expenses/operating income 2) 3)
Number of employees
Allocated equity capital as of 1 April/1 January 2001; 1 April 2000 in CHF mBIS tier 1 ratio 4)
1) Excl. amortisation of acquired intangible assets and goodwill.2) Excl. amortisation of retention payments.3) Excl. acquisition interest.4) Ratio applies to the legal entity Credit Suisse First Boston and is based on a tier 1 capital of CHF 18.4 bn
(31 Dec. 2000: CHF 17.6 bn), of which non-cumulative perpetual preferred securities is CHF 1.1 bn (both dates). Tier 1 capital 31 March 2000 was CHF 11.0 bn.
31 Dec. 2000in CHF m
669,758
409,738
245,345208,09491,22723,08719,566
192,301
371,033131,741102,43137,863
Q1/2000
75.2%74.7%
28.2%29.0%
29.0%
10,729
22.3%22.8%22.8%
59.1%
31 March 2000
15,331
10,9638.7%
31 March 2001in CHF m
739,123
426,622
271,073222,499103,03430,34318,110
218,522
427,256186,932103,21233,672
Q4/2000
77.9%74.4%
20.7%26.1%
29.5%
13,799
14.1%17.6%20.4%
50.2%
31 Dec. 2000
28,122
16,34613.6%
Q1/2001
84.4%79.8%
9.4%15.7%
18.7%
16,836
7.3%11.9%14.6%
58.7%
31 March 2001
28,211
17,32513.0%
savings targets for 2001 and beyond.The savings are to be achievedthrough a combination of headcountreductions – which have been com-pleted – and other cost synergies,which are on target or expected toexceed original goals. A portion of thesavings will be reinvested in thebusiness.
22
CONSOLIDATED RESULTS
Income statementInterest and discount incomeInterest and dividend income from trading portfoliosInterest and dividend income from financial investments Interest expenses
Net interest income
Commission income from lending activitiesCommissions from securities and investment transactionsCommissions from other servicesCommission expenses
Net commission and service fee income
Net trading income
Premiums earned, netClaims incurred and actuarial provisionsCommission expenses, netInvestment income from the insurance business
Net income from the insurance business
Income from the sale of financial investmentsIncome from investment activities– from participations valued according to the equity method– from other non-consolidated participationsReal estate incomeSundry ordinary incomeSundry ordinary expenses
Other ordinary income/(expenses), net
Operating income
Personnel expensesOther operating expenses
Operating expenses
Gross operating profit
Depreciation and write-offs on non-current assetsAmortisation of goodwillValuation adjustments, provisions and losses from the banking business
Depreciation, valuation adjustments, losses
Profit before extraordinary items, taxes and minority interests
Extraordinary incomeExtraordinary expensesTaxes
Net profit before minority interests
Minority interests
Net profit
Net operating profit
1) Consistent with the presentation of 2000 figures, interest income and expenses have each been restated by CHF 2,242 m.2)
Q1/2000in CHF m
5,973571147
) (5,471
1,220
1483,873
108) (233
3,896
2,665
8,211) (8,636) (512
2,293
1,356
13731301
29289
) (446
40
9,177
4,5281,396
5,924
3,253
25446
303
603
2,650
31) (68
(658
1,955
) (40
1,915
1,961
Change vs.Q1/2000
in %
46368(27
) 82
26
4916
252) (6
25
14
19) 5) (14
(43
12
61145150
06614
) 29
143
21
3340
35
(4
165270(21
79
(24
52) (63) (13
(25
) 18
(25
(12
)
)
))
)
)
)
))
)
)
)
Q4/2000in CHF m
9,8683,119
170) (11,276
1,881
2374,544
331) (180
4,932
1,356
7,691) (7,335) (539
2,073
1,890
63181 810
42337
) (519
572
10,631
5,1542,308
7,462
3,169
564103425
1,092
2,077
55) (1,612) 139
659
) (69
590
1,880
Q1/2001in CHF m
8,7402,673
108(9,978
1,543
2214,505
380(220
4,886
3,049
9,741(9,093
(4421,310
1,516
22076751
48330
(577
97
11,091
6,0301,954
7,984
3,107
674170238
1,082
2,025
47(25
(572
1,475
(47
1,428
1,726
www.credit-suisse.com 23
Consistent with the presentation of 2000 figures, CHF 185 m has been reclassified from interest and dividend income from financial investments to interest anddiscount income.
CONSOLIDATED RESULTS
Balance sheetAssetsCash and other liquid assets Money market papersDue from banksReceivables from the insurance businessDue from customers MortgagesSecurities and precious metals trading portfoliosFinancial investments from the banking businessInvestments from the insurance businessNon-consolidated participationsTangible fixed assetsIntangible assetsAccrued income and prepaid expensesOther assets
Total assets
Total subordinated assetsTotal receivables due from non-consolidated participations
Liabilities and shareholders’ equityMoney market papers issuedDue to banksPayables from the insurance businessDue to customers in savings and investment depositsDue to customers, otherMedium-term notes (cash bonds)Bonds and mortgage-backed bonds Accrued expenses and deferred income Other liabilitiesValuation adjustments and provisionsTechnical provisions for the insurance business
Total liabilities
Reserve for general banking risksShare capital Capital reserveRevaluation reserves for the insurance businessReserve for own sharesRetained earnings Minority interestsNet profit
Total shareholders’ equity
Total liabilities and shareholders’ equity
Total subordinated liabilitiesTotal liabilities due to non-consolidated participations
Changein %
(4(10112211(11313(0(2(358
15
8
(3932
53165
(34
(32
(13(304
8
00
12(35400116
(2(75
1
8
214
31 Dec. 2000in CHF m
2,92830,127
243,6929,871
145,25792,432
198,91725,574
132,6321,8299,913
23,29916,29454,668
987,433
4,876771
23,176359,441
8,80739,233
213,5493,225
65,52428,02157,65313,107
132,175
943,911
2,3196,009
19,8824,789
6001,5672,5715,785
43,522
987,433
21,801779
))
)
)))
)
)
)
))
)
))
31 March 2001in CHF m
2,81027,224
269,58112,004
161,31191,733
223,84128,802
132,1561,7849,616
24,40917,66662,606
1,065,543
2,9761,019
35,359417,040
9,24238,111
221,0283,138
66,54824,32255,98313,151
137,522
1,021,444
2,3196,015
22,3233,1013,0003,3922,5211,428
44,099
1,065,543
22,198885
24
Off-balance sheet businessContingent liabilitiesCredit guarantees in form of avals, guarantees
and indemnity liabilities Bid bonds, delivery and performance bonds,
letters of indemnity, other performance-related guarantees Irrevocable commitments in respect of documentary credits Other contingent liabilities
Total contingent liabilities
Irrevocable commitments
Liabilities for calls on shares and other equity
Confirmed credits
Fiduciary transactions
Derivative instrumentsInterest rate productsForeign exchange productsPrecious metals productsEquity/index-related productsOther products
Total derivative instruments
Selected notes
USD translation ratesAverage rate year-to-dateClosing rate as of reporting period end
Securities and precious metals trading portfoliosDebt instruments
– listed on stock exchange– unlisted
Total debt instruments– of which own bonds and medium-term notes
Equity instruments– listed on stock exchange– unlisted
Total equity instruments– of which own shares
Precious metals
Total securities and precious metals trading portfolios
– of which securities rediscountable or pledgeable at central banks
Changein %
5
12(13
5
8
(54
4
9
Negative grossreplacement
value31 Dec. 2000
in CHF bn
66.332.12.0
18.13.3
121.8
Q1/2000
1.611.6611
Change in %
1629
2330
(2(32
(61
(31
13
29
)
)
))
)
)
31 Dec. 2000in CHF m
7,013
4,8243,1425,026
20,005
126,998
305
150
41,974
Positive grossreplacement
value31 Dec. 2000
in CHF bn
66.430.41.5
15.22.7
116.2
Q4/2000
1.671.6346
31 Dec. 2000in CHF m
63,68465,678
129,362837
59,4548,081
67,5357,474
2,020
198,917
72,618
31 March 2001in CHF m
7,342
5,3993,1065,189
21,036
136,769
140
156
45,891
Nominal value
31 Dec. 2000in CHF bn
5,793.31,139.4
34.8473.980.4
7,521.8
Q1/2001
1.641.7325
31 March 2001in CHF m
74,17484,712
158,8861,090
58,0455,526
63,5717,582
1,384
223,841
93,593
Negative grossreplacement
value31 March 2001
in CHF bn
74.837.42.4
16.32.6
133.5
Positive grossreplacement
value31 March 2001
in CHF bn
77.136.61.9
15.12.7
133.4
Nominalvalue
31 March 2001in CHF bn
6,191.01,471.6
36.0448.898.7
8,246.1
www.credit-suisse.com 25
CONSOLIDATED RESULTS
Split of income statementbanking/insurance1)
Net interest income Net commission and service fee incomeNet trading incomeIncome from the insurance businessOther ordinary income/(expenses), net
Operating income
Personnel expenses Other operating expenses
Operating expenses
Gross operating profit
Depreciation and write-offs on non-current assetsAmortisation of goodwillValuation adjustments, provisions and losses
Depreciation, valuation adjustments, losses
Profit before extraordinary items,taxes and minority interests
Extraordinary incomeExtraordinary expensesTaxes
Net profit before minority interests
Minority interests
Net profit
1) Income statements for the banking and insurance business are presented on a stand-alone basis.2) Expenses due to the handling of both claims and investments are allocated to the income from the insurance business, of which for Q1/2001:
CHF 131 m (Q1/2000: CHF 125 m) are related to personnel expenses and for Q1/2001: CHF 80 m (Q1/2000: CHF 85 m) to other expenses.
Statement of shareholders’ equityTotal shareholders’ equity as of 1 January 2001Dividends paidCapital increases, par value and capital surplusChanges in scope of consolidation affecting minority interestsForeign exchange impactChange in revaluation reserves from the insurance business, netMinority interest in net profitNet profit
Total shareholders’ equity as of 31 March 2001
in CHF m
43,522(34481
928(1,841
471,428
44,099
)
)
2000in CHF m
30,6836
182(1,986
911(1
1900
Banking business TotalInsurance businessQ1/2001in CHF m
1,5144,8903,049
0217
9,670
5,4891,599
7,088
2,582
582160237
979
1,603
4(25
(449
1,133
(24
1,109
Q1/2000in CHF m
1,2203,8962,665
0 140
7,921
4,0501,070
5,120
2,801
19139
302
532
2,269
31) (68) (581
1,651
) (16
1,635
Q1/2001in CHF m
000
1,540(121
1,419
541354
895
524
93100
103
421
43) 0) (123
341
) (22
319
Q1/2000in CHF m
000
2) 1,356 ) (100
1,2562) 4782) 325
803
453
6370
70
383
00
) (78
305
) (25
280
Q1/2001in CHF m
1,5434,8863,049
2) 1,516) 97
11,0912) 6,0302) 1,954
7,984
3,107
674170238
1,082
2,025
47(25
) (572
1,475
) (47
1,428
Q1/2000in CHF m
1,2203,8962,6651,356
40
9,177
4,5281,396
5,924
3,253
25446
303
603
2,650
31) (68) (658
1,955
) (40
1,915
))
)
26
(2)237
5,785
43,522
air Valuew basis1)
ec. 1999n CHF m
16,59344,193
60,786
7,04822,199
29,247
2,2097,903
10,112
Investments from theinsurance businessNon-lifeDebt instrumentsEquity instrumentsReal estateMortgagesLoansShort-term investmentsNon-consolidated participations
Investment – non-life
LifeDebt instrumentsEquity instrumentsReal estateMortgagesLoansShort-term investmentsNon-consolidated participations
Investments – life
Equity instrumentsDebt instruments and loansShort-term investmentsReal estate
Total investments where investmentrisk is borne by the policyholder
Investments – life
CombinedTotal debt instrumentsTotal equity instrumentsTotal real estateTotal mortgagesTotal loansTotal short-term investmentsTotal non-consolidated participations
Total investments
Total investments where investmentrisk is borne by the policyholder
Total investments
Less debt instruments, loans issued by Group companies, non-consolidated participations and own-use real estate
Total investments from the insurance business
1) Cost column balances represent amortised costs.
Market value31 Dec. 2000
in CHF m
17,4806,5292,176
47,58625,2488,182
65,06631,77710,358
n/an/a
n/a
FNe
31 Di
Market value31 March 2001
in CHF m
1) 18,2015,9902,236
1) 48,56923,5968,164
1) 66,77029,58610,400
Cost31 Dec. 2000
in CHF m
1) 17,1815,0251,882
1) 46,51019,1277,139
1) 63,69124,1529,021
Cost31 March 2001
in CHF m
17,8305,3281,932
47,20520,6137,184
65,03525,9419,116
)
Book value31 March 2001
in CHF m
18,201 5,9901,6281,873
1691,795
234
29,890
48,56923,5965,7917,8104,3791,793
161
92,099
9,4781,6171,148
132
12,375
104,474
66,77029,5867,419 9,6834,5483,588
395
121,989
12,375
134,364
(2,208
132,156
Book value31 Dec. 2000
in CHF m
17,4806,5291,5851,869
1541,858
192
29,667
47,58625,2485,7737,5554,3241,590
205
92,281
10,1361,2331,402
118
12,889
105,170
65,06631,7777,3589,4244,4783,448
397
121,948
12,889
134,837
) (2,205
132,632
www.credit-suisse.com 27
CONSOLIDATED RESULTS
Risk commentary
During the first quarter of 2001, CreditSuisse First Boston managed itstrading risks in a narrow range whileachieving strong trading returns. TheGroup’s asset quality remains solidwith a share of 80% of counterpartyexposure to investment grade orequivalently-rated counterparties (AAAto BBB). The overall level of impairedassets remains stable.
Trading exposures The average VaR at Credit Suisse FirstBoston in the first quarter of 2001 wasUSD 82.4 million. At the end of thequarter VaR was USD 83.8 million,slightly below the USD 84.1 millionrecorded at 31 December 2000. Asillustrated by the backtesting chart,Credit Suisse First Boston’s VaR hasremained in a narrow range since thethird quarter. No outlier (days when thetrading loss exceeds the respectiveVaR) occurred and trading returns werestrong.
Asset quality While the more challenging credit envi-ronment has led to a modest decreasein the share of investment grade orequivalently-rated counterparties relativeto the total amount of credit exposures,the overall level of impaired assetsremained stable during the first quarter,with a modest increase at Credit SuisseFirst Boston being compensated by adecrease at Credit Suisse Banking.
Sale of Winterthur International The disposal of the core businesses ofWinterthur International will reduce therisk profile of Winterthur Insurance, inparticular with respect to insurance risksrelated to natural hazards, large propertyand liability exposures, as well as creditrisks related to ceded reinsurance.Based on the Group’s internal EconomicRisk Capital (ERC) measure, theplanned disposal will reduce WinterthurInsurance’s ERC by approximately 10%.
28
Asset quality &provisionsNon-performing loans (NPLs) 1)
Capital provisions against NPLs 2)
Counterparty exposure 1)
Coverage ratio of NPLs31.3.200131.12.2000NPLs as percentage of credit exposure31.3.200131.12.2000
1) Includes loans and loan equivalents.2) Excludes total interest of CHF 1,830 m (fully provided).
CreditSuisseGroup
31 March 2001 in CHF m
9,7305,997
422,879
62%63%
2.3%2.4%
113,4131,8198,889,7
CreditSuisse
FirstBoston
31 March 2001 in CHF m
1,8041,088
251,602
60%67%
0.7%0.6%
4,1
113,5
201,9
CreditSuissePrivate
Banking31 March 2001
in CHF m
11068
40,285
62%54%
0.3%0.3%
2nd quarter 2000 3rd quarter 2000 4th quarter 2000 1st quarter 2001
Daily revenueOne-day VaR (99%)
Relationship between daily revenue and VaR estimate for Credit Suisse First Boston
CreditSuisse
FinancialServices
31 March 2001 in CHF m
7,8164,841
130,992
62%62%
6.0%6.5%
CSFB trading exposures (99% one-day VaR)Total VaRPeriod endAverageMaximumMinimum
VaR by Risk TypeInterest rateForeign exchangeEquityCommodity
Subtotal
Diversification benefit
Total
Credit Suisse First Boston computes these VaR estimates separately for each risk type and for the wholeportfolio using historical simulation methodology. Diversification benefit reflects the net difference between thesum of the 99% percentile loss for each individual risk type and for the total portfolio.
Q4/2000in USD m
84.186.7
103.975.5
31 Dec. 2000in USD m
80.58.9
24.21.5
115.1
) (31.0
84.1
)
Q1/2001in USD m
83.882.499.469.5
31 March 2001in USD m
97.615.712.72.2
128.2
(44.4
83.8
in USD m
100
50
0
-50
-100
-150
-200
-250
INFORMATION FOR INVESTORS
CREDIT SUISSE GROUPMedia RelationsKarin Rhomberg Hug, Andreas HildenbrandTel. + 41 1 333 8844 Fax + 41 1 333 8877
Mailing address: P.O. Box 1, 8070 Zurich, Switzerland
Copies of all Credit Suisse Group’s financial publications may be ordered from:
CREDIT SUISSECIDM 23P.O. Box 1008070 ZurichSwitzerlandFax + 41 1 332 7294
Credit Suisse Group shares Ticker symbolsStock exchange listings Bloomberg Reuters Telekurs
SWX (Swiss Exchange) CSGN SW CSGZn.S CSGN,001Frankfurt CSHN GR CSGZn.F 876800,13Tokyo 8653 JP CSGZn.T N1492,106
Also traded in
New York (ADR) 1) CSGKY US CSGKY.OB CSGKY,130London (SEAQ) CSG LI CSHZnq.LT C2,182Paris (OTC) CSHR FP CSHZ.PA 916190,25
1) 4 ADR = 1 registered share until 14.8.20011) 1 ADR = 1 registered share as of 15.8.2001
Swiss security number 146248 1213853 2)
ISIN number CH0001462487 CH0012138530 2)
CUSIP number 225 401 108
2) New identification numbers for Credit Suisse Group registered shares with a par value of CHF 3, effective as of 15.8.2001.
RatingsAgencies Credit Suisse Group Credit Suisse First Boston Winterthur
Long term Short term Long term Short term Long term Short term
Moody’s, New York Aa3 - Aa3 P1 A1 P1 Aa3Standard & Poor’s, New York AA- A1+ AA A1+ AA A1+ AAFitch IBCA, New York AA- F1+ AA- F1+ AA F1+ AA-
Credit Suisse
Enquiries
CREDIT SUISSE GROUPInvestor RelationsGerhard Beindorff, Andreas PeterlikTel. + 41 1 333 4570, + 41 1 333 3169Fax + 41 1 333 2587