Prepared and filed by St Ives Burrups

 

FORM 6-K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer

Dated November 4, 2003

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

For the month of November 4, 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-       

 


Media Relations

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

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

e-mail media.relations@credit-suisse.com

 

CREDIT SUISSE GROUP REPORTS NET PROFIT OF
CHF 2.0 BILLION FOR THE THIRD QUARTER OF 2003
 
Private Banking Reports Net New Assets of CHF 8.4
Billion
 
Both Business Units Further Reduced Costs
 
Financial Highlights                    










 
in CHF million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Operating income 6,531   7,549   -13   21,104   -2  










 
Operating expenses 4,387   5,071   -13   14,478   -21  










 
Net profit 2,045   1,346   52   4,043   -  










 
Return on equity in % 26.3   18.5   42   18.2   -  










 
Earnings per share (in CHF) 1.66   1.09   52   3.29   -  










 
                     
 

Zurich, November 4, 2003 Credit Suisse Group today announced a net profit of CHF 2.0 billion for the third quarter of 2003, including a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from divestitures at Winterthur. Additionally, the Group’s third quarter 2003 net profit includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. Private Banking reported a strong net new asset inflow of CHF 8.4 billion. Credit Suisse Financial Services posted strong third quarter results in banking. Credit Suisse First Boston reported lower results compared with the second quarter of 2003, primarily reflecting dampened Fixed Income trading revenue, but continued to achieve significant progress on cost reduction.

Page 1 of 12


Oswald J. Gruebel, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse Financial Services, stated, "I am especially pleased by the good results in Private Banking, where the increase in operating income is all the more significant given the seasonally lower revenue trends usually expected in the third quarter. At the same time, the strong growth in net new assets reflects our clients' confidence in our company."

John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse First Boston, said, "The sound profit reported by Credit Suisse First Boston in the third quarter, in spite of lower results in Fixed Income, demonstrates that we are continuing to make progress towards our goal of sustained profitability. Although our strict cost management over the last two years has provided us with a more competitive cost structure, our overall profitability is still not satisfactory as we continue to work through historical issues. I am confident that if we continue to focus on clients and their needs while building a unified culture, we will have consistently strong financial results in addition to a strong franchise."

Group Results

Credit Suisse Group reported a net profit of CHF 2.0 billion in the third quarter of 2003, compared with a net profit of CHF 1.3 billion in the second quarter of 2003 and a net loss of CHF 2.1 billion in the third quarter of 2002. For the first nine months of 2003, the Group reported a net profit of CHF 4.0 billion, compared with a net loss of CHF 2.4 billion for the first nine months of 2002. The net profit of CHF 2.0 billion in the third quarter of 2003 includes a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from the divestitures of Winterthur’s Republic operations in the US, its Churchill operations in the UK and

Page 2 of 12


Winterthur Italy. Additionally, the Group’s net profit in the third quarter of 2003 includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. Earnings per share were CHF 1.66 for the third quarter of 2003, compared with earnings of CHF 1.09 per share for the second quarter of 2003. The Group’s return on equity was 26.3% in the third quarter of 2003, compared with 18.5% in the second quarter of 2003.

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The Group’s operating income totaled CHF 6.5 billion in the third quarter of 2003, down 13% from the second quarter of 2003 but up 15% from the third quarter of 2002. The decrease compared with the second quarter of 2003 was mainly attributable to a decline in trading income at Credit Suisse First Boston, which was partially offset by improved results within Private Banking.

The Group’s operating expenses in the third quarter of 2003 decreased 13% from the second quarter of 2003 and 18% from the third quarter of 2002, to CHF 4.4 billion. Personnel expenses declined 18% overall compared with the second quarter of 2003, reflecting lower incentive compensation accruals at Credit Suisse First Boston – in line with reduced operating income – and the impact of reversing the first six months of 2003 accrual for stock compensation in the third quarter of 2003 due to the previously announced change in the vesting of stock awards.

The Group’s total valuation adjustments, provisions and losses were CHF 215 million in the third quarter of 2003, compared with CHF 131 million in the second quarter of 2003. In the third quarter of 2003, net credit-related valuation allowances and provisions decreased slightly to CHF 96 million from the already low level of CHF 99 million in the second quarter of 2003. Compared with the third quarter of 2002, valuation adjustments, provisions and losses decreased CHF 758 million, or 78%, due primarily to lower credit valuation allowances and provisions reflecting an improvement in the credit environment, loan repayments and loan sales.

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The Group’s consolidated BIS tier 1 ratio was 11.1% as of September 30, 2003, an increase from 10.3% as of June 30, 2003. Winterthur’s capital base was strengthened during the third quarter of 2003 as a result of earnings generation and the divestitures referred to above. In isolation, these divestitures increased Winterthur's EU solvency surplus capital by approximately CHF 3.5 billion, due to the combination of lower required capital and higher available capital.

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Credit Suisse Financial Services

CSFS Business Unit Result                    










 
in CHF million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Operating income 4,548   3,544   28   11,594   35  










 
Operating expenses 2,117   2,178   -3   6,524   -9  










 
Net profit 1,778   851   109   3,333   -  










 

Credit Suisse Financial Services posted a net profit of CHF 1.8 billion in the third quarter of 2003, including a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from divestitures at Winterthur. Additionally, the business unit’s third quarter 2003 net profit includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. The third quarter of 2003 net profit of CHF 1.8 billion compares with a net profit of CHF 851 million in the second quarter of 2003 and a net loss of CHF 1.2 billion in the third quarter of 2002.

CSFS Segment Results                    










 
in CHF million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Private Banking 519   492   5   1,406   2  










 
Corporate & Retail Banking 169   156   8   445   22  










 
Life & Pensions 126   117   8   354   -  










 
Insurance 991   102   -   1,185   -  










 

In the third quarter of 2003, Credit Suisse Financial Services’ banking segments improved their results for the third consecutive quarter. The Private Banking segment reported a 3% increase in operating income in the third quarter of 2003 compared with the second quarter of 2003, due mainly to higher commission and fee income as a result of the higher average asset base and increased client activity. Due to this growth in operating income, together with a 4% decrease in operating expenses compared with the second quarter of 2003, Private Banking’s cost/income ratio improved by a further 4.0 percentage points to 55.1%, the lowest ratio

Page 6 of 12


in the past six quarters. Corporate & Retail Banking continued to improve its overall profitability and efficiency in the third quarter of 2003. The segment reported a further decrease in operating expenses of 4% compared with the second quarter of 2003, due mainly to lower personnel expenses in line with headcount development. The segment’s net interest margin rose 3 bp in the third quarter of 2003, to 215 bp. Corporate & Retail Banking’s cost/income ratio further improved to 64.4% in the third quarter of 2003, the lowest ratio in the last seven quarters. Additionally, the segment further strengthened its credit portfolio, with a reduction in impaired loans.

The insurance segments reported solid results for the first nine months of 2003, due primarily to the divestiture-related gains, strong investment performance, reduced administration costs and improved underwriting results. Life & Pensions reported a reduction in gross premiums written in the first nine months of 2003 compared with the first nine months of 2002, primarily reflecting its ongoing selective underwriting policy. The segment significantly reduced its administration costs in the first nine months of 2003, and its expense ratio decreased by 0.3 percentage points. Life & Pensions achieved an improved investment performance in the first nine months of 2003, with a total return on invested assets of 5.0%, compared with 1.5% in the first nine months of 2002. Insurance (casualty and property) recorded an increase in net premiums earned in the first nine months of 2003, due primarily to tariff increases across all major markets. The Insurance segment strengthened its net underwriting result before dividends to policyholders by CHF 218 million compared with the first nine months of 2002, reflecting an improvement in the combined ratio of 1.9 percentage points, to 101.6%, mainly as a result of improved pricing and the continued streamlining of its business portfolio. Demonstrating its continued progress in ongoing efficiency measures, the segment reduced

Page 7 of 12


its administration costs in the first nine months of 2003 compared with the first nine months of 2002. Investment performance improved in the first nine months of 2003, with a total return on invested assets of 3.8% compared with
-0.3% in the first nine months of 2002.

Credit Suisse First Boston

CSFB Business Unit Result                    










 
in USD million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Operating income 2,422   3,103   -22   8,363   -9  










 
Operating expenses 1,792   2,266   -21   6,167   -15  










 
Net profit 224   282   -21   650   -  










 

Page 8 of 12


Credit Suisse First Boston reported a net profit of USD 224 million (CHF 308 million) for the third quarter of 2003, down USD 58 million (CHF 65 million) compared with the second quarter of 2003. The business unit’s net operating profit of USD 358 million (CHF 491 million), which excludes the amortization of acquired intangible assets and goodwill net of tax, also declined compared with the second quarter 2003 results. The favorable resolution of certain outstanding income tax matters resulted in a 16% effective income tax rate in the third quarter of 2003, compared with 27% in the second quarter of 2003.

CSFB Segment Results                    










 
in USD million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Institutional Securities 348   453   -23   1,134   245  










 
CSFB Financial Services 34   40   -15   109   -39  










 

The Institutional Securities segment reported a decrease in operating income in the third quarter of 2003 compared with the second quarter of 2003, as the Fixed Income business was significantly impacted by conservative risk positioning which dampened its trading results but resulted in lower Value-at-Risk. While the Equity and Investment Banking divisions continued to see steady year-to-date improvements in cash trading and M&A activities, revenues in both units declined modestly compared with the second quarter of 2003. As a result of lower compensation accruals – discussed in the Group Results section above – and continued cost management, Institutional Securities reported a 24% decrease in operating expenses in the third quarter of 2003 compared with the second quarter of 2003. Credit Suisse First Boston’s franchise continued to benefit from its leading position in the high yield business. Within the CSFB Financial Services segment, Credit Suisse Asset Management’s operating income was comparable to the second quarter of 2003 and operating expenses increased marginally.

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Page 10 of 12


Net new assets

Net New Assets and Assets under Management (AuM) in the third quarter of 2003  

 
in CHF billion Net New Assets   Total AuM   Change in AuM in  
          % vs 30.6.03  






 
             
Private Banking 8.4   505.1   2.3  
Corporate & Retail Banking 1.8   69.4   3.9  
Life & Pensions -0.7   112.3   -4.0  
Insurance n/ a   27.1   -16.9  






 
Credit Suisse Financial Services 9.5   713.9   0.5  






 
Institutional Securities 0.1   29.1   -6.1  
CSFB Financial Services -5.6   456.2   0.4  






 
Credit Suisse First Boston -5.5   485.3   0.0  






 
             






 
Credit Suisse Group 4.0   1,199.2   0.3  






 
n/a: not applicable            

Credit Suisse Group’s net new asset inflow in the third quarter of 2003 was dominated by an inflow from Private Banking of CHF 8.4 billion. Corporate & Retail Banking recorded an inflow of CHF 1.8 billion, whereas Life & Pensions had an outflow of CHF 0.7 billion. CSFB Financial Services recorded an outflow of CHF 5.6 billion. As of September 30, 2003, the Group’s total assets under management were CHF 1,199.2 billion, practically unchanged compared with June 30, 2003.

Business transfers

In the third quarter of 2003, the Group completed the transfer of its securities and treasury execution platform in Switzerland from Credit Suisse First Boston to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. All comparative figures have been restated to reflect these business transfers.

Page 11 of 12


Outlook

Credit Suisse Group is benefiting from the measures taken in 2002 and 2003. Going forward, the Group will continue to concentrate on enhancing efficiency and building its client franchise, and it remains focused on producing sound profitability.

Page 12 of 12


Enquiries

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

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

Internet      www.credit-suisse.com

Commentary on Results – Non-GAAP Financial Information

For additional information with respect to Credit Suisse Group’s results for the third quarter and the first nine months of 2003, we refer you to the Group’s Quarterly Report Q3 2003, as well as the Group’s slide presentation for analysts and press, posted on the Internet at www.credit-suisse.com/results. This press release may contain non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under Swiss Generally Accepted Accounting Principles (as well as other related information) is also included in the Quarterly Report Q3 2003. The operating basis business unit results described above reflect the results of the separate segments constituting the respective business units and certain acquisition-related costs not allocated to the segments.

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 61,300 staff worldwide. As of September 30, 2003, it reported assets under management of CHF 1,199.2 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

Page 13 of 12


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.

Cautionary statement regarding non-GAAP financial information

This press release may contain non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under generally accepted accounting principles, is posted on our website at http://www.credit-suisse.com/sec.html.

Page 14 of 12


Presentation of Credit Suisse Group’s Third Quarter Results 2003 via Webcast and Telephone Conference

 

Date Tuesday, November 4, 2003
   
Time 15.00 CET / 14.00 GMT / 09.00 EST
   
Speakers Philip K. Ryan, CFO of Credit Suisse Group
  Ulrich Koerner, CFO of Credit Suisse Financial Services
  Barbara Yastine, CFO of Credit Suisse First Boston
   
  All presentations will be held in English.
   
Webcast www.credit-suisse.com/results
   
Telephone Europe:   +41 91 610 5600
  UK:       +44 207 107 0611
  USA:      +1 866 291 4166
   
  Reference: “Credit Suisse Group quarterly results”
   
Q&A You will have the opportunity to ask the speakers questions via telephone conference following the presentations.
   
  Video on demand – available approximately three hours after the event at www.credit-suisse.com/results
   
Playback Telephone – available approximately one hour after the event; please dial:
  Europe:   +41 91 612 4330
  UK:       +44 207 866 4300
  USA:      +1 412 858 1440
   
  Conference ID: 332#
   
Note We recommend that you dial in approximately ten minutes before the start of the presentation for the webcast and telephone conference. Further instructions and technical test functions are now available on our website.
   
 

Page 15 of 12










QUARTERLY REPORT 2003 Q3






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 61,300 staff worldwide.





QUARTERLY REPORT 2003
   EDITORIAL
   CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q3/2003
   AN OVERVIEW OF CREDIT SUISSE GROUP
      Equity capital
      Net new assets
      Operating income and expenses
      Valuation adjustments, provisions and losses
      Business transfers
      Swiss GAAP accounting changes
      Outlook
   RISK MANAGEMENT
      Overall Risk Trends
      Trading risks
      Credit risk exposure
   REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES
      Private Banking
      Corporate & Retail Banking
      Life & Pensions
      Insurance
   REVIEW OF BUSINESS UNITS | CREDIT SUISSE FIRST BOSTON
      Institutional Securities
      CSFB Financial Services
   RECONCILIATION OF OPERATING RESULTS TO SWISS GAAP
      Introduction
      Credit Suisse Financial Services business unit
      Credit Suisse First Boston business unit
   CONSOLIDATED RESULTS | CREDIT SUISSE GROUP
   LOANS
   INFORMATION FOR INVESTORS



This symbol is used to indicate topics on which further information is available on our website. Go to www.credit-suisse.com/results/bookmarks.html to find links to the relevant information. The additional information -indicated is openly accessible and does not form part of the Quarterly Report. Some areas of Credit Suisse Group’s websites are only available in English.

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.

Cautionary statement regarding non-GAAP financial information

This Quarterly Report may contain non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under generally accepted accounting principles is contained in this report and is posted on our website at www.credit-suisse.com/sec.html.


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

Credit Suisse Group’s net profit in the third quarter of 2003 was CHF 2.0 billion. The third quarter net profit includes an after-tax gain of CHF 1.3 billion net of related provisions from divestitures at Winterthur. Additionally, the Group’s third quarter of 2003 net profit includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio.

The Group made considerable progress during the third quarter of 2003. Most notably, Private Banking generated strong revenues, despite the typical third quarter seasonality. Private Banking’s operating income, combined with efficiency gains, resulted in a 79% increase in segment profit compared with the third quarter of 2002. Corporate & Retail Banking also benefited from increased efficiency and low credit provisions. In addition to making good progress in building capital and strengthening its balance sheet, Winterthur made additional improvements in expense reductions and pricing in the first nine months of 2003. Credit Suisse First Boston’s conservative risk positioning in light of US interest rate volatility reduced fixed income trading results but resulted in lower Value-at-Risk. The Equity and Investment Banking divisions of Credit Suisse First Boston continued to see modest improvements in client flows and business activity.

At Credit Suisse Financial Services, the focus on cost management remained a priority and the banking segments reported a reduction in operating expenses in the third quarter, while the insurance segments reported a reduction in administration costs in the first nine months of 2003. At Credit Suisse First Boston, expenses declined, reflecting lower incentive bonus accruals and the change in the vesting period of stock awards. Having reduced the guaranteed portion of incentive-based compensation, Credit Suisse First Boston has delivered on its pledge to create a more flexible cost base. All banking segment results benefited from lower credit provisions as a result of the continued improvement in the credit markets.

Going forward, we are concentrating on producing sound profitability and will continue to focus on cost management, efficiency and building our client franchise.
Oswald J. Grübel John J. Mack
November 2003


CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q3/2003


Consolidated income statement  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Operating income6,5317,5495,666(13)1521,10421,643(2)
Gross operating profit2,1442,478314(13)6,6263,225105
Net profit/(loss)2,0451,346(2,148)524,043(2,359)


Return on equity  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in %3Q20032Q20033Q20022Q20033Q2002200320022002
Return on equity26.318.5(26.9)4218.2(9.2)


Consolidated balance sheet  
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
Total assets994,5551,016,645955,656(2)4
Shareholders' equity34,87333,42831,394411
Minority interests in shareholders' equity2,9712,9402,87813


Capital data 1) 
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
BIS risk-weighted assets 197,412199,108196,486(1)0
BIS tier 1 capital21,90120,48717,613724
   of which non-cumulative perpetual preferred
   securities
2,1842,1672,16211
BIS total capital32,01031,23828,311213


Capital ratios 1) 
in % 30.09.0330.06.0331.12.02
BIS tier 1 ratioCredit Suisse 7.67.57.4
 Credit Suisse First Boston 2)12.211.010.3
 Credit Suisse Group 3) 11.110.39.0
BIS total capital ratio Credit Suisse Group16.215.714.4


Assets under management/client assets  
    ChangeChange
    in % fromin % from
in CHF bn30.09.0330.06.0331.12.0230.06.0331.12.02
Advisory assets under management615.1598.7577.936
Discretionary assets under management584.1596.9582.1(2)0
Total assets under management1,199.21,195.61,160.003
Client assets 1,299.41,285.91,757.91(26)


Net new assets  
        Change Change     Change
        in % from in % from     in % from
          9 months  
in CHF bn 3Q2003 2Q2003 3Q2002 2Q2003 3Q2002 2003 2002 2002
Net new assets 4.0 1.9 (13.6) 110.5 1.9 4.9 (61)
1) In cooperation with the Swiss Federal Banking Commission, the capital treatment of the Group’s investment in Winterthur has been revised. Previously published comparative figures have been restated to reflect the new methodology. The Group’s previously published figures under the old methodology were 11.1% as of 30.06.03 and 9.7% as of 31.12.02 for the consolidated BIS tier 1 ratio, and 18.0% as of 30.06.03 and 16.5% as of 31.12.02 for the Group’s BIS total capital ratio.
2) Ratio is based on a tier 1 capital of CHF 12.1 bn (30.06.03: CHF 11.3 bn; 31.12.02: CHF 10.6 bn), of which non-cumulative perpetual preferred securities is CHF 1.0 bn (30.06.03: CHF 1.0 bn; 31.12.02: CHF 1.0 bn).
3) Ratio is based on a tier 1 capital of CHF 21.9 bn (30.06.03: CHF 20.5 bn; 31.12.02: CHF 17.6 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (30.06.03: CHF 2.2 bn; 31.12.02: CHF 2.2 bn).


Number of employees (full-time equivalents)
      ChangeChange
      in % fromin % from
  30.09.0330.06.0331.12.0230.06.0331.12.02
Switzerlandbanking20,04220,54121,270(2)(6)
 insurance6,6496,7977,063(2)(6)
Outside Switzerlandbanking20,17820,10825,0570(19)
 insurance14,46325,05525,067(42)(42)
Total employees Credit Suisse Group61,33272,50178,457(15)(22)


Share data 
    ChangeChange
    in % fromin % from
 30.09.0330.06.0331.12.0230.06.0331.12.02
Shares issued 1,194,682,3301,189,980,1521,189,891,72000
To be issued upon conversion of MCS 1)40,413,83840,413,83840,413,83800
Shares outstanding 1,235,096,1681,230,393,9901,230,305,55800
Share price in CHF 42.2535.6530.001941
Market capitalization in CHF m52,18343,86436,9091941
Book value per share in CHF25.8324.7823.18411
1) Maximum number of shares related to Mandatory Convertible Securities (MCS) issued by Credit Suisse Group Finance (Guernsey) Ltd. in December 2002.


Share price  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF 3Q20032Q20033Q20022Q20033Q2002200320022002
High (closing price)48.6539.3048.8524048.6573.60(34)
Low (closing price)34.7523.2526.80493020.7026.80(23)


Calculation of earnings per share (EPS)  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
 3Q20032Q20033Q20022Q20033Q2002200320022002
Net profit/(loss) in CHF m2,0451,346(2,148)524,043(2,359)
Diluted net profit/(loss) in CHF m2,0451,346(2,148)524,043(2,359)
Weighted average shares outstanding1,230,710,9751,230,330,6731,189,341,0561)031,230,450,5541,189,212,9671)3
Dilutive impact  2)19,673,4494,922,81403009,814,5530
Weighted average shares, diluted1,250,384,4241,235,253,4871,189,341,056151,240,265,1071,189,212,9674
Basic earnings per share in CHF1.661.09(1.81)523.29(1.98)
Diluted earnings per share in CHF1.641.09(1.81)503.26(1.98)
1) Adjusted for weighted average shares repurchased.
2) The calculation for the diluted loss per share in 3Q2002 and for the 9 months 2002 excludes the effect of the potential exchange of convertible bonds and the potential exercise of options to purchase shares, as the effect would be anti-dilutive.






AN OVERVIEW OF CREDIT SUISSE GROUP




Credit Suisse Group reported a net profit of CHF 2.0 billion in the third quarter of 2003 compared to CHF 1.3 billion in the previous quarter. The third quarter result includes an after-tax gain of CHF 1.3 billion net of related provisions from divestitures at Winterthur. Additionally, the Group’s third quarter result includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. Credit Suisse Financial Services substantially increased its third quarter net profit compared with the previous quarter, with strong results in the banking segments and continued improvements in the insurance segments in the course of the year. Credit Suisse First Boston reported a decrease in its third quarter results compared with the second quarter of 2003.



The Group reported a net profit of CHF 2.0 billion in the third quarter of 2003, a substantial increase from the previous quarter’s net profit of CHF 1.3 billion. The net profit of CHF 2.0 billion in the third quarter 2003 includes a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from the divestitures of Winterthur’s Republic operations in the US, its Churchill operations in the UK and Winterthur Italy . Additionally, the Group’s net profit in the third quarter of 2003 includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. The Group’s third quarter performance was impacted by weaker trading income at Credit Suisse First Boston, which was partially compensated by improved results within the Credit Suisse Financial Services banking segments.

Net profit for the first nine months of 2003 was CHF 4.0 billion, compared to a net loss of CHF 2.4 billion in the same period of 2002. Earnings per share for the third quarter of 2003 were CHF 1.66, compared to CHF 1.09 for the second quarter of 2003. The Group’s return on equity was 26.3% in the third quarter of 2003, compared to 18.5% in the second quarter of 2003.

The Group’s third quarter result represents continued progress towards achieving sound profitability and restoring the capital base. It also reflects the realization of measures taken to reduce costs, increase the flexibility of the cost base, return Winterthur to profitability, reduce the impact of legacy assets at Credit Suisse First Boston and restructure European onshore Private Banking.

Credit Suisse Financial Services posted a net profit of CHF 1.8 billion in the third quarter of 2003, including the gain from the Winterthur divestitures and the additional provisions described above. This result compares with a net profit of CHF 851 million in the second quarter of 2003 and a net loss of CHF 1.2 billion in the third quarter of 2002. Although the third quarter has often proven to be a seasonally weak quarter, the banking segments in particular had a strong quarter, reflecting continued good margins and improvements in net new asset growth, thus demonstrating efficiency and the strength of the private banking franchise. Winterthur’s results reflected the divestitures, as well as lower administration costs and good investment income, which together improved its capital base and strengthened its balance sheet.

Credit Suisse First Boston reported a net profit of CHF 308 million for the third quarter of 2003, which was below the previous quarter’s net profit of CHF 373 million, but significantly improved compared to a net loss of CHF 668 million reported in the third quarter of 2002. Credit Suisse First Boston continues to reduce expenses and focus on its client franchise. Its third quarter result, however, reflects a lower fixed income trading result, which was impacted by conservative risk positioning in light of US interest rate volatility, thus resulting in reduced Value-at-Risk. While both the Equity and Investment Banking divisions continued to see steady improvements in client flows and M&A activity, operating income in both divisions declined compared with the second quarter of 2003. CSFB Financial Services’ operating income increased slightly compared with the previous quarter, with modest improvements in both Credit Suisse Asset Management and Private Client Services. Credit Suisse Asset Management launched an alternative investment initiative in the third quarter of 2003.

Equity capital
The Group’s consolidated BIS tier 1 ratio was 11.1% as of September 30, 2003, up from 10.3% as of June 30, 2003. These ratios reflect the new methodology for the BIS capital calculations as revised in cooperation with the Swiss Federal Banking Commission.

Winterthur’s capital base was strengthened during the third quarter of 2003 as a result of earnings generation and the sale of Winterthur’s Republic operations in the US, its Churchill operations in the UK and Winterthur Italy. In isolation, these divestitures increased Winterthur’s EU Group solvency surplus capital by approximately CHF 3.5 billion, due to the combination of lowered required capital and higher available capital.

Net new assets
Credit Suisse Group’s net new asset inflow in the third quarter of 2003 was dominated by an inflow from Private Banking of CHF 8.4 billion. Corporate & Retail Banking recorded an inflow of CHF 1.8 billion, whereas Life & Pensions had an outflow of CHF 0.7 billion. CSFB Financial Services recorded an outflow of CHF 5.6 billion, only slightly compensated by a net asset inflow of CHF 0.1 billion from the Institutional Securities segment. For Credit Suisse Group, a net new asset inflow of CHF 4.0 billion resulted in the third quarter of 2003, more than twice the net new asset inflow in the previous quarter. As of September 30, 2003, the Group’s total assets under management amounted to CHF 1,199.2 billion, practically unchanged compared to June 30, 2003.

Operating income and expenses
The Group’s operating income was CHF 6.5 billion in the third quarter of 2003, a decline of 13% from the previous quarter, but up 15% from the third quarter of 2002. The decrease compared with the second quarter of 2003 was mainly due to a decline in trading income, partially offset by increases in net interest and commission and service fee income.

The Group’s operating expenses in the third quarter of 2003 decreased 13% from the previous quarter and 18% from the third quarter of 2002 to CHF 4.4 billion, reflecting continued progress on cost management. Personnel expenses declined 18% overall compared with the previous quarter. This decrease reflects lower incentive compensation accruals at Credit Suisse First Boston, in line with lower operating income, and the impact of reversing the first six months of 2003 accrual for stock compensation in the third quarter of 2003 due to the previously announced change in vesting of stock awards. At Credit Suisse Financial Services, the continued focus on cost reduction resulted in a decrease in operating expenses in the banking segments in the third quarter of 2003 and in a decline in administration costs in the insurance segments in the first nine months of 2003.

Valuation adjustments, provisions and losses
The Group’s total valuation adjustments, provisions and losses were CHF 215 million in the third quarter of 2003, compared to CHF 131 million in the second quarter of 2003. In the third quarter of 2003, net credit-related valuation allowances and provisions decreased slightly to CHF 96 million from the already low level of CHF 99 million in the second quarter of 2003. Compared with the third quarter of 2002, valuation adjustments, provisions and losses decreased CHF 758 million, or 78%, primarily due to lower credit valuation allowances and provisions reflecting an improved credit environment, loan repayments and loan sales.

Business transfers
In the third quarter of 2003, the transfer of the securities and treasury execution platform in Switzerland from Credit Suisse First Boston to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston’s Private Client Services UK business from CSFB Financial Services to Private Banking were completed. All comparative figures have been restated to reflect these business transfers. The consolidated financial statements were not affected. Since September 1, 2003, Credit Suisse Financial Services has been executing securities and treasury transactions in Switzerland for its private banking, retail and corporate clients under its own name. Credit Suisse First Boston’s investment banking and Swiss institutional coverage businesses in Switzerland remain unaffected by these changes.

Swiss GAAP accounting changes
Reported earnings in the fourth quarter will be affected by mandatory changes in Swiss GAAP for banks that are required to be applied at the end of the year. The changes of significance for Credit Suisse Group relate to the accounting for own shares and for derivatives. If these changes in accounting principles were to be applied in the current reporting period, the estimated impact on net profit (including the cumulative effect) for the first nine months of 2003 would be a decrease of approximately CHF 110 million, and the estimated impact on reported shareholders’ equity would be a decrease of CHF 0.6 billion. These changes have no impact on the Group’s regulatory capital adequacy ratios.

Outlook
Credit Suisse Group is benefiting from the measures taken in 2002 and 2003. Going forward, the Group will continue to concentrate on enhancing efficiency and building its client franchise and remains focused on producing sound profitability.

In the “Overview of Credit Suisse Group”, the business unit results are presented in accordance with Swiss GAAP. Elsewhere in this Quarterly Report, business unit results are presented on an operating basis.

For a reconciliation of operating basis business unit results (reflecting the results of the separate segments comprising the business units) to the Swiss GAAP basis, a discussion of the material reconciling items and a discussion of the purpose of the operating basis results and the reasons why management believes they provide useful information for investors, please refer to “Reconciliation of operating results to Swiss GAAP” on pages 32 – 36.


Overview of Credit Suisse Group 1)
  Credit Suisse Financial Services  Credit Suisse First Boston  Corporate Center  Credit Suisse Group 
in CHF m  3Q2003  2Q2003  3Q2002  3Q2003  2Q2003  3Q2002  3Q2003  2Q2003  3Q2002  3Q2003  2Q2003  3Q2002 
Operating income  3,387  3,544  2,497  3,113  3,886  3,408  31  119  (239)  6,531  7,549  5,666 
Personnel expenses  1,385  1,434  1,533  1,681  2,306  2,231  59  84  29  3,125  3,824  3,793 
Other operating expenses  732  744  923  594  615  723  (64)  (112)  (87)  1,262  1,247  1,559 
Operating expenses  2,117  2,178  2,456  2,275  2,921  2,954  (5)  (28)  (58)  4,387  5,071  5,352 
Gross operating profit  1,270  1,366  41  838  965  454  36  147  (181)  2,144  2,478  314 
Depreciation of non-current assets 2)  279  194  291  125  136  207  67  145  94  471  475  592 
Amortization of acquired intangible assets and goodwill  25  27  31  211  201  308  2  (5)  (2)  238  223  337 
Valuation adjustments, provisions and losses  104  63  122  111  63  867  0  5  (16)  215  131  973 
Profit/(loss) before extraordinary items and taxes   862  1,082  (403)  391  565  (928)  (33)  2  (257)  1,220  1,649  (1,588) 
Extraordinary income/(expenses), net   1,164  8  (127)  2  0  (1)  2  53  (3)  1,168  61  (131) 
Taxes 3)  (256)  (229)  (681)  (65)  (173)  280  4  83  (9)  (317)  (319)  (410) 
Net profit/(loss) before minority interests   1,770  861  (1,211)  328  392  (649)  (27)  138  (269)  2,071  1,391  (2,129) 
Minority interests  8  (10)  17  (20)  (19)  (19)  (14)  (16)  (17)  (26)  (45)  (19) 
Net profit/(loss)  1,778  851  (1,194)  308  373  (668)  (41)  122  (286)  2,045  1,346  (2,148) 
1) Business unit results in accordance with Swiss GAAP. For a reconciliation of operating basis business unit results (reflecting the results of the separate segments comprising the business units) to Swiss GAAP basis, please refer to “Reconciliation of operating results to Swiss GAAP”.
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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 for Credit Suisse Financial Services of CHF –582 m, for Credit Suisse First Boston of CHF 286 m, and for Credit Suisse Group of CHF –306 m.


Assets under management/client assets  1)
            Change  Change 
            in % from  in % from 
in CHF bn  30.09.03  30.06.03  31.12.02  30.06.03  31.12.02 
Credit Suisse Financial Services                 
   Private Banking                  
   Assets under management   505.1  493.8  465.7  2.3  8.5 
      of which discretionary   129.2  128.3  121.5  0.7  6.3 
   Client assets   532.3  522.3  494.8  1.9  7.6 
   Corporate & Retail Banking                  
   Assets under management   69.4  66.8  70.3  3.9  (1.3) 
   Client assets   90.3  85.7  86.9  5.4  3.9 
   Life & Pensions                  
   Assets under management (discretionary)   112.3  117.0  110.8  (4.0)  1.4 
   Client assets   112.3  117.0  110.8  (4.0)  1.4 
   Insurance                  
   Assets under management (discretionary)   27.1  32.6  30.7  (16.9)  (11.7) 
   Client assets   27.1  32.6  30.7  (16.9)  (11.7) 
Credit Suisse Financial Services                     
Assets under management  713.9  710.2  677.5  0.5  5.4 
   of which discretionary   269.8  279.1  264.2  (3.3)  2.1 
Client assets  762.0  757.6  723.2  0.6  5.4 
Credit Suisse First Boston                     
   Institutional Securities                  
   Assets under management   29.1  31.0  31.3  (6.1)  (7.0) 
      of which Private Equity on behalf of clients
      (discretionary)
  19.7  20.6  20.9  (4.4)  (5.7) 
   Client assets   73.3  73.9  83.3  (0.8)  (12.0) 
   CSFB Financial Services 2)                  
   Assets under management   456.2  454.4  451.2  0.4  1.1 
      of which discretionary   288.9  291.1  289.6  (0.8)  (0.2) 
   Client assets   464.1  454.4  951.4  2.1  (51.2) 
Credit Suisse First Boston                     
Assets under management  485.3  485.4  482.5  0.0  0.6 
   of which discretionary   314.3  317.8  317.9  (1.1)  (1.1) 
Client assets  537.4  528.3  1,034.7  1.7  (48.1) 
Credit Suisse Group                     
Assets under management  1,199.2  1,195.6  1,160.0  0.3  3.4 
   of which discretionary   584.1  596.9  582.1  (2.1)  0.3 
Client assets  1,299.4  1,285.9  1,757.9  1.0  (26.1) 
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Excluding assets managed on behalf of other entities within Credit Suisse Group.


Net new assets 1)
            Change  Change        Change 
            in % from  in % from        in % from 
              9 months    
in CHF bn  3Q2003  2Q2003  3Q2002  2Q2003  3Q2002  2003  2002  2002 
Credit Suisse Financial Services                          
   Private Banking   8.4  3.8  3.4  121.1  147.1  13.7  18.2  (24.7) 
   Corporate & Retail Banking   1.8  0.5  (2.3)  260.0    (1.1)  (3.4)  (67.6) 
   Life & Pensions   (0.7)  0.5  0.4      2.0  4.7  (57.4) 
Credit Suisse Financial Services  9.5  4.8  1.5  97.9    14.6  19.5  (25.1) 
Credit Suisse First Boston                           
   Institutional Securities   0.1  1.0  (3.0)  (90.0)    1.0  1.9  (47.4) 
   CSFB Financial Services 2)   (5.6)  (3.9)  (12.1)  43.6  (53.7)  (13.7)  (16.5)  (17.0) 
Credit Suisse First Boston  (5.5)  (2.9)  (15.1)  89.7  (63.6)  (12.7)  (14.6)  (13.0) 
Credit Suisse Group  4.0  1.9  (13.6)  110.5    1.9  4.9  (61.2) 
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Excluding assets managed on behalf of other entities within Credit Suisse Group.


RISK MANAGEMENT


Credit Suisse Group’s overall position risk measured on the basis of Economic Risk Capital (ERC) decreased by 4% in the third quarter of 2003 compared with the previous quarter, due mainly to lower foreign exchange, fixed income positions and insurance underwriting risks as well as lower international lending exposures. The more narrowly defined average Value-at-Risk (VaR) for the trading book of Credit Suisse First Boston decreased 20% in the third quarter of 2003, due mainly to lower interest rate positions and the introduction of a refined risk methodology for mortgages. The Group’s credit-related balance sheet exposure decreased 3% as of September 30, 2003, compared to June 30, 2003.



Overall Risk Trends
Credit Suisse Group’s 1-year, 99% position risk ERC decreased by 4% in the third quarter of 2003 compared with the previous quarter. The reduction was mainly due to lower foreign exchange exposures and lower insurance underwriting risks at Winterthur following the divestitures completed during the third quarter of 2003 as well as lower credit spread positions and lower international lending and counterparty exposures at Credit Suisse First Boston. At the end of the third quarter of 2003, 52% of the Group’s position risk ERC was with Credit Suisse First Boston, 44% with Credit Suisse Financial Services (of which 66% was with the insurance units and 34% with the banking units) and 4% with the Corporate Center.

Trading risks
The table below shows the trading-related market risk exposure for Credit Suisse First Boston, Credit Suisse Financial Services and Credit Suisse Group on a consolidated basis, as measured by 1-day, 99% VaR. At Credit Suisse First Boston, the average 1-day, 99% VaR in the third quarter of 2003 was CHF 69.3 million compared to CHF 87.0 million during the second quarter of 2003. This decrease was mainly due to lower interest rate positions and the introduction of a refined risk methodology for mortgages. The Credit Suisse First Boston VaR at the end of the third quarter of 2003 was 38% below the VaR at the end of the second quarter of 2003 adjusted for the methodology change. As shown on the backtesting chart, Credit Suisse First Boston had no backtesting exceptions over the last 12 months (on average, an accurate 1-day, 99% VaR model would have no more than 2.5 exceptions per annum). At Credit Suisse Financial Services, the average 1-day, 99% VaR in the third quarter of 2003 was CHF 15.0 million compared to CHF 15.7 million during the previous quarter. The decrease was mainly due to lower inventory positions in structured investment products, partially offset by the impact of the transfer of the securities and treasury execution platform in Switzerland from Credit Suisse First Boston to Credit Suisse Financial Services.

Credit risk exposure
Credit Suisse Group’s total credit-related exposure was 3% lower at September 30, 2003, compared to June 30, 2003. Exposure at Credit Suisse Financial Services increased 4%, while exposure at Credit Suisse First Boston was largely unchanged. The reduction on a consolidated basis was primarily a result of increased intercompany exposure that appears in the business unit figures but is eliminated in the Credit Suisse Group consolidation.

Compared to June 30, 2003, non-performing and total impaired loans for Credit Suisse Group declined as of the end of the third quarter 2003, with reductions reported in both business units. Compared with the previous quarter, total non-performing loans declined 10% at both business units and on a consolidated basis. The reduction in total impaired loans during the third quarter of 2003 was 11% at Credit Suisse Financial Services and 10% at Credit Suisse First Boston. The decline in impaired assets is attributable to repayments, improved credit situations, loan sales and write-offs.

The net credit-related valuation allowances and provisions charged to the income statement for the third quarter of 2003 was CHF 96 million, a slight decrease from the second quarter of 2003, but significantly below that recorded for the third quarter of 2002, particularly at Credit Suisse First Boston. Presented on page 11 are the additions, releases and recoveries included in calculating the net credit-related valuation allowances and provisions.

Coverage of non-performing loans and impaired loans by the valuation allowances improved for both Credit Suisse Group and Credit Suisse First Boston, while coverage declined slightly for Credit Suisse Financial Services. The quality of the credit exposure for Credit Suisse Group, as measured by counterparty rating, was largely unchanged from the second quarter of 2003.


Key Position Risk Trends 
            Change Analysis: Brief Summary
     Change in % from   
in CHF m  3Q2003  2Q2003  3Q2002  3Q2003 vs 2Q2003
Real Estate ERC &              
   Structured Asset ERC 1)   3,992 (4%) (11%) Further reduction in legacy commercial real estate exposures at CSFB, partially offset by higher residential real estate exposures
Developed Market Fixed Income &              
   Foreign Exchange ERC   3,602 (11%) (5%) Lower foreign exchange exposures at Winterthur and lower credit spread exposures at CSFB
Equity Investment ERC  3,177  (2%)  (27%)  Lower equity positions at Winterthur, partially offset by higher equity trading exposures at CSFB and the CSFS banking segments
International Lending ERC  2,797  (10%)  (29%)  Loan sales to third parties and counterparty exposure reductions at CSFB
Swiss & Retail Lending ERC  1,898  (3%)  (9%)  Lower exposures with respect to Swiss corporates at Corporate & Retail Banking and lower mortgage exposures at Winterthur
Emerging Markets ERC  1,576  2%  (30%)  Higher Brazil, Turkey and Indonesia exposure, partially offset by lower Russia exposure
Insurance Underwriting ERC  647  (38%)  (22%)  Divestiture of Republic operations, Churchill and Winterthur Italy
Simple sum across risk categories  17,689         
Diversification benefit  (6,096)         
Total position risk ERC  11,593  (4%)  (19%)   
 
99%, 1-year position risk ERC, excluding foreign exchange translation risk. For an assessment of the total risk profile, operational risk ERC and business risk ERC have to be considered as well. Note that prior period risk data have been restated for methodology changes in order to maintain consistency over time. For a more detailed description of the Group’s ERC model, please refer to Credit Suisse Group's Annual Report 2002, which is available on the website: www.credit-suisse.com.
 
1) This category comprises the real estate investments of Winterthur, Credit Suisse First Boston’s commercial real estate exposures, Credit Suisse First Boston’s residential real estate exposures, Credit Suisse First Boston’s asset-backed securities exposures as well as the real estate acquired at auction and real estate for own use in Switzerland.




Trading exposures (1-day, 99% VaR) 
Credit SuisseCredit Suisse
Financial ServicesFirst Boston1)Credit Suisse Group2)
in CHF m3Q20032Q20033Q20032Q20033Q20032Q2003
Total VaR     
Period end19.116.550.4102.255.199.9
Average15.015.769.387.056.382.7
Maximum19.720.8152.5146.058.799.9
Minimum11.313.935.164.255.169.0
       
in CHF m30.09.0330.06.0330.09.0330.06.0330.09.0330.06.03
VaR by risk type     
Interest rate7.02.743.7118.047.9119.5
Foreign exchange2.22.118.314.818.614.3
Equity15.515.428.125.727.225.5
Commodity0.50.11.50.81.30.7
Subtotal25.220.391.6159.395.0160.0
Diversification benefit(6.1)(3.8)(41.2)(57.1)(39.9)(60.1)
Total19.116.550.4102.255.199.9
1) The CSFB VaR is calculated using the US dollar as the base currency. For the purpose of this disclosure, the CSFB VaR numbers are translated using the respective CSG currency translation closing rate.
2) As Credit Suisse Group does not manage its trading portfolios on a consolidated level, consolidated VaR calculations are performed on a monthly basis only. The average, maximum and minimum values therefore refer to the three month-ends during the quarter. The consolidated VaR calculations for Credit Suisse Group are net of diversification benefits between Credit Suisse First Boston and Credit Suisse Financial Services.


Total credit risk exposure 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m30.09.0330.06.0331.12.0230.09.0330.06.0331.12.0230.09.0330.06.0331.12.02
Due from banks 2)42,51234,59533,30666,78565,92443,46258,51168,93939,469
Due from customers and mortgages 2)138,060136,180132,35370,17583,88082,395206,794219,270213,206
Total due from banks and customers, gross 2)180,572170,775165,659136,960149,804125,857265,305288,209252,675
Contingent liabilities11,74312,33012,34938,14729,58627,86240,98141,05639,104
Irrevocable commitments 3)3,3413,6702,26377,67680,77381,88481,37085,03685,333
Total banking products195,656186,775180,271252,783260,163235,603387,656414,301377,112
Loans held for sale 4)0017,02816,33817,02816,338
Derivative instruments 5)4,4014,4525,01854,28356,41651,60056,87759,61854,757
Securities lending – banks000000000
Securities lending – customers0001,78269641,7826964
Reverse repurchase agreements – banks5,2326,7176,283168,498144,214154,531169,427146,443156,397
Reverse repurchase agreements – customers7,7458,09414,52841,09452,72456,98748,76760,53671,384
Forward reverse repurchase agreements00010,11513,8557,61710,11513,8557,617
Total traded products17,37819,263 25,829275,772267,278 270,799286,968280,521 290,219
Total credit risk exposure, gross213,034206,038206,100545,583543,779506,402691,652711,160667,331
Loan valuation allowances and provisions(3,098)(3,480)(4,092)(2,831)(3,053)(3,817)(5,932)(6,532)(7,911)
Total credit risk exposure, net209,936202,558202,008542,752540,726502,585685,720704,628659,420
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services. 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 loans held for sale, securities lending and reverse repurchase transactions.
3) Excluding forward reverse repurchase agreements. Prior periods restated.
4) Effective 1Q2003, loans held for sale are presented net of the related loan valuation allowances.
5) Positive replacement values considering netting agreements.


Total loan portfolio exposure and allowances and provisions for credit risk 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m30.09.0330.06.0331.12.0230.09.0330.06.0331.12.0230.09.0330.06.0331.12.02
Non-performing loans 2,2912,6003,0041,6791,9263,3513,9704,5266,355
Non-interest earning loans1,5771,7062,1084374372172,0152,1432,325
Total non-performing loans3,8684,3065,1122,1162,3633,5685,9856,6698,680
Restructured loans226352327198229349261281
Potential problem loans1,4481,5991,7237309651,6852,1782,5653,408
Total other impaired loans1,4701,6621,7751,0571,1631,9142,5272,8263,689
Total impaired loans5,3385,9686,8873,1733,5265,4828,5129,49512,369
Total due from banks and customers, gross180,572170,775165,659136,960149,804125,857265,305288,209252,675
Valuation allowances 3,0613,4464,0532,7272,9283,6475,7906,3737,703
   of which on principal 2,4542,7493,2012,4662,6923,4164,9215,4416,617
   of which on interest 6076978522612362318699321,086
Total due from banks and customers, net177,511167,329161,606134,233146,876122,210259,515281,836244,972
Provisions for contingent liabilities and irrevocable commitments373439104125170142159208
Total valuation allowances and provisions3,0983,4804,0922,8313,0533,8175,9326,5327,911
Ratios         
Valuation allowances as % of total non-performing loans79.1%80.0%79.3%128.9%123.9%102.2%96.7%95.6%88.7%
Valuation allowances as % of total impaired loans57.3%57.7%58.9%85.9%83.0%66.5%68.0%67.1%62.3%
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services. Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.


Roll forward of loan valuation allowance 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m3Q20032Q20033Q20023Q20032Q20033Q20023Q20032Q20033Q2002
At beginning of period3,4463,7764,6182,9283,1153,2446,3736,8917,862
Additions213129212141139611353268821
Releases(133)(80)(107)(105)(70)(49)(238)(150)(156)
Net additions charged to income statement80491053669562115118665
Gross write-offs(438)(408)(747)(239)(373)(362)(676)(778)(1,110)
Recoveries8671265211211
Net write-offs(430)(402)(740)(227)(367)(357)(655)(766)(1,099)
Provisions for interest11321311330312752
Foreign currency translation impact and other (36)10(3)(41)98(103)(74)103(102)
At end of period3,0613,4464,0012,7272,9283,3765,7906,3737,378
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.


Net credit-related valuation allowances and provisions 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m3Q20032Q20033Q20023Q20032Q20033Q20023Q20032Q20033Q2002
Net additions to loan valuation allowance80491053669562115118665
Net additions to provisions for contingent liabilities and irrevocable commitments6(5)1(26)(16)172(19)(19)153
Total net credit-related valuation allowances and provisions charged to income statement864410610537349699818
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 1.8 billion in the third quarter of 2003. This result includes an after-tax gain resulting from divestitures of Winterthur of CHF 1.3 billion, net of related provisions. Additionally, Credit Suisse Financial Services’ third quarter result includes the strengthening by CHF 383 million after tax of certain provisions related to its current and former international business portfolio. The banking segments improved their results for the third consecutive quarter, due mainly to slightly higher operating income and lower operating expenses. Assets under management remained stable at CHF 713.9 billion at the end of the third quarter of 2003, despite a negative impact from the Winterthur divestitures. Net new assets almost doubled to CHF 9.5 billion versus the previous quarter.



In the third quarter of 2003, Credit Suisse Financial Services reported a net profit of CHF 1.8 billion versus a net loss of CHF 1.2 billion in the corresponding period of the previous year. The third quarter 2003 result includes an after-tax gain of CHF 1.3 billion, net of related provisions, from the divestitures of Winterthur’s Republic operations in the US, its Churchill operations in the UK and Winterthur Italy . Additionally, Credit Suisse Financial Services’ third quarter result includes the strengthening by CHF 383 million after tax of certain provisions related to its current and former international business portfolio. In the first nine months of 2003, Credit Suisse Financial Services recorded a net profit of CHF 3.3 billion versus a net loss of CHF 891 million in the corresponding period of the previous year. The business unit’s result in the third quarter of 2003 was also affected by the business transfers discussed in “An overview of Credit Suisse Group – Business transfers” on page 7.

Winterthur’s capital base was strengthened during the third quarter of 2003 as a result of earnings generation and the above-mentioned divestitures. In isolation, these divestitures increased Winterthur’s EU Group solvency surplus capital by approximately CHF 3.5 billion, due to the combination of lowered required capital and higher available capital.

Assets under management for Credit Suisse Financial Services remained stable versus the end of the previous quarter and amounted to CHF 713.9 billion at the end of the third quarter of 2003, despite the CHF 13.7 billion negative impact of the Winterthur divestitures. Net new assets almost doubled in the third quarter of 2003 versus the previous quarter, amounting to CHF 9.5 billion for Credit Suisse Financial Services, with an especially strong contribution from Private Banking of CHF 8.4 billion.

As noted on page 5, the results of the Credit Suisse Financial Services business unit and its segments are discussed on an operating basis. For a reconciliation of operating basis business unit results to Swiss GAAP and a discussion of the material reconciling items, the purpose of the operating basis results and the reasons why management believes they provide useful information for investors, please refer to the “Reconciliation of operating results to Swiss GAAP” on pages 32 – 36.

Private Banking
In the third quarter of 2003, Private Banking reported a segment profit of CHF 519 million, an increase of 5% versus the previous quarter and 79% compared with the corresponding period of the previous year. Though the third quarter usually shows seasonal weakness, operating income increased 3%, to CHF 1.6 billion, versus the previous quarter. Compared with the third quarter of 2002, operating income rose 17%. Main drivers for this significant improvement since 2002 were higher commission and service fee income as a result of the higher average asset base and increased client activity.

Operating expenses in the third quarter of 2003 decreased by CHF 33 million, or 4%, to CHF 819 million quarter-on-quarter, and were down CHF 41 million, or 5%, compared with the corresponding period of 2002, in line with headcount development. In the third quarter of 2003, the cost/income ratio improved for the sixth consecutive quarter, decreasing 4.0 percentage points to 55.1%. The gross margin decreased to 125 bp in the third quarter of 2003, compared to 128 bp in the previous quarter, and increased 13 bp compared to 112 bp in the third quarter of 2002. The decrease in the third quarter of 2003 versus the previous quarter was mainly due to the higher average underlying asset base.

Net new assets more than doubled in the third quarter of 2003 to CHF 8.4 billion, compared to net inflows of CHF 3.8 billion in the second quarter of 2003. Assets under management were CHF 505.1 billion as of September 30, 2003, which reflects an increase of CHF 11.3 billion, or 2.3%, from June 30, 2003, and of CHF 39.4 billion, or 8.5%, versus December 31, 2002. Asian and European Private Banking again achieved good net new asset growth.

Corporate & Retail Banking
Corporate & Retail Banking reported a segment profit of CHF 169 million in the third quarter of 2003. The segment profit increased 8% versus the previous quarter and 54% compared with the corresponding period of the previous year. Operating income decreased slightly quarter-on-quarter, down 2% to CHF 789 million. This decrease is mainly due to lower other ordinary income that in the second quarter of 2003 contained realized gains from the recovery portfolio. Compared with the third quarter of 2002, Corporate & Retail Banking reported almost flat operating income. The net interest margin was 215 bp in the third quarter of 2003, corresponding to an increase of 3 bp from 212 bp in the previous quarter.

Operating expenses decreased CHF 20 million, or 4%, to CHF 483 million in the third quarter of 2003 versus the previous quarter, due mainly to lower personnel expenses in line with headcount development. Compared with the corresponding period of the previous year, operating expenses decreased CHF 56 million, or 10%, due to a reduction of both other operating expenses and personnel expenses.

In the third quarter of 2003, the cost/income ratio improved further to 64.4%, compared to 65.8% in the previous quarter and 72.8% in the third quarter of 2002. In the third quarter of 2003, the actual credit-related provisions recorded were CHF 24 million above the statistical valuation adjustments, but were CHF 20 million below the statistical valuation adjustments for the first nine months of 2003. The actual net credit-related valuation allowances and provisions in the third quarter of 2003 amounted to CHF 84 million and CHF 173 million for the first nine months of 2003. Impaired loans were further reduced by CHF 0.6 billion to CHF 5.0 billion in the third quarter of 2003 compared to June 30, 2003. The return on average allocated capital increased from 12.9% in the second quarter to 13.6% in the third quarter of 2003.

Net new assets of CHF 1.8 billion were recorded in the third quarter of 2003, compared to a net asset inflow of CHF 0.5 billion in the previous quarter. Assets under management were CHF 69.4 billion as of September 30, 2003, which reflects an increase of CHF 2.6 billion, or 3.9%, from June 30, 2003, and a decrease of 0.9 billion, or 1.3%, versus December 31, 2002.

Life & Pensions
In the first nine months of 2003, Life & Pensions reported a segment profit of CHF 354 million, representing a significant improvement from the loss of CHF 1.5 billion in the corresponding period of the previous year. In the third quarter of 2003, the segment profit amounted to CHF 126 million, including an after-tax gain of CHF 57 million from the divestiture of the Italian operations.

Life & Pensions reported a reduction in gross premiums written of 10%, or CHF 1.5 billion, to CHF 13.3 billion in the first nine months of 2003, compared with the same period of 2002. Adjusted for acquisitions, divestitures and exchange rate impacts, gross premiums written decreased 5%. The decline in reported gross premiums written in the first nine months of 2003 was primarily due to Life & Pensions’ ongoing selective underwriting policy and strong reported single premium growth during the first nine months of the previous year. Included in the gross premiums written for the first nine months of 2003 are premiums of the divested Winterthur Italy of CHF 692 million. Net new assets in the first nine months of 2003 amounted to CHF 2.0 billion.

In the first nine months of 2003, administration costs decreased 18%, or CHF 192 million, to CHF 862 million, compared with the corresponding period of the previous year. The expense ratio decreased 0.3 percentage points in the first nine months of 2003 to 10.6%, compared to 10.9% in the corresponding period of the previous year. Total expenses in the third quarter of 2003 were affected by additional amortization and write-downs of deferred acquisition costs of CHF 201 million, with a net impact of CHF 75 million on the segment result, recognized due to the lowered expectations for long-term investment returns.

Investment performance improved CHF 2.7 billion to CHF 3.8 billion in the first nine months of 2003, compared with the corresponding period of the previous year, primarily due to a significant decrease in equity impairments and realized losses. Reflecting the improved investment performance in the first nine months of 2003, the total return on invested assets amounted to 5.0%, compared to 1.5% in the corresponding period of 2002. Current income was 4.0% and realized gains/losses and other income/expenses were 1.0% in the first nine months of 2003.

Insurance
In the first nine months of 2003, Insurance reported a segment profit of CHF 1.2 billion compared to a segment loss of CHF 1.0 billion in the corresponding period of the previous year. The strong recovery of the Insurance segment in the first nine months of 2003 was mainly driven by divestiture-related gains and a significant improvement in investment performance, as well as an improvement in its underwriting result, due mainly to the implementation of tariff increases and a continued strict underwriting policy.

In the third quarter of 2003, the segment profit amounted to CHF 991 million, including an after-tax gain of CHF 1.3 billion, net of related provisions, from the divestiture of its US subsidiary Republic Financial Services, Churchill Insurance Group in the UK and Winterthur Italy. In addition, certain provisions of CHF 383 million after tax related to the current and former international business portfolio were recorded in the third quarter.

In the first nine months of 2003, Insurance’s net premiums earned increased CHF 205 million, or 2%, to CHF 11.9 billion compared with the corresponding period of the previous year. Adjusted for acquisitions, divestitures and exchange rate impacts, net premiums earned increased 8%, primarily due to tariff increases across all major markets. Included in the net premiums earned in the first nine months of 2003 are premiums of the three divested Winterthur operations of CHF 4.5 billion.

Insurance improved its net underwriting result before dividends to policyholders by CHF 218 million in the first nine months of 2003, reflecting a combined ratio improvement of 1.9 percentage points to 101.6% in the first nine months of 2003, compared to 103.5% in the first nine months of the previous year. This improvement resulted from a decrease in the claims ratio of 1.5 percentage points to 73.2% in the first nine months of 2003 versus the corresponding period of the previous year, mainly reflecting benefits from improved pricing and continued streamlining of the business portfolio. The reported combined ratio of 103.6% in the third quarter of 2003 includes CHF 117 million of certain provisions related to the current and former international business portfolio, which corresponds to 3.1 percentage points in the combined ratio.

Administration costs decreased 8%, or CHF 123 million, to CHF 1.4 billion in the first nine months of 2003 compared with the corresponding period of the previous year, despite premium growth, reflecting continued progress in ongoing efficiency initiatives. Compared with the corresponding period of the previous year, the expense ratio improved 0.4% to 28.4% in the first nine months of 2003, with a reduction in administration costs offset by higher policy acquisition costs.

In the first nine months of 2003, Insurance reported net investment income of CHF 952 million versus a net investment loss of CHF 69 million in the corresponding period of the previous year, primarily due to a significant decrease in equity impairments and realized losses. Reflecting the improved investment performance in the first nine months of 2003, the total return on invested assets amounted to 3.8%, compared to –0.3% in the corresponding period of 2002. Current income was 3.9% and realized gains/losses and other income/expenses were –0.1% in the first nine months of 2003.


Credit Suisse Financial Services business unit income statement – operating 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Operating income 2)4,5483,5442,364289211,5948,58635
Personnel expenses1,3851,4341,486(3)(7)4,2324,500(6)
Other operating expenses732744884(2)(17)2,2922,691(15)
Operating expenses2,1172,1782,370(3)(11)6,5247,191(9)
Gross operating profit2,4311,366(6)785,0701,395263
Depreciation of non-current assets17715614313245034824
Amortization of Present Value of Future Profits (PVFP)10238119168(14)192205(6)
Valuation adjustments, provisions and losses9090910(1)261285(8)
Net operating profit/(loss) before extraordinary items, acquisition-related costs, exceptional items and taxes2,0621,082(359)914,114423
Extraordinary income/(expenses), net 386(63)(50)1824(25)
Taxes 3) 4)(260)(223)(689)17(62)(742)(1,192)(38)
Net operating profit/(loss) before acquisition-related costs, exceptional items and minority interests1,805867(1,042)1083,390(745)
Amortization of acquired intangible assets and goodwill(25)(27)(27)(7)(7)(77)(102)(25)
Exceptional items00(119)(100)0(119)(100)
Tax impact1010220
Business unit result before minority interests1,781840(1,187)1123,315(964)
Minority interests8(10)17(53)(10)100
Business unit result 5)1,789830(1,170)1163,305(864)
Increased/(decreased) credit-related valuation adjustments, net of tax 6)11(21)24(54)(28)27
Net profit/(loss)1,778851 (1,194)1093,333(891)
       
Reconciliation to net operating profit/(loss)      
Business unit result1,789830(1,170)1163,305(864)
Amortization of acquired intangible assets and goodwill, net of tax242726(11)(8)75807)(6)
Exceptional items, net of tax00119(100)0119(100)
Net operating profit/(loss)1,813857(1,025)1123,380(665)
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. The operating basis 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, and exceptional items, not allocated to the segments are included in the business unit results. Certain other items, including credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions and gains/losses from sales of investments within the insurance business are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”.
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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of CHF –590 m and CHF –875 m, respectively.
4) Excluding tax impact on amortization of acquired intangible assets and goodwill.
5) Represents net profit/(loss) excluding credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions, net of tax.
6) Increased/(decreased) credit-related valuation adjustments before tax of CHF 14 m, CHF –27 m, CHF 31 m, CHF –37 m and CHF 35 m for 3Q2003, 2Q2003, 3Q2002, 9 months 2003 and 9 months 2002, respectively.
7) Excluding a CHF 20 m write-off relating to a participation.


Credit Suisse Financial Services business unit key information 1)
   9 months
 3Q20032Q20033Q200220032002
Cost/income ratio 2)70.7%66.9%110.0%68.8%92.3%
Cost/income ratio – operating 3) 4)50.4%65.9%106.3%60.6%89.4%
Cost/income ratio – operating, banking 3)58.2%61.4%70.9%61.5%64.6%
Return on average allocated capital 2)49.2%25.8%(39.4%)32.9%(10.6%)
Return on average allocated capital – operating 3)50.2%26.0%(33.9%)33.3%(8.2%)
Average allocated capital in CHF m14,39213,32612,28613,56612,432
Growth in assets under management0.5%7.0%(3.8%)5.4%(8.3%)
   of which net new assets 1.3%0.7%0.2%2.2%2.6%
   of which market movement and structural effects 1.1%6.3%(4.1%)5.3%(10.6%)
   of which acquisitions/(divestitures) (1.9%)(0.1%)0.1%(2.1%)(0.3%)
   of which discretionary (1.3%)2.6%(0.6%)0.8%(1.3%)
      
  30.09.0330.06.0331.12.02
Assets under management in CHF bn 713.9710.2677.5
Number of employees (full-time equivalents) 41,83453,06954,378
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Based on the business unit results on a Swiss GAAP basis.
3) Based on the operating basis business unit results, which exclude certain acquisition-related costs and exceptional items not allocated to the segments and reflect certain reclassifications discussed in the “Reconciliation of operating results to Swiss GAAP”.
4) Excluding amortization of PVFP from the insurance business within Credit Suisse Financial Services.


Overview of business unit Credit Suisse Financial Services – operating 1)
     Credit
  Corporate  Suisse
 Private& RetailLife & Financial
3Q2003, in CHF mBankingBankingPensionsInsuranceServices
Operating income 2)1,5717895991,5894,548
Personnel expenses5603021823411,385
Other operating expenses259181106186732
Operating expenses8194832885272,117
Gross operating profit7523063111,0622,431
Depreciation of non-current assets47256045177
Amortization of Present Value of Future Profits (PVFP)1011102
Valuation adjustments, provisions and losses256590
Net operating profit before extraordinary items, acquisition-related costs and taxes6802161501,0162,062
Extraordinary income/(expenses), net 30003
Taxes 3)(164)(47)(24)(25)(260)
Net operating profit before acquisition-related costs and minority interests5191691269911,805
Amortization of acquired intangible assets and goodwill    (25)
Tax impact    1
Business unit result before minority interests    1,781
Minority interests    8
Business unit result 4)    1,789
     
Other data:    
Average allocated capital 5)2,7694,9756,649  14,392
1) The operating basis 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, not allocated to the segments are included in the business unit results. Certain other items, including credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions and gains/losses from sales of investments within the insurance business are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”.
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. Gains or losses related to divestitures and sales of investments within the insurance business are recorded as operating income at the business unit level and reclassified to extraordinary income/(expenses) in the consolidated financial statements in accordance with Swiss GAAP.
3) Excluding tax impact on amortization of acquired intangible assets and goodwill.
4) Represents net profit excluding credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions.
5) Amount relating to Life & Pensions and Insurance segments represents the average shareholders' equity of “Winterthur” Swiss Insurance Company.


Private Banking income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Net interest income334365326(8)21,0251,039(1)
Net commission and service fee income 1,0389869345112,9323,203(8)
Net trading income188159721816150341621
Other ordinary income 1191422(21)2947(38)
Operating income1,5711,5191,3463174,4894,705(5)
Personnel expenses560577543(3)31,6811,730(3)
Other operating expenses259275317(6)(18)820981(16)
Operating expenses819852860(4)(5)2,5012,711(8)
Gross operating profit75266748613551,9881,994(0)
Depreciation of non-current assets4746792(41)150182(18)
Valuation adjustments, provisions and losses 2)25191732474851(6)
Net operating profit before extraordinary items, exceptional items and taxes68060239013741,7901,7612
Extraordinary income/(expenses), net 372(57)501721(19)
Taxes 3)(164)(117)(102)4061(401)(400)0
Net operating profit before exceptional items and minority interests (segment result)5194922905791,4061,3822
Other data:      
Increased/(decreased) credit-related valuation adjustments 2)(10)(7)1743(17)10
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, and exceptional items not allocated to the segments are included in the business unit results.
2) Increased/(decreased) credit-related valuation adjustments 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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of CHF –123 m and CHF –398 m, respectively.


Private Banking balance sheet information 1)
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
Total assets183,698175,451171,12657
Due from customers32,54831,95836,1642(10)
Mortgages25,69524,52722,935512
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.


Private Banking key information 1)
   9 months
 3Q20032Q20033Q200220032002
Cost/income ratio 2)55.1%59.1%69.8%59.1%61.5%
Average allocated capital in CHF m2,7692,6712,5362,6572,507
Pre-tax margin 2)43.5%40.1%29.1%40.3%37.9%
Fee income/operating income 66.1%64.9%69.4%65.3%68.1%
Net new assets in CHF bn8.43.83.413.718.2
Growth in assets under management2.3%8.1%(4.4%)8.5%(9.3%)
   of which net new assets 1.7%0.8%0.7%2.9%3.5%
   of which market movement and structural effects 0.6%7.2%(5.1%)5.5%(12.8%)
Gross margin 3)124.8 bp127.9 bp111.8 bp124.8 bp123.7 bp
   of which asset-driven 78.6 bp81.5 bp79.7 bp80.2 bp82.0 bp
   of which transaction-driven 42.2 bp42.3 bp27.5 bp40.5 bp37.0 bp
   of which other 4.0 bp4.1 bp4.6 bp4.1 bp4.7 bp
Net margin 4)41.2 bp41.4 bp24.1 bp39.1 bp36.3 bp
      
   30.09.0330.06.0331.12.02
Assets under management in CHF bn  505.1493.8465.7
Number of employees (full-time equivalents)  12,03212,31812,967
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Based on the segment results, which exclude certain acquisition-related costs and exceptional items not allocated to the segment.
3) Operating income/average assets under management.
4) Net operating profit before exceptional items and minority interests (segment result)/average assets under management.


Corporate & Retail Banking income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Net interest income5305195382(1)1,5561,615(4)
Net commission and service fee income 1651581774(7)485547(11)
Net trading income738069(9)62242126
Other ordinary income 21460(54)8138113
Operating income789803784(2)12,3462,412(3)
Personnel expenses302322313(6)(4)939943(0)
Other operating expenses1811812260(20)542684(21)
Operating expenses483503539(4)(10)1,4811,627(9)
Gross operating profit30630024522586578510
Depreciation of non-current assets2525320(22)7478(5)
Valuation adjustments, provisions and losses 2)657174(8)(12)213234(9)
Net operating profit before extraordinary items and taxes21620413965557847322
Extraordinary income/(expenses), net 014(100)(100)13(67)
Taxes 3)(47)(49)(33)(4)42(134)(112)20
Net operating profit before minority interests (segment result)16915611085444536422
Other data:      
Increased/(decreased) credit-related valuation adjustments 2)24(20)1471(20)25
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services. 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) credit-related valuation adjustments 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. The retroactive application of this change in accounting principle would not have had an impact on the taxes reported for 3Q2002 and for the 9 months 2002.


Corporate & Retail Banking balance sheet information 1)
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
Total assets96,42597,55794,757(1)2
Due from customers25,31826,94328,048(6)(10)
Mortgages59,46758,61657,16514
Due to customers in savings and investment deposits28,08027,84827,08114
Due to customers, other28,72828,22827,61124
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services.


Corporate & Retail Banking key information 1)
   9 months
 3Q20032Q20033Q200220032002
Cost/income ratio 2)64.4%65.8%72.8%66.3%70.7%
Return on average allocated capital 2)13.6%12.9%8.7%12.2%9.5%
Average allocated capital in CHF m4,9754,8285,0804,8595,103
Pre-tax margin 2)27.4%25.5%18.2%24.7%19.7%
Personnel expenses/operating income38.3%40.1%39.9%40.0%39.1%
Net interest margin215 bp212 bp223 bp213 bp214 bp
Loan growth(0.9%)(0.5%)(0.6%)(0.5%)0.6%
Net new assets in CHF bn1.80.5(2.3)(1.1)(3.4)
    
   30.09.0330.06.0331.12.02
Deposit/loan ratio   67.0%65.5%64.2%
Assets under management in CHF bn  69.466.870.3
Number of employees (full-time equivalents)  8,6908,8999,281
Number of branches   220221223
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services.
2) Based on the segment results, which exclude certain acquisition-related costs not allocated to the segment.


Life & Pensions income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Gross premiums written3,3123,4664,543(4)(27)13,27714,801(10)
Reinsurance ceded (33)(13)171154(69)(26)165
Net premiums written3,2793,4534,714(5)(30)13,20814,775(11)
Change in provision for unearned premiums 208(75)(8)(33)(76)
Net premiums earned3,2813,4534,722(5)(31)13,20014,742(10)
Death and other benefits incurred(3,791)(2,870)(2,672)3242(10,761)(9,319)15
Change in provision for future policyholder benefits (technical)243(1,098)(2,506)(3,726)(6,866)(46)
Change in provision for future policyholder benefits (separate account) 2)(435)(916)1,104(53)(1,140)1,650
Dividends to policyholders incurred(169)(202)207(16)(395)1,020
Policy acquisition costs (including change in DAC/PVFP)(305)(120)(358)154(15)(545)(556)(2)
Administration costs(263)(277)(333)(5)(21)(862)(1,054)(18)
Investment income general account1,3041,29630913223,8211,105246
Investment income separate account 2)435916(1,104)(53)1,140(1,650)
Interest received and paid(28)(14)(30)100(7)(61)(53)15
Interest on bonuses credited to policyholders(32)(53)(29)(40)10(118)(105)12
Other income/(expenses), net(90)255(78)98
Net operating profit/(loss) before taxes150140(685)7475(988)
Taxes 3)(24)(23)(396)4(94)(121)(505)(76)
Net operating profit/(loss) before minority interests (segment result)126117(1,081)8354(1,493)
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, 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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of CHF –302 m and CHF –247 m, respectively.


Life & Pensions key information 
   9 months
 3Q20032Q20033Q200220032002
Expense ratio 1)17.1%11.5%15.2%10.6%10.9%
Growth in gross premiums written(27.1%)(0.9%)44.8%(10.3%)18.3%
Return on invested assets (excluding separate account business)   
   Current income 4.0%4.2%3.6%4.0%4.0%
   Realized gains/losses and other income/expenses 1.0%0.9%(2.4%)1.0%(2.5%)
   Total return on invested assets 2) 5.0%5.1%1.2%5.0%1.5%
Net new assets in CHF bn 3)(0.7)0.50.42.04.7
Total sales in CHF m 4)3,8834,1645,24015,41917,507
      
   30.09.0330.06.0331.12.02
Assets under management in CHF bn 5)  112.3117.0110.8
Technical provisions in CHF m  107,437113,059105,939
Number of employees (full-time equivalents)  7,3927,5197,815
1) Operating expenses (i.e. policy acquisition costs and administration costs)/gross premiums written. Previous periods restated to reflect change in calculation.
2) Total 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)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Gross premiums written3,3854,0373,755(16)(10)14,25714,545(2)
Reinsurance ceded (236)(236)(232)02(899)(851)6
Net premiums written3,1493,8013,523(17)(11)13,35813,694(2)
Change in provision for unearned premiums and in provision for future policy benefits (health) 66328541413360(1,482)(2,023)(27)
Net premiums earned3,8124,0863,937(7)(3)11,87611,6712
Claims and annuities incurred, net(2,918)(2,945)(2,920)(1)0(8,689)(8,715)0
Dividends to policyholders incurred, net(95)(77)(53)2379(217)(3)
Policy acquisition costs (including change in DAC/PVFP)(582)(726)(630)(20)(8)(2,018)(1,882)7
Administration costs(450)(433)(496)4(9)(1,355)(1,478)(8)
Underwriting result, net(233)(95)(162)14544(403)(407)(1)
Net investment income34831511010216952(69)
Interest received and paid(28)(27)(36)4(22)(102)(67)52
Other income/(expenses), net929(57)(115)824(280)
Net operating profit/(loss) before taxes1,016136(203)1,271(823)
Taxes 2)(25)(34)(158)(26)(84)(86)(175)(51)
Net operating profit/(loss) before minority interests (segment result)991102(361)1,185(998)
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, 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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of CHF –132 m and CHF –118 m, respectively.


Insurance key information  
   9 months
 3Q20032Q20033Q200220032002
Combined ratio (excluding dividends to policyholders)103.6%100.5%102.8%101.6%103.5%
Claims ratio 1)76.5%72.1%74.2%73.2%74.7%
Expense ratio 2)27.1%28.4%28.6%28.4%28.8%
Return on invested assets    
   Current income 3.8%4.1%4.1%3.9%4.3%
   Realized gains/losses and other income/expenses 0.1%(0.1%)(2.5%)(0.1%)(4.6%)
   Total return on invested assets 3) 3.9%4.0%1.6%3.8%(0.3%)
      
   30.09.0330.06.0331.12.02
Assets under management in CHF bn  27.132.630.7
Technical provisions in CHF m  22,76432,30828,745
Number of employees (full-time equivalents)  13,72024,33324,315
1) Claims and annuities incurred, net/net premiums earned.
2) Operating expenses (i.e. policy acquisition costs and administration costs)/net premiums earned.
3) Total 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 reported a net profit of USD 224 million (CHF 308 million) in the third quarter of 2003, down 21% compared with the second quarter of 2003. Institutional Securities’ segment profit declined primarily on lower Fixed Income results partially offset by lower expenses. CSFB Financial Services’ segment profit declined compared with the previous quarter. Credit Suisse First Boston’s assets under management totaled USD 366.8 billion (CHF 485.3 billion) as of September 30, 2003.



Credit Suisse First Boston’s net operating profit in the third quarter of 2003, which is net profit excluding the amortization of goodwill and acquired intangible assets, net of tax, decreased to USD 358 million (CHF 491 million) from USD 412 million (CHF 548 million) in the second quarter of 2003, and increased compared to a net loss of USD 250 million (CHF 415 million) in the third quarter of 2002. For the first nine months of 2003, net operating profit was USD 1.0 billion (CHF 1.4 billion).

As announced previously, in the third quarter Credit Suisse First Boston introduced a three-year vesting period for future stock awards in line with its long-term service and retention strategy and industry practice in investment banking. Accordingly, future stock awards will be expensed over a three-year period beginning in 2004. The net pre-tax impact of this change in the third quarter was USD 90 million (CHF 122 million), and USD 65 million (CHF 88 million) after tax. The reversal of the pre-tax accrual for the first six months of 2003 of USD 173 million (CHF 234 million) was partially offset by an incremental incentive compensation accrual to achieve full year compensation objectives. This resulted in a ratio of personnel expenses to operating income, calculated on an operating basis, of 48.5% in the third quarter. The business unit review below includes the effects of this change in the expensing of stock awards .

Operating income in the third quarter of 2003 decreased 22% to USD 2.4 billion (CHF 3.4 billion) compared with the second quarter of 2003, as conservative risk positioning in light of US interest rate volatility reduced fixed income trading results and resulted in lower Value-at-Risk. Operating income from the Equity and the Investment Banking divisions also declined quarter-on-quarter by 8% and 11%, respectively. Compared with the third quarter of 2002, operating income decreased 6% in the third quarter of 2003, due to declines in the Fixed Income division and the sale of Pershing, partially offset by better performance in the legacy portfolio within the “Other” division.

Cost control continued to be a key goal for Credit Suisse First Boston during the third quarter of 2003. Operating expenses of USD 1.8 billion (CHF 2.5 billion) for the third quarter of 2003 decreased 21% compared with the previous quarter. Personnel expenses decreased 28% to USD 1.2 billion (CHF 1.6 billion) in the third quarter of 2003, compared to USD 1.6 billion (CHF 2.2 billion) in the second quarter of 2003, due primarily to lower incentive compensation accruals in line with lower revenue and the change in the vesting period of stock awards. In the third quarter of 2003, other operating expenses were 4% less than the second quarter of 2003.

Compared with the third quarter of 2002, third quarter 2003 operating expenses declined 15%, reflecting a 14% decline in personnel expenses, due to the implementation of the new vesting arrangements for future stock awards, lower incentive compensation accruals in line with lower operating income and reduced headcount. The 17% decline in other operating expenses was principally a result of ongoing cost containment efforts.

Valuation adjustments, provisions and losses of USD 80 million (CHF 111 million) increased 63% in the third quarter of 2003 compared with the second quarter of 2003 and included net credit-related valuation allowances and provisions of USD 7 million (CHF 10 million). Non-performing loans decreased 8% to USD 1.6 billion (CHF 2.1 billion) from June 30, 2003, and the ratio of valuation allowances to non-performing loans increased modestly to 129% during the third quarter of 2003. Compared with the third quarter of 2002, valuation adjustments, provisions and losses declined 86% on substantially lower credit provisions.

The decline of USD 81 million (CHF 105 million) in the amortization of retention payments from the second quarter of 2003 reflected the substantial completion of the DLJ retention award plan in June 2003.

The favorable resolution of certain outstanding tax matters resulted in a 16% effective income tax rate in the third quarter of 2003 compared to 27% in the second quarter of 2003.

On September 1, 2003, Credit Suisse First Boston transferred its securities and treasury execution platform in Switzerland to Credit Suisse Financial Services . It also transferred its Private Client Services UK business from CSFB Financial Services to Private Banking. The results for all periods presented have been restated to reflect these transfers and are discussed in “An overview of Credit Suisse Group – Business transfers” on page 7.

As noted on page 5, the results of the Credit Suisse First Boston business unit and its segments are discussed on an operating basis. For a reconciliation of operating basis business unit results to Swiss GAAP and a discussion of the material reconciling items, the purpose of the operating basis results and the reasons why management believes they provide useful information for investors, please refer to “Reconciliation of operating results to Swiss GAAP” on pages 32 – 36.

Institutional Securities
Institutional Securities reported a segment profit of USD 348 million (CHF 480 million) for the third quarter of 2003 compared to USD 453 million (CHF 604 million) in the second quarter of 2003 and a segment loss of USD 180 million (CHF 310 million) in the third quarter of 2002.

Operating income decreased 24% to USD 2.1 billion (CHF 3.0 billion) in the third quarter of 2003, compared with the second quarter of 2003 as a result of conservative risk positioning in the Fixed Income division and declines in the Equity and Investment Banking divisions. Third quarter 2003 operating expenses decreased 24% compared with the second quarter of 2003, largely due to lower compensation accruals and continued focus on cost control. Third quarter 2003 operating income was comparable with the third quarter of 2002, reflecting a significant reduction in legacy portfolio write-downs, largely offset by a decline in the Fixed Income division primarily due to a less favorable US interest rate environment. Operating expenses in the third quarter of 2003 decreased 10% compared with the third quarter of 2002, due to a decline in personnel expenses consistent with the trends explained for Credit Suisse First Boston overall. Third quarter 2003 valuation adjustments, provisions and losses of USD 80 million (CHF 111 million) were 43% higher than the second quarter of 2003, despite a decline in credit provisions that were principally due to loan repayments and loan sales, mainly reflecting markedly improved credit conditions.

Fixed Income ’s third quarter 2003 operating income of USD 819 million (CHF 1.1 billion) decreased 41% compared with the second quarter of 2003. Operating income was lower across most Fixed Income business lines. Structured products, most significantly residential mortgages, and the interest rate businesses were adversely impacted by lower volume, seasonal influences and conservative risk positioning in light of US interest rate volatility, resulting in reduced Value-at-Risk. Additionally, the level of securitizations declined compared with the robust second quarter of 2003. High yield operating income remained strong, although it was lower than the record-setting second quarter of 2003. Compared with the third quarter of 2002, operating income in the third quarter of 2003 decreased 26%, primarily due to declines in the interest rate and structured product businesses, offset in part by stronger high yield and credit trading results. Credit Suisse First Boston’s research strength was again recognized by a #2 ranking in Institutional Investor “All-America Fixed Income Research Team” survey and a top ranking for leveraged finance research as published in September 2003 .

The Equity division ’s third quarter 2003 operating income declined 8% to USD 675 million (CHF 931 million) compared with the second quarter of 2003. While operating income from the cash trading activity increased in all regions compared with the second quarter of 2003, operating income generated from derivatives activities, particularly related to convertible securities, was lower than the results recorded in the second quarter of 2003. Operating income in the third quarter of 2003 was comparable to the third quarter of 2002, with declines in index, options and structured products largely offset by an improvement in the convertible securities business.

Investment Banking ’s third quarter 2003 operating income, which includes private equity, decreased 11% to USD 572 million (CHF 790 million) compared with the second quarter of 2003. High yield and equity new issuance activity, particularly convertible securities, and private equity gains decreased in the third quarter of 2003 compared with the second quarter of 2003. Credit Suisse First Boston’s mergers and acquisition fee income increased, while the industry’s globally completed deals remained flat, based on US dollar volume, in the third quarter of 2003 compared with the second quarter of 2003. Investment Banking’s operating income in the third quarter of 2003 was comparable to last year’s third quarter. The third quarter of 2003 included improved syndicated finance and high yield new issuance results. Credit Suisse First Boston continued to be ranked first in underwriting global high yield new issuances in the third quarter of 2003.

The Other division reported third quarter 2003 operating income of USD 69 million (CHF 95 million), compared to operating income of USD 57 million (CHF 77 million) in the second quarter of 2003 and an operating loss of USD 240 million (CHF 377 million) in the third quarter of 2002. These increases in operating income were principally related to gains on sales of several legacy investments. All non-continuing legacy businesses produced operating income of USD 73 million (CHF 99 million) in the third quarter of 2003, compared to operating losses of USD 10 million (CHF 12 million) and USD 346 million (CHF 536 million) in the second quarter of 2003 and third quarter of 2002, respectively. Credit Suisse First Boston continues to reduce its net exposure of non-continuing legacy investments, totaling USD 2.4 billion (CHF 3.2 billion), including unfunded commitments on the real estate portfolio, as of September 30, 2003, down USD 60 million (CHF 154 million) from June 30, 2003.

CSFB Financial Services
CSFB Financial Services reported a segment profit of USD 34 million (CHF 46 million) for the third quarter of 2003, a decrease of 15% from the second quarter of 2003, predominantly due to an increase in personnel expenses. Compared with the third quarter of 2002, the segment profit decreased 11%. Operating income for the third quarter of 2003 was USD 287 million (CHF 395 million), up 3% compared with the second quarter of 2003 and down 40% compared with the third quarter of 2002. Operating expenses increased 4% compared with the second quarter of 2003 and decreased 40% compared with the third quarter of 2002. Excluding Pershing, operating income increased 6% compared with the third quarter of 2002, mainly as a result of higher Credit Suisse Asset Management results. Excluding Pershing, operating expenses increased 7% compared with the third quarter of 2002. Pershing’s third quarter 2002 operating income and operating expenses were USD 210 million (CHF 312 million) and USD 173 million (CHF 258 million), respectively. Pershing’s operating income for the first nine months of 2003 and 2002 was USD 15 million (CHF 21 million) and USD 650 million (CHF 1.0 billion), respectively, and operating expenses for the first nine months of 2002 were USD 506 million (CHF 805 million).

Credit Suisse Asset Management ’s operating income in the third quarter of 2003 was comparable with the second quarter of 2003. Total assets under management as of September 30, 2003 increased 0.4% compared with June 30, 2003, to USD 312.7 billion (CHF 413.7 billion), reflecting a USD 4.0 billion (CHF 5.5 billion) net outflow of assets, primarily related to institutional clients, offset by improved market performance and a favorable foreign exchange impact when expressed in US dollars. Compared with the third quarter of 2002, operating income increased 7%.

Private Client Services ’ operating income for the third quarter of 2003 increased 9% compared with the second quarter of 2003. Assets under management as of September 30, 2003 increased 2.9% to USD 49.2 billion (CHF 65.1 billion) compared to June 30, 2003, despite a USD 1.1 billion (CHF 1.5 billion) net outflow of assets. Compared with the third quarter of 2002, operating income decreased 7% in the third quarter of 2003, mainly reflecting declines in customer debit balances and reduced trading activity.


Credit Suisse First Boston business unit income statement – operating 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in USD m3Q20032Q20033Q20022Q20033Q2002200320022002
Operating income2,4223,1032,588(22)(6)8,3639,233(9)
Personnel expenses1,1731,6191,369(28)(14)4,2725,044(15)
Other operating expenses619647745(4)(17)1,8952,192(14)
Operating expenses1,7922,2662,114(21)(15)6,1677,236(15)
Gross operating profit630837474(25)332,1961,99710
Depreciation of non-current assets89104137(14)(35)286375(24)
Valuation adjustments, provisions and losses804956063(86)2571,022(75)
Net operating profit/(loss) before extraordinary items, acquisition-related costs and taxes461684(223)(33)1,653600176
Extraordinary income/(expenses), net 100116(94)
Taxes 2) 3)(80)(191)81(58)(411)(109)277
Net operating profit/(loss) before acquisition-related costs382493(142)(23)1,243507145
Acquisition interest(40)(48)(68)(17)(41)(151)(266)(43)
Amortization of retention payments4(77)(99)(153)(316)(52)
Amortization of acquired intangible assets and goodwill(154)(150)(207)3(26)(455)(626)(27)
Tax impact326496(50)(67)166318(48)
Net profit/(loss) 4)224282(420)(21)650(383)
       
Reconciliation to net operating profit      
Net profit/(loss)224282(420)(21)650(383)
Amortization of acquired intangible assets and goodwill, net of tax1341301703(21)395512(23)
Net operating profit/(loss)358412(250)(13)1,045129

See page 23 for footnotes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Credit Suisse First Boston business unit income statement – operating 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Operating income3,3524,1313,784(19)(11)11,37314,682(23)
Personnel expenses1,6272,1561,994(25)(18)5,8098,021(28)
Other operating expenses8548631,110(1)(23)2,5783,484(26)
Operating expenses2,4813,0193,104(18)(20)8,38711,505(27)
Gross operating profit8711,112680(22)282,9863,177(6)
Depreciation of non-current assets125136207(8)(40)389596(35)
Valuation adjustments, provisions and losses1116386776(87)3501,625(78)
Net operating profit/(loss) before extraordinary items, acquisition-related costs and taxes635913(394)(30)2,247956135
Extraordinary income/(expenses), net 20(1)225(92)
Taxes 2) 3)(111)(257)139(57)(559)(173)223
Net operating profit/(loss) before acquisition-related costs526656(256)(20)1,690808109
Acquisition interest(56)(64)(99)(13)(43)(206)(424)(51)
Amortization of retention payments3(102)(146)(208)(503)(59)
Amortization of acquired intangible assets and goodwill(211)(201)(308)5(31)(618)(995)(38)
Tax impact4684141(45)(67)226505(55)
Net profit/(loss) 4)308373(668)(17)884(609)
       
Reconciliation to net operating profit      
Net profit/(loss)308373(668)(17)884(609)
Amortization of acquired intangible assets and goodwill, net of tax1831752535(28)537814(34)
Net operating profit/(loss)491548(415)(10)1,421205
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. The operating basis 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, not allocated to the segments are included in the business unit results. Certain other items, including brokerage, execution and clearing expenses, contractor and recruitment costs and expenses related to certain redeemable preferred securities classified as minority interests are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”.
2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of CHF 144 m (USD 88 m) and CHF 24 m (USD 15 m), respectively.
3) Excluding tax impact on acquisition-related costs.
4) Net profit/(loss) is identical on an operating and Swiss GAAP basis.


Credit Suisse First Boston business unit key information 1)
   9 months
based on CHF amounts3Q20032Q20033Q200220032002
Cost/income ratio 2)77.1%78.7%92.8%78.9%87.4%
Cost/income ratio – operating 3)77.7%76.4%87.5%77.2%82.4%
Return on average allocated capital 2)11.3%12.8%(18.1%)10.3%(5.0%)
Return on average allocated capital – operating 3)16.9%18.0%(11.6%)15.5%1.9%
Average allocated capital in CHF m11,61512,21014,33212,20414,564
Pre-tax margin 2)12.6%14.5%(27.3%)12.0%(6.5%)
Pre-tax margin – operating 3)17.4%18.1%(16.9%)16.1%0.4%
Personnel expenses/operating income 2)54.0%59.3%65.5%58.0%64.6%
Personnel expenses/operating income – operating 3)48.5%52.2%52.7%51.1%54.6%
      
   30.09.0330.06.0331.12.02
Number of employees (full-time equivalents)  18,19518,13722,801
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Based on the business unit results on a Swiss GAAP basis.
3) Based on the operating basis business unit results, which exclude certain acquisition-related costs not allocated to the segments and reflect certain other reclassifications discussed in the “Reconciliation of operating results to Swiss GAAP”.


Overview of business unit Credit Suisse First Boston – operating 1)
in USD min CHF m
  CSFB  CSFB 
 InstitutionalFinancialCredit SuisseInstitutionalFinancialCredit Suisse
3Q2003SecuritiesServicesFirst BostonSecuritiesServicesFirst Boston
Operating income2,1352872,4222,9573953,352
Personnel expenses1,0161571,1731,4112161,627
Other operating expenses54277619748106854
Operating expenses1,5582341,7922,1593222,481
Gross operating profit5775363079873871
Depreciation of non-current assets845891178125
Valuation adjustments, provisions and losses800801110111
Net operating profit before extraordinary items, acquisition-related costs and taxes4134846157065635
Extraordinary income/(expenses), net 101202
Taxes 2)(66)(14)(80)(92)(19)(111)
Net operating profit before acquisition-related costs3483438248046526
Acquisition interest  (40)  (56)
Amortization of retention payments  4  3
Amortization of acquired intangible assets and goodwill  (154)  (211)
Tax impact  32  46
Net profit 3)  224  308
     
Other data:    
Average allocated capital8,3493708,67911,17349511,615
1) The operating basis 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, not allocated to the segments are included in the business unit results. Certain other items, including brokerage, execution and clearing expenses, contractor and recruitment costs and expenses related to certain redeemable preferred securities classified as minority interests are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”.
2) Excluding tax impact on acquisition-related costs.
3) Net profit is identical on an operating and Swiss GAAP basis.


Institutional Securities income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in USD m3Q20032Q20033Q20022Q20033Q2002200320022002
Fixed Income8191,3901,110(41)(26)3,5993,5960
Equity675732682(8)(1)1,9822,259(12)
Investment Banking572644556(11)31,7612,204(20)
Other6957(240)21173(354)
Operating income2,1352,8232,108(24)17,5157,705(2)
Personnel expenses1,0161,4731,126(31)(10)3,8294,303(11)
Other operating expenses542568596(5)(9)1,6651,743(4)
Operating expenses1,5582,0411,722(24)(10)5,4946,046(9)
Gross operating profit577782386(26)492,0211,65922
Depreciation of non-current assets8496115(13)(27)266309(14)
Valuation adjustments, provisions and losses805654943(85)2481,000(75)
Net operating profit/(loss) before extraordinary items, acquisition-related costs and taxes413630(278)(34)1,507350331
Extraordinary income/(expenses), net 100116(94)
Taxes 2(66)(177)98(63)(374)(37)
Net operating profit/(loss) before acquisition-related costs and minority interests (segment result)348453(180)(23)1,134329245
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, 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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of USD 105 m and USD 87 m, respectively.


Institutional Securities income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Fixed Income1,1411,8491,640(38)(30)4,8945,718(14)
Equity9319771,007(5)(8)2,6963,592(25)
Investment Banking790857802(8)(1)2,3953,505(32)
Other9577(377)23236(564)
Operating income2,9573,7603,072(21)(4)10,22112,251(17)
Personnel expenses1,4111,9611,631(28)(13)5,2076,842(24)
Other operating expenses748757890(1)(16)2,2652,771(18)
Operating expenses2,1592,7182,521(21)(14)7,4729,613(22)
Gross operating profit7981,042551(23)452,7492,6384
Depreciation of non-current assets117127174(8)(33)362492(26)
Valuation adjustments, provisions and losses1117385052(87)3381,589(79)
Net operating profit/(loss) before extraordinary items, acquisition-related costs and taxes570842(473)(32)2,049557268
Extraordinary income/(expenses), net 20(1)225(92)
Taxes 2)(92)(238)164(61)(509)(58)
Net operating profit/(loss) before acquisition-related costs and minority interests (segment result)480604(310)(21)1,542524194
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, 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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of CHF 169 m and CHF 139 m, respectively.


Active private equity investments 
USD m CHF m
  3Q2003 2Q2003 3Q2002 3Q2003 2Q2003 3Q2002
Net gains (realized and unrealized gains and losses) 8 59 (13) 12 79 (20)
Management and performance fees 50 45 53 69 60 78
             
USD bn CHF bn
  30.09.03 30.06.03 31.12.02 30.09.03 30.06.03 31.12.02
Book value 0.9 0.9 1.0 1.2 1.2 1.3
Fair value 1.0 0.9 1.0 1.3 1.3 1.4


Institutional Securities balance sheet information 1)
in CHF m30.09.0330.06.0331.12.02
Total assets 625,767614,435573,628
Total assets in USD m473,027454,195412,623
Due from banks233,811209,179193,944
   of which securities lending and reverse repurchase
   agreements
168,498144,214152,221
Due from customers111,211134,789114,191
   of which securities lending and reverse repurchase
   agreements
42,87652,79356,851
Mortgages14,59913,70114,825
Securities and precious metals trading portfolios179,442170,515157,320
Due to banks313,915307,193281,510
   of which securities borrowing and repurchase
   agreements
113,59087,651112,733
Due to customers, other115,317126,807109,980
   of which securities borrowing and repurchase
   agreements
60,54464,39066,864
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services.


Institutional Securities key information 1)
   9 months
based on CHF amounts3Q20032Q20033Q200220032002
Cost/income ratio 2)77.0%75.7%87.7%76.6%82.5%
Average allocated capital in CHF m11,17311,84813,80211,79813,937
Pre-tax margin 2)19.3%22.4%(15.4%)20.1%4.8%
Personnel expenses/operating income 2)47.7%52.2%53.1%50.9%55.8%
      
   30.09.0330.06.0331.12.02
Number of employees (full-time equivalents)  15,57815,45416,018
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services.
2) Based on the segment results, which exclude certain acquisition-related costs not allocated to the segment.


CSFB Financial Services income statement 1)
       Change Change     Change 
       in % from in % from     in % from 
          9 months  
in USD m3Q2003 2Q2003 3Q2002 2Q2003 3Q2002 2003 2002 2002 
Net interest income9 11 52 (18) (83) 29 160 (82) 
Net commission and service fee income 245 240 389 2 (37) 712 1,243 (43) 
Net trading income17 30 26 (43) (35) 71 88 (19) 
Other ordinary income 16 (1) 13  23 36 37 (3) 
Operating income287 280 480 3 (40) 848 1,528 (45) 
Personnel expenses157 146 243 8 (35) 443 741 (40) 
Other operating expenses77 79 149 (3) (48) 230 449 (49) 
Operating expenses234 225 392 4 (40) 673 1,190 (43) 
Gross operating profit53 55 88 (4) (40) 175 338 (48) 
Depreciation of non-current assets5 8 22 (38) (77) 20 66 (70) 
Valuation adjustments, provisions and losses0 (7) 11 (100) (100) 9 22 (59) 
Net operating profit before acquisition-related costs and taxes48 54 55 (11) (13) 146 250 (42) 
Taxes 2)(14) (14) (17) 0 (18) (37) (72) (49) 
Net operating profit before acquisition-related costs and minority interests (segment result)34 40 38 (15) (11) 109 178 (39) 
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, 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. The retroactive application of this change in accounting principle would not have had an impact on the taxes reported for 3Q2002 and for the 9 months 2002.


CSFB Financial Services income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Net interest income131579(13)(84)40255(84)
Net commission and service fee income 3373195756(41)9681,976(51)
Net trading income243938(38)(37)96141(32)
Other ordinary income 21(2)2054859(19)
Operating income3953717126(45)1,1522,431(53)
Personnel expenses21619536311(40)6021,179(49)
Other operating expenses1061062200(52)313713(56)
Operating expenses3223015837(45)9151,892(52)
Gross operating profit73701294(43)237539(56)
Depreciation of non-current assets8933(11)(76)27104(74)
Valuation adjustments, provisions and losses0(10)17(100)(100)1236(67)
Net operating profit before acquisition-related costs and taxes657179(8)(18)198399(50)
Taxes 2)(19)(19)(25)0(24)(50)(115)(57)
Net operating profit before acquisition-related costs and minority interests (segment result)465254(12)(15)148284(48)
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, 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. The retroactive application of this change in accounting principle would not have had an impact on the taxes reported for 3Q2002 and for the 9 months 2002.


CSFB Financial Services key information 1)
   9 months
based on CHF amounts3Q20032Q20033Q200220032002
Cost/income ratio 2)83.5%83.6%86.5%81.8%82.1%
Average allocated capital in CHF m4955539845321,041
Pre-tax margin 2)16.5%19.1%11.1%17.2%16.4%
Personnel expenses/operating income 2)54.7%52.6%51.0%52.3%48.5%
Net new assets Credit Suisse Asset Management in CHF bn (discretionary) 3)(5.5)(1.7)(12.2)(12.4)(22.6)
Net new assets Private Client Services in CHF bn(1.5)(1.7)(1.7)5.3
Growth in assets under management 3)(1.5%)5.8%(7.6%)(0.2%)(22.1%)
Growth in discretionary assets under management – Credit Suisse Asset Management 3)(1.2%)6.6%(9.3%)0.2%(19.8%)
   of which net new assets 3) (1.9%)(0.6%)(3.8%)(4.4%)(6.2%)
   of which market movement and structural effects 0.7%7.2%(5.5%)4.6%(13.6%)
Growth in net new assets Private Client Services(2.3%)(2.7%)(2.5%)5.7%
      
   30.09.0330.06.0331.12.02
Assets under management in CHF bn 3)  481.2488.4482.2
   of which Credit Suisse Asset Management 3)   413.7421.3412.8
   of which Private Client Services   65.164.667.5
Discretionary assets under management in CHF bn 3)  295.9299.7297.0
   of which Credit Suisse Asset Management 3)   279.5282.8278.7
      of which mutual funds distributed   112.6113.3106.5
   of which Private Client Services   16.416.918.3
Advisory assets under management in CHF bn  3)  185.3188.7185.2
Number of employees (full-time equivalents)  2,6172,6836,783
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Based on the segment results, which exclude certain acquisition-related costs not allocated to the segment.
3) Credit Suisse Asset Management figures for Assets under Management and Net New Assets include assets managed on behalf of other entities within Credit Suisse Group. This differs from the presentation in the overview of Credit Suisse Group, where such assets are eliminated.


RECONCILIATION OF OPERATING RESULTS TO SWISS GAAP

Introduction
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. For a description of these reporting principles, please refer to “Operating and Financial Review – Reporting Principles” in the Group’s 2002 Annual Report. The operating basis business unit results reflect the results of the separate segments constituting the respective business units and certain acquisition-related costs that are not allocated to the segments. The Group’s consolidated results reflect the operating basis business unit results adjusted for certain reclassifications associated with the business units and consolidation adjustments in the Corporate Center in accordance with Swiss GAAP.

The tables below reconcile the operating basis business unit results to Swiss GAAP. The “Reclassifications” columns include acquisition-related costs and reclassifications related to management reporting policies as described below. Acquisition-related costs are excluded from the operating basis business unit results because management believes that this enables them and investors to better assess the results and key performance indicators of the business. The operating basis business unit results in management’s view provide a more useful indication of the financial performance of the operating business as they reflect the core businesses’ operating performance for the periods under review unaffected by the amortization of costs related to historical acquisitions.

Credit Suisse Financial Services business unit
The Credit Suisse Financial Services operating basis column reflects the results of the respective segments, excluding amortization of acquired intangible assets and goodwill, which are reflected in the reclassifications column. The Credit Suisse Financial Services operating basis business unit results are also adjusted for credit-related valuation adjustments, resulting from the difference between the statistical credit provisions recorded by its banking segments and actual credit provisions on a Swiss GAAP basis. In addition, gains or losses related to divestitures and sales of investments within the insurance business are recorded as operating income at the insurance segments and the business unit level and reclassified to extraordinary income/expenses in the reconciliation in accordance with Swiss GAAP.

Credit Suisse First Boston business unit
The Credit Suisse First Boston operating basis column reflects the results of the respective segments, excluding acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, which are reflected in the reclassifications column. The Credit Suisse First Boston operating basis business unit results also deduct brokerage, execution and clearing expenses from other operating expenses (reclassified as a reduction in operating income in the consolidated results); deduct from other operating expenses contractor and certain staff recruitment costs (reclassified as an addition to personnel expenses in the consolidate results); and add to operating income expenses related to certain redeemable preferred securities (reclassified as minority interests in the consolidated results). This presentation brings Credit Suisse First Boston in line with its US competitors in the investment banking industry and facilitates comparison to its peers, which management believes is useful for investors. Swiss GAAP does not permit brokerage, execution or clearing expenses, contractor costs and certain staff recruitment costs to be reported 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 present more fairly the operating results from its core businesses because they reflect the operating performance for the periods under review unaffected by the funding costs related to historical acquisitions.


Credit Suisse Financial ServicesCredit Suisse First Boston  
  Re-Swiss Re-Swiss Credit
 Operatingclassifi-GAAPOperatingclassifi-GAAPCorporateSuisse
3Q2003, in CHF mbasiscationsbasisbasiscationsbasisCenter1)Group
Operating income4,548(1,161)2)3,3873,352(239)3) 4) 6)3,113316,531
Personnel expenses1,385 1,3851,627543) 4)1,681593,125
Other operating expenses732 732854(260)4)594(64)1,262
Operating expenses2,117 2,1172,481 2,275(5)4,387
Gross operating profit2,431 1,270871 838362,144
Depreciation of non-current assets279 279125 12567471
Amortization of acquired intangible assets and goodwill25252113)2112238
Valuation adjustments, provisions and losses90145)104111 1110215
Profit before extraordinary items and taxes2,062 862635 391(33)1,220
Extraordinary income/(expenses), net 31,1611,1642 221,168
Taxes(260)4(256)(111)46(65)4(317)
Net profit before minority interests 1,805 1,770526 328(27)2,071
Minority interests8 80(20)6)(20)(14)(26)
Net profit1,813 1,778526 308(41)2,045
      
Reconciliation to business unit results     
Acquisition interest  (56)56 
Amortization of retention payments  3(3) 
Amortization of acquired intangible assets and goodwill(25)25(211)211 
Tax impact1(1)46(46) 
Business unit result 1,789  308    
1) Corporate Center includes the parent company operations, including Group financing initiatives, centrally managed, own-use real estate, consisting mainly of bank premises within Switzerland and consolidation adjustments.
2) Reflects net gains/(losses) from sales of investments and other reclassifications within the insurance business of CHF 1,161 m reclassified from operating income to extraordinary income/(expenses).
3) Reflects acquisition interest of CHF 56 m allocated to operating income, amortization of retention payments of CHF -3 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 211 m.
4) Reflects brokerage, execution and clearing expenses of CHF 203 m reclassified from other operating expenses to a reduction of operating income and contractor costs of CHF 40 m and staff recruitment costs of CHF 17 m reclassified from other operating expenses to personnel expenses.
5) Reflects an increase/(decrease) in credit-related valuation adjustments resulting from the difference between statistical and actual credit provisions of CHF 14 m.
6) Reflects expenses of CHF 20 m related to certain redeemable preferred securities reclassified from operating income to minority interests.


Credit Suisse Financial ServicesCredit Suisse First Boston  
  Re-Swiss Re-Swiss Credit
 Operatingclassifi-GAAPOperatingclassifi-GAAPCorporateSuisse
2Q2003, in CHF mbasiscationsbasisbasiscationsbasisCenter1)Group
Operating income3,544 3,5444,131(245)2) 3) 5)3,8861197,549
Personnel expenses1,434 1,4342,1561502) 3)2,306843,824
Other operating expenses744 744863(248)3)615(112)1,247
Operating expenses2,178 2,1783,019 2,921(28)5,071
Gross operating profit1,366 1,3661,112 9651472,478
Depreciation of non-current assets194 194136 136145475
Amortization of acquired intangible assets and goodwill27272012)201(5)223
Valuation adjustments, provisions and losses90(27)4)6363 635131
Profit before extraordinary items and taxes1,082 1,082913 56521,649
Extraordinary income/(expenses), net 8 80 05361
Taxes(223)(6)(229)(257)84(173)83(319)
Net profit before minority interests 867 861656 3921381,391
Minority interests(10) (10)0(19)5)(19)(16)(45)
Net profit857 851656 3731221,346
      
Reconciliation to business unit results     
Acquisition interest  (64)64 
Amortization of retention payments  (102)102 
Amortization of acquired intangible assets and goodwill(27)27(201)201 
Tax impact0 84(84) 
Business unit result830  373    
1) Corporate Center includes the parent company operations, including Group financing initiatives, centrally managed, own-use real estate, consisting mainly of bank premises within Switzerland and consolidation adjustments.
2) Reflects acquisition interest of CHF 64 m allocated to operating income, amortization of retention payments of CHF 102 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 201 m.
3) Reflects brokerage, execution and clearing expenses of CHF 200 m reclassified from other operating expenses to a reduction of operating income and contractor costs of CHF 36 m and staff recruitment costs of CHF 12 m reclassified from other operating expenses to personnel expenses.
4) Reflects an increase/(decrease) in credit-related valuation adjustments resulting from the difference between statistical and actual credit provisions of CHF –27 m.
5) Reflects expenses of CHF 19 m related to certain redeemable preferred securities reclassified from operating income to minority interests.


Credit Suisse Financial ServicesCredit Suisse First Boston  
  Re-Swiss Re-Swiss Credit
 Operatingclassifi-GAAPOperatingclassifi-GAAPCorporateSuisse
3Q2002, in CHF mbasiscationsbasisbasiscationsbasisCenter1)Group
Operating income2,3641332)2,4973,784(376)3) 4) 6)3,408(239)5,666
Personnel expenses1,486475)1,5331,9942373) 4)2,231293,793
Other operating expenses884395)9231,110(387)4)723(87)1,559
Operating expenses2,370 2,4563,104 2,954(58)5,352
Gross operating profit(6) 41680 454(181)314
Depreciation of non-current assets262295)291207 20794592
Amortization of acquired intangible assets and goodwill315)313083)308(2)337
Valuation adjustments, provisions and losses91317)122867 867(16)973
Profit/(loss) before extraordinary items and taxes(359) (403)(394) (928)(257)(1,588)
Extraordinary income/(expenses), net 6(133)2)(127)(1) (1)(3)(131)
Taxes(689)8(681)139141280(9)(410)
Net profit/(loss) before minority interests (1,042) (1,211)(256) (649)(269)(2,129)
Minority interests17 170(19)6)(19)(17)(19)
Net profit/(loss)(1,025) (1,194)(256) (668)(286)(2,148)
      
Reconciliation to business unit results     
Acquisition interest  (99)99 
Amortization of retention payments  (146)146 
Amortization of acquired intangible assets and goodwill(27)27(308)308 
Exceptional items(119)119 
Tax impact1(1)141(141) 
Business unit result(1,170)  (668)    
1) Corporate Center includes the parent company operations, including Group financing initiatives, centrally managed, own-use real estate, consisting mainly of bank premises within Switzerland and consolidation adjustments.
2) Reflects net gains/(losses) from sales of investments within the insurance business of CHF -133 m reclassified from operating income to extraordinary income/(expenses).
3) Reflects acquisition interest of CHF 99 m allocated to operating income, amortization of retention payments of CHF 146 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 308 m.
4) Reflects brokerage, execution and clearing expenses of CHF 296 m reclassified from other operating expenses to a reduction of operating income and contractor costs of CHF 62 m and staff recruitment costs of CHF 29 m reclassified from other operating expenses to personnel expenses.
5) Reflects exceptional items allocated to personnel expenses of CHF 47 m, to other operating expenses of CHF 39 m, to depreciation of non-current assets of CHF 29 m and to amortization of acquired intangible assets and goodwill of CHF 4 m.
6) Reflects expenses of CHF 19 m related to certain redeemable preferred securities reclassified from operating income to minority interests.
7) Reflects an increase/(decrease) in credit-related valuation adjustments resulting from the difference between statistical and actual credit provisions of CHF 31 m.


Credit Suisse Financial ServicesCredit Suisse First Boston  
  Re-Swiss Re-Swiss Credit  
 Operatingclassifi-GAAPOperatingclassifi-GAAPCorporateSuisse 
9 months 2003, in CHF mbasiscationsbasisbasiscationsbasisCenter1)Group 
Operating income11,594(1,103)2)10,49111,373(731)3) 4) 6)10,642(29)21,104 
Personnel expenses4,232 4,2325,8093653) 4)6,17418210,588 
Other operating expenses2,292 2,2922,578(740)4)1,838(240)3,890 
Operating expenses6,524 6,5248,387 8,012(58)14,478 
Gross operating profit5,070 3,9672,986 2,630296,626 
Depreciation of non-current assets695 695389 3892821,366 
Amortization of acquired intangible assets and goodwill77776183)618(2)693 
Valuation adjustments, provisions and losses261(37)5)224350 3505579 
Profit before extraordinary items and taxes4,114 2,9712,247 1,273(256)3,988 
Extraordinary income/(expenses), net 181,1032)1,1212 2571,180 
Taxes(742)(7)(749)(559)226(333)68(1,014) 
Net profit before minority interests 3,390 3,3431,690 942(131)4,154 
Minority interests(10) (10)0(58)6)(58)(43)(111) 
Net profit3,380 3,3331,690 884(174)4,043 
      
Reconciliation to business unit results     
Acquisition interest  (206)206 
Amortization of retention payments  (208)208 
Amortization of acquired intangible assets and goodwill(77)77(618)618 
Tax impact2(2)226(226) 
Business unit result3,305  884    
1) Corporate Center includes the parent company operations, including Group financing initiatives, centrally managed, own-use real estate, consisting mainly of bank premises within Switzerland and consolidation adjustments.
2) Reflects net gains/(losses) from sales of investments and other reclassifications within the insurance business of CHF 1,103 m reclassified from operating income to extraordinary income/(expenses).
3) Reflects acquisition interest of CHF 206 m allocated to operating income, amortization of retention payments of CHF 208 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 618 m.
4) Reflects brokerage, execution and clearing expenses of CHF 583 m reclassified from other operating expenses to a reduction of operating income and contractor costs of CHF 119 m and staff recruitment costs of CHF 38 m reclassified from other operating expenses to personnel expenses.
5) Reflects an increase/(decrease) in credit-related valuation adjustments resulting from the difference between statistical and actual credit provisions of CHF –37 m.
6) Reflects expenses of CHF 58 m related to certain redeemable preferred securities reclassified from operating income to minority interests.


Credit Suisse Financial ServicesCredit Suisse First Boston  
  Re-Swiss Re-Swiss Credit  
 Operatingclassifi-GAAPOperatingclassifi-GAAPCorporateSuisse 
9 months 2002, in CHF mbasiscationsbasisbasiscationsbasisCenter1)Group
Operating income8,586702)8,65614,682(1,044)3) 4) 6)13,638(651)21,643
Personnel expenses4,500475)4,5478,0217863) 4)8,8079213,446
Other operating expenses2,691395)2,7303,484(963)4)2,521(279)4,972
Operating expenses7,191 7,27711,505 11,328(187)18,418
Gross operating profit1,395 1,3793,177 2,310(464)3,225
Depreciation of non-current assets687295)716596 5962271,539
Amortization of acquired intangible assets and goodwill1065)1069953)995(5)1,096
Valuation adjustments, provisions and losses285357)3201,625 1,625612,006
Profit/(loss) before extraordinary items and taxes423 237956 (906)(747)(1,416)
Extraordinary income/(expenses), net 24(70)2)(46)25 25(5)(26)
Taxes(1,192)10(1,182)(173)505332(64)(914)
Net profit/(loss) before minority interests (745) (991)808 (549)(816)(2,356)
Minority interests100 1000(60)6)(60)(43)(3)
Net profit/(loss)(645) (891)808 (609)(859)(2,359)
      
Reconciliation to business unit results     
Acquisition interest  (424)424 
Amortization of retention payments  (503)503 
Amortization of acquired intangible assets and goodwill(102)102(995)995 
Exceptional items(119)119 
Tax impact2(2)505(505) 
Business unit result(864)  (609)    
1) Corporate Center includes the parent company operations, including Group financing initiatives, centrally managed, own-use real estate, consisting mainly of bank premises within Switzerland and consolidation adjustments.
2) Reflects net gains/(losses) from sales of investments within the insurance business of CHF -70 m reclassified from operating income to extraordinary income/(expenses).
3) Reflects acquisition interest of CHF 424 m allocated to operating income, amortization of retention payments of CHF 503 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 995 m.
4) Reflects brokerage, execution and clearing expenses of CHF 680 m reclassified from other operating expenses to a reduction of operating income and contractor costs of CHF 223 m and staff recruitment costs of CHF 60 m reclassified from other operating expenses to personnel expenses.
5) Reflects exceptional items allocated to personnel expenses of CHF 47 m, to other operating expenses of CHF 39 m, to depreciation of non-current assets of CHF 29 m and to amortization of acquired intangible assets and goodwill of CHF 4 m.
6) Reflects expenses of CHF 60 m related to certain redeemable preferred securities reclassified from operating income to minority interests.
7) Reflects an increase/(decrease) in credit-related valuation adjustments resulting from the difference between statistical and actual credit provisions of CHF 35 m.


CONSOLIDATED RESULTS | CREDIT SUISSE GROUP


Consolidated income statement 
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Interest and discount income3,2273,5134,233(8)(24)10,08113,511(25)
Interest and dividend income from trading portfolios2,4812,4452,4951(1)6,9527,753(10)
Interest and dividend income from financial investments1811722985(39)528577(8)
Interest expenses(3,877)(4,268)(4,945)(9)(22)(12,036)(15,731)(23)
Net interest income2,0121,8622,0818(3)5,5256,110(10)
Commission income from lending activities224243152(8)4767255920
Commission income from securities and investment transactions2,9212,6412,9251108,11710,759(25)
Commission income from other services2772583997(31)7761,315(41)
Commission expenses(199)(182)(174)914(568)(599)(5)
Net commission and service fee income 3,2232,9603,3029(2)8,99712,034(25)
Net trading income721,32740(95)802,6722,14525
Premiums earned, net7,1267,5858,672(6)(18)25,18726,502(5)
Claims incurred and actuarial provisions(7,207)(8,143)(6,853)(11)5(25,034)(22,365)12
Commission expenses, net(619)(624)(708)(1)(13)(1,832)(1,727)6
Investment income from the insurance business2,1672,523(636)(14)6,022(486)
Net income from the insurance business1,4671,34147592094,3431,924126
Income from the sale of financial investments102147381(31)(73)324895(64)
Income from investments in associates8(2)(1)4983(41)
Income from other non-consolidated participations3152(80)501924(21)
Real estate income414576(9)(46)129164(21)
Sundry ordinary income219237284(8)(23)666730(9)
Sundry ordinary expenses 1)(616)(383)(974)61(37)(1,620)(2,466)(34)
Other ordinary income/(expenses), net(243)59(232)5(433)(570)(24)
Operating income6,5317,5495,666(13)1521,10421,643(2)
Personnel expenses3,1253,8243,793(18)(18)10,58813,446(21)
Other operating expenses1,2621,2471,5591(19)3,8904,972(22)
Operating expenses4,3875,0715,352(13)(18)14,47818,418(21)
Gross operating profit2,1442,478314(13)6,6263,225105
Depreciation of non-current assets 2)471475592(1)(20)1,3661,539(11)
Amortization of acquired intangible assets84781628(48)243528(54)
Amortization of goodwill1541451756(12)450568(21)
Valuation adjustments, provisions and losses from the banking business 1)21513197364(78)5792,006(71)
Depreciation, valuation adjustments and losses9248291,90211(51)2,6384,641(43)
Profit/(loss) before extraordinary items and taxes 1,2201,649(1,588)(26)3,988(1,416)
Extraordinary income1,568120(5)1,697120
Extraordinary expenses(400)(59)(126)217(517)(146)254
Taxes 3)(317)(319)(410)(1)(23)(1,014)(914)11
Net profit/(loss) before minority interests 2,0711,391(2,129)494,154(2,356)
Minority interests(26)(45)(19)(42)37(111)(3)
Net profit/(loss)2,0451,346(2,148)524,043(2,359)
1) Effective in the first quarter 2003, declines in value of debt securities and loans available for sale due to deterioration in creditworthiness are reported in “Sundry ordinary expenses”. In previous years they were recorded in “Valuation adjustments, provisions and losses from the banking business”.
2) Includes amortization of Present Value of Future Profits (PVFP) 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. The retroactive application of this change in accounting principle would have resulted in taxes for 3Q2002 and for the 9 months 2002 of CHF –306 m and CHF –400 m, respectively.


Consolidated balance sheet 
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
Assets    
Cash and other liquid assets3,6184,0162,551(10)42
Money market papers17,85121,28325,125(16)(29)
Due from banks227,853215,292195,778616
Receivables from the insurance business8,87012,35912,290(28)(28)
Due from customers168,935193,115182,143(13)(7)
Mortgages99,73296,81694,89635
Securities and precious metals trading portfolios196,314187,358173,133513
Financial investments from the banking business40,46635,05333,3941521
Investments from the insurance business127,707140,045128,450(9)(1)
Non-consolidated participations1,5681,5941,792(2)(13)
Tangible fixed assets7,1797,7268,152(7)(12)
Intangible assets14,65415,44718,359(5)(20)
Accrued income and prepaid expenses12,32214,74213,882(16)(11)
Other assets67,48671,79965,711(6)3
Total assets994,5551,016,645955,656(2)4
Subordinated assets6,7436,3615,479623
Receivables due from non-consolidated participations942864728929
     
Liabilities and shareholders' equity    
Money market papers issued36,98626,96722,1783767
Due to banks313,363325,887287,884(4)9
Payables from the insurance business8,3768,55610,218(2)(18)
Due to customers in savings and investment deposits42,79442,39839,73918
Due to customers, other256,786262,342258,244(2)(1)
Medium-term notes (cash bonds)1,9382,1612,599(10)(25)
Bonds and mortgage-backed bonds82,02180,70181,83920
Accrued expenses and deferred income16,53616,77417,463(1)(5)
Other liabilities57,82757,81256,07003
Valuation adjustments and provisions11,14712,50811,557(11)(4)
Technical provisions for the insurance business131,908147,111136,471(10)(3)
Total liabilities959,682983,217924,262(2)4
Reserve for general banking risks1,7331,7331,73900
Share capital1,1951,1901,19000
Capital reserve20,72020,71320,71000
Revaluation reserves for the insurance business1,1861,7041,504(30)(21)
Reserve for own shares1,9501,9501,95000
Retained earnings1,0751,2004,732(10)(77)
Minority interests2,9712,9402,87813
Net profit/(loss)4,0431,998(3,309)102
Total shareholders' equity34,87333,42831,394411
Total liabilities and shareholders' equity994,5551,016,645955,656(2)4
Subordinated liabilities19,38620,18620,932(4)(7)
Liabilities due to non-consolidated participations2,0901,3901,1645080


Off-balance sheet and fiduciary business 
in CHF m30.09.0331.12.02
Credit guarantees in form of bills of exchange and other guarantees 1)30,50527,745
Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees4,6484,680
Irrevocable commitments in respect of documentary credits3,1313,242
Other contingent liabilities2,6973,437
Contingent liabilities40,98139,104
Irrevocable commitments 91,48592,950
Liabilities for calls on shares and other equity instruments4643
Confirmed credits1332
Total off-balance sheet132,525132,129
Fiduciary transactions34,23737,703

At 30.09.03, market value guarantees reported as derivatives totaled CHF 217.8 bn (31.12.02: CHF 170.4 bn) (nominal value). The associated replacement value reported on-balance sheet totaled CHF 5.9 bn (31.12.02: CHF 10.3 bn).

 

 

 

 

 
1) Including credit guarantees of securities lent as arranger: 30.09.03: CHF 22.8 bn (31.12.02: CHF 20.7 bn).


Derivative instruments 
  PositiveNegative PositiveNegative
  grossgross grossgross
 NominalreplacementreplacementNominalreplacementreplacement
  value value 1) value 1) value value 1) value 1)
in CHF bn30.09.0330.09.0330.09.0331.12.0231.12.0231.12.02
Interest rate products11,884.9192.3181.810,647.2185.4181.0
Foreign exchange products1,640.639.540.21,376.734.836.1
Precious metals products14.60.93.019.80.92.5
Equity/index-related products459.915.521.9347.512.613.0
Other products252.74.25.0179.44.35.0
Total derivative instruments14,252.7252.4251.912,570.6238.0237.6
1) Including replacement values for traded derivatives (futures and traded options) subject to daily margining requirements. Total positive and negative replacement values of traded derivatives amount to CHF 5.0 bn (31.12.02: CHF 1.5 bn) and CHF 2.8 bn (31.12.02: CHF 1.1 bn).


Currency translation rates  
Average rate year-to-date Closing rate used in the
used in the income statementbalance sheet as of
in CHF 3Q20032Q20033Q200230.09.0330.06.0331.12.02
1 USD 1.361.351.591.32291.35281.3902
1 EUR1.511.491.471.53821.54611.4550
1 GBP2.192.182.342.20892.23572.2357
100 JPY1.151.141.261.19231.12901.1722


Income statement of the banking and insurance business 1)
Banking business    
(incl. Corporate Center)Insurance business2)Credit Suisse Group
9 months, in CHF m200320022003200220032002
Net interest income5,5286,0725,5256,110
Net commission and service fee income8,98112,0438,99712,034
Net trading income2,7182,1452,6722,145
Net income from the insurance business  3)4,3201,9344,3431,924
Other ordinary income/(expenses), net220(180)(668)(399)(433)(570)
Operating income17,44720,0803,6521,53521,10421,643
Personnel expenses9,06011,7331,5281,71310,58813,446
Other operating expenses2,8753,8041,0131,1383,8904,972
Operating expenses11,93515,5372,5412,85114,47818,418
Gross operating profit/(loss)5,5124,5431,111(1,316)6,6263,225
Depreciation of non-current assets8961,1124704271,3661,539
Amortization of acquired intangible assets24352800243528
Amortization of goodwill 4025194850450568
Valuation adjustments, provisions and losses from the banking business5792,0055792,006
Depreciation, valuation adjustments and losses2,1204,1645184772,6384,641
Profit/(loss) before extraordinary items, taxes and minority interests3,392379593(1,793)3,988(1,416)
Extraordinary income110701,587501,697120
Extraordinary expenses(33)(26)(484)(120)(517)(146)
Taxes(808)(234)(206)(680)(1,014)(914)
Net profit/(loss) before minority interests2,6611891,490(2,543)4,154(2,356)
Minority interests(114)(116)2113(111)(3)
Net profit/(loss)2,547731,492(2,430)4,043(2,359)
1) Income statements for the banking and insurance business are presented on a stand-alone basis.
2) Represents “Winterthur” Swiss Insurance Company.
3) Insurance business: expenses due to the handling of both claims and investments are allocated to the income from the insurance business, of which CHF 405 m (9 months 2002: CHF 428 m) are related to personnel expenses and CHF 341 m (9 months 2002: CHF 330 m) to other operating expenses.


Statement of shareholders' equity 
9 months
in CHF m20032002
At beginning of financial year31,39438,921
Repayment out of share capital0(2,379)
Dividends paid(123)0
Dividends paid to minority interests(109)(120)
Capital increases, par value and capital surplus14198
Cancellation of repurchased shares0(542)
Changes in scope of consolidation affecting minority interests(19)(95)
Foreign exchange impact(143)(1,745)
Change in revaluation reserves from the insurance business, net(289)579
Change in reserve for general banking risks, net(6)0
Minority interests in net profit1113
Net profit/(loss)4,043(2,359)
At end of period34,87332,461


LOANS


Due from banks 
in CHF m30.09.0331.12.02
Due from banks, gross227,938195,866
Valuation allowance(85)(88)
Total due from banks, net227,853195,778


Due from customers and mortgages 
in CHF m30.09.0331.12.02
Due from customers, gross 1)173,217187,617
Valuation allowance(4,282)(5,474)
Due from customers, net168,935182,143
Mortgages, gross 1)101,15597,037
Valuation allowance(1,423)(2,141)
Mortgages, net99,73294,896
Total due from customers and mortgages, net268,667277,039
1) Effective 1Q2003, loans held for sale are presented net of the related loan valuation allowances.


Due from customers and mortgages by sector 
in CHF m30.09.0331.12.02
Financial services50,29843,553
Real estate companies15,99516,472
Other services including technology companies15,07315,316
Manufacturing11,19013,273
Wholesale and retail trade9,89011,165
Construction4,0994,314
Transportation3,8814,149
Telecommunications1,9182,333
Health and social services1,8832,340
Hotels and restaurants2,5332,390
Agriculture and mining2,3012,317
Non-profit and international organizations189191
Commercial119,250117,813
Consumers95,25887,145
Public authorities5,9565,023
Lease financings3,2973,158
Professional securities transactions and securitized loans50,61171,515
Due from customers and mortgages, gross274,372284,654
Valuation allowance(5,705)(7,615)
Total due from customers and mortgages, net268,667277,039


Collateral of due from customers and mortgages 
 MortgageOtherWithoutTotal
in CHF mcollateralcollateralcollateral30.09.03
Due from customers5,438117,46746,030168,935
Residential properties73,001   
Business and office properties11,370   
Commercial and industrial properties12,115   
Other properties3,246   
Mortgages99,73299,732
Total collateral105,170117,46746,030268,667
As of 31.12.02100,002129,30047,737277,039


Loan valuation allowance 
in CHF m30.09.0331.12.02
Due from banks8588
Due from customers4,2825,474
Mortgages1,4232,141
Total loans valuation allowance 1) 2)5,7907,703
   of which on principal 4,9216,617
   of which on interest 8691,086
1) Of which are CHF 4,816 m specific allowances for impaired loans (31.12.02: CHF 6,778 m).
2) Effective 1Q2003, valuation allowances related to loans held for sale are netted directly with such loans, and are not presented separately in the total loan valuation allowance.


Roll forward of loan valuation allowance 
9 months
in CHF m20032002
At beginning of financial year7,7039,264
Additions9482,028
Releases(548)(584)
Net additions charged to income statement4001,444
Gross write-offs(2,033)(3,221)
Recoveries4234
Net write-offs(1,991)(3,187)
Reclassified to loans held for sale(355)
Provisions for interest100161
Foreign currency translation impact and other(67)(304)
At end of period5,7907,378


Impaired loans 1)
in CHF m30.09.0331.12.02
With a specific allowance7,73811,714
Without a specific allowance774655
Total impaired loans, gross8,51212,369
  
Non-performing loans3,9706,355
Non-interest earning loans2,0152,325
Restructured loans349281
Potential problem loans 2)2,1783,408
Total impaired loans, gross8,51212,369
1) Effective 1Q2003, loans classified as held for sale are excluded from presentation as impaired.
2) Potential problem loans consist of loans where interest payments are being made but where, in the credit officer's assessment, some doubt exists as to the timing and/or certainty of the repayment of contractual principal.


Securities and precious metals trading portfolios 
   
in CHF m30.09.0331.12.02
Listed on stock exchange67,74958,661
Unlisted75,63876,083
Debt instruments143,387134,744
   of which own bonds and medium-term notes 9141,520
Listed on stock exchange45,93733,208
Unlisted5,7353,935
Equity instruments51,67237,143
   of which own shares 2,5842,254
Precious metals1,255 1,246 
Total securities and precious metals trading portfolios196,314173,133
   of which securities rediscountable or pledgeable
   with central banks
33,52227,426


Investments from the insurance business 
   GrossGross 
  Amortizedunrealizedunrealized 
As of 30.09.03, in CHF mBook value costgainslossesFair value
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities7,1577,15701606,997
Corporate debt securities1,1991,1990191,180
Other1,8511,8510301,821
Total debt securities – held to maturity10,20710,20702099,998
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities4,2584,090184164,258
Debt securities issued by foreign governments16,84216,2556799216,842
Corporate debt securities38,73537,2461,73324438,735
Other6,9886,658349196,988
Debt securities66,82364,2492,94537166,823
Equity securities5,4855,1474821445,485
Total securities – available-for-sale72,30869,3963,42751572,308
Debt securities234
Equity securities81
Total securities – trading315
Own shares7
Mortgage loans10,932
Other loans4,407
Real estate7,5729,944
Short-term investments and other6,764
Investments from the insurance business 112,512
Equity securities10,883
Debt securities2,565
Short-term investments1,572
Real estate175
Investments where the investment risk is borne by the policyholder15,195
Investments from the insurance business 127,707


As of 31.12.02, in CHF m     
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities10,8149,951863010,814
Debt securities issued by foreign governments27,11026,3378719827,110
Corporate debt securities29,04227,4781,71715329,042
Other9,6859,157552249,685
Debt securities76,65172,9234,00327576,651
Equity securities9,0529,1713364559,052
Total securities – available-for-sale85,70382,0944,33973085,703
Debt securities246
Equity securities31
Total securities – trading277
Own shares44
Mortgage loans10,175
Other loans4,305
Real estate7,43110,057
Short-term investments and other7,120
Investments from the insurance business 115,055
Equity securities9,288
Debt securities2,841
Short-term investments1,069
Real estate197
Investments where the investment risk is borne by the policyholder13,395
Investments from the insurance business 128,450


INFORMATION FOR INVESTORS


Financial calendar
  
Fourth quarter/full-year results 2003Thursday, February 12, 2004
Annual General MeetingFriday, April 30, 2004


Credit Suisse Group shares  
Ticker symbols   
Stock exchange listingsBloombergReutersTelekurs
SWX Swiss Exchange/virt-xCSGN VXCSGN.VXCSGN,380
FrankfurtCSX GRCSGN.DECSX,013
New York (ADS) 1)CSR USCSR.NCSR,065
1) 1 ADS represents 1 registered share.
     
Swiss security number1213853  
ISIN numberCH0012138530  
German security numberDE 876 800  
CUSIP number225 401 108  


Ratings 
 Moody’s Standard & Poor’s Fitch Ratings
Credit Suisse Group   
Short termA-1F1+
Long termAa3AAA-
OutlookNegativeStableNegative
Credit Suisse   
Short termP-1A-1F1+
Long termAa3A+AA-
OutlookNegativeStableNegative
Credit Suisse First Boston   
Short termP-1A-1F1+
Long termAa3A+AA-
OutlookNegativeStableNegative
Winterthur   
Insurer Financial StrengthA1AAA
CreditA2AAA-
OutlookNegativeNegativeNegative

Enquiries
Credit Suisse Group
Investor Relations
Gerhard Beindorff, Marc Buchheister
Tel. +41 1 333 4570/+41 1 333 3169
Fax +41 1 333 2587
Credit Suisse Group
Media Relations
Karin Rhomberg Hug, Claudia Kraaz
Tel. +41 1 333 8844
Fax +41 1 333 8877

Financial Publications
Printed financial publications may be ordered from:
Credit Suisse
KIDM 23
Uetlibergstrasse 231
8070 Zurich
Switzerland
Fax +41 1 332 7294
www.credit-suisse.com/results/order.html


In this year’s corporate reports, we have chosen the work of Swiss artist Daniel Grobet to represent Credit Suisse Group’s 360° approach to finance. In his hand-crafted iron sculptures, Daniel achieves a harmonious balance by carefully combining static and dynamic elements.




Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich
Switzerland
Tel. +41 1 212 1616
Fax +41 1 333 2587
www.credit-suisse.com

5520144

English

 


PRESENTATION

RESULTS OVERVIEW    
       
CONSOLIDATED RESULTS Slide 4
       
CREDIT SUISSE FINANCIAL SERVICES Slide 13
       
CREDIT SUISSE FIRST BOSTON Slide 22
       
       
       
ADDITIONAL INFORMATION Slide 29
       
       
       
DISCLAIMER Slide 42
       
       
       

Slide 1

Back to Contents

RESULTS OVERVIEW

  in CHF m Q3/03   Q2/03   Q3/02     9M/03   9M/02  
                       
      Credit Suisse                      
      Financial Services 1,778   851   (1,194 )   3,333   (891 )
                       
      Credit Suisse                      
      First Boston 308   373   (668 )   884   (609 )
                       
      Corporate Center & adjustments (41 ) 122   (286 )   (174 ) (859 )







 



 Net profit/(loss) 2,045   1,346   (2,148 )   4,043   (2,359 )







 



                       
      Amortization of acquired intangible                      
       assets and goodwill, net of tax (1) 208   197   396     609   1,008  







 



 Net operating profit/(loss) 2,253   1,543   (1,752 )   4,652   (1,351 )







 



                       
 Basic earnings per share (in CHF) 1.66   1.09   (1.81 )   3.29   (1.98 )
                       
 Return on equity (annualized) 26.3% 18.5%   (26.9% )   18.2% (9.2% )

(1)   Q3/02 ans 9M/02 include exceptional items of CHF 119 m, net of tax


Slide 2

Back to Contents

KEY TRENDS IN Q3/03

Further progress achieved in our efforts to produce sound profitability
   
Divestitures and provisions at Winterthur significantly strengthened capital position and balance sheet
     
  After-tax gain of CHF 1.6 bn gross, or CHF 1.3 bn net of related provisions
     
  Additionally, provisions of CHF 383 m after tax related to its international business portfolio
   
Private Banking with better results than seasonally expected and a strong increase in net new assets
   
Corporate & Retail Banking benefited from efficiency improvements and stable revenue trends
   
Both insurance segments benefited from strong investment results, lower administration costs and tariff increases
   
CSFB performance was dampened by lower fixed income results reflecting conservative risk positioning in light of interest rate volatility, while the business unit demonstrated expense flexibility and continued to experience low credit charges

 


Slide 3

Back to Contents

PRESENTATION

RESULTS OVERVIEW Slide 1
       
CONSOLIDATED RESULTS    
       
CREDIT SUISSE FINANCIAL SERVICES Slide 13
       
CREDIT SUISSE FIRST BOSTON Slide 22
       
       
ADDITIONAL INFORMATION Slide 29
       
       
DISCLAIMER Slide 42

 


Slide 4

Back to Contents

OPERATING INCOME

                  9 months      
  in CHF m
             
   
    Q3/03   Q2/03   in %     2003   2002   in %  
                             
 Net interest income   2,012   1,862   8     5,525   6,110   (10 )
                             
 Net commission & fee income   3,223   2,960   9     8,997   12,034   (25 )
                             
 Net trading income   72   1,327   (95 )   2,672   2,145   25  
                             
 Net income from the                            
      insurance business   1,467   1,341   9     4,343   1,924   126  

 





 





 Total operating income (1)   6,531   7,549   (13 )   21,104   21,643   (2 )

 





 





   
(1)

including "Other ordinary income/(expenses), net"

 


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OPERATING EXPENSES, DEPRECIATION AND TAXES

                  9 months      
 in CHF m              


   
    Q3/03   Q2/03   in %     2003   2002   in %  
                             
 Personnel expenses   3,125 (1) 3,824   (18 )   10,588   13,446   (21 )
                             
 Other operating expenses   1,262   1,24 7   1     3,890   4,972   (22 )
                             
 Operating expenses   4,387   5,071   (13 )   14,478   18,418   (21 )

 





 





                             
 Depreciation   471   475   (1 )   1,366   1,539   (11 )
                             
 Cost/income ratio, reported (2)   74 % 73 %       75 % 92 %    
 Cost/income ratio,                            
      banking business only (2)(3)   70 % 73 %       74 % 83 %    
                             
 Taxes   317   319   (1 )   1,014   914   11  
                             
 Tax rate   13 % 19 %       20 % (63 %)    
   
(1)   includes positive net impact of CHF 122 m from change in vesting of share-based compensation and related incremental incentive compensation at CSFB
(2)   operating expenses plus depreciation of non-current assets divided by operating income
(3)   including results from Corporate Center and adjustments

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PROVISIONS

Note: Totals include Corporate Center and adjustments but exclude exceptional provisions of CHF 984 m in Q4/02

Slide 7

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 IMPAIRED LOANS

                               
















  6.0     4.6   4.9   4.1   3.3   3.0   Impaired loans as % of due
                            from banks and customers (1)
































  59.5     60.0   62.3   63.8   67.1   68.0   Valuation allowance as % of
                            impaired loans
















(1) due from banks and customers and mortgages (excluding securities lending and reverse repurchase agreements)

Slide 8

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BIS CAPITAL RATIOS
AS OF SEPTEMBER 30, 2003

              Credit Suisse
    Credit   Credit Suisse     Group
  in CHF m   Suisse(1)   First Boston(1)     Consolidated






 

                 
 Book equity   7,701   19,914     34,873  
  Deduction of goodwill   (254 ) (7,727 )   (9,462 )
  Deduction of 50% of Winterthur's                
         adjusted net asset value         (2,682 )
  Other tier 1 adjustments   (399 ) (75 )   (828 )
                 
 Tier 1 capital   7,049   12,112     21,901  
                 
  Acquired intangible assets   62   1,731  (2)   1,795  (2)
  Hybrid capital     1,003     2,184  





 






 

 Risk-weighted assets   92,269   99,308     197,412  






 







 

 Tier 1 capital ratio   7.6% 12.2%   11.1%
 excl. acquired intangible assets   7.6%   10.7%     10.3%  





 

 

(1) consolidated banking entities Credit Suisse and Credit Suisse First Boston   (2) net of tax liability



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YEAR-END 2003 PREVIEW
IMPLEMENTATION OF REVISED RRV-EBK*

Announced by EBK in December 2002, effective as of January 1, 2003
Changes to be applied prospectively, i.e. no restatement
Credit Suisse Group will implement full-year impact in Q4/2003
Impact predominantly from business unit CSFB
   
Change   Description   Pro-forma impact
Accounting for own shares   Income related to treasury shares to be recorded directly in equity   For nine months 2003:
decrease of CHF 120 m to net profit
  Treasury shares and share award-related liabilities to be recorded directly in equity   At September 30, 2003: net decrease of CHF 0.6 bn to shareholders' equity
  In line with US GAAP treatment   No impact on regulatory capital adequacy ratios
             
Accounting for derivatives   Revised hedge accounting
principles and documentation
requirements
  For nine months 2003:
decrease of CHF 180 m to net profit (before cumulative effect)
  Freestanding derivative valuations are marked to market   Cumulative positive effect from prior years of CHF 190 m, net of tax
  Strategic hedges disallowed      
             

* EBK = Swiss Federal Banking Commission      RRV = Swiss Banking GAAP as promulgated by the EBK



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US GAAP PREVIEW
DIVESTITURES TRIGGER ASSESSMENT OF US GAAP GOODWILL

Swiss GAAP
Merger accounted for applying the pooling of interests method
   
Historical carrying values maintained for Winterthur's assets and liabilities
   
No goodwill from merger but also no increase in equity account
   
Recent divestitures resulted in an after-tax gain of CHF 1.6 bn gross, or CHF 1.3 bn net of related provisions
   
   
   
   
   

 

US GAAP
Merger accounted for under the purchase method
  assets and liabilities valued at fair market value at transaction date
Difference between the net fair value of assets / liabilities acquired and the market capitalization of Winterthur recorded as
  goodwill, with corresponding
  increase in shareholders' equity
At January 1, 2003, the remaining additional US GAAP goodwill amounted to CHF 3.5 bn
Net result of recent divestitures under US GAAP significantly lower due to the higher book values and allocated goodwill
     



Slide 11

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US GAAP PREVIEW
DIVESTITURES TRIGGER ASSESSMENT OF US GAAP GOODWILL

in CHF billion   Swiss GAAP   US GAAP  
   Winterthur-related goodwill recorded in CSG          
   consolidated accounts at December 31, 2002   1.0   4.5  
           
      Q2/03 – Q3/03 goodwill allocation and write-off          
      related to divestitures   (0.1 ) (1.7 )
      Q2/2003 goodwill impairment charge (Life & Pensions)     (1.5 )
           
      YTD 2003 goodwill amortization charge   (0.1 )  






   Winterthur-related goodwill recorded in CSG          
   consolidated accounts at September 30, 2003   0.8   1.3  












           
   At December 31, 2002:          
      Winterthur shareholders' equity(1) 5.6   10.8  
      Winterthur shareholders' equity(1), net of goodwill   4.6   6.3  






    Relevant 2003      
    reporting      
    standard      
           
(1) including minority interests          

Slide 12

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PRESENTATION

RESULTS OVERVIEW Slide 1
       
CONSOLIDATED RESULTS Slide 4
       
CREDIT SUISSE FINANCIAL SERVICES    
       
CREDIT SUISSE FIRST BOSTON Slide 22
       
       
       
       
       
ADDITIONAL INFORMATION Slide 29
       
       
       
       
       
DISCLAIMER Slide 42

Slide 13

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CREDIT SUISSE FINANCIAL SERVICES  
OVERVIEW (1/2)
Results   Third quarter net profit of CHF 1.8 bn vs a net profit of CHF 851 m in Q2/03
   
       
  Winterthur’s Q3/03 results include
       
    an after-tax gain from divestitures of CHF 1.6 bn, or CHF 1.3 bn
      net of related provisions
       
    additionally: provisions of CHF 383 m after tax related to its
      current and former international business portfolio
       
  YTD 2003 net profit of CHF 3.3 bn, vs a loss of CHF 0.9 bn in the first nine months of 2002
   
         
Highlights
banking
segments
  Quarterly operating income slightly improved, although the third quarter usually shows seasonal weakness
   
       
  Results clearly reflect the impact of efficieny measures taken (YTD costs down CHF 356 m or 8% vs. 9M/02)
   
       
  Lowest cost/income ratio in the past seven quarters
       
  Private Banking net new assets more than doubled to CHF 8.4 bn in Q3/03
   

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CREDIT SUISSE FINANCIAL SERVICES    
OVERVIEW (2/2)
   
Highlights
insurance
segments
  Significantly improved investment results 9M/03  
  (Life & Pensions up CHF 2.7 bn; Insurance up CHF 1.0 bn)
     
Steady progress in the underlying performance vs 9M/02 due to
     
  tariff increases, selective business renewals  

   
    lower administration costs (in total down by CHF 315 m or 12%)
     
Finalized sales of Churchill (UK), Winterthur Italy and
  Republic (US)
     
  In isolation, these divestitures increased Winterthur Group’s
    EU solvency surplus capital by approximately CHF 3.5 bn
 
 
 
 
 

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WINTERTHUR SEGMENT PROFITS

  in CHF m   Non-Life   Life   Total
                   
   Segment profit Q3, including   991     126     1,117  
                   
      after-tax gains from divestitures,                  
      net of related provisions (1)   1,268     57     1,325  
                   
      additional provisions after tax (2)   (383 )       (383 )
                   
         of which recognized in claims   (117 )       (117 )
   
   
   
   
   
   
(1)   Churchill (UK), Winterthur Italy, Republic (US)
(2)   certain provisions related to Winterthur’s current and former international business portfolio
   

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PRIVATE BANKING

Segment result









Gross                
margin 128   125   124   125  
(bp)                


















C/I 59.1   55.1   61.5   59.1  
ratio (%)                


















Net new assets              
(CHF bn) 3.8   8.4   18.2   13.7  









  Q2   Q3   2002   2003  
 


 


 
  2003   9 months  
Key profit & loss items
                 
      vs       vs  
in CHF m Q3/03   Q2/03   9M/03   9M/02  









Operating income 1,571   3%   4,489   (5% )


















Operating expenses 819   (4% ) 2,501   (8% )











   
Operating income up 3% vs Q2/03, gross margin
  down 3 bp (to 125 bp) vs Q2/03
   
Operating expenses 4% below Q2/03, in line with
  headcount development
   
Improved cost/income ratio of 55.1%, lowest ratio
  in the past six quarters
   
Net new assets more than doubled to CHF 8.4 bn
  in Q3/03, higher AuM base

 


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CORPORATE & RETAIL BANKING

Segment result
 
Key profit & loss items
 
          vs       vs  
 in CHF m  
Q3/03
  Q2/03   9M/03   9M/02  










                   
 Operating income   789   (2 %) 2,346   (3% )




















 Operating expenses   483   (4 %) 1,481   (9% )




















   Provisions (1)   65   (8 %) 213   (9% )










 Net interest
 margin(bp)
212
215
 
214
213
     
Stable underlying operating income, net interest
margin up 3 bp vs Q2/03






         






         
 Cost/income
 
 
 
 
 
     
Operating expenses 4% below Q2/03, in line with
 ratio (%)
65.8
64.4
 
70.7
66.3
        headcount development






         
 ROE (%)
12.9
13.6
 
9.5
12.2
     
Improved cost/income ratio of 64.4%, lowest ratio
in the past seven quarters






         
 
Q2
Q3
 
2002
2003
     
Further reduced impaired loans
 
 
         
 
2003
 
9 months
     
(1)
valuation adjustments, provisions and losses (provisions based on expected credit losses derived from statistical model)

 
 
Slide 18

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LIFE & PENSIONS

Segment result
 
Key profit & loss items
 
   
 
vs
 
  in CHF m
9M/03
 
9M/02
 
 




  Gross premiums written
13,277
 
(10%
)
 




 




  Benefits & claims (1)
(14,487
)
(10%
)
 




 




  Policy acquisition costs
(545
)
(2%
)
 




 




  Administration costs
(862
)
(18%
)
 




 




  Investment income (2)
3,821
 
246%
 
 










     
Expense
ratio (%)
11.5
17.1
10.9
10.6 
  Segment result of CHF 126 m including after-tax
gain from divestitures of CHF 57M






     
Return on
invested
5.1
5.0
1.5
5.0 
  Premiums down 5.0% (organic) vs 9M/02 due to
selective underwriting
assets (%)
     






 
Administration costs down 18% vs 9M/02
  Q2 Q3   2002
2003 
     
 
 
 
Q3/03 acquisition costs and expense ratio
 
2003
 
9 months
    impacted by DAC unlocking of CHF 201 m
(1)  death and other benefits incurred & change in provision for     (segment result impact of CHF 75 m)
      future policyholder benefits      
(2)  excluding separate account business      
 
 

 
 
Slide 19

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INSURANCE

Segment result
 
Key profit & loss items
 
                  vs  
                   
 in CHF m  
      9M/03   9M/02  










                   
 Net premiums earned        11,876   2%  
                   
 Claims & annuities           (8,689 ) 0%  
                   
 Policy acquisition costs           (2,018 ) 7%  
                   
 Administration costs           (1,355 ) (8% )
                   
 Investment income           952  










                     
                  Segment result of CHF 991 m including
                       
 Combined                   an after-tax gain from divestitures of CHF 1.6 bn, or CHF 1.3 bn net of related provisions
 ratio (%)
100.5
103.6
 
103.5
 
101.6
     





 
         





 

      additional provisions of CHF 383 m after tax
 Return on                    
 Invested
 
 
 
 
 
 
   
Premiums up 8.1% (organic) vs 9M/02, largely driven by tariff increases
 assets (%)
4.0
3.9
 
(0.3
)
3.8
         





 

    Administration costs down 8% vs 9M/02
 
Q2
Q3
 
2002
 
2003
   
   
 
 
    Q3/03 reported combined ratio of 103.6% includes CHF 117 m additional provisions (corresponding to 3.1 ppt combined ratio)   
 
2003
 
9 months
     

 
 
Slide 20

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CREDIT SUISSE FINANCIAL SERVICES
OUTLOOK

    CSFS expects a good overall result in 2003:
         
      Overall: - Efficiency improvements
         
         
      Banking: - Higher AuM base
         
        - Stable credit trend
Outlook        
for 2003       - Seasonally higher costs in fourth quarter
         
      Winterthur: - Improved technical results
         
        - No contribution from divested businesses
          going forward
       
    Life & Pensions remains exposed to volatility of the capital markets

 
 
Slide 21

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PRESENTATION

RESULTS OVERVIEW Slide 1
       
CONSOLIDATED RESULTS Slide 4
       
CREDIT SUISSE FINANCIAL SERVICES Slide 13
       
CREDIT SUISSE FIRST BOSTON    
       
       
ADDITIONAL INFORMATION Slide 29
       
       
DISCLAIMER Slide 42
       
       

 
 
Slide 22

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CREDIT SUISSE FIRST BOSTON
OVERVIEW

    Net operating profit(1) of USD 358 m, down 13% from USD 412 m
         
      Net profit down 21% to USD 224 m
       
    Operating income of USD 2.4 bn, down 22% primarily as
      conservative risk positioning dampened fixed income trading results
Results
Q3/03
vs
Q2/03
       
Operating expenses reduced by 21% to USD 1.8 bn due to
  lower compensation accruals
     
  Compensation/revenue ratio(2) reduced to 48.5% from 52.2% due
        to positive net impact of USD 90 m from change in vesting of stock
        awards and related incremental incentive compensation accruals
    Pre-tax operating margin(2) comparable at 17.4%
       
    Return on average allocated capital(2) of 16.9% vs 18.0%
       
    Cost containment continues to be a key goal
       
Highlights   Credit provisions continue to be at historically low levels
     
  Amortization of retention payments substantially completed
     
     
   
(1)   excluding amortization of acquired intangible assets and goodwill, net of tax
(2)   excluding certain acquisition-related costs not allocated to the segments and reflecting certain other reclassifications

 
 
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CREDIT SUISSE FIRST BOSTON
KEY FINANCIAL RESULTS

in USD m Q3/03   Q2/03     9M/03   9M/02  
   Operating income 2,422   3,103     8,363   9,233  
      pro forma excluding Pershing       8,348   8,583  
   Operating expenses 1,792   2,266     6,167   7,236  
      pro forma excluding Pershing         6,730  
   Valuation adjustments, provisions and losses 80   49     257   1,022  





 



   Net operating profit (1) 358   412     1,045   129  
      pro forma excluding Pershing       1,030   57  





 



   Operating ROE (2) 16.9 % 18.0 %   15.5 % 1.9 %
   Operating pre-tax margin (2) 17.4 % 18.1 %   16.1 % 0.4 %
   Personnel expenses/operating income (2) 48.5 % 52.2 %   51.1 % 54.6 %
   Number of employees (3) 18,195   18,137            
   
(1) excluding amortization of acquired intangible assets and goodwill, net of tax
(2) excluding certain acquisition-related costs not allocated to the segments and reflecting certain other reclassifications
(3) full-time equivalents

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INSTITUTIONAL SECURITIES
OVERVIEW

Segment result   Key profit & loss items
          vs       vs  
  in USD m   Q3/03   Q2/03   9M/03   9M/02  
 









  Operating income   2,135   (24 %) 7,515   (2 %)
 









  Personnel expenses   1,016   (31 %) 3,829   (11 %)
 









  Other operating exp.   542   (5 %) 1,665   (4 %)
 









  Provisions (3)   80   43 % 248   (75 %)
 










Value-at-Risk (1-day, 99%) in USD m   Operating income lower across Fixed Income
Average 43.7 39.4   49.2 64.2 37.0      







  Positive expense trends
NPL (1) 1.6 2.6   2.2 1.7 1.6        
(USD bn)                 change in vesting of stock awards







       
Allowance/ 142 102   103 124 129   Continued favorable credit trends
NPL (%)(2)                    



 


  Leading franchise in leveraged finance
  Q3 Q4   Q1 Q2 Q3        
 

 


  VaR decreased on reduced interest rate/mortgage exposure,
  2002   2003     updated models

(1)   non-performing loans
(2)  ratio of valuation allowances to non-performing loans
(3) valuation adjustments, provisions and losses
   

Slide 25

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INSTITUTIONAL SECURITIES
OPERATING INCOME

41% decline, as the residential and commercial mortgages
and the interest rate businesses were adversely impacted

by lower volumes, fewer securitizations, seasonal influences

and a lower risk profile
 
 
   
Strong in high yield but lower than record-setting Q2/03
   
   
   
Down 8%, but cash trading activities improved in
all regions
   
Results generated from derivatives activities, particularly
related to convertible securities, lower than the results
recorded in previous quarter
   
   
   
11% decrease, driven by less significant private equity
investment sales
   
Mergers and acquisitions fee income increased, while
industry dollar volume of completed deals remains

comparable to previous quarter
 
 


Slide 26

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CSFB FINANCIAL SERVICES
OVERVIEW


 Net new assets (USD bn)
 CSAM (7.8 ) (5.9 ) (3.8 ) (1.3 ) (4.0 )
 PCS 0.1   1.8   1.0   (1.2 ) (1.1 )
 
 
 
 
 

   Total (7.7 ) (4.1 ) (2.8 ) (2.5 ) (5.1 )






















 AuM
 (USD bn)
333   347   339   361   364  











  Q3   Q4   Q1   Q2   Q3  
 


 




 
  2002   2003  
Key profit & loss items
                 
      vs       vs  
 in USD m Q3/03   Q2/03   9M/03   9M/02  









 Operating income 287   3 % 848   (45 %)
    pro forma excl. Pershing     832   (5 %)









                 









 Operating expenses 234   4 % 673   (43 %)
    pro forma excl. Pershing     673   (2 %)









   
CSAM operating income and assets under management comparable to Q2/03
   
Alternative investment initiative launched by CSAM in the third quarter of 2003
   
Comparability of results impacted by sale of Pershing on May 1, 2003

   
(1) excluding certain acquisition-related costs  


Slide 27

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CREDIT SUISSE FIRST BOSTON
OUTLOOK

Outlook
for 2003
  Outlook remains optimistic, despite seasonally lower revenues expected for the fourth quarter
       
    Progress towards sustained profitability
       
    Continued focus on client needs
       
  Core businesses remain challenging, with many of our markets operating at historically low levels
       
  While making continued progress, profitability still not satisfactory

 



Slide 28

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PRESENTATION    
       
RESULTS OVERVIEW Slide 1
       
CONSOLIDATED RESULTS Slide 4
       
CREDIT SUISSE FINANCIAL SERVICES Slide 13
       
CREDIT SUISSE FIRST BOSTON Slide 22
       
       
       
ADDITIONAL INFORMATION    
       
       
       
DISCLAIMER Slide 42

 



Slide 29

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ADDITIONAL INFORMATION
INDEX

Winterthur    
     
- Additional information on divestitures at Winterthur   (Slides 31 to 32)
- Investment result general account   (Slide 33)
- Investment portfolio - asset allocation   (Slide 34)
- Equity base development   (Slide 35)
     
     
Credit Suisse Private Banking    
     
- Development of gross margin   (Slide 36)
- AuM by product and currency   (Slide 37)
     
     
Credit Suisse First Boston    
     
- Operating income detail Investment Banking   (Slide 38)
- "Legacy" assets   (Slides 39 to 40)
- Counterparty exposure by industry   (Slide 41)

 


 
 
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ADDITIONAL INFORMATION ON    
DIVESTITURES AT WINTERTHUR (1/2 )
             
    Non-life     Life  
    2002   2003     2002   2003  
in CHF m       (9 months*)       (9 months)  
                     
   Gross premiums written   7,624   5,228     1,158   692  
                     
   Net premiums earned   5,885   4,455     1,151   688  
                     
   Segment result   177   54     (20 ) 47  
                     
   Technical reserves   8,606   9,429     4,372   5,046  
                     
   AuM   7,907   8,803     4,251   4,933  
                     
   FTE   9,524   10,353     129   122  

 

* Churchill (UK) and Republic (US) 8 months, Winterthur Italy 9 months


 
 
Slide 31

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ADDITIONAL INFORMATION ON    
DIVESTITURES AT WINTERTHUR (2/2 )
                   
in CHF m   Non-Life     Life     Total  
                   
   Sales proceeds (1)   4,376     434     4,810  
                   
   ./. Book value   (2,575 )   (369 )   (2,944 )
                   
   ./. Goodwill   (90 )         (90 )
                   
   ./. Tax impact   (135 )   (8 )   (143 )
                   
   Gross gains on sales, after tax   1,576     57     1,633  
                   
   ./. Sales related provisions                  
           booked as other expenses   (275 )         (275 )
                   
   ./. Sales related provisions                  
           booked as claims (technical)   (97 )         (97 )
                   
   Tax impact   64           64  
                   
   After-tax gains on sales,                  
   net of related provisions   1,268     57     1,325  

(1) Churchill (UK), Winterthur Italy, Republic (US)


 
 
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WINTERTHUR GROUP
INVESTMENT RESULT GENERAL ACCOUNT

  in CHF m                            
                         
      2002(1)           2003(1)      
 
 
 
  Q1   Q2   Q3   Q4   Q1   Q2   Q3  

                             
   Current income 1,236   1,435   1,203   1,222   1,255   1,394   1,359  
                             
   Realized gains 1,346   1,389   2,353   333   1,327   821   688  
                             
   Realized losses (647 ) (2,129 ) (1,589 ) (373 ) (633 ) (411 ) (193 )
                             
   Impairments (942 ) (857 ) (1,413 ) (675 ) (328 ) (52 ) (75 )
                             
   Other (114 ) (100 ) (135 ) (115 ) (111 ) (141 ) (127 )
                             
 Investment income (P&L) 879   (262 ) 419   392   1,510   1,611   1,652  

 

Note: Q1 to Q3 2002 reclassified to the current presentation format, including real estate for own use, interest paid from current income and realized gains/losses

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WINTERTHUR GROUP
INVESTMENT PORTFOLIO – ASSET ALLOCATION

Response to equity market developments
       
   

Decrease in equity securities from CHF 7.0 bn (5.3%) to CHF 5.6 bn (4.6%) in Q3/03

       
  Total investment portfolio reduced by CHF 13.7 bn through divestitures in Q3/03

(1)   all investments incl. real estate at market value; excluding separate account (i.e. unit-linked) business
(2)   reduced by CHF 4.5 bn vs reported figures due to trade accounting on purchased bonds and maturing money market transactions (settlement date)

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WINTERTHUR GROUP
EQUITY BASE DEVELOPMENT IN 2003

Significant increase of CHF 1.4 billion in shareholders' equity in 9M/03

 

(1) net of tax and policyholder participation

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PRIVATE BANKING
DEVELOPMENT OF GROSS MARGIN

 


 
 
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PRIVATE BANKING
AUM BY PRODUCT AND CURRENCY

 

 


 
 
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CREDIT SUISSE FIRST BOSTON
OPERATING INCOME DETAIL INVESTMENT BANKING

Investment Banking Division (1)  
  2002   2003  
 
 
 
 in USD m Q1   Q2   Q3   Q4   Q1   Q2   Q3  


 
 
 
 
 
 
 
                             
 Private equity 133   186   141   397   77   111   72  
                             
 Debt capital markets 100   94   28   64   85   95   68  
                             
 Equity capital markets 117   153   74   92   29   119   74  
                             
 Advisory 344   444   280   357   296   283   291  
                             
 Other 47   30   33   26   58   36   67  
 
 
 
 
 
 
 
 
      Total 741   907   556   936   545   644   572  















Note: results reflect the impact of various divisional sharing arrangements regarding operating income amongst the divisions

 

 


 
 
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CREDIT SUISSE FIRST BOSTON
"LEGACY" ASSETS
 
(1/2)
       
  in USD m   "Legacy" assets net exposure
  12/1999   11,925 8,964   Real estate      
           
1,975   Distressed      
           
986   Private equity (1,228 unfunded commitment)      
                     
  12/2000   8,026 4,805   Real estate      
           
1,498   Distressed      
           
1,724   Private equity (984 unfunded commitment)      
                     
  12/2001   5,357 2,925   Real estate      
           
1,107   Distressed      
           
1,325   Private equity (857 unfunded commitment)      
                     
        1,535   Real estate      
                   
  12/2002   3,031 512   Distressed      
                   
        984   Private equity (785 unfunded commitment)      
                     
        1,052   Real estate   Note:
                Unfunded commitments excluded for private equity
  06/2003   2,498 539   Distressed      
                Unfunded commitments included for real estate
        907   Private equity (863 unfunded commitment)      
                  Private equity unfunded commitments include employee commitments
                   
        978   Real estate      
                   
  09/2003   2,438 532   Distressed      
                   
        928   Private equity (778 unfunded commitment)      
                     

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CREDIT SUISSE FIRST BOSTON
"LEGACY" ASSETS
 
(2/2 )
 
Charges related to "legacy" assets
in CSFB's income statement
in USD m Real
estate
  Distressed
portfolio
  Private
equity
  Total  









   Q3/03                
      Operating income 8   20   45   73  
                 
      Provisions        
                 
   Total charges 8   20   45   73  


















                 
   9M/03                
                 
      Operating income 14   (9 ) 17   23  
                 
      Provisions (1 )     (1 )
                 
   Total charges 13   (9 ) 17   22  









 

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CREDIT SUISSE FIRST BOSTON
COUNTERPARTY EXPOSURE BY INDUSTRY

Selected CSFB exposure as of September 30, 2003 (1)
   in USD m Current
exposure
  Undrawn
commitments
  Reserves   Net
exposure
 









                 
 Telecommunications 1,347   1,717   (321 ) 2,743  
 Telecommunications                
 manufacturers 39   201   (14 ) 226  
 Merchant energy 789   130   (151 ) 768  
                 
 Airlines 625   39   (202 ) 462  









                 
Note:
(1) Current exposure equals committed amount (includes only drawn commitments) for lending plus mark-to-market for counterparty trading less credit protection.

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DISCLAIMER

  Cautionary Statement regarding forward-looking information
  This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
   
  Forward-looking statements involve inherent risks and uncertainties, and we might not be able to achieve the predictions, forecasts, projections and other outcomes we describe or imply in forward-looking statements. A number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions we express in these forward-looking statements, including those we identify in "Risk Factors" in our Annual Report on Form 20-F for the fiscal year ended December 31, 2002 filed with the US Securities and Exchange Commission, and in other public filings and press releases.
   
  We do not intend to update these forward-looking statements except as may be required by applicable laws.
   
  Quarterly Report 2003/Q3 — Non-GAAP Financial Information
  For additional information with respect to our results for the third quarter, we refer you to our “Quarterly Report 2003/Q3”, posted on our website at www.credit-suisse.com. This presentation may contain non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under Swiss generally accepted accounting principles (as well other related information), is also included in our Quarterly Report 2003/Q3.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  CREDIT SUISSE GROUP
(Registrant)
 
       
Date November 4, 2003 By: /s/ David Frick  
    (Signature)*  
*Print the name and title of the signing officer under his signature   Member of the Executive Board  
    /s/ Karin Rhomberg Hug  
    Managing Director