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, 2004

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

For the month of November 4, 2004

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
www.credit-suisse.com

Telephone   +41 1 333 88 44
Telefax        +41 1 333 88 77
media.relations@credit-suisse.com

 

Credit Suisse Group Reports Net Income of CHF 4.7 Billion for
the First Nine Months of 2004, with Net Income of CHF 1.4 Billion

for the Third Quarter of 2004
 
Banking Businesses Deliver Mixed Third Quarter 2004 Results, as
Reduced Levels of Market and Client Activity Offset Good Performance in Many Areas
 
Winterthur Reaffirms Core Earnings Strength, Achieving Solid Results with
Healthy Premium Growth for the First Nine Months of 2004
 
Financial Highlights                    










 
in CHF million 9 mths   Change in %   3Q2004   Change in %   Change in %  
  2004   vs 9 mths 2003       vs 2Q2004   vs 3Q2003  










 
Net revenues 41,817   8   11,753   (13)   0  










 
Total operating expenses 18,508   (7)   5,939   (5)   (4)  










 
Net income 4,669   -   1,351   (7)   414  










 
Return on equity 17.7%   -   15.3%   -   -  










 
Basic earnings per share (in CHF) 3.98   -   1.16   -   -  










 
BIS tier 1 ratio 11.8%   -   -   -   -  










 
                     
 

Zurich, November 4, 2004 – Credit Suisse Group today reported net income of CHF 1,351 million for the third quarter of 2004, compared to net income of CHF 1,457 million in the previous quarter. For the first nine months of 2004, the Group recorded net income of CHF 4,669 million. Private Banking reported seasonally lower third quarter 2004 results versus the second quarter, while Corporate & Retail Banking continued to deliver a solid performance; both segments recorded good results for the first nine months of the year. Credit Suisse First Boston reported improved fixed income trading and investment banking advisory revenues but lower equity trading and underwriting revenues and lower private equity gains compared to the second quarter of 2004. In the insurance business, both Life & Pensions and Non-Life produced solid results for the first nine months of 2004. Third quarter 2004 net income at Credit Suisse First Boston and Winterthur included favorable tax impacts totaling CHF 257 million. Credit Suisse Group’s return on equity was 15.3% in the third quarter and 17.7% in the first nine months of 2004.

Page 1 of 7


Oswald J. Grübel, CEO of Credit Suisse Group, stated, “Overall, Credit Suisse Group reported solid net income for the first nine months of the year, while it experienced a mixed third quarter against a backdrop of subdued market sentiment, significantly reduced client activity and normal seasonal effects.”

Turning to the individual businesses, he added, “In Private Banking, we reported seasonally lower results but underscored our ability to produce solid earnings. Corporate & Retail Banking confirmed its importance as a stable source of earnings, again delivering solid results. Credit Suisse First Boston achieved improvements in certain areas − and we are nearing completion of a comprehensive strategic review of its business and expect to announce our conclusions shortly. Our insurance business, Winterthur, delivered a very positive performance, reaffirming its core earnings strength in the first nine months of the year.”

He concluded, “We have the people, the capital strength and the necessary expertise to further enhance our existing platform and to realize our full potential. With our well-known track record in innovation, Credit Suisse Group is well positioned to close the gaps in performance and drive the business forward, while focusing on providing clients with products and services that create value in a less predictable market environment.”

Credit Suisse business unit

Credit Suisse Results                      













 
in CHF million   9 mths   Change in %   3Q2004   Change in %   Change in %  
        2004   vs 9 mths 2003       vs 2Q2004   vs 3Q2003  













 
Private Banking   Net revenues   5,453   16   1,644   (12)   (4)  
segment   Total op. expenses   3,150   8   994   (8)   (3)  
    Net income   1,857   42   511   (23)   0  













 
Corporate &   Net revenues   2,545   3   808   (15)   (11)  
Retail Banking   Total op. expenses   1,574   (2)   527   (5)   (3)  
segment   Net income   644   20   199   (22)   (9)  













 
Credit Suisse   Net revenues   7,998   12   2,452   (13)   (6)  
business unit   Total op. expenses   4,724   4   1,521   (7)   (3)  
    Net income   2,501   36   710   (23)   (2)  













 
                           

Private Banking reported net income of CHF 511 million in the third quarter of 2004, down 23% compared to the second quarter of 2004, primarily reflecting a decrease in transaction-related income which offset further efficiency gains. The gross margin declined to 122 basis points in the third quarter of 2004, as the transaction-driven margin decreased in line with client activity, while the asset-based margin remained stable at 81 basis points. For the first nine months of 2004, Private Banking recorded net income of CHF 1,857 million and its gross margin stood at 136 basis points.

Page 2 of 7


Corporate & Retail Banking posted solid net income of CHF 199 million in the third quarter of 2004, down 22% versus the very strong previous quarter, reflecting the impact of lower revenues despite a reduction in costs. Credit provisions were reduced by a further CHF 40 million compared to the second quarter of 2004. For the first nine months of the year, Corporate & Retail Banking achieved net income of CHF 644 million, and its return on average allocated capital was 17.0%.

Credit Suisse First Boston business unit

CSFB Results                      













 
in CHF million   9 mths   Change in %   3Q2004   Change in %   Change in %  
        2004   vs 9 mths 2003       vs 2Q2004   vs 3Q2003  













 
Institutional   Net revenues   10,214   8   3,083   (2)   18  
Securities   Total op. expenses   8,736   9   2,780   (3)   18  
segment   Net income   1,044   31   292   126   125  













 
Wealth & Asset   Net revenues   3,174   56   809   (46)   14  
Management   Total op. expenses   1,864   2   604   (5)   (3)  
segment   Net income   467   126   30   (90)   (59)  













 
CSFB   Net revenues   13,388   16   3,892   (16)   17  
business unit   Total op. expenses   10,600   8   3,384   (3)   14  
    Net income   1,511   51   322   (25)   59  













 
                           

Institutional Securities reported net income of CHF 292 million in the third quarter of 2004, including the release of tax contingency accruals totaling CHF 126 million following the favorable resolution of matters with the local tax authorities. Performance in the third quarter of 2004 reflected improved fixed income trading and investment banking advisory revenues, and lower levels of equity trading and underwriting revenues, versus the second quarter of 2004. Total operating expenses decreased 3% compared to the second quarter of 2004, with compensation and benefits down 13%. For the first nine months of the year, Institutional Securities reported net income of CHF 1,044 million.

Wealth & Asset Management reported net income of CHF 30 million in the third quarter of 2004, down from CHF 301 million in the second quarter of 2004, which included significant private equity investment-related gains. Third quarter net revenues decreased 46% compared to the previous quarter, reflecting a subdued period in the harvesting cycle of private equity investments and lower minority interest-related revenue. Total operating expenses were down 5% compared to the second quarter of 2004, reflecting a reduction in other expenses due to lower commission expense. For the first nine months of the year, Wealth & Asset Management recorded net income of CHF 467 million.

Page 3 of 7


Winterthur business unit

Winterthur Results                      













 
in CHF million   9 mths   Change in %   3Q2004   Change in %   Change in %  
        2004   vs 9 mths 2003       vs 2Q2004   vs 3Q2003  













 
Life & Pensions   Net revenues   11,970   (3)   2,717   (16)   (8)  
segment   Total op. expenses   1,366   (54)   433   (10)   (17)  
    Net income   370   -   164   145   -  













 
Non-Life   Net revenues   8,980   8   2,869   (4)   0  
segment   Total op. expenses   2,228   (18)   712   (9)   (42)  
    Net income   383   -   198   141   -  













 
Winterthur   Net revenues   20,950   2   5,586   (10)   (4)  
business unit   Total op. expenses   3,594   (37)   1,145   (10)   (34)  
    Net income   753   -   362   143   -  













 
                           

Life & Pensions reported third quarter 2004 net income of CHF 164 million, which included an increase in the valuation of deferred tax assets related to tax loss carry-forwards totaling CHF 72 million. For the first nine months of the year, Life & Pensions reported net income of CHF 370 million, compared to a net loss of CHF 1,859 million in the first nine months of 2003.
Total business volume, which includes deposits from policyholders and gross premiums written, increased 1.9% compared to the first nine months of 2003. Administration expenses declined 8% compared to the same period, and the expense ratio improved by 0.6 percentage points to 9.2%. Net investment income rose 5% to CHF 3,306 million, and the return on investments allocated to traditional life policies was 4.7%, compared to 4.6% in the same period of 2003.

Non-Life recorded third quarter 2004 net income of CHF 198 million, which included an increase in the valuation of deferred tax assets related to tax loss carry-forwards totaling CHF 59 million. For the first nine months of the year, Non-Life reported net income of CHF 383 million, compared to a net loss of CHF 429 million in the first nine months of 2003. Net premiums earned rose 5% compared to the first nine months of 2003, reflecting both tariff and volume increases across most markets. The combined ratio improved 2.8 percentage points to 99.7%, the claims ratio decreased by 1.2 percentage points and the segment’s expense ratio fell 1.6 percentage points compared to the first nine months of 2003. Net investment income rose by CHF 197 million, and the total investment return was 4.7%, compared to 4.0% in the same period of last year.

Page 4 of 7


Overall, the Winterthur business unit reported solid net income of CHF 753 million for the first nine months of 2004. This result includes a number of charges relating to restructuring, discontinued businesses and an initial provision for the mandatory participation in profits to policyholders prescribed by the Swiss government, all of which occurred in the first half of 2004. In addition to its results, Winterthur today announced that it is to sell its Canadian subsidiary L'Unique Compagnie d'Assurances Générales to La Capitale Assurances Générales Inc. for a consideration of CAD 48 million. Following the divestiture, Winterthur will continue to have a presence in Canada via its other subsidiary, The Citadel.

Net New Assets

Net New Assets and Assets under Management (AuM) for the third quarter 2004  

 
in CHF billion Net New Assets   Total AuM   Change in AuM in  
          % vs 30.6.04  






 
             
Private Banking 3.8   544.3   1.3  
Corporate & Retail Banking 0.2   52.8   (0.9)  






 
Institutional Securities 0.2   16.5   1.2  
Wealth & Asset Management 0.1   477.4   (0.1)  






 
Life & Pensions 0.4   116.4   (0.9)  
Non-Life n/ a   24.8   (2.0)  






 
Credit Suisse Group 4.7   1,232.2   0.4  






 
n/a: not applicable            

Private Banking reported CHF 3.8 billion of net new assets for the third quarter of 2004, with healthy inflows particularly from key markets in Europe and Asia. With an annualized year-to-date growth rate of 5.9%, Private Banking continued to exceed its mid-term target of 5%. Wealth & Asset Management recorded net new assets of CHF 0.1 billion, as inflows of CHF 1.2 billion in the Alternative Capital Division and of CHF 1.0 billion at Credit Suisse Asset Management were offset by CHF 2.1 billion of outflows in Private Client Services. Overall, Credit Suisse Group generated net new assets of CHF 4.7 billion for the third quarter of 2004. Its total assets under management stood at CHF 1,232.2 billion as of September 30, 2004, an increase of 0.4% compared to June 30, 2004.

Outlook
Credit Suisse Group is confident it can achieve a good result for the full year 2004. The Group does not anticipate that the overall market for financial services will grow significantly over the next few quarters. Consequently, it expects that earnings growth can be achieved primarily through tight cost management and increased market share. The Group’s new integrated management structure will further enhance cooperation throughout the company and allow clients to be served across multiple business lines. This should pave the way for the more efficient allocation of capital and other resources, which will be deployed with a view to expanding Credit Suisse Group’s key businesses.

Page 5 of 7


Enquiries

Credit Suisse Group, Media Relations        Telephone     +41 1 333 88 44

Credit Suisse Group, Investor Relations      Telephone     +41 1 333 31 69

For additional information on Credit Suisse Group’s results for the third quarter of 2004, please refer to the Group’s Quarterly Report Q3 2004, as well as the Group’s slide presentation for analysts and the press, posted on the Internet at: www.credit-suisse.com/results.

Credit Suisse Group
Credit Suisse Group is a leading global financial services company headquartered in Zurich. It provides private clients and small and medium-sized companies with private banking and financial advisory services, and pension and insurance solutions from Winterthur. In the area of investment banking, it 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 in the form of American Depositary Shares (CSR) in New York. The Group employs around 60,000 staff worldwide. As of September 30, 2004, it reported assets under management of CHF 1,232.2 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 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.

Page 6 of 7


Back to Contents

Presentation of Credit Suisse Group’s Third Quarter 2004 Results
via Audio Webcast and Telephone Conference

Date Thursday, November 4, 2004
   
Time 10.00 CET / 09.00 GMT / 04.00 EST
   
Speaker Renato Fassbind, Chief Financial Officer of Credit Suisse Group
   
  The presentation will be held in English.
   
Audio 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 questions via the telephone conference following the presentation.
   
Playback An audio playback facility will be available approximately one hour after the event. Please dial:
  Europe:   +41 91 612 4330
  UK:         +44 207 866 4300
  USA:       +1 412 858 0088
   
  Conference ID: 051#
   
Note We recommend that you dial in approximately ten minutes before the start of the presentation for the audio webcast and telephone conference. Further instructions and technical test functions are now available on our website.
   

Page 7 of 7











Letter to Shareholders Q3 2004















Dear Shareholders,

Credit Suisse Group recorded net income of CHF 1,351 million in the third quarter of 2004, versus net income of CHF 1,457 million in the second quarter of 2004. In the first nine months of 2004, the Group recorded net income of CHF 4,669 million. All banking segments felt the effects of low levels of client activity as well as significant market uncertainties caused by geopolitical issues and higher energy prices, while the insurance segments demonstrated good progress towards continued profitability.


Credit Suisse Group recorded net income of CHF 1,351 million in the third quarter of 2004. At Credit Suisse, results were lower at Private Banking in line with seasonality and the challenging environment, and solid at Corporate & Retail Banking. Credit Suisse First Boston showed improvements in many areas, from a low basis in the second quarter of 2004. Winterthur reported good quarterly net income that adds up to a very good year-to-date result showing a firm trend towards continued earnings generation.

Net income of CHF 511 million in Private Banking reflects the expected seasonality and low client activity worsened by weak markets, which negatively impacted transaction-based commissions and trading income. Asset-based revenues remained strong. Efficiency gains were solid, especially in light of the expansion of the distribution force, particularly in Private Banking’s international operations. Corporate & Retail Banking was less affected by the market environment, reporting net income of CHF 199 million in the third quarter. Once again, both Corporate & Retail Banking and Private Banking underscored their ability to produce solid revenues.

Despite a weak market environment, Institutional Securities performed reasonably well – particularly in fixed income trading, recording net income of CHF 292 million. However, performance was constrained by weakness in the business mix, which we will continue to actively address through sharpened focus and disciplined risk-taking. Wealth & Asset Management reported net income of CHF 30 million, down from the second quarter reflecting a subdued period in the harvesting cycle of private equity investments. Credit Suisse First Boston is reviewing its overall strategic direction with the aim of closing competitive gaps in the medium term.

Winterthur achieved net income of CHF 362 million in the third quarter of 2004, demonstrating a firm trend towards continued earnings generation. During 2004, both Life & Pensions and Non-Life recorded satisfactory growth, made progress towards reducing administration expenses, and recorded strong investment income. Winterthur continues to focus on profitability and operational efficiency.

Credit Suisse Group’s return on equity was 15.3% in the third quarter and 17.7% in the first nine months of 2004.

Net new assets
Credit Suisse Group generated net new assets of CHF 4.7 billion for the third quarter of 2004. Private Banking contributed CHF 3.8 billion of net new assets, with healthy inflows particularly from key markets in Europe and Asia . With an annualized year-to-date growth rate of 5.9%, Private Banking continued to exceed its mid-term target of 5%. Wealth & Asset Management recorded net new assets of CHF 0.1 billion, as inflows of CHF 1.2 billion in the Alternative Capital Division and of CHF 1.0 billion at Credit Suisse Asset Management were offset by CHF 2.1 billion of outflows in Private Client Services.

Equity capital
Credit Suisse Group’s consolidated BIS tier 1 ratio was 11.8% as of September 30, 2004, up from 11.6% as of June 30, 2004. This increase was attributable to continued earnings generation combined with stable risk-weighted assets. The Group’s shareholders’ equity as of September 30, 2004 increased to CHF 36.1 billion from CHF 35.3 billion as of June 30, 2004.

Private Banking
Private Banking reported net income of CHF 511 million in the third quarter of 2004, down 23% compared to the second quarter of 2004, primarily reflecting a decrease in transaction-related income which offset further efficiency gains. The gross margin declined to 122 basis points in the third quarter of 2004, as the transaction-driven margin decreased in line with client activity, while the asset-based margin remained stable at 81 basis points. For the first nine months of 2004, Private Banking recorded net income of CHF 1,857 million and its gross margin stood at 136 basis points.

Corporate & Retail Banking
Corporate & Retail Banking posted solid net income of CHF 199 million in the third quarter of 2004, down 22% versus the very strong previous quarter, reflecting the impact of lower revenues despite a reduction in costs. Credit provisions were reduced by a further CHF 40 million compared to the second quarter of 2004. For the first nine months of the year, Corporate & Retail Banking achieved net income of CHF 644 million, and its return on average allocated capital was 17.0%.

Institutional Securities
Institutional Securities reported net income of CHF 292 million in the third quarter of 2004, including the release of tax contingency accruals totaling CHF 126 million following the favorable resolution of matters with the local tax authorities. Performance in the third quarter of 2004 reflected improved fixed income trading and investment banking advisory revenues and lower levels of equity trading and underwriting revenues versus the second quarter of 2004. Total operating expenses decreased 3% compared to the second quarter of 2004, with compensation and benefits down 13%. For the first nine months of the year, Institutional Securities reported net income of CHF 1,044 million.

Wealth & Asset Management
Wealth & Asset Management reported net income of CHF 30 million in the third quarter of 2004, down from CHF 301 million in the second quarter of 2004, which included significant private equity investment-related gains. Third quarter net revenues decreased 46% compared to the previous quarter, reflecting a subdued period in the harvesting cycle of private equity investments and lower minority interest-related revenue. Total operating expenses were down 5% compared to the second quarter of 2004, reflecting a reduction in other expenses due to lower commission expense. For the first nine months of the year, Wealth & Asset Management recorded net income of CHF 467 million.

Life & Pensions
Life & Pensions reported third quarter 2004 net income of CHF 164 million, which included an increase in the valuation of deferred tax assets related to tax loss carry-forwards totaling CHF 72 million. For the first nine months of the year, Life & Pensions reported net income of CHF 370 million, compared to a net loss of CHF 1,859 million in the first nine months of 2003. Total business volume, which includes deposits from policyholders and gross premiums written, increased 1.9% compared to the first nine months of 2003. Administration expenses declined 8% compared to the same period, and the expense ratio improved by 0.6 percentage points to 9.2%. Net investment income rose 5% to CHF 3,306 million, and the return on investments allocated to traditional life policies was 4.7%, compared to 4.6% in the same period of 2003.

Non-Life
Non-Life recorded third quarter 2004 net income of CHF 198 million, which included an increase in the valuation of deferred tax assets related to tax loss carry-forwards totaling CHF 59 million. For the first nine months of the year, Non-Life reported net income of CHF 383 million, compared to a net loss of CHF 429 million in the first nine months of 2003. Net premiums earned rose 5% compared to the first nine months of 2003, reflecting both tariff and volume increases across most markets. The combined ratio improved 2.8 percentage points to 99.7%, the claims ratio decreased by 1.2 percentage points and the segment’s expense ratio fell 1.6 percentage points compared to the first nine months of 2003. Net investment income rose by CHF 197 million, and the total investment return was 4.7%, compared to 4.0% in the same period of last year.

Outlook
Credit Suisse Group is confident it can achieve a good result for the full year 2004. The Group does not anticipate that the overall market for financial services will grow significantly over the next few quarters. Consequently, it expects that earnings growth can be achieved primarily through tight cost management and increased market share. The Group’s new integrated management structure will further enhance cooperation throughout the company and allow clients to be served across multiple business lines. This should pave the way for the more efficient allocation of capital and other resources, which will be deployed with a view to expanding Credit Suisse Group’s key businesses.

Oswald J. Grübel
November 2004








Segment reporting 
 
Net revenues      
   9 months
in CHF m3Q20042Q20043Q200320042003
Private Banking1,6441,8691,7165,4534,681
Corporate & Retail Banking8089509042,5452,467
Institutional Securities 1)3,0833,1342,61910,2149,485
Wealth & Asset Management 2)8091,4997113,1742,034
Life & Pensions2,7173,2252,96711,97012,348
Non-Life2,8692,9902,8598,9808,285
Corporate Center(177)(162)(50)(519)(757)
Credit Suisse Group11,75313,50511,72641,81738,543
1) Including CHF 48 million, CHF 53 million and CHF 141 million in 3Q2004, 2Q2004 and 9 months 2004, respectively, from minority interest revenues relating to the FIN 46R consolidation.
2) Including CHF 174 million, CHF 462 million and CHF 704 million in 3Q2004, 2Q2004 and 9 months 2004, respectively, from minority interest revenues relating to the FIN 46R consolidation.



Net income      
   9 months
in CHF m3Q20042Q20043Q200320042003
Private Banking5116655101,8571,307
Corporate & Retail Banking199256218644536
Institutional Securities2921291301,044796
Wealth & Asset Management3030173467207
Life & Pensions16467(41)370(1,859)
Non-Life19882(612)383(429)
Corporate Center(43)(43)(15)(96)(572)
Credit Suisse Group1,3511,4572634,669(14)







Consolidated statements of income (unaudited) 
    ChangeChange  Change
   in % fromin % from9 monthsin % from
in CHF m3Q20042Q20043Q20032Q20043Q2003200420032003
Interest and dividend income7,6227,8967,121(3)723,25921,15110
Interest expense(4,848)(4,537)(3,950)723(14,047)(12,465)13
Net interest income2,7743,3593,171(17)(13)9,2128,6866
Commissions and fees3,3073,4183,457(3)(4)10,2889,6497
Trading revenues 931712233313003,1592,73416
Realized gains/(losses) from investment securities, net128198513(35)(75)8541,183(28)
Insurance net premiums earned4,2024,7044,549(11)(8)16,31916,618(2)
Other revenues4111,114(197)(63)1,985(327)
Total noninterest revenues8,97910,1468,555(12)532,60529,8579
Net revenues11,75313,50511,726(13)041,81738,5438
Policyholder benefits, claims and dividends4,1174,6224,386(11)(6)16,33116,3940
Provision for credit losses38133113(71)(66)205424(52)
Total benefits, claims and credit losses4,1554,7554,499(13)(8)16,53616,818(2)
Insurance underwriting, acquisition and administration expenses1,0471,1151,110(6)(6)3,2193,297(2)
Banking compensation and benefits2,8023,0872,482(9)139,3178,5169
Other expenses2,0771,9952,5594(19)5,8956,385(8)
Goodwill impairment00001,510
Restructuring charges136032(78)(59)7792(16)
Total operating expenses5,9396,2576,183(5)(4)18,50819,800(7)
Income from continuing operations before taxes, minority interests, extraordinary items and cumulative effect of accounting changes1,6592,4931,044(33)596,7731,925252
Income tax expense114442267(74)(57) 1,126 94319
Dividends on preferred securities for consolidated entities0034099
Minority interests, net of tax205548(9)(63)872(2)
Income from continuing operations before extraordinary items and cumulative effect of accounting changes1,3401,503752(11)784,775885440
Income/(loss) from discontinued operations, net of tax11(46)(477)(100)(351)(72)
Extraordinary items, net of tax00005
Cumulative effect of accounting changes, net of tax00(12)(6)(553)(99)
Net income/(loss)1,351 1,457 263 (7) 414 4,669 (14)  



       
Return on equity15.3%16.6%3.0%17.7%(0.1%)
Earnings per share in CHF       
Basic earnings per share1.161.260.223.98(0.01)
Diluted earnings per share1.151.220.233.91(0.01)



Key figures 
    ChangeChange
    in % fromin % from
in CHF m, except where indicated30.09.0430.06.0431.12.0330.06.0431.12.03
Total assets1,119,8811,131,6841,004,308(1)12
Shareholders' equity36,10035,28433,99126
Assets under management in CHF bn1,232.21,227.31,181.104
Market price per registered share in CHF 39.8544.5045.25(10)(12)
Market capitalization 44,20949,23851,149(10)(14)
Book value per share in CHF32.5431.8930.0728
BIS tier 1 ratio11.8%11.6%11.7%
BIS total capital ratio16.2%16.2%17.4%



Additional information
Additional information on the Credit Suisse Group’s third quarter 2004 results can be obtained in the Quarterly Report 3/04 and the analysts’ presentation, which are available on our website at: www.credit-suisse.com/results. The Quarterly Report (English only) can be ordered at Credit Suisse, ULLM 23, Uetlibergstrasse 231, 8070 Zurich, fax: +41 1 332 7294.

Cautionary Statement Regarding Forward-Looking Information
This document 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.




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



English

5520194











QUARTERLY REPORT 2004 Q3






Credit Suisse Group is a leading global financial services company headquartered in Zurich. It provides private clients and small and medium-sized companies with private banking and financial advisory services, and pension and insurance solutions from Winterthur. In the area of investment banking, it 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 in the form of American Depositary Shares (CSR) in New York. The Group employs around 60,000 staff worldwide.





QUARTERLY REPORT 2004
Cautionary statement regarding forward-looking information
EDITORIAL
CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q3/2004
CREDIT SUISSE GROUP
Revenues and expenses
Net new assets
Provision for credit losses
Equity capital
Outlook
Credit Suisse Group structure
RISK MANAGEMENT
Economic Risk Capital trends
Trading risks
Loan exposure
CSFB backtesting
CSFB trading revenue distribution, third quarter of 2004
CREDIT SUISSE
Private Banking
Corporate & Retail Banking
CREDIT SUISSE FIRST BOSTON
Institutional Securities
Wealth & Asset Management
WINTERTHUR
Life & Pensions
Non-Life
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | CREDIT SUISSE GROUP
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | UNAUDITED
Notes to the condensed consolidated financial statements
Basis of presentation
Share-based compensation
New accounting pronouncements
Financial instruments with off-balance sheet risk
Guarantees
Other off-balance sheet commitments
Variable interest entities
Collateralized debt obligations
Commercial paper conduits
Financial intermediation
INFORMATION FOR INVESTORS


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

Words such as "believes," "anticipates," "expects," "intends" and "plans" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable laws.

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

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



EDITORIAL



Oswald J. Grübel
Chief Executive Officer
Credit Suisse Group



Dear shareholders, clients and colleagues

The financial markets presented a number of challenges in the third quarter of 2004, with significantly reduced market volumes reflecting seasonality, historically low volatility and the absence of clear market trends. These developments – coupled with concerns about the near-term economic outlook and high energy prices – resulted in subdued market sentiment, which dampened client activity and narrowed trading opportunities.

Against this backdrop, Credit Suisse Group recorded net income of CHF 1,351 million in the third quarter of 2004. At Credit Suisse, results were lower at Private Banking in line with seasonality and the challenging environment, and solid at Corporate & Retail Banking. Credit Suisse First Boston showed improvements in many areas, from a low basis in the second quarter of 2004. Winterthur reported good quarterly net income that adds up to a very good year-to-date result showing a firm trend towards continued earnings generation.

Net income of CHF 511 million in Private Banking reflects the expected seasonality and low client activity worsened by weak markets, which negatively impacted transaction-based commissions and trading income. Asset-based revenues remained strong. Efficiency gains were solid, especially in light of the expansion of the distribution force, particularly in Private Banking’s international operations. Corporate & Retail Banking was less affected by the market environment, reporting net income of CHF 199 million in the third quarter. Once again, both Corporate & Retail Banking and Private Banking underscored their ability to produce solid revenues.

Despite a weak market environment, Institutional Securities performed reasonably well – particularly in fixed income trading, recording net income of CHF 292 million. However, performance was constrained by weakness in the business mix, which we will continue to actively address through sharpened focus and disciplined risk-taking. Wealth & Asset Management reported net income of CHF 30 million, down from the second quarter reflecting a subdued period in the harvesting cycle of private equity investments. Credit Suisse First Boston is reviewing its overall strategic direction with the aim of closing competitive gaps in the medium term.

Winterthur achieved net income of CHF 362 million in the third quarter of 2004, demonstrating a firm trend towards continued earnings generation. During 2004, both Life & Pensions and Non-Life recorded satisfactory growth, made progress towards reducing administration expenses, and recorded strong investment income. Winterthur continues to focus on profitability and operational efficiency.

Credit Suisse Group’s businesses are well-positioned to seize growth opportunities. We have the people, the capital strength and the know-how to improve our platform, as well as the determination to realize our full potential. Moreover, in view of the Group’s well-known track record in innovation, I am confident that, going forward, we can close remaining gaps while continuing to offer our clients outstanding products and services that create value in a less predictable market environment.

Oswald J. Grübel
November 2004






CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q3/2004


Credit Suisse Group financial highlights 
            Change  Change        Change 
           in % from  in % from  9 months  in % from 
in CHF m, except where indicated  3Q2004  2Q2004  3Q2003  2Q2004  3Q2003  2004  2003  2003 
Consolidated income statement                         
Net revenues  11,753  13,505  11,726  (13)  0  41,817  38,543  8 
Income from continuing operations before extraordinary items and cumulative effect of accounting changes  1,340  1,503  752  (11)  78  4,775  885  440 
Net income/(loss)  1,351  1,457  263  (7)  414  4,669  (14)   
Return on equity  15.3%  16.6%  3.0%      17.7%  (0.1%)   
Earnings per share                          
Basic earnings per share in CHF  1.16  1.26  0.22      3.98  (0.01)   
Diluted earnings per share in CHF  1.15  1.22  0.23      3.91  (0.01)   
Net new assets in CHF bn  4.7  9.1  1.4      29.4  0.3   



            Change  Change 
            in % from  in % from 
in CHF m, except where indicated  30.09.04  30.06.04  31.12.03  30.06.04  31.12.03 
Assets under management in CHF bn  1,232.2  1,227.3  1,181.1  0  4 
Consolidated balance sheet                
Total assets  1,119,881  1,131,684  1,004,308  (1)  12 
Shareholders' equity  36,100  35,284  33,991  2  6 
Consolidated BIS capital data 1)                
Risk-weighted assets   203,591  202,589  190,761     
Tier 1 ratio  11.8%  11.6%  11.7%     
Total capital ratio  16.2%  16.2%  17.4%     
Number of employees                  
Switzerland – banking segments  19,442  19,089  19,301  2  1 
Switzerland – insurance segments  6,246  6,336  6,426  (1)  (3) 
Outside Switzerland – banking segments  21,579  20,775  20,310  4  6 
Outside Switzerland – insurance segments  13,417  13,372  14,440  0  (7) 
Number of employees (full-time equivalents)  60,684  59,572  60,477  2  0 
Stock market data                 
Market price per registered share in CHF  39.85  44.50  45.25  (10)  (12) 
Market price per American Depositary Share in USD  31.94  35.81  36.33  (11)  (12) 
Market capitalization  44,209  49,238  51,149  (10)  (14) 
Market capitalization in USD m  35,434  39,623  41,066  (11)  (14) 
Book value per share in CHF  32.54  31.89  30.07  2  8 
Shares outstanding  1,109,392,268  1,106,464,994  1,130,362,948  0  (2) 
1) All calculations through December 31, 2003 are on the basis of Swiss GAAP. For further details see page 5.











Further information for investors is presented on page 44.



CREDIT SUISSE GROUP






Credit Suisse Group recorded net income of CHF 1,351 million in the third quarter of 2004, versus net income of CHF 263 million in the third quarter of 2003 and CHF 1,457 million in the second quarter of 2004. In the first nine months of 2004, the Group recorded net income of CHF 4,669 million. All banking segments felt the effects of low levels of client activity as well as significant market uncertainties caused by geopolitical issues and higher energy prices, while the insurance segments demonstrated good progress towards continued profitability. Since the announcement in June of the realignment of the Group’s management structure, momentum has increased in implementing a more integrated approach.


Private Banking and Corporate & Retail Banking have implemented a joint management structure and strengthened their cooperation, especially in the area of client coverage. Within Institutional Securities and Wealth & Asset Management, strategic direction has been a key focus of the new management team. This strategic review is focused on generating above-market growth in revenues by leveraging existing franchise business and closing gaps in core business areas. The insurance units combined their life and non-life organizations in Switzerland with the aim of increasing operational efficiency and strengthening their leading position within the Swiss market.

Private Banking reported net income of CHF 511 million in the third quarter of 2004, in line with seasonality and the challenging market environment. This result was virtually unchanged compared to the third quarter of 2003 and down CHF 154 million, or 23%, compared to the second quarter of 2004. The decline compared to the previous quarter was mainly due to lower client activity, as reflected in lower transaction-related income.

Corporate & Retail Banking recorded a solid third quarter 2004 result, reporting net income of CHF 199 million, down CHF 19 million, or 9%, versus the corresponding period of 2003.

During the third quarter of 2004, Private Banking and Corporate & Retail Banking were only marginally impacted by changes in the fair value of interest rate derivatives used for risk management purposes that do not qualify for hedge accounting.

Institutional Securities reported an increase in net income of CHF 162 million, or 125%, to CHF 292 million in the third quarter of 2004, compared to the third quarter of 2003, due largely to significantly higher fixed income trading, which was partially offset by lower equity trading and equity underwriting results. The quarter was positively impacted by the release of tax contingency accruals totaling CHF 126 million following the favorable resolution of matters with local tax authorities.

Wealth & Asset Management reported net income of CHF 30 million for the third quarter of 2004, a decline of CHF 43 million, or 59%, compared to the third quarter of 2003, and down CHF 271 million, or 90%, compared to the second quarter of 2004. This decrease was due mainly to lower realized private equity investment-related gains.

Life & Pensions reported net income of CHF 164 million in the third quarter of 2004. Total business volume increased, in particular the unit-linked business. The traditional business in Switzerland saw declines, reflecting current market trends. The results were further positively impacted by an increase in the valuation of deferred tax assets on net operating losses created in prior years amounting to CHF 72 million.

Non-Life achieved a significant improvement in its combined ratio and a marked increase in net investment income, reporting net income of CHF 198 million for the third quarter of 2004. In addition, the third quarter results were favorably impacted by an increase in the valuation of deferred tax assets on net operating losses created in prior years amounting to CHF 59 million.

The Group’s basic earnings per share in the third quarter of 2004 were CHF 1.16, compared to CHF 0.22 in the third quarter of 2003 and CHF 1.26 in the second quarter of 2004. Return on equity was 15.3% in the third quarter of 2004, versus 3.0% in the third quarter of 2003 and 16.6% in the second quarter of 2004.

Revenues and expenses
Third quarter 2004 net revenues amounted to CHF 11,753 million, virtually unchanged compared to the third quarter of 2003 and down CHF 1,752 million, or 13%, compared to the second quarter of 2004.

Net revenues in Private Banking totaled CHF 1,644 million in the third quarter of 2004, representing a decrease of 4% versus the third quarter of 2003, and a decrease of 12% versus the second quarter of 2004, primarily driven by reduced transaction-related revenues.

Corporate & Retail Banking recorded net revenues of CHF 808 million, down 11% versus the third quarter of 2003, due mainly to lower trading revenues.

Institutional Securities contributed net revenues of CHF 3,083 million, up CHF 464 million, or 18%, compared to the third quarter of 2003. This increase was primarily due to stronger fixed income trading results and was partially offset by lower equity trading and equity underwriting results.

Wealth & Asset Management reported net revenues of CHF 809 million for the third quarter of 2004. Excluding the attribution of minority interests, net revenues amounted to CHF 635 million, a decline of CHF 76 million, or 11%, compared to the third quarter of 2003 and a decrease of CHF 402 million, or 39%, compared to the second quarter of 2004. This decrease, compared to the second quarter of 2004, was due largely to an anticipated decline in the number and magnitude of private equity gains, and – to a lesser extent – declines in asset management fees in Credit Suisse Asset Management.

Life & Pensions reported net revenues of CHF 2,717 million for the third quarter of 2004, a decline of 8% compared to the third quarter of 2003, and a decline of 16% compared to the previous quarter. This decrease was driven mainly by lower volumes in traditional business in Switzerland, reflecting current market trends.

Non-Life reported net revenues of CHF 2,869 million for the third quarter of 2004, a slight increase of CHF 10 million compared to the third quarter of 2003, and a decline of CHF 121 million, or 4%, compared to the previous quarter. The decrease compared to the previous quarter was driven primarily by seasonal effects.

The Group’s total operating expenses in the third quarter of 2004 amounted to CHF 5,939 million, down 4% compared to the third quarter of 2003 and down 5% compared to the second quarter of 2004. An increase in operating expenses in Institutional Securities of CHF 426 million, or 18%, compared to the third quarter of 2003, was due mainly to increased compensation and benefits expenses, which were offset by lower compensation costs in Private Banking, Corporate & Retail Banking and Wealth & Asset Management. Additionally, operating expenses in the Life & Pensions and Non-Life segments decreased significantly due to cost savings and to provisions in the Non-Life segment recorded in 2003 relating to the former international business portfolio.

Net new assets
The Group reported net new assets of CHF 4.7 billion in the third quarter of 2004.

Private Banking reported net new assets of CHF 3.8 billion in the third quarter of 2004. Key markets in Asia and Europe generated double-digit annualized net new asset growth.

Wealth & Asset Management recorded net new assets of CHF 0.1 billion. Inflows of CHF 1.2 billion in the Alternative Capital division and CHF 1.0 billion at Credit Suisse Asset Management were almost completely offset by CHF 2.1 billion of outflows in Private Client Services.

As of September 30, 2004, the Group’s total assets under management amounted to CHF 1,232.2 billion, an increase of 0.4% compared to June 30, 2004.

Provision for credit losses
Provision for credit losses continued to decrease in light of the generally favorable credit environment. The Group recorded provision for credit losses of CHF 38 million in the third quarter of 2004, a decrease of CHF 75 million, or 66%, compared to the third quarter of 2003, and a decrease of CHF 95 million, or 71%, compared to the second quarter of 2004.

Equity capital
Credit Suisse Group’s consolidated BIS tier 1 ratio was 11.8% as of September 30, 2004, up from 11.6% as of June 30, 2004. This increase was attributable to continued earnings generation combined with stable risk-weighted assets. The market risk equivalents at Credit Suisse were reduced by 65%, due to the approval from the Swiss Federal Banking Commission (SFBC) to use Value-at-Risk models for the calculation of market risk positions in the Credit Suisse legal entity. The Group’s shareholders’ equity as of September 30, 2004 increased to CHF 36.1 billion from CHF 35.3 billion as of June 30, 2004.

Outlook
Credit Suisse Group is confident it can achieve a good result for the full year 2004. The Group does not anticipate that the overall market for financial services will grow significantly over the next few quarters. Consequently, it expects that earnings growth can be achieved primarily through tight cost management and increased market share. The Group’s new integrated management structure will further enhance cooperation throughout the company and allow clients to be served across multiple business lines. This should pave the way for the more efficient allocation of capital and other resources, which will be deployed with a view to expanding Credit Suisse Group’s key businesses.


Credit Suisse Group structure

Credit Suisse Group comprises three business units with six reporting segments: Credit Suisse, including the Private Banking and Corporate & Retail Banking segments; Credit Suisse First Boston, including the Institutional Securities and Wealth & Asset Management segments; and Winterthur, including the Life & Pensions and Non-Life segments.





Overview of segment results 
      Corporate &     Wealth &           Credit 
   Private   Retail  Institutional  Asset  Life &     Corporate  Suisse  
3Q2004, in CHF m  Banking  Banking  Securities  Management  Pensions  Non-Life  Center  Group 
Net revenues  1,644  808  3,083  809  2,717  2,869  (177)  11,753 
Policyholder benefits, claims and dividends          2,156  1,961    4,117 
Provision for credit losses  (2)  20  24  0  (5)  1  0  38 
Total benefits, claims and credit losses  (2)  20  24  0  2,151  1,962  0  4,155 
Insurance underwriting, acquisition and administration expenses          371  680  (4)  1,047 
Banking compensation and benefits  503  266  1,662  291      80  2,802 
Other expenses  492  261  1,118  313  59  21  (187)  2,077 
Restructuring charges  (1)  0  0  0  3  11  0  13 
Total operating expenses  994  527  2,780  604  433  712  (111)  5,939 
Income from continuing operations before taxes and minority interests  652  261  279  205  133  195  (66)  1,659 
Income tax expense/(benefit)  137  62  (57)  8  (38)  0  2  114 
Minority interests, net of tax  4  0  44  167  5  8  (23)  205 
Income from continuing operations  511  199  292  30  166  187  (45)  1,340 
Income/(loss) from discontinued operations, net of tax  0  0  0  0  (2)  11  2  11 
Net income  511  199  292  30  164  198  (43)  1,351 



BIS capital data 
  Credit Suisse  Credit Suisse First Boston  Credit Suisse Group 
in CHF m, except where indicated  30.09.04  31.12.03  30.09.04  31.12.03  30.09.04  31.12.03 
Risk-weighted positions   91,045  85,158  85,316  80,622  190,913  176,911 
Market risk equivalents  1,846  4,675  9,592  8,185  12,678  13,850 
Risk-weighted assets   92,891  89,833  94,908  88,807  203,591  190,761 
Tier 1 capital  7,856  7,362  11,482  12,062  24,084  22,287 
   of which non-cumulative perpetual preferred securities   0  0  1,035  1,025  2,169  2,167 
Tier 1 ratio  8.5% 8.2% 12.1% 13.6% 11.8% 11.7% 
Total capital  11,023  10,630  20,368  20,968  32,979  33,207 
Total capital ratio  11.9%  11.8%  21.5%  23.6%  16.2%  17.4% 
As of January 1, 2004, Credit Suisse Group bases its capital adequacy calculations on US GAAP, which is in accordance with the Swiss Federal Banking Commission (SFBC) newsletter 32 (dated December 18, 2003). The SFBC has advised Credit Suisse Group that it may continue to include as Tier 1 capital CHF 2.2 billion of equity from special purpose entities, which are deconsolidated under FIN 46R, and that Credit Suisse First Boston may include CHF 6.3 billion of such equity as Tier 1 capital. All calculations through December 31, 2003 are on the basis of Swiss GAAP.



Assets under management/client assets  
            Change  Change 
            in % from  in % from 
in CHF bn  30.09.04  30.06.04  31.12.03  30.06.04  31.12.03 
Private Banking                 
Assets under management  544.3  537.2  511.3  1.3  6.5 
Client assets  572.7  571.5  541.0  0.2  5.9 
Corporate & Retail Banking                 
Assets under management  52.8  53.3  53.6  (0.9)  (1.5) 
Client assets  98.2  98.1  95.2  0.1  3.2 
Institutional Securities                 
Assets under management  16.5  16.3  12.9  1.2  27.9 
Client assets  95.7  94.8  84.6  0.9  13.1 
Wealth & Asset Management                 
Assets under management 1)  477.4  477.8  464.1  (0.1)  2.9 
Client assets  494.2  496.1  482.1  (0.4)  2.5 
Life & Pensions                 
Assets under management   116.4  117.4  113.8  (0.9)  2.3 
Client assets  116.4  117.4  113.8  (0.9)  2.3 
Non-Life                 
Assets under management   24.8  25.3  25.4  (2.0)  (2.4) 
Client assets  24.8  25.3  25.4  (2.0)  (2.4) 
Credit Suisse Group                 
Discretionary assets under management  608.2  608.4  585.9  0.0  3.8 
Advisory assets under management  624.0  618.9  595.2  0.8  4.8 
Total assets under management   1,232.2  1,227.3  1,181.1  0.4  4.3 
Total client assets  1,402.0  1,403.2  1,342.1  (0.1)  4.5 



Net new assets 
           9 months 
in CHF bn  3Q2004  2Q2004  3Q2003  2004  2003 
Private Banking  3.8  7.9  8.4  22.5  13.6 
Corporate & Retail Banking  0.2  (0.3)  0.2  0.8  0.4 
Institutional Securities  0.2  (0.6)  (0.3)  1.4  0.8 
Wealth & Asset Management 1)  0.1  2.0  (6.0)  2.1  (16.2) 
Life & Pensions  0.4  0.1  (0.9)  2.6  1.7 
Credit Suisse Group  4.7  9.1  1.4  29.4  0.3 
1) Excluding assets managed on behalf of other entities within Credit Suisse Group. This differs from the presentation of the Wealth & Asset Management segment results on page 22, in which such assets are included.





RISK MANAGEMENT






Credit Suisse Group’s overall position risk, measured on the basis of Economic Risk Capital (ERC), decreased 2% in the third quarter of 2004 compared with the previous quarter. The decrease was due to lower equity trading and counterparty risks at Credit Suisse First Boston, partially offset by higher interest rate and foreign exchange positions. The more narrowly defined average Value-at-Risk (VaR) in US dollar terms for the trading book of Credit Suisse First Boston slightly decreased during the third quarter of 2004 due to the reduction in equity trading exposures and a reduction in the market volatility observed over the last two years. The loan portfolios across the Group continued to benefit from a favorable credit environment requiring low provisions for credit losses of CHF 38 million.


Economic Risk Capital trends
Credit Suisse Group assesses risk and economic capital adequacy using its Economic Risk Capital (ERC) model. ERC is designed to measure all quantifiable risks associated with the Group’s activities on a consistent and comprehensive basis. Credit Suisse Group assigns ERC for position risk, operational risk and business risk. Position risk measures the potential annual economic loss associated with market, credit and insurance exposures that is exceeded with a given, small probability (1% for risk management purposes; 0.03% for capital management purposes). It is not a measure of the potential impact on reported earnings, since non-trading activities generally are not marked to market through earnings.

Over the course of the third quarter of 2004, Credit Suisse Group’s 1-year, 99% position risk ERC decreased by 2%. The decrease was due to lower equity trading and counterparty risks at Credit Suisse First Boston, partially offset by higher interest rate and foreign exchange positions.

At the end of the third quarter of 2004, 49% of the Group’s position risk ERC was with Credit Suisse First Boston, 32% with Winterthur, 15% with Credit Suisse and 4% with the Corporate Center.

Trading risks
Credit Suisse Group assumes trading risks through the trading activities of the Institutional Securities segment of Credit Suisse First Boston and – to a lesser extent – the trading activities of Credit Suisse. Trading risks are measured using Value-at-Risk (VaR) as one of a range of risk measurement tools. VaR is the potential loss in fair value of trading positions due to adverse market movements over a defined time horizon and for a specified confidence level. In order to show the aggregate market risk in the Group’s trading books, the table below shows the trading-related market risk for Credit Suisse First Boston, Credit Suisse and Credit Suisse Group on a consolidated basis, as measured by a 10-day VaR scaled to a 1-day holding period and based on a 99% confidence level. This means that there is a one in 100 chance of incurring a daily mark-to-market trading loss that is at least as large as the reported VaR.

Credit Suisse First Boston’s average 1-day, 99% VaR in the third quarter of 2004 was CHF 66 million, compared to CHF 68 million during the second quarter of 2004. In US dollar terms, Credit Suisse First Boston’s average 1-day, 99% VaR was USD 52 million during the third quarter, compared to USD 53 million during the second quarter of 2004. The decrease in average VaR was due to a reduction in equity exposure and a reduction in the market volatility observed over the last two years (second quarter 2002 data replaced by more benign second quarter 2004 data in the rolling two-year underlying data set used to compute VaR).

Credit Suisse’ average 1-day, 99% VaR in the third quarter of 2004 was CHF 13 million, compared to CHF 12 million during the second quarter of 2004. The 8% increase in average VaR was mainly due to an increase in interest rate proprietary trading. The VaR for equity positions ended the quarter at the higher end of the range observed during the quarter, mainly due to lower risk offsets between structured derivatives and structured investment products towards the quarter-end.

The segments with trading portfolios use backtesting to assess the accuracy of the VaR model. Daily backtesting profit and loss is compared to VaR with a one-day holding period. Backtesting profit and loss is a subset of actual trading revenue and includes only the profit and loss effects due to movements in financial market variables such as interest rates, equity prices and foreign exchange rates on the previous night’s positions. It is appropriate to compare this measure with VaR for backtesting purposes, since VaR assesses only the potential change in position value due to overnight movements in financial market variables. On average, an accurate one-day, 99% VaR model should have no more than four backtesting exceptions per year. A backtesting exception occurs when the daily loss exceeds the daily VaR estimate.

Credit Suisse First Boston had no backtesting exceptions during the third quarter of 2004 (one backtesting exception in the last twelve months). The histogram entitled “CSFB trading revenue distribution” compares the distribution of daily backtesting profit and loss during the third quarter of 2004 with the distribution of actual trading revenues, which includes fees, commissions, provisions and the profit and loss effects associated with any trading subsequent to the previous night’s positions.

Loan exposure
Credit Suisse Group’s total gross loan exposure increased 2% at September 30, 2004, compared with June 30, 2004, driven by an increase in lending to financial institutions at Credit Suisse First Boston. Loans at Credit Suisse First Boston rose 20%, while loan exposure at Credit Suisse and Winterthur was largely unchanged.

Compared to June 30, 2004, non-performing loans at Credit Suisse Group declined 14% and total impaired loans declined 10% as of the end of the third quarter of 2004. Reductions were reported in all business units during the quarter, as was also the case in the first half of 2004.

Non-performing loans at Credit Suisse First Boston declined 37%, while total impaired loans were 24% lower. Non-performing loans declined 6% at Credit Suisse while total impaired loans declined 5%.

Provisions for credit losses charged to the income statement for the third quarter of 2004 were CHF 38 million, a reduction from CHF 133 million recorded for the second quarter of 2004 as well as from CHF 113 million recorded for the third quarter of 2003. Presented in the accompanying tables are the additions, releases, and recoveries included in calculating the allowance for loan losses.

Coverage of non-performing loans by valuation allowances improved in the third quarter of 2004 at Credit Suisse Group and all business units. Coverage of total impaired loans by valuation allowances declined slightly at Credit Suisse Group, Credit Suisse First Boston and Credit Suisse, while improving at Winterthur.


Key Position Risk Trends 
     Change in % from  Change Analysis: Brief Summary 
in CHF m  30.09.04  30.06.04  30.09.03  30.09.04 vs 30.06.04 
Interest Rate, Credit Spread ERC & Foreign Exchange ERC  4,821  10  12  Increase at CSFB due to higher interest rate trading risk in rates, structured products and treasury 
Equity Investment ERC  2,621  (16)  (6)  Decrease at CSFB due to a decrease in equity trading risk in options and structured products 
Swiss & Retail Lending ERC  1,713  (2)  (10)  Decrease at CS due to further reductions in recovery positions and rating upgrades in the corporate banking portfolio 
International Lending ERC & Counterparty ERC  2,427  (9)  (3)  Decrease at CSFB due to reductions in bridge financings and the completion of syndicated transactions 
Emerging Markets ERC  2,001    11  Higher CS trade finance exposures offset by a reduction in emerging market exposures at Winterthur 
Real Estate ERC & Structured Asset ERC  1)  3,430    (7)  No material change 
Insurance Underwriting ERC  671    4  No material change 
Simple sum across risk categories  17,684  (2)  1    
Diversification benefit  (5,198)  (1)  (6)    
Total Position Risk ERC  12,486  (2)  3    
1-year, 99% 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. For a more detailed description of the Group’s ERC model, please refer to Credit Suisse Group's Annual Report 2003, which is available on the website: www.credit-suisse.com/annualreport2003. Prior period balances have been restated for methodology changes in order to maintain consistency over time.
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 exposure as well as the real estate acquired at auction and real estate for own use in Switzerland.  



Market risk in the Credit Suisse Group trading portfolios (99%, 1-day VaR) 1)
   3Q2004  2Q2004 
in CHF m  Minimum  Maximum  Average  30.09.04  Minimum  Maximum  Average  30.06.04 
Credit Suisse                            
Interest rate & credit spread  2.9  7.4  4.5  6.5  2.7  4.2  3.3  2.8 
Foreign exchange rate  2.0  4.6  2.9  4.6  1.9  3.9  2.7  3.1 
Equity   7.7  11.5  9.4  11.2  5.8  15.3  9.9  8.9 
Commodity  0.4  1.4  0.8  0.7  0.6  1.7  1.1  1.1 
Diversification benefit  2)2)(5.1)  (5.2)  2)2)(5.4)  (4.6) 
Total  9.8  17.8  12.5  17.8  7.2  17.2  11.6  11.3 
                            
Credit Suisse First Boston                              
Interest rate & credit spread  47.4  94.4  64.7  49.1  38.1  77.0  54.4  73.3 
Foreign exchange rate  12.1  22.3  16.1  13.3  12.0  31.1  19.6  15.3 
Equity   28.9  42.1  34.7  32.4  34.8  53.1  40.9  41.6 
Commodity  0.2  0.3  0.2  0.3  0.2  0.8  0.4  0.2 
Diversification benefit  2)2)(49.9)  (41.3)  2)2)(47.6)  (63.8) 
Total  53.6  98.3  65.8  53.8  49.1  104.5  67.7  66.6 
                            
Credit Suisse Group 3)                              
Interest rate & credit spread  50.3  66.2  59.7  50.3  41.0  73.2  56.5  73.2 
Foreign exchange rate  12.7  16.6  14.3  12.7  13.5  15.9  14.7  19.7 
Equity   30.6  37.6  33.3  31.6  39.8  44.7  43.0  47.7 
Commodity  0.5  0.7  0.6  0.7  0.6  1.0  0.8  1.3 
Diversification benefit  2)2)(45.2)  (38.2)  2)2)(45.2)  (73.2) 
Total  57.1  70.1  62.7  57.1  66.3  74.4  69.8  68.7 
1) Represents 10-day VaR scaled to a 1-day holding period.
2) As the minimum and maximum occur on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit.
3) The VaR estimates for Credit Suisse Group are performed on a monthly basis and the VaR statistics for Credit Suisse Group therefore refer to monthly numbers. The consolidated VaR estimates for Credit Suisse Group are net of diversification benefits between Credit Suisse First Boston and Credit Suisse.




CSFB backtesting






CSFB trading revenue distribution, third quarter of 2004





Loans outstanding 
     Credit Suisse     Credit Suisse 
  Credit Suisse  First Boston  Winterthur  Group 
in CHF m  30.09.04  30.06.04  31.12.03  30.09.04  30.06.04  31.12.03  30.09.04  30.06.04  31.12.03  30.09.04  30.06.04  31.12.03 
Consumer loans:                                     
Mortgages  66,380  64,940  61,196  0  0  0  8,442  8,993  8,660  74,822  73,933  69,856 
Loans collateralized by securities  14,843  14,987  14,376  0  0  0  4  4  3  14,847  14,991  14,379 
Other  2,359  2,374  2,338  532  452  1,172  2  3  1  2,893  2,829  3,511 
Consumer loans  83,582  82,301  77,910  532  452  1,172  8,448  9,000  8,664  92,562  91,753  87,746 
Corporate loans:                                         
Real estate  26,473  26,333  27,122  721  452  188  1,319  1,488  1,279  28,513  28,273  28,589 
Commercial & industrial loans  33,259  33,787  32,260  14,244  14,199  13,859  1,494  1,425  1,837  48,997  49,411  47,956 
Loans to financial institutions  7,699  7,618  6,347  6,926  3,467  4,473  2,121  2,019  2,027  16,746  13,104  12,847 
Governments and public institutions  1,979  2,059  1,637  417  511  1,152  2,199  1,945  1,792  4,595  4,515  4,581 
Corporate loans   69,410  69,797  67,366  22,308  18,629  19,672  7,133  6,877  6,935  98,851  95,303  93,973 
Loans, gross  152,992  152,098  145,276  22,840  19,081  20,844  15,581  15,877  15,599  191,413  187,056  181,719 
(Unearned income)/deferred expenses, net  147  126  131  (39)  (41)  (25)  4  4  0  112  89  106 
Allowance for loan losses  (2,515)  (2,657)  (3,113)  (774)  (1,057)  (1,383)  (72)  (76)  (150)  (3,361)  (3,790)  (4,646) 
Total loans, net  150,624  149,567  142,294  22,027  17,983  19,436  15,513  15,805  15,449  188,164  183,355  177,179 
This disclosure presents the lending exposure of the Group from a risk management perspective. This presentation differs from other disclosures in this document.
Certain reclassifications have been made to conform to the current presentation.                         



Impaired loans 
in CHF m  30.09.04  30.06.04  31.12.03  30.09.04  30.06.04  31.12.03  30.09.04  30.06.04  31.12.03  30.09.04  30.06.04  31.12.03 
Non-performing loans   1,462  1,552  1,917  586  938  996  20  50  64  2,070  2,540  2,977 
Non-interest earning loans  1,277  1,376  1,517  9  13  246  19  6  6  1,305  1,394  1,769 
Total non-performing loans  2,739  2,928  3,434  595  951  1,242  39  56  70  3,375  3,934  4,746 
Restructured loans  56  52  24  43  6  256  5  5  3  104  64  283 
Potential problem loans  1,317  1,350  1,641  329  322  361  72  76  176  1,718  1,747  2,178 
Total other impaired loans  1,373  1,402  1,665  372  328  617  77  81  179  1,822  1,811  2,461 
Total impaired loans  4,112  4,330  5,099  967  1,279  1,859  116  137  249  5,197  5,745  7,207 
Valuation allowances as % of                                        
   Total non-performing loans   91.8%  90.7%  90.7%  130.1%  111.1%  111.4%  184.6%  135.7%  214.3%  99.6%  96.3%  97.9% 
   Total impaired loans   61.2%  61.4%  61.1%  80.0%  82.6%  74.4%  62.1%  55.5%  60.2%  64.7%  66.0%  64.5% 



Allowance for loan losses 
in CHF m  3Q2004  2Q2004  3Q2003  3Q2004  2Q2004  3Q2003  3Q2004  2Q2004  3Q2003  3Q2004  2Q2004  3Q2003 
Balance beginning of period  2,657  2,904  3,430  1,057  1,199  2,870  76  86  131  3,790  4,189  6,431 
New provisions  83  143  214  107  174  120  3  3  3  194  319  336 
Releases of provisions  (69)  (91)  (140)  (79)  (89)  (82)  (5)  (2)  0  (154)  (181)  (224) 
Net additions charged to income statement  14  52  74  28  85  38  (2)  1  3  40  138  112 
Gross write-offs  (174)  (306)  (439)  (329)  (247)  (242)  0  (3)  (1)  (502)  (556)  (681) 
Recoveries  6  7  15  10  12  10  0  0  0  16  20  26 
Net write-offs  (168)  (299)  (424)  (319)  (235)  (232)  0  (3)  (1)  (486)  (536)  (655) 
Allowances acquired  0  0  0  0  0  0  0  0  0  0  0  0 
Provisions for interest  6  2  0  17  11  31  0  0  0  24  11  31 
Foreign currency translation impact and other adjustments, net  6  (2)  (22)  (9)  (3)  (53)  (2)  (8)  (1)  (7)  (12)  (75) 
Balance end of period  2,515  2,657  3,058  774  1,057  2,654  72  76  132  3,361  3,790  5,844 
Provision for credit losses disclosed in the Credit Suisse Group consolidated statements of income also includes provisions for lending-related exposure of CHF -2 million, CHF -5 million and CHF 1 million for 3Q2004, 2Q2004 and 3Q2003, respectively.





CREDIT SUISSE






The Credit Suisse business unit comprises the two reporting segments Private Banking and Corporate & Retail Banking. Private Banking provides wealth management products and services for high-net-worth individuals in Switzerland and a large number of other markets worldwide. Private Banking operates with a leading client-centric service model and recognized innovation capabilities. Corporate & Retail Banking offers banking products and services for corporate and retail clients in Switzerland. Corporate & Retail Banking is the second-largest provider in Switzerland, with a nationwide branch network and multi-channel capabilities.


Credit Suisse’s third quarter 2004 net income amounted to CHF 710 million, generating a solid year-to-date net income of CHF 2,501 million, up CHF 658 million, or 36%, compared to the same period of 2003. Quarterly net income was down CHF 18 million, or 2%, compared to the third quarter of 2003.

The Private Banking result reflects the expected seasonality with low client activity worsened by weak markets, which negatively impacted transaction-based trading revenues, whereas asset-based revenues remained strong. Efficiency gains were solid, especially in light of the further strengthening of the distribution force, particularly in Private Banking’s international operations. Corporate & Retail Banking was less affected by the market environment and reported a solid quarterly result. Both segments were only marginally impacted by changes in the fair value of interest rate derivatives used for risk management purposes that do not qualify for hedge accounting. Once again, both Corporate & Retail Banking and Private Banking underscored their ability to produce solid revenues. Additionally, a low level of credit provisions was recorded.

Since the announcement of the realignment of the Group’s organizational structure in summer 2004 and the creation of the Credit Suisse business unit, the segments Private Banking and Corporate & Retail Banking have implemented a joint management structure and strengthened their cooperation – especially in the area of client coverage. Furthermore, the new structure facilitates the realization of additional efficiency gains, that remain a top priority of Credit Suisse given the current market environment, as well as the ongoing investments into targeted growth initiatives.

Private Banking
In the third quarter of 2004, Private Banking reported net income of CHF 511 million, nearly unchanged compared to the third quarter of 2003 but down CHF 154 million, or 23%, compared to the second quarter of 2004. Private Banking’s result reflected seasonal weakness and a challenging market environment.

Net revenues totaled CHF 1,644 million in the third quarter of 2004, representing a decrease of 4% versus the third quarter of 2003, and of 12% versus the previous quarter. Commissions and fees were negatively impacted by lower transaction-related income reflecting low market volumes, especially on the Swiss Exchange. The decrease in trading revenues from the third quarter of 2003 was mainly attributable to a negative change in the fair value of interest rate derivatives used for risk management purposes that do not qualify for hedge accounting, resulting in a loss of CHF 9 million, compared to gains of CHF 81 million in the third quarter of 2003 and of CHF 57 million in the previous quarter.

Total operating expenses amounted to CHF 994 million in the third quarter of 2004, down 3% compared to the third quarter of 2003. This reduction reflects solid efficiency gains, especially in light of the expansion of Private Banking’s distribution force, particularly in its international operations. Compared to the previous quarter, total operating expenses declined 8%, additionally reflecting lower incentive-related compensation accruals as well as lower commission expenses.

The cost/income ratio stood at 60.5% for the third quarter of 2004, up 1.0 percentage point compared to the third quarter of 2003. Private Banking’s year-to-date gross margin stood at 135.6 basis points, 5.3 basis points above the gross margin for the same period of the previous year. In the third quarter of 2004, the gross margin stood at 121.7 basis points. The asset-driven component of the third quarter gross margin remained high, at 80.8 basis points, whereas the transaction-driven margin decreased in line with reduced transaction-related revenues.

Private Banking reported net new assets of CHF 3.8 billion in the third quarter of 2004. Key markets in Asia and Europe generated double-digit annualized growth of net new assets. With an annualized year-to-date growth rate of 5.9%, net new asset generation in 2004 remains above Private Banking’s mid-term target of 5% annualized growth. Assets under management stood at CHF 544.3 billion at the end of the third quarter of 2004, up CHF 7.1 billion, or 1.3%, from the end of the second quarter. Compared to the end of 2003, assets under management were up CHF 33.0 billion, or 6.5%.

Corporate & Retail Banking
Corporate & Retail Banking recorded net income of CHF 199 million in the third quarter of 2004, down CHF 19 million, or 9%, versus the corresponding period of 2003, and down CHF 57 million, or 22%, from the strong previous quarter.

In the third quarter of 2004, net revenues totaled CHF 808 million, down 11% versus the third quarter of 2003. This decrease reflects considerably lower trading revenues as a result of substantially lower gains from the changes in fair value of interest rate derivatives used for risk management purposes that do not qualify for hedge accounting. Third quarter 2004 gains from these interest rate derivatives amounted to CHF 6 million, compared to CHF 134 million in third quarter of 2003 and CHF 136 million in the previous quarter. The increase in commissions and fees of CHF 20 million, or 11%, compared to the third quarter of 2003 reflects the strategic focus to strengthen such revenues with both corporate and retail clients.

Provisions for credit losses decreased by a further CHF 40 million compared to the second quarter of 2004 to stand at CHF 20 million in the third quarter, representing a low level of new provisions. Year-to-date credit provisions stood at CHF 128 million, 23% lower than the same period last year, mainly reflecting a favorable credit environment. Total impaired loans declined CHF 962 million to CHF 3.9 billion as of September 30, 2004, compared to the end of the previous year.

Third quarter operating expenses decreased CHF 19 million, or 3%, versus the corresponding period of 2003. This decrease was mainly driven by continued efficiency improvements as well as lower performance-related compensation accruals.

The return on average allocated capital stood at 15.6% in the third quarter of 2004, compared to 17.1% in the third quarter of 2003 and 20.4% in the second quarter of 2004. Corporate & Retail Banking’s cost/income ratio was 65.2%.

The third quarter of 2004 saw the successful launch of ‘Blue’ – the next generation of smart credit cards from American Express. Blue will provide cardholders with special security and additional features when making purchases via the Internet.


Credit Suisse 
            Change  Change        Change 
           in % from  in % from  9 months  in % from 
in CHF m, except where indicated  3Q2004  2Q2004  3Q2003  2Q2004  3Q2003  2004  2003 2003 
Net revenues  2,452  2,819  2,620  (13)  (6)  7,998  7,148 12 
Total operating expenses  1,521  1,636  1,567  (7)  (3)  4,724  4,523 4 
Net income  710  921  728  (23)  (2)  2,501  1,843 36 
Cost/income ratio  62.0%  58.0%  59.8%      59.1%  63.3%  
Return on average allocated capital  33.8%  43.8%  35.5%      40.2%  31.0%  
Average allocated capital  8,460  8,464  8,252  0  3  8,344  7,969 5 



Private Banking income statement 
            Change  Change        Change 
           in % from  in % from  9 months  in % from 
in CHF m  3Q2004  2Q2004  3Q2003  2Q2004  3Q2003  2004  2003  2003 
Net interest income  437  648  377  (33)  16  1,496  1,121  33 
Commissions and fees  1,113  1,178  1,185  (6)  (6)  3,583  3,250  10 
Trading revenues including realized gains/(losses) from investment securities, net  71  9  131    (46)  261  257  2 
Other revenues  23  34  23  (32)  0  113  53  113 
Total noninterest revenues  1,207  1,221  1,339  (1)  (10)  3,957  3,560  11 
Net revenues  1,644  1,869  1,716  (12)  (4)  5,453  4,681  16 
Provision for credit losses  (2)  (8)  3  (75)    (4)  19   
Compensation and benefits  503  564  517  (11)  (3)  1,649  1,521  8 
Other expenses  492  519  504  (5)  (2)  1,504  1,401  7 
Restructuring charges  (1)  0  0      (3)  1   
Total operating expenses  994  1,083  1,021  (8)  (3)  3,150  2,923  8 
Income from continuing operations before taxes, minority interests, extraordinary items and cumulative effect of accounting changes  652  794  692  (18)  (6)  2,307  1,739  33 
Income tax expense  137  124  172  10  (20)  436  419  4 
Minority interests, net of tax  4  5  4  (20)  0  14  11  27 
Income from continuing operations before extraordinary items and cumulative effect of accounting changes  511  665  516  (23)  (1)  1,857  1,309  42 
Income/(loss) from discontinued operations, net of tax  0  0  0      0  (1)   
Extraordinary items, net of tax  0  0  0      0  5   
Cumulative effect of accounting changes, net of tax  0  0  (6)      0  (6)   
Net income  511  665  510  (23)  0  1,857  1,307  42 



Private Banking key information 
           9 months 
   3Q2004  2Q2004  3Q2003  2004  2003 
Cost/income ratio  60.5%  57.9%  59.5%  57.8%  62.4% 
Gross margin  121.7 bp  139.1 bp  136.5 bp  135.6 bp  130.3 bp 
   of which asset-driven   80.8 bp  80.9 bp  77.1 bp  81.1 bp  78.1 bp 
   of which transaction-driven   36.5 bp  47.7 bp  46.9 bp  46.9 bp  44.9 bp 
   of which other   4.4 bp  10.5 bp  12.5 bp  7.6 bp  7.3 bp 
Net margin  38.1 bp  49.9 bp  40.9 bp  46.5 bp  36.7 bp 
Net new assets in CHF bn  3.8  7.9  8.4  22.5  13.6 
Average allocated capital in CHF m  3,362  3,414  3,157  3,295  2,936 



            Change  Change 
            in % from  in % from 
   30.09.04  30.06.04  31.12.03  30.06.04  31.12.03 
Assets under management in CHF bn  544.3  537.2  511.3  1  6 
Total assets in CHF bn  196.4  194.2  174.9  1  12 
Number of employees (full-time equivalents)  12,254  11,989  11,850  2  3 



Corporate & Retail Banking income statement 
            Change  Change        Change 
           in % from  in % from  9 months  in % from 
in CHF m  3Q2004  2Q2004  3Q2003  2Q2004  3Q2003  2004  2003  2003 
Net interest income  513  523  597  (2)  (14)  1,572  1,732  (9) 
Commissions and fees  197  208  177  (5)  11  613  520  18 
Trading revenues including realized gains/(losses) from investment securities, net  67  197  114  (66)  (41)  287  140  105 
Other revenues  31  22  16  41  94  73  75  (3) 
Total noninterest revenues  295  427  307  (31)  (4)  973  735  32 
Net revenues  808  950  904  (15)  (11)  2,545  2,467  3 
Provision for credit losses  20  60  77  (67)  (74)  128  166  (23) 
Compensation and benefits  266  300  293  (11)  (9)  841  855  (2) 
Other expenses  261  253  253  3  3  733  745  (2) 
Total operating expenses  527  553  546  (5)  (3)  1,574  1,600  (2) 
Income from continuing operations before taxes, minority interests and cumulative effect of accounting changes  261  337  281  (23)  (7)  843  701  20 
Income tax expense  62  80  57  (23)  9  198  158  25 
Minority interests, net of tax  0  1  0      1  1  0 
Income from continuing operations before cumulative effect of accounting changes  199  256  224  (22)  (11)  644  542  19 
Cumulative effect of accounting changes, net of tax  0  0  (6)      0  (6)   
Net income  199  256  218  (22)  (9)  644  536  20 



Corporate & Retail Banking key information 
           9 months 
   3Q2004  2Q2004  3Q2003  2004  2003 
Cost/income ratio  65.2%  58.2%  60.4%  61.8%  64.9% 
Net new assets in CHF bn  0.2  (0.3)  0.2  0.8  0.4 
Return on average allocated capital  15.6%  20.4%  17.1%  17.0%  14.2% 
Average allocated capital in CHF m  5,098  5,050  5,095  5,049  5,033 



            Change  Change 
            in % from  in % from 
   30.09.04  30.06.04  31.12.03  30.06.04  31.12.03 
Assets under management in CHF bn  52.8  53.3  53.6  (1)  (1) 
Total assets in CHF bn  102.3  101.9  98.5  0  4 
Mortgages in CHF bn  62.5  61.5  59.8  2  5 
Other loans in CHF bn  25.4  25.8  25.1  (2)  1 
Number of branches  214  214  214     
Number of employees (full-time equivalents)  8,304  8,160  8,479  2  (2) 





CREDIT SUISSE FIRST BOSTON






Credit Suisse First Boston serves global institutional, corporate, government and high-net-worth clients in its role as financial intermediary through two segments. The Institutional Securities segment provides securities underwriting, financial advisory, lending and capital raising services, and sales and trading for global users and suppliers of capital. The Wealth & Asset Management segment provides international asset management services to institutional, mutual fund and private investors through its Credit Suisse Asset Management, Alternative Capital and Private Client Services divisions.


Credit Suisse First Boston’s business environment in the third quarter of 2004 was characterized by uncertainty around geopolitical issues, increasing energy prices and the upcoming US Presidential election. These concerns led to trendless markets with accompanying low volatility levels, compounded by the seasonal summer months’ slowdown. Despite this challenging environment, fixed income trading revenues and investment banking advisory businesses performed reasonably well, equity underwriting and equity trading were down in line with the industry and, as anticipated, third quarter realizations of long-term private equity investments in Wealth & Asset Management were markedly below those of the second quarter.

Furthermore, Credit Suisse First Boston’s businesses are managed on a US dollar basis and a majority of its revenues, expenses and assets are US dollar-based. The 7% weakening of the US dollar against the Swiss franc in the third quarter of 2004 from the third quarter of 2003 adversely affected revenues and net income for the third quarter of 2004 when translated into Swiss francs.

Credit Suisse First Boston’s effective tax rate is based on expected income, statutory tax rates and tax planning. For the third quarter of 2004, the effective tax rate was negative 10%, positively impacted by the release of tax contingency accruals totaling CHF 126 million in the Institutional Securities segment following the favorable resolution of matters with local tax authorities. Excluding this release of tax contingency accruals and CHF 211 million of non-taxable income arising from investments that are required to be consolidated under accounting rules (FASB interpretation No. 46 (Revised), or FIN 46R) effective January 1, 2004, the effective tax rate was 28% for the quarter. The effective tax rate for the first nine months of 2004 was 13%. This is lower than the expected full year effective tax rate of 28% adjusted for the above accrual release and non-taxable FIN 46R income.

During the third quarter of 2004, Credit Suisse First Boston’s CEO Brady Dougan announced a new streamlined senior management team. While managing through a difficult industry environment, the team has been fully engaged in an assessment of Credit Suisse First Boston’s strategic direction. This review focuses on generating above-market growth by sharpening strategy, specifically by leveraging existing franchise business, closing gaps in core business areas and entering new areas that present attractive opportunities.

Institutional Securities
Institutional Securities’ third quarter 2004 net income increased CHF 162 million to CHF 292 million compared with the third quarter of 2003, reflecting an 18% increase in net revenues primarily due to significantly higher fixed income trading and lower equity trading and investment banking revenues. Reflecting improved revenues, compensation costs increased versus the third quarter of 2003. The quarter was also favorably impacted by the release of certain tax contingency accruals as described above. Compared to the second quarter of 2004, net income improved CHF 163 million, as the decline in revenue was more than offset by lower compensation costs and the favorable tax resolution.

During the third quarter of 2004 and as a result of a fairly stable credit environment, provisions for credit losses were CHF 24 million, an increase of CHF 14 million from the third quarter of 2003 and a decrease of CHF 56 million from the second quarter of 2004. Compared to June 30, 2004, total impaired loans decreased CHF 312 million to CHF 967 million, largely due to a specific loan write-off. Valuation allowances as a percentage of total impaired loans decreased 2.6 percentage points to 80.0% as of September 30, 2004.

Operating expenses of CHF 2,780 million were CHF 426 million higher, increasing 18%, compared to the third quarter of 2003. Compensation and benefits expenses increased 23%, or CHF 312 million, in the third quarter of 2004, with the increase attributable to higher incentive compensation costs commensurate with improved revenues, increased headcount and higher non-incentive compensation costs. Third quarter 2003 compensation and benefits reflected the introduction of three-year vesting for future stock awards and the reversal of an accrual for the first six months of 2003 as previously disclosed. Non-compensation expenses increased 11%, or CHF 114 million, as a result of higher professional fees and the outsourcing of selected information technology functions as well as business-driven costs, including commissions. Compared to the second quarter of 2004, operating expenses were down 3%, or CHF 78 million, as compensation and benefits expenses decreased 13% reflecting lower revenue levels, partially offset by a 19% increase in non-compensation expenses primarily reflecting increased business activity and higher professional fees, commission expenses and legal fee accruals relating to litigation.

Total investment banking revenues include debt underwriting, equity underwriting and advisory and other fees. Third quarter 2004 investment banking results were down by 8% from the third quarter of 2003, largely due to a weak underwriting calendar. Debt underwriting revenue of CHF 448 million was consistent with the third quarter of 2003, reflecting strong increases in the leveraged finance business and weaker investment grade debt underwriting revenues. Reflecting a 22% industry-wide decline in the number of global debt transactions, debt underwriting revenue decreased 5% compared to the second quarter of 2004. Declines were most notable in the leveraged and syndicated finance businesses as industry-wide global high-yield new issuance dollar volumes dropped 21% compared to the second quarter of 2004. On a year-to-date basis, Institutional Securities continued to be ranked first in global high-yield new issuances and third in global investment grade new issuances. Equity underwriting revenues in the third quarter of 2004 decreased 34% compared to the third quarter of 2003 to CHF 114 million, and decreased 40% compared to the second quarter of 2004, primarily due to lower industry-wide principal volume of new issuances as equity market conditions remained depressed. Institutional Securities maintained its strong number 3 position in global IPOs, was co-lead manager in the notable Google IPO auction and joint lead manager for the NAVTEQ IPO. Third quarter 2004 advisory and other fees declined 4%, when compared to the strong third quarter of 2003, and increased 27% compared to the second quarter of 2004, on improved mergers and acquisitions activity and Institutional Securities’ increased involvement in large deals including J. C. Penney, ChipPac, Refco Group, MONY Group, and TXU. Institutional Securities significantly improved its mergers and acquisitions market share during the year, rising from number fifteen at the end of the first quarter to number eight year-to-date through September 2004.

Total trading revenues include fixed income and equity sales and trading. The third quarter of 2004 saw significant market uncertainties in the wake of geopolitical issues, higher energy prices and seasonal slackening. Fixed income trading generated revenues of CHF 1,348 million in the third quarter of 2004, more than double the third quarter of 2003. The increase reflects improved risk taking and positioning, particularly in currency trading, the beneficial impact of declining long-term interest rates and a rebound in structured products results from a disappointing 2003. These strongly improved results were partially offset by weaker results due to reduced customer flow, primarily in interest rate products and, to a smaller extent, leveraged finance. In comparison to the second quarter of 2004, fixed income trading for the third quarter of 2004 improved CHF 336 million, or 33%, due to improved risk taking and positioning offset in part by weakened results from structured and interest rate products which continued to be constrained by reduced customer flow due to a seasonal slowdown and mixed economic data. Equity trading revenues decreased 17% to CHF 696 million in the third quarter of 2004 as compared to the third quarter of 2003, reflecting the industry-wide slowdown and generally lower transaction volumes on many exchanges. Convertible business declined in the third quarter of 2004, with very limited trading opportunities as new issuance activity slowed and volatility hit historic lows. These declines were partially offset by improved results from customer-driven options and structured products activity. Equity trading decreased CHF 147 million, or 17%, from the second quarter of 2004, due to the slowdown and lower transaction volumes as well as a seasonal decline.

Other revenues of CHF 171 million in the third quarter of 2004 were the same amount as the third quarter of 2003 and decreased 55% compared to the second quarter of 2004, largely due to fewer gains on legacy investments and a decline in minority interest related revenue. The net exposure to legacy investments as of September 30, 2004 was reduced to CHF 1.6 billion, including unfunded commitments for the real estate portfolio, a decline of CHF 332 million from June 30, 2004.

Wealth & Asset Management
The Wealth & Asset Management segment is comprised of Credit Suisse Asset Management, the Alternative Capital division, Private Client Services and Other.

Wealth & Asset Management reported net income of CHF 30 million for the third quarter of 2004, a decline of CHF 43 million compared to the third quarter of 2003. Compared to the second quarter of 2004, when significant levels of private equity investment-related gains were recorded, Wealth & Asset Management net income declined CHF 271 million.

Wealth & Asset Management’s third quarter 2004 net revenues were CHF 809 million, an increase of CHF 98 million, or 14%, compared to the third quarter of 2003, due to CHF 174 million of minority interest revenues. Revenues before investment-related gains decreased 13% to CHF 573 million with lower asset management fees due to a shift in business mix toward lower margin products in Credit Suisse Asset Management and lower performance fees from the Alternative Capital division, reflecting weaker market performance.

Third quarter 2004 investment-related gains increased 11% compared to the third quarter of 2003, to CHF 62 million. Investment-related revenues declined CHF 318 million compared to the second quarter of 2004 due to a decline in the number and magnitude of harvested private equity investments.

Minority interest related revenue declined CHF 288 million in the third quarter of 2004 to CHF 174 million compared to the second quarter of 2004, reflecting lower levels of investment-related gains.

Compared with the third quarter of 2003, operating expenses decreased 3% to CHF 604 million driven by lower compensation costs and lower other expenses. Compared with the second quarter of 2004, operating expenses decreased 5%, reflecting increased compensation and benefits costs offset by lower commission expense in line with lower net revenues.

Wealth & Asset Management reported a net new asset outflow of CHF 0.5 billion during the quarter as inflows of CHF 1.2 billion in the Alternative Capital division, primarily related to the launch of the Credit Opportunity Fund, and inflows of CHF 0.4 billion from improved Credit Suisse Asset Management results were more than offset by outflows of CHF 2.1 billion in Private Client Services. Assets under management as of September 30, 2004 of CHF 487.5 billion declined slightly, by 0.4%, compared to June 30, 2004, with net new asset outflows and the negative impact of foreign currency exchange rate movements mostly offset by market performance in Credit Suisse Asset Management.

Credit Suisse First Boston 
            Change  Change        Change 
           in % from  in % from  9 months  in % from 
in CHF m, except where indicated  3Q2004  2Q2004  3Q2003  2Q2004  3Q2003  2004  2003  2003 
Net revenues  3,892  4,633  3,330  (16)  17  13,388  11,519  16 
Total operating expenses  3,384  3,494  2,979  (3)  14  10,600  9,847  8 
Net income  322  430  203  (25)  59  1,511  1,003  51 
Cost/income ratio  86.9%  75.4%  89.5%      79.2%  85.5%   
Compensation/revenue ratio  50.2%  47.3%  49.7%      49.8%  51.9%   
Pre-tax margin  12.4%  22.9%  10.2%      20.2%  12.7%   
Return on average allocated capital  10.7%  14.5%  7.0%      17.6%  11.0%   
Average allocated capital  12,055  11,824  11,570  2  4  11,444  12,159  (6) 
Other data excluding minority interest                   
Net revenues  1)  3,670  4,118  3,330  (11)  10  12,543  11,519  9 
Cost/income ratio  1) 2)  91.9%  84.8%  89.5%      84.4%  85.5%   
Compensation/revenue ratio 1)  53.2%  53.2%  49.7%      53.2%  51.9%   
Pre-tax margin  1) 2)  7.4%  13.2%  10.2%      14.9%  12.7%   
1) Excluding CHF 222 million, CHF 515 million and CHF 845 million in 3Q2004, 2Q2004 and 9 months 2004, respectively, in minority interest revenues relating to the FIN 46R consolidation.
2) Excluding CHF 11 million in 3Q2004 and 9 months 2004 in expenses associated with minority interests relating to the FIN 46R consolidation.                



Institutional Securities income statement 
            Change  Change        Change 
           in % from  in % from  9 months  in % from 
in CHF m  3Q2004  2Q2004  3Q2003  2Q2004  3Q2003  2004  2003  2003 
Net interest income  786  1,065  1,092  (26)  (28)  2,893  2,858  1 
Investment banking  868  902  939  (4)  (8)  2,610  2,625  (1) 
Commissions and fees  673  617  691  9  (3)  2,053  1,927  7 
Trading revenues including realized gains/(losses) from investment securities, net  607  199  (100)  205    2,054  1,980  4 
Other revenues  149  351  (3)  (58)    604  95   
Total noninterest revenues  2,297  2,069  1,527  11  50  7,321  6,627  10 
Net revenues  3,083  3,134  2,619  (2)  18  10,214  9,485  8 
Provision for credit losses  24  80  10  (70)  140  83  214  (61) 
Compensation and benefits  1,662  1,916  1,350  (13)  23  5,829  5,155  13 
Other expenses  1,118  942  1,004  19  11  2,907  2,868  1 
Total operating expenses  2,780  2,858  2,354  (3)  18  8,736  8,023  9 
Income from continuing operations before taxes, minority interests and cumulative effect of accounting changes  279  196  255  42  9  1,395  1,248  12 
Income tax expense/(benefit)  (57)  14  124      214  439  (51) 
Minority interests, net of tax  44  53  0  (17)    137  0   
Income from continuing operations before cumulative effect of accounting changes  292  129  131  126  123  1,044  809  29 
Cumulative effect of accounting changes, net of tax  0  0