Credit Suisse Group - SEC Report

FORM 6-K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer

Dated May 4, 2005

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

For the month of May 4, 2005

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 44 333 88 44
Fax +41 44 333 88 77
media.relations@credit-suisse.com
 


CREDIT SUISSE GROUP REPORTS NET INCOME OF
CHF 1.9 BILLION FOR THE FIRST QUARTER OF 2005

Group achieves a strong start to 2005, with solid revenues

Return on equity of 22.9% for the banking businesses and 12.0% for Winterthur

Financial Highlights                    










 
in CHF million 1Q2005   4Q2004   1Q2004   Change in %   Change in % vs  
              vs 4Q2004   vs 1Q2004  










 
Net revenues 17,062   12,984   16,814   31   1  










 
Total operating expenses 6,146   6,128   6,308   0   (3 )










 
Net income 1,910   959   1,861   99   3  










 
Return on equity 20.6 % 10.6 % 21.3 %    










 
Basic earnings per share (CHF) 1.64   0.82   1.56          










 
BIS tier 1 ratio 12.1 % 12.3 %            










 

Zurich, May 4, 2005 – Credit Suisse Group today reported net income of CHF 1,910 million for the first quarter of 2005, compared to CHF 1,861 million in the first quarter of 2004. A continued strong performance from Private Banking and a record quarter for Corporate & Retail Banking contributed to this result. Institutional Securities reported lower net income and had a mixed quarter, with increased revenues in fixed income trading and lower results in equity underwriting and trading as well as in debt underwriting and advisory versus the strong first quarter of 2004. Wealth & Asset Management reported net income which was largely unchanged compared to the first quarter of 2004. Winterthur recorded a solid first-quarter performance, especially in Non-Life, which further improved its underwriting results. Life & Pensions reported moderate growth in its total business volume. The return on equity was 22.9% for the banking businesses and 12.0% for Winterthur. Credit Suisse Group’s overall return on equity was 20.6% for the first quarter.

Credit Suisse Group has received the requisite regulatory approvals from the Swiss Federal Banking Commission to merge its two Swiss banks, Credit Suisse and Credit Suisse First Boston. As previously announced, the merged bank will be operational from May 16, 2005, and will continue to use the Credit Suisse, Credit Suisse First Boston and Credit Suisse Asset Management brands.

Page 1 of 9


Oswald J. Grübel, CEO of Credit Suisse Group, said, "With solid revenues and good net income, Credit Suisse Group has made a strong start to 2005. Private Banking had another excellent quarter and Corporate & Retail Banking reported a record result.”

He continued, “While showing an improvement over the previous quarter and gaining market share in some key businesses, the results from Institutional Securities were mixed. Wealth & Asset Management achieved some progress but still has the potential to improve further. We will continue to implement our strategy, which is designed to rebuild a leadership position in these businesses.”

Turning to the insurance business, he added, “Winterthur produced a solid performance in the first quarter, especially in Non-Life − which further improved its underwriting results − as the insurance business benefited from increased business volumes and reduced expenses. Going forward, we will continue to work to enhance profitability at Winterthur.”

He concluded, "We continue to focus on improving performance and on the integration of our banking businesses and we still have more work to do. My management team and I strongly believe that by creating an integrated bank, we will be able to further improve client service, generate revenue growth and improve efficiency. This will help us to build our position as a leading global financial services provider.”

Banking Segments

Credit Suisse Group Banking Segment Results  










 
in CHF million 1Q2005   4Q2004   1Q2004   Change in %   Change in %  
              vs 4Q2004   vs 1Q2004  










 
Private Banking Net Revenues 1,912   1,717   1,940   11   (1 )
segment Total op. expenses 1,060   993   1,073   7   (1 )
  Net income 685   616   681   11   1  










 
Corporate & Net Revenues 860   803   787   7   9  
Retail Banking Total op. expenses 529   477   494   11   7  
segment Net income 274   257   189   7   45  










 
Institutional Net Revenues 3,842   2,906   3,997   32   (4 )
Securities Total op. expenses 3,006   2,639   3,098   14   (3 )
segment Net income 540   269   623   101   (13 )










 
Wealth & Asset Net Revenues 936   1,028   866   (9 ) 8  
Management Total op. expenses 598   675   624   (11 ) (4 )
segment Net income 135   63   136   114   (1 )










 

Page 2 of 9


Private Banking reported an 11% increase in net income to CHF 685 million in the first quarter of 2005 compared to the previous quarter, as a further recovery in client activity led to sound revenue growth. The segment was able to repeat the strong performance of the first quarter of 2004. The gross margin improved by 9.5 basis points to 137.7 basis points versus the previous quarter but was down 8.6 basis points from the first quarter of 2004. Private Banking’s cost/income ratio improved by 2.4 percentage points to 55.4% compared to the previous quarter and was virtually unchanged compared to the corresponding period of 2004.

Corporate & Retail Banking recorded net income of CHF 274 million for the first quarter of 2005, up 7% compared to the fourth quarter and up 45% versus the first quarter of 2004. This result mainly reflects sound revenues and a seasonally low cost base, as well as a net release of provisions for credit losses. Corporate & Retail Banking reported a return on average allocated capital of 22.4%, up 1.6 percentage points from the fourth quarter and up 7.3 percentage points versus the first quarter of 2004. At 61.5%, the cost/income ratio was 2.1 percentage points higher than in the previous quarter and improved by 1.3 percentage points versus the first quarter of 2004.

Institutional Securities generated net income of CHF 540 million in the first quarter of 2005, a 101% increase from the previous quarter. This performance was characterized by a 32% increase in revenues − reflecting higher fixed income and equity trading results and lower investment banking results − and a 14% rise in total operating expenses. Compared to the strong first quarter of 2004, net income declined 13%, due in part to lower revenues. Although fixed income trading results improved versus the prior-year period, revenues in equity trading and underwriting and in debt underwriting and advisory declined. Total operating expenses were down 3% versus the first quarter of 2004. The segment’s pre-tax margin (excluding minority interests) improved to 19.9% in the first quarter from 13.7% in the fourth quarter of 2004 but was down from 22.2% in the first quarter of last year.

Wealth & Asset Management reported net income of CHF 135 million for the first quarter of 2005, representing a 114% rise from the previous quarter. This first-quarter performance reflected stable revenues in Credit Suisse Asset Management, lower revenues in Private Client Services and lower fees in Alternative Capital, offset by higher investment-related gains and a decrease in total operating expenses. Compared to the first quarter of 2004, net income declined by 1%, reflecting lower revenues from Credit Suisse Asset Management and Private Client Services as well as lower investment-related gains, offset in part by an increase in fees from Alternative Capital and lower expenses.

Page 3 of 9


Insurance Segments

Credit Suisse Group Insurance Segment Results  










 
in CHF million 1Q2005   4Q2004   1Q2004   Change in %   Change in %  
              vs 4Q2004   vs 1Q2004  










 
Life & Pensions Net Revenues 6,610   3,939   6,298   68   5  
segment Total op. expenses 427   410   452   4   (6 )
  Net income 126   152   139   (17 ) (9 )










 
Non-Life Net Revenues 3,049   2,924   3,106   4   (2 )
segment Total op. expenses 698   1,008   726   (31 ) (4 )
  Net income 125   (177 ) 103     21  










 

Life & Pensions recorded net income of CHF 126 million in the first quarter of 2005. This 9% decrease compared to the first quarter of 2004 was primarily due to lower investment income from net realized gains, partially offset by improvements in the segment’s underlying business. Total business volume, which includes deposits from policyholders and gross premiums written, rose 7% compared to the first quarter of last year. This growth was mainly driven by a 7% increase in gross premiums written. Insurance underwriting and acquisition expenses decreased 12% and administration expenses rose 9% compared to the first quarter of last year. The expense ratio decreased by 0.3 percentage points to 6.3%. In the first quarter of 2005, the net investment return backing traditional life policies was down from 5.6% to 5.3% and the net current investment return remained stable at 3.8%.

Non-Life reported net income of CHF 125 million for the first quarter of 2005, up 21% compared to the first quarter of 2004. This increase was mainly attributable to further improvements in the segment’s underwriting results and reduced charges for divested operations. Net premiums earned declined 3% in the first quarter of 2005 and the combined ratio improved by 1.0 percentage points to 99.4% compared to the same period of last year. The claims ratio decreased by 1.6 percentage points to 75.3% in the period under review, mainly reflecting a lower level of large-scale losses and improvements in several market units. Administration expenses decreased 5%, while insurance underwriting and acquisition expenses rose by 3% in the first quarter of 2005. The expense ratio increased by 0.6 percentage points, due primarily to a decrease in net premiums earned. Non-Life’s net investment return decreased slightly from 5.1% to 5.0% and the net current investment return remained stable at 3.5% compared to the same period of 2004.

Page 4 of 9


Net New Assets

Net New Assets and Assets under Management (AuM) for the first quarter 2005      






 
in CHF billion Net New Assets   Total AuM   Change in AuM  
          % vs 31.12.04  






 
Private Banking 7.0   564.3   4.7  
Corporate & Retail Banking 1.0   54.5   1.1  






 
Institutional Securities (0.5 ) 16.1   5.9  
Wealth & Asset Management1) 5.1   492.0   4.0  






 
Life & Pensions 2.8   119.5   3.5  
Non-Life n/a   25.2   4.6  






 
Credit Suisse Group 15.4   1,271.6   4.2  






 
1) Excluding assets managed on behalf of other entities within Credit Suisse Group
  n/a: not applicable

Private Banking generated net new assets of CHF 7.0 billion in the first quarter of 2005, representing an annualized growth rate of 5.2% − with strategic key markets in Asia and Europe again reporting double-digit growth rates. Wealth & Asset Management reported net new assets of CHF 5.1 billion due mainly to corporate and client cash inflows as well as inflows related to the launch of a new real estate fund in Europe. Overall, Credit Suisse Group reported CHF 15.4 billion of net new assets in the first quarter. The Group’s total assets under management stood at CHF 1,271.6 billion as of March 31, 2005, up 4.2% from December 31, 2004.

Outlook

Following the generally more favorable business climate in the first quarter, Credit Suisse Group expects to see market activity slow considerably in the second quarter. These less buoyant market conditions are likely to result in more subdued client activity − bringing with it a corresponding decrease in business volumes. However, the Group expects market conditions to improve in the second half of 2005. Credit Suisse Group will concentrate on diligently responding to these trends to capture growth opportunities and on ensuring it has the necessary measures in place to respond rapidly to changing client requirements.

Enquiries

Credit Suisse Group, Media Relations Telephone +41 44 333 88 44
Credit Suisse Group, Investor Relations Telephone +41 44 333 31 69

Page 5 of 9


For additional information on Credit Suisse Group’s results for the first quarter of 2005, please refer to the Group’s Quarterly Report Q1 2005, as well as the Group’s slide presentation for analysts and the press, which are available 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 March 31, 2005, it reported assets under management of CHF 1,271.6 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 9


Presentation of Credit Suisse Group’s First Quarter Results 2005
via Webcast and Telephone Conference

Date Wednesday, May 4, 2005
   
Time 10.00 CEST / 09.00 BST / 04.00 EST
   
Speaker Renato Fassbind, Chief Financial Officer of Credit Suisse Group
   
  The presentation will be held in English.
   
Webcast www.credit-suisse.com/results
   
Telephone Europe:       +41 91 610 5600
  UK: +44 207 107 0611
  USA: +1 866 291 4166
  Reference: ‘Credit Suisse Group quarterly results’
   
Q&A You will have the opportunity to ask questions during the telephone conference following the presentation.
   
Playback Audio recording – available approximately three hours after the event at: www.credit-suisse.com/results
   
  Telephone – available approximately one hour after the event; please dial:
  Europe:       +41 91 612 4330
  UK: +44 207 108 6233
  USA: +1 866 416 2558
   
  Conference ID: 122#
   
Note We recommend that you dial in approximately ten minutes before the start of the presentation for the webcast and telephone conference. Further instructions and technical test functions are now available on our website.

Page 7 of 9









Letter to Shareholders 2005 Q1

















Dear Shareholders,


Credit Suisse Group recorded net income of CHF 1,910 million in the first quarter of 2005 versus CHF 1,861 million in the first quarter of 2004, an increase of CHF 49 million, or 3%. This was driven largely by increased net income in Corporate & Retail Banking and Non-Life, offset in part by declines in Institutional Securities and Life & Pensions, while Private Banking and Wealth & Asset Management reported net income largely unchanged compared to the first quarter of 2004.


Credit Suisse Group made a strong start to 2005, reporting net income of CHF 1.9 billion for the first quarter, with performance driven by solid revenues. The return on equity for the Group was 20.6%, with the banking segments and Winterthur reporting a return on equity of 22.9% and 12.0%, respectively.

Private Banking performed well, reporting strong net income. A further recovery in client activity during the quarter led to revenues which were almost unchanged compared to the strong first quarter 2004. Corporate & Retail Banking reported record net income for the first quarter, which was mainly attributable to sound revenues and a seasonally low cost base, as well as a continuing favorable credit environment.

Our Institutional Securities segment produced a mixed first quarter. Fixed income trading results improved compared to the first quarter of 2004. Results in equity trading and underwriting as well as in debt underwriting and advisory declined. Wealth & Asset Management reported net income, which was largely unchanged compared to the first quarter of 2004.

Our insurance business, Winterthur, delivered a solid first-quarter performance, especially in Non-Life, which further improved its underwriting results. Life & Pensions reported a moderate increase in its total business volume, reflecting growth in several markets within Europe.

While the Group generated strong first-quarter results, it is nonetheless evident that we must continue to sharpen our focus and close gaps in our performance going forward. At the end of 2004, we announced our plans to combine our banking businesses globally to produce a more powerful integrated organization. The first stage in this process is the merger of our two Swiss banks, Credit Suisse and Credit Suisse First Boston, which is planned for later this month. The design of the new organization will be finalized by the end of the summer and we expect it to be operational as of January 1, 2006. My management team and I remain firmly convinced that our measures to enhance cooperation between our banking businesses in order to capture synergies for revenue growth and to improve our efficiency will generate major benefits for our clients, shareholders and employees and help to secure our position as a leading global financial services provider in the future.


Net new assets

The Group reported net new assets of CHF 15.4 billion in the first quarter of 2005, an increase of CHF 11.9 billion compared to the fourth quarter of 2004. Double-digit growth rates in asset gathering in key Asian and European markets contributed to net new assets of CHF 7.0 billion in Private Banking, while Wealth & Asset Management reported net new assets of CHF 5.1 billion.


Private Banking

Private Banking reported an 11% increase in net income to CHF 685 million in the first quarter of 2005 compared to the previous quarter, as a further recovery in client activity led to sound revenue growth. The segment was able to repeat the strong performance of the first quarter of 2004. The gross margin improved by 9.5 basis points to 137.7 basis points versus the previous quarter but was down 8.6 basis points from the first quarter of 2004. Private Banking’s cost/income ratio improved by 2.4 percentage points to 55.4% compared to the previous quarter and was virtually unchanged compared to the corresponding period of 2004.


Corporate & Retail Banking

Corporate & Retail Banking recorded net income of CHF 274 million for the first quarter of 2005, up 7% compared to the fourth quarter and up 45% versus the first quarter of 2004. This result mainly reflects sound revenues and a seasonally low cost base, as well as a net release of provisions for credit losses. Corporate & Retail Banking reported a return on average allocated capital of 22.4%, up 1.6 percentage points from the fourth quarter and up 7.3 percentage points versus the first quarter of 2004. At 61.5%, the cost/income ratio was 2.1 percentage points higher than in the previous quarter and improved by 1.3 percentage points versus the first quarter of 2004.


Institutional Securities

Institutional Securities generated net income of CHF 540 million in the first quarter of 2005, a 101% increase from the previous quarter. This performance was characterized by a 32% increase in revenues – reflecting higher fixed income and equity trading results – and a 14% rise in expenses. Compared to the strong first quarter of 2004, net income declined 13%, due mainly to lower revenues. Although fixed income trading results improved versus the prior-year period, revenues in equity trading and underwriting and in debt underwriting and advisory declined. Expenses were down 3% versus the first quarter of 2004. The segment’s pre-tax margin (excluding minority interests) improved to 19.9% in the first quarter from 13.7% in the fourth quarter of 2004, but was down from 22.2% in the first quarter of last year.


Wealth & Asset Management

Wealth & Asset Management reported net income of CHF 135 million for the first quarter of 2005, representing a 114% rise from the previous quarter. This first-quarter performance reflected stable revenues in Credit Suisse Asset Management and lower revenues in Private Client Services and lower fees in Alternative Capital, offset by higher investment-related gains and a decrease in expenses. Compared to the first quarter of 2004, net income declined by 1% due to lower revenues from Credit Suisse Asset Management and Private Client Services as well as lower investment-related gains, offset in part by an increase in fees from Alternative Capital and lower expenses.


Life & Pensions

Life & Pensions recorded net income of CHF 126 million in the first quarter of 2005. This 9% decrease compared to the first quarter of 2004 was primarily due to lower investment income from net realized gains, partially offset by improvements in the segment’s underlying business. Total business volume, which includes deposits from policyholders and gross premiums written, rose 7% compared to the first quarter of last year. This growth was mainly driven by a 7% increase in gross premiums written. Insurance underwriting and acquisition expenses decreased 12% and administration expenses rose 9% compared to the first quarter of last year. The expense ratio decreased by 0.3 percentage points to 6.3%. In the first quarter of 2005, the net return on investments backing traditional life policies was down from 5.6% to 5.3% and the net current investment return remained stable at 3.8%.


Non-Life

Non-Life reported net income of CHF 125 million for the first quarter of 2005, up 21% compared to the first quarter of 2004. This increase was mainly attributable to further improvements in the segment’s underwriting results and reduced charges for divested operations. Net premiums earned declined 3% in the first quarter of 2005 and the combined ratio improved by 1.0 percentage points to 99.4% compared to the same period of last year. The claims ratio decreased by 1.6 percentage points to 75.3% in the period under review, mainly reflecting a lower level of large-scale losses and improvements in several market units. Administration expenses decreased 5%, while underwriting and acquisition expenses rose by 3% in the first quarter of 2005. The expense ratio increased by 0.6percentage points, due primarily to a decrease in net premiums earned. Non-Life’s net investment return decreased slightly from 5.1% to 5.0% and the net current investment return remained stable at 3.5% compared to the same period of 2004.


Outlook

Following the generally more favorable business climate in the first quarter, we expect to see market activity slow considerably in the second quarter. These less buoyant market conditions are likely to result in more subdued client activity – bringing with it a corresponding decrease in business volumes. However, we expect market conditions to improve in the second half of 2005. Credit Suisse Group will concentrate on diligently responding to these trends to capture growth opportunities and on ensuring we have the necessary measures in place to respond rapidly to changing client requirements.

Oswald J. Grübel
Chief Executive Officer, Credit Suisse Group
May 2005











Segment Reporting 
 
Net income
in CHF m1Q20054Q20041Q2004
Private Banking685616681
Corporate & Retail Banking274257189
Institutional Securities540269623
Wealth & Asset Management13563136
Life & Pensions126152139
Non-Life125(177)103
Corporate Center25(221)(10)
Credit Suisse Group1,9109591,861




Additional information

Additional information on the Credit Suisse Group’s first quarter 2005 results can be obtained in the Quarterly Report 1/05 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 44 332 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.

Consolidated statements of income (unaudited) 
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Interest and dividend income8,8147,7167,7411414
Interest expense(5,759)(4,960)(4,663)1624
Net interest income3,0552,7563,07811(1)
Commissions and fees3,2393,2893,563(2)(9)
Trading revenues 1,8281,4001,5163121
Realized gains/(losses) from investment securities, net42630252841(19)
Insurance net premiums earned7,7494,5977,399695
Other revenues765640730205
Total noninterest revenues14,00710,22813,736372
Net revenues17,06212,98416,814311
Policyholder benefits, claims and dividends8,1055,4467,852493
Provision for credit losses(36)(127)34(72)
Total benefits, claims and credit losses8,0695,3197,886522
Insurance underwriting, acquisition and administration expenses1,0599831,05381
Banking compensation and benefits3,2962,6343,42825(4)
Other expenses1,7912,5031,823(28)(2)
Restructuring charges084(100)
Total operating expenses6,1466,1286,3080(3)
Income from continuing operations before taxes, minority interests and cumulative effect of accounting changes2,8471,5372,620859
Income tax expense6303185709811
Minority interests, net of tax30125511918153
Income from continuing operations before cumulative effect of accounting changes1,9169641,93199(1)
Income/(loss) from discontinued operations, net of tax(20)(5)(64)300(69)
Cumulative effect of accounting changes, net of tax140(6)
Net income1,910 959 1,861 99 3 
Return on equity - Group20.6%10.6%21.3%
Earnings per share in CHF    
Basic earnings per share1.640.821.56
Diluted earnings per share1.630.801.54



Key figures 
in CHF m, except where indicated31.03.0531.12.04Change in % from 31.12.04
Total assets1,159,7111,089,4856
Shareholders' equity38,52436,2736
Assets under management in CHF bn1,271.61,220.74
Market price per registered share in CHF51.3547.807
Market capitalization57,29453,0978
Book value per share in CHF34.5332.656
BIS tier 1 ratio12.1%12.3%
BIS total capital ratio15.7%16.6%



Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich
Switzerland
Tel. +41 44 212 1616
Fax +41 44 333 2587
www.credit-suisse.com



English
5520174















Quarterly Report 2005 Q1








Credit Suisse Group financial highlights 
in CHF m, except where indicated1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Consolidated income statement     
Net revenues17,06212,98416,814311
Income from continuing operations before cumulative effect of accounting changes1,9169641,93199(1)
Net income1,9109591,861993
Return on equity     
Return on equity - Group20.6%10.6%21.3%
Return on equity - Banking22.9%14.1%24.2%
Return on equity - Winterthur12.0%(1.2%)12.2%
Earnings per share     
Basic earnings per share in CHF1.640.821.56
Diluted earnings per share in CHF1.630.801.54
Net new assets in CHF bn15.43.515.6



in CHF m, except where indicated31.03.0531.12.04Change in % from 31.12.04
Assets under management in CHF bn1,271.61,220.74
Consolidated balance sheet   
Total assets1,159,7111,089,4856
Shareholders' equity38,52436,2736
Consolidated BIS capital data   
Risk-weighted assets 215,279199,2498
Tier 1 ratio12.1%12.3%
Total capital ratio15.7%16.6%
Number of employees   
Switzerland - banking segments19,67619,5581
Switzerland - insurance segments6,0026,147(2)
Outside Switzerland - banking segments21,91021,6061
Outside Switzerland - insurance segments13,17713,2210
Number of employees (full-time equivalents)60,76560,5320
Stock market data  
Market price per registered share in CHF51.3547.807
Market price per American Depositary Share in USD42.8042.191
Market capitalization57,29453,0978
Market capitalization in USD m47,75446,8652
Book value per share in CHF34.5332.656
Shares outstanding1,115,749,4501,110,819,4810















Cover photo: Andreas Tschopp , Structured Finance, Credit Suisse; Christophe Müller , Key Account Management, Credit Suisse; Matthias Moser , Credit Analysis, Credit Suisse; Ralph Kretschmer , Investment Banking Switzerland, Credit Suisse First Boston; all based in Zurich.







Quarterly Report 2005 Q1
Message from the Chief Executive Officer
Credit Suisse Group
Risk Management
Private Banking
Corporate & Retail Banking
Institutional Securities
Wealth & Asset Management
Life & Pensions
Non-Life
Condensed consolidated financial statements – Credit Suisse Group
Consolidated statements of income (unaudited)
Consolidated balance sheets (unaudited)
Consolidated statements of changes in shareholders’ equity (unaudited)
Consolidated statements of cash flows (unaudited)
Notes to the condensed consolidated financial statements (unaudited)
Information for investors









Message from the Chief Executive Officer



Oswald J. Grübel
Chief Executive Officer
Credit Suisse Group





Dear shareholders, clients and colleagues


Credit Suisse Group made a strong start to 2005, reporting net income of CHF 1.9 billion for the first quarter, with performance driven by solid revenues. The return on equity for the Group was 20.6%, with the banking segments and Winterthur reporting a return on equity of 22.9% and 12.0%, respectively. During the quarter, the Group generated net new assets of CHF 15.4 billion.

Private Banking performed well, reporting strong net income. A further recovery in client activity during the quarter led to revenues which were almost unchanged compared to the strong first quarter 2004. Reflecting healthy inflows from strategic key markets in Asia and Europe, the segment reported net new assets of CHF 7.0 billion for the first quarter. Private Banking also expanded its presence in key growth markets during that period.

Corporate & Retail Banking reported record net income for the first quarter, which was mainly attributable to sound revenues and a seasonally low cost base, as well as a continuing favorable credit environment. Improvements in the segment’s return on average allocated capital and cost/income ratio underscored the strength of its underlying business.

Our Institutional Securities segment produced a mixed first quarter. Fixed income trading results improved compared to the first quarter of 2004. Results in equity trading and underwriting as well as in debt underwriting and advisory declined. In comparison to the prior-year period, we made some progress in reducing expenses.

Wealth & Asset Management reported net income, which was largely unchanged compared to the first quarter of 2004. Alternative Capital saw an increase in fees, while Credit Suisse Asset Management and Private Client Services posted a decline in revenues versus the first quarter of 2004. The result was helped by a decrease in expenses compared to the same period of last year. The segment reported CHF 5.4 billion in net new assets in the first quarter.

Our insurance business, Winterthur, delivered a solid first-quarter performance, especially in Non-Life, which further improved its underwriting results. Life & Pensions reported a moderate increase in its total business volume, reflecting growth in several markets within Europe.

While the Group generated strong first-quarter results, it is nonetheless evident that we must continue to sharpen our focus and close gaps in our performance going forward. At the end of 2004, we announced our plans to combine our banking businesses globally to produce a more powerful integrated organization. The first stage in this process is the merger of our two Swiss banks, Credit Suisse and Credit Suisse First Boston, which is planned for later this month. The design of the new organization will be finalized by the end of the summer and we expect it to be operational as of January 1, 2006. My management team and I remain firmly convinced that our measures to enhance cooperation between our banking businesses in order to capture synergies for revenue growth and to improve our efficiency will generate major benefits for our clients, shareholders and employees and help to secure our position as a leading global financial services provider in the future.


Outlook

Following the generally more favorable business climate in the first quarter, we expect to see market activity slow considerably in the second quarter. These less buoyant market conditions are likely to result in more subdued client activity bringing with it a corresponding decrease in business volumes. However, we expect market conditions to improve in the second half of 2005. Credit Suisse Group will concentrate on diligently responding to these trends to capture growth opportunities and on ensuring we have the necessary measures in place to respond rapidly to changing client requirements.

Yours sincerely,

Oswald J. Grübel
May 2005



Credit Suisse Group


Credit Suisse Group recorded net income of CHF 1,910 million in the first quarter of 2005 versus CHF 1,861 million in the first quarter of 2004, an increase of CHF 49 million, or 3%. This was driven largely by increased net income in Corporate & Retail Banking and Non-Life, offset in part by declines in Institutional Securities and Life & Pensions, while Private Banking and Wealth & Asset Management reported net income largely unchanged compared to the first quarter of 2004.





Factors affecting results of operations


Major US equity indices showed minor declines during the first quarter while major European indices closed generally higher. Asian indices were mixed, with many, though higher than at the beginning of the quarter, closing below their quarterly highs. While trading volumes were up, volatility remained low relative to historical norms, however a flat yield curve and tight credit spreads created strong customer-driven activity and a more favorable trading environment. The Group’s banking segments benefited generally from the improved market levels and activity.

The US Federal Reserve raised interest rates by 50 basis points during the quarter, while both the Bank of England and the European Central Bank left their respective rates unchanged. In line with the increase in US interest rates during the quarter, the US dollar strengthened against most major currencies, however it still remained weaker than in the first quarter of 2004. Movements in the US dollar – Swiss franc exchange rate impact Credit Suisse First Boston’s reported results in particular, due to its businesses being managed on a US dollar basis. Specifically, the weakening of the dollar against the Swiss franc adversely affected revenues and favorably impacted expenses. When measured in Swiss francs versus the first quarter 2004, revenues were down 2%, while in US dollar terms revenues increased 4%.

The global credit environment continued to remain positive with an increased number of upgrades and a reduced number of downgrades by rating agencies. As was the case during 2004, this continued to have a favorable impact on the Group’s provisions for credit losses.

Although the combined volume of debt and equity underwriting decreased by 5.2% compared to the first quarter of 2004, there was a substantial increase compared to the fourth quarter of 2004, including a number of large deals from European issuers and European governments. The asset-backed securities environment was highly competitive, which resulted in fee spread compression relative to the first quarter of 2004 and an 18% industry-wide decline in global high-yield debt issuance was recorded. Global industry volumes for investment grade debt issuances remained unchanged. A strong start was seen in the number of initial public offerings early in the quarter, however the pace reduced toward the end of the quarter. Overall, an industry-wide decline of 14% in the volume of new equity issuances was recorded compared to the first quarter of 2004. In addition, announced mergers and acquisitions activity trended higher in the quarter.




Summary of segment results


Credit Suisse consists of the Private Banking and Corporate & Retail Banking segments. Key results for the segments were as follows:

– Private Banking reported net income of CHF 685 million in the first quarter of 2005, virtually unchanged compared to the first quarter of 2004. In the course of expanding its presence in Asia, Private Banking opened an office in Bangkok, Thailand, in March 2005, which will serve as a point of contact for international clients. Private Banking’s new branch in Dubai, United Arab Emirates, started business on April 1, 2005.

– Corporate & Retail Banking reported net income of CHF 274 million in the first quarter of 2005, an increase of CHF 85 million, or 45%, compared to the first quarter of 2004, with improved market levels and activity contributing toward improved results. To support the strategic aim of achieving further growth in the Swiss residential mortgage business, Corporate & Retail Banking intensified its marketing activities. In the first quarter of 2005 Corporate & Retail Banking saw a growth rate of 8.7% (annualized) in residential mortgage volumes, which was again well above market growth.

Credit Suisse First Boston consists of the Institutional Securities and Wealth & Asset Management segments. During the first quarter of 2005, Credit Suisse First Boston continued its trend towards an improved financial performance, recording net income of CHF 675 million, down 11% compared to the strong first quarter of 2004 and up 103% compared to the fourth quarter of 2004. Credit Suisse First Boston reported net revenues of CHF 4,503 million for the quarter (excluding minority interest revenues arising from investments required to be consolidated under Financial Accounting Standards Board Interpretation No. 46 Revised, or FIN 46R), down 5% from the strong first quarter of 2004 and up 22% from the fourth quarter of 2004. A disciplined approach to compensation expenses was maintained, with its compensation to revenue ratio (excluding minority interest revenues arising from FIN 46R) reduced to 51.9% in the first quarter of 2005 compared to 53.2% in the first quarter of 2004 and 52.9% in the fourth quarter of 2004. In the first quarter of 2005, the effective tax rate was 22% compared to 25% in the first quarter of 2004. Excluding CHF 272 million of non-taxable minority interest income arising from FIN 46R, the effective tax rate was 28% for the first quarter of 2005. Key results for the segments were as follows:

– Institutional Securities reported net income of CHF 540 million in the first quarter of 2005, a decrease of CHF 83 million, or 13%, compared to the first quarter of 2004. In the current market environment, fixed income and equity trading performed well even though down by a combined 4%, and investment banking results decreased more significantly.

– Wealth & Asset Management reported net income of CHF 135 million in the first quarter of 2005, a decrease of CHF 1 million, or 1%, compared to the first quarter of 2004, due to lower revenues from Credit Suisse Asset Management and Private Client Services, as well as lower investment-related gains. This was offset in part by an increase in fees from Alternative Capital and a decrease in total operating expenses.

Winterthur consists of the Life & Pensions and Non-Life segments. A solid performance in Winterthur during the first quarter of 2005 resulted in net income of CHF 251 million. Total business volume increased and total operating expenses decreased resulting in productivity gains. Key results for the segments were as follows:

– Life & Pensions reported net income of CHF 126 million in the first quarter of 2005, a decrease of CHF 13 million, or 9%, compared to the first quarter of 2004. Total business volume increased moderately, reflecting growth in several markets within Europe. Life & Pensions achieved a strong start in the newly introduced second pillar pension business in Slovakia, achieving the number one position in the market. The business, which generates fee income for Life & Pensions as an administrator, is not reflected in total business volume.

– Non-Life reported net income of CHF 125 million in the first quarter of 2005, an increase of CHF 22 million, or 21%, compared to the first quarter of 2004. Non-Life’s net income rose primarily due to improvements in underwriting results.




Credit Suisse Group consolidated results



Net revenues

The Group reported net revenues of CHF 17,062 million, an increase of CHF 248 million, or 1%, compared to the first quarter of 2004.

Net interest income of CHF 3,055 million was reported in the first quarter of 2005, a decrease of CHF 23 million, or 1%, compared to the first quarter of 2004. This was due largely to a decrease in Institutional Securities of CHF 133 million, or 13%, which was partially offset by an increase of CHF 103 million in Private Banking mainly as a result of dividend income on its own trading portfolio.

Commissions and fees decreased by CHF 324 million, or 9%, due mainly to a decline in investment banking fees in Institutional Securities of CHF 213 million, or 25%, compared to the first quarter of 2004. In addition, Private Banking reported a decrease of CHF 83 million, or 6%, due to declines in client activity compared to the first quarter of 2004, reflecting investor caution in the markets.

Trading revenues increased CHF 312 million, or 21%, to CHF 1,828 million, driven mainly by increased trading results in Institutional Securities, Corporate & Retail Banking and Life & Pensions. This was partially offset by the lower ex-dividend value of the trading portfolio in Private Banking.

Net realized gains/(losses) from investment securities decreased by CHF 102 million, or 19%, to CHF 426 million due to a decline in both insurance segments.

Insurance net premiums earned increased CHF 350 million, or 5%, to CHF 7,749 million, compared to the first quarter of 2004, due mainly to an increase in Life & Pensions of CHF 326 million, or 7%, driven predominantly by growth in Switzerland, Spain and Germany. This was partially offset by a decline in Non-Life of CHF 85 million, or 3%, due primarily to a lower level of premiums in the German health business as a result of premiums financed through bonuses.

Other revenues of CHF 765 million were reported compared to CHF 730 million in the first quarter of 2004, reflecting increased gains on private equity-related investments in Institutional Securities as well as an increase of CHF 79 million in Wealth & Asset Management. The latter related largely to minority interests arising on investments that are required to be consolidated under accounting rules (FIN 46R). This was partially offset by a decrease in Private Banking of CHF 36 million, due mainly to divestiture gains recorded in the first quarter of 2004.


Total benefits, claims and credit losses

The Group reported a net release in provisions for credit losses of CHF 36 million in the first quarter 2005, compared to a net expense of CHF 34 million in the first quarter of 2004. This was largely due to net releases of CHF 19 million in Corporate & Retail Banking and of CHF 19 million in Institutional Securities, reflecting the ongoing favorable credit environment.

Compared to the first quarter of 2004, policyholder benefits, claims and dividends increased by CHF 253 million, or 3%, to CHF 8,105 million. Life & Pensions reported an increase of CHF 276 million due to an increase in provisions for future benefits in line with the development of premiums. Additionally, Non-Life reported a decrease of CHF 78 million due mainly to lower policyholder claims. Investment income credited to policyholder account balances, reported by Life & Pensions, increased by CHF 54 million, or 20%, to CHF 324 million, due to improvements in the financial markets.


Operating expenses

The Group reported total operating expenses of CHF 6,146 million in the first quarter of 2005, a decrease of CHF 162 million, or 3%, compared to the first quarter of 2004.

Insurance underwriting, acquisition and administration expenses remained virtually unchanged at CHF 1,059 million.

Banking compensation and benefits decreased CHF 132 million, or 4%, to CHF 3,296 million, largely attributable to lower performance-related compensation in the Institutional Securities segment in line with the first quarter result. This was partially offset by increased salaries and benefits in Institutional Securities due mainly to increased headcount, as well as higher performance-related compensation in Corporate & Retail Banking.

Other expenses amounted to CHF 1,791 million, a decrease of CHF 32 million, or 2%, with higher commission expenses, professional fees and litigation provisions in Institutional Securities offset by decreases in Private Banking, reflecting on-going cost containment.


Income tax expense

The Group recorded income tax expense of CHF 630 million compared to CHF 570 million in the first quarter of 2004, an increase of CHF 60 million, or 11%, reflecting the Group’s improved results in the first quarter of 2005.

The Group tax expense is reduced by non-taxable income arising on investments that are required to be consolidated under accounting rules (FIN 46R). The amount of non-taxable income relating to these investments varies from one period to the next and in the first quarter of 2005 amounted to CHF 272 million. Due mainly to this effect, the Group’s effective tax rate in the first quarter of 2005 was 22%.


Cumulative effect of accounting changes

Reflecting the Group’s application of SFAS 123R (Revised 2004) “Share-Based Payment”, an after-tax gain of CHF 14 million was recorded, mainly within Institutional Securities, to reverse the expense previously recognized on outstanding unvested awards that are not expected to vest. For further information, readers are referred to the Summary of significant accounting policies and Recently adopted accounting standards in the Notes to the condensed consolidated financial statements.


Equity capital

Credit Suisse Group’s consolidated BIS tier 1 ratio was 12.1% as of March 31, 2005, down from 12.3% as of December 31, 2004. This decrease was largely attributable to a general increase in risk-weighted assets mainly relating to the strengthening of the US dollar, an increase in market risk exposures and an increase in certain balance sheet positions in line with the Group’s business plan. The Group’s shareholders’ equity as of March 31, 2005, increased to CHF 38.5 billion from CHF 36.3 billion as of December 31, 2004. At the Annual General Meeting on April 29, 2005, the Board of Directors proposed a dividend of CHF 1.50 per share and the launch of a share repurchase program for a value of up to CHF 6 billion. Both proposals were approved.

Compared to December 31, 2004, Winterthur improved its capital position, reporting shareholders’ equity of CHF 8.5 billion as of March 31, 2005, an increase of CHF 0.3 billion. Winterthur’s solvency position improved, with its consolidated EU solvency ratio increasing to 192% as of December 31, 2004, from 168% as of December 31, 2003.


Net new assets

The Group reported net new assets of CHF 15.4 billion in the first quarter of 2005, an increase of CHF 11.9 billion compared to the fourth quarter of 2004. Double-digit growth rates in asset gathering in key Asian and European markets contributed to net new assets of CHF 7.0 billion in Private Banking, while Wealth & Asset Management reported net new assets of CHF 5.1 billion, due mainly to corporate and client cash inflows as well as inflows related to the launch of a new real estate fund in Europe. As of March 31, 2005, the Group’s total assets under management amounted to CHF 1,271.6 billion, an increase of 4.2% compared to December 31, 2004.


Credit Suisse Group structure


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

The organizational chart presented below reflects the legal entity, division and segment structure that will be operational as of May 16, 2005. The Credit Suisse legal entity will comprise the former Credit Suisse First Boston bank and the former Credit Suisse bank, which will be merged on May 13, 2005. The merger of these Swiss legal entities constitutes the first step towards the creation of an integrated organization.

It is planned that the merged bank will combine the Credit Suisse and Credit Suisse First Boston divisions in 2006 in order to better address client needs in a rapidly changing market environment. The objective of the new integrated bank is to operate more efficiently and provide enhanced advisory services and products with a sharper focus on client needs. The new integrated bank will be structured along three lines of business. Private Client Services will include those activities geared toward private clients. Corporate & Investment Banking will include the products and services provided to corporate and investment banking clients. Asset Management will include asset management products and services.





The following table sets forth an overview of segment results:
1Q2005, in CHF mPrivate BankingCorporate & Retail BankingInstitutional SecuritiesWealth & Asset ManagementLife & PensionsNon-LifeCorporate CenterCredit Suisse Group
Net revenues1,9128603,8429366,6103,049(147)17,062
Policyholder benefits, claims and dividends5,9802,12508,105
Provision for credit losses3(19)(19)0(1)00(36)
Total benefits, claims and credit losses3(19)(19)05,9792,12508,069
Insurance underwriting, acquisition and administration expenses40465231,059
Banking compensation and benefits6003082,070267513,296
Other expenses4602219363312346(226)1,791
Total operating expenses1,0605293,006598427698(172)6,146
Income from continuing operations before taxes, minority interests and cumulative effect of accounting changes849350855338204226252,847
Income tax expense156752164268685630
Minority interests, net of tax811111611014(4)301
Income from continuing operations before cumulative effect of accounting changes685274528135126144241,916
Income/(loss) from discontinued operations, net of tax00000(19)(1)(20)
Cumulative effect of accounting changes, net of tax0012000214
Net income685274540135126125251,910



The following table sets forth details of BIS data (risk-weighted assets, capital and ratios):
 Credit SuisseCredit Suisse First BostonCredit Suisse Group
in CHF m, except where indicated31.03.0531.12.0431.03.0531.12.0431.03.0531.12.04
Risk-weighted positions 96,53689,63093,27784,739202,943187,775
Market risk equivalents2,1641,9529,3067,81612,33611,474
Risk-weighted assets 98,70091,582102,58392,555215,279199,249
Tier 1 capital8,3978,13211,46411,15926,02224,596
of which non-cumulative perpetual preferred securities001,0251,0052,1472,118
Tier 1 ratio8.5% 8.9% 11.2% 12.1% 12.1% 12.3% 
Total capital11,22711,02719,93619,57933,84733,121
Total capital ratio11.4%12.0%19.4%21.2%15.7%16.6%
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 2.1 billion (December 31, 2004: CHF 2.1 bn) of equity from special purpose entities, which are deconsolidated under FIN 46R, and that Credit Suisse First Boston may include CHF 6.0 billion (December 31, 2004: CHF 5.7 billion) of such equity as Tier 1 capital.



The following table sets forth details of assets under management and client assets:
in CHF bn31.03.0531.12.04Change in % from 31.12.04
Private Banking  
Assets under management564.3539.14.7
Client assets596.1569.44.7
Corporate & Retail Banking  
Assets under management54.553.91.1
Client assets102.3102.10.2
Institutional Securities  
Assets under management16.115.25.9
Client assets104.595.19.9
Wealth & Asset Management  
Assets under management 1)492.0472.94.0
Client assets508.9488.94.1
Life & Pensions  
Assets under management 119.5115.53.5
Client assets119.5115.53.5
Non-Life  
Assets under management 25.224.14.6
Client assets25.224.14.6
Credit Suisse Group  
Discretionary assets under management620.7595.84.2
Advisory assets under management650.9624.94.2
Total assets under management 1,271.61,220.74.2
Total client assets1,456.51,395.14.4



The following table sets forth details of net new assets:
in CHF bn1Q20054Q20041Q2004
Private Banking7.03.910.8
Corporate & Retail Banking1.00.60.9
Institutional Securities(0.5)0.21.8
Wealth & Asset Management 1)5.10.20.0
Life & Pensions2.8(1.4)2.1
Credit Suisse Group15.43.515.6
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, in which such assets are included.










Risk Management


Credit Suisse Group’s overall position risk, measured on the basis of Economic Risk Capital (ERC), increased 6% in the first quarter of 2005 compared with the previous quarter. The increase was mainly due to higher risk exposures at Credit Suisse First Boston and the strengthening of the US dollar. The more narrowly defined average Value-at-Risk (VaR) in US dollar terms for the trading book of Credit Suisse First Boston increased by 22% during the first quarter of 2005 due to more active position taking in the mortgage and asset-backed securities markets. The loan portfolios across the Group continued to benefit from a favorable credit environment, resulting in a net release of credit provisions of CHF 36 million for the first quarter of 2005.



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 first quarter of 2005, Credit Suisse Group’s 1-year, 99% position risk ERC increased by 6%, mainly due to higher commercial real estate, asset-backed securities and OTC equity derivative positions at Credit Suisse First Boston and the strengthening of the US dollar.

At the end of the first quarter of 2005, 51% of the Group’s position risk ERC was with Credit Suisse First Boston, 32% with Winterthur, 15% with Credit Suisse and 2% 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 first quarter of 2005 was CHF 63 million, compared to CHF 53 million during the fourth quarter of 2004. In US dollar terms, Credit Suisse First Boston’s average 1-day, 99% VaR was USD 54 million during the first quarter 2005, compared to USD 45 million during the fourth quarter of 2004. The increase in average VaR was due to an increase in exposure in the mortgage and asset-backed securities markets as a result of engaging in additional market opportunities during the quarter.

Credit Suisse’ average 1-day, 99% VaR in the first quarter of 2005 was CHF 11 million, compared to CHF 10 million during the fourth quarter of 2004. The increase in average VaR was due to an increase in the average equity risk. The VaR development during the quarter was characterized by a reduction towards the end of the quarter due to a decrease in the inventory positions in alternative investment products.

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 first quarter of 2005 (and one backtesting exception in the last twelve months). The histogram entitled “Frequency of trading revenue for Credit Suisse First Boston” compares the distribution of daily backtesting profit and loss during the first quarter of 2005 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 grew 4% as of March 31, 2005 compared to December 31, 2004, with the increase concentrated at Credit Suisse.

Compared to December 31, 2004 non-performing loans and total impaired loans at Credit Suisse Group declined 10% as of March 31, 2005. The decline in non-performing loans and total impaired loans in the first quarter of 2005 was largely attributed to reductions at Credit Suisse where non-performing loans declined 10% and total impaired loans were 11% lower. Credit Suisse First Boston reported a small reduction in non-performing and total impaired loans, while Winterthur reported small increases.

During the first quarter of 2005, the Group recorded a net release of provisions for credit losses amounting to CHF 36 million, compared to a net release of CHF 127 million recorded in the fourth quarter of 2004. Presented in the accompanying tables are the additions, releases and recoveries included in determining the allowance for loan losses.

Coverage of non-performing loans and total impaired loans by valuation allowances at Credit Suisse Group improved at the end of the first quarter of 2005 compared to the end of the fourth quarter 2004, as coverage improved for Credit Suisse and Credit Suisse First Boston, but declined slightly at Winterthur.

The following table sets forth the Group's risk profile, using ERC as the common risk denominator:
  Change in % fromChange Analysis: Brief Summary
in CHF m31.03.0531.12.0431.03.0431.03.05 vs 31.12.04
Interest Rate, Credit Spread ERC & Foreign Exchange ERC4,5197(5)Increase in interest rate risk at Winterthur, partially offset by lower foreign exchange risks at Credit Suisse First Boston
Equity Investment ERC3,46818(3)Increase at Credit Suisse First Boston due to higher equity trading risk in OTC equity derivatives
Swiss & Retail Lending ERC1,6601(9)No material change
International Lending ERC & Counterparty ERC2,1920(10)Lower lending risks associated with syndications in USD terms at Credit Suisse First Boston, fully offset by the impact of the higher USD exchange rate
Emerging Markets ERC1,877(6)2Decrease at Credit Suisse First Boston due to lower risk exposures in Brazil and Turkey
Real Estate ERC & Structured Asset ERC  1)4,0081122Increase at Credit Suisse First Boston due to higher commercial real estate risk and higher asset-backed securities positions
Insurance Underwriting ERC846625Increase related to revised assessment of risks in discontinued operations
Simple sum across risk categories18,57071 
Diversification benefit(5,954)9(2) 
Total Position Risk ERC12,61662 
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 2004, which is available on the website: www.credit-suisse.com/annualreport2004. 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.



The following table sets forth the trading-related market risk exposure for Credit Suisse, Credit Suisse First Boston and Credit Suisse Group on a consolidated basis, as measured by scaled one-day, 99% VaR:
 1Q20054Q2004
in CHF mMinimumMaximumAverage31.03.05MinimumMaximumAverage31.12.04
Credit Suisse     
Interest rate & credit spread3.66.74.75.13.39.24.74.5
Foreign exchange rate1.45.52.42.51.94.72.83.8
Equity 4.719.38.36.05.29.66.99.5
Commodity0.83.01.42.50.41.40.71.4
Diversification benefit1)1)(6.1)(7.9)1)1)(4.9)(6.4)
Total6.620.510.78.26.813.910.212.8
        
Credit Suisse First Boston    
Interest rate & credit spread44.973.160.255.937.654.846.144.6
Foreign exchange rate9.429.419.410.98.626.315.918.2
Equity 21.750.431.737.121.645.331.335.4
Commodity0.22.91.01.60.20.50.30.4
Diversification benefit1)1)(49.4)(38.5)1)1)(40.6)(39.5)
Total53.674.962.967.040.971.053.059.1
        
Credit Suisse Group 2)    
Interest rate & credit spread58.964.761.758.938.646.844.146.8
Foreign exchange rate12.223.518.512.210.919.416.219.4
Equity 23.837.529.137.523.639.230.739.2
Commodity0.82.51.62.50.61.00.71.0
Diversification benefit1)1)(45.4)(42.1)1)1)(38.7)(43.5)
Total63.569.065.569.041.862.953.062.9
Represents 10-day VaR scaled to a 1-day holding period.
1) As the minimum and maximum occur on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit.
2) 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.













The following table sets forth the gross loan exposure:
 Credit SuisseCredit Suisse First BostonWinterthurCredit Suisse Group
in CHF m31.03.0531.12.0431.03.0531.12.0431.03.0531.12.0431.03.0531.12.04
Consumer loans:        
Mortgages68,45467,119008,2908,48576,74475,604
Loans collateralized by securities15,42515,018004415,42915,022
Other2,2502,319746540002,9952,859
Consumer loans86,12984,4567465408,2948,48995,16893,485
Corporate loans:    
Real estate26,45626,1355786131,3481,37628,38228,124
Commercial & industrial loans36,63333,12614,21613,5011,36295852,21147,585
Loans to financial institutions7,1116,2795,9875,3512,0842,09615,18213,726
Governments and public institutions1,9311,8982504022,1072,1014,2874,401
Corporate loans 72,13167,43821,03119,8676,9016,531100,06293,836
Loans, gross158,260151,89421,77720,40715,19515,020195,230187,321
(Unearned income)/deferred expenses, net136142(33)(32)75110116
Allowance for loan losses(2,245)(2,438)(543)(533)(64)(66)(2,851)(3,038)
Total loans, net156,151149,59821,20119,84215,13814,959192,489184,399
This disclosure presents the lending exposure of the Group from a risk management perspective. This presentation differs from other disclosures in this document.



The following table sets forth the impaired loan portfolio:
 Credit SuisseCredit Suisse First BostonWinterthurCredit Suisse Group
in CHF m31.03.0531.12.0431.03.0531.12.0431.03.0531.12.0431.03.0531.12.04
Non-performing loans 1,3341,48122126837221,5931,771
Non-interest earning loans1,1271,2599913141,1491,281
Total non-performing loans2,4612,74023027750362,7423,052
Restructured loans59537175547117
Potential problem loans1,0121,07735335567711,4321,503
Total other impaired loans1,0171,17239037272761,4791,620
Total impaired loans, gross3,4783,9126206491221124,2214,672
Valuation allowances as % of     
Total non-performing loans91.2%89.0%236.1%192.4%128.0%183.3%104.0%99.5%
Total impaired loans64.5%62.3%87.6%82.1%52.5%58.9%67.5%65.0%



The following table sets forth the movements in the provisions for credit losses:
 Credit SuisseCredit Suisse First BostonWinterthurCredit Suisse Group
in CHF m1Q20054Q20041Q20041Q20054Q20041Q20041Q20054Q20041Q20041Q20054Q20041Q2004
Balance beginning of period2,4382,5153,1135337741,38366721503,0383,3614,646
New provisions656912719623817085138165
Releases of provisions(81)(77)(63)(41)(184)(67)(3)(11)(1)(125)(271)(131)
Net additions charged to income statement(16)(8)64(22)(122)(29)(2)(4)(1)(40)(133)34
Gross write-offs(190)(75)(306)(33)(53)(210)0(3)(74)(223)(133)(590)
Recoveries9661455000231111
Net write-offs(181)(69)(300)(19)(48)(205)0(3)(74)(200)(122)(579)
Allowances acquired0000(24)00000(24)0
Provisions for interest(2)1210192113000173324
Foreign currency translation impact and other adjustments, net6(12)1732(68)37011136(77)64
Balance end of period2,2452,4382,9045435331,1996466862,8513,0384,189
Provision for credit losses disclosed in the Credit Suisse Group consolidated statements of income also includes provisions for lending-related exposure of CHF 4 million, CHF 6 million and CHF 0 million for 1Q2005, 4Q2004 and 1Q2004, respectively.






Private Banking


Private Banking provides high-net-worth individuals in Switzerland and in numerous other markets around the world with wealth management products and services.


Private Banking reported a strong result for the first quarter of 2005. One of the drivers was a recovery in client activity compared to the second half of 2004.

In the course of the expansion of its presence in Asia, Private Banking opened an office in Bangkok, Thailand, in March 2005. The new office will serve as a point of contact for international clients. Private Banking’s new branch in Dubai, United Arab Emirates, started business on April 1, 2005.

In the first quarter of 2005, Private Banking reported net income of CHF 685 million, which was virtually unchanged compared to CHF 681 million in the first quarter of 2004; however, it represents an increase of CHF 69 million, or 11%, compared to the fourth quarter of 2004.

Net revenues amounted to CHF 1,912 million in the first quarter of 2005, almost unchanged versus the first quarter of 2004. Compared to the previous quarter, net revenues increased by CHF 195 million, or 11%. Net interest income benefited primarily from dividend income from the own equity portfolio. This was offset by the lower ex-dividend value of the own equity trading portfolio reported in trading revenues. However, strong income from trading execution had a positive impact on trading revenues. Commissions and fees amounted to CHF 1,209 million, which was CHF 83 million, or 6%, below the first quarter of 2004, due to reduced brokerage fees and product sales. Compared to the previous quarter, however, commissions and fees increased by CHF 60 million, or 5%, driven mainly by increased brokerage fees due to higher client activity.

Total operating expenses amounted to CHF 1,060 million in the first quarter of 2005, CHF 13 million, or 1%, below the first quarter of 2004. Compared to the fourth quarter of 2004, operating expenses increased by CHF 67 million, or 7%, due mainly to an increase in performance-related compensation accruals reflecting the better result. Other expenses were CHF 460 million, which is below the first quarter of 2004, reflecting ongoing cost containment.

The cost/income ratio stood at 55.4% in the first quarter of 2005, 0.1 percentage points above the corresponding period in 2004. However, compared to the previous quarter, the cost/income ratio improved by 2.4 percentage points.

Private Banking’s gross margin stood at 137.7 basis points in the first quarter of 2005, which is 8.6 basis points below the first quarter of 2004 but well above Private Banking’s mid-term target of 130 basis points. Compared to the previous quarter, the gross margin improved by 9.5 basis points due to a substantial increase in underlying revenues.

Private Banking reported a net new asset inflow of CHF 7.0 billion for the first quarter of 2005, which represents an annualized growth rate of 5.2%. Strategic key markets in Asia and Europe reported double-digit growth rates in asset gathering.

Assets under management benefited from higher equity markets as well as from the strengthening of the US dollar and stood at CHF 564.3 billion at the end of the first quarter of 2005, up CHF 25.2 billion, or 5%, compared to year-end 2004.

The following table presents the results of the Private Banking segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Net interest income5144364111825
Commissions and fees1,2091,1491,2925(6) 
Trading revenues including realized gains/(losses) from investment securities, net16911318150(7) 
Other revenues2019565(64)
Total noninterest revenues1,3981,2811,5299(9)
Net revenues1,9121,7171,94011(1)
Provision for credit losses3(2)6(50)
Compensation and benefits600446582353 
Other expenses460546493(16)(7) 
Restructuring charges01(2)(100)
Total operating expenses1,0609931,0737(1)
Income from continuing operations before taxes and minority interests84972686117(1)
Income tax expense15610517549(11) 
Minority interests, net of tax8556060
Net income685616681111



The following table presents key information of the Private Banking segment:
 1Q20054Q20041Q2004
Cost/income ratio55.4%57.8%55.3%
Gross margin137.7 bp128.2 bp146.3 bp
of which asset-driven82.8 bp84.1 bp81.7 bp
of which transaction-driven49.4 bp39.2 bp56.8 bp
of which other5.5 bp4.9 bp7.8 bp
Net margin49.9 bp46.4 bp51.8 bp
Net new assets in CHF bn7.03.910.8
Average allocated capital in CHF m3,5913,3533,228



The following table outlines selected balance sheet and other data of the Private Banking segment:
 31.03.0531.12.04Change in % from 31.12.04
Assets under management in CHF bn564.3539.15
Total assets in CHF bn207.5188.710
Number of employees (full-time equivalents)12,55512,3422






Corporate & Retail Banking


Corporate & Retail Banking offers banking products and services to corporate and retail clients in Switzerland.


Corporate & Retail Banking reported a strong result in the first quarter of 2005 and further improved its return on average allocated capital.

To support its strategic aim of achieving further growth in the Swiss residential mortgage business, Corporate & Retail Banking intensified its marketing activities. In the first quarter of 2005, Corporate & Retail Banking reported a growth rate of 8.7% (annualized) in residential mortgage volumes, which was again well above market growth. Corporate & Retail Banking recorded net income of CHF 274 million in the first quarter of 2005. This represents an increase of CHF 85 million, or 45%, compared to the corresponding period of last year and of CHF 17 million, or 7%, compared to the previous quarter. This result mainly reflects sound revenues, a seasonally low cost base as well as a net release of provisions for credit losses.

Net revenues in the first quarter of 2005 amounted to CHF 860 million, up CHF 73 million, or 9%, compared to the corresponding period of 2004. This growth in net revenues was mainly driven by a strong trading result as well as by higher commission and fee income. These improvements more than offset the decline in net interest income of CHF 29 million, or 5%, reflecting higher hedging costs as well as margin pressure in the Swiss market.

Provisions for credit losses in the first quarter of 2005 resulted in a net release of CHF 19 million, compared to net provisions of CHF 48 million in the corresponding period of last year. The net release in the first quarter of 2005 reflects an ongoing favorable credit environment requiring a low level of new provisions. Total impaired loans declined from CHF 3.7 billion at the end of December 2004 to CHF 3.2 billion at the end of March 2005.

Total operating expenses amounted to CHF 529 million in the first quarter of 2005. The increase of CHF 35 million, or 7%, compared to the same period of the previous year and of CHF 52 million, or 11%, compared to the prior quarter, was driven mainly by higher performance-related compensation accruals reflecting the better result. Other expenses decreased by CHF 50 million or 18% compared to the previous quarter.

Corporate & Retail Banking achieved a return on average allocated capital of 22.4%, which is an improvement of 7.3 percentage points compared to the corresponding period of the previous year and an improvement of 1.6 percentage points compared to the previous quarter.

The segment’s cost/income ratio stood at 61.5%, an improvement of 1.3 percentage points compared to the first quarter of 2004 but 2.1 percentage points above the previous quarter.

The following table presents the results of the Corporate & Retail Banking segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Net interest income5074975362(5)
Commissions and fees22421020878 
Trading revenues including realized gains/(losses) from investment securities, net1014123146339 
Other revenues285520(49)40
Total noninterest revenues3533062511541
Net revenues86080378779
Provision for credit losses(19)(6)48217
Compensation and benefits3082062755012 
Other expenses221271219(18)1
Total operating expenses529477494117
Income from continuing operations before taxes and minority interests350332245543
Income tax expense757456134 
Minority interests, net of tax1100
Net income274257189745



The following table presents key information of the Corporate & Retail Banking segment:
 1Q20054Q20041Q2004
Cost/income ratio61.5%59.4%62.8%
Net new assets in CHF bn1.00.60.9
Return on average allocated capital22.4%20.8%15.1%
Average allocated capital in CHF m4,9144,9565,001



The following table outlines selected balance sheet and other data of the Corporate & Retail Banking segment:
 31.03.0531.12.04Change in % from 31.12.04
Assets under management in CHF bn54.553.91
Total assets in CHF bn102.999.53
Mortgages in CHF bn63.663.01
Other loans in CHF bn25.223.76
Number of branches2142140
Number of employees (full-time equivalents)8,2978,3140






Institutional Securities


Institutional Securities provides financial advisory, lending and capital raising services, as well as sales and trading for global users and suppliers.


Institutional Securities’ first-quarter 2005 net income decreased CHF 83 million to CHF 540 million compared with the first quarter 2004, primarily reflecting lower revenues relative to an exceptionally strong first quarter in the previous year. When measured in Swiss francs versus the first quarter 2004, net revenues were down 4%, while in US dollar terms, net revenues were up 1%. Compared to the fourth quarter of 2004, net income increased CHF 271 million, reflecting a 32% increase in net revenues and a 14% increase in total operating expenses.

Due to the continued favorable credit environment during the first quarter 2005, provisions for credit losses amounted to a net release of CHF 19 million. This compares to a net release of CHF 21 million in the first quarter 2004 and a net release of CHF 118 million in the fourth quarter 2004, which benefited from a significant recovery related to the sale of an impaired loan. Compared to December 31, 2004, total impaired loans decreased CHF 29 million to CHF 620 million, and valuation allowances as a percentage of total impaired loans increased 5.5 percentage points to 87.6% as of March 31, 2005.

Total operating expenses of CHF 3,006 million were CHF 92 million, or 3%, lower than in the first quarter of 2004. Compensation expenses decreased 8%, or CHF 181 million, in the first quarter of 2005, reflecting lower performance-related costs, partially offset by increased salaries and benefits relating to higher headcount, severance costs of CHF 58 million and higher costs related to deferred compensation plans. Other expenses increased 11% to CHF 936 million, primarily reflecting higher commission expenses, professional fees and litigation provisions. Total operating expenses were up 14% compared to the fourth quarter of 2004, reflecting a 29% increase in compensation expenses and a 10% decrease in other expenses.

Total investment banking revenues include debt underwriting, equity underwriting and advisory and other fees. First-quarter 2005 investment banking results declined 25% when compared with the first quarter 2004, mainly as a result of decreases in debt and equity underwriting as well as a small decline in advisory fees.

Debt underwriting revenues of CHF 306 million decreased 23% from the first quarter 2004 due primarily to lower results in asset-backed securities and commercial structured products. The asset-backed securities environment was highly competitive in the quarter and resulted in fee spread compression relative to the first quarter of the previous year. In addition, first-quarter 2004 commercial structured products results were particularly strong. Leverage finance results were essentially flat from first-quarter 2004 levels despite an 18% industry-wide decline in global high-yield debt issuance. For the first quarter of 2005, Institutional Securities was ranked third in global high-yield new issuances. First-quarter 2005 investment grade capital markets revenues increased despite a significantly lower industry market share ranking, which reflected a change in client focus and strategy in this business. Global industry volume for investment grade debt issuance was unchanged compared to the first quarter 2004.

Equity underwriting revenues in the first quarter of 2005 decreased 43% compared to the first quarter of 2004 to CHF 138 million. This decrease reflected a 14% industry-wide decline in the volume of new equity issuances and strong first-quarter 2004 results. Similarly, equity underwriting revenues decreased 31% compared to the fourth quarter of 2004 primarily due to a decline in industry-wide new issuances. Institutional Securities increased its market share to rank second in global IPOs in the first quarter 2005, with key transactions for the quarter including the Premiere AG IPO (the largest media IPO in German history), the AFK Sistema IPO (the largest Russian IPO in history) and the Huntsman IPO and convertible offering (the largest US IPO by a chemicals sector issuer on record).

First-quarter 2005 advisory and other fees of CHF 183 million decreased 9% compared to the first quarter of 2004 and 15% compared to the fourth quarter of 2004, due in part to lower announced transaction volumes in 2004 and in part to the timing of fees. Institutional Securities increased its global mergers and acquisitions market share based on announced transaction dollar volume to number six in the first quarter of 2005 from number eleven for the full year 2004. Institutional Securities advised on five of the top ten announced transactions in the first quarter 2005 — the sale of SunGard Data Systems to a group of private investment firms (the largest leveraged buyout since 1989), the sale of AT&T to SBC Communications, Federated Department Stores’ acquisition of May Department Stores, the sale of Gecina to Metrovacesa (the largest European real estate transaction on record) and the sale of Toys ‘R’ Us to a private investor group (the largest retail leveraged buyout in history).

Total trading revenues include fixed income and equity sales and trading. Total trading revenues for the first quarter of 2005 decreased CHF 122 million, or 4%, compared to an exceptionally strong first quarter of 2004. This slight decline primarily reflects weaker equity trading results, particularly in risk taking and positioning and in the convertibles business due to low volatility levels. Institutional Securities’ first quarter 2005 average daily VaR was CHF 63 million, down from CHF 66 million in the first quarter 2004 and up from CHF 53 million in the fourth quarter 2004.

Fixed income trading generated revenues of CHF 1,926 million in the first quarter of 2005, an increase of 3% from the strong first quarter 2004. The increase primarily reflects improved results in emerging markets trading, asset-backed securities and commercial and residential structured products, partially offset by weaker results in risk taking and positioning and leverage finance. Structured products results increased as a result of improved origination, distribution and trading conditions in local markets. Leverage finance results were down primarily due to lower volumes in the US high-yield market and spread compression. Effective January 1, 2005, Institutional Securities enhanced its estimates of fair value of over-the counter (OTC) derivatives to bring them closer to how the dealer market prices such contracts. Specifically, the valuations were enhanced to take into account better market data regarding counterparty credit exposure and to remove certain administrative cost adjustments that are no longer an element of OTC derivative pricing. This change in estimate resulted in a CHF 125 million adjustment to the valuation of OTC derivatives, which increased revenues for the first quarter 2005. Compared to the fourth quarter 2004, fixed income trading increased substantially by 51%, due to strong performances in emerging markets trading, commercial and residential structured products, interest rate products and the above-mentioned enhancements in fair value estimates, partially offset by weaker results in treasury products.

Equity trading revenues decreased 16% to CHF 926 million in the first quarter of 2005 compared to the first quarter 2004. This decline reflects weaker revenues in the convertibles business due to low volatility, lower risk taking and positioning results and weaker equity derivatives results. These declines were partially offset by improved revenues in prime services, driven primarily by business growth. The prime services business continued to gain momentum by adding valuable client mandates and by advancing in Global Custodian magazine’s annual Prime Brokerage survey to the number two position among all prime brokers, up from number eight in 2004, with twenty “best-in-class” awards. In addition, activity in the Latin America equity cash business was higher as a result of an increase in client-driven activity. Institutional Securities continued to provide more clients with advanced execution services, which includes its award-winning algorithmic trading platform, resulting in an increased revenue contribution. Equity trading revenues increased 12%, or CHF 98 million, compared to the fourth quarter of 2004, primarily due to stronger revenues in equity derivatives and prime services.

Other (including loan portfolio) revenues of CHF 363 million in the first quarter of 2005 increased 98% from the first quarter 2004 due to an increase in gains on private equity-related investments managed separately from Alternative Capital and higher minority interest revenues.

The following table presents the results of the Institutional Securities segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Net interest income9098271,04210(13)
Investment banking627718840(13)(25) 
Commissions and fees6796497635(11) 
Trading revenues including realized gains/(losses) from investment securities, net1,3456261,2481158 
Other revenues28286104228171
Total noninterest revenues2,9332,0792,95541(1)
Net revenues3,8422,9063,99732(4)
Provision for credit losses(19)(118)(21)(84)(10)
Compensation and benefits2,0701,6002,25129(8) 
Other expenses9361,039847(10)11
Total operating expenses3,0062,6393,09814(3)
Income from continuing operations before taxes, minority interests and cumulative effect of accounting changes855385920122(7)
Income tax expense21613025766(16) 
Minority interests, net of tax111(14)40178
Income from continuing operations before cumulative effect of accounting changes52826962396(15)
Cumulative effect of accounting changes, net of tax1200
Net income540269623101(13)



The following table presents the revenue details of the Institutional Securities segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Debt underwriting3063033971(23) 
Equity underwriting138199243(31)(43)
Underwriting444 502640(12)(31)
Advisory and other fees183216200(15)(9)
Total investment banking627718840(13)(25)
Fixed income1,9261,2781,869513 
Equity 9268281,10512(16)
Total trading 2,8522,1062,97435(4)
Other (including loan portfolio)3638218334398
Net revenues3,8422,9063,99732(4)



The following table presents key information of the Institutional Securities segment:
 1Q20054Q20041Q2004
Cost/income ratio78.2%90.8%77.5%
Compensation/revenue ratio53.9%55.1%56.3%
Pre-tax margin22.3%13.2%23.0%
Return on average allocated capital20.5%10.3%25.6%
Average allocated capital in CHF m10,51810,4859,726
Other data excluding minority interests       
Cost/income ratio  1) 2)80.6%90.4%78.3%
Compensation/revenue ratio  1)55.5%54.8%56.9%
Pre-tax margin 1) 2)19.9%13.7%22.2%
1) Excluding CHF 111 million, CHF -13 million and CHF 40 million in 1Q2005, 4Q2004 and 1Q2004, respectively, in minority interest revenues relating to the FIN 46R consolidation.
2) Excluding CHF 0 million, CHF 1 million and CHF 0 million in 1Q2005, 4Q2004 and 1Q2004, respectively, in expenses associated with minority interests relating to the FIN 46R consolidation.



The following table outlines selected balance sheet and other data of the Institutional Securities segment:
 31.03.0531.12.04Change in % from 31.12.04
Total assets in CHF bn760.0707.97
Number of employees (full-time equivalents)16,62616,4981






Wealth & Asset Management


Wealth & Asset Management offers international asset management services to institutional, mutual fund and private investors, provides advisory services for, and invests in, alternative investment vehicles including private equity funds, and provides financial advisory services to high-net-worth individuals and corporate investors.


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

Wealth & Asset Management reported net income of CHF 135 million for the first quarter of 2005, a decrease of CHF 1 million compared to the first quarter of 2004. When measured in Swiss francs versus the first quarter of 2004, net revenues were up 8%, while in US dollar terms, net revenues were up 14%. Net income increased CHF 72 million compared to the fourth quarter 2004. The fourth quarter included severance costs of CHF 88 million associated with the announced changes in the structure of Alternative Capital.

Wealth & Asset Management’s first-quarter of 2005 net revenues were CHF 936 million, a 8% increase from the first quarter of 2004. Revenues before investment-related gains decreased 1% to CHF 667 million compared to the first quarter of 2004, primarily due to lower revenues from Credit Suisse Asset Management and Private Client Services, offset in part by an increase in fees from Alternative Capital driven by higher placement fees in the private funds business.

First-quarter of 2005 investment-related gains decreased 17% compared to the first quarter of 2004, to CHF 105 million reflecting gains from the sale of private equity investments and an increase in interest costs associated with carrying the investment portfolio.

Minority interest revenues, arising from investments that are required to be consolidated under accounting rules (FIN 46R), increased CHF 96 million in the first quarter of 2005 to CHF 164 million compared to the first quarter of 2004.

Compared with the first quarter of 2004, total operating expenses decreased by 4%, or CHF 26 million, reflecting lower other expenses and lower compensation expenses. Compensation expenses in the first quarter of 2005 included severance costs of CHF 7 million.

Wealth & Asset Management had an inflow of net new assets of CHF 5.4 billion during the quarter due to inflows of CHF 3.2 billion in Private Client Services as a result of corporate and client cash inflows, inflows of CHF 1.6 billion in Credit Suisse Asset Management, primarily due to the launch of a new real estate fund in Europe, and inflows of CHF 0.6 billion in Alternative Capital. Assets under management as of March 31, 2005, of CHF 502.3 billion increased by 4% compared to December 31, 2004, due to foreign currency exchange rate movements, net new asset inflows and positive market performance, partially offset by the divestment of a fund in Alternative Capital.

The following table presents the results of the Wealth & Asset Management segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Net interest income18141929(5)
Asset management and administrative fees620659634(6)(2)
Trading revenues including realized gains/(losses) from investment securities, net4937433214
Other revenues249318170(22)46
Total noninterest revenues9181,014847(9)8
Net revenues9361,028866(9)8
Compensation and benefits267352277(24)(4)
Other expenses 3313233472(5)
of which commission and distribution expenses18616122316(17)
of which intangible asset impairment050(100)
Total operating expenses598675624(11)(4)
Income from continuing operations before taxes and minority interests338353242(4)40
Income tax expense4238381111
Minority interests, net of tax16125268(36)137
Net income13563136114(1)



The following table presents the revenue details of the Wealth & Asset Management segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Credit Suisse Asset Management4714734830(2)
Alternative Capital132213117(38)13
Private Client Services646672(3)(11)
Other01(1)(100)
Total before investment-related gains667 753671(11)(1)
Investment-related gains 1)10519127453(17)
Net revenues before minority interests7727727980(3)
Minority interest revenues 2)16425668(36)141
Net revenues9361,028866(9)8
1) Includes realized and unrealized gains/losses from investments as well as net interest income, trading and other revenues associated with Alternative Capital and Other.
2) Reflects minority interest revenues relating to the FIN 46R consolidation.



The following table presents key information for the Wealth & Asset Management segment:       
 1Q20054Q20041Q2004
Cost/income ratio63.9%65.7%72.1%
Compensation/revenue ratio28.5%34.2%32.0%
Pre-tax margin36.1%34.3%27.9%
Return on average allocated capital44.2%23.1%48.8%
Average allocated capital in CHF m1,2211,0891,115
Net new assets in CHF bn   
Credit Suisse Asset Management 1)1.6(3.2)(0.5)
Alternative Capital0.61.10.7
Private Client Services3.21.90.4
Total net new assets5.4(0.2)0.6
Other data excluding minority interests  
Cost/income ratio  2) 3)77.1%86.9%78.2%
Compensation/revenue ratio 2)34.6%45.6%34.7%
Pre-tax margin  2) 3)22.9%13.1%21.8%
1) Credit Suisse Asset Management balances for net new assets include assets managed on behalf of other entities within Credit Suisse Group. This differs from the presentation in the overview of Credit Suisse Group, where such assets are eliminated.
2) Excluding CHF 164 million, CHF 256 million and CHF 68 million in 1Q2005, 4Q2004 and 1Q2004, respectively, in minority interest revenues relating to the FIN 46R consolidation.
3) Excluding CHF 3 million, CHF 4 million and CHF 0 million in 1Q2005, 4Q2004 and 1Q2004, respectively, in expenses associated with minority interests relating to the FIN 46R consolidation.



The following table outlines selected balance sheet and other data of the Wealth & Asset Management segment:       
in CHF bn31.03.0531.12.04Change in % from 31.12.04
Assets under management 
Credit Suisse Asset Management 1)401.6386.74
Alternative Capital38.536.65
Private Client Services62.259.15
Total assets under management502.3482.44
of which advisory 176.7169.24
of which discretionary325.6313.24
Active private equity investments1.31.118
Number of employees (full-time equivalents)2,9752,9810
1) Credit Suisse Asset Management balances for assets under management include assets managed on behalf of other entities within Credit Suisse Group. This differs from the presentation in the overview of Credit Suisse Group, where such assets are eliminated.






Life & Pensions


Life & Pensions offers life insurance and pension solutions to private and corporate clients in Switzerland and selected markets in Europe and Asia through multiple distribution channels.


In the first quarter of 2005, Life & Pensions reported net income of CHF 126 million, down 9% from a net income of CHF 139 million in the first quarter of 2004. This decline was primarily attributable to lower investment income from net realized gains, partially offset by improvements in the underlying business.

Total business volume increased 7% compared to the corresponding period of the previous year. Growth in the first quarter of 2005 was primarily driven by a solid increase in gross premiums written of CHF 327 million, or 7%, to CHF 5.0 billion, which was mainly from Switzerland, Spain and Germany. Deposit business, which includes unit-linked business, grew by 5%, with significant growth in the Central and Eastern European, Swiss and German operations.

In the first quarter of 2005, the net investment return backing traditional life policies amounted to 5.3%, compared to 5.6% in the corresponding quarter of the previous year. Net current investment return remained stable at 3.8% but net realized gains decreased by 0.3 percentage points to 1.5%.

Dividends to policyholders in the first quarter of 2005 decreased CHF 47 million. The first quarter of 2005 reflected the policyholder’s share of the improved performance in the quarter, whereas the higher level of charges in the first quarter of 2004 was primarily due to the introduction of the legal quota in the Swiss group life business.

Insurance underwriting and acquisition expenses decreased slightly, by CHF 19 million, compared to the first quarter of 2004. Administration expenses increased CHF 22 million compared to the first quarter of 2004, which was due to the unusually low level of administration expenses in 2004. The expense ratio decreased by 0.3 percentage points to 6.3%.

The following table presents the results of the Life & Pensions segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Gross premiums written4,9681,9444,6411567
Net premiums earned4,9381,9364,6121557
Net investment income1,5421,8401,581(16)(2)
Other revenues, including fees, and net revenues from deposit business 130163105(20)24
Net revenues6,6103,9396,298685
Policyholder benefits incurred5,2822,2204,9591387
Investment income credited to policyholder account balances324743270(56)20
Dividends to policyholders incurred3743454218(11)
Provision for credit losses(1)(2)(1)(50)0
Total benefits, dividends and credit losses5,9793,3065,649816
Insurance underwriting and acquisition expenses 14510016445(12)
Administration expenses25925023749
Other expenses235749(60)(53)
Restructuring charges032(100)
Total operating expenses4274104524(6)
Income from continuing operations before taxes, minority interests and cumulative effect of accounting changes204223197(9)4
Income tax expense686551533
Minority interests, net of tax104715043
Income from continuing operations before cumulative effect of accounting changes126154139(18)(9)
Income/(loss) from discontinued operations, net of tax0(2)(1)(100)
Cumulative effect of accounting changes, net of tax001(100)
Net income126152139(17)(9)



The following table presents key information of the Life & Pensions segment:
 1Q20054Q20041Q2004
Total business volume in CHF m 1)6,4633,9586,067
Expense ratio 2)6.3%8.8%6.6%
Return on average allocated capital10.8%12.1%10.9%
Average allocated capital in CHF m5,0335,1435,365
1) Includes gross premiums written and policyholder deposits.
2) Insurance underwriting, acquisition and administration expenses as a percentage of total business volume.



The following table outlines selected balance sheet and other data of the Life & Pensions segment:
 31.03.0531.12.04Change in % from 31.12.04
Assets under management (discretionary) in CHF bn 1)119.5115.53
Technical provisions in CHF bn113.9110.53
Number of employees (full-time equivalents)6,9186,5246
1) Based on savings-related provisions for policyholders plus off-balance sheet assets.



The following table presents the investment income of the Life & Pensions segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Net current investment income9919491,0024(1)
of which backing traditional life policies9088749344(3)
of which backing unit-linked liabilities general account8375681122
Realized gains/(losses), net551891579(38)(5)
of which backing traditional life policies37830644724(15)
of which backing unit-linked liabilities general account173585132(70)31
Net investment income1,5421,8401,581(16)(2)
Investment income separate account1372199(37)



The following table presents the investment return of the Life & Pensions segment:
 1Q20054Q20041Q2004
Net current investment return backing traditional life policies3.8%3.6%3.8%
Realized gains/(losses) backing traditional life policies1.5%1.3%1.8%
Net investment return backing traditional life policies5.3%4.9%5.6%
Average assets backing traditional life policies in CHF bn96.496.698.7






Non-Life


Non-Life provides non-life insurance products to private clients and small and medium-sized corporate clients in Switzerland, North America and certain markets in Europe.


In the first quarter of 2005, Non-Life reported net income of CHF 125 million, an increase of 21% compared to net income of CHF 103 million in the first quarter of 2004. This increase was driven primarily by further improvements in underwriting results and reduced charges for divested operations.

Net premiums earned decreased by CHF 85 million, or 3%, to CHF 2.7 billion in the first quarter of 2005 compared to the same quarter of the previous year. This decline was primarily due to a lower level of premiums financed through bonuses in the German health business, partially offset by premium growth in Switzerland.

In the first quarter of 2005, the net investment return decreased slightly to 5.0%. Net current investment return remained stable at 3.5%, and net realized gains decreased by 0.1 percentage points to 1.5%.

The combined ratio improved by 1.0 percentage points to 99.4% in the first quarter of 2005, compared with the same quarter of the previous year. This development was driven by improvements in most market units. The claims ratio decreased by 1.6 percentage points to 75.3% in 2005 versus the corresponding period of the previous year, due mainly to a lower level of large-scale losses and improvements in several market units.

Administration expenses decreased CHF 15 million, whereas insurance underwriting and acquisition expenses increased slightly from CHF 362 million in the first quarter of 2004 to CHF 374 million in the first quarter of 2005. The expense ratio increased by 0.6 percentage points to 24.1% in the first quarter of 2005, compared to the same quarter of the previous year, driven primarily by the decrease in net premiums earned.

Non-Life reported a net loss from discontinued operations of CHF 19 million in the first quarter of 2005, due to charges related to risks retained on the business sold in the UK in 2003.

The following table presents the results of the Non-Life segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Gross premiums written5,3791,7615,451205(1)
Reinsurance ceded(187)(3)(251)(25)
Change in provisions for unearned premiums(2,489)903(2,412)3
Net premiums earned2,7032,6612,7882(3)
Net investment income29923331628(5)
Other revenues including fees4730257
Net revenues3,0492,9243,1064(2)
Claims and annuities incurred2,0352,0112,1431(5)
Dividends to policyholders incurred9012759(29)53
Total claims, dividends and credit losses2,1252,1382,202(1)(3)
Insurance underwriting and acquisition expenses 374395362(5)3
Administration expenses27824029316(5)
Other expenses4636867(88)(31)
Restructuring charges054(100)
Total operating expenses6981,008726(31)(4)
Income/(loss) from continuing operations before taxes and minority interests226(222)17827
Income tax expense/(benefit)68(44)14386
Minority interests, net of tax14(2)(1)
Income/(loss) from continuing operations144(176)165(13)
Income/(loss) from discontinued operations, net of tax(19)(1)(62)(69)
Net income/(loss)125(177)10321



The following table presents key information of the Non-Life segment:
 1Q20054Q20041Q2004
Combined ratio99.4%99.4%100.4%
Expense ratio 1)24.1%23.9%23.5%
Claims ratio 2)75.3%75.5%76.9%
Return on average allocated capital28.2%(35.6%)18.5%
Average allocated capital in CHF m1,9732,0142,211
1) Insurance underwriting, acquisition and administration expenses as a percentage of net premiums earned.
2) Claims and annuities incurred as a percentage of net premiums earned.



The following table outlines selected balance sheet and other data of the Non-Life segment:
 31.03.0531.12.04Change in % from 31.12.04
Assets under management (discretionary) in CHF bn25.224.15
Technical provisions in CHF bn28.225.013
Number of employees (full-time equivalents)12,26112,844(5)



The following table presents the investment income of the Non-Life segment:
in CHF m1Q20054Q20041Q2004Change in % from 4Q2004Change in % from 1Q2004
Net current investment income21320021470
Realized gains/(losses), net8633102161(16)
Net investment income29923331628(5)



The following table presents the investment return of the Non-Life segment:
 1Q20054Q20041Q2004
Net current investment return3.5%3.4%3.5%
Realized gains/(losses), net1.5%0.5%1.6%
Net investment return5.0%3.9%5.1%
Average assets in CHF bn24.023.824.8






Investments for Life & Pensions and Non-Life


Winterthur’s investment portfolios are managed according to a defined process and set of guidelines in order to meet the diversification, credit quality, yield and liquidity requirements of policy liabilities.

Investments include debt instruments such as government and corporate bonds, loans, and mortgage loans, real estate, equities and alternative assets.

The following table illustrates the investment portfolio of Life & Pensions and Non-Life by investment type:
 31.03.0531.12.04
in CHF mBook value Fair valueBook valueFair value
Debt securities - held-to-maturity 10,118 10,40610,14110,336
Debt securities - available-for-sale 73,682 73,68270,93770,937
Equity securities - available-for-sale 6,272 6,2725,9505,950
Debt securities - trading1,525 1,5251,7711,771
Equity securities - trading11,509 11,50910,81810,818
Mortgage loans10,121 10,12110,02810,028
Loans5,149 5,1495,0635,063
Real estate8,449 8,8358,4178,825
Other investments3,750 3,7503,5623,562
Investments, general account130,575 131,249126,687127,290
Investments, separate account4,726 4,7264,4904,490
Total investments135,301 135,975131,177131,780
of which Life & Pensions112,347 112,780109,857110,224
of which Non-Life22,954 23,19521,32021,556
Debt and Equity securities - trading include CHF 12,908 million (December 31, 2004: CHF 12,358 million) held to back unit-linked liabilities in the general account.



The following table illustrates held-to-maturity and available-for-sale securities of Life & Pensions and Non-Life:
 31.03.0531.12.04
in CHF mAmortized cost Gross unrealized gains Gross unrealized losses Fair value Amortized costGross unrealized gains Gross unrealized lossesFair value 
Debt securities - held-to-maturity10,118289110,40610,141198310,336
Debt securities - available-for-sale 70,9683,42270873,68267,9144,0351,01270,937
Equity securities - available-for-sale 5,656680646,2725,330686665,950
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