Prepared and filed by St Ives Burrups

 

 



FORM 6-K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer
Dated May 6, 2003

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

For the month of May 6, 2003

Commission File Number 001-15244

CREDIT SUISSE GROUP
(Translation of registrant's name into English)

Paradeplatz 8, P.O. Box 1, CH-8070 Zurich, Switzerland
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F        Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):       

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):       

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes        No  

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-       




Media Relations

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

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

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

 

CREDIT SUISSE GROUP REPORTS NET PROFIT OF
CHF 652 MILLION FOR THE FIRST QUARTER 2003
 
Credit Suisse First Boston Returns to Profitability
 
Credit Suisse Financial Services Reports
Improved Results Across All Segments
 
 
 

Zurich, May 6, 2003 Credit Suisse Group today announced a net profit of CHF 652 million for the first quarter of 2003, in line with the Group’s pre­liminary outlook announced on April 25, 2003. Credit Suisse First Boston returned to profitability in the first quarter, due in large part to the signif­icantly improved performance of its Institutional Securities segment. Winterthur’s results recovered further in the first quarter, with both Life & Pensions and Insurance improving their profitability versus the fourth quarter due primarily to increased investment income, tariff increases and lower administration costs. Private Banking recorded a higher segment profit than in the fourth quarter of 2002, as well as net new assets of CHF 1.5 billion. At the same time, Corporate & Retail Banking reported a significant increase in profitability compared to the weak fourth quarter of 2002.

Oswald J. Grübel, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse Financial Services, stated, "Credit Suisse Group’s first quarter results demonstrate real progress on our goal to return the Group to profitability in 2003. In addition, we are pleased that all of Credit Suisse Financial Services’ segments improved their results in the first quarter, reflecting our targeted measures to reduce costs and adapt the business to prevailing market conditions."

John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse First Boston, said, "Credit Suisse First Boston’s return to profitability in the first quarter confirms that the measures we have taken to restore our earnings strength are paying off. Last week, we announced the successful conclusion of the sale of Pershing to The Bank of New York. We also finalized the agreement with US regulators last week, which is an important step forward for the Firm and the entire industry in restoring investor confidence."

 

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Group Results

In the first quarter of 2003, Credit Suisse Group reported a net profit of CHF 652 million, including writedowns on the Group’s investments in Swiss Life and Swiss International Airlines of CHF 73 million and CHF 77 million, respectively, and CHF 204 million of amortization of acquired intangible assets and goodwill, after tax. This compared with a net loss of CHF 950 million in the fourth quarter of 2002, in which results were impacted by after-tax exceptional items of CHF 1.3 billion and the one-time positive cumulative effect of a change in accounting principlefor periods prior to 2002 of CHF 520 million. Compared to the first quarter of 2002, net profit increased by CHF 284 million or 77%. The Group’s operating income was CHF 7.0 billion in the first quarter of 2003, up 10% versus the previous quarter but down 16% versus the first quarter of 2002. The Group’s operating expenses decreased 2% versus the fourth quarter to CHF 5.0 billion and were down 23% compared to the first quarter of 2002.

Earnings per share for the first quarter of 2003 were CHF 0.53, versus a loss of CHF 0.80 for the fourth quarter and a profit of CHF 0.31 for the first quarter of 2002. The Group’s return on equity was 9.2% in the first quarter of 2003, versus -13.0% in the fourth quarter and 4.1% in the first quarter of 2002. The Group’s consolidated BIS tier 1 ratio was 10.0% as of March 31, 2003, up from 9.7% as of December 31, 2002. This increase is attributable to earnings generated in the first quarter, offset by moderate growth in risk-weighted assets in the banking segments and slightly lower equity in the insurance business, and to the positive impact of the Pershing sale transaction that closed on May 1, 2003.

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Business Unit Results

The segment results described below represent net operating profit before minority interests, excluding exceptional items (at Private Banking, Institutional Securities and CSFB Financial Services segments) and the one-time positive cumulative effect of a change in accounting principle for periods prior to 2002 in the fourth quarter of 2002. For further information on Credit Suisse Group’s first quarter 2003 and fourth quarter 2002 results, please refer to the respective Quarterly Reports, including the reconciliation of operating results to consolidated results contained therein.

All of Credit Suisse Financial Services’ segments improved their performance in the first quarter of 2003 versus the previous quarter. However, as the business unit’s fourth quarter 2002 result benefited from the one-time positive cumulative effect of a change in accounting principle for periods prior to 2002 of CHF 266 million, its first quarter 2003 net profit of CHF 666 million represents a decline of 6% quarter-on-quarter. Compared to the first quarter of 2002, net profit was up 13%. Before the amortization of acquired intangible assets and goodwill, excluding exceptional items in the fourth quarter of 2002 of CHF 73 million and the cumulative effect of a change in accounting principle for periods prior to 2002, first quarter 2003 net operating profit was CHF 690 million, up 29% versus the fourth quarter and up 11% versus the first quarter of 2002.

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Private Banking reported a segment profit of CHF 371 million in the first quarter 2003, up 10% versus the previous quarter but down 39% compared to the first quarter of 2002. Operating income declined 2% versus the previous quarter to CHF 1.3 billion and was down 21% versus the first quarter of 2002, primarily as a result of reduced transaction volumes in the securities business due to investor passivity and the market-driven lower asset base. First quarter operating expenses decreased 7% versus the fourth quarter and 8% versus the first quarter of 2002.

Corporate & Retail Banking posted a segment profit of CHF 124 million in the first quarter of 2003, up 158% versus the weak fourth quarter but down 15% compared to the first quarter of 2002. Operating income rose 3% quarter-on-quarter to CHF 734 million but was down 7% versus the first quarter of 2002. First quarter operating expenses were down 14% and 3% versus the fourth and first quarters of 2002, respectively. The cost/income ratio was 67.4% for the first quarter of 2003, compared to 80.8% in the fourth quarter of 2002.

Life & Pensions recorded a segment profit of CHF 111 million in the first quarter of 2003, an increase of CHF 96 million versus the first quarter of 2002 and of CHF 18 million compared to the fourth quarter of 2002. Investment income was CHF 1.2 billion for the first quarter of 2003, up CHF 429 million versus the first quarter of 2002. Life & Pensions reported a decrease in gross premiums written of 4%, or CHF 263 million, to CHF 6.5 billion compared to the first quarter of 2002. Adjusted for acquisitions, divestitures and exchange rate impacts, premiums fell 2% versus the first quarter of 2002. The expense ratio for the first quarter of 2003 was 6.8%, compared to 6.4% in the first quarter of 2002.

Insurance reported a segment profit of CHF 92 million in the first quarter of 2003, an increase of CHF 239 million compared to the first quarter of 2002 and of CHF 86 million compared to the fourth quarter of 2002. First quarter 2003 investment income was CHF 289 million, up CHF 202 million versus the first quarter of 2002. Net premiums earned rose CHF 227 million, or 6%, to CHF 4.0 billion versus the first quarter of 2002. Adjusted for acquisitions, divestitures and exchange rate impacts, the premium volume increased 13%. The combined ratio improved 3.2 percentage points in the first quarter to 100.7%, compared to 103.9% in the first quarter of 2002.

The Credit Suisse First Boston business unit reported a net profit of USD 161 million (CHF 221 million) in the first quarter of 2003, compared to a net loss of USD 811 million (CHF 1.3 billion) in the fourth quarter and a net loss of USD 19 million (CHF 32 million) in the first quarter of 2002. Before the amortization of acquired intangible assets and goodwill, excluding exceptional items in the fourth quarter of 2002 of CHF 1.4 billion before tax, or CHF 1.3 billion after tax, and the one-time positive cumulative effect of a change in accounting principle for periods prior to 2002, first quarter net operating profit was USD 292 million (CHF 400 million), compared to a net operating profit of USD 11 million (CHF 15 million) in the fourth quarter and up 88% from a net operating profit of USD 155 million (CHF 259 million) in the first quarter of 2002. Trends in operating income and expenses were affected by a change in reporting for Pershing; effective January 1, 2003, Pershing’s operating income was reported net of expenses. First quarter operating income increased 24% on a US dollar basis versus the previous quarter, reflecting significantly increased revenues in the Institutional Securities segment. With cost control remaining one of its top priorities, Credit Suisse First Boston significantly improved its pre-tax margin in the first quarter versus both the fourth and first quarters of 2002. Total operating expenses were 16% higher than in the fourth quarter and 16% lower than in the first quarter of 2002. Excluding Pershing, total operating expenses were 27% higher quarter-on-quarter because of increased incentive compensation tied to performance. However, compared to the first quarter of 2002 – again excluding Pershing – operating expenses were down 10% on a 12% reduction in headcount and various cost contain­ment measures.

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Institutional Securities reported a segment profit of USD 348 million (CHF 476 million) in the first quarter of 2003, up 452% versus the fourth quarter and 60% versus the first quarter of 2002. First quarter 2003 operating income was up 39% versus the prior quarter, to USD 2.6 billion (CHF 3.6 billion), reflecting stronger results in Fixed Income. Compared to the first quarter of 2002, operating income declined 5% as improved Fixed Income results were insufficient to offset industry-wide declines in equities and M&A volumes. Segment operating expenses were consistent with overall Firm trends cited above. In the first quarter of 2003, despite the continuing challenging market environment, the Equity division’s rankings in research, sales and trading generally remained consistent or improved, and Credit Suisse First Boston retained its number one ranking in global high yield new issuances.

CSFB Financial Services reported a segment profit of USD 37 million (CHF 51 million) for the first quarter of 2003, a decline of 23% versus the fourth quarter and 47% versus the first quarter of 2002. This performance reflects lower results from Private Client Services and Pershing, which were impacted by low customer activity and unfavorable market conditions, as well as from Credit Suisse Asset Management, which experienced a decline in assets under management. Operating income for the segment was down 37% compared to the fourth quarter and 43% compared to the first quarter of 2002, and operating expenses were below both periods by 41% and 44%, respectively. Excluding Pershing, operating income was flat compared to the fourth quarter and was down 5% compared to the first quarter of 2002, while operating expenses were below both periods by 3% and 5%, respectively.

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Net New Assets

Credit Suisse Financial Services reported net new assets of CHF 0.3 billion in the first quarter of 2003, with net inflows of CHF 1.5 billion at Private Banking and of CHF 2.2 billion at Life & Pensions partially offset by a net outflow of CHF 3.4 billion from Corporate & Retail Banking due to a shift from time deposit accounts of corporate clients to transaction accounts, which do not qualify as assets under management. Credit Suisse First Boston reported a net asset outflow of CHF 3.8 billion in the first quarter, as a CHF 1.5 billion net inflow at Private Client Services was offset by net outflows of CHF 5.2 billion from Credit Suisse Asset Management and CHF 0.1 billion from Institutional Securities. For Credit Suisse Group, an overall net asset outflow of CHF 3.5 billion was recorded in the first quarter of 2003, compared with a net asset outflow of CHF 6.6 billion in the fourth quarter of 2002. The Group’s total assets under management were CHF 1,160.5 billion as of March 31, 2003, a decline of 2.9% versus December 31, 2002.


Valuation Adjustments, Provisions and Losses

Total valuation adjustments, provisions and losses of CHF 233 million were recorded in the first quarter of 2003, a decrease of 90% compared with CHF 2.4 billion in the fourth quarter of 2002. Compared to the first quarter of 2002, valuation adjustments, provisions and losses decreased 51%.

Outlook


Given the continued challenging market environment and global uncertainty, Credit Suisse Group remains cautious in its outlook for 2003. The Group made progress towards its goal to return to solid profitability in 2003 but remains exposed to continued volatility in the financial markets, especially as regards the Life & Pensions business.

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Enquiries

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

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

The Quarterly Report Q1 2003 and the slide presentation will be available from around 07.30 CET / 06.30 BST / 01.30 EST at www.credit-suisse.com/results/docu.

Credit Suisse Group
Credit Suisse Group is a leading global financial services company headquartered in Zurich. The business unit Credit Suisse Financial Services provides private clients and small and medium-sized companies with Private Banking and financial advisory services, banking products, and Pension and Insurance solutions from Winterthur. The business unit Credit Suisse First Boston, an Investment Bank, serves global institutional, corp­or­ate, government and individual clients in its role as a financial intermediary. Credit Suisse Group’s registered shares (CSGN) are listed in Switzer­land and Frankfurt, and in the form of American Depositary Shares (CSR) in New York. The Group employs around 73,000 staff worldwide. As of March 31, 2003, it reported assets under management of CH 1,160.5 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.

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

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

Date Tuesday, May 6, 2003
   
Time 15.00 CET / 14.00 BST / 09.00 EST
   
Speakers Philip K. Ryan, CFO of Credit Suisse Group
  Ulrich Körner, CFO of Credit Suisse Financial Services
  Barbara Yastine, CFO of Credit Suisse First Boston
   
  All presentations will be held in English.
   
Webcast http://www.credit-suisse.com/results
   
Telephone Europe: +41 91 610 5600
  UK:       +44 207 866 4111
  USA: +1 412 858 4600
   
  Reference: “Credit Suisse Group quarterly results”
   
Q&A You will have the opportunity to ask the speakers questions via telephone conference following the presentations.
   
Playback

Video on demand – available approximately three hours after the event at http://www.credit-suisse.com/results

   
  Telephone – available approximately one hour after the event; please dial:
  Europe:  +41 91 612 4330
  UK:      +44 207 866 4300
  USA:     +1 412 858 1440
   
  Conference ID: 631#
   
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.

 

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QUARTERLY REPORT 2003  Q1


Credit Suisse Group is a leading global financial services company headquartered in Zurich. Credit Suisse Financial Services provides private clients and small and medium-sized companies with private banking and financial advisory services, banking products, and pension and insurance solutions from Winterthur. Credit Suisse First Boston, the investment bank, serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group’s registered shares (CSGN) are listed in Switzerland and Frankfurt, and in the form of American Depositary Shares (CSR) in New York. The Group employs around 73,000 staff worldwide.

QUARTERLY REPORT 2003 
EDITORIAL
CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q1/2003
AN OVERVIEW OF CREDIT SUISSE GROUP
Equity capital
Net new assets
Operating income and expenses
Valuation adjustments, provisions and losses
Outlook
RISK MANAGEMENT
Overall risk trends
Trading risks
Credit risk exposure
REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES
Private Banking
Corporate & Retail Banking
Life & Pensions
Insurance
REVIEW OF BUSINESS UNITS | CREDIT SUISSE FIRST BOSTON
Institutional Securities
CSFB Financial Services
RECONCILIATION OF OPERATING TO CONSOLIDATED RESULTS
Reconciliation of operating to consolidated results
CONSOLIDATED RESULTS | CREDIT SUISSE GROUP
LOANS
INFORMATION FOR INVESTORS
Enquiries
Financial Publications
This symbol is used to indicate topics on which further information is available on our website. Go to www.credit-suisse.com/results/bookmarks.html to find links to the relevant information. The additional information -indicated is openly accessible and does not form part of the Quarterly Report. Some areas of Credit Suisse Group’s websites are only available in English.

Cautionary statement regarding forward-looking information

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

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

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

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

Cautionary statement regarding non-GAAP financial information

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



EDITORIAL



Oswald J. Grübel
Co-CEO Credit Suisse Group
Chief Executive Officer
Credit Suisse Financial Services


John J. Mack
Co-CEO Credit Suisse Group
Chief Executive Officer
Credit Suisse First Boston
Dear shareholders, clients and colleagues

In the first quarter of 2003 Credit Suisse Group returned to profitability. The Group recorded a net profit of CHF 652 million in a challenging environment, after reporting a net loss of CHF 950 million in the previous quarter. The measures that we took across the Group to restore earnings strength and adapt the cost structure to the current business environment are beginning to pay off. The Group expects continuing challenging conditions for the remainder of the year. However, we are fully committed to achieving our goal of profitability in 2003.

All segments of Credit Suisse Financial Services improved profitability and reported better results than in the fourth quarter of 2002. Credit Suisse Financial Services posted a net profit of CHF 666 million in the first quarter of 2003, compared with a net profit of CHF 705 million in the previous quarter, which included the one-time positive cumulative effect of a change in accounting principle in the amount of CHF 266 million for periods prior to 2002. Private Banking recorded an increased segment profit and an increased level of net new assets compared with the fourth quarter of 2002. Corporate & Retail Banking increased its segment profit considerably compared to a weak fourth quarter.

Our insurance segments, Life & Pensions and Insurance, further improved their operating performance in the first quarter of 2003 and both segments increased their segment profits compared to the previous quarter. These improvements resulted primarily from tariff increases and stronger investment income. The realignment of the Winterthur organization has resulted in the merger of its two Corporate Centers and redefined management levels for the countries where the life and non-life businesses are being merged.

Credit Suisse First Boston restored its profitability in the first quarter of 2003, with a net profit of USD 161 million (CHF 221 million) compared to a net loss of USD 811 million (CHF 1.3 billion) in the previous quarter. Its Institutional Securities segment improved significantly from the fourth quarter of 2002, benefiting in particular from a strong performance by the Fixed Income division, notably lower cost levels and credit provisions. In the fourth quarter of 2002, the business unit reached an agreement in principle with certain US regulators involving research analyst independence and IPO allocations to corporate executives, and an ultimate settlement was recently finalized. In addition, certain structural and financial legacies and costs were reduced considerably.

The Group's consolidated BIS tier 1 ratio increased further to 10.0%, compared to 9.7% as of December 31, 2002 reflecting the quarter’s earnings and the sale of Pershing, partly offset by moderate growth in risk-weighted assets in the banking business.

While we are not yet satisfied with our results, we are pleased that the first quarter performance is the first tangible result of our efforts to return the Group to profitability. We expect 2003 to be challenging and will continue to focus on cost control and the strength of our franchises.

Oswald J. Grübel John J. Mack
May 2003


CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q1/2003

Consolidated income statement       
                  Change   Change  
                  in % from   in % from  
in CHF m     1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Operating income     7,024   6,395   8,330   10   (16)  
Gross operating profit     2,004   1,284   1,832   56   9  
Net profit/(loss)     652   (950)   368     77  


Return on equity       
                  Change   Change  
                  in % from   in % from  
in %     1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Return on equity     9.2   (13.0)   4.1     124  


Consolidated balance sheet       
                      Change  
                      in % from  
in CHF m             31.03.03   31.12.02   31.12.02  
Total assets             992,143   955,656   4  
Shareholders' equity             31,402   31,394   0  
Minority interests in shareholders' equity             2,879   2,878   0  


Capital data       
                      Change  
                      in % from  
in CHF m             31.03.03   31.12.02   31.12.02  
BIS risk-weighted assets             205,548   201,466   2  
BIS tier 1 capital             20,517   19,544   5  
of which non-cumulative perpetual preferred securities             2,146   2,162   (1)  
BIS total capital             34,685   33,290   4  


Capital ratios      
in %                31.03.03   31.12.02  
BIS tier 1 ratioCredit Suisse               7.5   7.4  
 Credit Suisse First Boston1)            10.5   10.3  
 Credit Suisse Group2)            10.0   9.7  
BIS total capital ratio Credit Suisse Group               16.9   16.5  


Assets under management/client assets       
                      Change  
                      in % from  
in CHF bn             31.03.03   31.12.02   31.12.02  
Advisory assets under management             588.5   605.6   (3)  
Discretionary assets under management             572.0   589.7   (3)  
Total assets under management             1,160.5   1,195.3   (3)  
Client assets             1,256.7   1,793.2   (30)  


Net new assets       
                  Change   Change  
                  in % from   in % from  
in CHF bn     1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net new assets     (3.5)   (6.6)   13.5   (47)    
1) Ratio is based on a tier 1 capital of CHF 11.2 bn (31.12.02: CHF 10.6 bn), of which non-cumulative perpetual preferred securities is CHF 1.0 bn (31.12.02: CHF 1.0 bn).
2) Ratio is based on a tier 1 capital of CHF 20.5 bn (31.12.02: CHF 19.5 bn), of which non-cumulative perpetual preferred securities is CHF 2.1 bn (31.12.02: CHF 2.2 bn).


Number of employees (full-time equivalents)     
                  Change  
                  in % from  
           31.03.03   31.12.02   31.12.02  
Switzerlandbanking         20,952   21,270   (1)  
 insurance         6,876   7,063   (3)  
Outside Switzerlandbanking         20,726   25,057   (17)  
 insurance         24,817   25,067   (1)  
Total employees Credit Suisse Group           73,371   78,457   (6)  


Share data      
                    Change  
                    in % from  
            31.03.03   31.12.02   31.12.02  
Shares issued           1,189,891,720   1,189,891,720   0  
To be issued upon conversion of MCS1)         40,413,838   40,413,838   0  
Shares outstanding           1,230,305,558   1,230,305,558   0  
Share price in CHF           23.50   30.00   (22)  
Market capitalization in CHF m           28,912   36,909   (22)  
Book value per share in CHF           23.18   23.18   0  
1) Maximum number of shares related to Mandatory Convertible Securities (MCS) issued by Credit Suisse Group Finance (Guernsey) Ltd. in December 2002.


Share price       
                Change   Change  
                in % from   in % from  
in CHF   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
High (closing price)   34.45   35.70   73.60   (4)   (53)  
Low (closing price)   20.70   20.60   56.50   0   (63)  


Earnings per share       
                Change   Change  
                in % from   in % from  
in CHF   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Basic earnings per share   0.53   (0.80)   0.31     71  
Diluted earnings per share   0.53   (0.80)   0.31     71  








AN OVERVIEW OF CREDIT SUISSE GROUP



Credit Suisse Group returned to profitability in the first quarter of 2003, reporting a net profit of CHF 652 million, compared with a net loss of CHF 950 million in the fourth quarter of 2002. Compared to the first quarter of 2002, the net profit increased CHF 284 million, or 77%. Credit Suisse Financial Services recorded a net profit of CHF 666 million, with all segments posting improved results. Credit Suisse First Boston recorded a net profit of USD 161 million (CHF 221 million) with a significant improvement in the results of the Institutional Securities segment.

The first quarter 2003 results demonstrate Credit Suisse Group's progress on returning to profitability despite continuing challenging market conditions.

Winterthur’s results continued to recover in the first quarter of 2003, with both Life & Pensions and Insurance improving profitability compared to the previous quarter due to stronger investment income and tariff increases. Private Banking recorded a higher segment profit than in the fourth quarter of 2002, primarily due to lower operating expenses. Corporate & Retail Banking increased its segment profit considerably compared to a weak fourth quarter. Overall, Credit Suisse Financial Services reported a net profit of CHF 666 million in the first quarter of 2003, down 6% compared to the fourth quarter of 2002 and up 13% compared to the corresponding period of the previous year. In the fourth quarter of 2002, Credit Suisse Financial Services’ results benefited from the one-time cumulative effect of a change in accounting principle for periods prior to 2002.

Credit Suisse First Boston posted a first quarter net profit of USD 161 million (CHF 221 million), compared with a net loss of USD 811 million (CHF 1.3 billion) in the previous quarter, which was impacted by exceptional items of USD 813 million (CHF 1.3 billion) after-tax. Compared to the first quarter of 2002, the business unit’s net profit increased USD 180 million (CHF 253 million). Institutional Securities improved its segment result in the first quarter of 2003 significantly compared to the previous quarter, benefiting particularly from strong results in the Fixed Income business. CSFB Financial Services reported a lower segment result compared to the fourth quarter of 2002, mainly due to weak equity markets and lower assets under management.

After accounting for the Corporate Center, which includes writedowns on the Group’s investments in Swiss Life and Swiss International Airlines of CHF 73 million and CHF 77 million, respectively, the Group reported a net profit of CHF 652 million for the first quarter of 2003, compared with a net loss of CHF 950 million in the previous quarter. In the first quarter of 2003, net profit included CHF 204 million of amortization of acquired intangible assets and goodwill after-tax. The fourth quarter 2002 results were impacted by exceptional items of CHF 1.3 billion after-tax and the positive one-time cumulative effect of a change in accounting principle for periods prior to 2002 in the amount of CHF 520 million. Compared to the first quarter of 2002, net profit increased CHF 284 million, or 77%. Earnings per share for the first quarter of 2003 were CHF 0.53 versus a loss of CHF 0.80 for the fourth quarter of 2002 and a profit of CHF 0.31 for the first quarter of 2002. The Group’s return on equity was 9.2% in the first quarter of 2003 versus -13.0% in the fourth quarter and 4.1% in the first quarter of 2002.


Equity capital
During the first quarter of 2003, Credit Suisse Group further improved its capital base in addition to the improvements reported in the fourth quarter of 2002. The Group’s consolidated BIS tier 1 ratio stood at 10.0% as of March 31, 2003, up from 9.7% as of December 31, 2002. This increase was due to earnings generated in the first quarter of 2003, offset by moderate growth in risk-weighted assets in the banking business and slightly lower equity in the insurance business. The Pershing sale transaction also had a positive impact on core capital.

On the basis of the final local statutory accounts of Winterthur’s operating entities for 2002, which were completed in April 2003, Credit Suisse Group updated Winterthur’s consolidated EU solvency ratio effective December 31, 2002, to 142%. At year-end 2002, the local solvency ratios of Winterthur’s operating entities worldwide continued to exceed regulatory requirements: for the ten largest entities, the average local coverage was above 200% and the lowest ratio was 135% at year-end. The consolidated EU solvency ratio is a supplementary financial disclosure for Winterthur and has no impact on published financial statements and note disclosures, regulatory insurance filings, or the Group’s internal economic risk capital models. This update does not change the Group’s view regarding the capitalization of Winterthur.


Net new assets
Credit Suisse Financial Services reported net new assets of CHF 0.3 billion in the first quarter of 2003, with net inflows of CHF 1.5 billion at Private Banking and CHF 2.2 billion at Life & Pensions, offset by a net outflow of CHF 3.4 billion from Corporate & Retail Banking due to a shift from time deposit into transaction accounts, which do not qualify as assets under management. Credit Suisse First Boston reported a net asset outflow of CHF 3.8 billion in the first quarter of 2003, as CHF 1.5 billion of net new assets from Private Client Services were offset by a net outflow of CHF 5.2 billion from Credit Suisse Asset Management and CHF 0.1 billion from Institutional Securities. For Credit Suisse Group, an overall net asset outflow of CHF 3.5 billion was recorded in the first quarter of 2003, compared with a net asset outflow of CHF 6.6 billion recorded in the fourth quarter of 2002. The Group’s total assets under management stood at CHF 1,160.5 billion as of March 31, 2003, corresponding to a decline of 2.9% versus December 31, 2002.


Operating income and expenses
The Group’s operating income was CHF 7.0 billion in the first quarter of 2003, up 10% on the previous quarter but down 16% on the first quarter of 2002. Credit Suisse Financial Services reported operating income of CHF 3.4 billion in the first quarter of 2003, a decrease of 4% versus the previous quarter and an increase of 3% versus the first quarter of 2002. At Private Banking, operating income decreased 2% versus the previous quarter due to investor passivity and a reduced asset base. Corporate & Retail Banking posted a 3% increase in operating income quarter-on-quarter, mainly driven by higher transaction-based and trading income. At Credit Suisse First Boston, first quarter 2003 operating income increased 24% on a US dollar basis versus the previous quarter to USD 2.9 billion (CHF 4.0 billion), mainly reflecting a significant increase in revenue in the Fixed Income business within Institutional Securities from USD 587 million (CHF 806 million) to USD 1.4 billion (CHF 1.9 billion). Compared to the first quarter of 2002, Credit Suisse First Boston’s operating income decreased 11%, reflecting weak market conditions in the mergers and acquisitions and equity new issuance markets. The increase in operating income versus the fourth quarter of 2002 was partially offset by a decline in operating income at CSFB Financial Services of 37% versus the previous quarter, principally related to the sale of Pershing. Excluding Pershing, operating income of CSFB Financial Services was flat compared with the fourth quarter of 2002 and decreased 5% compared to the first quarter of 2002.

The Group’s operating expenses decreased 2% quarter-on-quarter to CHF 5.0 billion, and were down 23% on the first quarter of 2002. At Credit Suisse Financial Services, first quarter operating expenses decreased 7% compared to the previous quarter and 5% versus the first quarter of 2002. At Credit Suisse First Boston, first quarter operating expenses increased 16% versus the previous quarter due to a rise in incentive compensation linked to improved performance and compared to an unusually low fourth quarter incentive compensation level. Compared to the first quarter of 2002, Credit Suisse First Boston’s operating expenses decreased 16%, reflecting headcount reductions and cost containment measures. For the first quarter of 2003, Credit Suisse First Boston’s other operating expenses were down 18% compared with the fourth quarter of 2002 and 15% compared with the first quarter of 2002.


Valuation adjustments, provisions and losses
Total valuation adjustments, provisions and losses were CHF 233 million in the first quarter of 2003 compared with CHF 2.4 billion in the fourth quarter of 2002, which included a charge of CHF 778 million in respect of an adjustment in the method of estimating inherent losses related to lending activities. In the first quarter of 2003, valuation adjustments, provisions and losses included a charge of CHF 32 million related to inherent loan loss risks. Compared to the first quarter of 2002, valuation adjustments, provisions and losses decreased 51%.


Outlook
Credit Suisse Group remains cautious in its outlook for 2003 given the continued challenging market environment and global uncertainty. The Group made progress towards its goal to return to profitability in 2003 but remains exposed to continued volatility in the financial markets.

Overview of business unit results 1)            
  Credit Suisse Financial Services   Credit Suisse First Boston   Adjust. incl. Corporate Center   Credit Suisse Group  
in CHF m   1Q2003   4Q2002   1Q2002   1Q2003   4Q2002   1Q2002   1Q2003   4Q2002   1Q2002   1Q2003   4Q2002   1Q2002  
Operating income   3,393   3,517   3,306   3,915   3,321   5,338   (284)   (443)   (314)   7,024   6,395   8,330  
Personnel expenses   1,369   1,408   1,443   2,177   1,896   3,216   93   160   178   3,639   3,464   4,837  
Other operating expenses   779   896   814   904   1,184   1,302   (302)   (433)   (455)   1,381   1,647   1,661  
Operating expenses   2,148   2,304   2,257   3,081   3,080   4,518   (209)   (273)   (277)   5,020   5,111   6,498  
Gross operating profit   1,245   1,213   1,049   834   241   820   (75)   (170)   (37)   2,004   1,284   1,832  
Depreciation of non-current assets2)220   334   205   130   156   207   70   144   69   420   634   481  
Amortization of acquired intangible assets and goodwill   25   92   29   206   308   357   1   3   (1)   232   403   385  
Valuation adjustments, provisions and losses   81   105   99   176   1,977   338   (24)   342   34   233   2,424   471  
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes   919   682   716   322   (2,200)   (82)   (122)   (659)   (139)   1,119   (2,177)   495  
Extraordinary income/(expenses), net   7   24   (3)   0   220   0   (56)   125   (2)   (49)   369   (5)  
Cumulative effect of change in accounting principle3)   266       254       0       520    
Taxes3)(252)   (318)   (119)   (101)   474   50   (25)   162   (18)   (378)   318   (87)  
Net profit/(loss) before minority interests   674   654   594   221   (1,252)   (32)   (203)   (372)   (159)   692   (970)   403  
Minority interests   (8)   51   (2)   0   0   0   (32)   (31)   (33)   (40)   20   (35)  
Net profit/(loss)3)666   705   592   221   (1,252)   (32)   (235)   (403)   (192)   652   (950)   368  
1) The Group’s consolidated results are prepared in accordance with Swiss GAAP, while the Group’s segment reporting principles are applied to the presentation of segment results. The business unit results reflect the results of the separate segments comprising the respective business units as well as certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle that are not allocated to the segments. For a complete reconciliation of the business unit results to the Group’s consolidated results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results”.
2) Includes amortization of Present Value of Future Profits (PVFP) from the insurance business within Credit Suisse Financial Services.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002 and 1Q2002 for Credit Suisse Financial Services of CHF –635 m and CHF –85 m, respectively, for Credit Suisse First Boston of CHF 276 m and CHF 50 m, respectively, and for Credit Suisse Group of CHF –198 m and CHF –53 m, respectively.


Assets under management/client assets       
                    Change  
                    in % from  
in CHF bn           31.03.03   31.12.02   31.12.02  
Credit Suisse Financial Services                      
Private Banking1)                   
Assets under management           457.0   465.7   (1.9)  
of which discretionary           118.2   121.5   (2.7)  
Client assets           486.3   494.8   (1.7)  
Corporate & Retail Banking1)                   
Assets under management           64.1   70.3   (8.8)  
Client assets           82.6   86.3   (4.3)  
Life & Pensions                      
Assets under management (discretionary)           111.7   110.8   0.8  
Client assets           111.7   110.8   0.8  
Insurance                      
Assets under management (discretionary)           31.0   30.7   1.0  
Client assets           31.0   30.7   1.0  
Credit Suisse Financial Services                      
Assets under management           663.8   677.5   (2.0)  
of which discretionary1)        262.1   264.2   (0.8)  
Client assets           711.6   722.6   (1.5)  
Credit Suisse First Boston                      
Institutional Securities                      
Assets under management           30.8   31.3   (1.6)  
of which Private Equity on behalf of clients (discretionary)           20.8   20.9   (0.5)  
Client assets           79.2   83.9   (5.6)  
CSFB Financial Services                      
Assets under management           465.9   486.5   (4.2)  
of which discretionary           281.9   297.2   (5.1)  
Client assets           465.9   986.7   (52.8)  
Credit Suisse First Boston                      
Assets under management           496.7   517.8   (4.1)  
of which discretionary           309.9   325.5   (4.8)  
Client assets           545.1   1,070.6   (49.1)  
Credit Suisse Group                      
Assets under management           1,160.5   1,195.3   (2.9)  
of which discretionary1)        572.0   589.7   (3.0)  
Client assets           1,256.7   1,793.2   (29.9)  
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking as well as re-evaluating the balances of 2002 discretionary assets.


Net new assets      
                Change   Change  
          in % from   in % from  
in CHF bn   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Credit Suisse Financial Services                      
Private Banking1)1.5   0.9   9.2   66.7   (83.7)  
Corporate & Retail Banking1)(3.4)   (0.2)   (1.4)     142.9  
Life & Pensions   2.2   (1.3)   3.0     (26.7)  
Credit Suisse Financial Services   0.3   (0.6)   10.8     (97.2)  
Credit Suisse First Boston                      
Institutional Securities   (0.1)     3.5      
CSFB Financial Services   (3.7)   (6.0)   (0.8)   (38.3)   362.5  
Credit Suisse First Boston   (3.8)   (6.0)   2.7   (36.7)    
Credit Suisse Group   (3.5)   (6.6)   13.5   (47.0)    
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking.




RISK MANAGEMENT

Credit Suisse Group’s overall position risk fell by 3% in the first quarter of 2003 compared to the previous quarter, predominantly due to further equity position reductions and lower credit risks. Credit Suisse First Boston’s average trading Value-at-Risk, or VaR, increased primarily as a consequence of higher interest rate positions. The Group’s credit risk exposures increased by 3% quarter-on-quarter.


Overall risk trends
Economic risk capital, or ERC, is an emerging best practice for measuring and reporting all quantifiable risks across a financial organization on a consistent and comprehensive basis. It is referred to as “economic” capital because it treats positions solely on an economic basis, irrespective of differences in accounting or regulatory treatment. Credit Suisse Group has established this tool over the last few years to achieve several objectives: to better assess the composition and trend of our risk portfolio; to improve risk control and limits; to allocate capital; to bettter assess our risk-bearing capacity in relation to financial resources; and to provide a benchmark for risk/return analysis by business. ERC is defined as the economic capital needed to remain solvent even under extreme market, business and operational conditions, based on conservative assumptions.

Credit Suisse Group distinguishes among three fundamental sources of risk. Position risk ERC measures the potential unexpected loss in economic value associated with the Group’s portfolio of positions over a 1-year horizon that is exceeded with a given, small probability (1% for daily risk management purposes; 0.03% for capital management purposes). Business risk ERC captures the risk related to the Group’s commission and fee-based activities by estimating the potential worst-case negative margin for these activities during a severe market downturn. Operational risk ERC represents the estimated worst-case loss resulting from inadequate or failed internal processes and systems, human error or external events.

Position risk ERC constitutes the most important risk category. Total 99%, 1-year position risk ERC was down 3% in the first quarter of 2003 compared with the previous quarter, due primarily to further equity position reductions and lower credit risks. At the end of the first quarter of 2003, 51% of the Group’s position risk ERC was with Credit Suisse First Boston, 45% with Credit Suisse Financial Services (of which 68% was with the insurance units and 32% was with the banking units) and 4% with the Corporate Center.


Trading risks
The average 1-day, 99% VaR at Credit Suisse First Boston in the first quarter of 2003 was USD 49.2 million, compared to USD 39.4 million in the fourth quarter of 2002. The increase was primarily attributable to an increase in interest rate positions. As shown in the backtesting chart, Credit Suisse First Boston had no backtesting exceptions in the first quarter of 2003. Over the last 12 months, Credit Suisse First Boston had one backtesting exception (on average, an accurate 1-day, 99% VaR model would have no more than 2.5 exceptions per annum).


Credit risk exposure
Credit-related balance sheet exposure increased 3% for Credit Suisse Group in the first quarter of 2003, as a slight decline in exposure at Credit Suisse Financial Services was offset by an increase in exposure at Credit Suisse First Boston.

Effective in the first quarter of 2003, loans held for sale are no longer reported as part of total due from banks and customers, gross with the related credit provisions reported separately, instead they are presented on a net lower of cost or market basis. This change resulted in a reclassification in the tables on page 10 which impacted both the loans, impaired loans and the valuation accounts as of March 31, 2003.

Impaired loans for Credit Suisse Group declined as of the end of the first quarter due to a reduction in impaired loans at both business units. Total non-performing loans declined 9% at Credit Suisse Financial Services. The decline in impaired loans at Credit Suisse First Boston is primarily attributable to the previously mentioned change in presentation and a decrease in non-performing loans. Coverage of non-performing loans increased slightly for both business units and Credit Suisse Group. Coverage of total impaired loans at Credit Suisse Group improved during the quarter, as coverage at Credit Suisse First Boston improved from 66.5% at December 31, 2002 to 71.6% at March 31, 2003, while coverage of impaired loans declined slightly at Credit Suisse Financial Services. Credit quality for the Group was largely unchanged from year-end 2002.

Key Position Risk Trends         
      Change in % from   Change Analysis: Brief Summary
in CHF m   1Q2003   4Q2002   1Q2002   1Q2003 vs 4Q2002
Developed Market Fixed Income & Foreign Exchange ERC   3,922   7%   (28%)   Reduced risk-offset between CSFB and Winterthur with respect to interest rate-sensitive positions
Equity Investment ERC   3,071   (16%)   (65%)   Mostly due to lower equity exposures at Winterthur
Swiss & Retail Lending ERC   2,057   (2%)   (3%)   Continued write-off of aged exposures, offsetting increase in default risk due to downgrades
International Lending ERC   3,455   (10%)   (14%)   Reduced exposures and lower US dollar exchange rate
Emerging Markets ERC   1,755   (11%)   (29%)   Exposure reductions in Brazil and counterparty rating upgrade
Real Estate ERC & Structured Asset ERC1)4,284   1%   (9%)   No material change
Insurance Underwriting ERC   1,019   24%   15%   Due to refined insurance loss distribution modelling and assumed growth in volume
Simple sum across risk categories   19,563   (4%)   (31%)   Lower Equity and Lending ERC
Diversification Benefit   (6,465)   (5%)   (39%)   In line with overall risk reduction
Total position risk ERC   13,098   (3%)   (26%)   Lower Equity and ERC

99%, 1-year position risk ERC, excluding foreign exchange translation risk. For an assessment of the total risk profile, operational risk ERC and business risk ERC have to be considered as well. For a more detailed description of the Group’s ERC model, please refer to our Annual Report 2001 and 2002, which are available on our website: www.credit-suisse.com. Note that prior period risk data have been restated for methodology changes.

 

 

 

 

 

 

 

 
1) This category comprises the real estate investments of Winterthur, Credit Suisse First Boston’s commercial real estate exposures, Credit Suisse First Boston’s residential real estate exposures, Credit Suisse First Boston’s asset-backed securities exposures as well as the real estate acquired at auction and real estate for own use in Switzerland.


CSFB trading exposures (1-day, 99% VaR) 
in USD m   1Q20034Q20023Q20022Q2002
Total VaR        
Period end   54.541.338.959.3
Average   49.239.443.746.4
Maximum   76.346.557.459.3
Minimum   39.431.937.636.8
         
in USD m   31.03.0331.12.0230.09.0230.06.02
VaR by risk type        
Interest rate   56.948.359.354.7
Foreign exchange   15.310.87.618.7
Equity   17.610.112.116.5
Commodity   0.81.01.20.5
Subtotal   90.670.280.290.4
Diversification benefit   (36.1) (28.9) (41.3) (31.1)
Total   54.541.338.959.3

Credit Suisse First Boston computes these VaR estimates separately for each risk type and for the whole portfolio using the historical simulation methodology. Diversification benefit reflects the net difference between the sum of the 99% percentile loss for each risk type and for the total portfolio.

 

 

 

 

 




Total credit risk exposure 1)      
  Credit Suisse Financial Services   Credit Suisse First Boston   Credit Suisse Group  
in CHF m   31.03.03   31.12.02   31.03.03   31.12.02   31.03.03   31.12.02  
Due from banks2)29,889   32,752   56,851   44,016   57,569   39,469  
Due from customers and mortgages2)133,372   132,353   72,941   82,395   205,030   213,206  
Total due from banks and customers, gross2)163,261   165,105   129,792   126,411   262,599   252,675  
Contingent liabilities   12,460   12,349   28,280   27,862   39,866   39,104  
Irrevocable commitments   2,917   2,263   80,403   86,599   84,415   90,048  
Total banking products   178,638   179,717   238,475   240,872   386,880   381,827  
Loans held for sale3)0     18,373     18,373    
Derivative instruments4)1,957   2,375   56,230   54,243   57,016   54,757  
Securities lending – banks   0   0   37   0   37   0  
Securities lending – customers   0   0   30   64   30   64  
Reverse repurchase agreements – banks   2,052   2,270   157,862   158,544   156,312   156,397  
Reverse repurchase agreements – customers   11,989   13,944   53,399   57,571   65,081   71,384  
Total traded products   15,998   18,589   267,558   270,422   278,476   282,602  
Total credit risk exposure, gross   194,636   198,306   524,406   511,294   683,729   664,429  
Loan valuation allowances and provisions   (3,820)   (4,092)   (3,271)   (3,817)   (7,092)   (7,911)  
Total credit risk exposure, net   190,816   194,214   521,135   507,477   676,637   656,518  
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.
2) Excluding loans held for sale, securities lending and reverse repurchase transactions.
3) Effective 1Q2003, loans held for sale are presented net of the related loan valuation allowances.
4) Positive replacement values considering netting agreements.


Total loan portfolio exposure and allowances and provisions for credit risk 1)      
  Credit Suisse Financial Services   Credit Suisse First Boston   Credit Suisse Group  
in CHF m   31.03.03   31.12.02   31.03.03   31.12.02   31.03.03   31.12.02  
Non-performing loans   2,749   3,004   2,616   3,351   5,365   6,355  
Non-interest earning loans   1,897   2,108   402   217   2,299   2,325  
Total non-performing loans   4,646   5,112   3,018   3,568   7,664   8,680  
Restructured loans   80   52   201   229   281   281  
Potential problem loans   1,726   1,723   1,123   1,685   2,848   3,408  
Total other impaired loans   1,806   1,775   1,324   1,914   3,129   3,689  
Total impaired loans   6,452   6,887   4,342   5,482   10,793   12,369  
Total due from banks and customers, gross   163,261   165,105   129,792   126,411   262,599   252,675  
Valuation allowances   3,779   4,053   3,111   3,647   6,891   7,703  
of which on principal   3,010   3,201   2,866   3,416   5,875   6,617  
of which on interest   769   852   245   231   1,016   1,086  
Total due from banks and customers, net   159,482   161,052   126,681   122,764   255,708   244,972  
Provisions for contingent liabilities and irrevocable commitments   41   39   160   170   201   208  
Total valuation allowances and provisions   3,820   4,092   3,271   3,817   7,092   7,911  
Ratios                          
Valuation allowances as % of total non-performing loans   81.3%   79.3%   103.1%   102.2%   89.9%   88.7%  
Valuation allowances as % of total impaired loans   58.6%   58.9%   71.6%   66.5%   63.8%   62.3%  
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and the Corporate Center.




REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES





Credit Suisse Financial Services recorded a net profit of CHF 666 million and a net operating profit, excluding the amortization of acquired intangible assets and goodwill, of CHF 690 million in the first quarter of 2003. Winterthur achieved an improved operating performance through tariff increases, a selective underwriting policy and stronger investment results. Primarily as a result of lower operating expenses, Private Banking recorded a higher segment profit than in the fourth quarter of 2002. Corporate & Retail Banking increased its segment result considerably compared to a weak fourth quarter of 2002.

Credit Suisse Financial Services recorded a net profit of CHF 666 million in the first quarter of 2003, down 6% versus the fourth quarter of 2002 and up 13% versus the corresponding period in the previous year. Fourth quarter 2002 results benefited from the one-time cumulative effect of a change in accounting principle of CHF 266 million for periods prior to 2002. Net operating profit before the amortization of acquired intangible assets and goodwill for the first quarter of 2003 amounted to CHF 690 million. The net operating profit was positively impacted by the investment income in the insurance segments, which increased by CHF 1.1 billion to CHF 1.5 billion compared to the previous quarter.

The refocusing of the European initiative on Private Banking clients is progressing well and has already led to cost improvements. With regard to the realignment of the Winterthur organization, the merger of the two Corporate Centers has been completed and the management levels have been defined in the countries in which the life and non-life businesses are being merged.

Credit Suisse Financial Services made progress towards its goal to return to profitability in 2003 but remains exposed to continued volatility in the financial markets, particularly in Life & Pensions.


Private Banking
In the first quarter of 2003, Private Banking reported a segment profit of CHF 371 million, up 10% versus the previous quarter and down 39% versus the corresponding period in the previous year. Operating income decreased 2% versus the previous quarter to CHF 1.3 billion. The decrease in operating income of 21% versus the first quarter of 2002 was mainly attributable to lower transaction volumes in the securities business due to investor passivity and the market-driven lower asset base. Operating expenses decreased 7% compared to the previous quarter and 8% versus the first quarter of 2002. The gross margin stood at 113.8 bp in the first quarter of 2003, compared with 112.4 bp in the previous quarter and 126.4 bp in the first quarter of 2002.

Net new assets amounted to CHF 1.5 billion in the first quarter of 2003, compared to CHF 0.9 billion in the previous quarter. Assets under management decreased 1.9% versus year-end 2002 to CHF 457.0 billion, due to market performance and the foreign exchange impact.

In Europe, substantial progress was achieved in the refocusing of the European initiative on private banking clients, most significantly in Germany and Spain. In onshore Europe and in Asia, Private Banking achieved above-average growth of net new assets. To protect clients’ capital and improve risk-return profiles, Private Banking launched a number of innovative products, tailored to market conditions, as an alternative to direct investments in equities or fixed income products. In the second quarter of 2003, Private Banking is introducing a new advisory concept that will focus on in-depth client asset and liability management.


Corporate & Retail Banking
Corporate & Retail Banking posted a segment profit of CHF 124 million in the first quarter of 2003, up 158% versus the previous quarter and down 15% versus the corresponding period in the previous year. Operating income rose 3% quarter-on-quarter to CHF 734 million, due primarily to increased commission and trading income, which compensated for the lower interest income. In the first quarter of 2003, the net interest margin stood at 214 bp, down from 219 bp in the previous quarter. Compared with the first quarter of 2002, operating income decreased by 7%, mainly driven by lower transaction-based commission income and the lower interest rate environment.

Operating expenses decreased 14% versus the previous quarter to CHF 473 million, partly due to seasonality. The credit-related provisions recorded were CHF 24 million below the statistical valuation adjustments. In the first quarter of 2003, total impaired loans declined by CHF 397 million to CHF 6.1 billion as of March 31, 2003. The cost/income ratio stood at 67.4% in the first quarter of 2003, compared with 80.8% in the previous quarter. The return on average allocated capital increased quarter-on-quarter from 4.0% to 10.7%.

Assets under management stood at CHF 64.1 billion at the end of the first quarter of 2003, down 8.8% versus year-end 2002. The net asset outflow of CHF 3.4 billion in the first quarter of 2003 was attributable to shifts from time deposit accounts of corporate clients to transaction accounts. These transaction accounts do not qualify as assets under management. In the first quarter of 2003, Corporate & Retail Banking, together with Private Banking, achieved good growth in the Swiss private mortgage business.


Life & Pensions
In the first quarter 2003, Life & Pensions reported a segment profit of CHF 111 million, an increase of CHF 96 million versus the corresponding period in the previous year. Compared to the fourth quarter of 2002, segment profit increased CHF 18 million or 19%. This result was primarily driven by a reduction in administration costs and a positive investment performance.

In the first quarter of 2003, Life & Pensions reported a decrease in gross premiums written of 4%, or CHF 263 million, to CHF 6.5 billion compared to the corresponding period in the previous year. Adjusted for acquisitions, divestitures and exchange rate impacts, premium volume decreased by 2%. The first quarter decline was due both to Life & Pensions’ ongoing selective underwriting and strong reported single premium growth in Italy, the UK and Belgium in the first quarter of 2002. Net new assets in the first quarter of 2003 amounted to CHF 2.2 billion, compared to CHF 3.0 billion in the first quarter of 2002, reflecting lower premium volume.

Administration costs decreased 6% to CHF 322 million, compared to the first quarter of 2002, largely due to cost reduction measures. The total expense ratio in the first quarter of 2003 stood at 6.8%, compared to 6.4% in the corresponding period of the previous year, primarily due to the reduction in premium income and higher amortization of deferred acquisition costs (DAC), in line with the development of investment income.

Investment income increased CHF 429 million to CHF 1.2 billion in the first quarter of 2003, compared to the corresponding period in the previous year. The increase of CHF 888 million compared to the fourth quarter of 2002 partly reflects a decrease in impairments of CHF 481 million, to CHF 268 million, recorded in the first quarter of 2003. In the reporting period, the total return on invested assets amounted to 4.9%, compared with 3.2% in the first quarter of 2002. Current income thereof was 3.9%, whereas realized gains/losses and other income/expenses were 1.1%. The proportion of investments held in equities was 5% as of March 31, 2003, compared with 8% as of December 31, 2002.


Insurance
Insurance reported a segment profit of CHF 92 million in the first quarter of 2003, an increase of CHF 239 million compared to the corresponding period of the previous year. Compared to the fourth quarter of 2002, segment profit increased CHF 86 million. The strong recovery of the Insurance result in the first quarter of 2003 is mainly driven by a significant improvement in the underwriting result due to the continued implementation of tariff increases and a strict underwriting policy, as well as improvements in investment income, compared to the first quarter of 2002. This result was partially offset by charges of CHF 63 million after-tax for the realignment of the organization and the international business portfolio.

In the first quarter of 2003, Insurance’s net premiums earned increased CHF 227 million, or 6%, to CHF 4.0 billion compared to the corresponding period in the previous year. Adjusted for acquisitions, divestitures and exchange rate impacts, the increase was 13%, primarily due to tariff increases across all major markets.

Insurance improved its net underwriting result by CHF 137 million in the first quarter of 2003 versus the corresponding period of the previous year, resulting in a decrease in the combined ratio of 3.2 percentage points to 100.7% in the first quarter of 2003, compared to 103.9% in the first quarter of 2002. This improvement resulted mainly from a decrease in the claims ratio of 4.2 percentage points to 71.0% in the first quarter of 2003 versus the corresponding period in the previous year, reflecting improved pricing and continued streamlining of the portfolio. In addition, fewer large losses resulting from natural catastrophes were reported during the quarter.

In the first quarter of 2003, administration costs decreased by 6% to CHF 472 million versus the corresponding period in the previous year. The overall expense ratio increased 1.0 percentage point to 29.7% in the first quarter of 2003, compared to the corresponding period of the previous year, due to higher policy acquisition costs mainly related to premium growth and the effect of fully integrating the book of business acquired from Prudential plc.

Insurance reported an increase in net investment income of CHF 202 million in the first quarter of 2003, to CHF 289 million, versus the corresponding period in the previous year. Compared with the fourth quarter of 2002, net investment income increased by CHF 230 million. In the first quarter of 2003, total return on invested assets amounted to 3.5%, compared with 1.2% in the first quarter of 2002. Current income was 3.9%, whereas realized gains/losses and other income/expenses were -0.5%. The proportion of investments held in equities was 5% as of March 31, 2003, compared with 7% as of December 31, 2002.

Credit Suisse Financial Services business unit income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Operating income2)3,393   3,517   3,306   (4)   3  
Personnel expenses   1,369   1,405   1,443   (3)   (5)  
Other operating expenses   779   897   814   (13)   (4)  
Operating expenses   2,148   2,302   2,257   (7)   (5)  
Gross operating profit   1,245   1,215   1,049   2   19  
Depreciation of non-current assets   168   256   162   (34)   4  
Amortization of Present Value of Future Profits (PVFP)   52   62   43   (16)   21  
Valuation adjustments, provisions and losses   81   105   99   (23)   (18)  
Net operating profit before extraordinary and exceptional items, cumulative effect of change in accounting principle and taxes   944   792   745   19   27  
Extraordinary income/(expenses), net   7   24   (3)   (71)    
Taxes3) 4)(253)   (332)   (120)   (24)   111  
Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests   698   484   622   44   12  
Amortization of acquired intangible assets and goodwill   (25)   (37)   (29)   (32)   (14)  
Exceptional items   0   (73)   0   (100)    
Tax impact   1   14   1   (93)    
Cumulative effect of change in accounting principle3)   266        
Net profit before minority interests   674   654   594   3   13  
Minority interests   (8)   51   (2)     300  
Net profit   666   705   592   (6)   13  
1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. For a complete reconciliation of the business unit results to the Group’s consolidated results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results”.
2) For the purpose of the consolidated financial statements, operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002 and 1Q2002 of CHF –649 m and CHF –86 m, respectively.
4) Excluding tax impact on amortization of acquired intangible assets and goodwill as well as exceptional items.


Reconciliation to net operating profit      
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net profit   666   705   592   (6)   13  
Amortization of acquired intangible assets and goodwill   25   37   29   (32)   (14)  
Exceptional items   0   73   0   (100)    
Tax impact   (1)   (14)   (1)   (93)    
Cumulative effect of change in accounting principle     (266)        
Net operating profit   690   535   620   29   11  
 


Credit Suisse Financial Services business unit key information      
            1Q2003   4Q2002   1Q2002  
Cost/income ratio1)        69.8%   75.0%   74.5%  
Cost/income ratio (operating)2) 3)        68.3%   72.7%   73.2%  
Cost/income ratio (operating), banking2)        64.7%   71.1%   56.9%  
Return on average allocated capital1)        21.8%   20.8%   19.1%  
Return on average allocated capital (operating)2)        22.6%   15.4%   20.0%  
Average allocated capital in CHF m           12,369   12,600   12,431  
Growth in assets under management           (2.0%)   (1.3%)   1.0%  
of which net new assets           0.0%   (0.1%)   1.4%  
of which market movement and structural effects           (2.1%)   (1.3%)    
of which acquisitions/(divestitures)             0.1%   (0.4%)  
of which discretionary           (0.3%)   (0.7%)   0.7%  
                       
                31.03.03   31.12.02  
Assets under management in CHF bn               663.8   677.5  
Number of employees               52,871   53,755  
1) Based on the business unit results including certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments. Please refer to “Reconciliation of operating to consolidated results”.
2) Based on the results of the separate segments comprising the business unit, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments. Please refer to “Reconciliation of operating to consolidated results”.
3) Excluding amortization of PVFP from the insurance business within Credit Suisse Financial Services.


Overview of business unit Credit Suisse Financial Services 1)     
                    Credit  
        Corporate           Suisse  
    Private   & Retail   Life &       Financial  
1Q2003, in CHF m   Banking   Banking   Pensions   Insurance   Services  
Operating income2)1,310   734   622   727   3,393  
Personnel expenses   515   300   203   351   1,369  
Other operating expenses   256   173   136   214   779  
Operating expenses   771   473   339   565   2,148  
Gross operating profit   539   261   283   162   1,245  
Depreciation of non-current assets   57   22   47   42   168  
Amortization of Present Value of Future Profits (PVFP)       51   1   52  
Valuation adjustments, provisions and losses   4   77       81  
Net operating profit before extraordinary items and taxes   478   162   185   119   944  
Extraordinary income/(expenses), net   7   0   0   0   7  
Taxes3)(114)   (38)   (74)   (27)   (253)  
Net operating profit before minority interests   371   124   111   92   698  
Amortization of acquired intangible assets and goodwill                   (25)  
Tax impact                   1  
Net profit before minority interests                   674  
Minority interests                   (8)  
Net profit                   666  
                       
Average allocated capital4)2,261   4,656   5,452     12,369  
1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill not allocated to the segments are included in the business unit results. For a complete reconciliation of the business unit results to the Group’s consolidated results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results”.
2) Operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
3) Excluding tax impact on amortization of acquired intangible assets and goodwill.
4) Life & Pensions and Insurance segments amount represents the average shareholders' equity of “Winterthur” Swiss Insurance Company.


Private Banking income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net interest income   310   311   326   0   (5)  
Net commission and service fee income   889   901   1,183   (1)   (25)  
Net trading income   102   114   145   (11)   (30)  
Other ordinary income   9   13   6   (31)   50  
Operating income   1,310   1,339   1,660   (2)   (21)  
Personnel expenses   515   502   553   3   (7)  
Other operating expenses   256   323   283   (21)   (10)  
Operating expenses   771   825   836   (7)   (8)  
Gross operating profit   539   514   824   5   (35)  
Depreciation of non-current assets   57   58   49   (2)   16  
Valuation adjustments, provisions and losses2)4   27   11   (85)   (64)  
Net operating profit before extraordinary and exceptional items, cumulative effect of change in accounting principle and taxes   478   429   764   11   (37)  
Extraordinary income/(expenses), net   7   23   (2)   (70)    
Taxes3)(114)   (115)   (154)   (1)   (26)  
Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests (segment result)   371   337   608   10   (39)  
                       
Increased/(decreased) credit-related valuation adjustments2)0   (9)   2          
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002 and 1Q2002 of CHF –117 m and CHF –140 m, respectively.


Private Banking balance sheet information 1)     
                    Change  
                    in % from  
in CHF m           31.03.03   31.12.02   31.12.02  
Total assets           152,910   155,363   (2)  
Due from customers           33,493   35,580   (6)  
Mortgages           23,603   22,935   3  
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking.


Private Banking key information 1)     
            1Q2003   4Q2002   1Q2002  
Cost/income ratio2)        63.2%   65.9%   53.3%  
Average allocated capital in CHF m           2,261   2,304   2,340  
Pre-tax margin2)        37.0%   33.8%   45.9%  
Fee income/operating income           67.9%   67.3%   71.3%  
Net new assets in CHF bn           1.5   0.9   9.2  
Growth in assets under management           (1.9%)   (1.3%)   2.3%  
of which net new assets           0.3%   0.2%   1.8%  
of which market movement and structural effects           (2.2%)   (1.6%)   0.5%  
of which acquisitions/(divestitures)             0.1%    
Net margin3)        32.2 bp   28.3 bp   46.3 bp  
Gross margin4)        113.8 bp   112.4 bp   126.4 bp  
                       
               
                31.03.03   31.12.02  
Assets under management in CHF bn               457.0   465.7  
Number of employees               12,249   12,587  
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking.
2) Based on the segment results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segment.
3) Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests (segment result)/average assets under management.
4) Operating income/average assets under management.


Corporate & Retail Banking income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net interest income   502   521   540   (4)   (7)  
Net commission and service fee income   149   131   172   14   (13)  
Net trading income   69   60   63   15   10  
Other ordinary income   14   1   15     (7)  
Operating income   734   713   790   3   (7)  
Personnel expenses   300   297   294   1   2  
Other operating expenses   173   250   194   (31)   (11)  
Operating expenses   473   547   488   (14)   (3)  
Gross operating profit   261   166   302   57   (14)  
Depreciation of non-current assets   22   29   22   (24)   0  
Valuation adjustments, provisions and losses2)77   78   88   (1)   (13)  
Net operating profit before extraordinary items, cumulative effect of change in accounting principle and taxes   162   59   192   175   (16)  
Extraordinary income/(expenses), net   0   1   (1)   (100)   (100)  
Taxes3)(38)   (12)   (45)   217   (16)  
Net operating profit before cumulative effect of change in accounting principle and minority interests (segment result)   124   48   146   158   (15)  
                       
Increased/(decreased) credit-related valuation adjustments2)(24)   94   (6)          
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, not allocated to the segments are included in the business unit results.
2) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would not have had an impact on the taxes reported for 4Q2002 and 1Q2002.


Corporate & Retail Banking balance sheet information 1)     
                    Change  
                    in % from  
in CHF m           31.03.03   31.12.02   31.12.02  
Total assets           93,104   94,203   (1)  
Due from customers           26,952   27,179   (1)  
Mortgages           57,927   57,165   1  
Due to customers in savings and investment deposits           27,830   27,081   3  
Due to customers, other           27,561   27,509   0  
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking.


Corporate & Retail Banking key information 1)     
            1Q2003   4Q2002   1Q2002  
Cost/income ratio2)        67.4%   80.8%   64.6%  
Return on average allocated capital2)        10.7%   4.0%   11.4%  
Average allocated capital in CHF m           4,656   4,815   5,116  
Pre-tax margin2)        22.1%   8.4%   24.2%  
Personnel expenses/operating income           40.9%   41.7%   37.2%  
Net interest margin           214 bp   219 bp   231 bp  
Loan growth           0.6%   (1.7%)   2.3%  
Net new assets in CHF bn           (3.4)   (0.2)   (1.4)  
                       
               
                31.03.03   31.12.02  
Deposit/loan ratio               65.3%   64.7%  
Assets under management in CHF bn               64.1   70.3  
Number of employees               8,929   9,038  
Number of branches               221   223  
1) 2002 comparative figures have been restated to reflect the realignment of the private client business as of 01.01.2003. This entailed moving certain client segments in Switzerland from Private Banking to Corporate & Retail Banking.
2) Based on the segment results, which exclude certain acquisition-related costs not allocated to the segment.


Life & Pensions income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Gross premiums written   6,499   4,218   6,762   54   (4)  
Reinsurance ceded   (23)   (14)   (96)   64   (76)  
Net premiums written   6,476   4,204   6,666   54   (3)  
Change in provision for unearned premiums   (10)   29   (39)     (74)  
Net premiums earned   6,466   4,233   6,627   53   (2)  
Death and other benefits incurred   (4,100)   (5,373)   (3,813)   (24)   8  
Change in provision for future policyholder benefits (technical)   (2,871)   1,116   (3,289)     (13)  
Change in provision for future policyholder benefits (separate account)2)211   80   (141)   164    
Dividends to policyholders incurred   (24)   738   135      
Policy acquisition costs (including change in DAC/PVFP)   (120)   (160)   (80)   (25)   50  
Administration costs   (322)   (409)   (344)   (21)   (6)  
Investment income general account   1,221   333   792   267   54  
Investment income separate account2)(211)   (80)   141   164    
Interest received and paid   (19)   (39)   (27)   (51)   (30)  
Interest on bonuses credited to policyholders   (33)   (41)   (29)   (20)   14  
Other income/(expenses)   (13)   (24)   6   (46)    
Net operating profit/(loss) before cumulative effect of change in accounting principle and taxes   185   374   (22)   (51)    
Taxes3)(74)   (281)   37   (74)    
Net operating profit before cumulative effect of change in accounting principle and minority interests (segment result)   111   93   15   19    
1) The presentation of segment results differs from the presentation of the Group's consolidated results as it reflects the way the insurance business is managed, which is in line with peers in the insurance industry. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) This represents the market impact for separate account (or unit-linked) business, where the investment risk is borne by the policyholder.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002 and 1Q2002 of CHF –540 m and CHF 63 m, respectively.


Life & Pensions key information      
            1Q2003   4Q2002   1Q2002  
Expense ratio1)        6.8%   13.4%   6.4%  
Growth in gross premiums written           (3.9%)   (13.9%)   9.3%  
Return on invested assets (excluding separate account business)                      
Current income           3.9%   3.6%   4.0%  
Realized gains/losses and other income/expenses           1.1%   (2.5%)   (0.8%)  
Total return on invested assets2)        4.9%   1.2%   3.2%  
Net new assets in CHF bn3)        2.2   (1.3)   3.0  
Total sales in CHF m4)        7,372   5,283   7,783  
                       
               
                31.03.03   31.12.02  
Assets under management in CHF bn5)            111.7   110.8  
Technical provisions in CHF m               108,490   105,939  
Number of employees               7,629   7,815  
1) Operating expenses (i.e. policy acquisition costs and administration costs)/net premiums earned.
2) Total return on invested assets includes depreciation on real estate and investment expenses as well as investment income and realized gains and losses.
3) Based on change in technical provisions for traditional business, adjusted for technical interests, net inflow of separate account business and change in off-balance sheet business such as funds.
4) Includes gross premiums written and off-balance sheet sales.
5) Based on savings-related provisions for policyholders plus off-balance sheet assets.


Insurance income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Gross premiums written   6,835   3,846   6,668   78   3  
Reinsurance ceded   (427)   (299)   (415)   43   3  
Net premiums written   6,408   3,547   6,253   81   2  
Change in provision for unearned premiums and in provision for future policy benefits (health)   (2,430)   485   (2,502)     (3)  
Net premiums earned   3,978   4,032   3,751   (1)   6  
Claims and annuities incurred, net   (2,826)   (3,034)   (2,819)   (7)   0  
Dividends to policyholders incurred, net   (45)   109   (67)     (33)  
Policy acquisition costs (including change in DAC/PVFP)   (710)   (647)   (574)   10   24  
Administration costs   (472)   (481)   (503)   (2)   (6)  
Underwriting result, net   (75)   (21)   (212)   257   (65)  
Net investment income   289   59   87   390   232  
Interest received and paid   (47)   (39)   (3)   21    
Other income/(expenses), net   (48)   (69)   (61)   (30)   (21)  
Net operating profit/(loss) before cumulative effect of change in accounting principle and taxes   119   (70)   (189)      
Taxes2)(27)   76   42      
Net operating profit/(loss) before cumulative effect of change in accounting principle and minority interests (segment result)   92   6   (147)      
1) The presentation of segment results differs from the presentation of the Group's consolidated results as it reflects the way the insurance business is managed, which is in line with peers in the insurance industry. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002 and 1Q2002 of CHF 20 m and CHF 36 m, respectively.


Insurance key information       
            1Q2003   4Q2002   1Q2002  
Combined ratio (excluding dividends to policyholders)           100.7%   103.2%   103.9%  
Claims ratio1)        71.0%   75.2%   75.2%  
Expense ratio2)        29.7%   28.0%   28.7%  
Return on invested assets                      
Current income           3.9%   3.9%   3.9%  
Realized gains/losses and other income/expenses           (0.5%)   (3.4%)   (2.7%)  
Total return on invested assets3)        3.5%   0.5%   1.2%  
                       
               
                31.03.03   31.12.02  
Assets under management in CHF bn               31.0   30.7  
Technical provisions in CHF m               31,429   28,745  
Number of employees               24,064   24,315  
1) Claims and annuities incurred, net/net premiums earned.
2) Operating expenses (i.e. policy acquisition costs and administration costs)/net premiums earned.
3) Total return on invested assets includes depreciation on real estate and investment expenses as well as investment income and realized gains and losses.




REVIEW OF BUSINESS UNITS | CREDIT SUISSE FIRST BOSTON





Credit Suisse First Boston reported a net profit of USD 161 million (CHF 221 million) in the first quarter of 2003, compared with a net loss of USD 811 million (CHF 1.3 billion) in the fourth quarter of 2002 and a net loss of USD 19 million (CHF 32 million) in the first quarter of 2002. Excluding the amortization of acquired intangible assets and goodwill, and, for the fourth quarter 2002, exceptional items and the cumulative effect of a change in accounting principle, net operating profit in the first quarter of 2003 was USD 292 million (CHF 400 million), compared with a net operating profit of USD 11 million (CHF 15 million) in the fourth quarter of 2002 and a net operating profit of USD 155 million (CHF 259 million) in the first quarter of 2002.

First quarter 2003 operating income increased 24% compared with the fourth quarter of 2002 to USD 2.9 billion (CHF 4.0 billion), primarily as a result of a 39% increase in the operating income of the Institutional Securities segment. Compared with the first quarter of 2002, Credit Suisse First Boston’s operating income decreased 11%, with the Institutional Securities segment down 5%, reflecting challenging conditions in the mergers and acquisitions and equity new issuance markets. Excluding Pershing, operating income increased 34% compared with the fourth quarter of 2002 and declined 5% compared with the first quarter of 2002.

For the first quarter of 2003, Pershing’s net result of USD 15 million (CHF 21 million) was reported within the operating income of the CSFB Financial Services segment. Pershing’s fourth and first quarter 2002 operating income was USD 195 million (CHF 284 million) and USD 231 million (CHF 388 million), respectively. The fourth and first quarter of 2002 operating expenses for Pershing were USD 156 million (CHF 229 million) and USD 169 million (CHF 284 million), respectively. The sale of Pershing to The Bank of New York Company, Inc. closed on May 1, 2003.

Cost control continues to be a priority, and Credit Suisse First Boston significantly improved its pre-tax margin in the first quarter of 2003 compared with the fourth and first quarter of 2002. Excluding Pershing, operating expenses increased 27% on a rise in incentive compensation linked to improved performance, compared with an unusually low fourth quarter of 2002. Compared to the first quarter of 2002, and excluding Pershing, operating expenses declined 10%, due to a 12% reduction in headcount and cost containment measures. Credit Suisse First Boston is continuing to take measures to bring costs in line with operating income.

First quarter 2003 valuation adjustments, provisions and losses of USD 128 million (CHF 176 million) decreased 81% and 37%, respectively, compared with the fourth and first quarter of 2002. The first quarter of 2003 included a charge of USD 22 million (CHF 30 million) for credit provisions related to the risk of loss inherent in the portfolio of non-impaired loans and commitments compared with a similar charge of USD 340 million (CHF 530 million) in the fourth quarter of 2002 related to a change in estimate for the inherent loss in this portfolio. In the fourth quarter of 2002, Credit Suisse Group released a portion of its reserve for general banking risks, allocating USD 245 million (CHF 382 million) of this release to Credit Suisse First Boston to offset the after-tax impact of this change in estimate of the inherent loan loss. This release was reported as extraordinary income in the Group's consolidated financial statements. Excluding the provision for non-impaired loans and commitments, valuation adjustments, provisions and losses in the first quarter of 2003 declined 66% compared with the fourth quarter of 2002 and 47% compared with the first quarter of 2002. In line with a lower level of corporate credit provisions, impaired loans at the end of the first quarter of 2003 declined 6% on a US dollar basis compared to December 31, 2002, as a result of the impact of held for sale real estate loans presented on the basis of lower of cost or market net of related credit provisions, which, effective March 31, 2003, were no longer reported within the impaired loan exposure. Real estate loans of USD 541 million (CHF 752 million) were included in the impaired loan exposure as of December 31, 2002.

The fourth quarter of 2002 included pre-tax exceptional items of USD 890 million (CHF 1.4 billion), or USD 813 million (CHF 1.3 billion) after tax, consisting of a loss related to the sale of Pershing, a charge related to the agreement in principle with US regulators involving research analyst independence and the allocation of IPO shares to corporate executive officers (a settlement of which was recently finalized), a provision for private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation, and a charge related to a cost reduction program. Additionally, the fourth quarter of 2002 reflected the positive cumulative effect of a change in accounting principle for periods prior to 2002 of USD 162 million (CHF 254 million) relating to the recognition of deferred tax assets on net operating losses.

Assets under management, including private equity, totaled USD 364.4 billion (CHF 496.7 billion) as of March 31, 2003, down 2.2% on a US dollar basis from December 31, 2002, primarily due to market depreciation. Discretionary assets under management as of March 31, 2003, totaled USD 227.3 billion (CHF 309.9 billion), a decrease of 2.9% on a US dollar basis from December 31, 2002. Advisory assets under management as of March 31, 2003, totaled USD 137.1 billion (CHF 186.8 billion), a decrease of 0.9% on a US dollar basis from December 31, 2002.


Institutional Securities
The Institutional Securities segment reported a segment profit of USD 348 million (CHF 476 million) in the first quarter of 2003, compared with USD 63 million (CHF 88 million) in the fourth quarter of 2002 and USD 218 million (CHF 367 million) in the first quarter of 2002. First quarter operating income of USD 2.6 billion (CHF 3.6 billion) increased 39% compared with the fourth quarter of 2002. The increase reflected improved results in the Fixed Income division and lower write-downs related to the non-continuing businesses in the Other division. This increase was partially offset by a decline in Investment Banking’s operating income, due, in part, to the inclusion of a gain in the fourth quarter 2002 operating income resulting from the sale of an investment in Swiss Re. Compared with the first quarter of 2002, operating income declined 5%. Both the Equity and Investment Banking divisions were adversely impacted by weak market conditions. Operating expenses in the first quarter of 2003 increased 31% compared with the fourth quarter of 2002, reflecting the unusually low personnel expenses in the fourth quarter of 2002, and decreased 11% compared with the first quarter of 2002. First quarter 2003 valuation adjustments, provisions and losses were 83% and 44% lower than the fourth and first quarters of 2002, respectively.

For consistency, the results of certain legacy private equity investments, including investments in mature third-party leverage buyout funds which had been monitored and reported separately within the Investment Banking division, were formally transferred to the Other division in the first quarter of 2003. Accordingly, the operating income of the Investment Banking and Other divisions were reclassified for all periods presented to reflect management’s determination to report results from the non-continuing businesses in the Other division.

Fixed Income's   operating income for the first quarter of 2003 increased 142% compared with the fourth quarter of 2002 to USD 1.4 billion (CHF 1.9 billion). The increase was primarily driven by secondary trading in the developed markets credit products business, the seasonal impact of increased customer flow and increased mortgage activity. Additionally, fourth quarter 2002 credit products results were adversely impacted by a write-down on notes issued by affiliates of National Century Financial Enterprises, Inc. First quarter 2003 increases were also recorded in interest rate derivatives, due to a favorable environment with a steep yield curve and increased volatility, and in the leveraged and bank finance business. First quarter 2003 operating income increased 12% compared with the first quarter of 2002, primarily due to an increase in the interest rate products business, particularly in the derivatives area, reflecting a favorable interest rate environment and increased client demand following the decline in the equity markets in early 2002.

First quarter 2003 operating income of the Equity division increased 7% compared with the fourth quarter of 2002 to USD 602 million (CHF 825 million). The increase was principally related to options and structured products derivatives transactions, which benefited from an increase in customer volume compared with relatively low demand during the fourth quarter of 2002. Convertible trading activity also increased in the first quarter of 2003 due to renewed investor interest. Partially offsetting these increases was a decline in the cash customer business, which was adversely impacted by declines in volume, general margin compression and a decrease in equity new issuance activity. Compared with the first quarter of 2002, operating income decreased 30% due to declines in the cash customer business, principally in the United States, for the reasons cited previously. Operating income from derivatives activity was in line with the first quarter of 2002. Despite the challenging market, rankings in research, sales and trading generally remained consistent or improved.

Investment Banking’s   first quarter 2003 operating income, which includes private equity, declined 42% versus the fourth quarter 2002 to USD 545 million (CHF 748 million). The decline was principally attributable to a gain reported in the fourth quarter of 2002 on the sale of an investment in Swiss Re of USD 309 million (CHF 473 million), with the remainder principally attributable to a decrease in equity new issuance revenue. Globally, equity new issuance activity in the reporting period declined 24% compared with the fourth quarter of 2002, but Credit Suisse First Boston continued to exhibit strength in the middle-market sector. Operating income from mergers and acquisitions was comparable to the fourth quarter of 2002, despite a 19% decline in global merger and acquisition industry volume. Results from the leverage and bank finance business benefited from a 60% increase in global high-yield new issuance activity and an increase in market share. High-yield new issuance market share increased from 12% for the fourth quarter of 2002 to 22% for the first quarter of 2003, and Credit Suisse First Boston retained its number one ranking in global high-yield new issuances. First quarter 2003 operating income decreased 26% compared with the first quarter of 2002, which included a USD 110 million (CHF 185 million) gain on the sale of an investment in Swiss Re, reflecting mainly the impact of a decline in merger and acquisition and equity new issuance operating income. Industry-wide global new issuance activity declined 52% compared with the first quarter of 2002.

Active private equity investments net gains (both realized and unrealized gains and losses) were USD 30 million (CHF 41 million) in the first quarter of 2003, compared with net gains of USD 347 million (CHF 533 million) in the fourth quarter of 2002 and net gains of USD 55 million (CHF 92 million) in the first quarter of 2002, including gains from the sale of an investment in Swiss Re. Management and performance fees were USD 44 million (CHF 60 million) in the first quarter of 2003, compared with USD 50 million (CHF 73 million) in the fourth quarter of 2002 and USD 59 million (CHF 99 million) in the first quarter of 2002. The book value of the active private equity investments was USD 858 million (CHF 1.2 billion) and fair value was USD 902 million (CHF 1.2 billion) as of March 31, 2003.

First quarter 2003 operating income for the Other division was USD 47 million (CHF 64 million), compared with operating losses of USD 208 million (CHF 312 million) and USD 124 million (CHF 210 million) in the fourth and first quarters of 2002, respectively. The increase in operating income was principally related to fewer write-downs on the non-continuing businesses, which include real estate, distressed trading and private equity investments. The aggregate operating loss related to all non-continuing legacy businesses in the first quarter of 2003 was USD 42 million (CHF 57 million) compared with USD 272 million (CHF 401 million) and USD 202 million (CHF 339 million) in the fourth and first quarters of 2002, respectively. Credit Suisse First Boston continues to reduce the net exposure of the non-continuing portfolio as market conditions permit. As of March 31, 2003, the net exposure of the entire non-continuing portfolio, including unfunded commitments on the real estate portfolio, was USD 2.7 billion (CHF 3.7 billion), a decrease of USD 303 million (CHF 495 million) compared with December 31, 2002.


CSFB Financial Services
CSFB Financial Services reported a segment profit of USD 37 million (CHF 51 million) for the first quarter of 2003, a decline of 23% compared with the fourth quarter of 2002 and 47% compared with the first quarter of 2002. Operating income for the first quarter of 2003 was USD 304 million (CHF 416 million), down 37% and 43% from the fourth and first quarters of 2002, respectively, and operating expenses declined 41% and 44%, respectively. Excluding Pershing, operating income was flat compared with the fourth quarter of 2002 and decreased 5% compared with the first quarter of 2002.

Credit Suisse Asset Management’s   operating income in the first quarter of 2003 was flat compared to the fourth quarter of 2002. Operating income compared with the first quarter of 2002 declined as a result of market depreciation and asset outflows. Assets under management decreased USD 5.3 billion (CHF 15.2 billion), or 1.8%, compared with December 31, 2002 to USD 291.7 billion (CHF 397.6 billion) due to market declines and a net USD 3.8 billion (CHF 5.2 billion) outflow of assets. Discretionary assets under management decreased USD 5.8 billion (CHF 13.4 billion) compared with December 31, 2002.

Private Client Services’   operating income for the first quarter of 2003 was flat compared with the fourth quarter of 2002 despite a 5.6% decrease in assets under management on a US dollar basis. Compared with the first quarter of 2002, operating income declined, reflecting the weak equity markets. Decreased customer debit balances adversely impacted net interest income and lower trading activity and assets under management resulted in decreased commission and service fee income. Customer debit balances averaged USD 539 million in the first quarter of 2003 compared with USD 637 million and USD 839 million in the fourth and first quarters of 2002, respectively. Total transactions in the first quarter of 2003 totaled 316,900, down from 325,700 and 393,400 in the fourth and first quarters of 2002, respectively. Private Client Services’ net new assets were USD 1.1 billion (CHF 1.5 billion) for the first quarter of 2003.

On a net basis, the first quarter 2003 after-tax operating results of Pershing decreased compared with the fourth and first quarters of 2002. During the first quarter of 2003, trades per day averaged 123,000 compared with 122,600 and 134,300 during the fourth and first quarters of 2002, respectively. In the first quarter of 2003, customer debit balances averaged USD 4.8 billion compared with USD 4.2 billion and USD 4.9 billion in the fourth and first quarters of 2002, respectively.

Credit Suisse First Boston business unit income statement 1)     
                Change   Change  
                in % from   in % from  
in USD m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Operating income   2,920   2,361   3,277   24   (11)  
Personnel expenses   1,509   1,068   1,808   41   (17)  
Other operating expenses   660   802   775   (18)   (15)  
Operating expenses   2,169   1,870   2,583   16   (16)  
Gross operating profit   751   491   694   53   8  
Depreciation of non-current assets   94   107   123   (12)   (24)  
Valuation adjustments, provisions and losses   128   657   202   (81)   (37)  
Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes   529   (273)   369     43  
Extraordinary income/(expenses), net   0   246   0      
Taxes2) 3)(144)   138   (81)     78  
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests   385   111   288   247   34  
Acquisition interest   (63)   (57)   (99)   11   (36)  
Amortization of retention payments   (80)   (97)   (107)   (18)   (25)  
Amortization of acquired intangible assets and goodwill   (151)   (209)   (213)   (28)   (29)  
Exceptional items   0   (890)   0   (100)    
Tax impact   70   169   112   (59)   (38)  
Cumulative effect of change in accounting principle2)   162        
Net profit/(loss) before minority interests   161   (811)   (19)      
Minority interests   0   0   0      
Net profit/(loss)   161   (811)   (19)      

See page 22 for footnotes.

 

 

 

 

 

 

 

 

 

 

 


Reconciliation to net operating profit      
                Change   Change  
                in % from   in % from  
in USD m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net profit/(loss)   161   (811)   (19)      
Amortization of acquired intangible assets and goodwill   151   209   213   (28)   (29)  
Exceptional items   0   890   0   (100)    
Tax impact   (20)   (115)   (39)   (83)   (49)  
Cumulative effect of change in accounting principle     (162)        
Net operating profit   292   11   155     88  


Credit Suisse First Boston business unit income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Operating income   4,001   3,401   5,505   18   (27)  
Personnel expenses   2,067   1,512   3,037   37   (32)  
Other operating expenses   904   1,184   1,302   (24)   (31)  
Operating expenses   2,971   2,696   4,339   10   (32)  
Gross operating profit   1,030   705   1,166   46   (12)  
Depreciation of non-current assets   130   156   207   (17)   (37)  
Valuation adjustments, provisions and losses   176   993   338   (82)   (48)  
Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes   724   (444)   621     17  
Extraordinary income/(expenses), net   0   383   0   (100)    
Taxes2) 3)(197)   220   (137)     44  
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests   527   159   484   231   9  
Acquisition interest   (86)   (80)   (167)   8   (49)  
Amortization of retention payments   (110)   (142)   (179)   (23)   (39)  
Amortization of acquired intangible assets and goodwill   (206)   (308)   (357)   (33)   (42)  
Exceptional items   0   (1,389)   0   (100)    
Tax impact   96   254   187   (62)   (49)  
Cumulative effect of change in accounting principle2)   254        
Net profit/(loss) before minority interests   221   (1,252)   (32)      
Minority interests   0   0   0      
Net profit/(loss)   221   (1,252)   (32)      
1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. Certain other items, including brokerage, execution and clearing expenses, contractor costs and expenses related to certain redeemable preferred securities classified as minority interests, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results. For a complete reconciliation of the business unit results to the Group’s consolidated results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results”.
2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes of CHF 22 m (USD 14 m) for 4Q2002 and would not have had an impact on the taxes reported for 1Q2002.
3) Excluding tax impact on acquisition-related costs as well as exceptional items.


Reconciliation to net operating profit      
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net profit/(loss)   221   (1,252)   (32)      
Amortization of acquired intangible assets and goodwill   206   308   357   (33)   (42)  
Exceptional items   0   1,389   0   (100)    
Tax impact   (27)   (176)   (66)   (85)   (59)  
Cumulative effect of change in accounting principle     (254)        
Net operating profit   400   15   259     54  


Credit Suisse First Boston business unit key information      
based on CHF amounts           1Q2003   4Q2002   1Q2002  
Cost/income ratio1)        82.0%   97.4%   88.5%  
Cost/income ratio (operating)2)        77.5%   83.9%   82.6%  
Return on average allocated capital1)        6.9%   (36.1%)   (0.9%)  
Return on average allocated capital (operating)2)        12.4%   0.4%   6.9%  
Average allocated capital in CHF m           12,889   13,864   14,913  
Pre-tax margin1)        8.2%   (52.0%)   (1.5%)  
Pre-tax margin (operating)2)        13.2%   (8.3%)   5.0%  
Personnel expenses/operating income1)        55.6%   57.1%   60.2%  
Personnel expenses/operating income (operating)2)        51.7%   44.5%   55.2%  
                       
                31.03.03   31.12.02  
Number of employees               19,218   23,424  
1) Based on the business unit results including certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments. Please refer to “Reconciliation of operating to consolidated results”.
2) Based on the results of the separate segments comprising the business unit, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments. Please refer to “Reconciliation of operating to consolidated results”.


Overview of business unit Credit Suisse First Boston 1)      
  in USD m   in CHF m  
        CSFB           CSFB      
    Institutional   Financial   Credit Suisse   Institutional   Financial   Credit Suisse  
1Q2003   Securities   Services   First Boston   Securities   Services   First Boston  
Operating income   2,616   304   2,920   3,585   416   4,001  
Personnel expenses   1,361   148   1,509   1,864   203   2,067  
Other operating expenses   574   86   660   787   117   904  
Operating expenses   1,935   234   2,169   2,651   320   2,971  
Gross operating profit   681   70   751   934   96   1,030  
Depreciation of non-current assets   86   8   94   119   11   130  
Valuation adjustments, provisions and losses   112   16   128   154   22   176  
Net operating profit before extraordinary items, acquisition-related costs and taxes   483   46   529   661   63   724  
Extraordinary income/(expenses), net   0   0   0   0   0   0  
Taxes2)(135)   (9)   (144)   (185)   (12)   (197)  
Net operating profit before acquisition-related costs   348   37   385   476   51   527  
Acquisition interest           (63)           (86)  
Amortization of retention payments           (80)           (110)  
Amortization of acquired intangible assets and goodwill           (151)           (206)  
Tax impact           70           96  
Net profit           161           221  
                           
Average allocated capital   9,092   433   9,360   12,519   595   12,889  
1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, not allocated to the segments are included in the business unit results. Certain other items, including brokerage, execution and clearing expenses, contractor costs and expenses related to certain redeemable preferred securities classified as minority interests, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results. For a complete reconciliation of the business unit results to the Group’s consolidated results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results”.
2) Excluding tax impact on acquisition-related costs.


Institutional Securities income statement 1)     
                Change   Change  
                in % from   in % from  
in USD m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Fixed Income2)1,422   587   1,269   142   12  
Equity   602   562   855   7   (30)  
Investment Banking3)545   936   741   (42)   (26)  
Other2) 3)47   (208)   (124)      
Operating income   2,616   1,877   2,741   39   (5)  
Personnel expenses   1,361   831   1,550   64   (12)  
Other operating expenses   574   641   618   (10)   (7)  
Operating expenses   1,935   1,472   2,168   31   (11)  
Gross operating profit   681   405   573   68   19  
Depreciation of non-current assets   86   81   102   6   (16)  
Valuation adjustments, provisions and losses   112   664   199   (83)   (44)  
Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes   483   (340)   272     78  
Extraordinary income/(expenses), net   0   246   0   (100)    
Taxes4)(135)   157   (54)     150  
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)   348   63   218   452   60  
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) Reflects the movement of the results of certain non-continuing real estate and distressed assets from Fixed Income to Other.
3) Reflects the movement of the results of certain non-continuing private equity business from Investment Banking to Other.
4) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes of USD 33 m for 4Q2002 and would not have had an impact on the taxes reported for 1Q2002.


Institutional Securities income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Fixed Income2)1,948   806   2,132   142   (9)  
Equity   825   806   1,437   2   (43)  
Investment Banking3)748   1,394   1,245   (46)   (40)  
Other2) 3)64   (312)   (210)      
Operating income   3,585   2,694   4,604   33   (22)  
Personnel expenses   1,864   1,166   2,603   60   (28)  
Other operating expenses   787   947   1,039   (17)   (24)  
Operating expenses   2,651   2,113   3,642   25   (27)  
Gross operating profit   934   581   962   61   (3)  
Depreciation of non-current assets   119   117   171   2   (30)  
Valuation adjustments, provisions and losses   154   1,006   333   (85)   (54)  
Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes   661   (542)   458     44  
Extraordinary income/(expenses), net   0   383   0   (100)    
Taxes4)(185)   247   (91)     103  
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)   476   88   367   441   30  
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) Reflects the movement of the results of certain non-continuing real estate and distressed assets from Fixed Income to Other.
3) Reflects the movement of the results of certain non-continuing private equity business from Investment Banking to Other.
4) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes of CHF 49 m for 4Q2002 and would not have had an impact on the taxes reported for 1Q2002.


Institutional Securities balance sheet information      
in CHF m               31.03.03   31.12.02  
Total assets               621,288   588,904  
Total assets in USD m               455,757   423,611  
Due from banks               213,537   198,511  
of which securities lending and reverse repurchase agreements               157,899   156,234  
Due from customers               125,552   114,775  
of which securities lending and reverse repurchase agreements               53,376   57,435  
Mortgages               14,841   14,825  
Securities and precious metals trading portfolios               174,533   163,480  
Due to banks               317,781   292,449  
of which securities borrowing and repurchase agreements               120,453   123,017  
Due to customers, other               116,926   109,980  
of which securities borrowing and repurchase agreements               64,269   66,864  


Institutional Securities key information      
based on CHF amounts           1Q2003   4Q2002   1Q2002  
Cost/income ratio1)        77.3%   82.8%   82.8%  
Average allocated capital in CHF m           12,519   13,438   14,188  
Pre-tax margin1)        18.4%   (5.9%)   9.9%  
Personnel expenses/operating income1)        52.0%   43.3%   56.5%  
                       
                31.03.03   31.12.02  
Number of employees               16,332   16,524  
1) Based on the segment results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segment.


CSFB Financial Services income statement 1)
          Change Change 
          in % from in % from 
in USD m   1Q2003 4Q2002 1Q2002 4Q2002 1Q2002 
Net interest income   12 46 49 (74) (76) 
Net commission and service fee income   246 425 438 (42) (44) 
Net trading income   25 19 31 32 (19) 
Other ordinary income   21 (6) 18  17 
Operating income   304 484 536 (37) (43) 
Personnel expenses   148 237 258 (38) (43) 
Other operating expenses   86 161 157 (47) (45) 
Operating expenses   234 398 415 (41) (44) 
Gross operating profit   70 86 121 (19) (42) 
Depreciation of non-current assets   8 26 21 (69) (62) 
Valuation adjustments, provisions and losses   16 (7) 3  433 
Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes   46 67 97 (31) (53) 
Extraordinary income/(expenses), net   0 0 0   
Taxes2)(9) (19) (27) (53) (67) 
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)   37 48 70 (23) (47) 
1) Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would not have had an impact on the taxes reported for 4Q2002 and 1Q2002.


CSFB Financial Services income statement 1)     
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net interest income   16   67   82   (76)   (80)  
Net commission and service fee income   337   625   737   (46)   (54)  
Net trading income   34   26   52   31   (35)  
Other ordinary income   29   (11)   30     (3)  
Operating income   416   707   901   (41)   (54)  
Personnel expenses   203   346   434   (41)   (53)  
Other operating expenses   117   237   263   (51)   (56)  
Operating expenses   320   583   697   (45)   (54)  
Gross operating profit   96   124   204   (23)   (53)  
Depreciation of non-current assets   11   39   36   (72)   (69)  
Valuation adjustments, provisions and losses   22   (13)   5     340  
Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes   63   98   163   (36)   (61)  
Extraordinary income/(expenses), net   0   0   0      
Taxes2)(12)   (27)   (46)   (56)   (74)  
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)   51   71   117   (28)   (56)  
1) Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would not have had an impact on the taxes reported for 4Q2002 and 1Q2002.


CSFB Financial Services key information      
             
based on CHF amounts           1Q2003   4Q2002   1Q2002  
Cost/income ratio1)        79.6%   88.0%   81.4%  
Average allocated capital in CHF m           595   701   1,098  
Pre-tax margin1)        15.1%   13.9%   18.1%  
Personnel expenses/operating income1)        48.8%   48.9%   48.2%  
Net new assets Credit Suisse Asset Management in CHF bn (discretionary)           (5.2)   (8.7)   (3.9)  
Net new assets Private Client Services in CHF bn           1.5   2.7   3.1  
Growth in assets under management           (4.2%)   (2.7%)   (5.3%)  
Growth in discretionary assets under management – Credit Suisse Asset Management           (4.8%)   (4.6%)   (1.3%)  
of which net new assets           (1.9%)   (3.0%)   (1.1%)  
of which market movement and structural effects           (2.9%)   (1.6%)   (0.2%)  
of which acquisitions/(divestitures)                
Growth in net new assets Private Client Services           2.1%   3.6%   3.2%  
                       
                31.03.03   31.12.02  
Assets under management in CHF bn               465.9   486.5  
of which Credit Suisse Asset Management               397.6   412.8  
of which Private Client Services               66.3   71.7  
Discretionary assets under management in CHF bn               281.9   297.2  
of which Credit Suisse Asset Management               265.3   278.7  
of which mutual funds distributed               104.9   106.5  
of which Private Client Services               16.6   18.5  
Advisory assets under management in CHF bn               184.0   189.3  
Number of employees               2,886   6,900  
1) Based on the segment results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segment.




RECONCILIATION OF OPERATING TO CONSOLIDATED RESULTS


Reconciliation of operating to consolidated results
The Group’s consolidated results are prepared in accordance with Swiss GAAP, while the Group’s segment reporting principles are applied to the presentation of segment results, including business unit results. For a description of these reporting principles, please refer to "Operating and Financial Review – Reporting Principles" in the Group's 2002 Annual Report. The business unit results reflect the results of the separate segments constituting the respective business units as well as certain acquisition-related costs, exceptional items and the cumulative effect of a change in accounting principle that are not allocated to the segments. The business unit results also include certain other reclassifications that are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results.

The acquisition-related costs and exceptional items excluded from the segment results and from the business unit operating basis results shown below include, among other items, acquisition interest, amortization of retention payments, amortization of acquired intangible assets and goodwill and the exceptional items described in the reviews of business unit results and in the footnotes to the reconciliation tables. The reclassifications shown for the Credit Suisse Financial Services business unit reflect the amortization of acquired intangible assets and goodwill, and for the fourth quarter of 2002, exceptional items and the cumulative effect of a change in accounting principle. The reclassifications shown in the Credit Suisse First Boston business unit reflect acquisition-related costs, and for the fourth quarter 2002, exceptional items and the cumulative effect of a change in accounting principle. Acquisition-related costs and exceptional items are excluded from the business unit operating results because management believes that this enables management and investors to assess the operating results or “cash earnings” and key performance indicators of the business. The effect of the change in accounting principle has been excluded from the business unit operating results to the extent that the positive current-period tax benefits resulted from prior-period losses.

The results presented in the column “Adjustments including Corporate Center” include the parent company operations, including Group financing initiatives as well as income and expense items related to centrally managed, own-use real estate, mainly comprised of bank premises within Switzerland. In addition, this column includes consolidation adjustments and adjustments to segment accounts related to management reporting policies and the reversal of certain reclassifications made in the business units.

The adjustments made for the Credit Suisse Financial Services business unit results include valuation adjustments, provisions and losses. This adjustment reflects the difference between the expected credit provisions recorded by Credit Suisse Financial Services’ banking segments and the actual credit provisions for the year, and also includes a charge relating to an adjustment in the method of estimating inherent losses related to lending activities in the fourth quarter of 2002. The impact of this charge, after tax, was fully offset by a release from the reserve for general banking risks, which was recorded as extraordinary income at Credit Suisse Group.

The reclassifications made for the Credit Suisse First Boston business unit results include, among others, the deduction from other operating expenses of brokerage, execution and clearing expenses of Credit Suisse First Boston, reclassified as a reduction of operating income; the deduction from other operating expenses of contractor costs of Credit Suisse First Boston, reclassified as an addition to personnel expenses; and the addition to operating income of expenses related to certain redeemable preferred securities of Credit Suisse First Boston, reclassified as minority interests. Credit Suisse First Boston’s brokerage, execution and clearing expenses and contractor costs are presented in a manner that brings them in line with its US competitors in the investment banking industry and makes it easier for investors to compare the Credit Suisse First Boston business unit’s operating expenses with those of its competitors. Swiss GAAP does not permit the Group to report brokerage, execution and clearing expenses and contractor costs as part of other operating expenses. The presentation of redeemable preferred securities of Credit Suisse First Boston, issued by consolidated special purpose entities, as an expense reducing its operating income, is intended to more fairly present the operating results from its core businesses.

  Credit Suisse Financial Services   Credit Suisse First Boston          
        Re-   Re-       Re-   Re-   Adjust. incl.   Credit  
    Operating   classifi-   classified   Operating   classifi-   classified   Corporate   Suisse  
1Q2003, in CHF m   basis   cations   basis   basis   cations   basis   Center   Group  
Operating income   3,393       3,393   4,001   (86)1)3,915   (284)   7,024  
Personnel expenses   1,369       1,369   2,067   1101)2,177   93   3,639  
Other operating expenses   779       779   904       904   (302)   1,381  
Operating expenses   2,148       2,148   2,971       3,081   (209)   5,020  
Gross operating profit   1,245       1,245   1,030       834   (75)   2,004  
Depreciation of non-current assets   220       220   130       130   70   420  
Amortization of acquired intangible assets and goodwill     252)25     2061)206   1   232  
Valuation adjustments, provisions and losses   81       81   176       176   (24)   233  
Profit before extraordinary items and taxes   944       919   724       322   (122)   1,119  
Extraordinary income/(expenses), net   7       7   0       0   (56)   (49)  
Taxes   (253)   1   (252)   (197)   96   (101)   (25)   (378)  
Net profit before minority interests   698       674   527       221   (203)   692  
Minority interests       (8)   (8)       0   0   (32)   (40)  
Net profit           666           221   (235)   652  
1) Reflects acquisition interest of CHF 86 m allocated to operating income, amortization of retention payments of CHF 110 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 206 m.
2) Reflects acquisition-related costs of CHF 25 m allocated to amortization of acquired intangible assets and goodwill.


  Credit Suisse Financial Services   Credit Suisse First Boston          
        Re-   Re-       Re-   Re-   Adjust. incl.   Credit  
    Operating   classifi-   classified   Operating   classifi-   classified   Corporate   Suisse  
4Q2002, in CHF m   basis   cations   basis   basis   cations   basis   Center   Group  
Operating income   3,517       3,517   3,401   (80)1)3,321   (443)   6,395  
Personnel expenses   1,405   32)1,408   1,512   3841) 3)1,896   160   3,464  
Other operating expenses   897   (1)2)896   1,184       1,184   (433)   1,647  
Operating expenses   2,302       2,304   2,696       3,080   (273)   5,111  
Gross operating profit   1,215       1,213   705       241   (170)   1,284  
Depreciation of non-current assets   318   162)334   156       156   144   634  
Amortization of acquired intangible assets and goodwill     922) 4)92     3081)308   3   403  
Valuation adjustments, provisions and losses   105       105   993   9843)1,977   342   2,424  
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes   792       682   (444)       (2,200)   (659)   (2,177)  
Extraordinary income/(expenses), net   24       24   383   (163)3)220   125   369  
Cumulative effect of change in accounting principle     2665)266     2545)254   0   520  
Taxes   (332)   14   (318)   220   254   474   162   318  
Net profit/(loss) before minority interests   484       654   159       (1,252)   (372)   (970)  
Minority interests       51   51       0   0   (31)   20  
Net profit/(loss)           705           (1,252)   (403)   (950)  
1) Reflects acquisition interest of CHF 80 m allocated to operating income, amortization of retention payments of CHF 142 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 308 m.
2) Reflects exceptional items totaling CHF 73 m (CHF 60 m net of tax) in respect of focusing the European initiative on private banking clients allocated as follows: CHF 3 m to personnel expenses, CHF –1 m to operating expenses, CHF 16 m to depreciation of non-current assets and CHF 55 m to amortization of acquired intangible assets and goodwill.
3) Reflects exceptional items of CHF 1,389 m (CHF 1,269 m net of tax) allocated as follows: CHF 242 m to personnel expenses, CHF 984 m to valuation adjustments, provisions and losses and CHF 163 m to extraordinary expenses.
4) Reflects acquisition-related costs of CHF 37 m allocated to amortization of acquired intangible assets and goodwill.
5) Reflects the cumulative effect of a change in accounting principle related to the recognition of deferred tax assets on net operating losses for Credit Suisse Financial Services of CHF 266 m and Credit Suisse First Boston of CHF 254 m.


  Credit Suisse Financial Services   Credit Suisse First Boston          
        Re-   Re-       Re-   Re-   Adjust. incl.   Credit  
    Operating   classifi-   classified   Operating   classifi-   classified   Corporate   Suisse  
1Q2002, in CHF m   basis   cations   basis   basis   cations   basis   Center   Group  
Operating income   3,306       3,306   5,505   (167)1)5,338   (314)   8,330  
Personnel expenses   1,443       1,443   3,037   1791)3,216   178   4,837  
Other operating expenses   814       814   1,302       1,302   (455)   1,661  
Operating expenses   2,257       2,257   4,339       4,518   (277)   6,498  
Gross operating profit   1,049       1,049   1,166       820   (37)   1,832  
Depreciation of non-current assets   205       205   207       207   69   481  
Amortization of acquired intangible assets and goodwill       292)29       3571)357   (1)   385  
Valuation adjustments, provisions and losses   99       99   338       338   34   471  
Profit/(loss) before extraordinary items and taxes   745       716   621       (82)   (139)   495  
Extraordinary income/(expenses), net   (3)       (3)   0       0   (2)   (5)  
Taxes   (120)   1   (119)   (137)   187   50   (18)   (87)  
Net profit/(loss) before minority interests   622       594   484       (32)   (159)   403  
Minority interests       (2)   (2)       0   0   (33)   (35)  
Net profit/(loss)           592           (32)   (192)   368  
1) Reflects acquisition interest of CHF 167 m allocated to operating income, amortization of retention payments of CHF 179 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 357 m.
2) Reflects acquisition-related costs of CHF 29 m allocated to amortization of acquired intangible assets and goodwill.




CONSOLIDATED RESULTS | CREDIT SUISSE GROUP

Consolidated income statement      
                Change   Change  
                in % from   in % from  
in CHF m   1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Interest and discount income   3,341   4,119   4,652   (19)   (28)  
Interest and dividend income from trading portfolios   2,026   2,204   2,648   (8)   (23)  
Interest and dividend income from financial investments   175   156   107   12   64  
Interest expenses   (3,891)   (4,553)   (5,554)   (15)   (30)  
Net interest income   1,651   1,926   1,853   (14)   (11)  
Commission income from lending activities   205   313   200   (35)   3  
Commission income from securities and investment transactions   2,555   2,899   3,913   (12)   (35)  
Commission income from other services   241   334   485   (28)   (50)  
Commission expenses   (187)   (246)   (225)   (24)   (17)  
Net commission and service fee income   2,814   3,300   4,373   (15)   (36)  
Net trading income   1,273   109   1,216     5  
Premiums earned, net   10,476   8,309   10,463   26   0  
Claims incurred and actuarial provisions   (9,684)   (6,426)   (10,131)   51   (4)  
Commission expenses, net   (589)   (549)   (444)   7   33  
Investment income from the insurance business   1,332   54   1,082     23  
Net income from the insurance business   1,535   1,388   970   11   58  
Income from the sale of financial investments   75   490   249   (85)   (70)  
Income from investments in associates   43   (18)   60     (28)  
Income from other non-consolidated participations   1   3   7   (67)   (86)  
Real estate income   43   30   31   43   39  
Sundry ordinary income   210   86   262   144   (20)  
Sundry ordinary expenses1)(621)   (919)   (691)   (32)   (10)  
Other ordinary income/(expenses), net   (249)   (328)   (82)   (24)   204  
Operating income   7,024   6,395   8,330   10   (16)  
Personnel expenses   3,639   3,464   4,837   5   (25)  
Other operating expenses   1,381   1,647   1,661   (16)   (17)  
Operating expenses   5,020   5,111   6,498   (2)   (23)  
Gross operating profit   2,004   1,284   1,832   56   9  
Depreciation of non-current assets2)420   634   481   (34)   (13)  
Amortization of acquired intangible assets   81   165   193   (51)   (58)  
Amortization of goodwill   151   238   192   (37)   (21)  
Valuation adjustments, provisions and losses from the banking business1)233   2,424   471   (90)   (51)  
Depreciation, valuation adjustments and losses   885   3,461   1,337   (74)   (34)  
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes   1,119   (2,177)   495     126  
Extraordinary income   9   626   4   (99)   125  
Extraordinary expenses   (58)   (257)   (9)   (77)    
Cumulative effect of change in accounting principle3)   520        
Taxes3)(378)   318   (87)     334  
Net profit/(loss) before minority interests   692   (970)   403     72  
Minority interests   (40)   20   (35)     14  
Net profit/(loss)   652   (950)   368     77  
1) Effective in the first quarter 2003, declines in value of debt securities and loans available for sale due to deterioration in creditworthiness are reported in “Sundry ordinary expenses”. In previous years they were recorded in “Valuation adjustments, provisions and losses from the banking business”.
2) Includes amortization of Present Value of Future Profits (PVFP) from the insurance business.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for Q42002 and 1Q2002 of CHF –198 m and CHF –53 m, respectively.


Consolidated balance sheet    
            Change  
            in % from  
in CHF m   31.03.03   31.12.02   31.12.02  
Assets              
Cash and other liquid assets   2,440   2,551   (4)  
Money market papers   22,921   25,125   (9)  
Due from banks   213,829   195,778   9  
Receivables from the insurance business   12,604   12,290   3  
Due from customers   185,370   182,143   2  
Mortgages   96,342   94,896   2  
Securities and precious metals trading portfolios   183,424   173,133   6  
Financial investments from the banking business   32,889   33,394   (2)  
Investments from the insurance business   131,605   128,450   2  
Non-consolidated participations   5,011   1,792   180  
Tangible fixed assets   7,693   8,152   (6)  
Intangible assets   15,799   18,359   (14)  
Accrued income and prepaid expenses   13,882   13,882   0  
Other assets   68,334   65,711   4  
Total assets   992,143   955,656   4  
Subordinated assets1)5,866   6,502   (10)  
Receivables due from non-consolidated participations   986   728   35  
               
Liabilities and shareholders' equity              
Money market papers issued   29,438   22,178   33  
Due to banks   316,302   287,884   10  
Payables from the insurance business   8,365   10,218   (18)  
Due to customers in savings and investment deposits   41,582   39,739   5  
Due to customers, other   254,215   258,244   (2)  
Medium-term notes (cash bonds)   2,331   2,599   (10)  
Bonds and mortgage-backed bonds   84,441   81,839   3  
Accrued expenses and deferred income   13,384   17,463   (23)  
Other liabilities   56,931   56,070   2  
Valuation adjustments and provisions   12,254   11,557   6  
Technical provisions for the insurance business   141,498   136,471   4  
Total liabilities   960,741   924,262   4  
Reserve for general banking risks   1,739   1,739   0  
Share capital   1,190   1,190   0  
Capital reserve   20,710   20,710   0  
Revaluation reserves for the insurance business   1,044   1,504   (31)  
Reserve for own shares   1,950   1,950   0  
Retained earnings   1,238   4,732   (74)  
Minority interests   2,879   2,878   0  
Net profit/(loss)   652   (3,309)    
Total shareholders' equity   31,402   31,394   0  
Total liabilities and shareholders' equity   992,143   955,656   4  
Subordinated liabilities   19,207   19,704   (3)  
Liabilities due to non-consolidated participations   1,714   1,164   47  
1) 31.12.02 restated.


Off-balance sheet and fiduciary business       
in CHF m                   31.03.03   31.12.02  
Credit guarantees in form of bills of exchange and other guarantees1)                29,217   27,745  
Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees                   4,762   4,680  
Irrevocable commitments in respect of documentary credits                   3,277   3,242  
Other contingent liabilities                   2,610   3,437  
Contingent liabilities                   39,866   39,104  
Irrevocable commitments                   84,415   90,048  
Liabilities for calls on shares and other equity instruments                   43   43  
Confirmed credits                   32   32  
Total off-balance sheet                   124,356   129,227  
Fiduciary transactions                   37,247   37,703  

At 31.03.03, market value guarantees reported as derivatives totaled CHF 192.6 bn (31.12.02: CHF 170.4 bn) (nominal value). The associated replacement value reported on-balance sheet totaled CHF 9.2 bn (31.12.02: CHF 10.3 bn).

 

 

 

 

 

 

 

 

 

 

 

 

 
1) Including credit guarantees of securities lent as arranger: 31.03.03: CHF 22.5 bn (31.12.02: CHF 20.7 bn).


Derivative instruments       
        Positive   Negative       Positive   Negative  
        gross   gross       gross   gross  
    Nominal   replacement   replacement   Nominal   replacement   replacement  
    value   value 1) value 1) value   value 1) value 1)
in CHF bn   31.03.03   31.03.03   31.03.03   31.12.02   31.12.02   31.12.02  
Interest rate products   14,616.6   196.2   190.5   10,647.2   185.4   181.0  
Foreign exchange products   1,613.4   31.8   32.5   1,376.7   34.8   36.1  
Precious metals products   16.7   0.6   2.2   19.8   0.9   2.5  
Equity/index-related products   369.9   14.2   14.1   347.5   12.6   13.0  
Other products   200.0   3.9   5.2   179.4   4.3   5.0  
Total derivative instruments   16,816.6   246.7   244.5   12,570.6   238.0   237.6  
1) Including replacement values for traded derivatives (futures and traded options) subject to daily margining requirements. Total positive and negative replacement values of traded derivatives amount to CHF 2.9 bn (31.12.02: CHF 1.5 bn) and CHF 1.1 bn (31.12.02: CHF 1.1 bn).


Currency translation rates         
      Average rate year-to-date   Closing rate used in the
    used in the income statement   balance sheet as of
in CHF       1Q2003   4Q2002   1Q2002   31.03.03   31.12.02  
1 USD       1.37   1.56   1.68   1.3632   1.3902  
1 EUR       1.47   1.47   1.47   1.4768   1.4550  
1 GBP       2.19   2.33   2.40   2.1493   2.2357  
100 JPY       1.15   1.24   1.27   1.1434   1.1722  


Calculation of earnings per share (EPS)        
                    Change   Change  
                    in % from   in % from  
        1Q2003   4Q2002   1Q2002   4Q2002   1Q2002  
Net profit/(loss) in CHF m       652   (950)   368     77  
Diluted net profit/(loss) in CHF m       652   (950)   368     77  
Weighted average shares outstanding1)    1,230,305,558   1,193,153,538   1,189,051,080   3   3  
Dilutive impact 2)    2,015,114   0   7,477,415     (73)  
Weighted average shares, diluted       1,232,320,672   1,193,153,538   1,196,528,495   3   3  
Basic earnings per share in CHF       0.53   (0.80)   0.31     71  
Diluted earnings per share in CHF       0.53   (0.80)   0.31     71  
1) Adjusted for weighted average shares repurchased.
2) The calculation for the diluted loss per share in 4Q2002 excludes the effect of the potential exchange of convertible bonds and the potential exercise of options to purchase shares, as the effect would be anti-dilutive.


Income statement of the banking and insurance business 1)      
  Banking business      
  (incl. Corporate Center)   Insurance business2)Credit Suisse Group  
3 months, in CHF m   2003   2002   2003   2002   2003   2002  
Net interest income   1,655   1,835       1,651   1,853  
Net commission and service fee income   2,812   4,382       2,814   4,373  
Net trading income   1,286   1,216       1,273   1,216  
Net income from the insurance business 3)     1,522   976   1,535   970  
Other ordinary income/(expenses), net   (150)   46   (114)   (122)   (249)   (82)  
Operating income   5,603   7,479   1,408   854   7,024   8,330  
Personnel expenses   3,118   4,241   521   596   3,639   4,837  
Other operating expenses   985   1,323   383   338   1,381   1,661  
Operating expenses   4,103   5,564   904   934   5,020   6,498  
Gross operating profit/(loss)   1,500   1,915   504   (80)   2,004   1,832  
Depreciation of non-current assets   276   347   143   134   420   481  
Amortization of acquired intangible assets   81   193   0   0   81   193  
Amortization of goodwill   135   174   16   18   151   192  
Valuation adjustments, provisions and losses from the banking business   234   471       233   471  
Depreciation, valuation adjustments and losses   726   1,185   159   152   885   1,337  
Profit/(loss) before extraordinary items, taxes and minority interests   774   730   345   (232)   1,119   495  
Extraordinary income   9   4   0   0   9   4  
Extraordinary expenses   (1)   (9)   (58)   0   (58)   (9)  
Taxes   (275)   (166)   (102)   79   (378)   (87)  
Net profit/(loss) before minority interests   507   559   185   (153)   692   403  
Minority interests   (36)   (38)   (5)   3   (40)   (35)  
Net profit/(loss)   471   521   180   (150)   652   368  
1) Income statements for the banking and insurance business are presented on a stand-alone basis.
2) Represents “Winterthur” Swiss Insurance Company.
3) Insurance business: expenses due to the handling of both claims and investments are allocated to the income from the insurance business, of which CHF 141 m (3 months 2002: CHF 168 m) are related to personnel expenses and CHF 87 m (3 months 2002: CHF 83 m) to other operating expenses.


Statement of shareholders' equity       
                    3 months   3 months  
in CHF m                   2003   2002  
At beginning of financial year                   31,394   38,921  
Dividends paid to minority interests                   (17)   (16)  
Capital increases, par value and capital surplus                   0   10  
Changes in scope of consolidation affecting minority interests                   (8)   (27)  
Foreign exchange impact                   (199)   (42)  
Change in revaluation reserves from the insurance business, net                   (460)   (274)  
Minority interests in net profit                   40   35  
Net profit                   652   368  
At end of period                   31,402   38,975  




LOANS

Due from banks     
in CHF m           31.03.03   31.12.02  
Due from banks, gross           213,918   195,866  
Valuation allowance           (89)   (88)  
Total due from banks, net           213,829   195,778  


Due from customers and mortgages     
in CHF m           31.03.03   31.12.02  
Due from customers, gross1)        190,482   187,617  
Valuation allowance           (5,112)   (5,474)  
Due from customers, net           185,370   182,143  
Mortgages, gross1)        98,032   97,037  
Valuation allowance           (1,690)   (2,141)  
Mortgages, net           96,342   94,896  
Total due from customers and mortgages, net           281,712   277,039  
1) Effective 1Q2003, loans held for sale are presented net of the related loan valuation allowances.


Due from customers and mortgages by sector     
in CHF m           31.03.03   31.12.02  
Financial services           51,293   38,279  
Real estate companies           15,870   16,472  
Other services including technology companies           15,655   15,316  
Manufacturing           13,200   13,273  
Wholesale and retail trade           11,968   11,165  
Construction           4,126   4,314  
Transportation           4,149   4,149  
Telecommunications           2,980   2,333  
Health and social services           2,069   2,340  
Hotels and restaurants           2,468   2,390  
Agriculture and mining           2,390   2,317  
Non-profit and international organizations           180   191  
Commercial           126,348   112,539  
Consumers           88,356   92,419  
Public authorities           5,465   5,023  
Lease financings           3,169   3,158  
Professional securities transactions and securitized loans           65,176   71,515  
Due from customers and mortgages, gross           288,514   284,654  
Valuation allowance           (6,802)   (7,615)  
Total due from customers and mortgages, net           281,712   277,039  


Collateral of due from customers and mortgages     
    Mortgage   Other   Without   Total  
in CHF m   collateral   collateral   collateral   31.03.03  
Due from customers   5,144   133,422   46,804   185,370  
Residential properties   69,310              
Business and office properties   12,313              
Commercial and industrial properties   11,977              
Other properties   2,742              
Mortgages   96,342           96,342  
Total collateral   101,486   133,422   46,804   281,712  
As of 31.12.02   100,002   129,300   47,737   277,039  


Loan valuation allowance     
in CHF m           31.03.03   31.12.02  
Due from banks           89   88  
Due from customers           5,112   5,474  
Mortgages           1,690   2,141  
Total loans valuation allowance1) 2)        6,891   7,703  
of which on principal           5,875   6,617  
of which on interest           1,016   1,086  
1) Of which are CHF 5,828 m specific allowances for impaired loans (31.12.02: CHF 6,778 m).
2) Effective 1Q2003, valuation allowances related to loans held for sale are netted directly with such loans, and are not presented separately in the total loan valuation allowance.


Roll forward of loan valuation allowance     
            3 months   3 months  
in CHF m           2003   2002  
At beginning of financial year           7,703   9,264  
Net additions charged to income statement           168   242  
Net write-offs           (571)   (947)  
Reclassified to loans held for sale           (355)    
Provisions for interest           42   73  
Foreign currency translation impact and other           (96)   125  
At end of period           6,891   8,757  


Impaired loans 1)    
in CHF m           31.03.03   31.12.02  
With a specific allowance           10,030   11,714  
Without a specific allowance           763   655  
Total impaired loans, gross           10,793   12,369  
                   
Non-performing loans           5,365   6,355  
Non-interest earning loans           2,299   2,325  
Restructured loans           281   281  
Potential problem loans2)        2,848   3,408  
Total impaired loans, gross           10,793   12,369  
1) Effective 1Q2003, loans classified as held for sale are excluded from presentation as impaired.
2) Potential problem loans consist of loans where interest payments are being made but where, in the credit officer's assessment, some doubt exists as to the timing and/or certainty of the repayment of contractual principal.


Securities and precious metals trading portfolios   
           
in CHF m   31.03.03   31.12.02  
Listed on stock exchange   65,170   58,661  
Unlisted   85,236   76,083  
Debt instruments   150,406   134,744  
of which own bonds and medium-term notes   1,263   1,520  
Listed on stock exchange   27,862   33,208  
Unlisted   4,086   3,935  
Equity instruments   31,948   37,143  
of which own shares   1,620   2,254  
Precious metals   1,070 1,246 
Total securities and precious metals trading portfolios   183,424   173,133  
of which securities rediscountable or pledgeable with central banks   35,248   27,426  


Investments from the insurance business      
            Gross   Gross      
        Amortized   unrealized   unrealized      
As of 31.03.03, in CHF m   Book value   cost   gains   losses   Fair value  
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities   12,109   11,463   682   36   12,109  
Debt securities issued by foreign governments   28,412   27,683   865   136   28,412  
Corporate debt securities   33,107   31,568   1,691   152   33,107  
Other   8,202   7,694   520   12   8,202  
Debt securities   81,830   78,408   3,758   336   81,830  
Equity securities   6,488   6,734   137   383   6,488  
Total securities – available-for-sale   88,318   85,142   3,895   719   88,318  
Debt securities   251          
Equity securities   51          
Total securities – trading   302          
Own shares   31          
Mortgage loans   10,350          
Other loans   4,163          
Real estate   7,589         10,065  
Short-term investments and other   7,921          
Investments from the insurance business   118,674          
Equity securities   8,861          
Debt securities   2,653          
Short-term investments   1,284          
Real estate   133          
Investments where the investment risk is borne by the policyholder   12,931          
Investments from the insurance business   131,605          


Investments from the insurance business 1)     
            Gross   Gross      
        Amortized   unrealized   unrealized      
As of 31.12.02, in CHF m   Book value   cost   gains   losses   Fair value  
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities   10,814   9,951   863   0   10,814  
Debt securities issued by foreign governments   27,110   26,337   871   98   27,110  
Corporate debt securities   29,042   27,478   1,717   153   29,042  
Other   9,685   9,157   552   24   9,685  
Debt securities   76,651   72,923   4,003   275   76,651  
Equity securities   9,052   9,171   336   455   9,052  
Total securities – available-for-sale   85,703   82,094   4,339   730   85,703  
Debt securities   246          
Equity securities   31          
Total securities – trading   277          
Own shares   44          
Mortgage loans   10,175          
Other loans   4,305          
Real estate   7,431         10,057  
Short-term investments and other   7,120          
Investments from the insurance business   115,055          
Equity securities   9,288          
Debt securities   2,841          
Short-term investments   1,069          
Real estate   197          
Investments where the investment risk is borne by the policyholder   13,395          
Investments from the insurance business   128,450          
1) Certain reclassifications have been made to conform to the current presentation.


INFORMATION FOR INVESTORS

Credit Suisse Group shares  
Ticker symbols      
Stock exchange listings   BloombergReutersTelekurs
SWX Swiss Exchange/virt-x   CSGN VXCSGZn.VXCSGN,380
Frankfurt   CSX GRCSGZn.DECSX,013
New York (ADS)1)CSR USCSR.NCSR,065
1) 1 ADS represents 1 registered share.
       
Swiss security number   1213853  
ISIN number   CH0012138530  
German security number   DE 876 800  
CUSIP number   225 401 108  


Ratings        
                               
Agencies   Credit Suisse Group   Credit Suisse   Credit Suisse First Boston   Winterthur  
    Long term   Short term   Long term   Short term   Long term   Short term      
Moody’s, New York   Aa3     Aa3   P1   Aa3   P1   A1  
Standard & Poor’s, New York   A   A1   A+   A1   A+   A1   A  
Fitch Ratings, New York   AA–   F1+   AA–   F1+   AA–   F1+   AA–  


Financial calendar
  
Second quarter results 2003Tuesday, August 5, 2003
Third quarter results 2003Tuesday, November 4, 2003



Enquiries
Credit Suisse Group

Investor Relations  

Gerhard Beindorff, Marc Buchheister

Tel. +41 1 333 4570/+41 1 333 3169

Fax +41 1 333 2587

Credit Suisse Group

Media Relations  

Karin Rhomberg Hug, Claudia Kraaz

Tel. +41 1 333 8844

Fax +41 1 333 8877


Financial Publications
Printed financial publications may be ordered from:

Credit Suisse

KIDM 23

Uetlibergstrasse 231

8070 Zurich

Switzerland

Fax +41 1 332 7294

www.credit-suisse.com/results/order.html

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


Credit Suisse Group

Paradeplatz 8 P.O. Box 1

8070 Zurich Switzerland

Tel. +41 1 212 1616

Fax +41 1 333 2587

www.credit-suisse.com

5520124

English

 

   
 
     
 
QUARTERLY RESULTS 2003
 Q1
     

PRESENTATION

   
CONSOLIDATED RESULTS
   
CREDIT SUISSE FINANCIAL SERVICES
   
CREDIT SUISSE FIRST BOSTON
   
SUMMARY
   
   
   
   
   
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION

 


Slide 1

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FIRST QUARTER 2003 NET PROFIT OVERVIEW

  in CHF m Q1/03   4Q/02   1Q/02  
    Credit Suisse            
    Financial Services 666   705   592  
                 
    Credit Suisse            
    First Boston 221   (1,252 ) (32 )
                 
    Corporate Center & adjustments (235 ) (403 ) (192 )









  Group reported net profit/(loss) 652   (950 ) 368  









    Amortization of acquired intangible assets and goodwill 232   348   385  
                 
    Exceptional items (1) -   1,462   -  
                 
    Cumulative effect of change in accounting principle -   (520 ) -  
                 
    Tax impact (28 ) (190 ) (67 )









  Group net operating profit 856   150   686  









   
(1) for more information about these items, please refer to the "Quarterly Report Q4 and Financial Review 2002" which is posted on our website at www.credit-suisse.com


Slide 2

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HIGHLIGHTS OF Q1 RESULTS

     
  Demonstrates the success of efforts to return the Group to profitability
       
  Lower costs were a factor in all business areas
     
  Despite challenges, the Group's franchise has remained strong
     
    Return to stronger revenues in CSFB Fixed Income
       
    Increased net new assets at Private Banking
       
    Selective premium growth at Winterthur, focussing on profitability
       
     
  Delivering on the key priorities set in Q3/02
       
    Further strengthen capital base
       
    Realign Winterthur to respond to the new operating environment
       
    Refocus and reduce the cost run-rates in European Private Banking
       
    Bring costs in line with revenues at CSFB
       

Slide 3

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OPERATING INCOME

* excluding other ordinary income/(expenses), net

Slide 4

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OPERATING EXPENSES AND DEPRECIATION


Slide 5

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PROVISIONS

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


Slide 6

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IMPAIRED LOANS


6.0% 5.0% 5.1%    4.6% 4.9% 4.1%    Impaired loans as % of due from banks and customers (1)


59.5% 60.4% 60.2%    60.0% 62.3% 63.8%   Valuation allowance as % of impaired loans

 

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


Slide 7

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BANKING CAPITAL RATIOS
AS OF MARCH 31, 2003

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







 Book equity 6,739   19,659   31,402  
     Deduction of goodwill (275 ) (8,145 ) (10,022 )
     Other tier 1 adjustments (246 ) (282 ) (862 )
 Tier 1 capital 6,218   11,232   20,517  
     acquired intangible assets
70   1,881 (2) 1,948  
     hybrid capital -   1,012   2,146  














 BIS risk-weighted assets 82,801   107,320   205,548  














 Tier 1 capital ratio 7.5%   10.5%   10.0%  
     excl. acquired intangible assets 7.4%   9.0%   9.2%  







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

Slide 8

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PRESENTATION
    
CONSOLIDATED RESULTS
   
CREDIT SUISSE FINANCIAL SERVICES
   
CREDIT SUISSE FIRST BOSTON
   
SUMMARY
   
   
   
   
   
   CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
   

Slide 9

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CREDIT SUISSE FINANCIAL SERVICES OVERVIEW  

 

Results Q1/2003    
Net profit of CHF 666 m, up 13% vs Q1/02 (down 6% vs Q4/02)
 
Net operating profit of CHF 690 m, up 11% vs Q1/02 (up 29% vs Q4/02)
 
All segments with improved results vs Q4/02, leading to an ROE of 22.6%
 
       
Highlights Q1/2003  
Progress in cost management
 
operating expenses in banking segments down 9%  vs Q4/02
 
administration costs in insurance segments down 6%  vs Q1/02
 
 
Increasing NNA in Private Banking and improved investment income in insurance segments 
 
 
Realignment of the Winterthur organization well on track 
 
 
Refocusing of European Private Banking almost completed 
 
       
Outlook    
 
Good progress towards our goal to return to solid profitability in 2003 
 
 
CSFS remains exposed to continued volatility in the financial markets, particularly in Life & Pensions  

 


Slide 10

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PRIVATE BANKING

Gross margin (bp) 126 120 107 112   114


NNA(CHF bn) 9.2 5.6 3.4 0.9   1.5

  Q1 Q2 Q3 Q4   Q1
 
 
  2002   2003
  Key Profit & Loss Items
      Change vs
     


in CHF m Q1/03   Q4/02   Q1/02







Operating income 1,310   (2%)   (21%)














Operating expenses 771   (7%)   (8%)







             
Operating income in line with 2H/2002 but down 21% vs Q1/02
             
Progress in cost management
             
Gross margin stable (112bp for Q4/02, restated for transfer of affluent clients to CRB, formerly published 118bp)
             
Increased net new assets

 


Slide 11

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PRIVATE BANKING
REDUCTION IN OPERATING INCOME Q1/03 vs Q1/02

     
     Lower transaction volume
driven by investor passivity
(brokerage down 36%,
trading income down 30%)
     
     CHF 75 bn lower AuM base
driven by lower equity
valuations (53%) and
FX impact (47%)
     
     Lower interest margin on
liabilities driven by low interest
rate environment
     
     
     


Slide 12

CORPORATE & RETAIL BANKING

   
Key Profit & Loss Items
          Change vs
         


  in CHF m Q1/03   Q4/02   Q1/02
 






  Operating income 734   3%   (7%)
 






 






  Operating expenses 473   (14%)   (3%)
 





 






  Provisions (2) 77   (1%)   (13%)
 






               
  Operating income slightly up vs Q4/02 while further progress in cost management and a seasonally lower cost level in Q1
     
  Effective credit losses CHF 24 m below statistical valuation adjustments
                 
    NNA outflow of CHF 3.4 bn due to shifts from time deposits to transaction accounts in corporate banking
(1) operating
(2) valuation adjustments, provisions and losses (provisions based on expected credit losses derived from statistical model)

 


Slide 13

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LIFE & PENSIONS

 









  Expense
ratio (%)
6.4
14.6
14.6
13.4
 
6.8
 


















  Return on
invested
assets (%)
3.2
0.1
1.2
1.2
 
4.9
 









   
Q1
Q2
Q3
Q4
 
Q1
 
   




 

 
   
2002
 
2003
 

(1) death and other benefits incurred & change in provision for future policyholder benefits (technical)
(2) excluding separate account business
Key Profit & Loss Items
  in CHF m
Q1/03
 
Change vs
Q1/02






  Gross premiums written 6,499   (4% )












  Benefits & claims (1) (6,971 ) (2% )












  Policy acquisition costs (120 ) 50%  












  Administration costs (322 ) (6% )












  Investment income (2) 1,221   54%  






           
     Premiums (GPW) down 4% due to selective underwriting / renewals and exceptionally strong single life business in Q1/02
     Lower administration costs offset by higher acquisition costs mainly due to accelerated DAC depreciation, in line with investment income development
  Expense ratio up slightly by 0.4 ppts to 6.8%
  Investment income significantly improved


Slide 14

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INSURANCE

Combined ratio (%) 103.9   103.7   102.8   103.2   100.7  






















Return on invested assets (%) 1.2   (3.8 ) 1.6   0.5   3.5  











  Q1   Q2   Q3   Q4   Q1  
 






 

2002
  2003  
Key Profit & Loss Items
      Change vs  
in CHF m Q1/03   Q1/02  





Net premiums earned 3,978   6 %










Claims & annuities (2,826 ) 0 %










Policy acquisition costs (710 ) 24 %










Administration costs (472 ) (6 %)










Investment income 289   232 %





   
Premiums (NPE) up 6% driven by tariff increases
Lower administration costs offset by higher acquisition costs mainly related to strong organic growth and to the effect of fully integrating the book of business acquired from Prudential plc
Underwriting result improved by CHF 137 m leading to a combined ratio of 100.7%
Investment income up significantly, driven by lower impairments


Slide 15

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PRESENTATION
    
CONSOLIDATED RESULTS
   
CREDIT SUISSE FINANCIAL SERVICES
   
CREDIT SUISSE FIRST BOSTON
   
SUMMARY
   
   
   
   
   
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
   

Slide 16

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CREDIT SUISSE FIRST BOSTON
OVERVIEW

         
Results
Q1/2003
  Net operating profit of USD 292 m, up from USD 11 m in Q4/02
    and up 88% vs Q1/02
       
  Net profit of USD 161 m vs net loss of CHF 811 m in Q4/02
    and net loss of USD 19 m in Q1/02
       
  Operating income up 24% vs Q4/02, driven by Fixed Income
     
    Up 34% vs Q4/02 and down 5% vs Q1/02 when adjusting for
      Pershing consolidation differences
       
  Substantial reduction in credit provisions
         
Highlights
Q1/2003
  Finalized agreement with regulators to settle industry-wide
    investigations
       
  Completed sale of Pershing
       
  Further key senior management appointments
    (Jerry Wood in Fixed Income, Michael Kenneally at CSAM)
       
  Recovery of Fixed Income revenue momentum

 


Slide 17

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CREDIT SUISSE FIRST BOSTON
KEY FINANCIAL RESULTS

    2002   2003  
   






 
 
  in USD m Q1      Q2      Q3      Q4      Q1     
                       
  Operating income 3,277   3,493   2,638   2,361   2,920  
     proforma excl. Pershing 3,046   3,277   2,428   2,166   2,905  
                       
  Operating expenses 2,583   2,655   2,169   1,870   2,169  
     proforma excl. Pershing 2,414   2,490   1,997   1,714   2,169  
                       
  Provisions 202   260   560   657   128  











  Net operating profit (1) 155   229   (255 ) 11   292  











  Operating ROE (1) (%) 6.9   9.9   (11.8 ) 0.4   12.4  
                       
  Pre-tax margin (1) (%) 5.0   7.7   (17.0 ) (8.3 ) 13.2  
                       
  Personnel expenses /                    
     operating income (1) (%) 55.2   55.0   52.7   44.5   51.7  
                       
  Number of employees 25,970   25,265   24,961   23,424   19,218
(2)

(1) excludes exceptional items, cumulative effect of change in accounting principle and amortization of acquired intangible assets and goodwill

(2)   

Q1/03 excludes Pershing headcount of 3,913

Slide 18

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INSTITUTIONAL SECURITIES
OVERVIEW

 



  Value at Risk (1-day, 99%) in USD m  
  Period end 52.5   59.3   38.9   41.3   54.5  
  Average 49.2   46.4   43.7   39.4   49.2  
























  Pre-tax (1) 9.9   13.0   (15.4 ) (5.9 ) 18.4  
  Margin(%)                    












    Q1   Q2   Q3   Q4   Q1  
   
 
 
    2002   2003  
  (1) operating                    
Key Profit & Loss Items
        Change vs  
       
 
  in USD m Q1/03   Q4/02   Q1/02  








  Operating income 2,616   39%   (5% )
















  Personnel expenses 1,361   64%   (12% )
















  Other operating expenses 574   (10% ) (7% )
















  Provisions 112   (83% ) (44% )








               
    Strong Fixed Income performance but continued low levels of equity new issuance and M&A
     
    Improved results on non-continuing businesses versus significant write-offs in 2002
     
    Personnel expenses reflect increase in incentive compensation due to rise in operating income
     
    Q4/02 provisions included USD 340 m reserve for losses inherent in non-impaired portfolio
     


Slide 19

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INSTITUTIONAL SECURITIES OPERATING INCOME

    Up 142% vs Q4/02, driven by developed credit products, including increase in investment grade secondary trading, increased mortgage activity and NCFE in Q4/02
       
   

Increase in interest rate derivatives, favorably impacted by steep yield curve and increased volatility

         
    Up 7% vs Q4/02, driven by customer volume in options and structured product derivatives
       
    Growth in prime banking business
       
    Cash business down due to decline in customer volume, lower margins and reduced equity new issuance
         
   

Down 42% vs Q4/02, (Q4 incl. USD 309 m Swiss Re gain)

       
    Lower equity new issuance; industry-wide volume fell 24%
       
    M&A in line with Q4/02, despite 19% lower industry volume
       
   

Increased high-yield issuance volume and market share

         
    Significant decrease in write-offs on non-continuing business
       
    Net exposure reduced to USD 2.7 bn from USD 3.0 bn at 12/02
     
       
         

(1) includes provisions


Slide 20

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CSFB FINANCIAL SERVICES
OVERVIEW

   
Net new assets (USD bn)  
CSAM  
(2.3
)
(4.1
)
(7.9
)
(5.8
)
(3.8
)
PCS  
1.8
1.4
0.1
1.8
1.1
   





  Total  
(0.5
)
2.7
(7.8
)
(4.0
)
(2.7
)


AuM  
361
363
336
350
342
(USD bn)


Pre-tax (1)  
18.1
17.9
9.6
13.9
15.1
Margin (%)  

   
Q1
Q2
Q3
Q4
Q1
   









   
2002
2003
Key Profit & Loss Items
 
         
 
 
Change vs
     

 
in USD m
Q1/03
 
Q4/02
Q1/02

Operating income
304
 
(37%
)
(43%
)
  proforma excl. Pershing
289
 
0%
(5%
)


Operating expenses
234
 
(41%
)
(44%
)
  proforma excl. Pershing
234
 
(3%
)
(5%
)

Provisions
16
 
443%

   
Change to Pershing consolidation distorts
comparison to previous quarters – proforma
comparison more meaningful
   
CSAM operating income down, impacted by net
outflow of assets, market depreciation and
seasonal impact of performance fees
   
PCS impacted by weak equity market

 
(1) operating

Slide 21

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PRESENTATION
   
CONSOLIDATED RESULTS
   
CREDIT SUISSE FINANCIAL SERVICES
   
CREDIT SUISSE FIRST BOSTON
   
SUMMARY
   
   
   
   
   
   
CAUTIONARY STATEMENT REGARDING
  FORWARD-LOOKING INFORMATION

 


Slide 22

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SUMMARY

While the level of performance is not yet satisfactory, the Group made progress towards its goal to return to solid profitability in 2003
   
Key priorities for long-term success remain valid
     
  Continued growth of our client franchise
     
  Strict cost control
   
  Sustained profitability
   
  Strong capital base
   
Given the continued challenging market environment and global uncertainty, Credit Suisse Group remains cautious in its outlook for 2003


Slide 23

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Cautionary statement regarding forward-looking information

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties, and we might not be able to achieve the predictions, forecasts, projections and other outcomes we describe or imply in forward-looking statements.

A number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions we express in these forward-looking statements, including those we identify in "Risk Factors" in our Annual Report on Form 20-F for the fiscal year ended December 31, 2002 filed with the US Securities and Exchange Commission, and in other public filings and press releases.

We do not intend to update these forward-looking statements except as may be required by applicable laws.

 


Slide 24

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  SUPPLEMENTS TO THE
FIRST QUARTER 2003
PRESENTATION
 

 


CONTENT

CSPB  
   
- Development of gross margin
   
- AuM by product and currency (page 3)
   
   
 Winterthur  
   
- Investment result (page 4 to 5)
   
- Investment portfolio / asset allocation (page 6)
   
- Equity base development (page 7)
   
CSFB  
   
- Revenue detail Investment Banking (slide 8)
   
- "Legacy" assets exposure (slide 9)
   
- "Legacy" assets P&L charges (slide 10)
   
- Counterparty exposure by industry (slide 11)
   
Cautionary statement regarding
forward-looking information
(page 12)
   

Supplement Slide 1

Back to Contents

PRIVATE BANKING
DEVELOPMENT OF GROSS MARGIN


Supplement Slide 2

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PRIVATE BANKING
AUM BY PRODUCT & CURRENCY

 
     

 


Supplement Slide 3

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WINTERTHUR GROUP
INVESTMENT RESULT (1)
(1/2)
                                     
                                     
          2002(1)        2003(1)  
             
     
 
      12M/02(1)       Q1   Q2   Q3   Q4       Q1  
                                     



















  Current income   5,096       1,236   1,435   1,203   1,222       1,255  
                                     
  Realized gains   5,421       1,346   1,389   2,353   333       1,327  
                                     
  Realized losses   (4,738 )      (647 )  (2,129 )  (1,589)   (373 )      (633 )
                                     
  Impairments    (3,887 )      (942 )  (857 )  (1,413)   (675 )      (328 )
                                     
  Other   (464 )      (114 )  (100 )  (135)   (115 )      (111 )
     
     
 
 
 
     
 
  Investment Income (P&L)   1,428       879   (262 )  419   392       1,510  



















   
(1) general account only
Note: Q1 to Q3 2002 reclassified to the current presentation format, including real estate for own use, interest paid from current income and realized gains/losses to other


Supplement Slide 4

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WINTERTHUR GROUP
INVESTMENT RESULT (1)
(2/2)
   
Development of gross unrealized losses in equity portfolio
   

     
    Given flat markets, unrealized losses are recognized in the P&L after 6 months as an impairment
     
    NOP impact highly country-specific depending on whether the investment risk is borne by the company or the policyholder
     
    Further improvement in reducing unrealized losses on equities
     
    Taking only the NOP-relevant portion into account, unrealized losses decreased 20% to the level of CHF 200 m
     
     

(1) general account only

Supplement Slide 5

Back to Contents

WINTERTHUR GROUP
INVESTMENT PORTFOLIO – ASSET ALLOCATION

Responsive to equity market development
     
  reduction of equity securities from CHF 9.1 bn (7%) to CHF 6.6 bn (5%) in Q1/2003
     
  "investment view" equity exposure stands at 5.9 bn (4.6%) (1) 

 

 

(1) investment view excludes CHF 0.7 bn of participations in bond funds and special funds classified as equities under accounting rules
(2) all investments incl. real estate at market value; excluding separate account (i.e. unit-linked) business
(3) reduced by CHF 4.5 bn vs reported figures due to trade accounting on purchased bonds and maturing money market transactions (settlement date)

Supplement Slide 6

WINTERTHUR GROUP
EQUITY BASE DEVELOPMENT IN 2003

(1) net of tax / shadow


Supplement Slide 7

CREDIT SUISSE FIRST BOSTON
REVENUE DETAIL 2002 AND Q1/03

Investment Banking Division (1)
                     
  2002          2003  
 






 
 
in USD m Q1   Q2   Q3   Q4   Q1  











Private Equity 133   186   141   397   77  
                     
Debt Capital Markets 100   94   28   64   85  
                     
Equity Capital Markets 117   153   74   92   29  
                     
Advisory 344   444   280   357   296  
                     
Other 47   30   33   26   58  
 
 
 
 
 
 
  Total 741   907   556   936   545  










 

 

(1) previous quarters have been restated and reflect the movement of the results of certain non-continuing private equity assets from
  Investment Banking Division to Other Division
Note: IBD results reflect the impact of various divisional sharing arrangements of operating income amongst the divisions

 


Supplement Slide 8

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CREDIT SUISSE FIRST BOSTON
"LEGACY" ASSETS EXPOSURE

in USD m   "Legacy" Assets Net Exposure    
                 
      8,964   Real Estate    
12/1999   11,925 1,975   Distressed    
      986   Private Equity (1,228 unfunded commitments)    
                 
      4,805   Real Estate    
12/2000   8,026 1,498   Distressed    
      1,724   Private Equity (984 unfunded commitments)    
                 
      2,925   Real Estate    
12/2001   5,357 1,107   Distressed    
      1,325   Private Equity (857 unfunded commitments)  

Note:

- Unfunded commitments excluded for Private Equity
- Unfunded commitments included for Real Estate
- Private Equity unfunded commitments include employee commitments

               
      1,535   Real Estate  
12/2002   3,031 512   Distressed  
      984   Private Equity (785 unfunded commitments)

 

             
      1,185   Real Estate
03/2003   2,727 508   Distressed
      1,034   Private Equity (911 unfunded commitments)(1)
                 
   
(1) A fund previously reported in the Fixed Income division that is in the process of liquidation has been transferred to "Legacy". The related exposure as of March 31, 2003 was USD 95 m.

Supplement Slide 9

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CREDIT SUISSE FIRST BOSTON
"LEGACY" ASSETS P&L CHARGES

Charges related to "legacy" assets
in CSFB's income statement
 in USD m Real Estate
 
Distressed Portfolio
 
Private Equity
 
Total  

Q1/03  
 
 
   
Operating Income  7
(20
)
(29
)
(42
)
Provisions
- 
-
-
-
Taxes
(2
)
6
8
12
 
 
 

 

Net Operating Profit/(Loss)
5
(14
)
(21
)
(30
)


2002  
 
 
 
Operating Income (120
)
(523
)
(275
)
(919
)
Provisions (154
)
-
-
(154
)
Taxes 77
147
77
301
 
 

 

 

Net Operating Profit/(Loss) (197
)
(377
)
(199
)
(773
)


Supplement Slide 10

Back to Contents

CREDIT SUISSE FIRST BOSTON
COUNTERPARTY EXPOSURE BY INDUSTRY

Selected CSFB Exposures (as of March 31, 2003)
  in USD m        
  Industry
Current exposure
Undrawn commitm.
Total exposure
 






  Telecom service providers 2,038 1,289 3,327  
  Telecom manufacturing 244 83 327  
  Merchant energy 1,043 253 1,296  
  Airlines 778 74 852  

 

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


Supplement Slide 11

Back to Contents

Cautionary statement regarding
forward-looking information

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties, and we might not be able to achieve the predictions, forecasts, projections and other outcomes we describe or imply in forward-looking statements.

A number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions we express in these forward-looking statements, including those we identify in “Risk Factors” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2002 filed with the US Securities and Exchange Commission, and in other public filings and press releases.

We do not intend to update these forward-looking statements except as may be required by applicable laws.


Supplement Slide 12

Signatures

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

 

  CREDIT SUISSE GROUP
  (Registrant)
   
Date May 6, 2003 By: /s/ David Frick
  (Signature)*
Member of the Executive Board
   
  By: /s/ Karin Rhomberg Hug
  (Signature)*
  Managing Director