ZURICH, Switzerland, Nov. 2, 2005 (PRIMEZONE) -- Credit Suisse Group today reported net income of CHF 1,918 million for the third quarter of 2005, compared to CHF 1,351 million in the third quarter of 2004 and CHF 919 million in the second quarter of 2005. The Group's return on equity for the third quarter of 2005 was 20.1%, with a return on equity of 22.7% for the banking business and 11.9% for the insurance business. Basic earnings per share were CHF 1.67. Net new assets for the Group amounted to CHF 19.0 billion.
Oswald J. Grubel, CEO of Credit Suisse Group, said, "The third-quarter result was satisfactory, as our Group benefited from increased levels of client activity and the active market environment. This was demonstrated by the substantial increase in our net income versus the third quarter of last year."
He added, "By building a global integrated bank that capitalizes on our strengths and expertise in investment banking, private banking and asset management, I am convinced that we will realize our ambition to achieve sustainable growth."
Banking Segments
Private Banking reported net income of CHF 728 million in the third quarter of 2005, an increase of 42% over the same period of 2004 and of 25% versus the second quarter of 2005. This result was driven primarily by strong asset-based and transaction-based revenues, which more than offset an increase in total operating expenses due to increased compensation and benefits -- resulting mainly from higher performance-related compensation accruals -- as well as strategic investments in international growth markets. The cost/income ratio improved to 55.7% in the third quarter of 2005 and the gross margin was 130.9 basis points, up 9.2 basis points from the third quarter of 2004 and up 5.3 basis points from the prior quarter.
Corporate & Retail Banking generated net income of CHF 264 million in the third quarter of 2005. This result reflects strong net revenues driven by higher commissions and fees and higher trading revenues, as well as the positive impact of the ongoing favorable credit environment. This corresponds to a 33% increase over the third quarter of 2004 and a decline of 5% versus the record result in the second quarter of 2005. The segment's return on average allocated capital was 19.8% for the third quarter of 2005 and the cost/income ratio was 62.7%, an improvement of 2.5 percentage points versus the same period of 2004 and of 1.2 percentage points versus the prior quarter.
Institutional Securities reported net income of CHF 612 million in the third quarter of 2005, an increase of 110% compared to the third quarter of 2004. This improvement reflects an increased focus on high-margin products and the generally favorable market environment. This result compares to a net loss of CHF 408 million in the second quarter of 2005, which included a CHF 624 million after-tax charge to increase the reserve for certain private litigation matters. Excluding this litigation charge, net income would have risen by 183% quarter-on-quarter. The segment's pre-tax margin (excluding minority interests) improved to 20.4% in the third quarter of 2005 from 7.7% in the same period of last year and the return on average allocated capital was 18.0%.
Wealth & Asset Management generated net income of CHF 101 million in the third quarter of 2005, an increase of 237% versus the third quarter of 2004 due primarily to higher revenues in key areas. The segment reported an increase in total operating expenses versus the same period of 2004, reflecting higher compensation and benefits expenses and higher other expenses. Compared to the second quarter of 2005, which included a particularly high level of private equity gains in Alternative Capital, net income declined by 59%. For the first nine months of 2005, net income increased 3% to CHF 481 million compared to the same period of 2004, despite somewhat lower year-to-date private equity gains which have varied from quarter to quarter.
Insurance Segments
Life & Pensions reported net income of CHF 96 million in the third quarter of 2005, reflecting solid technical results and business volumes. This result includes an adverse net impact after tax and policyholder participations of CHF 61 million related to the changes in actuarial assumptions and models. This was partly offset by a CHF 31 million increase in the valuation of deferred tax assets in relation to tax loss carry-forwards created in prior years. As a result, reported third-quarter 2005 net income declined by CHF 68 million from CHF 164 million in the third quarter of 2004. This decline was also attributable to a CHF 72 million release of valuation allowances on deferred tax assets in the third quarter of 2004, which was higher than in the third quarter of 2005. The CHF 32 million reduction in year-to-date net income from CHF 370 million to CHF 338 million was attributable to these factors. In the third quarter of 2005, total business volume grew by 13% versus the same period of 2004 and gross premiums written increased by 10%. Insurance underwriting and acquisition expenses rose by 164%, driven by the above-mentioned changes in actuarial assumptions and models, and administration expenses were up by 4%. The net investment return backing traditional life policies totaled 4.9% in the third quarter of 2005 and the net current investment return was 3.6%.
Non-Life reported net income of CHF 190 million in the third quarter of 2005, down 4% versus the third quarter of 2004. This result was negatively affected by losses relating to unusually heavy rainfall and flooding in Switzerland, which had a negative impact of CHF 72 million after tax. Net income benefited from a release of CHF 132 million of the valuation allowance on deferred tax assets primarily in relation to tax loss carry-forwards created in prior years. Year-to-date, net income totaled CHF 452 million, an increase of 18% versus the same period of 2004, reflecting the ongoing focus on selective and controlled underwriting. In the third quarter of 2005, net premiums earned rose 6% versus the third quarter of 2004 and the combined ratio increased by 0.5 percentage points to 101.8%. Administration expenses fell by 1% compared to the third quarter of 2004, while insurance underwriting and acquisition expenses rose 9%. The expense ratio decreased by 0.4 percentage points versus the third quarter of 2004. Non-Life's net investment return improved to 4.4% in the third quarter of 2005 and the net current investment return decreased slightly to 3.4%.
Net New Assets
Private Banking reported net new assets of CHF 14.3 billion in the third quarter of 2005, with healthy inflows from strategic key markets in Asia and the European onshore business. With an annualized year-to-date growth rate of 8.4%, Private Banking exceeded its mid-term target of 5%. Wealth & Asset Management reported net new assets of CHF 4.0 billion, mainly reflecting new client accounts in Private Client Services and inflows in Credit Suisse Asset Management, driven primarily by solid business growth in Europe. Overall, Credit Suisse Group reported CHF 19.0 billion of net new assets in the third quarter. The Group's total assets under management stood at CHF 1,404.6 billion as of September 30, 2005, up by 4.7% from June 30, 2005.
Management Change
Credit Suisse Group also announced today that Richard E. Thornburgh will be proposed for election to the Board of Directors of Credit Suisse Group at the Annual General Meeting in April 2006. He will step down from his current positions as a Member of the Executive Boards of Credit Suisse Group and Credit Suisse First Boston and as Executive Vice Chairman of Credit Suisse First Boston at the end of the year, after 30 years of loyal and distinguished service with Credit Suisse Group.
Outlook
Credit Suisse Group expects to see higher interest rates and increased market volatility in the fourth quarter of 2005. The Group anticipates that the global economy will remain robust as growth in Asia and Europe helps offset the pressure from higher energy costs and interest rates facing US consumers. Credit Suisse Group expects that oil and other commodities will continue to experience a correction within their longer-term uptrend.
For additional information on Credit Suisse Group's results for the third quarter of 2005, please refer to the Group's Quarterly Report Q3 2005, as well as the Group's slide presentation for analysts and the press, which are available on the Internet at: www.credit-suisse.com/results
Credit Suisse Group
Credit Suisse Group is a leading global financial services company headquartered in Zurich. It provides private clients and small and medium-sized companies with private banking and financial advisory services, and pension and insurance solutions from Winterthur. In the area of investment banking, it serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group's registered shares (CSGN) are listed in Switzerland and in the form of American Depositary Shares (CSR) in New York. The Group employs around 62,000 staff worldwide. As of September 30, 2005, it reported assets under management of CHF 1,404.6 billion.
Cautionary Statement Regarding Forward-Looking Information
This press release contains statements that constitute forward-looking statements. In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to our plans, objectives or goals; our future economic performance or prospects; the potential effect on our future performance of certain contingencies; and assumptions underlying any such statements. Words such as "believes," "anticipates," "expects," "intends" and "plans" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable laws. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include (i) market and interest rate fluctuations; (ii) the strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations in particular; (iii) the ability of counterparties to meet their obligations to us; (iv) the effects of, and changes in, fiscal, monetary, trade and tax policies, and currency fluctuations; (v) political and social developments, including war, civil unrest or terrorist activity; (vi) the possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations; (vii) the ability to maintain sufficient liquidity and access capital markets; (viii) operational factors such as systems failure, human error, or the failure to properly implement procedures; (ix) actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations; (x) the effects of changes in laws, regulations or accounting policies or practices; (xi) competition in geographic and business areas in which we conduct our operations; (xii) the ability to retain and recruit qualified personnel; (xiii) the ability to maintain our reputation and promote our brands; (xiv) the ability to increase market share and control expenses; (xv) technological changes; (xvi) the timely development and acceptance of our new products and services and the perceived overall value of these products and services by users; (xvii) acquisitions, including the ability to integrate successfully acquired businesses; (xviii) the adverse resolution of litigation and other contingencies; and (xix) our success at managing the risks involved in the foregoing. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, as well as the risks identified in our most recently filed Form 20-F and reports on Form 6-K furnished to the US Securities and Exchange Commission.
Presentation of Credit Suisse Group's Third Quarter 2005 Results via Webcast and Telephone Conference
Date Wednesday, November 2, 2005
Time 10.00 CET / 09.00 GMT / 04.00 EST
Speaker Renato Fassbind, Chief Financial Officer of Credit Suisse
Group
The presentation will be held in English.
Webcast www.credit-suisse.com/results
Telephone
Europe: +41 91 610 5600
UK: +44 207 107 0611
USA: +1 866 291 4166
Reference: 'Credit Suisse Group quarterly results'
Q&A You will have the opportunity to ask questions during the
telephone conference following the presentation.
Playback Audio recording - available approximately three hours after
the event at: www.credit-suisse.com/results
Telephone - available approximately three hours after the event,
please dial:
Europe: +41 91 612 4330
UK: +44 207 108 6233
USA: +1 866 416 2558
Conference ID: 209#
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.
The full press release including tables can be downloaded from the following link: http://hugin.info/100174/R/1019134/160191.pdf