ZURICH, Switzerland, Aug. 4, 2004 (PRIMEZONE) -- Credit Suisse Group today reported net income of CHF 3,318 million for the first half of 2004, compared to the loss reported under US GAAP in the first half of 2003. The Group's net income for the second quarter of 2004 amounted to CHF 1,457 million, compared to CHF 1,861 million in the strong first quarter of 2004. Credit Suisse Financial Services contributed CHF 1,070 million to the Group's second quarter 2004 result, driven primarily by strong revenue generation. Private Banking achieved solid net revenues and attracted CHF 7.9 billion in net new assets. Corporate & Retail Banking delivered a strong quarterly performance, based on good underlying results and benefiting from gains on interest rate derivatives. Both insurance segments recorded a good operating performance as well as solid investment income. Credit Suisse First Boston contributed CHF 430 million to the Group's second quarter 2004 result and achieved a return on average allocated capital of 14.5%. Credit Suisse Group's return on equity was 16.6% in the second quarter of 2004. Oswald J. Grubel, CEO of Credit Suisse Group, stated, "We are pleased with our results in the first half of 2004, with healthy revenue growth at Private Banking and Corporate & Retail Banking accompanied by a continued good operating performance and solid investment income at Winterthur. Following a strong first quarter, Credit Suisse First Boston achieved satisfactory second quarter results given the challenging environment."
He continued, "Our second quarter results not only underscore the Group's fundamental strengths but also pinpoint the areas we must build on. We have defined a series of key growth measures: in Private Banking, we will continue to concentrate on growth markets worldwide, as well as targeting profitable growth in key European markets. In Corporate & Retail Banking in Switzerland, the emphasis will be on increasing market share in the lending business and in retail investment products, as well as on expanding business with investment-grade corporates. At Credit Suisse First Boston, our main goal is to drive revenue growth by building on our successful businesses such as high-yield and private equity and by increasing the scale of existing businesses such as large cap banking and prime brokerage, as well as entering new areas with promising growth potential. In insurance, we remain firmly committed to enhancing business momentum and to positioning Winterthur as one of the leading retail insurers in key European and other selected markets, while exploring options to capture value for stakeholders."
He concluded, "We have a strong team of dedicated professionals in place to drive profitable growth. Together, we will implement our strategy of providing the Group's full expertise to our clients and delivering operational excellence, while remaining committed to fostering a diverse, team-oriented culture and increasing accountability. With the more powerful, integrated Group structure announced at the end of June, I firmly believe that our company is ideally positioned to leverage its strong franchises and underpin its competitive position as a leader in our industry."
Net New Assets
Credit Suisse Group reported CHF 9.1 billion in net new assets in the second quarter of 2004. Private Banking contributed net new assets of CHF 7.9 billion, corresponding to an annualized growth rate of 5.8% and thus exceeding its mid-term target for the second quarter in succession. A net new asset inflow of CHF 2.0 billion was reported at Wealth & Asset Management. The Group's total assets under management amounted to CHF 1,227.3 billion as of June 30, 2004, a marginal decrease of 1.1% from March 31, 2004, due to market valuations and foreign exchange impacts.
Credit Suisse Financial Services
Credit Suisse Financial Services reported net income of CHF 2,182 million for the first half of 2004, compared to a loss for the first half of 2003. In the second quarter of 2004, the business unit recorded net income of CHF 1,070 million, compared to net income of CHF 1,112 million in the first quarter of 2004.
Private Banking reported net income of CHF 665 million in the second quarter, practically unchanged compared to the strong first quarter of 2004. Net revenues decreased 4% compared to the first quarter of 2004, driven mainly by lower brokerage income, offset by the positive change in the fair value of interest rate derivatives. Total operating expenses were virtually unchanged compared to the first quarter of 2004. The cost/income ratio stood at 57.9%, up 2.6 percentage points compared to the first quarter of 2004. Private Banking's gross margin remained high at 139.1 basis points, down 7.2 basis points compared to the first quarter of 2004 but up 14.5 basis points compared to the second quarter of 2003.
Corporate & Retail Banking posted strong net income of CHF 256 million in the second quarter of 2004, up 35% versus the prior quarter. Net revenues rose 21% compared to the first quarter of 2004, mainly reflecting the positive change in the fair value of interest rate derivatives. Total operating expenses rose 12% compared to the first quarter of 2004, as efficiency improvements were more than offset by higher incentive-related compensation accruals in line with the improved result. Credit provisions remained moderate in the second quarter given the ongoing favorable risk profile of the lending portfolio. The segment further improved its cost/income ratio to 58.2%, down 4.6 percentage points compared to the first quarter of 2004. The return on average allocated capital increased to 20.4% in the second quarter, compared to 15.1% in the first quarter of 2004.
Life & Pensions reported net income of CHF 206 million in the first half of 2004, compared to a net loss of CHF 1,818 million in the first half of 2003. This year-on-year improvement was due primarily to a goodwill impairment of CHF 1,510 million and a cumulative effect of a change in accounting for provisions for policyholders and annuities, both of which were recognized in the first half of 2003. The total business volume, which includes deposits from policyholders and gross premiums written on traditional business, increased 1% compared to the first half of 2003. Administration expenses declined 13% compared to the first half of 2003 due to efficiency gains. Net investment income rose 12% to CHF 2,403 million compared to the first half of 2003 and the net investment return was 5.1%. The return on average allocated capital amounted to 7.9% in the first half of 2004. Non-Life reported net income of CHF 185 million in the first half of 2004, up 1% compared to the first half of 2003, as an improved operating performance and higher investment income were partially offset by provisions relating to discontinued businesses in the UK and France as well as by restructuring charges related primarily to the streamlining of its Spanish operations. Net premiums earned rose 9% in the first half of 2004 compared to the first half of 2003, and the combined ratio improved 1.6 percentage points to 99.0%. The claims ratio stood at 74.0%, essentially unchanged versus the first half of 2003, and the expense ratio fell 1.8 percentage points, as the increase in expenses was contained to 1% compared to net premium growth of 9%. The segment reported net investment income of CHF 599 million, up from CHF 420 million in the first half of 2003, and the net investment return was 4.8% compared to 3.9% in the same period of last year. The return on average allocated capital was 17.9% in the first half of 2004.
Winterthur also announced today that effective September 1, 2004, its Chief Financial Officer, John Dacey, will take on a new role within the Winterthur Executive Board, examining all the strategic options for Winterthur. The Board of Directors of Winterthur has appointed Hans Ulrich Lienau as his successor. Mr Lienau has extensive experience in the financial services sector and his previous positions include the role of Chief Financial Officer of GE Frankona Re Group, where he was also a Member of the Group Executive Board. Additionally, the Board of Directors of Winterthur has appointed Heinrich Linz to the newly created post of Head of Corporate Center, also effective September 1, 2004. Mr Linz was previously responsible for Special Projects at Allianz Group.
Credit Suisse First Boston
Credit Suisse First Boston reported net income of CHF 1,189 million for the first half of 2004, compared to net income of CHF 800 million in the first half of 2003. For the second quarter of 2004, Credit Suisse First Boston recorded net income of CHF 430 million, down 43% on lower trading results compared to the first quarter but up 113% compared to the second quarter of 2003. Net revenues were down 5% compared to the first quarter and total operating expenses were down 6%. The return on average allocated capital decreased by 13.6 percentage points to 14.5% compared with the first quarter of 2004.
Institutional Securities reported a 79% decrease in net income in the second quarter of 2004 from the strong prior quarter. Compared to the second quarter of 2003, net income was down 17%. The segment's net revenues declined 22% compared to the first quarter of 2004, or 24% on a US dollar basis. Total trading revenues were down 38% compared to the first quarter of 2004, primarily reflecting significantly lower fixed income trading results due to lower proprietary trading results, reduced client activity and losses on derivatives used for risk management purposes, which do not qualify for hedge accounting. Equity trading revenues declined as convertible results were negatively impacted by lower liquidity and reduced volumes. Investment Banking revenues remained solid, with strong advisory fees and debt underwriting offset by lower equity underwriting compared with the first quarter of 2004. The segment's 2004 revenues were favorably impacted by gains on legacy assets. In aggregate, second quarter 2004 non-compensation expenses were up 11% from the first quarter of 2004, or 8% on a US dollar basis, primarily reflecting increased business activity. Compensation and benefits expenses declined 15%, or 18% on a US dollar basis, compared to the first quarter of 2004 and decreased 3% versus the second quarter of 2003, with a decline in incentive compensation in line with lower revenues.
At Wealth & Asset Management, net income rose by 121% versus the prior quarter and was up more than 500% compared to the second quarter of 2003, due principally to increased private equity investment gains, asset management and administrative fees, and other revenues. Second quarter 2004 net revenues were up 73% compared to the first quarter of 2004, largely due to the consolidation of certain private equity funds required under a new US GAAP pronouncement, for which offsetting minority interests were recorded, as well as gains on private equity investments. Excluding the consolidation impact, net revenues increased 30% compared to the first quarter of 2004. Total operating expenses increased 2% compared to the first quarter of 2004, reflecting volume-related commission expenses.
Outlook
With progress in a number of its core businesses and a solid pipeline of mandates and products, Credit Suisse Group is confident that it can achieve further improvements in its results. However, the Group's results are dependent on economic and market conditions and their impact on client activity and transaction volumes. Additionally, the Group is subject to continued cost pressure, particularly in its investment banking business. Going forward, Credit Suisse Group is committed to achieving continued progress in its performance relative to its peers.
Enquiries Credit Suisse Group, Media Relations Telephone +41 1 333 88 44 Credit Suisse Group, Investor Relations Telephone +41 1 333 31 69
For additional information on Credit Suisse Group's results for the second quarter and first half of 2004, we refer you to the Group's Quarterly Report Q2 2004, as well as the Group's slide presentation for analysts and the press, posted on the Internet at: www.credit-suisse.com/results.
Credit Suisse Group
Credit Suisse Group is a leading global financial services company headquartered in Zurich. It provides private clients and small and medium-sized companies with private banking and financial advisory services, and pension and insurance solutions from Winterthur. In the area of investment banking, it serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group's registered shares (CSGN) are listed in Switzerland and in the form of American Depositary Shares (CSR) in New York. The Group employs around 60,000 staff worldwide. As of June 30, 2004, it reported assets under management of CHF 1,227.3 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.
Today's Presentation of the Results
Analysts' Presentation, Zurich (English) * August 4, 2004, 9.00 a.m. CET / 8.00 a.m. BST / 3.00 a.m. EST at the Credit Suisse Forum St. Peter, Zurich * Internet -- Live broadcast at www.credit-suisse.com/results -- Video playback available approximately 3 hours after the event * Telephone -- Live audio dial-in on +41 91 610 5600 (Europe), +44 207 107 0611 (UK), or +1 866 291 4166 (USA), ask for "Credit Suisse Group quarterly results"; please dial in 10 minutes before the start of the presentation -- Telephone replay available approximately 1 hour after the event on +41 91 612 4330 (Europe), +44 207 866 4300 (UK) or +1 412 858 1440 (USA), conference ID 156#
Speakers * Oswald J. Grubel, CEO of Credit Suisse Group * Philip K. Ryan, Chief Financial Officer of Credit Suisse Group
Media Conference, Zurich (English/German) * August 4, 2004, 11.00 a.m. CET / 10.00 a.m. BST / 5.00 a.m. EST at the Credit Suisse Forum St. Peter, Zurich * Simultaneous interpreting: German -- English, English -- German * Internet -- Live broadcast at www.credit-suisse.com/results -- Video playback available approximately 3 hours after the event * Telephone -- Live audio dial-in on +41 91 610 5600 (Europe), +44 207 107 0611 (UK), or +1 866 291 4166 (USA), ask for "Credit Suisse Group quarterly results"; please dial in 10 minutes before the start of the presentation - Telephone replay available approximately 1 hour after the event on +41 91 612 4330 (Europe), +44 207 866 43 00 (UK) or +1 412 858 1440 (USA), conference ID 025# (English) or 087# (German)
Speakers * Oswald J. Grubel, CEO of Credit Suisse Group * Philip K. Ryan, Chief Financial Officer of Credit Suisse Group
Media Relations
Credit Suisse GROUP P.O. Box 1 CH-8070 Zurich www.credit-suisse.com
Telephone +41 1 333 88 44 Telefax +41 1 333 88 77 media.relations@credit-suisse.com
The full report including tables can be downloaded from the following link: