Prepared and filed by St Ives Burrups

 

FORM 6-K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer

Dated November 4, 2003

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

For the month of November 4, 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 2.0 BILLION FOR THE THIRD QUARTER OF 2003
 
Private Banking Reports Net New Assets of CHF 8.4
Billion
 
Both Business Units Further Reduced Costs
 
Financial Highlights                    










 
in CHF million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Operating income 6,531   7,549   -13   21,104   -2  










 
Operating expenses 4,387   5,071   -13   14,478   -21  










 
Net profit 2,045   1,346   52   4,043   -  










 
Return on equity in % 26.3   18.5   42   18.2   -  










 
Earnings per share (in CHF) 1.66   1.09   52   3.29   -  










 
                     
 

Zurich, November 4, 2003 Credit Suisse Group today announced a net profit of CHF 2.0 billion for the third quarter of 2003, including a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from divestitures at Winterthur. Additionally, the Group’s third quarter 2003 net profit includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. Private Banking reported a strong net new asset inflow of CHF 8.4 billion. Credit Suisse Financial Services posted strong third quarter results in banking. Credit Suisse First Boston reported lower results compared with the second quarter of 2003, primarily reflecting dampened Fixed Income trading revenue, but continued to achieve significant progress on cost reduction.

Page 1 of 12


Oswald J. Gruebel, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse Financial Services, stated, "I am especially pleased by the good results in Private Banking, where the increase in operating income is all the more significant given the seasonally lower revenue trends usually expected in the third quarter. At the same time, the strong growth in net new assets reflects our clients' confidence in our company."

John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse First Boston, said, "The sound profit reported by Credit Suisse First Boston in the third quarter, in spite of lower results in Fixed Income, demonstrates that we are continuing to make progress towards our goal of sustained profitability. Although our strict cost management over the last two years has provided us with a more competitive cost structure, our overall profitability is still not satisfactory as we continue to work through historical issues. I am confident that if we continue to focus on clients and their needs while building a unified culture, we will have consistently strong financial results in addition to a strong franchise."

Group Results

Credit Suisse Group reported a net profit of CHF 2.0 billion in the third quarter of 2003, compared with a net profit of CHF 1.3 billion in the second quarter of 2003 and a net loss of CHF 2.1 billion in the third quarter of 2002. For the first nine months of 2003, the Group reported a net profit of CHF 4.0 billion, compared with a net loss of CHF 2.4 billion for the first nine months of 2002. The net profit of CHF 2.0 billion in the third quarter of 2003 includes a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from the divestitures of Winterthur’s Republic operations in the US, its Churchill operations in the UK and

Page 2 of 12


Winterthur Italy. Additionally, the Group’s net profit in the third quarter of 2003 includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. Earnings per share were CHF 1.66 for the third quarter of 2003, compared with earnings of CHF 1.09 per share for the second quarter of 2003. The Group’s return on equity was 26.3% in the third quarter of 2003, compared with 18.5% in the second quarter of 2003.

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The Group’s operating income totaled CHF 6.5 billion in the third quarter of 2003, down 13% from the second quarter of 2003 but up 15% from the third quarter of 2002. The decrease compared with the second quarter of 2003 was mainly attributable to a decline in trading income at Credit Suisse First Boston, which was partially offset by improved results within Private Banking.

The Group’s operating expenses in the third quarter of 2003 decreased 13% from the second quarter of 2003 and 18% from the third quarter of 2002, to CHF 4.4 billion. Personnel expenses declined 18% overall compared with the second quarter of 2003, reflecting lower incentive compensation accruals at Credit Suisse First Boston – in line with reduced operating income – and the impact of reversing the first six months of 2003 accrual for stock compensation in the third quarter of 2003 due to the previously announced change in the vesting of stock awards.

The Group’s total valuation adjustments, provisions and losses were CHF 215 million in the third quarter of 2003, compared with CHF 131 million in the second quarter of 2003. In the third quarter of 2003, net credit-related valuation allowances and provisions decreased slightly to CHF 96 million from the already low level of CHF 99 million in the second quarter of 2003. Compared with the third quarter of 2002, valuation adjustments, provisions and losses decreased CHF 758 million, or 78%, due primarily to lower credit valuation allowances and provisions reflecting an improvement in the credit environment, loan repayments and loan sales.

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The Group’s consolidated BIS tier 1 ratio was 11.1% as of September 30, 2003, an increase from 10.3% as of June 30, 2003. Winterthur’s capital base was strengthened during the third quarter of 2003 as a result of earnings generation and the divestitures referred to above. In isolation, these divestitures increased Winterthur's EU solvency surplus capital by approximately CHF 3.5 billion, due to the combination of lower required capital and higher available capital.

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Credit Suisse Financial Services

CSFS Business Unit Result                    










 
in CHF million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Operating income 4,548   3,544   28   11,594   35  










 
Operating expenses 2,117   2,178   -3   6,524   -9  










 
Net profit 1,778   851   109   3,333   -  










 

Credit Suisse Financial Services posted a net profit of CHF 1.8 billion in the third quarter of 2003, including a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from divestitures at Winterthur. Additionally, the business unit’s third quarter 2003 net profit includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. The third quarter of 2003 net profit of CHF 1.8 billion compares with a net profit of CHF 851 million in the second quarter of 2003 and a net loss of CHF 1.2 billion in the third quarter of 2002.

CSFS Segment Results                    










 
in CHF million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Private Banking 519   492   5   1,406   2  










 
Corporate & Retail Banking 169   156   8   445   22  










 
Life & Pensions 126   117   8   354   -  










 
Insurance 991   102   -   1,185   -  










 

In the third quarter of 2003, Credit Suisse Financial Services’ banking segments improved their results for the third consecutive quarter. The Private Banking segment reported a 3% increase in operating income in the third quarter of 2003 compared with the second quarter of 2003, due mainly to higher commission and fee income as a result of the higher average asset base and increased client activity. Due to this growth in operating income, together with a 4% decrease in operating expenses compared with the second quarter of 2003, Private Banking’s cost/income ratio improved by a further 4.0 percentage points to 55.1%, the lowest ratio

Page 6 of 12


in the past six quarters. Corporate & Retail Banking continued to improve its overall profitability and efficiency in the third quarter of 2003. The segment reported a further decrease in operating expenses of 4% compared with the second quarter of 2003, due mainly to lower personnel expenses in line with headcount development. The segment’s net interest margin rose 3 bp in the third quarter of 2003, to 215 bp. Corporate & Retail Banking’s cost/income ratio further improved to 64.4% in the third quarter of 2003, the lowest ratio in the last seven quarters. Additionally, the segment further strengthened its credit portfolio, with a reduction in impaired loans.

The insurance segments reported solid results for the first nine months of 2003, due primarily to the divestiture-related gains, strong investment performance, reduced administration costs and improved underwriting results. Life & Pensions reported a reduction in gross premiums written in the first nine months of 2003 compared with the first nine months of 2002, primarily reflecting its ongoing selective underwriting policy. The segment significantly reduced its administration costs in the first nine months of 2003, and its expense ratio decreased by 0.3 percentage points. Life & Pensions achieved an improved investment performance in the first nine months of 2003, with a total return on invested assets of 5.0%, compared with 1.5% in the first nine months of 2002. Insurance (casualty and property) recorded an increase in net premiums earned in the first nine months of 2003, due primarily to tariff increases across all major markets. The Insurance segment strengthened its net underwriting result before dividends to policyholders by CHF 218 million compared with the first nine months of 2002, reflecting an improvement in the combined ratio of 1.9 percentage points, to 101.6%, mainly as a result of improved pricing and the continued streamlining of its business portfolio. Demonstrating its continued progress in ongoing efficiency measures, the segment reduced

Page 7 of 12


its administration costs in the first nine months of 2003 compared with the first nine months of 2002. Investment performance improved in the first nine months of 2003, with a total return on invested assets of 3.8% compared with
-0.3% in the first nine months of 2002.

Credit Suisse First Boston

CSFB Business Unit Result                    










 
in USD million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Operating income 2,422   3,103   -22   8,363   -9  










 
Operating expenses 1,792   2,266   -21   6,167   -15  










 
Net profit 224   282   -21   650   -  










 

Page 8 of 12


Credit Suisse First Boston reported a net profit of USD 224 million (CHF 308 million) for the third quarter of 2003, down USD 58 million (CHF 65 million) compared with the second quarter of 2003. The business unit’s net operating profit of USD 358 million (CHF 491 million), which excludes the amortization of acquired intangible assets and goodwill net of tax, also declined compared with the second quarter 2003 results. The favorable resolution of certain outstanding income tax matters resulted in a 16% effective income tax rate in the third quarter of 2003, compared with 27% in the second quarter of 2003.

CSFB Segment Results                    










 
in USD million 3Q2003   2Q2003   Change in %   9 months   Change in %  
          vs 2Q2003   2003   vs 9m 2002  










 
Institutional Securities 348   453   -23   1,134   245  










 
CSFB Financial Services 34   40   -15   109   -39  










 

The Institutional Securities segment reported a decrease in operating income in the third quarter of 2003 compared with the second quarter of 2003, as the Fixed Income business was significantly impacted by conservative risk positioning which dampened its trading results but resulted in lower Value-at-Risk. While the Equity and Investment Banking divisions continued to see steady year-to-date improvements in cash trading and M&A activities, revenues in both units declined modestly compared with the second quarter of 2003. As a result of lower compensation accruals – discussed in the Group Results section above – and continued cost management, Institutional Securities reported a 24% decrease in operating expenses in the third quarter of 2003 compared with the second quarter of 2003. Credit Suisse First Boston’s franchise continued to benefit from its leading position in the high yield business. Within the CSFB Financial Services segment, Credit Suisse Asset Management’s operating income was comparable to the second quarter of 2003 and operating expenses increased marginally.

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Page 10 of 12


Net new assets

Net New Assets and Assets under Management (AuM) in the third quarter of 2003  

 
in CHF billion Net New Assets   Total AuM   Change in AuM in  
          % vs 30.6.03  






 
             
Private Banking 8.4   505.1   2.3  
Corporate & Retail Banking 1.8   69.4   3.9  
Life & Pensions -0.7   112.3   -4.0  
Insurance n/ a   27.1   -16.9  






 
Credit Suisse Financial Services 9.5   713.9   0.5  






 
Institutional Securities 0.1   29.1   -6.1  
CSFB Financial Services -5.6   456.2   0.4  






 
Credit Suisse First Boston -5.5   485.3   0.0  






 
             






 
Credit Suisse Group 4.0   1,199.2   0.3  






 
n/a: not applicable            

Credit Suisse Group’s net new asset inflow in the third quarter of 2003 was dominated by an inflow from Private Banking of CHF 8.4 billion. Corporate & Retail Banking recorded an inflow of CHF 1.8 billion, whereas Life & Pensions had an outflow of CHF 0.7 billion. CSFB Financial Services recorded an outflow of CHF 5.6 billion. As of September 30, 2003, the Group’s total assets under management were CHF 1,199.2 billion, practically unchanged compared with June 30, 2003.

Business transfers

In the third quarter of 2003, the Group completed the transfer of its securities and treasury execution platform in Switzerland from Credit Suisse First Boston to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. All comparative figures have been restated to reflect these business transfers.

Page 11 of 12


Outlook

Credit Suisse Group is benefiting from the measures taken in 2002 and 2003. Going forward, the Group will continue to concentrate on enhancing efficiency and building its client franchise, and it remains focused on producing sound profitability.

Page 12 of 12


Enquiries

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

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

Internet      www.credit-suisse.com

Commentary on Results – Non-GAAP Financial Information

For additional information with respect to Credit Suisse Group’s results for the third quarter and the first nine months of 2003, we refer you to the Group’s Quarterly Report Q3 2003, as well as the Group’s slide presentation for analysts and press, posted on the Internet at www.credit-suisse.com/results. This press release may contain non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under Swiss Generally Accepted Accounting Principles (as well as other related information) is also included in the Quarterly Report Q3 2003. The operating basis business unit results described above reflect the results of the separate segments constituting the respective business units and certain acquisition-related costs not allocated to the segments.

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 61,300 staff worldwide. As of September 30, 2003, it reported assets under management of CHF 1,199.2 billion.

Cautionary statement regarding forward-looking information

This press release contains statements that constitute forward-looking statements. In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to our plans, objectives or goals; our future economic performance or prospects; the potential effect on our future performance of certain contingencies; and assumptions underlying any such statements. Words such as “believes,” “anticipates,” “expects,” "intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable

Page 13 of 12


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 at http://www.credit-suisse.com/sec.html.

Page 14 of 12


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

 

Date Tuesday, November 4, 2003
   
Time 15.00 CET / 14.00 GMT / 09.00 EST
   
Speakers Philip K. Ryan, CFO of Credit Suisse Group
  Ulrich Koerner, CFO of Credit Suisse Financial Services
  Barbara Yastine, CFO of Credit Suisse First Boston
   
  All presentations 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 the speakers questions via telephone conference following the presentations.
   
  Video on demand – available approximately three hours after the event at www.credit-suisse.com/results
   
Playback 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: 332#
   
Note We recommend that you dial in approximately ten minutes before the start of the presentation for the webcast and telephone conference. Further instructions and technical test functions are now available on our website.
   
 

Page 15 of 12










QUARTERLY REPORT 2003 Q3






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 61,300 staff worldwide.





QUARTERLY REPORT 2003
   EDITORIAL
   CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q3/2003
   AN OVERVIEW OF CREDIT SUISSE GROUP
      Equity capital
      Net new assets
      Operating income and expenses
      Valuation adjustments, provisions and losses
      Business transfers
      Swiss GAAP accounting changes
      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 RESULTS TO SWISS GAAP
      Introduction
      Credit Suisse Financial Services business unit
      Credit Suisse First Boston business unit
   CONSOLIDATED RESULTS | CREDIT SUISSE GROUP
   LOANS
   INFORMATION FOR INVESTORS



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

Credit Suisse Group’s net profit in the third quarter of 2003 was CHF 2.0 billion. The third quarter net profit includes an after-tax gain of CHF 1.3 billion net of related provisions from divestitures at Winterthur. Additionally, the Group’s third quarter of 2003 net profit includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio.

The Group made considerable progress during the third quarter of 2003. Most notably, Private Banking generated strong revenues, despite the typical third quarter seasonality. Private Banking’s operating income, combined with efficiency gains, resulted in a 79% increase in segment profit compared with the third quarter of 2002. Corporate & Retail Banking also benefited from increased efficiency and low credit provisions. In addition to making good progress in building capital and strengthening its balance sheet, Winterthur made additional improvements in expense reductions and pricing in the first nine months of 2003. Credit Suisse First Boston’s conservative risk positioning in light of US interest rate volatility reduced fixed income trading results but resulted in lower Value-at-Risk. The Equity and Investment Banking divisions of Credit Suisse First Boston continued to see modest improvements in client flows and business activity.

At Credit Suisse Financial Services, the focus on cost management remained a priority and the banking segments reported a reduction in operating expenses in the third quarter, while the insurance segments reported a reduction in administration costs in the first nine months of 2003. At Credit Suisse First Boston, expenses declined, reflecting lower incentive bonus accruals and the change in the vesting period of stock awards. Having reduced the guaranteed portion of incentive-based compensation, Credit Suisse First Boston has delivered on its pledge to create a more flexible cost base. All banking segment results benefited from lower credit provisions as a result of the continued improvement in the credit markets.

Going forward, we are concentrating on producing sound profitability and will continue to focus on cost management, efficiency and building our client franchise.
Oswald J. Grübel John J. Mack
November 2003


CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q3/2003


Consolidated income statement  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Operating income6,5317,5495,666(13)1521,10421,643(2)
Gross operating profit2,1442,478314(13)6,6263,225105
Net profit/(loss)2,0451,346(2,148)524,043(2,359)


Return on equity  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in %3Q20032Q20033Q20022Q20033Q2002200320022002
Return on equity26.318.5(26.9)4218.2(9.2)


Consolidated balance sheet  
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
Total assets994,5551,016,645955,656(2)4
Shareholders' equity34,87333,42831,394411
Minority interests in shareholders' equity2,9712,9402,87813


Capital data 1) 
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
BIS risk-weighted assets 197,412199,108196,486(1)0
BIS tier 1 capital21,90120,48717,613724
   of which non-cumulative perpetual preferred
   securities
2,1842,1672,16211
BIS total capital32,01031,23828,311213


Capital ratios 1) 
in % 30.09.0330.06.0331.12.02
BIS tier 1 ratioCredit Suisse 7.67.57.4
 Credit Suisse First Boston 2)12.211.010.3
 Credit Suisse Group 3) 11.110.39.0
BIS total capital ratio Credit Suisse Group16.215.714.4


Assets under management/client assets  
    ChangeChange
    in % fromin % from
in CHF bn30.09.0330.06.0331.12.0230.06.0331.12.02
Advisory assets under management615.1598.7577.936
Discretionary assets under management584.1596.9582.1(2)0
Total assets under management1,199.21,195.61,160.003
Client assets 1,299.41,285.91,757.91(26)


Net new assets  
        Change Change     Change
        in % from in % from     in % from
          9 months  
in CHF bn 3Q2003 2Q2003 3Q2002 2Q2003 3Q2002 2003 2002 2002
Net new assets 4.0 1.9 (13.6) 110.5 1.9 4.9 (61)
1) In cooperation with the Swiss Federal Banking Commission, the capital treatment of the Group’s investment in Winterthur has been revised. Previously published comparative figures have been restated to reflect the new methodology. The Group’s previously published figures under the old methodology were 11.1% as of 30.06.03 and 9.7% as of 31.12.02 for the consolidated BIS tier 1 ratio, and 18.0% as of 30.06.03 and 16.5% as of 31.12.02 for the Group’s BIS total capital ratio.
2) Ratio is based on a tier 1 capital of CHF 12.1 bn (30.06.03: CHF 11.3 bn; 31.12.02: CHF 10.6 bn), of which non-cumulative perpetual preferred securities is CHF 1.0 bn (30.06.03: CHF 1.0 bn; 31.12.02: CHF 1.0 bn).
3) Ratio is based on a tier 1 capital of CHF 21.9 bn (30.06.03: CHF 20.5 bn; 31.12.02: CHF 17.6 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (30.06.03: CHF 2.2 bn; 31.12.02: CHF 2.2 bn).


Number of employees (full-time equivalents)
      ChangeChange
      in % fromin % from
  30.09.0330.06.0331.12.0230.06.0331.12.02
Switzerlandbanking20,04220,54121,270(2)(6)
 insurance6,6496,7977,063(2)(6)
Outside Switzerlandbanking20,17820,10825,0570(19)
 insurance14,46325,05525,067(42)(42)
Total employees Credit Suisse Group61,33272,50178,457(15)(22)


Share data 
    ChangeChange
    in % fromin % from
 30.09.0330.06.0331.12.0230.06.0331.12.02
Shares issued 1,194,682,3301,189,980,1521,189,891,72000
To be issued upon conversion of MCS 1)40,413,83840,413,83840,413,83800
Shares outstanding 1,235,096,1681,230,393,9901,230,305,55800
Share price in CHF 42.2535.6530.001941
Market capitalization in CHF m52,18343,86436,9091941
Book value per share in CHF25.8324.7823.18411
1) Maximum number of shares related to Mandatory Convertible Securities (MCS) issued by Credit Suisse Group Finance (Guernsey) Ltd. in December 2002.


Share price  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF 3Q20032Q20033Q20022Q20033Q2002200320022002
High (closing price)48.6539.3048.8524048.6573.60(34)
Low (closing price)34.7523.2526.80493020.7026.80(23)


Calculation of earnings per share (EPS)  
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
 3Q20032Q20033Q20022Q20033Q2002200320022002
Net profit/(loss) in CHF m2,0451,346(2,148)524,043(2,359)
Diluted net profit/(loss) in CHF m2,0451,346(2,148)524,043(2,359)
Weighted average shares outstanding1,230,710,9751,230,330,6731,189,341,0561)031,230,450,5541,189,212,9671)3
Dilutive impact  2)19,673,4494,922,81403009,814,5530
Weighted average shares, diluted1,250,384,4241,235,253,4871,189,341,056151,240,265,1071,189,212,9674
Basic earnings per share in CHF1.661.09(1.81)523.29(1.98)
Diluted earnings per share in CHF1.641.09(1.81)503.26(1.98)
1) Adjusted for weighted average shares repurchased.
2) The calculation for the diluted loss per share in 3Q2002 and for the 9 months 2002 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.






AN OVERVIEW OF CREDIT SUISSE GROUP




Credit Suisse Group reported a net profit of CHF 2.0 billion in the third quarter of 2003 compared to CHF 1.3 billion in the previous quarter. The third quarter result includes an after-tax gain of CHF 1.3 billion net of related provisions from divestitures at Winterthur. Additionally, the Group’s third quarter result includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. Credit Suisse Financial Services substantially increased its third quarter net profit compared with the previous quarter, with strong results in the banking segments and continued improvements in the insurance segments in the course of the year. Credit Suisse First Boston reported a decrease in its third quarter results compared with the second quarter of 2003.



The Group reported a net profit of CHF 2.0 billion in the third quarter of 2003, a substantial increase from the previous quarter’s net profit of CHF 1.3 billion. The net profit of CHF 2.0 billion in the third quarter 2003 includes a gross after-tax gain of CHF 1.6 billion, or CHF 1.3 billion net of related provisions, from the divestitures of Winterthur’s Republic operations in the US, its Churchill operations in the UK and Winterthur Italy . Additionally, the Group’s net profit in the third quarter of 2003 includes the strengthening by CHF 383 million after tax of certain provisions related to Winterthur’s current and former international business portfolio. The Group’s third quarter performance was impacted by weaker trading income at Credit Suisse First Boston, which was partially compensated by improved results within the Credit Suisse Financial Services banking segments.

Net profit for the first nine months of 2003 was CHF 4.0 billion, compared to a net loss of CHF 2.4 billion in the same period of 2002. Earnings per share for the third quarter of 2003 were CHF 1.66, compared to CHF 1.09 for the second quarter of 2003. The Group’s return on equity was 26.3% in the third quarter of 2003, compared to 18.5% in the second quarter of 2003.

The Group’s third quarter result represents continued progress towards achieving sound profitability and restoring the capital base. It also reflects the realization of measures taken to reduce costs, increase the flexibility of the cost base, return Winterthur to profitability, reduce the impact of legacy assets at Credit Suisse First Boston and restructure European onshore Private Banking.

Credit Suisse Financial Services posted a net profit of CHF 1.8 billion in the third quarter of 2003, including the gain from the Winterthur divestitures and the additional provisions described above. This result compares with a net profit of CHF 851 million in the second quarter of 2003 and a net loss of CHF 1.2 billion in the third quarter of 2002. Although the third quarter has often proven to be a seasonally weak quarter, the banking segments in particular had a strong quarter, reflecting continued good margins and improvements in net new asset growth, thus demonstrating efficiency and the strength of the private banking franchise. Winterthur’s results reflected the divestitures, as well as lower administration costs and good investment income, which together improved its capital base and strengthened its balance sheet.

Credit Suisse First Boston reported a net profit of CHF 308 million for the third quarter of 2003, which was below the previous quarter’s net profit of CHF 373 million, but significantly improved compared to a net loss of CHF 668 million reported in the third quarter of 2002. Credit Suisse First Boston continues to reduce expenses and focus on its client franchise. Its third quarter result, however, reflects a lower fixed income trading result, which was impacted by conservative risk positioning in light of US interest rate volatility, thus resulting in reduced Value-at-Risk. While both the Equity and Investment Banking divisions continued to see steady improvements in client flows and M&A activity, operating income in both divisions declined compared with the second quarter of 2003. CSFB Financial Services’ operating income increased slightly compared with the previous quarter, with modest improvements in both Credit Suisse Asset Management and Private Client Services. Credit Suisse Asset Management launched an alternative investment initiative in the third quarter of 2003.

Equity capital
The Group’s consolidated BIS tier 1 ratio was 11.1% as of September 30, 2003, up from 10.3% as of June 30, 2003. These ratios reflect the new methodology for the BIS capital calculations as revised in cooperation with the Swiss Federal Banking Commission.

Winterthur’s capital base was strengthened during the third quarter of 2003 as a result of earnings generation and the sale of Winterthur’s Republic operations in the US, its Churchill operations in the UK and Winterthur Italy. In isolation, these divestitures increased Winterthur’s EU Group solvency surplus capital by approximately CHF 3.5 billion, due to the combination of lowered required capital and higher available capital.

Net new assets
Credit Suisse Group’s net new asset inflow in the third quarter of 2003 was dominated by an inflow from Private Banking of CHF 8.4 billion. Corporate & Retail Banking recorded an inflow of CHF 1.8 billion, whereas Life & Pensions had an outflow of CHF 0.7 billion. CSFB Financial Services recorded an outflow of CHF 5.6 billion, only slightly compensated by a net asset inflow of CHF 0.1 billion from the Institutional Securities segment. For Credit Suisse Group, a net new asset inflow of CHF 4.0 billion resulted in the third quarter of 2003, more than twice the net new asset inflow in the previous quarter. As of September 30, 2003, the Group’s total assets under management amounted to CHF 1,199.2 billion, practically unchanged compared to June 30, 2003.

Operating income and expenses
The Group’s operating income was CHF 6.5 billion in the third quarter of 2003, a decline of 13% from the previous quarter, but up 15% from the third quarter of 2002. The decrease compared with the second quarter of 2003 was mainly due to a decline in trading income, partially offset by increases in net interest and commission and service fee income.

The Group’s operating expenses in the third quarter of 2003 decreased 13% from the previous quarter and 18% from the third quarter of 2002 to CHF 4.4 billion, reflecting continued progress on cost management. Personnel expenses declined 18% overall compared with the previous quarter. This decrease reflects lower incentive compensation accruals at Credit Suisse First Boston, in line with lower operating income, and the impact of reversing the first six months of 2003 accrual for stock compensation in the third quarter of 2003 due to the previously announced change in vesting of stock awards. At Credit Suisse Financial Services, the continued focus on cost reduction resulted in a decrease in operating expenses in the banking segments in the third quarter of 2003 and in a decline in administration costs in the insurance segments in the first nine months of 2003.

Valuation adjustments, provisions and losses
The Group’s total valuation adjustments, provisions and losses were CHF 215 million in the third quarter of 2003, compared to CHF 131 million in the second quarter of 2003. In the third quarter of 2003, net credit-related valuation allowances and provisions decreased slightly to CHF 96 million from the already low level of CHF 99 million in the second quarter of 2003. Compared with the third quarter of 2002, valuation adjustments, provisions and losses decreased CHF 758 million, or 78%, primarily due to lower credit valuation allowances and provisions reflecting an improved credit environment, loan repayments and loan sales.

Business transfers
In the third quarter of 2003, the transfer of the securities and treasury execution platform in Switzerland from Credit Suisse First Boston to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston’s Private Client Services UK business from CSFB Financial Services to Private Banking were completed. All comparative figures have been restated to reflect these business transfers. The consolidated financial statements were not affected. Since September 1, 2003, Credit Suisse Financial Services has been executing securities and treasury transactions in Switzerland for its private banking, retail and corporate clients under its own name. Credit Suisse First Boston’s investment banking and Swiss institutional coverage businesses in Switzerland remain unaffected by these changes.

Swiss GAAP accounting changes
Reported earnings in the fourth quarter will be affected by mandatory changes in Swiss GAAP for banks that are required to be applied at the end of the year. The changes of significance for Credit Suisse Group relate to the accounting for own shares and for derivatives. If these changes in accounting principles were to be applied in the current reporting period, the estimated impact on net profit (including the cumulative effect) for the first nine months of 2003 would be a decrease of approximately CHF 110 million, and the estimated impact on reported shareholders’ equity would be a decrease of CHF 0.6 billion. These changes have no impact on the Group’s regulatory capital adequacy ratios.

Outlook
Credit Suisse Group is benefiting from the measures taken in 2002 and 2003. Going forward, the Group will continue to concentrate on enhancing efficiency and building its client franchise and remains focused on producing sound profitability.

In the “Overview of Credit Suisse Group”, the business unit results are presented in accordance with Swiss GAAP. Elsewhere in this Quarterly Report, business unit results are presented on an operating basis.

For a reconciliation of operating basis business unit results (reflecting the results of the separate segments comprising the business units) to the Swiss GAAP basis, a discussion of the material reconciling items and a discussion of the purpose of the operating basis results and the reasons why management believes they provide useful information for investors, please refer to “Reconciliation of operating results to Swiss GAAP” on pages 32 – 36.


Overview of Credit Suisse Group 1)
  Credit Suisse Financial Services  Credit Suisse First Boston  Corporate Center  Credit Suisse Group 
in CHF m  3Q2003  2Q2003  3Q2002  3Q2003  2Q2003  3Q2002  3Q2003  2Q2003  3Q2002  3Q2003  2Q2003  3Q2002 
Operating income  3,387  3,544  2,497  3,113  3,886  3,408  31  119  (239)  6,531  7,549  5,666 
Personnel expenses  1,385  1,434  1,533  1,681  2,306  2,231  59  84  29  3,125  3,824  3,793 
Other operating expenses  732  744  923  594  615  723  (64)  (112)  (87)  1,262  1,247  1,559 
Operating expenses  2,117  2,178  2,456  2,275  2,921  2,954  (5)  (28)  (58)  4,387  5,071  5,352 
Gross operating profit  1,270  1,366  41  838  965  454  36  147  (181)  2,144  2,478  314 
Depreciation of non-current assets 2)  279  194  291  125  136  207  67  145  94  471  475  592 
Amortization of acquired intangible assets and goodwill  25  27  31  211  201  308  2  (5)  (2)  238  223  337 
Valuation adjustments, provisions and losses  104  63  122  111  63  867  0  5  (16)  215  131  973 
Profit/(loss) before extraordinary items and taxes   862  1,082  (403)  391  565  (928)  (33)  2  (257)  1,220  1,649  (1,588) 
Extraordinary income/(expenses), net   1,164  8  (127)  2  0  (1)  2  53  (3)  1,168  61  (131) 
Taxes 3)  (256)  (229)  (681)  (65)  (173)  280  4  83  (9)  (317)  (319)  (410) 
Net profit/(loss) before minority interests   1,770  861  (1,211)  328  392  (649)  (27)  138  (269)  2,071  1,391  (2,129) 
Minority interests  8  (10)  17  (20)  (19)  (19)  (14)  (16)  (17)  (26)  (45)  (19) 
Net profit/(loss)  1,778  851  (1,194)  308  373  (668)  (41)  122  (286)  2,045  1,346  (2,148) 
1) Business unit results in accordance with Swiss GAAP. For a reconciliation of operating basis business unit results (reflecting the results of the separate segments comprising the business units) to Swiss GAAP basis, please refer to “Reconciliation of operating results to Swiss GAAP”.
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 3Q2002 for Credit Suisse Financial Services of CHF –582 m, for Credit Suisse First Boston of CHF 286 m, and for Credit Suisse Group of CHF –306 m.


Assets under management/client assets  1)
            Change  Change 
            in % from  in % from 
in CHF bn  30.09.03  30.06.03  31.12.02  30.06.03  31.12.02 
Credit Suisse Financial Services                 
   Private Banking                  
   Assets under management   505.1  493.8  465.7  2.3  8.5 
      of which discretionary   129.2  128.3  121.5  0.7  6.3 
   Client assets   532.3  522.3  494.8  1.9  7.6 
   Corporate & Retail Banking                  
   Assets under management   69.4  66.8  70.3  3.9  (1.3) 
   Client assets   90.3  85.7  86.9  5.4  3.9 
   Life & Pensions                  
   Assets under management (discretionary)   112.3  117.0  110.8  (4.0)  1.4 
   Client assets   112.3  117.0  110.8  (4.0)  1.4 
   Insurance                  
   Assets under management (discretionary)   27.1  32.6  30.7  (16.9)  (11.7) 
   Client assets   27.1  32.6  30.7  (16.9)  (11.7) 
Credit Suisse Financial Services                     
Assets under management  713.9  710.2  677.5  0.5  5.4 
   of which discretionary   269.8  279.1  264.2  (3.3)  2.1 
Client assets  762.0  757.6  723.2  0.6  5.4 
Credit Suisse First Boston                     
   Institutional Securities                  
   Assets under management   29.1  31.0  31.3  (6.1)  (7.0) 
      of which Private Equity on behalf of clients
      (discretionary)
  19.7  20.6  20.9  (4.4)  (5.7) 
   Client assets   73.3  73.9  83.3  (0.8)  (12.0) 
   CSFB Financial Services 2)                  
   Assets under management   456.2  454.4  451.2  0.4  1.1 
      of which discretionary   288.9  291.1  289.6  (0.8)  (0.2) 
   Client assets   464.1  454.4  951.4  2.1  (51.2) 
Credit Suisse First Boston                     
Assets under management  485.3  485.4  482.5  0.0  0.6 
   of which discretionary   314.3  317.8  317.9  (1.1)  (1.1) 
Client assets  537.4  528.3  1,034.7  1.7  (48.1) 
Credit Suisse Group                     
Assets under management  1,199.2  1,195.6  1,160.0  0.3  3.4 
   of which discretionary   584.1  596.9  582.1  (2.1)  0.3 
Client assets  1,299.4  1,285.9  1,757.9  1.0  (26.1) 
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Excluding assets managed on behalf of other entities within Credit Suisse Group.


Net new assets 1)
            Change  Change        Change 
            in % from  in % from        in % from 
              9 months    
in CHF bn  3Q2003  2Q2003  3Q2002  2Q2003  3Q2002  2003  2002  2002 
Credit Suisse Financial Services                          
   Private Banking   8.4  3.8  3.4  121.1  147.1  13.7  18.2  (24.7) 
   Corporate & Retail Banking   1.8  0.5  (2.3)  260.0    (1.1)  (3.4)  (67.6) 
   Life & Pensions   (0.7)  0.5  0.4      2.0  4.7  (57.4) 
Credit Suisse Financial Services  9.5  4.8  1.5  97.9    14.6  19.5  (25.1) 
Credit Suisse First Boston                           
   Institutional Securities   0.1  1.0  (3.0)  (90.0)    1.0  1.9  (47.4) 
   CSFB Financial Services 2)   (5.6)  (3.9)  (12.1)  43.6  (53.7)  (13.7)  (16.5)  (17.0) 
Credit Suisse First Boston  (5.5)  (2.9)  (15.1)  89.7  (63.6)  (12.7)  (14.6)  (13.0) 
Credit Suisse Group  4.0  1.9  (13.6)  110.5    1.9  4.9  (61.2) 
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Excluding assets managed on behalf of other entities within Credit Suisse Group.


RISK MANAGEMENT


Credit Suisse Group’s overall position risk measured on the basis of Economic Risk Capital (ERC) decreased by 4% in the third quarter of 2003 compared with the previous quarter, due mainly to lower foreign exchange, fixed income positions and insurance underwriting risks as well as lower international lending exposures. The more narrowly defined average Value-at-Risk (VaR) for the trading book of Credit Suisse First Boston decreased 20% in the third quarter of 2003, due mainly to lower interest rate positions and the introduction of a refined risk methodology for mortgages. The Group’s credit-related balance sheet exposure decreased 3% as of September 30, 2003, compared to June 30, 2003.



Overall Risk Trends
Credit Suisse Group’s 1-year, 99% position risk ERC decreased by 4% in the third quarter of 2003 compared with the previous quarter. The reduction was mainly due to lower foreign exchange exposures and lower insurance underwriting risks at Winterthur following the divestitures completed during the third quarter of 2003 as well as lower credit spread positions and lower international lending and counterparty exposures at Credit Suisse First Boston. At the end of the third quarter of 2003, 52% of the Group’s position risk ERC was with Credit Suisse First Boston, 44% with Credit Suisse Financial Services (of which 66% was with the insurance units and 34% with the banking units) and 4% with the Corporate Center.

Trading risks
The table below shows the trading-related market risk exposure for Credit Suisse First Boston, Credit Suisse Financial Services and Credit Suisse Group on a consolidated basis, as measured by 1-day, 99% VaR. At Credit Suisse First Boston, the average 1-day, 99% VaR in the third quarter of 2003 was CHF 69.3 million compared to CHF 87.0 million during the second quarter of 2003. This decrease was mainly due to lower interest rate positions and the introduction of a refined risk methodology for mortgages. The Credit Suisse First Boston VaR at the end of the third quarter of 2003 was 38% below the VaR at the end of the second quarter of 2003 adjusted for the methodology change. As shown on the backtesting chart, Credit Suisse First Boston had no backtesting exceptions over the last 12 months (on average, an accurate 1-day, 99% VaR model would have no more than 2.5 exceptions per annum). At Credit Suisse Financial Services, the average 1-day, 99% VaR in the third quarter of 2003 was CHF 15.0 million compared to CHF 15.7 million during the previous quarter. The decrease was mainly due to lower inventory positions in structured investment products, partially offset by the impact of the transfer of the securities and treasury execution platform in Switzerland from Credit Suisse First Boston to Credit Suisse Financial Services.

Credit risk exposure
Credit Suisse Group’s total credit-related exposure was 3% lower at September 30, 2003, compared to June 30, 2003. Exposure at Credit Suisse Financial Services increased 4%, while exposure at Credit Suisse First Boston was largely unchanged. The reduction on a consolidated basis was primarily a result of increased intercompany exposure that appears in the business unit figures but is eliminated in the Credit Suisse Group consolidation.

Compared to June 30, 2003, non-performing and total impaired loans for Credit Suisse Group declined as of the end of the third quarter 2003, with reductions reported in both business units. Compared with the previous quarter, total non-performing loans declined 10% at both business units and on a consolidated basis. The reduction in total impaired loans during the third quarter of 2003 was 11% at Credit Suisse Financial Services and 10% at Credit Suisse First Boston. The decline in impaired assets is attributable to repayments, improved credit situations, loan sales and write-offs.

The net credit-related valuation allowances and provisions charged to the income statement for the third quarter of 2003 was CHF 96 million, a slight decrease from the second quarter of 2003, but significantly below that recorded for the third quarter of 2002, particularly at Credit Suisse First Boston. Presented on page 11 are the additions, releases and recoveries included in calculating the net credit-related valuation allowances and provisions.

Coverage of non-performing loans and impaired loans by the valuation allowances improved for both Credit Suisse Group and Credit Suisse First Boston, while coverage declined slightly for Credit Suisse Financial Services. The quality of the credit exposure for Credit Suisse Group, as measured by counterparty rating, was largely unchanged from the second quarter of 2003.


Key Position Risk Trends 
            Change Analysis: Brief Summary
     Change in % from   
in CHF m  3Q2003  2Q2003  3Q2002  3Q2003 vs 2Q2003
Real Estate ERC &              
   Structured Asset ERC 1)   3,992 (4%) (11%) Further reduction in legacy commercial real estate exposures at CSFB, partially offset by higher residential real estate exposures
Developed Market Fixed Income &              
   Foreign Exchange ERC   3,602 (11%) (5%) Lower foreign exchange exposures at Winterthur and lower credit spread exposures at CSFB
Equity Investment ERC  3,177  (2%)  (27%)  Lower equity positions at Winterthur, partially offset by higher equity trading exposures at CSFB and the CSFS banking segments
International Lending ERC  2,797  (10%)  (29%)  Loan sales to third parties and counterparty exposure reductions at CSFB
Swiss & Retail Lending ERC  1,898  (3%)  (9%)  Lower exposures with respect to Swiss corporates at Corporate & Retail Banking and lower mortgage exposures at Winterthur
Emerging Markets ERC  1,576  2%  (30%)  Higher Brazil, Turkey and Indonesia exposure, partially offset by lower Russia exposure
Insurance Underwriting ERC  647  (38%)  (22%)  Divestiture of Republic operations, Churchill and Winterthur Italy
Simple sum across risk categories  17,689         
Diversification benefit  (6,096)         
Total position risk ERC  11,593  (4%)  (19%)   
 
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. Note that prior period risk data have been restated for methodology changes in order to maintain consistency over time. For a more detailed description of the Group’s ERC model, please refer to Credit Suisse Group's Annual Report 2002, which is available on the website: www.credit-suisse.com.
 
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.




Trading exposures (1-day, 99% VaR) 
Credit SuisseCredit Suisse
Financial ServicesFirst Boston1)Credit Suisse Group2)
in CHF m3Q20032Q20033Q20032Q20033Q20032Q2003
Total VaR     
Period end19.116.550.4102.255.199.9
Average15.015.769.387.056.382.7
Maximum19.720.8152.5146.058.799.9
Minimum11.313.935.164.255.169.0
       
in CHF m30.09.0330.06.0330.09.0330.06.0330.09.0330.06.03
VaR by risk type     
Interest rate7.02.743.7118.047.9119.5
Foreign exchange2.22.118.314.818.614.3
Equity15.515.428.125.727.225.5
Commodity0.50.11.50.81.30.7
Subtotal25.220.391.6159.395.0160.0
Diversification benefit(6.1)(3.8)(41.2)(57.1)(39.9)(60.1)
Total19.116.550.4102.255.199.9
1) The CSFB VaR is calculated using the US dollar as the base currency. For the purpose of this disclosure, the CSFB VaR numbers are translated using the respective CSG currency translation closing rate.
2) As Credit Suisse Group does not manage its trading portfolios on a consolidated level, consolidated VaR calculations are performed on a monthly basis only. The average, maximum and minimum values therefore refer to the three month-ends during the quarter. The consolidated VaR calculations for Credit Suisse Group are net of diversification benefits between Credit Suisse First Boston and Credit Suisse Financial Services.


Total credit risk exposure 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m30.09.0330.06.0331.12.0230.09.0330.06.0331.12.0230.09.0330.06.0331.12.02
Due from banks 2)42,51234,59533,30666,78565,92443,46258,51168,93939,469
Due from customers and mortgages 2)138,060136,180132,35370,17583,88082,395206,794219,270213,206
Total due from banks and customers, gross 2)180,572170,775165,659136,960149,804125,857265,305288,209252,675
Contingent liabilities11,74312,33012,34938,14729,58627,86240,98141,05639,104
Irrevocable commitments 3)3,3413,6702,26377,67680,77381,88481,37085,03685,333
Total banking products195,656186,775180,271252,783260,163235,603387,656414,301377,112
Loans held for sale 4)0017,02816,33817,02816,338
Derivative instruments 5)4,4014,4525,01854,28356,41651,60056,87759,61854,757
Securities lending – banks000000000
Securities lending – customers0001,78269641,7826964
Reverse repurchase agreements – banks5,2326,7176,283168,498144,214154,531169,427146,443156,397
Reverse repurchase agreements – customers7,7458,09414,52841,09452,72456,98748,76760,53671,384
Forward reverse repurchase agreements00010,11513,8557,61710,11513,8557,617
Total traded products17,37819,263 25,829275,772267,278 270,799286,968280,521 290,219
Total credit risk exposure, gross213,034206,038206,100545,583543,779506,402691,652711,160667,331
Loan valuation allowances and provisions(3,098)(3,480)(4,092)(2,831)(3,053)(3,817)(5,932)(6,532)(7,911)
Total credit risk exposure, net209,936202,558202,008542,752540,726502,585685,720704,628659,420
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services. 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) Excluding forward reverse repurchase agreements. Prior periods restated.
4) Effective 1Q2003, loans held for sale are presented net of the related loan valuation allowances.
5) Positive replacement values considering netting agreements.


Total loan portfolio exposure and allowances and provisions for credit risk 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m30.09.0330.06.0331.12.0230.09.0330.06.0331.12.0230.09.0330.06.0331.12.02
Non-performing loans 2,2912,6003,0041,6791,9263,3513,9704,5266,355
Non-interest earning loans1,5771,7062,1084374372172,0152,1432,325
Total non-performing loans3,8684,3065,1122,1162,3633,5685,9856,6698,680
Restructured loans226352327198229349261281
Potential problem loans1,4481,5991,7237309651,6852,1782,5653,408
Total other impaired loans1,4701,6621,7751,0571,1631,9142,5272,8263,689
Total impaired loans5,3385,9686,8873,1733,5265,4828,5129,49512,369
Total due from banks and customers, gross180,572170,775165,659136,960149,804125,857265,305288,209252,675
Valuation allowances 3,0613,4464,0532,7272,9283,6475,7906,3737,703
   of which on principal 2,4542,7493,2012,4662,6923,4164,9215,4416,617
   of which on interest 6076978522612362318699321,086
Total due from banks and customers, net177,511167,329161,606134,233146,876122,210259,515281,836244,972
Provisions for contingent liabilities and irrevocable commitments373439104125170142159208
Total valuation allowances and provisions3,0983,4804,0922,8313,0533,8175,9326,5327,911
Ratios         
Valuation allowances as % of total non-performing loans79.1%80.0%79.3%128.9%123.9%102.2%96.7%95.6%88.7%
Valuation allowances as % of total impaired loans57.3%57.7%58.9%85.9%83.0%66.5%68.0%67.1%62.3%
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services. Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.


Roll forward of loan valuation allowance 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m3Q20032Q20033Q20023Q20032Q20033Q20023Q20032Q20033Q2002
At beginning of period3,4463,7764,6182,9283,1153,2446,3736,8917,862
Additions213129212141139611353268821
Releases(133)(80)(107)(105)(70)(49)(238)(150)(156)
Net additions charged to income statement80491053669562115118665
Gross write-offs(438)(408)(747)(239)(373)(362)(676)(778)(1,110)
Recoveries8671265211211
Net write-offs(430)(402)(740)(227)(367)(357)(655)(766)(1,099)
Provisions for interest11321311330312752
Foreign currency translation impact and other (36)10(3)(41)98(103)(74)103(102)
At end of period3,0613,4464,0012,7272,9283,3765,7906,3737,378
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.


Net credit-related valuation allowances and provisions 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m3Q20032Q20033Q20023Q20032Q20033Q20023Q20032Q20033Q2002
Net additions to loan valuation allowance80491053669562115118665
Net additions to provisions for contingent liabilities and irrevocable commitments6(5)1(26)(16)172(19)(19)153
Total net credit-related valuation allowances and provisions charged to income statement864410610537349699818
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.


REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES






Credit Suisse Financial Services recorded a net profit of CHF 1.8 billion in the third quarter of 2003. This result includes an after-tax gain resulting from divestitures of Winterthur of CHF 1.3 billion, net of related provisions. Additionally, Credit Suisse Financial Services’ third quarter result includes the strengthening by CHF 383 million after tax of certain provisions related to its current and former international business portfolio. The banking segments improved their results for the third consecutive quarter, due mainly to slightly higher operating income and lower operating expenses. Assets under management remained stable at CHF 713.9 billion at the end of the third quarter of 2003, despite a negative impact from the Winterthur divestitures. Net new assets almost doubled to CHF 9.5 billion versus the previous quarter.



In the third quarter of 2003, Credit Suisse Financial Services reported a net profit of CHF 1.8 billion versus a net loss of CHF 1.2 billion in the corresponding period of the previous year. The third quarter 2003 result includes an after-tax gain of CHF 1.3 billion, net of related provisions, from the divestitures of Winterthur’s Republic operations in the US, its Churchill operations in the UK and Winterthur Italy . Additionally, Credit Suisse Financial Services’ third quarter result includes the strengthening by CHF 383 million after tax of certain provisions related to its current and former international business portfolio. In the first nine months of 2003, Credit Suisse Financial Services recorded a net profit of CHF 3.3 billion versus a net loss of CHF 891 million in the corresponding period of the previous year. The business unit’s result in the third quarter of 2003 was also affected by the business transfers discussed in “An overview of Credit Suisse Group – Business transfers” on page 7.

Winterthur’s capital base was strengthened during the third quarter of 2003 as a result of earnings generation and the above-mentioned divestitures. In isolation, these divestitures increased Winterthur’s EU Group solvency surplus capital by approximately CHF 3.5 billion, due to the combination of lowered required capital and higher available capital.

Assets under management for Credit Suisse Financial Services remained stable versus the end of the previous quarter and amounted to CHF 713.9 billion at the end of the third quarter of 2003, despite the CHF 13.7 billion negative impact of the Winterthur divestitures. Net new assets almost doubled in the third quarter of 2003 versus the previous quarter, amounting to CHF 9.5 billion for Credit Suisse Financial Services, with an especially strong contribution from Private Banking of CHF 8.4 billion.

As noted on page 5, the results of the Credit Suisse Financial Services business unit and its segments are discussed on an operating basis. For a reconciliation of operating basis business unit results to Swiss GAAP and a discussion of the material reconciling items, the purpose of the operating basis results and the reasons why management believes they provide useful information for investors, please refer to the “Reconciliation of operating results to Swiss GAAP” on pages 32 – 36.

Private Banking
In the third quarter of 2003, Private Banking reported a segment profit of CHF 519 million, an increase of 5% versus the previous quarter and 79% compared with the corresponding period of the previous year. Though the third quarter usually shows seasonal weakness, operating income increased 3%, to CHF 1.6 billion, versus the previous quarter. Compared with the third quarter of 2002, operating income rose 17%. Main drivers for this significant improvement since 2002 were higher commission and service fee income as a result of the higher average asset base and increased client activity.

Operating expenses in the third quarter of 2003 decreased by CHF 33 million, or 4%, to CHF 819 million quarter-on-quarter, and were down CHF 41 million, or 5%, compared with the corresponding period of 2002, in line with headcount development. In the third quarter of 2003, the cost/income ratio improved for the sixth consecutive quarter, decreasing 4.0 percentage points to 55.1%. The gross margin decreased to 125 bp in the third quarter of 2003, compared to 128 bp in the previous quarter, and increased 13 bp compared to 112 bp in the third quarter of 2002. The decrease in the third quarter of 2003 versus the previous quarter was mainly due to the higher average underlying asset base.

Net new assets more than doubled in the third quarter of 2003 to CHF 8.4 billion, compared to net inflows of CHF 3.8 billion in the second quarter of 2003. Assets under management were CHF 505.1 billion as of September 30, 2003, which reflects an increase of CHF 11.3 billion, or 2.3%, from June 30, 2003, and of CHF 39.4 billion, or 8.5%, versus December 31, 2002. Asian and European Private Banking again achieved good net new asset growth.

Corporate & Retail Banking
Corporate & Retail Banking reported a segment profit of CHF 169 million in the third quarter of 2003. The segment profit increased 8% versus the previous quarter and 54% compared with the corresponding period of the previous year. Operating income decreased slightly quarter-on-quarter, down 2% to CHF 789 million. This decrease is mainly due to lower other ordinary income that in the second quarter of 2003 contained realized gains from the recovery portfolio. Compared with the third quarter of 2002, Corporate & Retail Banking reported almost flat operating income. The net interest margin was 215 bp in the third quarter of 2003, corresponding to an increase of 3 bp from 212 bp in the previous quarter.

Operating expenses decreased CHF 20 million, or 4%, to CHF 483 million in the third quarter of 2003 versus the previous quarter, due mainly to lower personnel expenses in line with headcount development. Compared with the corresponding period of the previous year, operating expenses decreased CHF 56 million, or 10%, due to a reduction of both other operating expenses and personnel expenses.

In the third quarter of 2003, the cost/income ratio improved further to 64.4%, compared to 65.8% in the previous quarter and 72.8% in the third quarter of 2002. In the third quarter of 2003, the actual credit-related provisions recorded were CHF 24 million above the statistical valuation adjustments, but were CHF 20 million below the statistical valuation adjustments for the first nine months of 2003. The actual net credit-related valuation allowances and provisions in the third quarter of 2003 amounted to CHF 84 million and CHF 173 million for the first nine months of 2003. Impaired loans were further reduced by CHF 0.6 billion to CHF 5.0 billion in the third quarter of 2003 compared to June 30, 2003. The return on average allocated capital increased from 12.9% in the second quarter to 13.6% in the third quarter of 2003.

Net new assets of CHF 1.8 billion were recorded in the third quarter of 2003, compared to a net asset inflow of CHF 0.5 billion in the previous quarter. Assets under management were CHF 69.4 billion as of September 30, 2003, which reflects an increase of CHF 2.6 billion, or 3.9%, from June 30, 2003, and a decrease of 0.9 billion, or 1.3%, versus December 31, 2002.

Life & Pensions
In the first nine months of 2003, Life & Pensions reported a segment profit of CHF 354 million, representing a significant improvement from the loss of CHF 1.5 billion in the corresponding period of the previous year. In the third quarter of 2003, the segment profit amounted to CHF 126 million, including an after-tax gain of CHF 57 million from the divestiture of the Italian operations.

Life & Pensions reported a reduction in gross premiums written of 10%, or CHF 1.5 billion, to CHF 13.3 billion in the first nine months of 2003, compared with the same period of 2002. Adjusted for acquisitions, divestitures and exchange rate impacts, gross premiums written decreased 5%. The decline in reported gross premiums written in the first nine months of 2003 was primarily due to Life & Pensions’ ongoing selective underwriting policy and strong reported single premium growth during the first nine months of the previous year. Included in the gross premiums written for the first nine months of 2003 are premiums of the divested Winterthur Italy of CHF 692 million. Net new assets in the first nine months of 2003 amounted to CHF 2.0 billion.

In the first nine months of 2003, administration costs decreased 18%, or CHF 192 million, to CHF 862 million, compared with the corresponding period of the previous year. The expense ratio decreased 0.3 percentage points in the first nine months of 2003 to 10.6%, compared to 10.9% in the corresponding period of the previous year. Total expenses in the third quarter of 2003 were affected by additional amortization and write-downs of deferred acquisition costs of CHF 201 million, with a net impact of CHF 75 million on the segment result, recognized due to the lowered expectations for long-term investment returns.

Investment performance improved CHF 2.7 billion to CHF 3.8 billion in the first nine months of 2003, compared with the corresponding period of the previous year, primarily due to a significant decrease in equity impairments and realized losses. Reflecting the improved investment performance in the first nine months of 2003, the total return on invested assets amounted to 5.0%, compared to 1.5% in the corresponding period of 2002. Current income was 4.0% and realized gains/losses and other income/expenses were 1.0% in the first nine months of 2003.

Insurance
In the first nine months of 2003, Insurance reported a segment profit of CHF 1.2 billion compared to a segment loss of CHF 1.0 billion in the corresponding period of the previous year. The strong recovery of the Insurance segment in the first nine months of 2003 was mainly driven by divestiture-related gains and a significant improvement in investment performance, as well as an improvement in its underwriting result, due mainly to the implementation of tariff increases and a continued strict underwriting policy.

In the third quarter of 2003, the segment profit amounted to CHF 991 million, including an after-tax gain of CHF 1.3 billion, net of related provisions, from the divestiture of its US subsidiary Republic Financial Services, Churchill Insurance Group in the UK and Winterthur Italy. In addition, certain provisions of CHF 383 million after tax related to the current and former international business portfolio were recorded in the third quarter.

In the first nine months of 2003, Insurance’s net premiums earned increased CHF 205 million, or 2%, to CHF 11.9 billion compared with the corresponding period of the previous year. Adjusted for acquisitions, divestitures and exchange rate impacts, net premiums earned increased 8%, primarily due to tariff increases across all major markets. Included in the net premiums earned in the first nine months of 2003 are premiums of the three divested Winterthur operations of CHF 4.5 billion.

Insurance improved its net underwriting result before dividends to policyholders by CHF 218 million in the first nine months of 2003, reflecting a combined ratio improvement of 1.9 percentage points to 101.6% in the first nine months of 2003, compared to 103.5% in the first nine months of the previous year. This improvement resulted from a decrease in the claims ratio of 1.5 percentage points to 73.2% in the first nine months of 2003 versus the corresponding period of the previous year, mainly reflecting benefits from improved pricing and continued streamlining of the business portfolio. The reported combined ratio of 103.6% in the third quarter of 2003 includes CHF 117 million of certain provisions related to the current and former international business portfolio, which corresponds to 3.1 percentage points in the combined ratio.

Administration costs decreased 8%, or CHF 123 million, to CHF 1.4 billion in the first nine months of 2003 compared with the corresponding period of the previous year, despite premium growth, reflecting continued progress in ongoing efficiency initiatives. Compared with the corresponding period of the previous year, the expense ratio improved 0.4% to 28.4% in the first nine months of 2003, with a reduction in administration costs offset by higher policy acquisition costs.

In the first nine months of 2003, Insurance reported net investment income of CHF 952 million versus a net investment loss of CHF 69 million in the corresponding period of the previous year, primarily due to a significant decrease in equity impairments and realized losses. Reflecting the improved investment performance in the first nine months of 2003, the total return on invested assets amounted to 3.8%, compared to –0.3% in the corresponding period of 2002. Current income was 3.9% and realized gains/losses and other income/expenses were –0.1% in the first nine months of 2003.


Credit Suisse Financial Services business unit income statement – operating 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Operating income 2)4,5483,5442,364289211,5948,58635
Personnel expenses1,3851,4341,486(3)(7)4,2324,500(6)
Other operating expenses732744884(2)(17)2,2922,691(15)
Operating expenses2,1172,1782,370(3)(11)6,5247,191(9)
Gross operating profit2,4311,366(6)785,0701,395263
Depreciation of non-current assets17715614313245034824
Amortization of Present Value of Future Profits (PVFP)10238119168(14)192205(6)
Valuation adjustments, provisions and losses9090910(1)261285(8)
Net operating profit/(loss) before extraordinary items, acquisition-related costs, exceptional items and taxes2,0621,082(359)914,114423
Extraordinary income/(expenses), net 386(63)(50)1824(25)
Taxes 3) 4)(260)(223)(689)17(62)(742)(1,192)(38)
Net operating profit/(loss) before acquisition-related costs, exceptional items and minority interests1,805867(1,042)1083,390(745)
Amortization of acquired intangible assets and goodwill(25)(27)(27)(7)(7)(77)(102)(25)
Exceptional items00(119)(100)0(119)(100)
Tax impact1010220
Business unit result before minority interests1,781840(1,187)1123,315(964)
Minority interests8(10)17(53)(10)100
Business unit result 5)1,789830(1,170)1163,305(864)
Increased/(decreased) credit-related valuation adjustments, net of tax 6)11(21)24(54)(28)27
Net profit/(loss)1,778851 (1,194)1093,333(891)
       
Reconciliation to net operating profit/(loss)      
Business unit result1,789830(1,170)1163,305(864)
Amortization of acquired intangible assets and goodwill, net of tax242726(11)(8)75807)(6)
Exceptional items, net of tax00119(100)0119(100)
Net operating profit/(loss)1,813857(1,025)1123,380(665)
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. The operating basis 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, and exceptional items, not allocated to the segments are included in the business unit results. Certain other items, including credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions and gains/losses from sales of investments within the insurance business are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”.
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 3Q2002 and for the 9 months 2002 of CHF –590 m and CHF –875 m, respectively.
4) Excluding tax impact on amortization of acquired intangible assets and goodwill.
5) Represents net profit/(loss) excluding credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions, net of tax.
6) Increased/(decreased) credit-related valuation adjustments before tax of CHF 14 m, CHF –27 m, CHF 31 m, CHF –37 m and CHF 35 m for 3Q2003, 2Q2003, 3Q2002, 9 months 2003 and 9 months 2002, respectively.
7) Excluding a CHF 20 m write-off relating to a participation.


Credit Suisse Financial Services business unit key information 1)
   9 months
 3Q20032Q20033Q200220032002
Cost/income ratio 2)70.7%66.9%110.0%68.8%92.3%
Cost/income ratio – operating 3) 4)50.4%65.9%106.3%60.6%89.4%
Cost/income ratio – operating, banking 3)58.2%61.4%70.9%61.5%64.6%
Return on average allocated capital 2)49.2%25.8%(39.4%)32.9%(10.6%)
Return on average allocated capital – operating 3)50.2%26.0%(33.9%)33.3%(8.2%)
Average allocated capital in CHF m14,39213,32612,28613,56612,432
Growth in assets under management0.5%7.0%(3.8%)5.4%(8.3%)
   of which net new assets 1.3%0.7%0.2%2.2%2.6%
   of which market movement and structural effects 1.1%6.3%(4.1%)5.3%(10.6%)
   of which acquisitions/(divestitures) (1.9%)(0.1%)0.1%(2.1%)(0.3%)
   of which discretionary (1.3%)2.6%(0.6%)0.8%(1.3%)
      
  30.09.0330.06.0331.12.02
Assets under management in CHF bn 713.9710.2677.5
Number of employees (full-time equivalents) 41,83453,06954,378
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Based on the business unit results on a Swiss GAAP basis.
3) Based on the operating basis business unit results, which exclude certain acquisition-related costs and exceptional items not allocated to the segments and reflect certain reclassifications discussed in the “Reconciliation of operating results to Swiss GAAP”.
4) Excluding amortization of PVFP from the insurance business within Credit Suisse Financial Services.


Overview of business unit Credit Suisse Financial Services – operating 1)
     Credit
  Corporate  Suisse
 Private& RetailLife & Financial
3Q2003, in CHF mBankingBankingPensionsInsuranceServices
Operating income 2)1,5717895991,5894,548
Personnel expenses5603021823411,385
Other operating expenses259181106186732
Operating expenses8194832885272,117
Gross operating profit7523063111,0622,431
Depreciation of non-current assets47256045177
Amortization of Present Value of Future Profits (PVFP)1011102
Valuation adjustments, provisions and losses256590
Net operating profit before extraordinary items, acquisition-related costs and taxes6802161501,0162,062
Extraordinary income/(expenses), net 30003
Taxes 3)(164)(47)(24)(25)(260)
Net operating profit before acquisition-related costs and minority interests5191691269911,805
Amortization of acquired intangible assets and goodwill    (25)
Tax impact    1
Business unit result before minority interests    1,781
Minority interests    8
Business unit result 4)    1,789
     
Other data:    
Average allocated capital 5)2,7694,9756,649  14,392
1) The operating basis 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. Certain other items, including credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions and gains/losses from sales of investments within the insurance business are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”.
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. Gains or losses related to divestitures and sales of investments within the insurance business are recorded as operating income at the business unit level and reclassified to extraordinary income/(expenses) in the consolidated financial statements in accordance with Swiss GAAP.
3) Excluding tax impact on amortization of acquired intangible assets and goodwill.
4) Represents net profit excluding credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions.
5) Amount relating to Life & Pensions and Insurance segments represents the average shareholders' equity of “Winterthur” Swiss Insurance Company.


Private Banking income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Net interest income334365326(8)21,0251,039(1)
Net commission and service fee income 1,0389869345112,9323,203(8)
Net trading income188159721816150341621
Other ordinary income 1191422(21)2947(38)
Operating income1,5711,5191,3463174,4894,705(5)
Personnel expenses560577543(3)31,6811,730(3)
Other operating expenses259275317(6)(18)820981(16)
Operating expenses819852860(4)(5)2,5012,711(8)
Gross operating profit75266748613551,9881,994(0)
Depreciation of non-current assets4746792(41)150182(18)
Valuation adjustments, provisions and losses 2)25191732474851(6)
Net operating profit before extraordinary items, exceptional items and taxes68060239013741,7901,7612
Extraordinary income/(expenses), net 372(57)501721(19)
Taxes 3)(164)(117)(102)4061(401)(400)0
Net operating profit before exceptional items and minority interests (segment result)5194922905791,4061,3822
Other data:      
Increased/(decreased) credit-related valuation adjustments 2)(10)(7)1743(17)10
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, and exceptional items not allocated to the segments are included in the business unit results.
2) Increased/(decreased) credit-related valuation adjustments 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 3Q2002 and for the 9 months 2002 of CHF –123 m and CHF –398 m, respectively.


Private Banking balance sheet information 1)
    ChangeChange
    in % fromin % from
in CHF m30.09.0330.06.0331.12.0230.06.0331.12.02
Total assets183,698175,451171,12657
Due from customers32,54831,95836,1642(10)
Mortgages25,69524,52722,935512
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.


Private Banking key information 1)
   9 months
 3Q20032Q20033Q200220032002
Cost/income ratio 2)55.1%59.1%69.8%59.1%61.5%
Average allocated capital in CHF m2,7692,6712,5362,6572,507
Pre-tax margin 2)43.5%40.1%29.1%40.3%37.9%
Fee income/operating income 66.1%64.9%69.4%65.3%68.1%
Net new assets in CHF bn8.43.83.413.718.2
Growth in assets under management2.3%8.1%(4.4%)8.5%(9.3%)
   of which net new assets 1.7%0.8%0.7%2.9%3.5%
   of which market movement and structural effects 0.6%7.2%(5.1%)5.5%(12.8%)
Gross margin 3)124.8 bp127.9 bp111.8 bp124.8 bp123.7 bp
   of which asset-driven 78.6 bp81.5 bp79.7 bp80.2 bp82.0 bp
   of which transaction-driven 42.2 bp42.3 bp27.5 bp40.5 bp37.0 bp
   of which other 4.0 bp4.1 bp4.6 bp4.1 bp4.7 bp
Net margin 4)41.2 bp41.4 bp24.1 bp39.1 bp36.3 bp
      
   30.09.0330.06.0331.12.02
Assets under management in CHF bn  505.1493.8465.7
Number of employees (full-time equivalents)  12,03212,31812,967
1) Comparative figures have been restated to reflect the transfer of the securities and treasury execution platform transactions of Credit Suisse First Boston in Switzerland to Credit Suisse Financial Services and the transfer of Credit Suisse First Boston's Private Client Services UK business from CSFB Financial Services to Private Banking.
2) Based on the segment results, which exclude certain acquisition-related costs and exceptional items not allocated to the segment.
3) Operating income/average assets under management.
4) Net operating profit before exceptional items and minority interests (segment result)/average assets under management.


Corporate & Retail Banking income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     9 months 
in CHF m3Q20032Q20033Q20022Q20033Q2002200320022002
Net interest income5305195382(1)1,5561,615(4)
Net commission and service fee income 1651581774(7)485547(11)
Net trading income738069(9)62242126
Other ordinary income 21460(54)8138113
Operating income789803784(2)