Prepared and filed by St Ives Financial

FORM 6-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

For the month of May 4, 2006


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 office)


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 the registrant by furnishing the information contained in this Form 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-       

 

 

CREDIT SUISSE GROUP  
  Paradeplatz 8
P.O. Box
CH-8070 Zurich
Switzerland
Telephone +41 844 33 88 44
Fax +41 44 333 88 77
media.relations@credit-suisse.com


Media Release
 
Credit Suisse Group reports net income of CHF 2.6 billion for the first quarter of 2006
 
Zurich, May 2, 2006 Credit Suisse Group today reported net income of CHF 2,604 million for the first quarter of 2006, an increase of 36% compared to net income of CHF 1,910 million in the first quarter of 2005. Net new assets totaled CHF 31.1 billion in the first quarter of 2006. The Group recorded a return on equity of 24.4%, with a return on equity of 27.4% in the banking business and 15.0% in the insurance business.

Oswald J. Grübel, CEO of Credit Suisse Group, stated, "The first quarter of 2006 provided an excellent environment in which to start operating as an integrated global bank. Positive market sentiment translated into strong client activity across our Investment Banking, Private Banking and Asset Management divisions and we were well positioned to benefit from favorable trading conditions. I am very pleased with our performance in our first three months as an integrated bank."

Financial highlights                  









 
in CHF million 1Q2006 4Q2005   1Q2005   Change in %   Change in %  
            vs 4Q2005   vs 1Q2005  









 
Net revenues 21,779 14,138   16,897   54   29  









 
Total operating 7,686 7,693   6,116   0   26  









 
Net income 2,604 1,103   1,910   136   36  









 
Return on equity - Group 24.4% 11.2%   20.6%   -   -  









 
Return on equity - Banking 27.4% 10.8%   22.9%   -   -  









 
Return on equity - Insurance 15.0% 11.4%   12.0%   -   -  









 
Basic earnings per share (CHF) 2.31 0.98   1.64   -   -  









 
BIS tier 1 ratio (at quarter-end) 10.8% 11.3%   12.1%   -   -  









 

New reporting structure
Credit Suisse Group realigned its reporting structure to reflect the launch of the new integrated global bank, effective January 1, 2006. Under the new structure, the Group has a separate reporting segment for each of its three banking divisions − Investment Banking, Private Banking and Asset Management − and a single reporting segment for the insurance business, Winterthur. The new reporting structure applies with effect from the first quarter of 2006.

 


Media Release
  May 2, 2006
Page 2/6

 

Credit Suisse Group banking segment                  









 
in CHF million   1Q2006 4Q2005   1Q2005   Change in %   Change in %  
              vs 4Q2005   vs 1Q2005  










 
Investment Net revenues 5,757 3,735   3,994   54   44  
Banking Total operating expenses 4,248 3,462   3,081   23   38  
  Income from                  
  operations before taxes 1,564 286   932   447   68  










 
Private Net revenues 3,110 2,716   2,539   15   22  
Banking Total operating expenses 1,810 1,711   1,581   6   14  
  Income from                  
  operations before taxes 1,308 1,026   974   27   34  










 
Asset Net revenues 756 757   614   0   23  
Management Total operating expenses 520 516   406   1   28  
  Income from                  
  operations before taxes 234 241   208   (3)   13  










 

Investment Banking segment
The Investment Banking segment reported record income from continuing operations before taxes of CHF 1,564 million in the first quarter of 2006, an increase of 68% compared to the first quarter of 2005. Net revenues were also at a record level, growing 44% compared to the same period of 2005 due to substantially higher investment banking revenues and trading revenues, driven by increased client activity. The segment's total operating expenses rose 38% compared to the first quarter of 2005, primarily reflecting higher compensation accruals in line with improved results. The compensation/revenue ratio improved by 2.0 percentage points to 53.5% in the first quarter of 2006 from 55.5% for the full-year 2005. Compared to the fourth quarter of 2005, income from continuing operations before taxes grew by CHF 1,278 million. This significant improvement was driven mainly by 54% growth in net revenues. Total operating expenses rose 23% from the previous quarter due primarily to higher compensation accruals in line with improved results, partly offset by lower other expenses. Investment Banking's pre-tax income margin was 27.2% for the first quarter of 2006, up 3.9 percentage points from the first quarter of 2005 and up 19.5 percentage points from the previous quarter. The pre-tax return on average economic risk capital was 42.0% in the first quarter of 2006, compared to 35.8% in the first quarter of 2005 and 10.3% in the previous quarter. Investment Banking recorded net releases of provisions for credit losses of CHF 55 million in the first quarter of 2006, reflecting the continued favorable credit environment for lenders. This compares to net releases of CHF 19 million in the first quarter of 2005 and of CHF 13 million in the previous quarter.

Private Banking segment
The Private Banking segment recorded excellent income from continuing operations before taxes of CHF 1,308 million in the first quarter of 2006, up 34% from the first quarter of 2005. Net revenues grew 22% compared to the first quarter of 2005, primarily reflecting a significant increase in commissions and fees as the segment proved its ability to capitalize on the very strong client activity and market momentum. Total operating expenses rose 14% from the first quarter of 2005, mainly reflecting higher performance-related compensation accruals as well as personnel expenses relating to strategic growth initiatives. Compared to the fourth quarter of 2005, income from continuing operations before taxes rose 27%, reflecting a 15% improvement in net revenues and a 6% rise in total operating expenses. Private Banking recorded net releases of provisions for credit losses of CHF 8 million in the first quarter of 2006. This compares to net releases of CHF 16 million in the first quarter of 2005 and of CHF 21 million in the previous quarter.

 


Media Release
  May 2, 2006
Page 3/6

 

The Wealth Management business, which is part of Private Banking, reported income from continuing operations before taxes of CHF 963 million in the first quarter of 2006, up 50% from the first quarter of 2005 and up 37% from the previous quarter. The pre-tax income margin was 43.2% for the first quarter of 2006, corresponding to an increase of 5.5 percentage points versus the first quarter of 2005 and of 5.6 percentage points versus the previous quarter.

The Corporate & Retail Banking business, which is part of Private Banking, posted income from continuing operations before taxes of CHF 345 million in the first quarter of 2006, an increase of 4% from the first quarter of 2005 and of 7% from the previous quarter. The pre-tax income margin was 39.1%, down 0.5 percentage points from the first quarter of 2005 and up 1.1 percentage points from the previous quarter. Corporate & Retail Banking reported a pre-tax return on average economic risk capital of 48.4% in the first quarter of 2006. This represents an increase of 6.6 percentage points versus the first quarter of 2005 and an increase of 6.0 percentage points versus the previous quarter.

Asset Management segment
The Asset Management segment posted income from continuing operations before taxes of CHF 234 million in the firstquarter of 2006, an improvement of 13% versus the first quarter of 2005. Net revenues grew 23% compared to the corresponding period of 2005, primarily reflecting stronger asset management revenues and higher private equity gains. Total operating expenses rose 28% versus the first quarter of 2005 due to higher performance-related compensation, higher commission expenses, costs associated with the realignment of the Asset Management business and costs associated with the branding implementation and related advertising costs. Compared to the fourth quarter of 2005, income from continuing operations before taxes declined 3%, reflecting stable net revenues and a marginal increase in total operating expenses. Asset Management's pre-tax income margin was 31.0% for the first quarter of 2006, down 2.9 percentage points from the first quarter of 2005 and down 0.8 percentage points from the previous quarter. The segment's cost/income ratio was up 2.7 percentage points versus the first quarter of 2005 to 68.8% and up 0.6 percentage points from the previous quarter.

Net new assets
Wealth Management business recorded CHF 14.5 billion of net new assets in the first quarter of 2006, representing an annualized growth rate of 8.4%. This strong asset generation was driven by inflows from Switzerland, Europe and the Americas. Asset Management reported CHF 17.0 billion of net new assets, driven mainly by money market products, fixed income, multi-asset class solution products and alternative investments which originated primarily from the US and Europe. Overall, Credit Suisse Group recorded CHF 31.1 billion of net new asset inflows in the first quarter of 2006. The Group’s total assets under management stood at CHF 1,553.6 billion as of March 31, 2006, an increase of 4.7% from December 31, 2005.

 


Media Release
  May 2, 2006
Page 4/6

 

Winterthur
Commenting on the insurance business, Oswald J. Grübel stated, "Winterthur confirmed the strength of its business in the first quarter of 2006, further improving its operating performance and recording significant growth in total business volume, while reducing its total operating expenses. Going forward, we remain committed to enhancing efficiency and productivity in order to capture the full value of this business."

Winterthur segment results                    










 
in CHF million 1Q2006   4Q2005   1Q2005   Change in %   Change in %  
              vs 4Q2005   vs 1Q2005  










 
Net revenues 10,915   6,381   9,485   71   15  
Total operating expenses 1,051   1,099   1,085   (4)   (3)  
Income from continuing operations                    
before taxes 505   482   418   5   21  










 

Winterthur recorded income from continuing operations before taxes of CHF 505 million in the first quarter of 2006, an increase of 21% versus the first quarter of 2005, reflecting continued operational improvements. Gross premiums written totaled CHF 10,657 million in the first quarter of 2006, representing growth of 7% compared to the first quarter of 2005. Total business volume was CHF 12,737 million, an increase of 11%. This growth was driven by the Life & Pensions business, where total business volume rose 18% as a result of a 13% increase in traditional business, primarily in Switzerland, and 39% growth in investment-type products, primarily in the UK. Net investment return backing traditional life policies and non-life policies decreased 0.5 percentage points to 4.8% in the first quarter of 2006 compared to the first quarter of 2005, reflecting a lower level of realized gains. Winterthur's total operating expenses decreased 3% in the first quarter of 2006 compared to the same period of 2005, primarily reflecting a decline in insurance underwriting and acquisition expenses. The Life & Pensions business reported an expense ratio of 4.2%, an improvement of 1.6 percentage points compared to the first quarter of 2005, as the total business volume grew strongly and expenses decreased. The Non-Life business recorded a combined ratio of 93.5%, an improvement of 3.2 percentage points versus the same period of 2005, due to generally favorable claims development. Winterthur's income from discontinued operations, net of tax, was CHF 23 million, driven mainly by the gain on the sale of the Canadian subsidiary, Citadel General Assurance Company, in the first quarter of 2006. Net income for the first quarter of 2006 was CHF 357 million, an increase of 42% compared to the first quarter of 2005, representing a return on equity of 15.0%, up 3.0 percentage points.

Outlook
Global growth looks set to continue through 2007. Credit Suisse Group does not expect interest rates to increase substantially before the end of the year. It expects a stable US dollar against major currencies.

Information
Media Relations Credit Suisse, telephone +41 844 33 88 44, media.relations@credit-suisse.com
Investor Relations Credit Suisse, telephone +41 44 333 71 49, investor.relations@credit-suisse.com

For additional information on Credit Suisse Group’s first-quarter 2006 results, please refer to the Group’s Quarterly Report Q1 2006, as well as the Group’s slide presentation for analysts and the press, which are available on the Internet at: www.credit-suisse.com/results

 


Media Release
  May 2, 2006
Page 5/6

Credit Suisse Group
Credit Suisse Group is a leading global financial services company headquartered in Zurich. Credit Suisse – Credit Suisse Group's banking arm – provides clients worldwide with investment banking, private banking and asset management services. It provides companies, institutional clients and high-net-worth private clients worldwide, as well as retail clients in Switzerland, with specialist advisory services, comprehensive solutions, and innovative products.

Credit Suisse Group also includes Winterthur, a Swiss general insurer with a focus on international business activities. Credit Suisse Group is active in over 50 countries and employs approximately 63,000 people. Credit Suisse Group registered shares (CSGN) are listed in Switzerland and, in the form of American Depositary Shares (CSR), in New York. Further information about Credit Suisse Group and Credit Suisse can be found at www.credit-suisse.com. Further information about Winterthur can be found at www.winterthur.com.

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

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

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

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

 


Media Release
  May 2, 2006
Page 6/6

Presentation of Credit Suisse Group’s First-Quarter 2006 Results
via Audio Webcast and Telephone Conference

Date     Tuesday, May 2, 2006      
             
Time     10:00 CEST / 09:00 BST / 04:00 EST  
             
Speaker     Renato Fassbind, Chief Financial Officer of Credit Suisse Group
      The presentation will be held in English.
             
Audio Webcast     www.credit-suisse.com/results  
             
Telephone     Europe:   +41 91 610 5600  
      UK:   +44 207 107 0611  
      US:   +1 866 291 4166  
             
      Reference: ‘Credit Suisse Group quarterly results’  
       
Q&A session     You will have the opportunity to ask questions during the telephone conference following the presentation.
       
Playbacks     Audio playback available approximately 3 hours after the event at:
      www.credit-suisse.com/results  
             
      Telephone replay available approximately 1 hour after the event on
      Europe:   +41 91 612 4330  
      UK:   +44 207 108 6233  
      US:   +1 866 416 2558  
      Conference ID: 176#      
             
Note     We recommend that you dial in approximately 10 minutes before the start of the presentation for the audio webcast and telephone conference. Further instructions and technical test functions are available on our website.
             

 







Credit Suisse Group
Letter to Shareholders 2006/Q1













Oswald J. Grübel Walter B. Kielholz
Chief Executive Officer Chairman of the Board of Directors
   


Dear shareholders
The first quarter of 2006 provided an excellent environment in which to start operating as an integrated global bank. Positive market sentiment translated into strong client activity across our Investment Banking, Private Banking and Asset Management segments, and we were well positioned to benefit from favorable trading conditions. This drove strong revenue generation across our businesses and contributed to a 29% increase in Credit Suisse Group’s net revenues compared to the first quarter of 2005.

The Group reported record net income of CHF 2.6 billion in the first quarter of 2006, up 36% from the same period of last year. Our return on equity was 24.4%, with a return on equity of 27.4% in the banking business and 15.0% in the insurance business. Basic earnings per share were CHF 2.31, up 41% from the first quarter of 2005.

The Group continues to be well capitalized and reported a BIS tier 1 ratio of 10.8% as of March 31, 2006. Net new assets – a key indicator of our ability to generate future revenues in Private Banking and Asset Management –totaled CHF 31.1 billion for the first quarter.

We are presenting our first-quarter 2006 results according to the new reporting structure that we implemented following the launch of the integrated global bank on January 1, 2006. Our banking business now comprises three reporting segments: Investment Banking, Private Banking and Asset Management. In addition, our insurance business, Winterthur, is presented as a single reporting segment with effect from the first quarter of 2006. Going forward, we will disclose income from continuing operations before taxes for our banking segments, as opposed to net income.


Banking segment results
The Investment Banking segment provides financial advisory, lending and capital raising services and sales and trading to institutional, corporate and government clients worldwide.

Investment Banking delivered a record result in the first quarter of 2006. This performance reflected a strong level of client activity in a favorable market environment. Income from continuing operations before taxes increased 68% to CHF 1.6 billion, driven by revenue growth in all key business areas.

One of the highlights of the quarter was our strong performance in the emerging markets business. Credit Suisse is a leader and trusted partner in some of the world’s most important emerging markets – particularly Brazil, Mexico, Russia and China. This is reflected by the awards we received this quarter, including that of "Best Investment Bank in Latin America" from Latin Finance . Prime Services – which provides services to hedge funds –is another key growth area within Investment Banking. In this area, we achieved particularly strong momentum during the quarter as the business continued to rank in the top tier of industry surveys.

In an environment of strengthening equity underwriting volumes, Investment Banking’s initial public offering (IPO) business – which is reported as part of equity underwriting – remained strong. Credit Suisse participated in a number of important transactions during the quarter, including the IPO for QinetiQ Group plc (the privatization of a UK provider of defense technology and security solutions). In addition, Investment Banking’s mergers & acquisitions (M&A) advisory business benefited from increased global industry-wide M&A activity. Notable transactions announced in the first quarter of 2006 included Bayer AG’s acquisition of Schering AG and the sale of Pixar Animation Studios to the Walt Disney Company.

While our distinct client focus translated into sound revenue growth, we also made progress in respect of costs. In the first quarter of 2006, Investment Banking’s cost/income ratio – a key indicator of operating performance in the investment banking business – improved versus both the first quarter of 2005 and the fourth quarter of 2005. Increased productivity and the achievement of sustainable, long-term improvements in the cost/income ratio remain a priority in Investment Banking. We have identified significant opportunities to grow revenues, enhance productivity and reduce expenses within this segment going forward. As part of our overall strategy for Credit Suisse, we aim to achieve growth in Investment Banking by further expanding our global footprint and by rolling out successful products worldwide –with a focus on key client segments.

The Private Banking segment provides comprehensive advice and a broad range of investment products and services that are tailored to the needs of high-net-worth individuals all over the world through its Wealth Management business. In Switzerland, Private Banking supplies banking products and services to business and retail clients through its Corporate & Retail Banking business.

Our Private Banking segment produced an excellent result in the first quarter, with income from continuing operations before taxes of CHF 1.3 billion. This reflects very strong client activity in a favorable market environment. Private Banking successfully developed investment strategies in response to macro-trends in commodities, emerging markets, infrastructure and globalization using its financial products and research expertise in these fields.

Net revenues grew 22% compared to the first quarter of 2005, primarily reflecting a significant increase in commissions and fees as the segment proved its ability to capitalize on the very strong client activity and market momentum. In addition, Private Banking recorded net releases of provisions for credit losses of CHF 8 million, reflecting the continued favorable credit environment for lenders.

Private Banking recorded an increase in total operating expenses in the first quarter of 2006, which was primarily attributable to higher performance-related compensation, commission expenses and international growth initiatives in the Wealth Management business. International growth in Private Banking is of vital importance to the overall strategy of Credit Suisse. The Wealth Management business reported net new assets of CHF 14.5 billion in the first quarter of 2006, driven by inflows from Switzerland, Europe and the Americas. The segment’s assets under management totaled CHF 882.7 billion as of March 31, 2006, an increase of 5.4% from December 31, 2005.

Our Asset Management segment brings together the Group’s expertise in discretionary investment management and alternative capital activities. Its products are offered through both proprietary and third-party distribution channels as well as through other distribution channels within Credit Suisse. The business includes equity, fixed income and multi-asset class solutions, which provide a range of balanced portfolio products and services to government, institutional and private clients. In addition, Asset Management includes alternative investments such as private equity, hedge funds, real estate, indexed products and funds of funds. With alternative assets under management of CHF 124.3 billion as of March 31, 2006, we are a global leader in the field of alternative investments.

During the first quarter of 2006, Asset Management recorded income from continuing operations before taxes of CHF 234 million, representing an increase of 13% compared to the first quarter of 2005. Net revenues grew 23%, primarily reflecting stronger asset management revenues and higher private equity gains. Total operating expenses rose 28% compared to the first quarter of 2005 due to higher performance-related compensation, higher commission expenses, costs associated with the realignment of the Asset Management business and costs associated with the branding implementation and related advertising costs.

The segment recorded net new assets of CHF 17.0 billion for the first quarter, driven mainly by money market products, fixed income, multi-asset class solution products and alternative investments that originated primarily from the US and Europe. As of March 31, 2006, Asset Management reported CHF 619.6 billion of assets under management.

As part of our strategy to develop our presence in Asia, Credit Suisse announced a joint venture in South Korea with Woori Asset Management in April 2006. This initiative will create one of the largest joint venture asset management companies between a South Korean company and a foreign asset manager. This venture will combine Woori’s strong distribution network in South Korea with Credit Suisse’s expertise and knowledge of global markets.

Asset Management has launched a number of initiatives to increase profitability. These initiatives will focus on improving client orientation, reducing the overall cost base and specifically targeting geographic regions with low profitability.


Winterthur results
Winterthur , our insurance segment, is presented as a single reporting segment with effect from the first quarter of 2006 and will report performance details for its three businesses: Life & Pensions, Non-Life and Other Activities.

Winterthur confirmed the strength of its business in the first quarter of 2006, further improving its operating performance and recording significant growth in total business volume, while reducing its total operating expenses. Income from continuing operations before taxes totaled CHF 505 million, up 21% from the same period of last year. Gross premiums written improved 7% and total business volume rose 11%, driven mainly by the strong development in the Life & Pensions business. In the Non-Life business, the combined ratio improved by 3.2 percentage points to 93.5%.


The potential of the integrated bank
Credit Suisse Group’s banking operations achieved a good start to 2006 and – more importantly –started to capture the opportunities that are available within the integrated organization.

We are convinced that the integrated global Credit Suisse has even greater potential. To ensure that we can sustain our current rate of progress, we will now focus on further developing our integrated business model, which places our clients at the center of all that we do and capitalizes on our integrated global platform. Our plan is to grow our revenues by creating synergies between our banking businesses and by extending our global presence. In addition, we are in the process of expanding our operations in key growth markets worldwide. We have also identified significant opportunities to improve productivity and implement a more efficient cost structure. By creating tangible long-term value for our clients, we will be able to deliver sustained value for our shareholders.


Outlook
Global growth looks set to continue through 2007. We do not expect interest rates to increase substantially before the end of the year. We expect a stable US dollar against major currencies.

Yours sincerely

   
Walter B. Kielholz Oswald J. Grübel
Chairman of the Board of Directors Chief Executive Officer
   
May 2006  



Investment Banking


Summary
The Investment Banking segment's record first-quarter 2006 result reflects a strong level of client activity in a favorable market environment, as well as continued progress in the implementation of the strategy to deliver a more focused franchise.

Investment Banking reported income from continuing operations before taxes of CHF 1,564 million in the first quarter of 2006, an increase of 68% compared to the first quarter of 2005.

Net revenues reached a record level of CHF 5,757 million, up 44% from the first quarter of 2005. This increase reflects a 72% rise in underwriting revenues, a 48% rise in advisory and other fees and a 52% rise in trading revenues.

Total operating expenses were up 38% versus the first quarter of 2005. Compensation and benefits increased 44%, due primarily to higher compensation accruals in line with improved results. The compensation/revenue ratio was 53.5% in the first quarter of 2006, down from 55.5% for the full-year 2005. This improvement reflects the segment's commitment to reducing its cost/income ratio over time.

The pre-tax return on average economic risk capital – the measure of risk and capital performance being disclosed with effect from the first quarter of 2006 – was 42.0% in the first quarter of 2006, compared to 35.8% in the first quarter of 2005.

Key information
in CHF m, except where indicated1Q20061Q2005Change in % from 1Q2005
Net revenues5,7573,99444
of which underwriting revenues70541072
of which advisory and other fees33322548
of which total trading revenues4,8443,18252
Provision for credit losses(55)(19)189
Total operating expenses4,2483,08138
Income from continuing operations before taxes1,56493268
Pre-tax income margin27.2%23.3%
Pre-tax return on average economic risk capital42.0%35.8%
















Private Banking


Summary
The Private Banking segment reported a 34% increase in income from continuing operations before taxes to CHF 1,308 million in the first quarter of 2006, driven primarily by an increase in the Wealth Management business.

The segment’s excellent first-quarter results reflect a 22% improvement in net revenues compared to the first quarter of 2005, driven primarily by higher commissions and fees. This growth reflects considerably higher assets under management, higher brokerage volumes and increased product issuing fees.

Private Banking’s total operating expenses increased 14% compared to the first quarter of 2005, driven mainly by higher performance-related compensation accruals in line with the strong quarterly performance and higher personnel expenses related to ongoing strategic growth in the Wealth Management business, including front office recruiting. The increase in expenses also reflects costs associated with the branding implementation and related advertising costs and higher commission expenses.

Private Banking continued to benefit from the favorable credit environment in the first quarter of 2006 and recorded net releases of provisions for credit losses of CHF 8 million.

Wealth Management reported first-quarter 2006 net new assets of CHF 14.5 billion, representing an annualized growth rate of 8.4% and a rolling four-quarter average of 7.8%. Asset generation in this business was driven in particular by strong inflows from Switzerland, Europe and the Americas.

The pre-tax return on average economic risk capital for the Corporate & Retail Banking business was 48.4% for the first quarter of 2006, up 6.6 percentage points compared to the first quarter of 2005.

Key information
in CHF m, except where indicated1Q20061Q2005Change in % from 1Q2005
Net revenues3,1102,53922
Provision for credit losses(8)(16)(50)
Total operating expenses1,8101,58114
Income from continuing operations before taxes1,30897434
of which Wealth Management96364350
of which Corporate & Retail Banking3453314
Pre-tax income margin42.1%38.4%
Net new assets, in CHF bn14.814.1
Assets under managment, in CHF bn882.7837.61)5.4
1) As of December 31, 2005.
















Asset Management


Summary
Asset Management’s income from continuing operations before taxes was CHF 234 million in the first quarter of 2006, an increase of 13% compared to the first quarter of 2005. The segment’s first-quarter 2006 net revenues were CHF 756 million, up 23% from the first quarter of 2005. Asset management revenues, which consist primarily of fees from asset management and fund administration services provided to clients, increased 5% compared to the first quarter of 2005, driven mainly by higher assets under management, which increased by 29%. Asset management revenues were negatively impacted by lower trading revenues as a result of changes in the fair value of interest rate derivatives. Private equity commissions and fees, which include private equity fund management fees, were stable compared to the first quarter of 2005. Private equity gains, which include gains on investments and performance-related carried interest and are cyclical in nature, totaled CHF 206 million, an increase of 142% from the first quarter of 2005.

Total operating expenses increased 28% compared to the first quarter of 2005, reflecting higher performance-related compensation, higher commission expenses, costs associated with the realignment of the Asset Management business and costs associated with the branding implementation and related advertising costs.

Assets under management increased from CHF 589.4 billion as of December 31, 2005, to CHF 619.6 billion as of March 31, 2006, reflecting market and foreign exchange-related movements of CHF 13.2 billion and CHF 17.0 billion of net new assets. These inflows were driven mainly by money market products, fixed income, multi-asset class solution products and alternative investments that originated primarily from the US and Europe.

Key information
in CHF m, except where indicated1Q20061Q2005Change in % from 1Q2005
Net revenues75661423
of which asset management revenues4944725
of which private equity commissions and fees5657(2)
of which private equity gains20685142
Total operating expenses52040628
Income from continuing operations before taxes23420813
Pre-tax income margin31.0%33.9%
Net new assets, in CHF bn17.03.9
Assets under management, in CHF bn619.6589.41)5.1
1) As of December 31, 2005.
















Winterthur


Summary
Winterthur recorded income from continuing operations before taxes of CHF 505 million in the first quarter of 2006, an increase of 21% versus the first quarter of 2005, reflecting continued operating improvements.

Total business volume in the first quarter of 2006 rose 11%, driven mainly by an 18% increase in total business volume in the Life & Pensions business versus the first quarter of 2005. This reflects strong growth in traditional business as well as in investment-type products.

Total operating expenses decreased by 3% in the first quarter of 2006 compared to the same period of 2005. Insurance underwriting and acquisition expenses decreased 7%, while administration expenses rose 2%. The overall reduction in expenses reflects strict cost management, with efficiency improvements in mature markets offsetting higher costs in growth markets.

The expense ratio for the Life & Pensions business was 4.2% in the first quarter of 2006, an improvement of 1.6 percentage points compared to 5.8% in the first quarter of 2005, as total business volume grew and expenses decreased.

In the Non-Life business, the combined ratio improved by 3.2 percentage points to 93.5%, due to generally favorable claims development.

Key information
in CHF m, except where indicated1Q20061Q2005Change in % from 1Q2005
Total business volume12,73711,45011
Gross premiums written10,6579,9557
Total benefits, claims, dividends and credit losses9,3597,98217
Total operating expenses 1,0511,085(3)
Income from continuing operations before taxes50541821
Net income35725142
Return on equity15.0%12.0%
Life & Pensions – expense ratio4.2%5.8%
Non-Life – combined ratio93.5%96.7%





Consolidated statements of income (unaudited)

in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Interest and dividend income12,55511,5608,808943
Interest expense(9,685)(9,132)(5,760)668
Net interest income2,8702,4283,04818(6)
Commissions and fees4,2714,0963,237432
Trading revenues 4,3111,8141,828138136
Realized gains/(losses) from investment securities, net35826142137(15)
Insurance net premiums earned8,2044,4787,596838
Other revenues1,7651,06176766130
Total noninterest revenues18,90911,71013,8496137
Net revenues21,77914,13816,8975429
Policyholder benefits, claims and dividends9,3724,7867,9849617
Provision for credit losses(60)(27)(36)12267
Total benefits, claims and credit losses9,3124,7597,9489617
Insurance underwriting, acquisition and administration expenses9989791,0292(3)
Banking compensation and benefits4,4723,9823,2961236
Other expenses2,2112,7291,791(19)23
Restructuring charges53067
Total operating expenses7,6867,6936,116026
Income from continuing operations before taxes, minority interests, extraordinary items and cumulative effect of accounting changes4,7811,6862,83318469
Income tax expense8608562737
Minority interests1,316511301158337
Income from continuing operations before extraordinary items and cumulative effect of accounting changes2,6051,0901,90513937
Income/(loss) from discontinued operations, net of tax2313(9)77
Extraordinary items, net of tax(24)00
Cumulative effect of accounting changes, net of tax0014
Net income2,6041,1031,91013636



 1Q20064Q20051Q2005
Basic earnings per share, in CHF  
Income from continuing operations before cumulative effect of accounting changes2.310.971.64
Income/(loss) from discontinued operations, net of tax0.020.01(0.01)
Extraordinary items, net of tax(0.02)0.000.00
Cumulative effect of accounting changes, net of tax0.000.000.01
Net income available for common shares2.310.981.64
   
Diluted earnings per share, in CHF  
Income from continuing operations before cumulative effect of accounting changes2.210.941.63
Income/(loss) from discontinued operations, net of tax0.020.01(0.01)
Extraordinary items, net of tax(0.02)0.000.00
Cumulative effect of accounting changes, net of tax0.000.000.01
Net income available for common shares2.210.951.63





Consolidated balance sheets (unaudited)

in CHF m31.03.0631.12.05Change in % from 31.12.05
Assets   
Cash and due from banks34,78927,57726
Interest-bearing deposits with banks6,7226,1439
Central bank funds sold, securities purchased under resale agreements and securities borrowing transactions344,475352,281(2)
Securities received as collateral30,37723,95027
Trading assets (of which CHF 153,512 m and CHF 151,793 m encumbered)460,847435,2506
Investment securities (of which CHF 2,371 m and CHF 2,456 m encumbered)120,931121,565(1)
Other investments28,47420,73637
Loans, net of allowance for loan losses of CHF 2,054 m and CHF 2,241 m215,496205,6715
Premises and equipment7,4307,4270
Goodwill12,83012,932(1)
Other intangible assets3,4193,09111
Assets held for separate accounts13,54411,87514
Other assets (of which CHF 29,418 m and CHF 4,860 m encumbered)154,287110,55440
Total assets1,433,6211,339,0527
    
Liabilities and shareholders' equity   
Deposits383,361364,2385
Central bank funds purchased, securities sold under repurchase agreements and securities lending transactions302,780309,803(2)
Obligation to return securities received as collateral30,37723,95027
Trading liabilities219,523194,22513
Short-term borrowings (of which CHF 2,078 m reported at fair value as of March 31, 2006)20,98119,4728
Provisions from the insurance business155,713148,4145
Long-term debt (of which CHF 40,461 m reported at fair value as of March 31, 2006)141,509132,9756
Liabilities held for separate accounts13,54411,87514
Other liabilities107,13384,13527
Minority interests16,0707,847105
Total liabilities1,390,9911,296,9347
Common shares6246240
Additional paid-in capital24,71624,6390
Retained earnings27,24824,58411
Treasury shares, at cost(7,349)(5,823)26
Accumulated other comprehensive income/(loss)(2,609)(1,906)37
Total shareholders' equity42,63042,1181
Total liabilities and shareholders' equity1,433,6211,339,0527



For further information, please refer to our Quarterly Report 2006/Q1, which is available at: www.credit-suisse.com/results


Additional information
For additional information on Credit Suisse Group’s first-quarter results, please refer to the Group’s Quarterly Report 2006/Q1, as well as the Group’s slide presentation for analysts and the press, which are available on the Internet at: www.credit-suisse.com/results.

The Quarterly Report can be ordered at:

Credit Suisse ULLM 2 Uetlibergstrasse 231 8070 Zürich Fax: +41 44 332 7294

Cover photograph taken by John Wildgoose Mauriz Lang and Andreas Nedoma, Advisory & Fulfillment, Private Banking, Zürich

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 implement procedures properly; (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 brand; (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 acquired businesses successfully, and divestitures, including the ability to sell non-core assets; (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.

CREDIT SUISSE GROUP Paradeplatz 8 CH-8070 Zürich Switzerland www.credit-suisse.com
5520174 English

 






Credit Suisse Group
Quarterly Report 2006/Q1






Credit Suisse Group financial highlights 
in CHF m, except where indicated1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Consolidated statements of income     
Net revenues21,77914,13816,8975429
Income from continuing operations before taxes, minority interests, extraordinary items and cumulative effect of accounting changes4,7811,6862,83318469
Net income2,6041,1031,91013636
Return on equity     
Return on equity – Group24.4%11.2%20.6%
Return on equity – Banking27.4%10.8%22.9%
Return on equity – Insurance15.0%11.4%12.0%
Earnings per share     
Basic earnings per share, in CHF2.310.981.64
Diluted earnings per share, in CHF2.210.951.63
Cost/income ratio – Banking68.4%78.9%70.9%
Net new assets, in CHF bn31.17.815.4



in CHF m, except where indicated31.03.0631.12.05Change in % from 31.12.05
Assets under management, in CHF bn1,553.61,484.34.7
Consolidated balance sheets   
Total assets1,433,6211,339,0527
Shareholders' equity42,63042,1181
Consolidated BIS capital data   
Risk-weighted assets248,116232,8917
Tier 1 ratio10.8%11.3%
Total capital ratio13.5%13.7%
Number of employees   
Switzerland – Banking20,02620,194(1)
Switzerland – Insurance5,8785,928(1)
Outside Switzerland – Banking23,62124,370(3)
Outside Switzerland – Insurance12,99413,0310
Number of employees (full-time equivalents)62,51963,523(2)
Stock market data  
Share price per registered share, in CHF73.1567.009
High (closing price) year-to-date, in CHF78.4568.5015
Low (closing price) year-to-date, in CHF68.2546.8546
Share price per American Depositary Share, in USD55.8650.9510
Market capitalization, in CHF m80,90075,3997
Market capitalization, in USD m61,77857,3378
Book value per share, in CHF38.5537.433
Share information  
Shares issued 1,247,752,1661,247,752,1660
Treasury shares(141,809,733)(122,391,983)16
Shares outstanding1,105,942,4331,125,360,183(2)



Financial calendar 
  
Second quarter results 2006Wednesday, August 2, 2006
Third quarter results 2006Thursday, November 2, 2006



Cover: Mauriz Lang and Andreas Nedoma, Advisory & Fulfillment, Private Banking, Zürich Photographer: John Wildgoose



Contents




Credit Suisse Group
Contents
Enquiries
Message from the Chief Executive Officer
Dear shareholders, clients and colleagues
Outlook
Credit Suisse Group
Summary of segment results
Banking
Investment Banking
Private Banking
Asset Management
Insurance
Winterthur
Credit Suisse Group consolidated results
Net revenues
Total benefits, claims and credit losses
Total operating expenses
Income tax expense
Minority interests
Discontinued operations
Factors affecting results of operations
Credit Suisse Group structure
Investment Banking
Private Banking
Wealth Management
Corporate & Retail Banking
Asset Management
Winterthur
Life & Pensions
Non-Life
Other Activities
Investment results
Assets under management
Assets under management
Net new assets
Client assets
Capital
Credit Suisse Group
Credit Suisse
Risk management
Economic Risk Capital trends
Trading risks
Loan exposure
Condensed consolidated financial statements
Consolidated statements of income (unaudited)
Consolidated balance sheets (unaudited)
Consolidated statements of changes in shareholders’ equity (unaudited)
Comprehensive income (unaudited)
Consolidated statements of cash flows (unaudited)
Consolidated statements of cash flows – continued (unaudited)
Notes to the condensed consolidated financial statements – unaudited
Summary of significant accounting policies
Basis of presentation
New accounting pronouncements
EITF 04-5, FSP SOP 78-9-1 and EITF 96-16
SFAS 123R
SFAS 154
SFAS 155
SFAS 156
FSP FTB 85-4-1
Standards to be adopted in future periods
SOP 05-1
FSP FIN 46(R)-6
Segment reporting
Interest and dividend income and interest expense
Trading activities
Commissions and fees
Loans
Life settlement contracts
Restructuring liabilities
Accumulated other comprehensive income
Earnings per share
Pension
Guarantees and commitments
Guarantees
Disposal-related contingencies and other indemnifications
Disposal-related contingencies
Other indemnifications
Other commitments
Variable interest entities
Collateralized debt obligations
Commercial paper conduits
Financial intermediation
Litigation
Subsequent events
Information for investors
Foreign currency translation rates
Cautionary statement regarding forward-looking information



Enquiries
Credit Suisse Group Investor Relations Ian Roundell, Tel. +41 44 333 1748 Marc Buchheister, Tel. +41 44 333 3169 Manuela Luzio, Tel. +41 44 332 6098 Fax +41 44 333 2587

Credit Suisse Group Media Relations Charles Naylor, Andrés Luther Tel. +41 844 33 8844 Fax +41 44 333 8877





Oswald J. Grübel

Chief Executive Officer

Credit Suisse Group




Message from the Chief Executive Officer


Dear shareholders, clients and colleagues
The first quarter of 2006 provided an excellent environment in which to start operating as an integrated global bank. Positive market sentiment translated into strong client activity across our Investment Banking, Private Banking and Asset Management segments, and we were well positioned to benefit from favorable trading conditions.

Credit Suisse Group delivered record net income of CHF 2.6 billion in the first quarter, up 36% from the same period of last year. The Group’s return on equity was 24.4%, with a return on equity of 27.4% in the banking business and 15.0% in the insurance business.

We realigned our reporting structure following the launch of the integrated global bank on January 1, 2006. Our banking business now comprises three segments: Investment Banking, Private Banking and Asset Management. We are presenting our results according to this new structure for the first time.

In the first quarter we achieved strong growth in terms of both net revenues and net income. To ensure we can sustain this progress, we will focus on the development of our integrated business model, which places our clients at the center of all that we do and enables us to capitalize on our integrated global platform. Our plan is to grow our revenues both by creating synergies between our banking businesses and by expanding our global presence. In addition, we have identified opportunities to improve our productivity and implement a more efficient cost structure.

Investment Banking achieved a record result. This performance reflected a high level of client activity in a favorable market environment. Net revenues grew by 44% and income from continuing operations before taxes increased 68% to CHF 1.6 billion compared to the first quarter of 2005. We saw a strong performance in our emerging markets businesses, particularly in Asia and Latin America. While our focus on clients translated into sound revenue growth, we still see further potential to improve our productivity, increase revenues and reduce expenses. Our strategy is geared towards achieving global growth by further expanding our geographic footprint with a focus on key client segments.

Private Banking produced an excellent result in the first quarter with income from continuing operations before taxes of CHF 1.3 billion, as we benefited from very strong client activity and market momentum. Net revenues grew by 22% compared to the first quarter of 2005, primarily reflecting a significant increase in commissions and fees. Private Banking continued to invest in its international expansion with a particular focus on the dynamic markets in Asia, the Middle East and Eastern Europe, which are experiencing high levels of wealth creation. International growth in Private Banking is of central importance to the overall strategy of Credit Suisse. Private Banking recorded CHF 14.8 billion of net new assets in the first quarter. This strong asset generation was mainly driven by inflows from Switzerland, Europe and the Americas, representing an annualized growth rate of 7.1%.

Asset Management brings together our Group-wide expertise in traditional and alternative asset management. The business includes equity and fixed-income products as well as multi-asset class solution products that provide a range of balanced portfolio investments and services to institutional and private clients. In addition, Asset Management includes private equity, hedge funds, real estate, indexed products and funds of funds. With alternative assets under management of CHF 124.3 billion as of March 31, 2006, we are a global leader in these types of products. During the first quarter of 2006, Asset Management recorded income from continuing operations before taxes of CHF 234 million, representing an increase of 13% from the first quarter of 2005. Net revenues grew by 23%, driven primarily by stronger asset management revenues and higher private equity gains. <\!s >Net new asset inflows totaled CHF 17.0 billion in the first quarter.

Winterthur, our insurance segment, confirmed the strength of its underlying business, delivering further operational improvements and recording double-digit growth in total business volume, while reducing total operating expenses. Its income from continuing operations before taxes totaled CHF 505 million, up 21% from the same period of last year. Gross premiums written improved 7% to CHF 10,657 million and total business volume rose 11%, driven mainly by the strong development in the Life & Pensions business, which reported an 18% increase in total business volume versus the first quarter of 2005. In the Life & Pensions business, the expense ratio improved by 1.6 percentage points to 4.2%. In the Non-Life business, the combined ratio improved by 3.2 percentage points to 93.5%.

I am very pleased with our performance in the first three months of 2006. However, Credit Suisse is capable of delivering more. In addition to focusing on the needs of our clients, we will exploit revenue synergies, improve productivity and concentrate on cost efficiency in order to deliver sustained profitable growth. Through these targeted efforts, we will continue to build a bank that is committed to providing our clients with the best products and advice and to creating value for our shareholders.


Outlook
Global growth looks set to continue through 2007. We do not expect interest rates to increase substantially before the end of the year. We expect a stable US dollar against major currencies.

Yours sincerely

Oswald J. Grübel May 2006




Credit Suisse Group

Credit Suisse Group recorded net income of CHF 2,604 million in the first quarter of 2006, an increase of CHF 694 million, or 36%, from net income of CHF 1,910 million in the first quarter of 2005. All segments reported an improvement in income from continuing operations before taxes compared to the first quarter of 2005, driven largely by positive market conditions, strong trading volume and a continued favorable credit environment.




Summary of segment results


Banking

Investment Banking
Investment Banking reported income from continuing operations before taxes of CHF 1,564 million in the first quarter of 2006, an increase of CHF 632 million, or 68%, compared to the first quarter of 2005. Net revenues increased 44%, with all key business areas reporting stronger revenues as a result of positive market conditions and continued progress in delivering a more focused franchise. Total operating expenses increased 38%, largely reflecting higher performance-related compensation in line with the improved results.

Investment Banking reported pre-tax income margin of 27.2% compared to 23.3% in the first quarter of 2005, and 7.7% in the fourth quarter of 2005. The compensation/revenue ratio was 53.5% in the first quarter of 2006, a decline from the full-year 2005 level of 55.5%.


Private Banking
Private Banking reported income from continuing operations before taxes of CHF 1,308 million in the first quarter of 2006, an increase of CHF 334 million, or 34%, compared to CHF 974 million in the first quarter of 2005. Net revenues increased 22% from the first quarter of 2005 to CHF 3,110 million mainly driven by commissions and fees, which benefited from a high level of brokerage and product-issuing fees, supported by strong client activity.

Operating expenses increased 14% from the first quarter of 2005, primarily as a result of higher performance-related compensation, commission expense and international growth initiatives in the Wealth Management business.

Private Banking’s cost/income ratio declined to 58.2% in the first quarter of 2006, compared to 62.3% in the first quarter of 2005, as revenue growth exceeded the increase in expenses. Pre-tax income margin improved to 42.1% in the first quarter of 2006 compared to 38.4% in the first quarter of 2005.

Net new assets amounted to CHF 14.8 billion compared to CHF 14.1 billion in the first quarter of 2005.


Asset Management
Asset Management reported income from continuing operations before taxes of CHF 234 million in the first quarter of 2006, an increase of CHF 26 million, or 13%, compared to the first quarter of 2005. The increase of 23% in net revenues compared to the first quarter of 2005 reflected increases in asset management revenues and higher private equity gains.

Operating expenses increased 28% compared to the first quarter of 2005, reflecting higher performance-related compensation and other expenses. Pre-tax income margin was 31.0% in the first quarter of 2006 compared to 33.9% in the first quarter of 2005. Assets under management increased to CHF 619.6 billion as of March 31, 2006 from CHF 589.4 billion as of December 31, 2005, reflecting CHF 17.0 billion in net new assets and CHF 13.2 billion in market and foreign exchange-related movements.


Insurance

Winterthur
Winterthur continued to improve its performance, reporting income from continuing operations before taxes of CHF 505 million in the first quarter of 2006, an increase of 21% compared to the first quarter of 2005. This growth was the result of stronger operating results in both the Life & Pensions and Non-Life businesses.

Gross premiums written increased 7% and total business volume rose 11% over the first quarter of 2005, primarily as a result of growth in life premiums. The expense ratio for the Life & Pensions business declined to 4.2% in the first quarter of 2006 from 5.8% in the first quarter of 2005 as a result of decreased expenses and increased business volume. The combined ratio for the Non-Life business improved to 93.5%, compared to 96.7% in the first quarter of 2005, due to favorable claims development.

The following tables set forth an overview of segment results:
1Q2006, in CHF mInvestment BankingPrivate BankingAsset ManagementTotal BankingWinterthurCorporate Center1)Credit Suisse Group
Net revenues5,7573,1107569,62310,9151,24121,779
Policyholder benefits, claims and dividends9,358149,372
Provision for credit losses(55)(8)2(61)10(60)
Total benefits, claims and credit losses(55)(8)2(61)9,359149,312
Insurance underwriting, acquisition and administration expenses9980998
Banking compensation and benefits3,0801,0712614,412604,472
Other expenses1,1687392592,16648(3)2,211
Restructuring charges0000505
Total operating expenses4,2481,8105206,5781,051577,686
Income from continuing operations before taxes, minority interests, extraordinary items and cumulative effect of accounting changes1,5641,3082343,1065051,1702)4,781



1Q2005, in CHF mInvestment BankingPrivate BankingAsset ManagementTotal BankingWinterthurCorporate Center1)Credit Suisse Group
Net revenues3,9942,5396147,1479,48526516,897
Policyholder benefits, claims and dividends7,98407,984
Provision for credit losses(19)(16)0(35)(2)1(36)
Total benefits, claims and credit losses(19)(16)0(35)7,98217,948
Insurance underwriting, acquisition and administration expenses1,02631,029
Banking compensation and benefits2,1359062253,266303,296
Other expenses9466751811,80258(69)1,791
Restructuring charges00001(1)0
Total operating expenses3,0811,5814065,0681,085(37)6,116
Income from continuing operations before taxes, minority interests, extraordinary items and cumulative effect of accounting changes9329742082,1144183013)2,833
1) Includes consolidation eliminations, revenues and expenses from certain parent company investments and certain other revenues and expenses not allocated to the segments.
2) Includes minority interest income of CHF 1,275 million from the consolidation of certain private equity funds and other entities in which the Group does not have a significant economic interest in such income.
3) Includes minority interest income of CHF 272 million from the consolidation of certain private equity funds and other entities in which the Group does not have a significant economic interest in such income.



The following table presents the Group's condensed consolidated statement of income:
Credit Suisse Group
in CHF m1Q20061Q2005Change in % from 1Q2005
Net revenues21,77916,89729
Policyholder benefits, claims and dividends9,3727,98417
Provision for credit losses(60)(36)67
Total benefits, claims and credit losses9,3127,94817
Insurance underwriting, acquisition and administration expenses9981,029(3)
Banking compensation and benefits4,4723,29636
Other expenses2,2111,79123
Restructuring charges50
Total operating expenses7,6866,11626
Income from continuing operations before taxes, minority interests, extraordinary items and cumulative effect of accounting changes4,7812,83369
Income tax expense/(benefit)86062737
Minority interests1,316301337
Income from continuing operations2,6051,90537
Income/(loss) from discontinued operations, net of tax23(9)
Extraordinary items, net of tax(24)0
Cumulative effect of accounting changes, net of tax014
Net income2,6041,91036





Credit Suisse Group consolidated results

Credit Suisse Group recorded net income of CHF 2,604 million in the first quarter of 2006, an increase of CHF 694 million, or 36%, from net income of CHF 1,910 million in the first quarter of 2005. Basic earnings per share increased 41% to CHF 2.31 compared to the first quarter of 2005. The return on equity in the first quarter of 2006 was 24.4% compared to 20.6% in the first quarter of 2005.


Net revenues
The Group reported net revenues of CHF 21,779 million, an increase of CHF 4,882 million, or 29%, compared to the first quarter of 2005.

Net interest income was CHF 2,870 million in the first quarter of 2006, a decrease of CHF 178 million, or 6%, compared to the first quarter of 2005. This was driven largely by a decrease in Investment Banking of CHF 268 million, or 26%, due mainly to higher interest rates on deposits and long-term debt, which was partially offset by increased interest and dividend income in other segments as a result of the improved market environment.

Commissions and fees increased CHF 1,034 million, or 32%, reflecting significant increases in both underwriting and advisory and other fees in Investment Banking due to increased market activity. In addition, Private Banking reported an increase in commission and fees due to increased client activity and higher assets under management.

Trading revenues increased CHF 2,483 million, or 136%, to CHF 4,311 million, reflecting significant increases in both fixed income and equity trading revenues in Investment Banking. In addition, trading revenues in Winterthur were higher primarily due to market appreciation on assets backing unit-linked policies, which was credited to policyholder accounts.

Net realized gains/(losses) from investment securities decreased CHF 63 million, or 15%, to CHF 358 million as a result of lower realized gains at Winterthur.

Insurance net premiums earned increased CHF 608 million, or 8%, to CHF 8,204 million, compared to the first quarter of 2005, due primarily to the growth in the group life business in Switzerland.

Other revenues were CHF 1,765 million in the first quarter of 2006 compared to CHF 767 million in the first quarter of 2005. Other revenues in the first quarter of 2006 included CHF 1,284 million of minority interest revenues from consolidated private equity funds and other entities in which the Group does not have a significant economic interest in such revenues.


Total benefits, claims and credit losses
The Group reported a net release in provisions for credit losses of CHF 60 million in the first quarter of 2006 compared to a net release of CHF 36 million in the first quarter of 2005. This was largely due to a net release of CHF 55 million in Investment Banking, reflecting the continued favorable credit environment.

Compared to the first quarter of 2005, policyholder benefits, claims and dividends increased CHF 1,388 million, or 17%, to CHF 9,372 million. Investment income on unit-linked policies credited to policyholders’ accounts increased CHF 731 million. Higher traditional premium income resulted in an increase in provisions for policyholder benefits of CHF 506 million. An increase in dividends to policyholders of CHF 151 million, or 33%, was mainly driven by the improved results in the group life business in Switzerland.


Total operating expenses
The Group reported total operating expenses of CHF 7,686 million in the first quarter of 2006, an increase of CHF 1,570 million, or 26%, compared to the first quarter of 2005.

Insurance underwriting, acquisition and administration expenses were CHF 998 million, a decrease of CHF 31 million, or 3%, compared to the first quarter 2005, primarily reflecting lower amortization of deferred policy acquisition costs (DAC) and present value of future profits (PVFP).

Banking compensation and benefits increased CHF 1,176 million, or 36%, to CHF 4,472 million, primarily attributable to higher performance-related compensation, mainly in the Investment Banking and Private Banking segments, in line with the stronger results. For further details on share-based compensation expense, see “Notes to the condensed consolidated financial statements – unaudited – New accounting pronouncements.”

Other expenses amounted to CHF 2,211 million, an increase of CHF 420 million, or 23%, as a result of higher commission expenses due to higher activity levels, and costs associated with the branding implementation and related advertising costs. Compared to the fourth quarter of 2005, other expenses decreased CHF 518 million, or 19%. Other expenses in the fourth quarter of 2005 reflected integration costs associated with the Group’s organizational realignment.


Income tax expense
The Group recorded income tax expense of CHF 860 million compared to CHF 627 million in the first quarter of 2005, an increase of CHF 233 million, or 37%, reflecting the Group’s improved results.

The Group tax expense is not impacted by minority interest revenues and expenses from consolidated private equity and other entities in which the Group does not have a significant economic interest in such revenues and expenses. The amount of non-taxable income relating to these entities varies from one period to the next and in the first quarter of 2006 amounted to CHF 1,275 million. The Group’s effective tax rate in the first quarter of 2006 was 18.0%. Excluding the effect of non-taxable income from these investments, the Group’s effective tax rate in the first quarter of 2006 was 24.5%. The Group’s effective tax rate in the first quarter of 2005 was 22.1% and 24.5% excluding the effect of non-taxable income of CHF 272 million.


Minority interests
Credit Suisse Group’s net revenues and operating expenses reflect the consolidation of certain private equity funds and other entities in which the Group does not have a significant economic interest in such revenues and expenses. The consolidation of these entities does not affect net income as the amounts recorded in net revenues and expenses are offset by corresponding amounts reported as minority interests. This minority interest income, which amounted to CHF 1,275 million in the first quarter of 2006, is reported in the Corporate Center.

Minority interests were CHF 1,316 million in the first quarter of 2006, an increase of CHF 1,015 million compared to the first quarter of 2005. This increase was primarily due to revenues from certain private equity funds and other entities that were consolidated for the first time during the first quarter of 2006. For further details see “Notes to the condensed consolidated financial statements – unaudited – New accounting pronouncements.”


Discontinued operations
Income from discontinued operations of CHF 23 million was reported in the first quarter of 2006, resulting mainly from the sale of Winterthur’s Canadian subsidiary, Citadel General Assurance Company. In March 2006, Winterthur announced the sale of part of its Swiss health care business to Sanitas, subject to regulatory approval, and this business is included in discontinued operations.



Factors affecting results of operations

The market environment in the first quarter of 2006 was highly favorable, with improved conditions compared to the fourth quarter of 2005. Global equity markets had a strong quarter amid general investor optimism, despite persistently high energy prices and campaigns to raise interest rates by the central banks of the three largest economies. The Dow Jones Industrial Average recovered from its drop at the end of 2005, breaking a three-year streak of first-quarter declines. The S&P also performed well, while the NASDAQ composite index had its best first quarter since 2000.

European stocks maintained their strong run from 2005 into the quarter, helped by the strengthening Euro and increased merger activity. The Swiss Market Index increased 6% during the quarter. Most Asian markets kept up last year’s robust pace, though stocks in Japan declined in the beginning of the year but rebounded toward the end of the quarter.

The US economy did not show any evident signs of slowing, with healthy employment expansion and other economic data indicating continued strength. The US Federal Reserve continued to raise short-term interest rates at a measured pace. Both the Swiss National Bank and the European Central Bank also raised rates in the quarter. The Bank of Japan indicated its intention to increase rates for the first time in five years, creating investor anxiety over the potential ripple effects that stricter monetary policy could have on global markets.

Favorable trading conditions were observed in the quarter with a substantial increase in new issue activity, as well as positive trends in the commodities markets.

Industry-wide volume of announced mergers and acquisitions was higher than the first quarter of 2005, with financial sponsors continuing to play a major role. The volume of announced mergers and acquisitions was nearly triple the quarterly totals reached in 2002, when a cautious business climate brought deal-making to a halt. Europe, which typically trails the US in announced mergers and acquisitions dollar volumes, accounted for 40% of total quarterly volumes, almost double the European deal level in the same period of 2005.

Equity underwriting continued to be strong, with an increase in industry-wide equity capital markets activity compared to the first quarter of 2005 largely driven by financial sponsors and the technology sector. Global initial public offering underwriting volumes marked the best first quarter since 2000 and were generally driven by non-US issuers.

Industry-wide volumes for debt issuance increased compared to the first quarter of 2005 and to the prior quarter. Global investment grade debt underwriting reached record volumes in the quarter, while high-yield debt underwriting recovered from relatively low volumes in the previous three quarters, benefiting from strong global mergers and acquisitions activity.



















Credit Suisse Group structure

Effective January 1, 2006, Credit Suisse Group aligned its organizational structure to its new strategic orientation, which is to focus on banking and to hold its insurance business as a financial investment. As a result of this realignment, the Group’s banking business consists of three lines of business: Investment Banking, Private Banking and Asset Management. The newly integrated global bank was launched on January 1, 2006 and operates under a single Credit Suisse brand.

As an integrated bank, Credit Suisse is committed to delivering its combined experience and expertise to clients by drawing on its tradition of innovation across businesses and regions. With global segments dedicated to investment banking, private banking and asset management, Credit Suisse can now provide more comprehensive solutions for its clients, create synergies for revenue growth, increase efficiencies and grow shareholder value. A new regional structure will enable Credit Suisse to better leverage its resources and to develop cross-segmental strategies that span the Americas, Asia-Pacific, Europe, Middle East and Africa (EMEA) and Switzerland.

The Group’s segments are managed and reported on a pre-tax basis. Minority interest-related revenues and expenses resulting from the consolidation of certain private equity funds and other entities in which the Group does not have a significant economic interest in such revenues and expenses are reported in the Corporate Center. Net income is unaffected by the consolidation of these entities due to offsetting minority interests.

Prior period results presented in this Quarterly Report have been revised to reflect the operational and management structure in place during 2006.








Investment Banking

Investment Banking provides financial advisory, lending and capital raising services and sales and trading to institutional, corporate and government clients worldwide.


Investment Banking reported record income from continuing operations before taxes of CHF 1,564 million in the first quarter of 2006, an increase of CHF 632 million, or 68%, compared to the first quarter of 2005. Net revenues were at a record level of CHF 5,757 million, up 44% compared to the first quarter of 2005, reflecting higher revenues in all key business areas. Total operating expenses increased 38% compared to the first quarter of 2005, driven primarily by increased compensation accruals in line with improved results. The strengthening of the average rate of the US dollar against the Swiss franc by 11% from the first quarter of 2005 favorably impacted revenues and adversely affected expenses. These strong first quarter results reflect a highly favorable market environment as well as continued progress toward the Investment Banking strategy to deliver a more focused franchise.

Pre-tax income margin for the first quarter of 2006 increased to 27.2% from 23.3% in the first quarter of 2005 and 7.7% in the fourth quarter of 2005. Pre-tax return on average economic risk capital (ERC) was 42.0% compared to 35.8% in the first quarter of 2005 and 10.3% in the fourth quarter of 2005.

Net revenues were CHF 5,757 million in the first quarter of 2006, up CHF 1,763 million, or 44%, compared to the first quarter of 2005, reflecting a 63% increase in investment banking revenues and a 52% increase in trading revenues. These results reflected the improving franchise and a favorable market environment during the quarter. Net revenues increased 54% from the fourth quarter of 2005, due primarily to significant increases in trading revenues.

Provision for credit losses amounted to a release of CHF 55 million in the first quarter of 2006, reflecting the continued favorable credit environment for lenders. This compares to a credit release of CHF 19 million in the first quarter of 2005. Compared to December 31, 2005, total impaired loans increased CHF 69 million to CHF 581 million but remained stable as a percentage of total loans, and valuation allowances as a percentage of total impaired loans decreased 14.7 percentage points to 76.1% as of March 31, 2006.

Total operating expenses were CHF 4,248 million in the first quarter of 2006, up CHF 1,167 million, or 38%, versus the first quarter of 2005. Compensation and benefits increased CHF 945 million, or 44%, due primarily to increased compensation accruals in line with improved results. Consistent with its commitment to improve the cost/income ratio over time, Investment Banking had a compensation/revenue ratio of 53.5% in the first quarter of 2006, a decline from the full-year 2005 level of 55.5%. For information on share-based compensation expense, see “Notes to the condensed consolidated financial statements – unaudited – New accounting pronouncements.” Other expenses increased CHF 222 million, or 23%, from the first quarter of 2005, reflecting higher professional fees and costs associated with the branding implementation and related advertising costs. Total operating expenses increased 23% compared to the fourth quarter of 2005, due primarily to higher compensation accruals. This was offset in part by a CHF 158 million reduction in other expenses compared to the fourth quarter of 2005. The cost/income ratio declined to 73.8% in the first quarter of 2006 from 77.1% in the first quarter of 2005 and 92.7% in the fourth quarter of 2005. Improved productivity and the achievement of sustainable, long-term cost/income ratio reductions remain a priority for Investment Banking.

The following table presents the results of the Investment Banking segment:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Net interest income7484211,01678(26)
Commissions and fees1,9421,9841,327(2)46
Trading revenues and realized gains/(losses) from investment securities, net2,9431,2031,48414598
Other revenues124127167(2)(26)
Total noninterest revenues5,0093,3142,9785168
Net revenues5,7573,7353,9945444
Provision for credit losses(55)(13)(19)323189
Compensation and benefits3,0802,1362,1354444
Other expenses1,1681,326946(12)23
Total operating expenses4,2483,4623,0812338
Income from continuing operations before taxes1,56428693244768



Total investment banking revenues include debt underwriting, equity underwriting and advisory and other fees. In the first quarter of 2006, investment banking revenues totaled CHF 1,038 million, up CHF 403 million, or 63%, versus the first quarter of 2005, reflecting significant increases in both underwriting and advisory and other fees. In line with its strategy, Investment Banking continued to build on its industry-leading platform in the emerging markets. Among the many awards received in the quarter, Credit Suisse was named “Best Investment Bank in Latin America” by Latin Finance and was recognized for its leadership last year across investment banking products, particularly in the competitive equity underwriting market. This award provided further confirmation of Credit Suisse’s momentum in the region and commitment to providing best-in-class products throughout the emerging markets and globally.

Debt underwriting revenues in the first quarter of 2006 were CHF 456 million, up CHF 185 million, or 68%, compared to the first quarter of 2005. These results reflect higher revenues in leveraged finance, asset-backed securities and investment grade capital markets, with global industry-wide investment grade debt underwriting reaching record volumes and high-yield debt underwriting recovering from lower volumes in the three previous quarters, benefiting from strong global mergers and acquisitions activity. For the first quarter of 2006, Credit Suisse ranked third in global high-yield securities new issuance volumes. The high-yield market continued to be very competitive among the top firms. The overall leveraged finance franchise remained strong and corporate issuance continued the trend seen in 2005 with the shift from high-yield securities to the syndicated loan market. Investment Banking continued to focus on profitability rather than league table rankings in the investment grade capital markets business, consistent with its strategy to focus on high-margin products.

Equity underwriting revenues in the first quarter of 2006 were CHF 249 million, up CHF 110 million, or 79%, compared to the first quarter of 2005, reflecting higher industry-wide equity issuance activity, including higher convertible securities activity, and improved market share. Equity underwriting revenues decreased 27% compared to the strong fourth quarter of 2005, due primarily to lower global industry-wide equity issuances. Credit Suisse ranked third for the first quarter of 2006 in global initial public offering market share. Credit Suisse participated in a number of key equity transactions in the quarter across a broad range of industries and geographies, including a convertible bond issue for Bayer AG and initial public offerings for QinetiQ Group plc (privatization of a UK provider of defense technology and security solutions) and Partners Group (one of the largest independent global alternative asset managers). In addition, Credit Suisse was the sole global coordinator for the privatization of Grupo Aeroportuario del Pacifico, S.A. de C.V. (a network of 12 national airport assets), Mexico’s largest initial public offering in fifteen years.

The following table presents the revenue details of the Investment Banking segment:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Debt underwriting4563942711668
Equity underwriting249343139(27)79
Underwriting705737410(4)72
Advisory and other fees333448225(26)48
Total investment banking1,0381,185635(12)63
Fixed income2,7671,5662,1167731
Equity 2,0771,0211,06610395
Total trading 4,8442,5873,1828752
Other (including loan portfolio)(125)(37)177238
Net revenues5,7573,7353,9945444



Advisory and other fees of CHF 333 million in the first quarter of 2006 were up CHF 108 million, or 48%, compared to the first quarter of 2005, which was negatively impacted by lower announced transaction volumes in late 2004 and the timing of fees. Advisory and other fees declined 26% compared to the fourth quarter of 2005, due primarily to lower industry-wide completed mergers and acquisitions activity and lower market share. Credit Suisse ranked eleventh in global announced mergers and acquisitions and fourteenth in global completed mergers and acquisitions for the first quarter of 2006. Notable transactions announced in the first quarter of 2006 included Bayer AG’s acquisition of Schering AG, the sale of Pixar Animation Studios to the Walt Disney Company and the McClatchy Company’s acquisition of Knight-Ridder Inc.

Total trading revenues include results from fixed income and equity sales and trading. Total trading revenues for the first quarter of 2006 were CHF 4,844 million, up CHF 1,662 million, or 52%, versus the first quarter of 2005, due to strength in both fixed income and equity trading revenues and favorable market conditions. Total trading revenues increased 87% compared to the fourth quarter of 2005, reflecting improved results in both equity and fixed income trading.

Investment Banking’s average daily VaR in the first quarter of 2006 was CHF 72 million, up from CHF 67 million in the first quarter of 2005 and up from CHF 71 million in the fourth quarter of 2005. Average ERC increased CHF 4.7 billion versus the first quarter of 2005 and CHF 0.8 billion versus the fourth quarter of 2005, in line with the strategy to extend incremental capital to support high-growth and high-margin activities with notable increases in the leveraged finance, structured products and proprietary trading businesses.

Fixed income trading recorded revenues of CHF 2,767 million in the first quarter of 2006. These results were up CHF 651 million, or 31%, compared to the first quarter of 2005, reflecting strong results in leveraged finance, fixed income proprietary trading, Latin America trading and global foreign exchange positioning, partially offset by weaker results in other emerging markets trading, asset-backed securities and commercial mortgage-backed securities. Fixed income markets in the first quarter of 2006 were generally favorable, with narrowing credit spreads and a substantial increase in new issue activity. The results in the first quarter of 2005 reflected a CHF 125 million positive adjustment to the valuation of over-the-counter derivatives in connection with enhancements to bring Credit Suisse’s estimates of fair value closer to how the dealer market prices such derivatives. Compared to the fourth quarter of 2005, fixed income trading revenues increased by 77%, due primarily to higher revenues in leveraged finance, residential mortgage-backed securities, emerging markets trading, global foreign exchange positioning and fixed income proprietary trading, partially offset by weaker results in commercial mortgage-backed securities. Interest rate products performed well despite the flat yield curve. Consistent with the strategy to grow the commodities business, Credit Suisse announced during the quarter a strategic alliance with Glencore International to build a derivatives and structured products trading business in the oil and petroleum products market.

Equity trading revenues increased CHF 1,011 million, or 95%, and CHF 1,056 million, or 103%, to CHF 2,077 million, compared to the first quarter of 2005 and the fourth quarter of 2005, respectively. These significant increases reflected higher revenues across all major business areas amid strong markets. The customer flow businesses in cash and convertibles performed well across all regions. Equity proprietary trading exhibited strong results across most regions and strategies and equity derivatives benefited from increased deal flow and good trading results. Prime services continued to perform well with higher revenues in the quarter. Credit Suisse solidified its position as a Best in Class prime broker in the top tier of the market, according to the 2006 Global Custodian Prime Brokerage survey. In line with furthering Credit Suisse’s leading global emerging markets franchise, Credit Suisse and Standard Bank in South Africa announced a new joint venture known as Credit Suisse Standard Securities to focus on equities research, sales, trading and capital markets transactions in South Africa. The combination of Credit Suisse’s global equity franchise with Standard Bank’s local expertise will provide institutional clients with analysis and access to the South African equity market, which is a significant component of many emerging market indices.

Other (including loan portfolio) recorded a loss of CHF 125 million for the first quarter of 2006 compared to revenues of CHF 177 million in the first quarter of 2005, due primarily to lower gains from private equity-related investments not managed as part of Asset Management and credit default swap losses related to the loan portfolio. Investment Banking selectively hedges the loan book using credit default swaps, which recorded weaker performance as a result of tightening credit spreads.

The following tables present key information of the Investment Banking segment:
1Q20064Q20051Q2005
Cost/income ratio73.8%92.7%77.1%
Pre-tax income margin27.2%7.7%23.3%
Compensation/revenue ratio53.5%57.2%53.5%
Average economic risk capital, in CHF m15,87115,10911,221
Pre-tax return on average economic risk capital 1)42.0%10.3%35.8%
Average one-day, 99% VaR, in CHF m727167
1) Calculated using a return excluding funding costs for allocated goodwill.



31.03.0631.12.05Change in % from 31.12.05
Total loans39,65434,76214
Non-performing loans/total loans0.7%0.4%
Impaired loans/total loans1.5%1.5%






















Private Banking

Private Banking provides comprehensive advice and a broad range of investment products and services tailored to the complex needs of high-net-worth individuals all over the world through its Wealth Management business. In Switzerland, Private Banking provides banking products and services to business and retail clients through its Corporate & Retail Banking business.


Private Banking reported income from continuing operations before taxes of CHF 1,308 million in the first quarter of 2006, up CHF 334 million, or 34%, from the first quarter of 2005. The excellent 2006 first quarter results for Private Banking reflected significant improvement in net revenues, primarily from growth in commissions and fees and strong trading revenues. This is the result of very strong client activity in a favorable market environment. Private Banking successfully developed investment strategies relating to macro-trends in commodities, emerging markets, infrastructure and globalization using its industry-leading financial product and research expertise in these fields.

Private Banking net revenues were CHF 3,110 million in the first quarter of 2006, an increase of CHF 571 million, or 22%, compared to the first quarter of 2005, primarily as a result of significant increases in commissions and fees and trading revenues. Private Banking benefited from very strong client activity and capitalized on market momentum across all of its key business areas. Commissions and fees rose CHF 404 million, or 29%, from the first quarter of 2005, driven by revenues relating to considerably higher assets under management, higher brokerage volumes and increased product issuing fees. Private Banking's trading revenues increased CHF 136 million, or 81%, compared to the first quarter of 2005, as a result of high levels of client foreign exchange activity and gains from changes in the fair value of interest rate derivatives. Compared to the first quarter of 2005, net interest income increased CHF 44 million, or 5%, mainly driven by an increase in the liability margin. There was ongoing pressure on the asset margin, reflecting competitive markets. Interest rate-related assets and liabilities volumes rose during the first quarter of 2006, with a strong annualized growth rate of approximately 10% in Swiss residential mortgage volume.

Provision for credit losses in the first quarter of 2006 resulted in net releases of CHF 8 million compared to net releases of CHF 16 million in the first quarter of 2005, reflecting the continued favorable credit environment.

Private Banking's total operating expenses amounted to CHF 1,810 million for the first quarter of 2006, an increase of CHF 229 million, or 14%, compared to the first quarter of 2005. The main driver of the increase in expenses was higher compensation and benefits, which increased CHF 165 million, or 18%, compared to the first quarter of 2005. This increase primarily reflected higher performance-related compensation accruals in line with the strong quarterly performance and higher personnel expenses related to ongoing strategic growth in the Wealth Management business. This strategic growth included front office recruiting with a net increase of approximately 200 relationship managers since the beginning of 2005, predominantly outside Switzerland. Other expenses increased CHF 64 million, or 9%, mainly driven by costs associated with the branding implementation and related advertising costs and higher commission expenses related to the increase in commissions and fees.

Private Banking reported pre-tax income margin of 42.1% in the first quarter of 2006, 3.7 percentage points above the first quarter of 2005, with net revenue growth of 22% compared to a 14% increase in total operating expenses.

Assets under management increased from CHF 837.6 billion as of December 31, 2005 to CHF 882.7 billion as of March 31, 2006, reflecting net asset inflows of CHF 14.8 billion as well as market and foreign exchange-related movements of CHF 30.3 billion.

In April 2006, the Group announced the merger of its four independent private banks, Clariden Bank, BGP Banca di Gestione Patrimoniale, Bank Hofmann and Bank Leu as well as the securities dealer, Credit Suisse Fides, subject to regulatory and other approvals. This merger, which is expected to be effective as of the beginning of 2007, will create a single independently-operated bank named Clariden Leu, which will combine existing complementary product ranges to help achieve growth in Switzerland and selected international markets.

The following table presents the results of the Private Banking segment:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Net interest income96692492255
Commissions and fees1,8071,5351,4031829
Trading revenues and realized gains/(losses) from investment securities, net3032361672881
Other revenues34214762(28)
Total noninterest revenues2,1441,7921,6172033
Net revenues3,1102,7162,5391522
Provision for credit losses(8)(21)(16)(62)(50)
Compensation and benefits1,0718889062118
Other expenses739823675(10)9
Total operating expenses1,8101,7111,581614
Income from continuing operations before taxes1,3081,0269742734



The following tables present key information of the Private Banking segment:
1Q20064Q20051Q2005
Cost/income ratio58.2%63.0%62.3%
Pre-tax income margin42.1%37.8%38.4%
Net new assets, in CHF bn14.88.914.1
Average economic risk capital, in CHF m4,7784,7434,655
Pre-tax return on average economic risk capital 1)111.1%88.2%84.8%
1) Calculated using a return excluding funding costs for allocated goodwill.



 31.03.0631.12.05Change in % from 31.12.05
Assets under management, in CHF bn882.7837.65.4





Wealth Management

Income from continuing operations before taxes for the Wealth Management business was CHF 963 million, an increase of 50% compared to the first quarter of 2005. Net revenues totaled CHF 2,227 million in the first quarter of 2006, an increase of CHF 522 million, or 31%, compared to the first quarter of 2005. This increase was mainly due to high brokerage volumes, product sales, foreign exchange transaction activity from clients and revenues related to higher assets under management. Total operating expenses were CHF 1,264 million in the first quarter of 2006, an increase of CHF 205 million, or 19%, compared to the first quarter of 2005. The main drivers of the increase were higher performance-related compensation accruals in line with the strong quarterly performance and higher expenses related to strategic growth initiatives.

Pre-tax income margin was 43.2% in the first quarter of 2006, 5.5 percentage points above the first quarter of 2005. This increase reflected strong net revenue growth of 31% compared to an increase in operating expenses of 19%. For the first quarter of 2006, net new assets were CHF 14.5 billion, an increase of CHF 3.4 billion compared to the first quarter of 2005, representing an annualized growth rate of 8.4% and a rolling four quarter average of 7.8%. Net new assets in this business particularly benefited from strong inflows from Switzerland, Europe and the Americas. Gross margin on assets under management increased 7.4 basis points to 124.6 basis points compared to the first quarter of 2005. The transaction-based margin increased 12.1 basis points, benefiting from very strong client activity. The asset-based margin decreased 4.7 basis points, as average assets under management increased 23%, whereas interest income increased only 11% compared to the first quarter of 2005. In addition, the asset-based margin decreased due to the temporary dilution effect from the strong growth in net new assets in the first quarter of 2006.

The following table presents the results of the Wealth Management business:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Net interest income4583964111611
Total noninterest revenues1,7691,4721,2942037
Net revenues2,2271,8681,7051931
Provision for credit losses023
Compensation and benefits7355965892325 
Other expenses529567470(7)13
Total operating expenses1,2641,1631,059919
Income from continuing operations before taxes9637036433750



The following tables present key information of the Wealth Management business:
 1Q20064Q20051Q2005
Cost/income ratio56.8%62.3%62.1%
Pre-tax income margin43.2%37.6%37.7%
Net new assets, in CHF bn14.56.811.1
Net new asset growth (rolling four quarter average)7.8%7.5%5.3%
Net new asset growth8.4%4.0%7.8%
Gross margin on assets under management124.6 bp109.4 bp117.2 bp
of which asset-based73.1 bp70.3 bp77.8 bp
of which transaction-based51.5 bp39.1 bp39.4 bp
Net margin (pre-tax) on assets under management53.9 bp41.2 bp44.2 bp



 31.03.0631.12.05Change in % from 31.12.05
Assets under management, in CHF bn733.7693.35.8





Corporate & Retail Banking

Income from continuing operations before taxes for the Corporate & Retail Banking business was CHF 345 million, an increase of 4% compared to the first quarter of 2005. Net revenues totaled CHF 883 million in the first quarter of 2006, an increase of CHF 48 million, or 6%, compared to the first quarter of 2005. This increase mainly resulted from strong commissions and fees and increased trading revenues. Provision for credit losses in the first quarter of 2006 resulted in net releases of CHF 8 million, compared to net releases of CHF 19 million in the first quarter of 2005.

Pre-tax income margin was 39.1% in the first quarter of 2006, a decrease of 0.5 percentage points compared to the first quarter of 2005. This decrease was attributable to lower releases of credit provisions. The pre-tax return on average economic risk capital for the first quarter of 2006 was 48.4%, an increase of 6.6 percentage points compared to the first quarter of 2005. Average economic risk capital in the first quarter of 2006 was CHF 2,858 million, a decrease of 10% compared to the first quarter of 2005, which was primarily a result of the continued improvement in the risk profile of the lending portfolio.

The following table presents the results of the Corporate & Retail Banking business:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Net interest income508528512(4)(1)
Total noninterest revenues3753193231816
Net revenues88384783546
Provision for credit losses(8)(23)(19)(65)(58)
Compensation and benefits336291318156 
Other expenses210257205(18)2
Total operating expenses54654852304
Income from continuing operations before taxes34532233174



The following tables present key information of the Corporate & Retail Banking business:
 1Q20064Q20051Q2005
Cost/income ratio61.8%64.7%62.6%
Pre-tax income margin39.1%38.0%39.6%
Net new assets, in CHF bn0.32.13.0
Average economic risk capital, in CHF m2,8583,0413,168
Pre-tax return on average economic risk capital 1)48.4%42.4%41.8%
1) Calculated using a return excluding funding costs for allocated goodwill.      



 31.03.0631.12.05Change in % from 31.12.05
Assets under management, in CHF bn149.0144.33.3
Mortgage loans, in CHF bn67.266.31.4
Other loans, in CHF bn31.728.312.0
Non-performing loans/total loans1.6%1.9%(15.8)
Impaired loans/total loans2.2%2.6%(15.4)
Number of branches2152150.0



 












Wealth Management













Corporate & Retail Banking















Asset Management

Asset Management combines the discretionary investment management functions of Credit Suisse and offers products across a broad range of investment classes, from equity, fixed income and multi-asset class products to alternative investments such as real estate, hedge funds, private equity and volatility management. Asset Management manages portfolios, mutual funds and other investment vehicles for government, institutional and private clients. Products are offered through both proprietary and third party distribution channels as well as through other channels within Credit Suisse.


Asset Management’s income from continuing operations before taxes was CHF 234 million in the first <\!s >quarter of 2006, an increase of CHF 26 million, or 13%, compared to the first quarter of 2005, reflecting a slight increase in commission and fee income and strong private equity gains partly offset by higher total operating expenses.

First quarter 2006 net revenues were CHF 756 million, a 23% increase from the first quarter of 2005. Asset management revenues, which consist primarily of fees from asset management and fund administration services provided to clients, increased CHF 22 million, or 5%, compared to the first quarter of 2005, mainly driven by higher assets under management, which increased 29%, reflecting the inclusion of more than CHF 40 billion in low margin money market products in the fourth quarter of 2005. Asset management revenues were negatively impacted by lower trading revenues as a result of changes in the fair value of interest rate derivatives. Asset management revenues decreased slightly versus the fourth quarter of 2005 also due primarily to lower trading revenues. Private equity commissions and fees, which include private equity fund management fees, were stable compared to the first quarter of 2005.

In the first quarter of 2006, Asset Management recorded private equity gains of CHF 206 million, an increase of CHF 121 million, or 142%, compared to the first quarter of 2005. Private equity gains, which include gains on investments and performance-related carried interest, are cyclical in nature and in 2005 were considered to be at the high-end of the private equity cycle. The first quarter 2006 gains included CHF 85 million arising from the sale of assets in an emerging market investment fund.

The following table presents the results of the Asset Management segment:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Net interest income(19)(22)(13)(14)46
Commissions and fees56153952447
Trading revenues and realized gains/(losses) from investment securities, net(11)107
Other revenues22523096(2)134
Total noninterest revenues775779627(1)24
Net revenues756757614023
Provision for credit losses200
Compensation and benefits261252225416
Other expenses 259264181(2)43
of which commission expenses848663(2)33
Total operating expenses520516406128
Income from continuing operations before taxes234241208(3)13



The following table presents the revenue details of the Asset Management segment:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Asset management revenues494502472(2)5
Private equity commissions and fees56475719(2)
Net revenues before private equity gains55054952904
Private equity gains20620885(1)142
Net revenues756757614023



The following tables present key information of the Asset Management segment:
1Q20064Q20051Q2005
Cost/income ratio68.8%68.2%66.1%
Pre-tax income margin31.0%31.8%33.9%
Net new assets17.0(0.8)3.9
of which private equity2.41.30.1
of which advisory assets1.03.21.1
Gross margin on assets under management49.8 bp54.0 bp52.1 bp
Net margin (pre-tax) on assets under management15.4 bp17.2 bp17.6 bp
Average economic risk capital, in CHF m1,3451,311939
Pre-tax return on average economic risk capital 1)77.7%82.1%97.1%
1) Calculated using a return excluding funding costs for allocated goodwill.



in CHF bn31.03.0631.12.05Change in % from 31.12.05
Assets under management619.6589.45.1
Private equity investments2.01.442.9



Total operating expenses were CHF 520 million, an increase of CHF 114 million, or 28%, compared to the first quarter of 2005, reflecting higher performance-related compensation, higher commission expenses, costs associated with the realignment of the Asset Management business and costs associated with the branding implementation and related advertising costs.

Pre-tax income margin for the first quarter of 2006 was 31.0%, down 2.9 percentage points from the first quarter of 2005, with a 23% increase in net revenues offset by a 28% increase in total operating expenses. Compared to the fourth quarter of 2005, pre-tax income margin decreased 0.8 percentage points, reflecting stable net revenues and a slight increase in total operating expenses. Asset Management maintained its pre-tax income margin over the past year at a generally constant level, with the exception of the second quarter of 2005 which included exceptional private equity gains.

Gross margin on assets under management amounted to 49.8 basis points in the first quarter of 2006, down 2.3 basis points from the first quarter of 2005, due to the inclusion of more than CHF 40 billion in low margin money market products in the fourth quarter of 2005 and the decrease in trading revenues.

Pre-tax return on average economic risk capital was 77.7%, down 19.4 percentage points versus the first quarter of 2005. Average economic risk capital was higher in the first quarter of 2006, partly due to increased direct investments in alternative products.

Asset Management has launched a number of initiatives to increase profitability. These initiatives will focus on improving client orientation, reducing the overall cost base and specifically targeting geographic regions with low profitability.

The following table presents total assets under management of the Asset Management segment by asset class:
in CHF bn31.03.0631.12.05Change in % from 31.12.05
Money market71.464.111.4
Fixed income116.5110.05.9
Balanced255.6254.60.4
Equities51.847.78.6
Alternative 1)124.3113.010.0
of which private equity28.125.510.2
Total assets under management619.6589.45.1
of which discretionary assets527.9500.35.5
of which advisory assets91.789.12.9
1) Alternative include private equity, funds of hedge funds, real estate and indexed products.



Assets under management increased from CHF 589.4 billion as of December 31, 2005, to CHF 619.6 billion as of March 31, 2006, reflecting market and foreign exchange-related movements of CHF 13.2 billion and net new assets of CHF 17.0 billion. Net asset inflows of CHF 18.3 billion were partly offset by outflows of CHF 1.3 billion related to movements in the German real estate market. Net inflows were mainly from money market products, fixed income, multi-asset class solution products and alternative investments and originated mainly in the US and Europe. Of the net new assets recorded in the first quarter, approximately a third related to the reinvestment in the US of money market outflows in the fourth quarter of 2005.

Asset Management expects to benefit significantly from the integration of the banking businesses through focused collaboration within Credit Suisse. As a result of this focused collaboration, Asset Management won mandates with the help of the Investment Banking and Private Banking segments. In addition, Asset Management launched initiatives together with Private Banking to increase penetration of the private client base with discretionary mandates, which is expected to provide additional high-margin returns for Credit Suisse.

As part of its strategy to develop its presence in Asia, Credit Suisse announced an agreement to form a joint venture in South Korea with Woori Asset Management, in which Credit Suisse will acquire a 30% stake. The venture combines Woori Asset Management's strong onshore distribution network with Credit Suisse's expertise and knowledge of global markets.

In addition to proprietary channels in the US, registered funds of hedge funds are now being sold through third party retail channels, representing a significant growth opportunity for this product.




















Winterthur

Winterthur provides life, pension and non-life insurance products to private customers and small and medium-sized enterprises. The Life & Pensions business includes life insurance, savings, pensions and annuity products in Europe and Asia and the German health business. The Non-Life business includes motor, property, liability, accident and health insurance in Europe and in the US. Other Activities include centrally managed closed portfolios and related reinsurance.


In the first quarter of 2006, Winterthur showed strong operating performance, increasing its income from continuing operations before taxes 21% and recording double-digit growth in total business volume, while reducing total operating expenses compared to the first quarter of 2005. The announcement of the sale of part of its Swiss health business and the changes in its operational structure in Switzerland, including a partial restructuring of its administration and back-office functions and an increase in the number of its sales agents, reflected Winterthur's commitment to further optimize its business portfolio while strengthening its operating platforms.

Winterthur reported an increase in income from continuing operations before taxes of CHF 87 million, or 21%, to CHF 505 million, compared to CHF 418 million in the first quarter of 2005. The result reflected continued operating improvement, with a lower expense ratio in the Life & Pensions business and a lower combined ratio in the Non-Life business.

Gross premiums written amounted to CHF 10,657 million, an increase of CHF 702 million, or 7%, compared to the first quarter of 2005. Total business volume was CHF 12,737 million in the first quarter of 2006, an increase of CHF 1,287 million, or 11%, compared to the first quarter of 2005.

The following table presents the results of the Winterthur segment:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Gross premiums written10,6573,6579,9551917
Net premiums earned8,2044,4787,4898310
Net current investment income and net realized gains/(losses)2,5401,7231,8524737
Other revenues, including fees171180144(5)19
Net revenues10,9156,3819,4857115
Policyholder benefits incurred7,7024,1137,196877
Investment income credited to policyholder account balances1,041351324197221
Dividends to policyholders incurred6153284648833
Provisions for credit losses18(2)(88)
Total benefits, claims, dividends and credit losses9,3594,8007,9829517
Insurance underwriting and acquisition expenses 4614584971(7)
Administration expenses53751952932
Other expenses4811858(59)(17)
Restructuring charges54125400
Total operating expenses1,0511,0991,085(4)(3)
Income from continuing operations before taxes505482418521



The growth in total business volume was driven by the Life & Pensions business, which increased 18% to CHF 8,179 million as a result of a CHF 681 million, or 13%, growth in traditional business and a CHF 578 million, or 39%, growth in investment-type products. A strong increase in traditional single premiums in the group life business in Switzerland resulted from new contracts, transfers of vested benefits and additional contributions from individuals. The growth in traditional business was further driven by premium growth in the German life and health business as well as by an increase in annual premiums in Japan. The strong growth in investment-type products was mainly driven by the UK, reflecting both strong new business performance and an increased investment inflow in anticipation of UK tax law changes that will impact treatment of pension contributions effective in the second quarter of 2006. In addition, the growth in investment-type products reflected increased contributions from Asia and Central and Eastern Europe.

Gross premiums written in the Non-Life business remained stable at CHF 4,544 million, while net premiums earned grew 2% to CHF 2,107 million, benefiting from the strengthening of the US dollar. Premium growth was mainly achieved in Switzerland due to tariff increases and in Spain due to volume increases in the non-motor business. This growth was offset by a decline in Germany, resulting from both selective re-underwriting in the non-motor business and market pressure in the motor business. Management continues to take measures to address this market pressure, including the introduction of a new competitively priced product line in October 2005 and other product initiatives.

Net current investment income and net realized gains/(losses) in the first quarter of 2006 increased CHF 688 million, or 37%, compared to the first quarter of 2005, primarily reflecting the market appreciation on the underlying assets backing the unit-linked policies, which was credited to policyholders' accounts. Net investment return backing traditional life policies and non-life policies decreased 0.5 percentage points to 4.8% compared to the first quarter of 2005, reflecting a lower level of realized gains.

In the first quarter of 2006, total benefits, claims, dividends and credit losses increased CHF 1,377 million, or 17%, to CHF 9,359 million, compared to the first quarter of 2005. The increase in investment income credited to policyholder account balances amounted to CHF 717 million, primarily reflecting market appreciation. The higher traditional life premium income resulted in an increase in the change in provisions for policyholders' benefits incurred by CHF 506 million, or 7%. The increase in dividends to policyholders of CHF 151 million, or 33%, was mainly driven by the improved results in the group life business in Switzerland.

Total operating expenses in the first quarter of 2006 decreased CHF 34 million, or 3%, compared to the first quarter of 2005. Insurance underwriting and acquisition expenses decreased CHF 36 million, or 7%, reflecting lower amortization of deferred policy acquisition costs (DAC) and present value of future profits (PVFP). Administration expenses increased 2%, a lower rate than total business volume, reflecting sustained strict cost management, with efficiency improvements in mature markets offsetting increased expenses in growth markets.

The following table presents an overview of Winterthur's results by business:
Winterthur
1Q2006 ,in CHF mLife & PensionsNon-LifeOther ActivitiesCorporate Center / Eliminations1)1Q20061Q2005Change in % from 1Q2005
Total business volume8,1794,544194(180)12,73711,45011
Gross premiums written6,1094,544180(176)10,6579,9557
Net premiums earned6,0712,10727(1)8,2047,48910
Net revenues8,6022,31317(17)10,9159,48515
Total benefits, claims, dividends and credit losses7,9131,4034309,3597,98217
Total operating expenses37461116501,0511,085(3)
Income from continuing operations before taxes and minority interests315299(42)(67)50541821
Income tax expense14513210
Minority interests26254
Income from continuing operations33426128
Income/(loss) from discontinued operations, net of tax23(10)
Net income35725142
1) Includes Corporate Center expenses, certain financing costs and eliminations.



The following tables present key information of the Winterthur segment:
in CHF m, except where indicated1Q20064Q20051Q2005
Total business volume 1)12,7375,68311,450
Return on equity 2)15.0%11.4%12.0%
1) Gross premiums written from non-life and traditional life business and policyholder deposits on investment-type products.
2) Net income/(loss) divided by average shareholder's equity.



in CHF bn, except where indicated31.03.0631.12.05Change in % from 31.12.05
Assets under management 1)159.8153.34.2
Technical provisions152.2145.14.9
Shareholder's equity, in CHF m9,4019,695(3)
1) Based upon savings-related provisions for policyholders plus off-balance sheet assets for life, pension and health businesses and investment assets for non-life business.



Income from discontinued operations, net of tax, was CHF 23 million in the first quarter of 2006, compared to a loss of CHF 10 million in the first quarter of 2005. This increase was mainly driven by a gain on the sale of the Canadian subsidiary, Citadel General Assurance Company.

In March 2006, Winterthur announced the sale of part of its Swiss health insurance business to Sanitas, subject to regulatory approval. This business is reported as discontinued operations.

Net income for Winterthur in the first quarter of 2006 was CHF 357 million, an increase of 42% compared to the first quarter of 2005, representing a return on equity of 15.0%, up 3.0 percentage points.



Life & Pensions

The following table presents the results of the Life & Pensions business:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Gross premiums written6,1092,3335,42816213
Net premiums earned6,0712,3335,39116013
Net current investment income and net realized gains/(losses)2,3631,5681,6665142
Other revenues, including fees1681441381722
Net revenues8,6024,0457,19511320
Total benefits, claims, dividends and credit losses7,9133,4106,49413222
Insurance underwriting and acquisition expenses 97101149(4)(35)
Administration expenses249275255(9)(2)
Other expenses284422(36)27
Total operating expenses374420426(11)(12)
Income from continuing operations before taxes3152152754715



The following tables present key information of the Life & Pensions business:
in CHF m, except where indicated1Q20064Q20051Q2005
Total business volume 1)8,1794,3526,920
Expense ratio 2)4.2%8.6%5.8%
1) Gross premiums written from traditional business and policyholder deposits from investment-type products.
2) Insurance underwriting, acquisition and administration expenses as a percentage of total business volume.



in CHF bn31.03.0631.12.05Change in % from 31.12.05
Assets under management139.1131.95.5
Technical provisions132.0126.84.1



Life & Pensions reported income from continuing operations before taxes of CHF 315 million in the first quarter of 2006, up 15% versus CHF 275 million in the first quarter of 2005. The expense ratio for the Life & Pensions business was 4.2% in the first quarter of 2006, an improvement of 1.6 percentage points compared to 5.8% in the first quarter of 2005, as total business volume grew and expenses decreased. The expense ratio in the first quarter typically reflects the seasonally higher business volume from the group life business in Switzerland.



Non-Life

The following table presents the results of the Non-Life business:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Gross premiums written4,5441,3354,5222400
Net premiums earned2,1072,1142,06702
Net current investment income and net realized gains/(losses)18814320331(7)
Other revenues, including fees183916(54)13
Net revenues2,3132,2962,28611
Total benefits, claims, dividends and credit losses1,4031,3831,4471(3)
Insurance underwriting and acquisition expenses 36233734874
Administration expenses226228223(1)1
Other expenses2342(4)(45)
Total operating expenses61160756718
Income from continuing operations before taxes299306272(2)10



The following tables present key information of the Non-Life business:
in %1Q20064Q20051Q2005
Combined ratio 1)93.5%90.5%96.7%
Claims ratio 2)65.6%63.8%69.1%
Expense ratio 3)27.9%26.7%27.6%
1) Claims and annuities incurred and insurance underwriting, acquisition and administration expenses as a percentage of net premiums earned.
2) Claims and annuities incurred as a percentage of net premiums earned.
3) Insurance underwriting, acquisition and administration expenses as a percentage of net premiums earned.



 31.03.0631.12.05Change in % from 31.12.05 
Technical provisions, in CHF bn19.417.510.9



Non-Life reported income from continuing operations before taxes of CHF 299 million in the first quarter of 2006, up 10% versus CHF 272 million in the first quarter of 2005. The Non-Life business combined ratio was 93.5%, an improvement of 3.2 percentage points compared to the first quarter of 2005. The claims ratio decreased 3.5 percentage points to 65.6%, due to generally favorable claims development. The expense ratio increased 0.3 percentage points to 27.9%, driven by increased underwriting and acquisition expenses.



Other Activities

The following table presents the results of the Other Activities business:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Gross premiums written1801192(6)
Net premiums earned272931(7)(13)
Net revenues174932(65)(47)
Total benefits, claims, dividends and credit losses436422
Total operating expenses166449(75)(67)
Income from continuing operations before taxes(42)(21)(59)100(29)



Other Activities reported a loss from continuing operations before taxes of CHF 42 million in the first quarter of 2006, compared to a loss of CHF 59 million in the first quarter of 2005, as a result of lower project costs related to closed portfolio management.



Investment results

The following table presents the investment income of the Winterthur segment:
in CHF m1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Net current investment income1,2511,1021,219143
of which backing traditional life policies and non-life policies1,1651,0751,13683
     of which Life & Pensions 1,00593599571
     of which Non-Life 1571361391513
of which backing unit-linked liabilities general account8627832194
     of which Life & Pensions 8627832194
Realized gains/(losses), net1,289620633108104
of which backing traditional life policies and non-life policies38434146013(17)
     of which Life & Pensions 36832741313(11)
     of which Non-Life 32664433(50)
of which backing unit-linked liabilities general account905279173224423
     of which Life & Pensions 905279173224423
Net current investment income and net realized gains/(losses)2,540 1,7221,8524837 
of which backing traditional life policies and non-life policies1,5491,4161,5969(3)
of which backing unit-linked liabilities general account991306256224287
Investment income separate account311 149137109127 



The following table presents the investment return of the Winterthur segment:
 1Q20064Q20051Q2005Change in % from 4Q2005Change in % from 1Q2005
Net current investment return backing traditional life policies and non-life policies3.6%3.4%3.8%
Realized gains/(losses) backing traditional life policies and non-life policies1.2%1.0%1.5%
Net investment return backing traditional life and non-life policies4.8% 4.4%5.3% 
of which Life & Pensions5.0%4.6%5.5%
of which Non-Life4.0%3.0%4.8%



The following table presents Winterthur's investment portfolio:
 31.03.0631.12.05
in CHF mBook value Fair valueBook valueFair value
Debt securities - held-to-maturity 10,010 10,18710,05210,523
Debt securities - available-for-sale 77,679 77,67978,43178,431
Equity securities - available-for-sale 11,198 11,1988,8858,885
Debt securities - trading1,589 1,5891,6701,670
Equity securities - trading19,872 19,87217,98817,988
Mortgage loans10,192 10,46510,02710,540
Other loans5,570 5,7985,3205,775
Real estate8,777 9,0958,7008,940
Other investments993 9931,4211,421
Investments, general account145,880 146,876142,494144,173
Investments, separate account6,417 6,4175,9205,920
Total investments152,297 153,293148,414150,093
of which Life & Pensions133,050 133,768129,298130,597
of which Non-Life18,357 18,65118,30718,759
of which Other Activities   890   874   809   737  
Debt and equity securities - trading and loans - include CHF 18,705 million (December 31, 2005: CHF 17,109 million) held backing unit-linked liabilities in the general account.         



The following table presents detail of held-to-maturity and available-for-sale securities of the Winterthur investment portfolio:
 31.03.0631.12.05
in CHF mAmortized cost1)Gross unrealized gains Gross unrealized losses Fair value Amortized cost2)Gross unrealized gains Gross unrealized lossesFair value 
Debt securities – held-to-maturity10,0102143710,18710,052477610,523
Debt securities – available-for-sale 76,7551,9691,04577,67975,2743,52136478,431
Equity securities – available-for-sale 9,5961,6706811,1987,7311,200468,885
Securities – available-for-sale86,351 3,639 1,11388,87783,0054,72141087,316
1) Includes an increase of CHF 308 million to amortized cost due to hedge accounting basis adjustments.
2) Includes an increase of CHF 262 million to amortized cost due to hedge accounting basis adjustments.



 




Assets under management


Assets under management
Assets under management include assets which are placed with Group entities for investment purposes or, in the case of the insurance business, underlie insurance contracts. Assets under management include discretionary and advisory counterparty assets.

Discretionary assets are assets for which the customer fully transfers the discretionary power to a Group entity with a management mandate. Advisory assets include assets placed with the Group where the client is provided access to investment advice but retains discretion over investment decisions.

As of March 31, 2006, the Group’s assets under management amounted to CHF 1,553.6 billion, an increase of CHF 69.3 billion, or 4.7%, compared to December 31, 2005. Private Banking assets under management increased CHF 45.1 billion in the first quarter of 2006, while assets under management in Asset Management increased CHF 30.2 billion. This reflected strong growth in net new assets and positive market performance in both segments.

The following table sets forth information on assets under management:
in CHF bn31.03.0631.12.05Change in % from 31.12.05
Investment Banking14.314.5(1.4)
Private Banking882.7837.65.4
Asset Management619.6589.45.1
Winterthur159.8153.34.2
Less assets managed on behalf of other segments(122.8)(110.5)11.1
Credit Suisse Group1,553.61,484.34.7
of which discretionary772.9742.54.1
of which advisory780.7741.85.2




Net new assets
Net new assets include individual cash and securities transactions and new or repaid loans. Interest and dividend income credited to clients, commissions, interest and fees charged for banking services are not considered as they do not reflect success in acquiring assets under management. Changes due to currency and market movements as well as asset inflows and outflows due to the acquisition or divestiture of businesses are not part of net new assets.

Net new assets were CHF 31.1 billion in the first quarter of 2006, an increase of CHF 23.3 billion compared to the fourth quarter of 2005. Strong growth rates in Switzerland, Europe and the Americas contributed to net new assets of CHF 14.8 billion in Private Banking. The Asset Management segment reported net new assets of CHF 17.0 billion, mainly in money market products, fixed income, multi-asset class solution products and alternative investments, and originated primarily from the US and Europe.

The following table sets forth information on net new assets:
in CHF bn1Q20064Q20051Q2005
Investment Banking0.20.0(0.5)
Private Banking14.88.914.1
Asset Management17.0(0.8)3.9
Winterthur3.7(0.2)2.8
Less net new assets managed on behalf of other segments(4.6)(0.1)(4.9)
Credit Suisse Group31.17.815.4




Client assets
Client assets is a broader measure than assets under management as it includes transactional and custody accounts (assets held solely for transaction-related or safekeeping/custody purposes) and assets of corporate clients and public institutions used primarily for cash management or transaction-related purposes.

The following table sets forth information on client assets:
in CHF bn31.03.0631.12.05Change in % from 31.12.05
Investment Banking73.669.65.7
Private Banking1,000.4951.95.1
Asset Management626.1596.05.1
Winterthur159.8153.34.2
Less client assets managed on behalf of other segments(122.8)(110.5)11.1
Credit Suisse Group1,737.11,660.34.6







 




Capital


Credit Suisse Group
The Group’s consolidated BIS tier 1 ratio was 10.8% as of March 31, 2006, down from 11.3% as of December 31, 2005. The Group continued the share buyback program approved by the Annual General Meeting in 2005, repurchasing 34.1 million common shares in the amount of CHF 1.9 billion since the initiation of the program through March 31, 2006. In the first quarter of 2006, 7.9 million common shares in the amount of CHF 580 million were repurchased. Risk-weighted assets increased compared to the fourth quarter of 2005, primarily reflecting increased commercial and private lending as well as securitization activities in the first quarter of 2006. Tier 1 capital increased CHF 430 million with the contribution of first quarter net income offset by the deduction for shares repurchased through the Group’s share buyback program, dividend accruals and disallowed unrealized gains. The Group’s shareholders’ equity of CHF 42.1 billion as of December 31, 2005 increased to CHF 42.6 billion as of March 31, 2006.

Winterthur’s capital position decreased slightly with shareholder’s equity of CHF 9.4 billion as of March 31, 2006 compared to CHF 9.7 billion as of December 31, 2005. Winterthur’s consolidated EU solvency ratio as of December 31, 2005 was 229% compared to 192% as of December 31, 2004.


Credit Suisse
Credit Suisse’s consolidated BIS tier 1 ratio was 9.4% as of March 31, 2006, down from 9.6% as of December 31, 2005. Risk-weighted assets increased compared to the fourth quarter of 2005, primarily reflecting increased commercial and private lending as well as securitization activities in the first quarter of 2006. Tier 1 capital increased CHF 1,173 million with the contribution of first quarter net income, partially offset by dividend accruals. The shareholder’s equity of Credit Suisse decreased from CHF 25.8 billion as of December 31, 2005, to CHF 25.6 billion as of March 31, 2006.

The following table sets forth details of BIS data (risk-weighted assets, capital and ratios):    
 Credit Suisse GroupCredit Suisse
in CHF m, except where indicated31.03.0631.12.0531.03.0631.12.05
Risk-weighted positions 233,649218,899217,215200,904
Market risk equivalents14,46713,99213,28712,499
Risk-weighted assets 248,116232,891230,502213,403
   
Total shareholders' equity42,63042,11825,63825,788
Reconciliation to Tier 1 capital:  
Non-cumulative perpetual preferred securities2,1792,1701,0491,044
Investment in insurance entities(4,056)(4,179)(12)(12)
Adjustments for goodwill, minority interests, disallowed unrealized gains on fair value measurement, own shares and dividend accruals(13,975)(13,761)(4,939)(6,257)
Tier 1 capital26,77826,34821,73620,563
   
Tier 1 ratio10.8%11.3%9.4%9.6%
Total capital33,60931,91832,04129,815
Total capital ratio13.5%13.7%13.9%14.0%
The Swiss Federal Banking Commission (EBK) has advised that Credit Suisse Group and Credit Suisse may continue to include as Tier 1 capital CHF 2.2 billion and CHF 6.5 billion, respectively, as of March 31, 2006 (December 31, 2005: CHF 2.2 billion and CHF 6.5 billion, respectively) of equity from special purpose entities that are deconsolidated under FIN 46R.    






Risk management

Credit Suisse Group’s overall position risk, measured on the basis of Economic Risk Capital (ERC), increased 10% in the first quarter of 2006 compared with the previous quarter. The more narrowly defined average Value-at-Risk (VaR) for the Group’s trading books increased 6% in the first quarter of 2006 to CHF 73 million due to an increase in equity and credit spread exposures. Loan portfolios across the Group continued to benefit from a favorable credit environment, resulting in a net release of credit provisions of CHF 60 million in the first quarter of 2006.



Economic Risk Capital trends
The Group assesses risk and economic capital adequacy using its Economic Risk Capital (ERC) model. ERC is designed to measure all quantifiable risks associated with the Group’s activities on a consistent and comprehensive basis. The Group assigns ERC for position risk, operational risk and expense risk. Position risk measures the potential annual economic loss associated with market, credit and insurance exposures that is exceeded with a given, small probability (1% for risk management purposes, 0.03% for capital management purposes). It is not a measure of the potential impact on reported earnings, since non-trading activities are generally not marked-to-market through earnings.

In the first quarter of 2006, the Group’s one-year, 99% position risk ERC increased 10% compared to the fourth quarter of 2005, mainly due to increased equity investments and increased credit spread ERC.

In the first quarter of 2006, the contribution of the banking segments (Investment Banking, Private Banking and Asset Management) to the Group’s ERC decreased from 69% to 67%. The contribution of the Corporate Center remained 2% and Winterthur’s contribution increased from 29% to 31%.

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The following table sets forth the Group's risk profile, using ERC as the common risk measure:
 
  Change in % fromChange analysis: brief summary
in CHF m31.03.0631.12.0531.03.06 vs 31.12.05
Interest Rate ERC, Credit Spread ERC & Foreign Exchange Rate ERC5,31613%Higher credit spread risk in Investment Banking and Winterthur.
Equity Investment ERC4,43525%