credit-suisse Annual Report Part 2
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credit-suisse Annual Report Part 2 credit-suisse Annual Report Part 2 Document Transcript

  • FINANCIAL REPORT 44 Comments to the financial statements 46 Consolidated income statement 48 Consolidated balance sheet 50 Consolidated statement of source and application of funds 51 Consolidated off-balance sheet business 53 Notes to the consolidated financial statements 61 Notes to the banking and insurance business 63 Notes to the banking business 65 Notes to the insurance business 68 Notes to the consolidated financial statements 93 Report of the Group’s auditors 94 Income statement (parent company) 95 Balance sheet before allocation of retained earnings (parent company) 96 Notes to the financial statements (parent company) 100 Proposed allocation of retained earnings 101 Report of the statutory auditors 43
  • COMMENTS TO THE FINANCIAL STATEMENTS Credit Suisse Group’s Annual Report contains two sets of financial statements: the consolidated annual financial statements of Credit Suisse Group at 31 December 1997 and the annual financial statements of Credit Suisse Group, parent company, for the financial year ended 31 March 1998. It is the latter set of statements which forms the basis for resolutions voted on by the Annual General Meeting of Shareholders. Both sets of statements have been examined by independent auditors. Their reports are pre- sented on pages 93 and 101. The consolidated financial statements include the Credit Suisse First Boston sub- group, the Credit Suisse sub-group, Neue Aargauer Bank, the Private Banks, the Winterthur sub-group, CS Life and the financial subsidiaries and long-term holdings of Credit Suisse Group. The consolidated financial statements include individual reporting for the banking and insurance units. The merger of “Winterthur” Swiss Insurance Company (Winterthur) was treated as a “pooling of interests”; its financial results have been in- cluded in the consolidated income statement and balance sheet. Income statement and balance sheet notes relating specifically to insurance activity are also detailed separately. The closing of the announced merger with Winterthur oc- The 1997 financial year curred on 15 December 1997. As at 31 December 1997, Credit Suisse Group owned 99.9% of the outstanding shares of Winterthur. Former Winterthur shareholders re- ceived 7.3 shares of Credit Suisse Group for each registered share of “Winterthur” Swiss Insurance Company. As a result, the share capital of Credit Suisse Group was increased by the issuance of 70,714,107 registered shares at a nominal value of CHF 20 per share. Winterthur is included in the consolidated reporting of Credit Suisse Group under the “pooling of interests method”. As of the 1997 financial year, Credit Suisse Group applied a new dynamic provisioning method for the management of credit risks. It was originally intended to include the dynamic credit provisions in the annual income statement. However, the final regulatory guidelines for applying dynamic credit provisioning methods to the finan- cial statements has led to the decision that this method will be used only for management accounting. Because the credit situation in the Swiss market remains difficult, especially in the real estate area, it was necessary to make a provision of around CHF 1.1 bn for pre-existing non-performing loans. In 1997, CHF 1,186 m was released from the reserves for general banking risks and included in the income state- ment as extraordinary income. Extraordinary expense of CHF 1,629 m was also added to the reserves for general banking risks during the year. A reserve of CHF 1 bn was created in 1996 for the expected restructuring costs of Credit Suisse Group. Costs of CHF 298 m in 1996 and CHF 450 m in 1997 were incurred and charged to this reserve. Additional obligations incurred in connection with the restructuring required an additional extraordinary provision of CHF 349 m, leaving a reserve balance of CHF 467 m as at 31 December 1997. At Credit Suisse First Boston, an extraordinary provision of CHF 332 m (CHF 237 m after tax) was created for expected restructuring costs associated with the acquisition of the European investment banking business of BZW. An extraordinary provision of CHF 115 m (CHF 82 m after tax) was created to implement the new organisational structure at Bank Leu, which became effective 1 January 1998. An extraordinary provision of 44
  • CHF 488 m (CHF 401 m after tax) was created for technology, primarily for expenses related to the additional data processing requirements associated with the introduction of the euro and the modification of systems to prepare for the year 2000. The provision consisted of CHF 220 m (CHF 147 m after tax) for the international banking business, CHF 198 m for the Swiss banking business and CHF 70 m (CHF 56 m after tax) for the insurance business. A provision of CHF 375 m (CHF 300 m after tax) was made for integration and restructuring costs for the insurance business. Total extraordinary restructuring costs amounted to CHF 1,659 m (CHF 1,369 m after tax). The sale of Electrowatt Ltd. contracted last year was completed on 29 December 1997. After obtaining an additional 53.3% of the remaining Electrowatt Ltd. shares existing in the market through a public offering at a price of CHF 550 per share, Credit Suisse Group held 99% of the outstanding shares. These shares were tendered to the buyers, Siemens AG and an energy consortium consisting of Nordostschweizerische Kraftwerke, Bayernwerk AG, Energie Baden-Württemberg AG and Credit Suisse Group. Credit Suisse Group holds a 20% stake in this consortium. On 30 September 1997, Fides Informatik was sold to EDS, an international infor- mation services firm. Credit Suisse Group retained a 67% stake in Fides Information Services, which was spun off from Fides Informatik at the same time and which is active in electronic banking and financial information services. The annual financial statement for Credit Suisse Asset Management International Fund Holding, Zurich, includes approximately CHF 29 m in non-recurring after-tax pro- fit, which is a result of moving the closing dates of all the company’s mutual fund management subsidiaries to 31 December 1997. A provision of CHF 27.5 m was made for Göhner Merkur to reflect continued stagnating economic activity in Switzerland and pressure from the increased number of foreclosures in the real estate market. CS Life has been fully consolidated in the income statement for 1997 and prior years. Events after year-end As of 1 January 1998, the business activities of Bank Leu Ltd. were focused on private banking. Commercial relationships and individual customers were transferred to the responsibility of Credit Suisse. 45
  • CONSOLIDATED INCOME STATEMENT 1997 Notes 1996 Change Change in CHF m (p. 61 ff) in CHF m in CHF m in % RESULT FROM INTEREST BUSINESS Interest and discount income 18,761 17,829 932 5 Interest and dividend income from trading portfolios 5,764 6,108 –344 –6 Interest and dividend income from financial investments from banking activities 406 318 88 28 Interest expenses from banking activities 20,352 20,767 –415 –2 4,579 3,488 1,091 31 NET INTEREST INCOME 1, 2, 6 RESULT FROM COMMISSION AND SERVICE FEE BUSINESS Commission income from lending activities 387 313 74 24 Commissions from securities and investment transactions 6,389 4,751 1,638 34 Commissions from other services 307 320 –13 –4 Commission expenses 491 442 49 11 6,592 4,942 1,650 33 NET COMMISSION AND SERVICE FEE INCOME 1, 2 5,312 3,901 1,411 36 NET TRADING INCOME 1, 2, 7 NET INCOME FROM INSURANCE BUSINESS Premiums earned, net 25,258 24,307 951 4 Claims incurred and actuarial provisions 25,557 23,866 1,691 7 Commission expenses, net 2,277 2,192 85 4 Investment income from insurance business 7,395 5,890 1,505 26 4,819 4,139 680 16 NET INCOME FROM INSURANCE BUSINESS 1, 2, 9, 10 OTHER ORDINARY INCOME Income from the sale of financial investments 82 256 –174 –68 Income from investment activities 81 130 –49 –38 – of which from participations valued according to the equity method 30 77 –47 –61 – of which from other non-consolidated participations 51 53 –2 –4 Real estate income 45 27 18 67 Sundry ordinary income 407 442 –35 –8 Sundry ordinary expenses 893 658 235 36 –278 197 –475 – OTHER ORDINARY INCOME 1, 2 21,024 16,667 4,357 26 NET OPERATING INCOME 1, 2 46
  • 1997 Notes 1996 Change Change in CHF m (p. 61 ff) in CHF m in CHF m in % 21,024 16,667 4,357 26 NET OPERATING INCOME CONTINUED 1, 2 Personnel expenses 9,901 8,087 1,814 22 Other operating expenses 3,847 3,244 603 19 13,748 11,331 2,417 21 TOTAL OPERATING EXPENSES 1, 2 7,276 5,336 1,940 36 GROSS OPERATING PROFIT Depreciation and write-offs on non-current assets 590 676 –86 –13 1 Valuation adjustments, provisions and losses from banking business 2,624 1,251 1,373 110 1, 8 3,214 1,927 1,287 67 DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES GROUP PROFIT BEFORE 4,062 3,409 653 19 EXTRAORDINARY ITEMS AND TAXES Extraordinary income 1,323 1,340 –17 –1 1, 3 Extraordinary expenses 3,534 5,407 –1,873 –35 1, 4 Taxes 1,250 1,172 78 7 1, 2 601 –1,830 2,431 – GROUP PROFIT/GROUP LOSS Minority interests 204 252 –48 –19 397 –2,082 2,479 – NET PROFIT/NET LOSS (AFTER MINORITY INTERESTS) 47
  • CONSOLIDATED BALANCE SHEET 31 Dec. 1997 Notes 31 Dec. 1996 Change Change in CHF m (p. 61 ff) in CHF m in CHF m in % ASSETS Cash and other liquid assets 3,404 2,932 472 16 33 Money market claims 24,013 20,077 3,936 20 12, 33 Due from banks 145,778 122,645 23,133 19 33 Claims from the insurance business 6,424 6,017 407 7 33 Due from customers 144,491 159,291 –14,800 –9 13, 14, 33, 34 Mortgages 78,904 78,073 831 1 14, 33 Securities and precious metals trading portfolios 103,826 85,380 18,446 22 15, 16, 33 Financial investments from the banking business 15,770 11,581 4,189 36 17, 19 Investments from the insurance business 93,387 81,113 12,274 15 18, 19 Non-consolidated participations 1,192 1,990 –798 –40 20, 21 Tangible fixed assets 6,271 6,239 32 1 21 Intangible assets 181 110 71 65 21 Accrued income and prepaid expenses 9,419 7,503 1,916 26 Other assets 56,508 41,445 15,063 36 23 689,568 624,396 65,172 10 TOTAL ASSETS 24, 25, 35, 36 Total subordinated claims 2,566 1,616 950 59 Total due from non-consolidated participations 43 128 –85 –66 48
  • 31 Dec. 1997 Notes 31 Dec.1996 Change Change in CHF m (p. 61 ff) in CHF m in CHF in % LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities in respect of money market paper 12,520 11,236 1,284 11 33 Due to banks 180,236 194,572 –14,336 –7 33 Commitments from the insurance business 6,045 5,012 1,033 21 33 Due to customers in savings and investment accounts 48,533 47,296 1,237 3 33 Due to customers, other 195,571 166,563 29,008 17 26, 33 Medium-term notes (cash bonds) 7,216 8,681 –1,465 –17 33 Bonds and mortgage-backed bonds 45,594 27,580 18,014 65 27, 33 Accrued expenses and deferred income 11,677 8,749 2,928 33 Other liabilities 58,168 43,176 14,992 35 28 Valuation adjustments and provisions 7,129 4,820 2,309 48 29 Technical provisions for the insurance business 91,228 83,850 7,378 9 30 Reserves for general banking risks 2,890 2,388 502 21 29, 31 Share capital 5,322 3,886 1,436 37 31 Capital reserve 9,366 10,200 –834 –8 31 Revaluation reserves from the insurance business 5,337 3,163 2,174 69 31 Retained earnings 334 3,462 –3,128 –90 31 Minority interests in shareholders’ equity 1,801 1,592 209 13 31 Group profit/Group loss 601 –1,830 2,431 – 31 – of which minority interests 204 252 –48 –19 31 Total shareholders’ equity 25,651 22,861 2,790 12 31 689,568 624,396 65,172 10 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 35, 36 Total subordinated liabilities 16,636 13,397 3,239 24 Total liabilities due to non-consolidated participations 567 263 304 116 49
  • CONSOLIDATED STATEMENT OF SOURCE AND APPLICATION OF FUNDS 1997 1996 Source Application Net in/outflow Source Application Net in/outflow in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m FROM OPERATIONS, –24 365 EQUITY TRANSACTIONS AND INVESTMENTS 8,317 7,672 OPERATING ACTIVITIES Net profit for the year/net loss for the year 601 1,830 Provisions for credit and other risks 2,617 1,132 Losses 133 180 Provisions for taxes 1,250 1,101 Depreciation and write-offs 617 661 Creation of extraordinary valuation adjustments and provisions 3,330 5,016 Extraordinary income 1,213 0 Income from participations valued according to the equity method 30 77 Accrued income and prepaid expenses 1,916 1,692 Accrued expenses and deferred income 2,928 3,181 1,746 551 EQUITY TRANSACTIONS Share capital 1,436 115 Capital surplus and retained earnings 1,358 582 Dividends paid 1,114 1,055 Foreign exchange differences 38 1,164 Minority interests 104 255 93 –486 INVESTMENTS IN LONG-TERM ASSETS Investments in companies 813 411 Real estate 280 209 Other tangible and intangible fixed assets 1,000 688 FINANCIAL INVESTMENTS, PROVISIONS, –7,372 OTHER ASSETS AND LIABILITIES –10,180 Investments from banking business 4,189 4,263 Investments from insurance business 12,274 16,170 Valuation adjustments and provisions 1,198 866 Technical provisions1 7,378 13,767 Other assets 14,889 13,763 Other liabilities 14,992 13,923 18,942 23,646 FROM OTHER BALANCE SHEET ITEMS –15,833 –71,422 ASSETS Money market claims 3,936 6,723 Due from banks 23,133 8,566 Claims from the insurance business 407 929 Due from customers 13,870 47,740 Mortgages 2,227 7,464 34,775 95,068 LIABILITIES Liabilities in respect of money market paper 1,284 4,488 Due to banks 14,336 49,032 Commitments from the insurance business 1,033 919 Due to customers in savings and inv. accounts 1,237 3,462 Due to customers, other 29,008 36,767 Bonds and medium-term notes 16,549 400 18,918 24,011 CHANGE IN LIQUID ASSETS Securities and precious metals trading portfolios 18,446 23,156 Cash and accounts with central banks 472 855 1 In line with insurance practice, the change in the technical provisions is shown as a total amount under changes in provisions affecting the cash flow. 50
  • CONSOLIDATED OFF-BALANCE SHEET BUSINESS 31 Dec. 1997 31 Dec. 1996 Change Change in CHF m in CHF m in CHF m in % CONTINGENT LIABILITIES Credit guarantees in form of avals, guarantees and indemnity liabilities 9,852 9,703 149 2 Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees 4,965 6,738 –1,773 –26 Irrevocable commitments in respect of documentary credits 3,112 3,491 –379 –11 Other contingent liabilities 5,508 3,320 2,188 66 23,437 23,252 185 1 TOTAL CONTINGENT LIABILITIES 64,490 59,545 4,945 8 IRREVOCABLE COMMITMENTS 63 76 –13 –17 LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY 473 510 –37 –7 CONFIRMED CREDITS Mortgage Other Without Total collateral collateral collateral ANALYSIS OF COLLATERAL AT 31 DECEMBER 1997 in CHF m in CHF m in CHF m in CHF m CONTINGENT LIABILITIES Credit guarantees in form of avals, guarantees and indemnity liabilities 9,852 37 4,586 5,229 Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees 4,965 161 1,366 3,438 Irrevocable commitments in respect of documentary credits 3,112 0 313 2,799 Other contingent liabilities 5,508 108 546 4,854 306 6,811 16,320 23,437 TOTAL CONTINGENT LIABILITIES At 31 December 1996 221 7,431 15,600 23,252 383 25,151 38,956 64,490 IRREVOCABLE COMMITMENTS At 31 December 1996 160 25,139 34,246 59,545 0 0 63 63 LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY At 31 December 1996 0 0 76 76 10 463 0 473 CONFIRMED CREDITS At 31 December 1996 0 0 510 510 31 Dec. 1997 31 Dec. 1996 Change Change in CHF m in CHF m in CHF m in % 32,581 29,162 3,419 12 FIDUCIARY TRANSACTIONS 51
  • CONSOLIDATED OFF-BALANCE SHEET BUSINESS 31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31 Dec. 1996 31 Dec. 1997 Positive gross Negative gross 31 Dec. 1996 Positive gross Negative gross Notional replacement replacement Notional replacement replacement amount value value amount value value in CHF bn in CHF bn in CHF bn in CHF bn in CHF bn in CHF bn DERIVATIVE INSTRUMENTS INTEREST RATE PRODUCTS Forward rate agreements 193.7 0.3 0.1 163.9 0.1 0.3 Swaps 1,551.1 39.5 38.2 1,141.1 34.0 30.7 Options bought and sold (OTC) 598.3 5.1 5.0 357.8 3.1 3.3 Forwards 0.1 0.0 0.0 16.3 0.1 0.0 Futures 420.8 0.0 0.0 195.2 0.0 0.0 Options bought and sold (traded) 219.0 0.0 0.0 82.1 0.0 0.0 2,983.0 44.9 43.3 1,956.4 37.3 34.3 TOTAL INTEREST RATE PRODUCTS FOREIGN EXCHANGE PRODUCTS Forwards 667.6 19.2 17.7 792.9 15.8 16.9 Swaps 212.9 9.2 10.3 165.6 7.7 8.8 Options bought and sold (OTC) 534.2 5.3 5.7 351.8 2.4 2.7 Futures 0.4 0.0 0.0 0.0 0.0 0.0 Options bought and sold (traded) 0.1 0.0 0.0 0.7 0.0 0.0 1,415.2 33.7 33.7 1,311.0 25.9 28.4 TOTAL FOREIGN EXCHANGE PRODUCTS PRECIOUS METALS PRODUCTS Forwards 26.3 1.6 2.0 15.7 0.5 0.6 Options bought and sold (OTC) 8.6 0.5 0.7 9.7 0.0 0.6 Futures 1.8 0.0 0.0 7.0 0.0 0.0 Options bought and sold (traded) 0.0 0.0 0.0 1.1 0.0 0.0 36.7 2.1 2.7 33.5 0.5 1.2 TOTAL PRECIOUS METALS PRODUCTS EQUITY/INDEX-RELATED PRODUCTS Forwards 1.1 0.1 0.0 0.1 0.0 0.0 Options bought and sold (OTC) 203.2 10.1 10.2 117.9 3.9 4.2 Futures 20.6 0.0 0.0 12.5 0.0 0.0 Options bought and sold (traded) 63.4 0.0 0.0 48.7 0.0 0.0 288.3 10.2 10.2 179.2 3.9 4.2 TOTAL EQUITY/INDEX-RELATED PRODUCTS OTHER PRODUCTS Forwards 0.0 0.0 0.0 0.0 0.0 0.0 Options bought and sold (OTC) 3.1 0.1 0.0 3.1 0.1 0.0 Futures 9.5 0.0 0.0 0.6 0.0 0.0 Options bought and sold (traded) 0.6 0.0 0.0 2.8 0.0 0.0 13.2 0.1 0.0 6.5 0.1 0.0 TOTAL OTHER PRODUCTS 4,736.4 91.0 89.9 3,486.6 67.7 68.1 OVERALL TOTAL, GROSS TOTAL REPLACEMENT VALUES 49.8 1 50.7 1 36.0 1 37.1 ACCORDING TO THE BALANCE SHEET 1 positive replacement value after deduction of CHF 3.1 bn (1996: CHF 2.1 bn) of assets pledged as security: negative replacement values of CHF 1.0 bn for traded derivatives 52
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SCOPE AND METHOD OF CONSOLIDATION The assets and liabilities, off-balance sheet transactions and income and expenses of all the banking, insurance and financial institutions in which Credit Suisse Group has a direct or an indirect interest of more than 50% as of the balance sheet date are fully consolidated in the financial statements. For the “Winterthur” Swiss Insurance Company, Winterthur, legal entity, the capital is consolidated according to the pooling-of-interests method. For the other Group companies the capital is consolidated according to the purchase method as of 1 January 1990 (or later, if acquired thereafter). Inter-company transactions and unrealised gains therefrom are eliminated. Minority interests in share- holders’ equity and net profit are indicated separately, but are viewed as forming an integral part of the corporate base. Other companies in which the Group has a stake of 20% or more are accounted for using the equity method. Long-term holdings which are designated for resale are booked as “Financial investments”. Subsidiaries and long-term holdings outside of the core business and less significant holdings are not consolidated. GENERAL PRINCIPLES The Group financial statements are drawn up in accordance with the accounting rules of the Implementing Ordinance to the Swiss Federal Law on Banks and Savings Banks of 1 February 1995 and the Federal Banking Commission guidelines of 14 December 1994 (with the amendments of 14 November 1996 and 22 October 1997), supple- mented by the pooling-of-interests method and the provisions of the Swiss accounting and reporting recommendations with respect to insurance companies (FER 14). As required by the pooling-of-interests method, the consolidated financial statement of Credit Suisse Group shows the combined results of Credit Suisse Group and Winterthur as if the merger had been effective for all previous periods shown. In addition, the con- solidation and valuation policies reflect the accounting principles set out in the Swiss stock exchange listing regulations; they also largely conform to the provisions of the 4th and 7th EU directives and the EU directive governing the financial statements of banks. The financial year for the Group ends on 31 December. Group companies with a different closing date prepare interim financial statements as of 31 December for consolidation purposes. Goodwill (the amount paid in excess of the equity acquired when purchasing an interest in a company) was directly written off to shareholders’ equity until the end of 1996. Winterthur charges such goodwill (accumulated amount 1997: CHF 1,480 m) against revaluation reserves from insurance business. Credit Suisse Group has restated this treatment and charged the accumulated amount to retained earnings. For subsidiaries acquired after 1 January 1997, goodwill is stated in the balance sheet under “Intangible assets” and written off over its estimated useful life (not exceeding 20 years) on the income statement. 53
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CHANGES TO THE SCOPE OF CONSOLIDATION The scope of consolidation has undergone the following changes: “Winterthur” Swiss Insurance Company, Winterthur In accordance with the agreement of 10 August 1997 between Credit Suisse Group and Winterthur, the merger was accounted for on the basis of the pooling-of-interests method. The figures for all applicable previous periods have been adjusted accordingly. CS Life, Zurich CS Life has been fully consolidated retroactively. The figures for all applicable previous periods have been adjusted accordingly. Banque Hottinguer, Paris Purchased as of 2 October 1997 and subsequently merged with Credit Suisse (France) SA, Paris, to form Credit Suisse Hottinguer. FOREIGN CURRENCY TRANSLATIONS In the annual accounts of the individual Group companies, income and expense items denominated in foreign currencies are translated into the relevant local reporting curren- cies on the basis of the exchange rate as of the transaction date. Assets, liabilities and off-balance sheet items are translated as of the year-end rate. Hedged assets and liabi- lities are carried at their forward hedging rates. For the purposes of consolidation, the balance sheets of foreign Group companies are translated into Swiss francs at the year-end exchange rate, and their income statements are translated using the average exchange rate for the financial year. Translation differences are credited or debited to shareholders’ equity and are shown separately in the statement of shareholders’ equity. The key foreign exchange rates are listed in the notes to the consolidated financial state- ments on page 60. 54
  • DEVIATIONS FROM THE RELEVANT EU DIRECTIVES The Swiss accounting rules for banks conform in essence to EU directives and guidelines. The areas in which Group accounting policies deviate from the accounting principles set out in the directives of the European Union (4th and 7th EU directives and the EU directive governing the financial statements of banks) can be summarised as follows: – The classification criteria used in the balance sheet and the income statement differ from those set out in the EU directive governing the financial statements of banks. – The proportions of overall income and expenditure for operations outside Switzerland are not detailed by geographical location but are provided as combined totals. – No specific information is given concerning compensation or liabilities towards Members of the Board of Directors or Members of the Executive Board of Credit Suisse Group. – Securities and precious metals treated as trading positions are valued at market. Historical differences between cost and current market values are not disclosed in the notes to the consolidated financial statements. – Subsidiaries and long-term holdings which are not in the banking, finance or insur- ance sectors are not consolidated. – There is no formal management report on the business year. The following are significant deviations from the EU directives governing the financial statements of insurance companies: – The classification and presentation used in the financial statements have been ad- justed from those set out in the EU directives governing the financial statements of insurance companies. Winterthur Group publishes an annual report which focuses on the presentation of the result of the insurance business. – Unrealised gains on life business investments are taken to revaluation reserves as part of shareholders’ equity and not to funds for future distribution to shareholders and policyholders. GENERAL ACCOUNTING AND VALUATION PRINCIPLES REPO BUSINESS Repurchase and reverse repurchase trans- Transactions involving monetary assets actions are accounted for on the balance sheet as advances against securities serving as collateral or as cash deposits against own pledged securities. These transactions are shown in the balance sheet in the same way as those involving non-monetary assets. Claims and liabilities from lending and Transactions involving non-monetary assets borrowing transactions of non-monetary assets such as money market paper, precious metals or commodities and those arising from securities lending and borrowing are marked to market and, depending on the counterparty, are shown as claims on, or liabilities towards, banks or customers. Securities positions arising as a result of securities lend- ing and borrowing are included in the securities and precious metals trading portfolios. 55
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS These positions are carried Cash, bank balances, money market paper and loans at nominal value. The necessary provisions for recognisable risks and potential losses are normally deducted from the appropriate asset items in the balance sheet. Interest and commission income from customers and banks which is more than 90 days in arrears is not booked as “Interest from income business”. Instead, it is only included in the income statement following payment. Provisions with regard to claims subject to country risk, default risks and other bank risks are booked to “Valuation adjustments and provisions”. This position contains no undisclosed reserves. Leasing All leased items (capital goods, vehicles and real estate) are valued using the annuity method and are stated as a separate item under lendings. The depreciation charges contained in the rental income are set off directly against the book values of the corresponding leased assets, so that only the interest portion of the rental income is shown in the income statement. Real estate is valued at the cost (including capital improvements) less Real estate depreciation over its useful life (40–67 years). No depreciation is charged on land except where valuation adjustments have been made to allow for a reduction in the market value. Other tangible fixed assets such as computers, machin- Other tangible fixed assets ery, furnishings, vehicles and other equipment, as well as alterations and improvements to rented premises, are depreciated using the straight line method over their estimated useful life (3–5 years). The goodwill included in this balance sheet position arises from Intangible assets the majority holdings acquired from 1 January 1997 in connection with the capital consolidation. This goodwill is written down over its estimated useful life (maximum 20 years). As a rule, employees are affiliated to legally autonomous staff pension Pension fund funds which are independent of the Group. The requisite contributions are made to the pension funds and posted under “Personnel expenses”. Tax expense is calculated on the basis of the annual results posted in the indi- Taxes vidual financial statements of the Group companies. Deferred tax assets and liabilities are established for the expected future tax implications of temporary differences be- tween the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities calculated at the expected tax rate on the basis of adjustments in the valuation of assets and liabilities for Group purposes are charged to tax expense and recorded as other assets or provisions. No provision is made for non-recoverable withholding taxes on undistributed profits of Group companies outside Switzerland nor is a deferred tax asset recognised arising from tax losses brought forward in the case of Swiss Group companies. 56
  • Claims and liabilities in respect of Claims and liabilities of related companies related companies towards Group companies which are accounted for using the equity method are reported in the notes to the consolidated financial statements. VALUATION AND ACCOUNTING POLICIES IN RELATION TO BANK-SPECIFIC POSITIONS The trading portfolio consists of balances held in Securities trading portfolio connection with the trading of readily realisable securities, securities acquired as a result of underwriting activities and holdings of precious metals. Securitised and non- securitised options are shown under “Other assets”. Trading balances in bonds, shares and similar securities and precious metal accounts and holdings are marked to market as of the balance sheet date. Balances for which there is no representative market are valued according to the lowest value principle. Profits and losses from the valuation of the trading portfolio and realised gains and losses on these positions are shown under “Income from trading”. Interest and dividend income from the trading portfolio is credited to “Result from interest business”. This balance sheet item com- Financial investments from the banking business prises securities and precious metal positions purchased as a long-term investment. It also includes real estate and holdings assumed from the lending business and desig- nated for resale. Fixed-interest debt securities which are being held until final maturity are valued according to the accrual method. In this case, premiums and discounts are accrued or deferred over the term of the instrument until final maturity in the relevant balance sheet position. Realised profits or losses which are interest related and which arise from the early disposal or redemption of the instrument are accrued or deferred over the remaining term of the instrument, i.e. to the original final maturity, and credited to or debited from “Result from interest business” as appropriate. Investment holdings of equities and debt securities which are designated for resale and which do not consti- tute trading balances are valued according to the lowest value principle. The notes to the consolidated financial statements include details of both the cost price and the market value of these holdings. Real estate assumed from the lending business and designated for resale is valued according to the lowest value principle. Reserves for general banking risks are pre- Reserves for general banking risks cautionary reserves charged to “Extraordinary expenses” to hedge against latent risks in the bank’s operating activities. 57
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS These transactions are marked to market as of the year end. Unrealised Derivatives gains or losses are booked to the income statement as trading income, with the counter-positions shown in “Other assets” or “Other liabilities” as appropriate. Hedging transactions are valued using the same procedures as for the underlying transactions they hedge. Derivative financial instruments which form part of the trading portfolio are marked to market provided they are traded on a stock exchange or form part of a representa- tive market. If this is not the case, they are valued according to the lowest value prin- ciple. Strategic positions are valued according to the lowest value principle. Derivative financial instruments which are deployed in the context of interest rate risk management are valued according to the accrual method. The interest component is accrued or deferred over the term of the instrument according to the annuity method. Realised profits or losses which are interest related and which arise from the early disposal or redemption of the instrument are also accrued or deferred over the re- maining term of the instrument, i.e. to the original final maturity. CHANGES AGAINST 1996 Balance sheet, income statement, off-balance sheet business Federal Banking Commission guidelines of 14 December 1994, with amendments of 14 November 1996 and 22 October 1997, apply to the annual financial statement for 1997. The changes primarily affect the following positions. FINANCIAL INVESTMENTS Fixed-interest deposits constituting financial investments are Fixed-interest deposits valued according to the accrual method. Debt securities which were not acquired with the intention of being held until final maturity are now valued according to the lowest value principle. As the implications for the Group financial statement are minimal, the figures for the previous year have not been adjusted. Real Real estate taken over from lending business and designated for resale estate taken over from lending business and designated for resale is now stated under “Financial investments” rather than under “Tangible fixed assets”. The figures for the previous year have been adjusted accordingly for the following positions of the Group financial statement. Adjustments 1996 in CHF m Tangible fixed assets –1,137 Financial investments 1,137 Sundry ordinary expenses 158 Depreciation and write-offs on non-current assets –158 58
  • OTHER As of 1 January 1997, purchased goodwill is no longer charged Intangible assets against shareholders’ equity, but is stated in the balance sheet under “Intangible assets”. Holdings of precious metals are Securities and precious metals trading portfolios no longer valued at the average price for December but are marked to market as of the year-end balance sheet date. No adjustment has been made to the figures for the pre- vious year since the amount involved is insignificant. VALUATION AND ACCOUNTING POLICIES IN RELATION TO INSURANCE-SPECIFIC POSITIONS INVESTMENTS IN RESPECT OF INSURANCE BUSINESS Real estate is valued at the market price. The market value of a property Real estate is calculated as its capitalised rental income at the interest rate applied in the country or market in question. Undeveloped plots of land and buildings under construction are carried at cost. Bonds and loans are valued according to the amortised cost Bonds and loans method. The difference between the purchase price and the redemption value is distributed over the remaining life so that a constant yield is achieved. The correspond- ing valuation adjustment is shown under the position “Net investment income from insurance business”. Default risk is accounted for through the use of write-downs. Inter-company transactions and unrealised gains have been eliminated, with the exception of assets booked as investments from insurance business. Listed shares are marked to market at year-end. Unlisted shares are valued Shares at cost. If the yield or intrinsic value is endangered, a valuation adjustment is made. Derivatives and other financial instruments are generally used to hedge Derivatives the exposure to changes in the fair value of recognised assets, liabilities and firm commitments. Any gains and losses are therefore recognised in the income statement together with the offsetting loss or gain on the hedged item. Investments for the benefit of life insurance policyholders who bear the invest- Investments for the benefit of life insurance policyholders who bear the ment risk investment risk are carried at their market value. 59
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Statement of higher and lower values arising from the uniform valuation of Higher or lower investments in the Group accounts and revaluation reserves values arising from the uniform valuation of investments in the Group accounts in com- parison with the figures contained in the statutory accounts are recorded as follows: Valuation differences resulting from the revaluation of fixed-interest securities and mortgages, unlisted shares and non-consolidated long-term holdings are included in the income statement (under “Net investment income from insurance business”). In the case of listed shares and real estate, compensated write-downs in respect of the difference between the balance sheet value in the statutory accounts and the cost value are stated in the income statement (“Net investment income from insurance business”). Valuation differences between cost and market values are allocated to shareholders’ equity (“Revaluation reserves from the insurance business”) directly, with- out affecting the income statement, after deferred tax has been taken into account. In the life insurance business, policyholders normally share in the gains realised on the basis of statutory accounts. The valuation of technical provisions is determined by pre- Technical provisions sumed liabilities in respect of policyholders and claimants. As a rule, calculations are made individually, i.e. per insurance contract or claim. Statistical or mathematical calculation methods are applied if these produce approximately the same results and if they conform to the procedures approved by the supervisory authorities of the individual countries in question. Technical provisions for life business are calculated with regard to local regulations. The surplus due to policyholders is accounted for on the basis of the resolutions passed by the individual companies as to the distribution of profit. Year-end rate used Average rate used in the balance sheet 31 Dec. in the income statement FOREIGN CURRENCY TRANSLATION RATES IN CHF 1997 1997 1996 1996 1 US dollar (USD) 1.44 1.44 1.34 1.22 1 British pound sterling (GBP) 2.41 2.35 2.27 1.90 1 Canadian dollar (CAD) 1.01 1.04 0.98 0.89 1 Singapore dollar (SGD) 0.854 0.97 0.96 0.87 1 Hong Kong dollar (HKD) 0.1852 0.185 0.1700 0.1575 100 Deutsche marks (DEM) 80.90 82.90 86.60 81.30 100 Dutch guilders (NLG) 71.36 73.65 76.46 72.50 100 French francs (FRF) 24.02 24.60 25.45 23.90 100 Italian lire (ITL) 0.0817 0.0840 0.0870 0.0790 100 Japanese yen (JPY) 1.11 1.19 1.16 1.12 100 Spanish pesetas (ESP) 0.9455 0.977 1.0135 0.961 60
  • NOTES TO THE BANKING AND INSURANCE BUSINESS 1 SPLIT OF INCOME STATEMENT INTO BANKING Banking business Insurance business Total AND INSURANCE BUSINESS 1997 1997 1997 1996 1996 1996 Net interest income 4,579 0 4,579 3,488 0 3,488 Net commission and service income 6,592 0 6,592 4,942 0 4,942 Net trading income 5,312 0 5,312 3,901 0 3,901 Net income from insurance business 0 4,819 4,819 0 4,139 4,139 Other ordinary income 346 –624 –278 393 –196 197 16,829 4,195 21,024 12,724 3,943 16,667 NET OPERATING INCOME Salaries and other compensation 6,967 1,371 8,338 5,191 1,509 6,700 Employee benefits 632 310 942 582 264 846 Other personnel expenses 412 209 621 348 193 541 Personnel expenses 8,011 1,890 9,901 6,121 1,966 8,087 Premises and real estate expenses 531 242 773 480 243 723 Expenses for IT, machinery, furnishing, vehicles and other equipment 689 166 855 396 166 562 Sundry operating expenses 1,600 619 2,219 1,341 618 1,959 Other operating expenses 2,820 1,027 3,847 2,217 1,027 3,244 Total operating expenses 10,831 2,917 13,748 8,338 2,993 11,331 5,998 1,278 7,276 4,386 950 5,336 GROSS OPERATING PROFIT Depreciation and write-offs on non-current assets 573 17 590 675 1 676 Valuation adjustments, provisions and losses 2,624 0 2,624 1,251 0 1,251 Total depreciation, valuation adjustments, losses 3,197 17 3,214 1,926 1 1,927 GROUP PROFIT BEFORE EXTRAORDINARY 2,801 1,261 4,062 2,460 949 3,409 ITEMS AND TAXES Extraordinary income 1,323 0 1,323 1,340 0 1,340 Extraordinary expenses 3,089 445 3,534 5,407 0 5,407 Taxes 842 408 1,250 833 339 1,172 193 408 601 –2,440 610 –1,830 GROUP PROFIT/GROUP LOSS Minority interests 114 90 204 157 95 252 NET PROFIT/NET LOSS 79 318 397 –2,597 515 –2,082 (AFTER MINORITY INTERESTS) 61
  • NOTES TO THE BANKING AND INSURANCE BUSINESS 1997 1996 Change 2 INCOME AND EXPENSES FROM Switzerland Abroad Switzerland Abroad Switzerland Abroad ORDINARY ACTIVITIES BY ORIGIN in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m Net interest income 2,539 2,040 2,443 1,045 96 995 Net commission and service income 3,539 3,053 2,883 2,059 656 994 Net trading income 883 4,429 958 2,943 –75 1,486 Income from insurance business 1,768 3,051 1,226 2,913 542 138 Other ordinary income –124 –154 349 –152 –473 –2 8,605 12,419 7,859 8,808 746 3,611 NET OPERATING INCOME Personnel expenses 3,489 6,412 3,583 4,504 –94 –1,908 Other operating expenses 1,620 2,227 1,480 1,764 140 463 5,109 8,639 5,063 6,268 46 2,371 TOTAL OPERATING EXPENSES 3,496 3,780 2,796 2,540 700 1,240 GROSS OPERATING PROFIT BEFORE TAXES % of total 48% 52% 52% 48% Taxes 194 1,056 289 883 –95 173 % of total 16% 84% 25% 75% 3,302 2,724 2,507 1,657 795 1,067 GROSS OPERATING PROFIT AFTER TAXES % of total 55% 45% 60% 40% 1997 1996 Change Change 3 ANALYSIS OF EXTRAORDINARY INCOME in CHF m in CHF m in CHF m in % Gains from the disposal of participations 27 1,255 –1,228 –98 Other extraordinary income 1,296 85 1,211 – – of which reclassification of reserves for general banking risks 1,186 0 1,186 – 1,323 1,340 –17 –1 TOTAL EXTRAORDINARY INCOME 1997 1996 Change Change 4 ANALYSIS OF EXTRAORDINARY EXPENSES in CHF m in CHF m in CHF m in % Realised losses from the disposal of participations 42 0 42 – Restructuring cost CREDIT SUISSE GROUP 839 1,000 –161 –16 Restructuring cost BZW 332 0 332 – Restructuring cost due to merger CS/SVB, CSFB Inc. 0 97 –97 –100 Information technology, year 2000, euro 488 0 488 – Creation of reserves for general banking risks 1,629 1,763 –134 –8 Creation of provisions for risks from lending and emerging market trading 0 1,446 –1,446 –100 Depreciation on real estate acquired at auction, bank premises and IT 0 859 –859 –100 Other extraordinary expenses 204 242 –38 –16 3,534 5,407 –1,873 –35 TOTAL EXTRAORDINARY EXPENSES 62
  • NOTES TO THE BANKING BUSINESS 1997 1996 Change Change 5 INCOME STATEMENT OF BANKING BUSINESS in CHF m Notes in CHF m in CHF m in % 4,579 3,488 1,091 31 NET INTEREST INCOME 6 RESULT FROM COMMISSION AND SERVICE FEE ACTIVITIES Commission income from lending activities 387 313 74 24 Commissions from securities and investment transactions 6,389 4,751 1,638 34 Commissions from other services 307 320 –13 –4 Commission expenses 491 442 49 11 6,592 4,942 1,650 33 NET COMMISSION AND SERVICE FEE INCOME 5,312 3,901 1,411 36 NET TRADING INCOME 7 OTHER ORDINARY INCOME Income from the sale of financial investments 82 256 –174 –68 Income from investment activities 57 89 –32 –36 – of which from participations valued according to the equity method 30 77 –47 –61 – of which from other non-consolidated participations 27 12 15 125 Real estate income 45 27 18 67 Sundry ordinary income 282 257 25 10 Sundry ordinary expenses 120 236 –116 –49 346 393 –47 –12 OTHER ORDINARY INCOME 16,829 12,724 4,105 32 NET OPERATING INCOME Personnel expenses 8,011 6,121 1,890 31 Other operating expenses 2,820 2,217 603 27 10,831 8,338 2,493 30 TOTAL OPERATING EXPENSES 5,998 4,386 1,612 37 GROSS OPERATING PROFIT Depreciation and write-offs on non-current assets 573 675 –102 –15 – of which on real estate 120 123 –3 –2 – of which on other tangible fixed assets 453 538 –85 –16 – of which on non-consolidated participations 0 14 –14 – Valuation adjustments, provisions and losses 2,624 1,251 1,373 110 8 3,197 1,926 1,271 66 DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES 2,801 2,460 341 14 GROUP PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES Extraordinary income 1,323 1,340 –17 –1 Extraordinary expenses 3,089 5,407 –2,318 –43 Taxes 842 833 9 1 193 –2,440 2,633 – GROUP PROFIT/GROUP LOSS Minority interests 114 157 –43 –27 79 –2,597 2,676 – NET PROFIT/NET LOSS (AFTER MINORITY INTERESTS) 63
  • NOTES TO THE BANKING BUSINESS 6 ANALYSIS OF THE RESULT FROM 1997 1996 Change Change INTEREST BUSINESS in CHF m in CHF m in CHF m in % Interest and discount income Interest income on claims due from customers 9,634 9,463 171 2 Interest income on claims due from banks 7,934 7,415 528 7 Interest income from money market claims 775 597 178 30 Credit commissions treated as interest earnings 330 264 66 25 Interest income from leasing operations 79 90 –11 –12 18,761 Total interest and discount income 17,829 932 5 Interest and dividend income from trading portfolios Interest income 5,685 5,990 –305 –5 Dividend income 79 118 –39 –33 5,764 Total interest and dividend income from trading portfolios 6,108 –344 –6 Interest and dividend income from financial investments Interest income 389 245 144 59 Dividend income 17 73 –56 –77 406 Total interest and dividend income from financial investments 318 88 28 Interest expense Interest expenses for liabilities due to customers 11,900 8,956 2,944 33 Interest expenses for liabilities due to banks 8,452 11,811 –3,359 –28 20,352 Total interest expense 20,767 –415 –2 – of which interest expenses for subordinated liabilities 757 497 260 52 4,579 3,488 1,091 31 NET INTEREST INCOME 1997 1996 Change Change 7 ANALYSIS OF TRADING INCOME in CHF m in CHF m in CHF m in % Income from securities and commodities trading 3,115 2,373 742 31 Income from foreign exchange and banknote trading 1,014 844 170 20 Income from precious metals trading 210 97 113 116 Income from trading in interest rate instruments 973 587 386 66 5,312 3,901 1,411 36 NET TRADING INCOME 8 ANALYSIS OF VALUATION ADJUSTMENTS, 1997 1996 Change Change PROVISIONS AND LOSSES in CHF m in CHF m in CHF m in % For default risks (credit and country risks) 2,193 908 1,285 142 For other business risks 298 163 135 83 Losses 133 180 –47 –26 – of which losses from lending activities 64 109 –45 –41 2,624 1,251 1,373 110 VALUATION ADJUSTMENTS, PROVISIONS AND LOSSES 64
  • NOTES TO THE INSURANCE BUSINESS 1997 1996 Change Change 9 INCOME STATEMENT OF INSURANCE BUSINESS in CHF m Notes in CHF m in CHF m in % NON-LIFE BUSINESS Premiums written 13,694 13,414 280 2 10 Change in provisions for unearned premiums and in actuarial provisions (health) –397 –343 –54 16 13,297 13,071 226 2 PREMIUMS EARNED Claims and annuities paid –8,940 –8,605 –335 4 Change in provision for claims and annuities outstanding –1,214 –1,182 –32 3 –10,154 –9,787 –367 4 CLAIMS INCURRED Dividends paid –189 –245 56 –23 Change in provision for dividend –106 –144 38 –26 –295 –389 94 –24 DIVIDENDS TO POLICYHOLDERS INCURRED –3,955 –3,998 43 –1 OPERATING EXPENSES –1,107 –1,103 –4 0 UNDERWRITING RESULT NON-LIFE Net investment income 2,144 1,614 530 33 11 Interest on deposits and bank accounts (incl. exchange rate differences) 128 129 –1 –1 Other interest paid –71 –64 –7 11 Other income and expenses –190 42 –232 – 904 618 286 46 PROFIT BEFORE TAX AND MINORITY INTERESTS LIFE BUSINESS Premiums written 12,072 11,279 793 7 10 Change in provisions for claims outstanding –111 –43 –68 158 11,961 11,236 725 6 PREMIUMS EARNED Claims paid –6,038 –5,538 –500 9 Change in provisions for claims outstanding –113 –20 –93 465 –6,151 –5,558 –593 11 CLAIMS INCURRED –7,305 –6,582 –723 11 CHANGE IN ACTUARIAL PROVISIONS Bonus allocation –1,420 –1,402 –18 1 Change in participation fund –208 –130 –78 60 –1,628 –1,532 –96 6 ALLOCATION TO PARTICIPATION –1,251 –1,187 –64 5 OPERATING EXPENSES Net investment income 5,029 4,079 950 23 11 Interest on deposits and bank accounts 118 109 9 8 Interest on bonuses credited to policyholders –124 –159 35 –22 Other interest paid –189 –151 –38 25 Other income and expenses (incl. exchange rate differences) –61 120 –181 – 399 375 24 6 PROFIT BEFORE TAX AND MINORITY INTERESTS 65
  • NOTES TO THE INSURANCE BUSINESS 1997 1996 Change Change 9 INCOME STATEMENT OF INSURANCE BUSINESS in CHF m Notes in CHF m in CHF m in % SUMMARY Profit before tax and minority interests (non-life business) 904 618 286 46 Profit before tax and minority interests (life business) 399 375 24 6 PROFIT BEFORE TAX, MINORITY INTERESTS, EXTRAORDINARY 1,303 993 310 31 EXPENSES AND INTEREST ON BONDS Interest on convertible bonds and warrant issues –42 –44 2 –4 Extraordinary expenses –445 0 –445 – Tax –408 –339 –69 20 408 610 –202 –33 ANNUAL PROFIT BEFORE MINORITY INTERESTS Minority interests –90 –95 5 –5 318 515 –197 –38 ANNUAL PROFIT AFTER MINORITY INTERESTS 10 ANALYSIS OF DIRECT BUSINESS, 1997 1996 Change Change GEOGRAPHICAL DISTRIBUTION in CHF m in CHF m in CHF m in % Europe Non-life 10,064 10,046 18 0 Life 11,587 10,968 619 6 21,651 21,014 637 3 EUROPE, TOTAL North America Non-life 2,498 2,179 319 15 Life 17 5 12 240 2,515 2,184 331 15 NORTH AMERICA, TOTAL Asia-Pacific Non-life 1,559 1,454 105 7 Life 54 36 18 50 1,613 1,490 123 8 ASIA-PACIFIC, TOTAL Other regions Non-life 48 48 0 0 Life 0 0 0 0 48 48 0 0 OTHER REGIONS, TOTAL 25,827 24,736 1,091 4 DIRECT BUSINESS, GROSS, TOTAL Reinsurance assumed, gross Non-life 1,309 1,722 –413 –24 Life 472 416 56 13 1,781 2,138 –357 –17 REINSURANCE ASSUMED, GROSS, TOTAL 27,608 26,874 734 3 TOTAL BUSINESS, GROSS Reinsurance ceded Non-life –1,784 –2,035 251 –12 Life –58 –146 88 –60 –1,842 –2,181 339 –16 REINSURANCE CEDED, TOTAL Business, net Non-life 13,694 13,414 280 2 Life 7 12,072 11,279 793 25,766 24,693 1,073 4 TOTAL BUSINESS, NET Home market Switzerland Non-life 2,820 2,801 19 1 Life 4 6,489 6,221 268 9,309 9,022 287 3 HOME MARKET SWITZERLAND, TOTAL 66
  • 1997 1996 Change Change 11 ANALYSIS OF NET INVESTMENT INCOME in CHF m in CHF m in CHF m in % Real estate Non-life 201 199 2 1 Life 366 372 –6 –2 567 571 –4 –1 REAL ESTATE, TOTAL Mortgages Non-life 60 66 –6 –9 Life 389 405 –16 –4 449 471 –22 –5 MORTGAGES, TOTAL Bonds and loans Non-life 1,011 955 56 6 Life 2,541 2,383 158 7 3,552 3,338 214 6 BONDS AND LOANS, TOTAL Shares Non-life 120 125 –5 –4 Life 323 294 29 10 443 419 24 6 SHARES, TOTAL Non-consolidated participations Non-life 13 24 –11 –46 Life 11 17 –6 –35 24 41 –17 –41 NON-CONSOLIDATED PARTICIPATIONS, TOTAL Short-term investments Non-life 78 60 18 30 Life 48 58 –10 –17 126 118 8 7 SHORT-TERM INVESTMENTS, TOTAL 1,483 1,429 54 4 NON-LIFE 3,678 3,529 149 4 LIFE 5,161 4,958 203 4 INVESTMENT INCOME, TOTAL Profits and losses on investments Realised gains on real estate 1 10 –9 –90 Realised losses on real estate –9 –9 0 0 Realised gains (+)/realised losses (–) on other investments 865 280 585 209 Depreciation (–)/appreciation (+) on investments –96 –26 –70 269 761 255 506 198 NON-LIFE Realised gains on real estate 17 21 –4 –19 Realised losses on real estate –5 –1 –4 400 Realised gains (+)/realised losses (–) on other investments 1,545 547 998 182 Depreciation (–)/appreciation (+) on investments –108 77 –185 – 1,449 644 805 125 LIFE 2,210 899 1,311 146 PROFITS AND LOSSES ON INVESTMENTS, TOTAL Investment expenses Non-life –100 –70 –30 43 Life –98 –94 –4 4 –198 –164 –34 21 INVESTMENT EXPENSES, TOTAL 2,144 1,614 530 33 NON-LIFE 5,029 4,079 950 23 LIFE 7,173 5,693 1,480 26 TOTAL 67
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 Dec. 1997 31 Dec. 1996 Change Change 12 MONEY MARKET CLAIMS in CHF m in CHF m in CHF m in % Bills of exchange and money market paper rediscountable or pledgeable at central banks 8,585 13,488 –4,903 –36 – of which treasury bills 3,691 8,831 –5,140 –58 Other bills of exchange and money market paper 15,428 6,589 8,839 134 24,013 20,077 3,936 20 TOTAL MONEY MARKET CLAIMS 31 Dec. 1997 31 Dec. 1996 Change Change 13 DUE FROM CUSTOMERS FROM FINANCIAL LEASES in CHF m in CHF m in CHF m in % 817 1,240 –423 –34 TOTAL Mortgage Other Without Total collateral collateral collateral 14 ANALYSIS OF LOAN COLLATERAL AT 31 DECEMBER 1997 in CHF m in CHF m in CHF m in CHF m Due from customers 144,491 7,950 92,370 44,171 Mortgages 78,904 78,904 Residential properties 51,112 Business and office properties 9,216 Commercial and industrial properties 10,057 Other properties 8,519 223,395 86,854 92,370 44,171 TOTAL LOAN COLLATERAL At 31 December 1996 85,793 105,848 45,723 237,364 31 Dec. 1997 31 Dec. 1996 Change Change 15 SECURITIES AND PRECIOUS METALS TRADING PORTFOLIOS in CHF m in CHF m in CHF m in % Interest bearing securities and rights 72,597 57,323 15,274 27 listed on stock exchange 41,009 47,960 –6,951 –14 unlisted 31,588 9,363 22,225 237 – of which own bonds and medium-term notes 1,185 23 1,162 – Equities 29,624 26,085 3,539 14 – of which own shares 1,951 1,893 58 3 Precious metals 1,605 1,972 –367 –19 103,826 85,380 18,446 22 TOTAL SECURITIES AND PRECIOUS METALS TRADING PORTFOLIOS – of which securities rediscountable or pledgeable at central banks 29,508 22,022 7,486 34 Substantial claims and liabilities included in other balance-sheet positions. These are valued at market rates and any profit/loss on them is shown under trading income. Lent trading positions (Due from banks and customers) 34,244 16,758 17,486 104 Borrowed trading positions (Due to banks and customers) 31,120 6,721 24,399 363 Positive replacement values of derivative instruments from trading activities (Other assets) 51,384 37,804 13,580 36 Negative replacement values of derivative instruments from trading activities (Other liabilities) 51,316 36,988 14,328 39 68
  • 1997 1997 1996 1996 16 OWN SHARES INCLUDED IN SECURITIES TRADING PORTFOLIOS No. of shares in CHF m No. of shares in CHF m In registered shares equivalents, including derivatives at beginning of financial year 296,514 41 3,885,372 459 at end of financial year 477,971 108 296,514 41 17 FINANCIAL INVESTMENTS FROM THE Book value Cost Market value BANKING BUSINESS 31 Dec. 1997 31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31 Dec. 1996 31 Dec. 1996 Interest bearing securities and rights 9,861 – – – – 8,274 listed on stock exchange 6,112 – – – – 7,214 unlisted 3,749 – – – – 1,060 – of which valued according to the accrual method 5,661 – – – – 1 0 – of which valued at lower of cost or market 4,200 4,201 4,203 01 01 01 – of which own bonds and medium-term notes 379 – – – – 22 Equities 4,342 4,480 7,132 01 01 2,158 – of which own shares 2 – – – – 2 – of which qualifying participations 706 – – – – 4 Precious metals 9 9 9 01 01 12 Real estate 1,558 1,805 1,558 01 01 1,137 TOTAL FINANCIAL INVESTMENTS FROM THE 15,770 – – – – 11,581 BANKING BUSINESS – of which valued at lower of cost or market 10,109 10,495 12,902 1 01 01 0 – of which securities rediscountable or – pledgeable at central banks 9,150 – – – – 2,231 Borrowed financial investments 2 2,726 – – 0 0 0 1 not available 2 shown in the consolidated balance sheet as due to banks or customers 31 Dec. 1997 31 Dec. 1996 Change Change 18 INVESTMENTS FROM THE INSURANCE BUSINESS in CHF m in CHF m in CHF m in % Real estate at market value Non-life 4,139 4,267 –128 –3 Life 8,406 8,166 240 3 12,545 12,433 112 1 REAL ESTATE AT MARKET VALUE, TOTAL Mortgages at redemption value Non-life 1,261 1,260 1 0 Life 6,787 6,672 115 2 8,048 7,932 116 1 MORTGAGES AT REDEMPTION VALUE, TOTAL 20,593 20,365 continued 69
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 Dec. 1997 31 Dec. 1996 Change Change 18 INVESTMENTS FROM THE INSURANCE BUSINESS in CHF m in CHF m in CHF m in % 20,593 20,365 continued Bonds and loans at amortised cost Non-life 15,197 13,616 1,581 12 Life 40,047 36,728 3,319 9 55,244 50,344 4,900 10 BONDS AND LOANS AT AMORTISED COST, TOTAL Shares at market value Non-life 5,640 4,165 1,475 35 Life 17,287 11,444 5,843 51 22,927 15,609 7,318 47 SHARES AT MARKET VALUE, TOTAL Non-consolidated participations at cost Non-life 402 917 –515 –56 Life 282 439 –157 –36 684 1,356 –672 –50 NON-CONSOLIDATED PARTICIPATIONS AT COST, TOTAL Short-term investments at par value Non-life 1,483 1,462 21 1 Life 1,188 1,265 –77 –6 2,671 2,727 –56 –2 SHORT-TERM INVESTMENTS AT PAR VALUE, TOTAL Less mortgages and non-consolidated participations not included in investments from the insurance business 8,732 9,288 –556 –6 93,387 81,113 12,274 15 TOTAL INVESTMENTS FROM THE INSURANCE BUSINESS Investments in life business where the investment risk is borne by policyholders, total 2,756 1,843 913 50 ADDITIONAL DATA ON INVESTMENTS Real estate at cost value Non-life 3,508 3,572 –64 –2 Life 7,502 6,979 532 7 11,010 10,551 459 4 REAL ESTATE AT COST VALUE, TOTAL Shares at cost value Non-life 4,318 3,541 777 22 Life 12,819 9,964 2,855 29 17,137 13,505 3,632 27 SHARES AT COST VALUE, TOTAL Bonds and loans at market value Non-life 15,850 14,158 1,692 12 Life 41,944 38,283 3,661 10 57,794 52,441 5,353 10 BONDS AND LOANS AT MARKET VALUE, TOTAL 70
  • 19 OWN SHARES INCLUDED IN FINANCIAL INVESTMENTS 1997 1997 1996 1996 FROM THE BANKING AND INSURANCE BUSINESS No. of shares in CHF m No. of shares in CHF m Registered shares, at beginning of financial year 2,442,401 321 1,941,849 217 Additions (purchase price) 239,776 35 2,952,000 377 Disposals (selling price) 2,492,969 501 2,451,448 313 Registered shares, at end of financial year 189,208 18 2,442,401 321 31 Dec. 1997 31 Dec. 1996 Change Change 20 NON-CONSOLIDATED PARTICIPATIONS in CHF m in CHF m in CHF m in % Participations valued according to the equity method 458 521 –63 –12 Other non-consolidated participations 734 1,469 –735 –50 1,192 1,990 –798 –40 TOTAL NON-CONSOLIDATED PARTICIPATIONS With market value 244 859 –615 –72 Without market value 948 1,131 –183 –16 Book Foreign ex- value at Write-offs/ Change in change diff. 21 ANALYSIS OF CAPITAL 31 Dec. Historical accumulated Book value at scope of Write-offs/ and reclassifi- depreciation 1 ASSETS IN CHF M 1997 value depreciation 31 Dec. 1996 consolidation Additions Disposals cations Participations valued according to the equity method 458 521 0 521 –15 4 –66 0 14 Other non-consolidated participations 734 1,469 0 1,469 0 89 –407 0 –417 Non-consolidated participations 1,990 0 1,990 –15 93 –473 0 –403 1,192 Bank premises 3,640 4,839 –744 4,095 41 142 –286 –105 –247 Other real estate 547 524 –28 496 –3 10 –28 –19 91 Real estate 5,363 –772 4,591 38 152 –314 –156 4,187 –124 Other tangible fixed assets 3,572 –1,924 1,648 104 831 –84 –477 62 2,084 Leasing assets 0 0 0 0 0 0 0 0 0 Intangible assets 152 –42 110 0 102 –10 –16 –5 181 11,077 –2,738 8,339 127 1,178 –881 –617 –502 7,644 TOTAL 1 write-offs in the amount of CHF 27 million in extraordinary expenses 31 Dec. 1997 31 Dec. 1996 Change Change 22 ADDITIONAL INFORMATION ON FIXED ASSETS in CHF m in CHF m in CHF m in % Fire insurance value of real estate 15,347 16,886 –1,539 –9 Fire insurance value of other tangible fixed assets 2,358 2,098 260 12 Future leasing installments from operating leases 197 1,089 –892 –82 31 Dec. 1997 31 Dec. 1996 Change Change 23 OTHER ASSETS in CHF m in CHF m in CHF m in % Positive replacement value of derivative instruments 52,913 38,166 14,747 39 – of which trading 51,384 37,804 13,580 36 – of which other 1,529 362 1,167 322 Compensation account 24 0 24 – Other 3,571 3,279 292 9 56,508 41,445 15,063 36 TOTAL OTHER ASSETS 71
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31 Dec. 1996 24 ANALYSIS OF ASSETS BY COUNTRY/GROUPS OF COUNTRIES in CHF m in % in CHF m in % Switzerland 183,361 27 179,131 29 EU 195,485 28 228,812 37 United States 176,459 26 138,013 22 Canada 3,464 1 5,039 1 Mexico 2,078 0 1,312 0 Japan 39,264 6 26,926 4 Other industrialised countries 14,645 2 10,699 2 Financial centres outside the industrialised countries 37,678 5 13,435 2 – of which Hong Kong 3,991 1 3,962 1 Singapore 8,045 1 2,616 0 Other 25,642 3 6,857 1 Oil-producing countries 4,369 1 1,849 0 Newly industrialised countries 29,551 4 16,552 3 – of which Eastern Europe and Commonwealth of Independent States 13,020 2 7,762 1 Asia 5,521 1 3,336 1 South America 9,285 1 4,637 1 Other 1,725 0 817 0 Other countries 3,214 0 2,628 0 689,568 100 624,396 100 TOTAL ASSETS 31 Dec. 1997 31 Dec. 1996 25 ASSETS PLEDGED OR ASSIGNED AND 31 Dec. 1997 actual commit- 31 Dec. 1996 actual commit- ASSETS SUBJECT TO OWNERSHIP commitment ment secured commitment ment secured RESERVATION in CHF m in CHF m in CHF m in CHF m Total assets not at free disposal 51,740 23,752 20,823 16,037 – of which due from banks/customers 1,387 1,368 888 848 – of which securities (trading and investment) 6,231 2,228 3,745 1,173 – of which mortgages 1,842 1,387 4,063 3,643 – of which other 1 42,280 18,769 12,127 10,373 Assets under retention of ownership 0 0 0 0 51,740 23,752 20,823 16,037 TOTAL 1 notably, assets pledged as security for CSFB’s international business activities in compliance with local regulations 31 Dec. 1997 31 Dec. 1996 Change Change 26 LIABILITIES TO OWN PENSION FUNDS in CHF m in CHF m in CHF m in % 1,263 976 287 29 TOTAL 72
  • 31 Dec. 1997 31 Dec. 1996 Change Change 27 OUTSTANDING BONDS ISSUED – SUMMARY in CHF m in CHF m in CHF m in % Bonds 44,131 25,994 18,137 70 Bonds issued by the central issuing office 160 271 –111 –41 Mortgage bonds issued by the central mortgage bond institutions 1,303 1,315 –12 –1 45,594 27,580 18,014 65 TOTAL 27a BONDS ISSUED BY CREDIT SUISSE GROUP Year Earliest date Par value Redemption Interest rate of issue callable in m 20.07.1998 3.50% 1989 CHF 300 23.02.2000 7.00% 1990 CHF 200 1 28.02.2000 2.25% Convertible Bond 1997 CHF 400 06.08.2001 2.25% 1993 CHF 500 1 15.12.2003 6.00% 1994 CHF 250 31.10.2006 4.00% 1997 CHF 800 23.05.2007 4.00% 1997 CHF 1,000 27b BONDS ISSUED BY SUBSIDIARIES Year Earliest date Par value Redemption Interest rate of issue callable in m Credit Suisse Group Finance (Guernsey) Ltd., Guernsey 16.02.1998 8.00% 1995 USD 200 29.07.1999 6.75% 1994 DEM 400 1 19.11.2002 4.88% Convertible Bond 1992 USD 31 All bonds issued by Credit Suisse Group Finance (Guernsey) Ltd. are guaranteed by Credit Suisse Group. Credit Suisse First Boston, Zurich 1 01.02.1998 4.75% 1988 CHF 80 10.04.1998 7.00% 1990 CHF 6 05.07.1998 7.00% 1990 CHF 4 2 10.1998 6.09% 1997 USD 1,498 24.10.1998 7.25% 1990 CHF 3 21.12.1998 7.50% 1990 CHF 5 11.03.1999 7.00% 1991 CHF 5 15.05.1999 6.50% 1991 CHF 5 08.09.1999 5.00% 1994 CHF 200 16.09.1999 6.75% 1991 CHF 4 1 31.01.2000 7.25% 1990 CHF 150 31.01.2000 6.75% 1990 31.01.1998 CHF 40 1 15.09.2000 3.25% 1986 15.09.1998 CHF 100 15.09.2000 4.50% 1995 CHF 250 2 10.2000 6.09% 1997 USD 1,994 1 26.10.2000 5.00% 1988 26.10.1998 CHF 230 1 26.10.2000 5.00% 1988 26.10.1998 CHF 70 05.06.2001 7.25% 1990 CHF 170 1 31.07.2001 7.00% 1991 CHF 150 1 15.09.2001 6.00% 1989 15.09.1999 CHF 200 15.01.2002 7.00% 1992 CHF 100 1 20.02.2002 7.50% 1991 CHF 75 15.05.2002 6.75% 1992 CHF 60 73
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 2 10.2002 6.09% 1997 USD 1,495 1 31.03.2003 3.50% 1993 CHF 75 1 31.03.2003 3.50% 1993 CHF 125 1 29.09.2003 6.13% 1993 USD 200 1 18.11.2003 6.25% 1993 DEM 600 1 20.02.2004 5.00% 1989 20.02.1999 CHF 180 1 22.04.2004 4.38% 1996 CHF 200 1 18.11.2004 8.50% 1994 USD 300 1 30.12.2004 6.13% 1994 DEM 100 1 31.03.2005 5.75% 1995 CHF 225 16.11.2005 2.00% 1997 11.2000 USD 200 17.11.2005 2.00% 1997 11.2000 USD 100 1 30.03.2006 7.21% 1996 USD 238 95 1,4 30.03.2006 6.84% 1997 USD 1 06.07.2007 5.25% 1995 CHF 150 1 06.07.2007 5.25% 1995 CHF 100 1 10.03.2016 5.00% 1986 10.03.2006 CHF 200 500 1,3 perpetual 7.90% 1997 05.2007 USD 1,250 1,3 perpetual 6.50% 1997 06.2007 FRF 1 perpetual 7.74% 1997 06.2007 USD 100 1,3 perpetual 4.38% 1997 07.2007 CHF 500 150 1,3 perpetual 8.25% 1997 07.2009 GBP Credit Suisse, Zurich 1 10.08.1998 7.00% 1990 CHF 100 1 15.09.1998 3.00% 1988 CHF 100 15.01.1999 7.50% 1991 CHF 100 05.05.1999 4.50% 1994 CHF 100 31.10.1999 5.50% 1994 CHF 100 1 18.04.2000 7.25% 1990 CHF 110 1 20.02.2001 7.50% 1991 CHF 150 28.07.2001 5.00% 1994 CHF 200 1 17.09.2001 7.00% 1991 CHF 150 17.12.2001 2.75% 1993 CHF 125 1 20.02.2002 7.50% 1991 CHF 125 16.03.2002 6.75% 1992 CHF 200 1 30.03.2002 7.25% 1990 30.03.2000 CHF 150 30.06.2002 7.25% 1992 CHF 100 1 25.09.2002 7.75% 1992 CHF 100 1 15.01.2003 7.75% 1991 CHF 100 1 15.01.2003 7.25% 1992 CHF 100 1 01.02.2003 5.00% 1988 01.02.2000 CHF 100 1 01.02.2003 5.00% 1988 01.02.2000 CHF 70 31.03.2003 5.25% 1993 CHF 250 1 20.02.2004 5.00% 1989 20.02.1999 CHF 120 02.02.2005 5.50% 1995 CHF 100 1 28.04.2005 5.75% 1995 CHF 120 74
  • BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 1 12.10.2005 5.00% 1995 CHF 125 1 12.10.2005 5.00% 1995 CHF 25 1 13.11.2005 3.13% 1995 CHF 300 1 05.01.2006 4.35% 1996 CHF 150 1 08.02.2008 4.50% 1996 CHF 200 1 31.07.2009 4.00% 1997 CHF 200 1998–2009 3.3%–7.4% Mortgage bonds issued by the Swiss Mortgage 1983–1997 CHF 509 Bond Bank, Zurich Neue Aargauer Bank, Aarau 28.06.2002 4.25% 1996 CHF 100 1 11.07.1998 4.63% Central issuing office of the Association of Swiss Regional Banks 1988 CHF 5 1 26.06.1999 6.13% Central issuing office of the Association of Swiss Regional Banks 1989 CHF 7 1 10.04.2000 7.13% Central issuing office of the Association of Swiss Regional Banks 1990 CHF 5 1 11.03.2001 7.25% Central issuing office of the Association of Swiss Regional Banks 1991 CHF 5 1998–2001 4.5%–7.6% Central issuing office of the Association of Swiss Regional Banks 1988–1993 CHF 138 1998–2007 3.3%–7.4% Mortgage bonds issued by the Swiss Mortgage 1983–1997 CHF 735 Bond Bank, Zurich Credit Suisse (Luxembourg) S.A., Luxembourg 1 31.12.2001 9.13% 1991 LUF 2,500 1 06.08.2003 7.25% 1993 LUF 1,500 Credit Suisse First Boston Finance (Guernsey) Ltd., Guernsey 01.02.2000 0.00% 1990 CAD 500 22.10.2002 0.00% 1992 DEM 500 Credit Suisse First Boston International (Guernsey) Ltd., Guernsey 01.10.1998 5.61% 1997 USD 500 07.10.1998 5.62% 1997 USD 300 09.11.1998 5.62% 1997 USD 125 18.11.1998 5.71% 1997 USD 200 Credit Suisse First Boston Finance B.V., Amsterdam (The Netherlands) 13.11.1998 9.00% 1992 USD 67 31.03.1999 6.07% 1993 USD 250 22.03.1999 5.25% 1993 USD 103 21.09.1999 6.05% 1992 USD 56 22.09.1999 6.05% 1992 USD 85 22.02.2000 7.50% 1992 USD 173 1 15.06.2000 7.75% 1993 USD 54 1 01.07.2003 7.75% 1993 USD 81 1 26.05.2003 5.88% 1993 USD 200 1 25.08.2003 5.50% 1993 USD 200 1 perpetual 5.69% 1986 USD 150 75
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m Credit Suisse First Boston Inc., New York 09.02.1998 6.81% 1993 USD 5 17.02.1998 5.93% 1996 USD 5 02.03.1998 7.25% 1992 USD 5 09.03.1998 6.22% 1993 USD 2 02.04.1998 5.72% 1996 USD 250 29.04.1998 5.83% 1996 USD 5 15.05.1998 8.18% 1992 USD 4 01.07.1998 6.63% 1992 USD 10 07.07.1998 5.90% 1995 USD 25 1 27.07.1998 6.42% 1995 DEM 107 1 07.10.1998 6.37% 1994 USD 150 1 08.10.1998 6.19% 1993 USD 50 09.11.1998 0.92% 1994 JPY 9 13.11.1998 8.28% 1992 USD 4 15.01.1999 6.01% 1995 USD 35 15.01.1999 6.01% 1996 USD 15 15.01.1999 5.98% 1997 USD 25 1 27.01.1999 6.26% 1994 USD 8 1 15.06.1999 9.25% 1992 USD 170 01.07.1999 5.65% 1997 USD 2 01.10.1999 6.55% 1992 USD 5 1 15.10.1999 7.23% 1992 USD 5 15.10.1999 6.50% 1992 USD 10 1 04.01.2000 6.45% 1994 USD 25 03.03.2000 6.43% 1993 USD 10 1 03.05.2000 6.41% 1995 DEM 147 1 02.11.2000 6.25% 1994 PTE 32 1 14.02.2001 6.40% 1996 DEM 136 15.03.2001 6.49% 1996 USD 8 1 26.03.2001 6.41% 1996 USD 5 1 17.04.2001 6.30% 1996 USD 20 1 30.04.2001 6.39% 1992 USD 200 22.05.2001 6.13% 1996 USD 17 1 06.06.2001 6.48% 1994 USD 52 1 07.06.2001 6.09% 1996 USD 8 1 08.08.2001 6.28% 1996 USD 10 1 08.08.2001 6.08% 1996 USD 2 1 16.08.2001 6.23% 1995 FRF 156 1 21.12.2001 6.59% 1995 USD 20 1 01.08.2002 6.48% 1994 USD 5 03.09.2002 7.83% 1992 USD 3 1 15.01.2003 7.23% 1993 USD 5 1 03.02.2003 7.19% 1993 USD 5 10.02.2003 6.33% 1993 USD 35 07.04.2003 6.76% 1992 USD 7 76
  • BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 1 27.04.2003 6.60% 1993 USD 21 28.05.2003 6.05% 1996 USD 11 1 11.02.2004 6.44% 1994 USD 150 08.03.2004 8.95% 1992 USD 11 09.03.2004 8.75% 1992 USD 42 1 15.03.2004 6.42% 1994 USD 165 05.04.2004 6.41% 1995 DEM 107 30.04.2004 9.30% 1992 USD 100 1 27.10.2005 6.51% 1993 USD 200 1 07.11.2005 6.95% 1995 USD 5 1 15.05.2006 6.56% 1996 USD 337 1 27.02.2007 6.61% 1995 USD 15 1 27.02.2007 6.58% 1995 USD 15 1 28.02.2007 6.61% 1995 USD 15 1 28.02.2007 6.58% 1995 USD 15 15.02.2013 8.50% 1993 USD 3 1 02.04.2018 7.71% 1993 USD 5 1 various 6.50% var. USD 6 1 various variable 1993 USD 156 1 various variable 1993–1995 USD 10 1 various variable 1995–1996 USD 56 1 various variable 1994 USD 40 Credit Suisse Financial Products, London 1998 various 1996–1997 CHF 75 30.09.1998 0.00% Zero Coupon Notes 1996 DEM 19 23.10.1998 variable Floating Rate Notes 1995 FRF 400 15.01.1998 0.00% Zero Coupon Notes 1997 HKD 18 1 29.05.1998 0.00% Zero Coupon Notes 1997 ITL 40,000 1998 various 1995–1997 JPY 33,633 1998 various 1997 PTE 14,500 1998 various 1997 SEK 359 1998 various 1992–1997 USD 276 1 31.08.1998 0.00% Zero Coupon Notes 1991 USD 109 1999 various 1996–1997 CHF 23 1999 various 1995–1997 DEM 91 1999 1.25% 1994 GBP 60 1999 various 1996–1997 ITL 17,000 1999 various 1996–1997 JPY 1,085 1999 various 1994 NLG 46 1999 various 1997 SEK 210 1999 various 1992–1997 USD 291 1 30.04.1999 7.75% 1992 XEU 47 10.08.2000 4.00% 1997 DEM 28 21.12.2000 3.00% Index–linked Notes 1995 21.12.1999 FIM 25 77
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 06.11.2000 7.50% 1997 GBP 25 2000 various 1997 ITL 110,000 2000 various 1995–1997 JPY 20,717 27.09.2000 0.00% Zero Coupon Index–linked Notes 1994 NLG 25 11.07.2000 variable Floating Rate Notes 1997 PTE 5,000 2000 various 1992–1997 USD 279 13.06.2001 6.50% 1997 BEF 100 07.03.2001 variable Floating Rate Notes 1997 09.03.1998 CHF 10 2001 various 1997 ITL 108,000 2001 various 1995–1997 JPY 15,569 2001 various 1994–1997 USD 545 10.05.2001 variable Floating Rate Notes 1994 XEU 15 1 31.10.2002 variable Floating Rate Notes 1997 CHF 75 2002 various 1996–1997 DEM 83 1 19.12.2002 0.00% Zero Coupon Notes 1997 ITL 20,000 2002 various 1996–1997 JPY 163,940 1 2002 various 1992 LUF 3,500 2002 various 1996–1997 USD 490 30.07.2002 0.00% Zero Coupon Notes 1997 XEU 10 13.06.2003 8.00% 1997 BEF 200 06.11.2003 0.00% Zero Coupon Notes 1995 FRF 25 04.02.2003 0.00% Zero Coupon Notes 1997 GBP 19 31.10.2003 2.00% 1997 ITL 30,000 2003 various 1997 JPY 1,700 1 19.03.2003 7.63% 1993 LUF 1,500 2003 various 1994–1997 USD 215 1 2004 0.00% Zero Coupon Notes 1994 CHF 13 2004 variable Floating Rate Notes 1997 DEM 25 2004 various 1996–1997 ITL 293,000 1 2004 0.00% Zero Coupon Notes 1997 ITL 35,000 2004 various 1995–1997 JPY 12,300 2004 0.00% Zero Coupon Notes 1997 NOK 110 2004 various 1995–1997 USD 116 16.06.2004 8.50% 1997 XEU 3 1 01.12.2004 0.00% Zero Coupon Notes 1994 XEU 10 1 08.06.2005 8.25% 1995 BEF 200 1 27.09.2005 variable Floating Rate Notes 1995 DEM 47 08.12.2005 0.00% Zero Coupon Bonds 1997 FRF 200 2005 0.00% Zero Coupon Notes 1997 ITL 90,000 1 01.12.2005 0.00% Zero Coupon Notes 1997 ITL 60,000 2005 various 1996–1997 JPY 8,400 19.12.2005 0.00% Zero Coupon Notes 1997 07.06.1999 NOK 160 1 2005 0.00% Zero Coupon Notes 1997 PTE 9,362 2005 various 1995–1997 USD 272 78
  • BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 1 27.09.2006 variable Floating Rate Notes 1996 DEM 9 06.11.2006 0.00% Zero Coupon Notes 1997 17.04.1998 FIM 50 2006 various 1997 ITL 64,280 19.12.2006 5.70% Dual Currency Bonds 1996 JPY 500 2006 various 1995–1997 USD 83 1 28.07.2006 0.00% Zero Coupon Bonds 1994 USD 40 2007 various 1996–1997 CHF 120 2007 various 1997 DEM 70 1 23.05.2007 variable Floating Rate Notes 1997 DEM 80 06.11.2007 0.00% Zero Coupon Notes 1997 17.10.2000 FIM 50 2007 various 1997 ITL 113,600 2007 various 1996–1997 JPY 9,500 2007 various 1995–1997 USD 193 1 02.07.2007 variable Floating Rate Notes 1997 USD 40 1 2008 0.00% Zero Coupon Notes 1993–1994 DEM 153 2008 various 1997 ITL 63,000 1 15.10.2008 variable Floating Rate Notes 1997 02.1998 ITL 15,000 2008 various 1997 JPY 600 2008 various 1995–1997 USD 64 2009 various 1997 DEM 92 1 2009 0.00% Zero Coupon Notes 1994–1996 DEM 213 30.05.2009 variable Floating Rate Notes 1997 ITL 17,000 2009 various 1996–1997 JPY 4,500 2009 0.00% Zero Coupon Notes 1997 USD 85 06.01.2010 0.00% Zero Coupon Notes 1997 DEM 20 1 20.06.2010 0.00% Zero Coupon Bonds 1997 DEM 60 1 01.03.2010 0.00% Zero Coupon Bonds 1995 ITL 3 0,000 2010 0.00% Zero Coupon Notes 1997 USD 67 2011 various 1993–1997 USD 147 2012 0.00% Zero Coupon Notes 1997 DEM 35 2012 various 1996–1997 USD 27 2013 various 1995–1997 USD 67 1 20.12.2014 0.00% Zero Coupon Bonds 1994 ITL 250,000 30.10.2014 0.00% Zero Coupon Notes 1995 USD 29 12.06.2015 variable Floating Rate Notes 1997 USD 42 15.09.2017 0.00% Zero Coupon Notes 1997 DEM 15 15.05.2017 variable Floating Rate Notes 1997 JPY 5,000 01.09.2017 0.00% Zero Coupon Bonds 1997 PTE 1,700 30.08.2017 0.00% Zero Coupon Bonds 1997 USD 28 15.01.2018 variable Floating Rate Notes 1997 ITL 50,000 07.01.2020 variable Floating Rate Notes 1996 CAD 162 19.09.2021 variable Floating Rate Notes 1996 19.09.1999 JPY 10,000 1 15.12.2021 0.00% Zero Coupon Bonds 1995 USD 81 02.10.2022 0.00% Zero Coupon Bonds 1997 DEM 40 08.10.2027 0.00% Zero Coupon Bonds 1997 DEM 50 79
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 1 perpetual various 1995 CHF 80 1 perpetual 10.25% 1995 17.08.2015 GBP 100 1 perpetual variable Floating Rate Notes 1993–1995 JPY 20,000 1 perpetual various 1995–1997 NLG 60 1 perpetual variable Floating Rate Notes 1992–1997 USD 220 Bank Leu Ltd., Zurich 1 17.11.2006 5.00% 1986 CHF 100 23.01.1998 0.00% 1996 CHF 10 23.01.1998 0.00% 1996 CHF 14 1998–2006 4.2%–7.3% Mortgage bonds issued by the Swiss Mortgage 1983–1996 CHF 59 Bond Bank, Zurich “Winterthur” Swiss Insurance Company, Winterthur 1998 4.25% Issue of bonds with warrants 1990 CHF 507 Winterthur Finance Ltd., British Virgin Islands 1999 2.25% Issue of bonds with warrants 1994 CHF 300 HIH Winterthur International Holdings Ltd., Sydney 2001 8.00% Convertible bond issue 1996 AUD 123 1 subordinated bonds 2 issued by Credit Suisse First Boston Guernsey branch 3 issued by Credit Suisse First Boston London branch 4 issued by Credit Suisse First Boston Nassau branch 80
  • 31 Dec. 1997 31 Dec. 1996 Change Change 28 OTHER LIABILITIES in CHF m in CHF m in CHF m in % Negative replacement value of derivative instruments 52,684 37,060 15,624 42 – of which trading 51,316 36,988 14,328 39 – of which other 1,368 72 1,296 – Other 5,484 6,116 –632 –10 58,168 43,176 14,992 35 TOTAL OTHER LIABILITIES Change in Recoveries, definition of doubtful New creation Releases 29 VALUATION ADJUSTMENTS AND Specific purpose interest, charged to New creation credited to PROVISIONS/RESERVES FOR Balance at usage and (reclassifi- currency income charged to income Balance at cation) 2 GENERAL BANKING RISKS IN CHF M 31 Dec. 1996 releases differences statement equity statement 31 Dec. 1997 Valuation adjustments and provisions for default risks (credit and country risk) 12,503 10,586 –1,106 278 552 2,193 0 0 Valuation adjustments and provisions for other business risks 922 835 –54 –509 9 641 0 0 Provisions for taxes and deferred taxes1 3,231 2,094 –1,449 363 100 1,424 699 0 Provisions for restructuring 1,421 702 –498 37 1 1,179 0 0 Other provisions 766 322 –70 258 –7 263 0 0 14,539 –3,177 427 655 5,700 699 0 18,843 Total Less valuation adjustments directly –9,719 –11,714 netted with assets TOTAL VALUATION ADJUSTMENTS AND 4,820 7,129 PROVISIONS AS PER BALANCE SHEET RESERVES FOR GENERAL 2,388 2,890 0 59 0 1,629 0 –1,186 BANKING RISKS 1 CHF 174 m deviation to tax expense due to deferred tax assets that are not included in the provisions 2 CHF 486 m reclassified from other balance sheet positions 81
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 TECHNICAL PROVISIONS FOR 31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31 Dec. 1996 Change Change THE INSURANCE BUSINESS IN CHF M gross net gross net gross net NON-LIFE Provision for unearned premiums 4,835 4,162 4,852 4,186 –17 –24 Actuarial provisions (health) 2,012 2,003 1,809 1,800 203 203 Provisions for claims outstanding 1 18,791 16,406 17,717 15,597 1,074 809 Actuarial provision for annuities 614 599 551 540 63 59 Provision for dividends to policyholders 700 700 640 640 60 60 Equalisation reserve prescribed by law 335 335 316 316 19 19 27,287 24,205 25,885 23,079 1,402 1,126 NON-LIFE, TOTAL LIFE Provisions for unearned premiums 746 735 712 725 34 10 Actuarial provisions 61,269 60,584 55,294 54,527 5,975 6,057 Provisions for claims outstanding 430 393 441 397 –11 –4 Participation fund 2,155 2,142 2,070 2,067 85 75 Bonuses left on deposit 3,169 3,169 3,055 3,055 114 114 2 67,769 67,023 61,572 60,771 6,197 6,252 LIFE, TOTAL TECHNICAL PROVISIONS FOR THE 95,056 91,228 87,457 83,850 7,599 7,378 INSURANCE BUSINESS, TOTAL 1 of which undiscounted provisions for claims outstanding 3,065 2,224 841 impact of discounting –439 –367 –72 Discounted provisions for claims outstanding 2,626 1,857 769 2 of which technical provisions in life business where the investment risk is borne by policyholders 2,846 2,846 1,827 1,827 1,019 1,019 82
  • 1997 1996 Change Change 31 STATEMENT OF SHAREHOLDERS’ EQUITY in CHF m in CHF m in CHF m in % SHAREHOLDERS’ EQUITY AT BEGINNING OF FINANCIAL YEAR Share capital 3,886 3,771 115 3 Capital reserve 10,455 74 1 10,381 Retained earnings 4,713 2,970 1,743 59 Revaluation reserves from the insurance business 3,249 2,796 453 16 Reserves for general banking risks 2,388 432 1,956 453 Group loss/Group profit –1,830 2,027 –3,857 – 22,861 22,377 484 2 TOTAL SHAREHOLDERS’ EQUITY AT BEGINNING OF FINANCIAL YEAR Reclassification from valuation adjustments and provisions 59 193 –134 –69 Creation of reserves for general banking risks, net 443 1,763 –1,320 –75 Dividends paid –1,114 –1,055 –59 6 Capital increases, par value and capital surplus 1,508 606 902 149 Capital increases, minority interests 87 2 85 – Acquisition of minority interests –238 –475 237 –50 Pooling adjustment –1,298 0 –1,298 – Goodwill 0 –330 330 –100 Foreign exchange differences –38 1,164 –1,202 – Change in revaluation reserves from the insurance business 2,539 453 2,086 460 Valuation adjustments relating to subsidiaries –151 –7 –144 – Capital surplus increase in Winterthur prior to merger 392 0 392 – Group profit/Group loss 601 –1,830 2,431 – 25,651 22,861 2,790 12 TOTAL SHAREHOLDERS’ EQUITY AT END OF FINANCIAL YEAR of which: Share capital 5,322 3,886 1,436 37 Capital reserve 9,366 10,200 –834 –8 Minority interests in capital reserve 104 255 –151 –59 Retained earnings –266 2,862 –3,128 – Minority interests in retained earnings 1,246 1,251 –5 0 Revaluation reserves from the insurance business 5,337 3,163 2,174 69 Minority interests in insurance revaluation reserves 451 86 365 424 Reserves for own shares 600 600 0 0 Reserves for general banking risks 2,890 2,388 502 21 Group profit/Group loss 601 –1,830 2,431 – – of which minority interests 204 252 –48 –19 31 Dec. 1997 31 Dec. 1996 Change Change 32 LOANS TO THE BANK’S GOVERNING BODIES in CHF m in CHF m in CHF m in % Loans to the bank’s governing bodies 86 257 –171 –67 Loans to the bank’s governing bodies comprise advances to members of the Board of Directors, the Executive Board as well as the Statutory Auditors and companies controlled by these individuals or legal entities. 83
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 33 MATURITY STRUCTURE OF CURRENT ASSETS, FINANCIAL Due Due Due within Due INVESTMENTS AND BORROWED Redeemable within 3 within 3 to 12 months after FUNDS AT 31 DECEMBER IN CHF M At sight by notice months 12 months to 5 years 5 years Real estate Total CURRENT ASSETS Cash and other liquid assets 3,404 3,404 – – – – – Money market claims 24,013 3 0 17,361 6,592 57 0 Due from banks 145,778 5,514 2,966 123,932 9,926 3,350 90 Claims from the insurance business 6,424 105 6,319 0 0 0 0 Due from customers 144,491 4,472 11,752 95,293 18,187 10,293 4,494 Mortgages 78,904 – 21,651 11,687 17,707 25,846 2,013 Securities and precious metals trading portfolios 103,826 103,826 – – – – – 117,324 42,688 248,273 52,412 39,546 6,597 0 506,840 TOTAL CURRENT ASSETS At 31 December 1996 111,673 41,026 206,562 69,693 36,868 8,593 0 474,415 TOTAL FINANCIAL INVESTMENTS 1 4,351 1,230 3,224 1,497 3,222 688 1,558 15,770 At 31 December 1996 2,282 0 1,426 1,743 3,569 1,424 1,137 11,581 BORROWED FUNDS Liabilities in respect of money market paper 12,520 0 0 9,236 3,051 233 0 Due to banks 180,236 47,462 3,682 116,911 10,067 2,044 70 Commitments from insurance business 6,045 25 6,020 0 0 0 0 Due to customers in savings and investment accounts 48,533 0 48,257 276 0 0 0 Due to customers, other 195,571 31,204 2,206 136,905 17,529 4,816 2,911 Medium-term bank notes 7,216 – – 449 1,285 5,061 421 Bonds and mortgage-backed bonds 45,594 – – 1,735 4,591 23,430 15,838 78,691 60,165 265,512 36,523 35,584 19,240 0 495,715 TOTAL BORROWED FUNDS At 31 December 1996 69,111 64,722 260,320 31,731 21,761 13,295 0 460,940 1 excluding investments from the insurance business 34 SECURITIES BORROWING AND LENDING 31 Dec. 1997 31 Dec. 1996 Change Change AND REPURCHASE AGREEMENTS in CHF m in CHF m in CHF m in % Due from banks 29,556 13,011 16,545 127 Due from customers 5,618 4,587 1,031 22 35,174 17,598 17,576 100 SECURITIES LENDING Due from banks 74,663 69,302 5,361 8 Due from customers 56,861 81,198 –24,337 –30 131,524 150,500 –18,976 –13 REVERSE REPURCHASE AGREEMENTS Due to banks 10,100 8,083 2,017 25 Due to customers 21,832 5,263 16,569 315 31,932 13,346 18,586 139 SECURITIES BORROWING Due to banks 71,076 81,969 –10,893 –13 Due to customers 46,365 46,801 –436 –1 117,441 128,770 –11,329 –9 REPURCHASE AGREEMENTS 84
  • 35 BALANCE SHEET BY ORIGIN Switzerland Abroad Switzerland Abroad Switzerland Abroad IN CHF M 31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31. Dec. 1996 Change Change ASSETS Cash and other liquid assets 2,316 1,088 2,571 361 –252 724 Money market claims 3,155 20,858 4,051 16,026 –896 4,832 Due from banks 4,633 141,145 4,642 120,831 –9 20,314 Claims from the insurance business 3,048 3,376 2,334 3,681 878 –469 Due from customers 26,781 117,710 29,836 129,455 –3,055 –11,745 Mortgages 67,484 11,420 68,087 9,987 –603 1,433 Securities and precious metals trading portfolios 11,190 92,636 8,826 76,554 2,364 16,082 Financial investments from the banking business 4,589 11,181 3,173 7,271 1,416 3,910 Investments from the insurance business 42,655 50,732 34,820 43,464 8,029 7,074 Non-consolidated participations 583 609 1,184 807 –601 –198 Tangible fixed assets 4,775 1,496 5,414 2,072 –639 –576 Intangible assets 0 181 0 0 0 181 Accrued income and prepaid expenses 1,726 7,693 1,448 6,056 278 1,637 Other assets 10,426 46,082 12,745 28,700 –2,319 17,382 183,361 506,207 179,131 445,265 4,591 60,581 TOTAL ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities in respect of money market paper 503 12,017 499 10,737 4 1,280 Due to banks 17,544 162,692 16,822 177,750 722 –15,058 Commitments from the insurance business 3,124 2,921 2,514 2,499 610 422 Due to customers in savings and investment accounts 44,290 4,243 43,403 3,893 887 350 Due to customers, other 63,567 132,004 43,797 122,766 19,770 9,238 Medium-term notes 7,216 0 8,681 0 –1,465 0 Bonds and mortgage-backed bonds 12,771 32,823 12,665 14,915 106 17,908 Accrued expenses and deferred income 3,496 8,181 1,878 6,871 1,618 1,310 Other liabilities 9,441 48,727 12,753 30,422 –3,312 18,305 Valuation adjustments and provisions 3,712 3,417 3,382 1,438 330 1,979 Technical provisions for the insurance business 43,802 47,426 40,001 43,849 3,801 3,577 Shareholders’ equity (excluding minority interests) 11,289 12,357 11,992 9,025 –703 3,332 Minority interests 47 1,958 45 1,799 2 159 220,802 468,766 198,432 425,964 22,370 42,802 TOTAL LIABILITIES 85
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 36 BALANCE SHEET BY CURRENCIES AT 31 DECEMBER 1997 IN CHF M Swiss francs US dollars Other currencies Total ASSETS Cash and other liquid assets 2,007 893 504 3,404 Money market claims 3,235 8,477 12,301 24,013 Due from banks 11,037 63,334 71,407 145,778 Claims from the insurance business 2,031 570 3,823 6,424 Due from customers 32,211 62,233 50,047 144,491 Mortgages 68,197 6,768 3,939 78,904 Securities and precious metals trading portfolios 22,273 39,423 42,130 103,826 Financial investments from the banking business 5,148 3,973 6,649 15,770 Investments from the insurance business 35,014 5,935 52,438 93,387 Non-consolidated participations 429 138 625 1,192 Tangible fixed assets 4,164 901 1,206 6,271 Intangible assets 0 0 181 181 Accrued income and prepaid expenses 1,661 3,256 4,502 9,419 Other assets 12,482 42,456 1,570 56,508 199,889 238,357 251,322 689,568 TOTAL ASSETS At 31 December 1996 180,360 264,265 179,771 624,396 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities in respect of money market paper 28 10,055 2,437 12,520 Due to banks 17,010 68,104 95,122 180,236 Commitments from the insurance business 2,945 196 2,904 6,045 Due to customers in savings and investment accounts 48,257 261 15 48,533 Due to customers, other 47,746 85,855 61,970 195,571 Medium-term notes 7,216 0 0 7,216 Bonds and mortgage-backed bonds 13,865 19,626 12,103 45,594 Accrued expenses and deferred income 3,620 4,993 3,064 11,677 Other liabilities 16,417 30,301 11,450 58,168 Valuation adjustments and provisions 3,615 2,010 1,504 7,129 Technical provisions for the insurance business 39,650 4,697 46,881 91,228 Shareholders’ equity (excluding minority interests) 5,957 7,472 10,217 23,646 Minority interests 56 387 1,562 2,005 206,382 233,957 249,229 689,568 TOTAL LIABILITIES At 31 December 1996 187,541 273,113 163,742 624,396 86
  • 37 PARTICIPATIONS, principal fully consolidated participations at 31 December 1997 Company (% of equity capital held by the company exercising control) Domicile Capital in m Business unit Credit Suisse Group Zurich 99.98 Credit Suisse Zurich CHF 3,114.7 CS/CSPB 99.99 Credit Suisse First Boston Zurich CHF 3,148.8 CSFB/CSAM 99.90 “Winterthur” Swiss Insurance Company Winterthur CHF 193.7 Winterthur 98.63 Neue Aargauer Bank Aarau CHF 273.8 CS 100.00 Bank Leu Ltd. Zurich CHF 400.0 CSPB 100.00 Bank Hofmann AG Zurich CHF 20.0 CSPB 86.69 Clariden Holding AG Zurich CHF 6.5 CSPB 100.00 Affida Bank Zurich CHF 7.0 CSPB 100.00 Bank Heusser & Cie AG Basle CHF 10.0 CSPB 100.00 Banque Leu (Luxembourg) SA Luxembourg CHF 25.0 CSPB 100.00 CS Life Zurich CHF 25.0 Winterthur 100.00 Credit Suisse Fides Zurich CHF 5.0 CSPB 100.00 Credit Suisse Trust AG Zurich CHF 5.0 CSPB 100.00 Credit Suisse Trust Holdings Ltd. St. Peter Port GBP 5.0 CSPB 66.67 IT Services AG Dübendorf CHF 2.4 100.00 Credit Suisse First Boston Private Equity Zug CHF 0.1 CSFB 100.00 Merban Equity Zug CHF 0.1 CSFB 100.00 CSFB IGP Zug CHF 0.1 CSFB 99.98 Credit Suisse Zurich CHF 3,114.7 CS/CSPB 89 City Bank Zurich CHF 5.0 CS 100 Denaro-Hypo Bank Aarau CHF 5.0 CS 100 Schweizerische Schiffshypothekenbank Basle CHF 15.0 CS 100 CS Leasing AG Zurich CHF 31.0 CS 100 CS Immobilien Leasing AG Zurich CHF 3.0 CS 90 Innoventure Capital AG Zurich CHF 10.0 CS 100 WECO Inkasso AG Zurich CHF 0.5 CS 100 ABZ Finanz- und Beteiligungsgesellschaft AG Zug CHF 4.0 CS 100 Bank für Handel und Effekten Zurich CHF 30.0 CSPB 100 Credit Suisse (UK) Ltd. London GBP 16.5 CSPB 100 Credit Suisse (Guernsey) Ltd. St. Peter Port GBP 3.0 CSPB 100 Credit Suisse (Gibraltar) Ltd. Gibraltar GBP 5.0 CSPB 100 Credit Suisse (Bahamas) Ltd. Nassau USD 12.0 CSPB 87 Credit Suisse Hottinguer Paris FRF 346.9 CSPB 100 Credit Suisse (Deutschland) AG Frankfurt DEM 10.0 CSPB 100 Credit Suisse (Italia) S.p.A. Milan ITL 25,000.0 CSPB 100 Credit Suisse Securities Ltd. London GBP 10.0 CSPB 100 Swiss American Corporation New York USD 38.9 CSPB 100 Credit Suisse Asset Management Inc. New York USD 19.3 CSAM 93 Swiss American Securities, Inc. New York USD 8.3 CSPB 87
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Principal fully consolidated participations (continued) Company (% of equity capital held by the company exercising control) Domicile Capital in m Business unit 99.99 Credit Suisse First Boston Zurich CHF 3,148.8 CSFB/CSAM 100 Credit Suisse First Boston, Inc. New York USD 2.2 CSFB 100 Credit Suisse First Boston (International) AG Zug CHF 37.5 CSFB 100 Credit Suisse First Boston Canada Toronto CAD 157.3 CSFB 100 Credit Suisse First Boston Aktiengesellschaft Frankfurt DEM 155.0 CSFB 99 Credit Suisse First Boston (Moscow) A/O Moscow USD 20.0 CSFB 100 Credit Suisse First Boston Custody (Moscow) Ltd. Moscow USD 0.5 CSFB 100 Credit Suisse (Luxembourg) S.A. Luxembourg LUF 624.0 CSFB 100 Credit Suisse First Boston (Cyprus) Limited Limassol USD 60.0 CSFB 75 Credit Suisse First Boston (India) Securities Private Ltd. Mumbai INR 238.5 CSFB 100 Credit Suisse First Boston (Ukraine) Kiev USD 15.0 CSFB 100 Finanz AG Zurich CHF 15.0 CSFB 100 Credit Suisse First Boston Bullion (Japan) Ltd. Tokyo JPY 1,000.0 CSFB 51 Finorafa AG Chiasso CHF 4.0 CSFB 100 Credit Suisse First Boston Finanziaria S.p.A. Milan ITL 1,000.0 CSFB 80 Credit Suisse Financial Products London USD 482.3 CSFB 100 Credit Suisse First Boston International (Guernsey) Ltd. St. Peter Port USD 350.1 CSFB 100 CSFB Investment (Guernsey) Limited St. Peter Port USD 200.0 CSFB 100 CSFB (Latin America) Holdings LLC Grand Cayman USD 84.6 CSFB 100 Credit Suisse First Boston Australia (Finance) Ltd. Melbourne AUD 10.0 CSFB 100 Boomskill Limited London GBP 2.5 CSFB 100 Credit Suisse First Boston Finance Ltd. Hong Kong USD 1.9 CSFB 100 Veryfinance AG Zug CHF 0.5 CSFB 100 Credit Suisse First Boston Finance (Panama) S.A. Panama City USD 0.3 CSFB 100 Credit Suisse First Boston Finance (Gibraltar) Ltd. Marina Bay GBP 0.1 CSFB 100 Credit Suisse First Boston Finance (Guernsey) Ltd. St. Peter Port USD 0.2 CSFB 100 Limpa AG Zurich CHF 0.1 CSFB 100 Credit Suisse Financial Services Inc. Wilmington USD ~ CSFB 100 Credit Suisse First Boston Finance B.V. Amsterdam NLG ~ CSFB 100 Credit Suisse First Boston Australia (Holdings) Ltd. Sydney AUD 42.6 CSFB 100 Credit Suisse Asset Management International Fund Holding Zurich CHF 20.0 CSAM 100 Credit Suisse Trust & Banking Co. Ltd. Tokyo JPY 9,000.0 CSAM 100 Credit Suisse Asset Management (UK) Holding Ltd. London GBP 11.0 CSAM 100 Credit Suisse Asset Management Ltd. London GBP ~ CSAM 100 Credit Suisse Gestion SGIIC, S.A. Madrid ESP 200.0 CSAM 100 Credit Suisse Asset Management (Guernsey) Ltd. St. Peter Port GBP 1.0 CSAM 100 Credit Suisse Asset Management (Nederland) Holding B.V. Amsterdam NLG 1.7 CSAM 100 Credit Suisse Asset Management (Polska) Sp.z.o.o. Warsaw USD 0.9 CSAM 100 Credit Suisse Asset Management (Praha) s.r.o. Prague CZK 1.0 CSAM 100 Credit Suisse Asset Management (Australia) Sydney AUD 0.3 CSAM 100 Credit Suisse Investment Corporation Wilmington USD ~ CSAM 100 Credit Suisse Capital Corporation New York USD ~ CSAM 100 BEA Associates New York USD 6.7 CSAM 88
  • Principal fully consolidated participations (continued) Company (% of equity capital held by the company exercising control) Domicile Capital in m Business unit 99.90 “Winterthur” Swiss Insurance Company Winterthur CHF 193.7 Winterthur Switzerland 100 Winterthur Life Winterthur CHF 150.0 Winterthur 100 The Federal Zurich CHF 10.0 Winterthur 100 Winterthur Legal Assistance Winterthur CHF 6.0 Winterthur 100 Vitodurum Insurance Winterthur CHF 40.0 Winterthur 100 Vitodurum Holding Winterthur CHF 5.0 Winterthur 100 Swissline Wallisellen CHF 0.5 Winterthur 67 Winterthur Columna Winterthur CHF 1.5 Winterthur 100 Winterthur International Winterthur CHF 1.0 Winterthur Germany 100 Winterthur Beteiligungsgesellschaft m.b.H. Wiesbaden DEM 70.0 Winterthur 75 WINCOM Versicherungs-Holding AG Wiesbaden DEM 102.7 Winterthur 61 DBV-Winterthur Group Wiesbaden DEM 169.4 Winterthur Italy 100 Winterthur Holding Italia Milan ITL 10,000.0 Winterthur 100 Winterthur Assicurazioni Milan ITL 345,000.0 Winterthur 100 Winterthur Vita S.p.A. Milan ITL 81,500.0 Winterthur Spain 100 Hispanowin S.A. Barcelona ESP 11,798.5 Winterthur 100 Winterthur Seguros Generales Barcelona ESP 5,744.3 Winterthur 80 Winterthur Asistencia Barcelona ESP 420.0 Winterthur 100 Winterthur Vida Espanola ˜ Barcelona ESP 5,819.0 Winterthur 100 Winterthur Salud de Seguros Madrid ESP 1,205.7 Winterthur 100 Equitativa Riesgos Diversos Madrid ESP 2,322.6 Winterthur 100 Winterthur Pensiones Barcelona ESP 600.0 Winterthur Belgium 85 Winterthur-Europe Assurances Brussels BEF 1.9 Winterthur 100 Assurance Group Josi Brussels BEF 291.3 Winterthur 100 ASG Accidents du Travail Brussels BEF 60.0 Winterthur Luxembourg 100 Winterthur-Europe Life Luxembourg LUF 132.0 Winterthur UK 100 Winterthur (UK) Holdings London GBP 42.6 Winterthur 100 Churchill Insurance Bromley GBP 60.0 Winterthur 100 Winterthur Life UK Holdings Basingstoke GBP ~ Winterthur 100 Winterthur Life UK Basingstoke GBP 26.4 Winterthur 100 Winterthur International London GBP 35.0 Winterthur Austria 100 Winterthur Versicherungen Vienna ATS 127.5 Winterthur 100 Winterthur Pensionskassen Vienna ATS 70.0 Winterthur 100 Wintisa Vienna ATS 1.0 Winterthur Portugal 100 Europeia Seguros Lisbon PTE 2,220.0 Winterthur 89
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Principal fully consolidated participations (continued) Company (% of equity capital held by the company exercising control) Domicile Capital in m Business unit “Winterthur” Swiss Insurance Company (continued) France 50 Assurcrédit Paris FRF 75.0 Winterthur 75 Rhodia Assurance Lyon FRF 60.0 Winterthur Czech Republic 65 Winterthur pojist’ouna, a.s. Prague CZK 363.0 Winterthur 65 Winterthur penzijní fond, a.s. Brno CZK 61.5 Winterthur Hungary 65 Winterthur Pénztárszolgáltató Rt. Budapest HUF 370.0 Winterthur 100 Winterthur Biztosito Rt. Budapest HUF 1,000.0 Winterthur Poland 45 Azur Ostoja Warsaw PLN 1.0 Winterthur 45 Azur Zycie Warsaw PLN 7.5 Winterthur USA 100 Winterthur U.S. Holdings Wilmington USD 30.0 Winterthur 100 Blue Ridge Simsbury USD 6.1 Winterthur 100 General Casualty Sun Prairie USD 3.0 Winterthur 100 Republic Financial Services Dallas USD 5.0 Winterthur 100 Southern Guaranty Montgomery USD 2.0 Winterthur 100 Unigard Bellevue USD 3.0 Winterthur 100 Winterthur Reinsurance of America New York USD 3.0 Winterthur 100 Winterthur Life U.S. Holdings Wilmington USD 30.0 Winterthur 100 Winterthur Life Re Dallas USD 1.5 Winterthur Canada 100 Winterthur Canada Financial Toronto CAD ~ Winterthur 100 The Citadel General Toronto CAD 34.1 Winterthur 100 L’Unique Quebec CAD 7.0 Winterthur Other countries 100 Winterthur Empreendimentos e Participações São Paulo BRL 1.6 Winterthur 100 Winterthur International (SA) Johannesburg ZAR 37.0 Winterthur 100 Winterthur International Argentina S.A. Buenos Aires USD 0.5 Winterthur 100 Winterthur Holdings Australia Sydney AUD 54.1 Winterthur 51 HIH Winterthur International Holdings Ltd. Sydney AUD 78.5 Winterthur 97 Winterthur Insurance (Far East) Singapore SGD 17.5 Winterthur 100 Winterthur Swiss Insurance (Asia) Hong Kong HKD 150.0 Winterthur 100 Winterthur Insurance (Asia) Hong Kong HKD 150.0 Winterthur 60 Winterthur Life Indonesia Jakarta IDR 16,500.0 Winterthur 91 Winterthur International Hamilton, Bermuda USD 2.4 Winterthur 92 Winterthur Overseas Hamilton, Bermuda USD 0.3 Winterthur 100 Windsor Parc Ltd. Hamilton, Bermuda USD 1.0 Winterthur 29 Harrington Holdings Hamilton, Bermuda USD 70.0 Winterthur 100 Winterthur Finance Ltd. British Virgin Islands GBP ~ Winterthur 90
  • Principal participations at 31 December 1997 valued according to the equity method Company Domicile Capital in m Equity interest in % Credit Suisse Group Inreska Ltd. St. Peter Port GBP 3.0 100.0 Göhner Merkur AG Zurich CHF 80.0 33.2 Credit Suisse Winterthur-Columna Zurich CHF 1.5 33.3 Cornèr Bank Ltd. Lugano CHF 12.0 27.3 Innoventure Equity Partners AG Zurich CHF ~ 30.0 Credit Suisse First Boston Valcambi S.A. Balerna CHF 12.0 100.0 Innovent Capital Ltd. Grand Cayman CHF 36.3 38.6 Premex AG Zurich CHF 1.5 33.3 Reinsurance Finance Consultants AG Zurich CHF 0.8 33.3 “Winterthur” Swiss Insurance Company Norwich Winterthur Holdings Norwich GBP 54.5 48.5 Norwich Winterthur Reinsurance Corp. Norwich GBP 57.8 86.4 Commonwealth Insurance Grand Cayman USD 0.1 91.0 Winterthur Internacional Brasil S.A. São Paulo BRL 2,300.0 100.0 91
  • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Principal participations at 31 December 1997 valued at cost Company Domicile Capital in m Equity interest in % Credit Suisse Group Fides Information Services Zurich CHF 1.0 66.7 Capital Union Dubai USD 30.0 25.0 Credit Suisse Swiss Mortgage Bond Bank Zurich CHF 300.0 16.8 Credit Suisse First Boston Banco General de Negocios Buenos Aires ARS 38.0 19.7 Banco Exterior Suiza S.A. Zurich CHF 115.0 10.0 Banco Comercial S.A. Montevideo UYU 215.9 17.4 Telekurs Holding AG Zurich CHF 45.0 17.4 Intersettle Swiss Corp. Zurich CHF 36.0 9.5 SEGA Schweiz. Effekten Giro Olten CHF 10.0 19.8 SNOC Swiss Nominee Company Zurich CHF 2.0 25.0 Swiss Online AG Zurich CHF 5.0 6.0 Euro-Clear Clearance System Ltd. London GBP 2.5 6.0 NCO Dealer Soc. Fin. Lisbon PTE 500.0 18.0 San Luis Financial and Investment Co. Ltd. Panama City PAB 0.5 12.1 Cedel Luxembourg USD 78.5 0.7 Link Telecom Ltd. St. Peter Port USD ~ 50.0 SWIFT La Hulpe BEF 439.9 1.6 “Winterthur” Swiss Insurance Company Auto-Bestandteil-Wiederverwertung AG Grolley CHF 0.2 50.0 Expertisa Vorsorge-Beratungen Winterthur CHF 0.1 100.0 Gartenhotel Winterthur CHF 2.5 100.0 Intershop Holding Zurich CHF 137.2 24.2 Intershop Properties USA AG Zurich CHF 62.0 10.0 IT Services AG Dübendorf CHF 2.4 33.3 Lehr-und Versuchswerkstätte Volketswil CHF 0.3 100.0 RFC Reinsurance Finance Consultants Zurich CHF 0.8 33.3 Tertianum Management AG Herrenschwanden CHF 0.5 14.9 Technopark Immobilien Zurich CHF 40.0 25.0 Wincare Versicherungen Winterthur CHF 0.1 100.0 Winterthur Financial Services Winterthur CHF 0.5 100.0 Zürcher Freilager AG Zurich CHF 4.0 36.1 DBV Allgemeine Dilbeek near Brussels BEF 500.0 100.0 Winterthur Financial Services Luxembourg LUF 25.0 100.0 Winterthur Fund Management Co. Luxembourg LUF 5.0 100.0 Winterthur Research SA Barcelona ESP 15.0 100.0 Winterthur-Service SA Barcelona ESP 25.0 100.0 Chiyoda Fire & Marine Insurance Tokyo JPY 18,390.8 6.3 Winterthur International Services Hamilton, Bermuda USD ~ 100.0 Seguros ATLAS Mexico City MXN 50.0 30.0 92
  • REPORT OF THE GROUP’S AUDITORS TO THE ANNUAL GENERAL MEETING OF CREDIT SUISSE GROUP, ZURICH As auditors of the Group, we have audited the consolidated financial statements (income statement, balance sheet, statement of source and application of funds and notes) of Credit Suisse Group for the year ended 31 December 1997. These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the profession in Switzerland and with the International Standards on Auditing issued by the International Federation of Accountants (IFAC), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, results of operations and the source and application of funds in accordance with Swiss accounting rules for banks, modified for the use of pooling-of-interests method of accounting for a business combination and the Swiss accounting and reporting recommendations (ARR) for the insurance business of the Group, both of which are explained in the notes to the consolidated financial statements, and comply with Swiss law and the Listing Rules of the Swiss Exchange. Furthermore, the consolidated financial statements comply with European Union directives (4th, 7th and directive for banks), except for the deviations described in the notes to the consolidated financial statements. We recommend that the consolidated financial statements submitted to you be approved. KPMG Klynveld Peat Marwick Goerdeler SA Brendan Nelson Bruce A. Mathers Chartered Accountant Chartered Accountant Auditors in Charge Zurich,16 March 1998 93