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.credit-suisse Annual Report Part 2 Financial report 1999 / 2000

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  • 1. FINANCIAL REPORT 50 Comments to the financial statements 52 Consolidated income statement 54 Consolidated balance sheet 55 Consolidated statement of source and application of funds 56 Consolidated off-balance sheet business 58 Notes to the consolidated financial statements 101 Report of the Group’s auditors 102 Income statement (parent company) 103 Balance sheet before allocation of retained earnings (parent company) 104 Notes to the financial statements (parent company) 108 Proposed allocation of retained earnings 109 Report of the statutory auditors 49
  • 2. 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 1999 and the annual financial statements of Credit Suisse Group, parent company, for the financial year ended 31 March 2000. Both sets of statements have been examined by independent auditors. Their reports are presented on pages 101 and 109. The consolidated financial statements include Credit Suisse First Boston, Credit Suisse, Neue Aargauer Bank, the Private Banks, the financial subsidiaries of Credit Suisse Group in Guernsey and Winterthur Insurance. For the banking and financial businesses, the consolidated financial statements were prepared pursuant to the accounting rules for banks; for the insurance business, the accounting rules for insurance companies were applied. ‘Winterthur’ Swiss Insurance Company (Winterthur) is included in the consolidated financial statements using the ‘pooling of interests’ method. Significant information about insurance operations is shown separately in the balance sheet and income statement. The 1999 financial year Following organisational changes at Credit Suisse First Boston, in April 1999 Credit Suisse Group repurchased Swiss Re’s 20% minority position in Credit Suisse Financial Products. Credit Suisse Group’s acquisition of Warburg Pincus Asset Management (CHF 36 bn in assets under management) and of a 19.9% stake in the private equity activities of Warburg, Pincus & Co became effective in July 1999. In December, the BGP Banca di Gestione Patrimoniale SA, Lugano was founded with share capital of CHF 50 m. The new private bank is a 100% direct subsidiary of Credit Suisse Group. Business activities started in February 2000. In December, Winterthur bought an additional 23% stake in DBV Winterthur Holding AG, Wiesbaden, from Commerzbank. This stake is composed of a 15% share held indirectly by Commerzbank through the intermediate WinCom holding and a direct shareholding of 8%. Winterthur’s participation in DBV Winterthur Holding AG thus increased to 69%. In the consolidated accounts, the change in equity capital held is effective from 1 July 1999. 50
  • 3. Of the CHF 446 m restructuring provisions available for the Focus project, BZW and Winterthur at the start of the year, CHF 327 m was used in 1999. The resulting end balance is CHF 119 m. Provisions for technology costs declined by CHF 181 m from CHF 247 m at the beginning of the year to CHF 66 m at the end. In 1999 CHF 96 m was booked against the reserve specifically earmarked for costs associated with the Y2K date change. This figure was CHF 163 m in 1998. Subsequent events In the United Kingdom, Winterthur announced the acquisition of the National Insurance and Guarantee Corp. Plc. (NIG), London in December. Together with its subsidiaries, NIG’s gross written premiums for 1999 will amount to some CHF 1.1 bn. NIG will be consolidated in the accounts as soon as regulatory approval is obtained, probably in the first quarter of 2000. In January, Winterthur Group anounced the acquisition of the Japanese life insurance company, Nicos Life. In the current business year (ending March 2000), Nicos Life is expected to achieve gross premiums of some CHF 447 m. 51
  • 4. CONSOLIDATED INCOME STATEMENT Notes 1999 1998 Change Change (p. 68 ff) in CHF m in CHF m in CHF m in % RESULT FROM INTEREST BUSINESS Interest and discount income 16,953 19,280 –2,327 –12 Interest and dividend income from trading portfolios 4,127 5,562 –1,435 –26 Interest and dividend income from financial investments from banking business 656 425 231 54 Interest expenses from banking business 16,484 20,115 – 3,631 –18 5,252 5,152 100 2 NET INTEREST INCOME 1, 2, 6 RESULT FROM COMMISSION AND SERVICE FEE BUSINESS Commission income from lending business 594 392 202 52 Commission from securities and investment transactions 10,523 8,030 2,493 31 Commission from other services 393 330 63 19 Commission expenses 640 425 215 51 10,870 8,327 2,543 31 NET COMMISSION AND SERVICE FEE INCOME 1, 2 6,578 2,378 4,200 177 NET TRADING INCOME 1, 2, 7 NET INCOME FROM INSURANCE BUSINESS Premiums earned, net 26,203 26,477 –274 –1 Claims incurred and actuarial provisions 27,120 27,395 –275 –1 Commission expenses, net 2,157 2,075 82 4 Investment income from insurance business 8,134 8,350 –216 –3 5,060 5,357 –297 –6 NET INCOME FROM INSURANCE BUSINESS 1, 2, 9, 10 OTHER ORDINARY INCOME Income from the sale of financial investments 505 1,224 –719 – 59 Income from investment activities 124 129 –5 –4 – of which from participations valued according to the equity method 95 105 –10 –10 – of which from other non-consolidated participations 29 24 5 21 Real estate income 33 28 5 18 Sundry ordinary income 703 336 367 109 Sundry ordinary expenses 1,255 1,231 24 2 110 486 – 376 –77 OTHER ORDINARY INCOME 1, 2 27,870 21,700 6,170 28 NET OPERATING INCOME 52
  • 5. Notes 1999 1998 Change Change (p. 68 ff) in CHF m in CHF m in CHF m in % 27,870 21,700 6,170 28 NET OPERATING INCOME (continued) Personnel expenses 13,509 10,586 2,923 28 1, 2 Other operating expenses 5,229 4,473 756 17 1, 2 18,738 15,059 3,679 24 TOTAL OPERATING EXPENSES 6,641 9,132 2,491 38 GROSS OPERATING PROFIT Depreciation and write-offs on non-current assets 657 1,045 388 59 1 Valuation adjustments, provisions and losses from banking business 3,175 1,540 –1,635 – 51 1, 8 3,832 2,585 –1,247 – 33 DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES GROUP PROFIT BEFORE EXTRAORDINARY 2,809 6,547 3,738 133 ITEMS AND TAXES Extraordinary income 1,554 93 –1,461 – 94 1, 3 Extraordinary expenses 573 152 – 421 –73 1, 4 Taxes 575 1,149 574 100 1, 2 3,215 5,339 2,124 66 GROUP PROFIT Minority interests 147 118 –29 –20 1 3,068 5,221 2,153 70 NET PROFIT (AFTER MINORITY INTERESTS) 53
  • 6. CONSOLIDATED BALANCE SHEET Notes 31 Dec. 1999 31 Dec. 1998 Change Change (p. 68 ff) in CHF m in CHF m in CHF m in % ASSETS Cash and other liquid assets 3,141 2,313 828 36 33 Money market claims 28,994 26,594 2,400 9 12, 33 Due from banks 164,901 140,152 24,749 18 33 Claims from insurance business 6,457 7,482 –1,025 –14 33 Due from customers 104,931 103,183 1,748 2 13, 14, 33 Mortgages 86,553 80,558 5,995 7 14, 33 Securities and precious metals trading portfolios 126,746 102,515 24,231 24 15, 16, 33 Financial investments from banking business 18,828 17,467 1,361 8 17, 19, 33 Investments from insurance business 117,222 102,316 14,906 15 18, 19 Non-consolidated participations 1,823 1,331 492 37 20, 21 Tangible fixed assets 6,828 6,362 466 7 21 Intangible assets 2,990 802 2,188 273 21 Accrued income and prepaid expenses 9,023 9,628 – 605 –6 Other assets 44,309 51,734 –7,425 –14 23 722,746 652,437 70,309 11 TOTAL ASSETS 24, 35, 36 Total subordinated claims 1,792 3,048 –1,256 – 41 Total due from non-consolidated participations 928 227 701 309 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities in respect of money market paper 22,120 14,735 7,385 50 33 Due to banks 198,324 154,048 44,276 29 33 Commitments from insurance business 6,268 8,412 –2,144 –25 33 Due to customers, in savings and investment accounts 44,007 46,618 –2,611 –6 33 Due to customers, other 182,249 178,561 3,688 2 33 Medium-term notes (cash bonds) 3,885 5,844 –1,959 – 34 33 Bonds and mortgage-backed bonds 47,905 44,953 2,952 7 27, 33 Accrued expenses and deferred income 11,778 3,138 14,916 27 Other liabilities 57,004 – 4,427 52,577 –8 28 Valuation adjustments and provisions 5,670 2,896 51 8,566 29 Technical provisions for insurance business 96,652 10,909 11 107,561 30 Reserves for general banking risks 2,048 83 4 2,131 29, 31 Share capital 5,382 62 1 5,444 31 Capital reserve 10,993 703 6 11,696 31 Revaluation reserves from insurance business 5,942 1,035 17 6,977 31 Retained earnings –1,596 2,748 172 1,152 31 Minority interests in shareholders’ equity 2,178 – 549 –25 1,629 31 Group profit 3,215 2,124 66 5,339 31 – of which minority interests 147 –29 –20 118 31 Total shareholders’ equity 28,162 6,206 22 34,368 31 652,437 70,309 11 722,746 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 35, 36 Total subordinated liabilities 16,524 1,670 10 18,194 Total liabilities due to non-consolidated participations 718 31 4 749 54
  • 7. CONSOLIDATED STATEMENT OF SOURCE AND APPLICATION OF FUNDS 1999 1998 Net Net in/outflow Source Application Source Application in/outflow in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m FROM OPERATIONS, 8,399 EQUITY TRANSACTIONS AND INVESTMENTS 1,186 12,749 OPERATING ACTIVITIES 5,917 Net profit for the year 3,215 5,339 Provisions for credit and other risks 1,421 2,584 Losses 78 101 Provisions for taxes 1,149 575 Depreciation and write-offs 1,045 681 Extraordinary income 1,488 32 Extraordinary expenses 101 462 Valuation of participations valued according to the equity method 105 95 Accrued income and prepaid expenses 209 605 Accrued expenses and deferred income 3,138 101 787 EQUITY TRANSACTIONS 226 Share capital 62 60 Capital surplus and retained earnings 1,486 1,922 Dividends paid 1,457 1,430 Foreign exchange differences 363 1,313 Minority interests 644 64 – 4,085 INVESTMENTS IN LONG-TERM ASSETS – 874 Investments in companies 386 514 Real estate 152 42 Other tangible and intangible fixed assets 1,430 3,547 FINANCIAL INVESTMENTS, PROVISIONS, –1,052 OTHER ASSETS AND LIABILITIES – 4,083 Investments from banking business 1,450 1,361 Investments from insurance business 8,929 14,906 Valuation adjustments and provisions 3,108 1,020 Technical insurance provisions 1 10,909 5,424 Other assets 7,713 5,144 Other liabilities 1,164 4,427 16,660 FROM OTHER BALANCE SHEET ITEMS – 3,588 – 34,927 ASSETS 38,956 Money market claims 2,581 2,401 24,953 2 Due from banks 5,626 Claims from insurance business 1,058 1,025 2,320 2 Due from customers 40,234 Mortgages 3,265 6,278 51,587 LIABILITIES – 42,544 Liabilities in respect of money market paper 7,385 2,215 44,276 2 Due to banks 26,188 Commitments from insurance business 2,144 2,367 2,611 2 Due to customers 1,915 Due to customers, other 17,010 3,688 Bonds and medium-term notes 2,013 993 25,059 CHANGE IN LIQUID ASSETS –2,402 Securities and precious metals trading portfolios 24,231 1,311 Cash and accounts with central banks 828 1,091 1 In line with insurance practice, the change in the technical provisions is shown as a total amount under changes in provisions affecting cashflow. 2 The changes are affected to some extent by the changes to accounting principles described on pages 64/65. 55
  • 8. CONSOLIDATED OFF-BALANCE SHEET BUSINESS 31 Dec. 1999 31 Dec. 1998 Change Change in CHF m in CHF m in CHF m in % CONTINGENT LIABILITIES Credit guarantees in form of avals, guarantees and indemnity liabilities 6,755 8,870 –2,115 –24 Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees 5,262 4,471 791 18 Irrevocable commitments in respect of documentary credits 3,224 2,225 999 45 Other contingent liabilities 3,870 3,710 160 4 19,111 19,276 –165 –1 TOTAL CONTINGENT LIABILITIES 120,560 84,775 35,785 42 IRREVOCABLE COMMITMENTS 50 59 –9 –15 LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY 226 262 – 36 –14 CONFIRMED CREDITS Mortgage Other Without collateral collateral collateral Total ANALYSIS OF COLLATERAL AS AT 31 DECEMBER 1999 in CHF m in CHF m in CHF m in CHF m CONTINGENT LIABILITIES Credit guarantees in form of avals, guarantees and indemnity liabilities 44 6,313 398 6,755 Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees 171 2,306 2,785 5,262 Irrevocable commitments in respect of documentary credits 0 216 3,008 3,224 Other contingent liabilities 137 1,043 2,690 3,870 352 9,878 8,881 19,111 TOTAL CONTINGENT LIABILITIES At 31 December 1998 339 9,759 9,178 19,276 2,630 56,553 61,377 120,560 IRREVOCABLE COMMITMENTS At 31 December 1998 2,889 40,946 40,940 84,775 0 0 50 50 LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY At 31 December 1998 0 0 59 59 0 1 225 226 CONFIRMED CREDITS At 31 December 1998 0 0 262 262 31 Dec. 1999 31 Dec. 1998 Change Change in CHF m in CHF m in CHF m in % 37,371 FIDUCIARY TRANSACTIONS 35,216 2,155 6 56
  • 9. 31 Dec. 1999 31 Dec. 1999 31 Dec. 1998 31 Dec. 1998 31 Dec. 1999 Positive gross Negative gross 31 Dec. 1998 Positive gross Negative gross Nominal replacement replacement Nominal replacement replacement value 4 value value 4 value 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 305.2 0.3 0.3 152.7 0.1 0.1 Swaps 3,354.3 52.7 50.1 2,383.1 65.3 60.3 Options bought and sold (OTC) 1,186.1 8.6 9.1 914.1 8.5 8.8 Forwards 45.3 0.6 0.5 54.0 0.2 0.3 Futures 542.4 – – 539.2 – – Options bought and sold (traded) 348.8 – – 633.8 – – 5,782.1 62.2 60.0 4,676.9 74.1 69.5 TOTAL INTEREST RATE PRODUCTS FOREIGN EXCHANGE PRODUCTS Forwards 1 525.7 10.5 9.7 782.2 14.7 16.9 Swaps 2 261.8 10.8 14.6 247.4 9.3 11.6 Options bought and sold (OTC) 280.6 3.9 3.7 342.3 5.5 6.1 Futures 0.5 – – 1.5 – – Options bought and sold (traded) 0.1 – – 0.3 – – 1,068.7 25.2 28.0 1,373.7 29.5 34.6 TOTAL FOREIGN EXCHANGE PRODUCTS PRECIOUS METALS PRODUCTS Forwards 1 17.5 1.5 1.2 18.8 0.9 1.1 Options bought and sold (OTC) 11.2 0.6 0.7 15.4 0.5 0.9 Futures 0.1 – – 0.2 – – Options bought and sold (traded) 0.0 – – 0.4 – – 28.8 2.1 1.9 34.8 1.4 2.0 TOTAL PRECIOUS METALS PRODUCTS EQUITY/INDEX-RELATED PRODUCTS Forwards 27.0 2.5 2.8 8.2 0.7 0.6 Options bought and sold (OTC) 295.3 20.2 21.3 191.4 13.8 14.7 Futures 35.7 – – 38.6 – – Options bought and sold (traded) 81.9 – – 63.2 – – 439.9 22.7 24.1 301.4 14.5 15.3 TOTAL EQUITY/INDEX-RELATED PRODUCTS OTHER PRODUCTS Forwards 8.7 0.5 0.4 0.1 0.0 0.0 Options bought and sold (OTC) 8.7 0.3 0.3 4.0 0.3 0.1 Futures 7.8 – – 8.5 – – Options bought and sold (traded) 0.1 – – 0.1 – – 25.3 0.8 0.7 12.7 0.3 0.1 TOTAL OTHER PRODUCTS 7,344.8 113.0 114.7 6,399.5 119.8 121.5 TOTAL, GROSS TOTAL REPLACEMENT VALUES 3, 5 5 43.1 3, 5 49.2 5 37.3 ACCORDING TO THE BALANCE SHEET 40.4 1 including outstanding spot transactions 2 cross-currency interest rate swaps 3 positive replacement value after deduction of CHF 1.4 bn (1998: CHF 4.4 bn) of assets pledged as security 4 No replacement values are shown for traded derivatives (futures and traded options) subject to daily margining requirements. Total positive and negative replacement values on traded derivatives amount to CHF 1.1 bn and CHF 1.0 bn respectively. 5 of which from insurance business: positive replacement values CHF 0.3 bn (1998 CHF 1.3 bn), negative replacement values CHF 0.4 bn (1998 CHF 0.6 bn) 57
  • 10. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENERAL PRINCIPLES The Group financial statements have been drawn up based on the accounting rules of the Implementing Ordinance to the Swiss Federal Law on Banks and Savings Banks of 14 December 1994 (status as at 28 October 1999), supplemented by the pooling- of-interests method and the provisions of the Swiss accounting and reporting recom- mendations with respect to insurance companies (FER 14). As required by the pooling- of-interests method, the consolidated financial statements of Credit Suisse Group show the combined results of Credit Suisse Group and Winterthur as if the merger had been effective for all previous periods shown. In addition, the consolidation 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. Until the end of 1996, goodwill (the difference between the purchase price and the amount of equity capital acquired) was set off against equity capital. For subsidiaries acquired after 1 January 1997, goodwill is stated in the balance sheet under ‘Intangible assets’ and amortised over its estimated useful life (not exceeding 20 years). SCOPE AND METHOD OF CONSOLIDATION All 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 subgroup, capital is consolidated according to the pooling-of-interests method. For the other Group companies capital is consolidated according to the purchase method with effect from 1 January 1990 (or later, if acquired thereafter). Intercompany transactions and unrealised gains therefrom are eliminated. Minority interests in shareholders’ 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 out- side the core business, and less significant holdings are not consolidated. 58
  • 11. CHANGES TO THE SCOPE OF CONSOLIDATION The scope of consolidation has undergone the following material changes: Banking business Credit Suisse Financial Products In April 1999 Credit Suisse Group repurchased Swiss Re’s 20% minority position in Credit Suisse Financial Products. The transaction is reflected in the consolidated accounts with effect from 1 January 1999. In March 2000, the company was renamed Credit Suisse First Boston International. Warburg Pincus Asset Management In July, the Credit Suisse Asset Management business unit (part of the Credit Suisse First Boston legal entity) acquired 100% of Warburg Pincus Asset Management, New York. BGP Banca di Gestione Patrimoniale SA In December, the BGP Banca di Gestione Patrimoniale SA, Lugano was founded with share capital of CHF 50 m. The new private bank, which is a 100% direct sub- sidiary of Credit Suisse Group, started its operations in February 2000. Insurance business DBV-Winterthur In December, Winterthur bought an additional 23% stake in DBV Winterthur Holding AG, Wiesbaden, from Commerzbank. This stake is composed of a 15% share held by Commerzbank indirectly through the intermediate WinCom holding and a direct share- holding that currently stands at 8%. Winterthur’s participation in DBV Winterthur Holding AG thus increased to 69%. In Winterthur’s consolidated accounts, the change in equity capital held is effective from 1 July 1999. 59
  • 12. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOREIGN CURRENCY TRANSLATION In the annual accounts of the individual Group companies, income and expense items denominated in foreign currencies are translated into the relevant local reporting currencies on the basis of the exchange rate as of the transaction date. Assets, liabilities and off-balance-sheet items are translated using the year-end rate. Hedged assets and liabilities are carried at their forward hedging rates. For the purposes of consolidation, the balance sheets of foreign Group companies are translated into Swiss francs using the year-end exchange rate, and their income statements are translated using the average exchange rate for the financial year. Translation differences are cred- ited or debited to shareholders’ equity and are shown separately in the statement of shareholders’ equity. The key foreign exchange rates are listed on page 100. DEVIATIONS FROM THE RELEVANT EU DIRECTIVES The Swiss accounting rules for banks conform in essence to EU directives and guide- lines. The areas in which Group accounting policies deviate from the accounting prin- ciples 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 emoluments paid to and liabilities in respect of 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 carried at their fair value. Historical differences between cost and fair value are not disclosed in the notes to the financial statements; – 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 adjust- ed 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 results 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. 60
  • 13. GENERAL ACCOUNTING AND VALUATION PRINCIPLES All completed business is recorded in the financial state- Recording of business ments as follows: foreign exchange, money market and precious metals transactions are recorded on value (settlement) date. Prior to the value date, foreign exchange and precious metals transactions are recorded as off-balance-sheet business. Securities transactions are recorded on a trade date basis. Reverse repurchase and repurchase transactions are shown in the Repo business balance sheet as advances secured by securities or as deposits against which the bank’s securities are pledged. Depending on the type of counterparty, they are shown as claims on (‘Due from’) or liabilities to (‘Due to’) banks or customers. They are carried in the balance sheet at the amounts at which the securities were initially acquired or sold as specified by the respective agreements, plus interest accrued to the balance sheet date. Securities borrowed and lent with Transactions involving non-monetary assets cash collateral and daily margining are included in the balance sheet corresponding to the accounting treatment for repurchase and reverse repurchase agreements. Securities borrowed and lent with non-monetary collateral and daily margining are recorded as a combination of repurchase and reverse repurchase agreements. Securities borrowed and lent against a fee are recorded in the balance sheet as inventory movement only when the transferor relinquishes control over the securities. All other claims and liabilities from transactions involving non-monetary assets (e.g. precious metals and commodities) are marked to market and shown as claims on (‘Due from’) or liabilities to (‘Due to’) banks or customers. Receivables and liabilities Cash, bank balances, money market paper and loans are generally accounted for at nominal value. Money market instruments held for trading are carried at their fair value. The necessary provisions for recognisable risks and potential losses are normally deducted from the appropriate asset items in the balance sheet. Endangered interest and commission income due from customers and banks are not booked as ‘Income from interest business’. Instead, they are only included in the income statement following payment. Provisions for exposures subject to country risk, default risk 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. 61
  • 14. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Real estate is valued at cost (including capital improvements) less depre- Real estate ciation 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, Other tangible fixed assets machinery, 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 (in general 3 – 5 years). The goodwill included in this balance sheet position arises from Intangible assets the capital consolidation of the majority holdings acquired from 1 January 1997. This goodwill is amortised over its estimated useful life (maximum 20 years). From 1 January 1999, third-party costs relating to the purchase and installation of software are capitalised and depreciated over the estimated useful life of the software, normally not exceeding 3 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’. Taxes Tax expenses are calculated on the basis of the annual results posted in the individual financial statements of the Group companies. Deferred tax assets and liabilities are established for the expected future tax implications of temporary differ- ences between 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 expenses and recorded as other assets or provisions. No provision is made for non- recoverable withholding taxes on undistributed profits of Group companies. Deferred tax assets arising from tax losses brought forward are similarly not recognised. Claims and liabilities in respect of Claims and liabilities of related companies related companies which are accounted for using the equity method and valued at cost are reported in the notes to the consolidated financial statements. 62
  • 15. VALUATION AND ACCOUNTING POLICIES IN RELATION TO BANK-SPECIFIC POSITIONS The trading portfolio consists of holdings of readily Securities trading portfolio 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 metals accounts and holdings are carried at fair value (amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s- length transaction). 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 comprises Financial investments from banking business securities and precious metals positions purchased as a long-term investment. It also includes real estate and holdings assumed from the lending business and desig- nated for resale. Private equity positions (long-term equity financing of companies usually not listed on a stock exchange) are valued at the lower of cost or market value. 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 or debited to ‘Result from interest business’ as appropriate. Investment holdings of equities and debt securities which are designated for resale and which do not constitute trading balances are valued at the lower of cost or market value. The notes to the consolidated financial statements include details of both the cost price and the market value of these holdings. Capital gains resulting from the disposal of financial investments at above the purchase price are shown under ‘Income from the disposal of financial investments’. Unrealised losses on equity positions as a result of a decrease in their market value, and unrealised profits which do not exceed the original result of changes in credit- worthiness are accounted for in the same way as credit business. Real estate assumed from lending business and designated for resale is valued according to the lower of cost or market value. 63
  • 16. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Reserves for general banking risks are Reserves for general banking risks precautionary reserves charged to ‘Extraordinary expenses’ to hedge against latent risks in the bank’s operating activities. Releases are credited to extraordinary income. Forward rate agreements, futures, swaps, options, forward contracts and Derivatives other over-the-counter off-balance-sheet instruments held for trading purposes are carried at their fair value and the resulting profits and losses are included in ‘Net trading income’ in the income statement. The resulting replacement values are included in ‘Other assets’ or ‘Other liabilities’ as appropriate and are presented net by counterparty for transactions in those products where the bank has a legal right to set off; otherwise the replacement values are presented gross by contract. Hedging transactions are valued using the same procedures as for the underlying transactions they hedge. Strategic positions are valued according to the lower of cost or market value. 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 dis- posal or redemption of the instrument are also accrued or deferred over the remaining term of the instrument, i.e. to the original final maturity. CHANGES TO ACCOUNTING PRINCIPLES From 1 January 1999, third-party costs relating to the acquisition Intangible assets and installation of software which meets the entity’s business needs alone are capi- talised and depreciated over the estimated useful life, normally not exceeding 3 years. Based on the changes in Transactions involving non-monetary assets (SLB) accounting rules, securities lending and borrowing transactions are recorded as described on page 61. Prior to 1999, the securities borrowed and lent in connection with such transactions were recorded as inventory movements and corresponding receivables and payables. Using the revised accounting rules, the 1998 figures for the balance sheet items would have been as follows: 64
  • 17. Disclosed Under new Balance sheet heading amount policy (in CHF m) Due from banks 140,152 134,378 Due from customers 103,183 103,164 Securities and precious metals trading portfolio 102,515 98,386 Due to banks 154,048 158,439 Due to customers 178,561 164,247 VALUATION AND ACCOUNTING POLICIES IN RELATION TO INSURANCE-SPECIFIC POSITIONS INVESTMENTS IN RESPECT OF INSURANCE BUSINESS Real estate is valued at market price. The market price of a property is Real estate calculated at its capitalised rental income using 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 dis- tributed over the remaining life so that a constant yield is achieved. The corresponding valuation adjustment is shown under the ‘Net investment income from insurance busi- ness’ position. Default risk is accounted for through the use of write-offs. 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. 65
  • 18. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Derivatives and other financial instruments are generally used to hedge Derivatives 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 Investments for the benefit of life insurance policyholders who investment risk bear the investment risk are carried at their market value. 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 mort- gages, 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-offs 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, without affecting the income statement, after deferred tax calculated on the basis of a full provision on unrealised gains for which there is no contractual obligation to pay to policyholders upon realisation. The amount of the technical provisions is based on the expected Technical provisions liabilities due to insured persons and claimants. As a rule, calculations are made individually, i.e. depending on the insurance contract or claim. Statistical or mathematical calculation methods are applied if these lead to approximately the same results and if they conform to the methods approved by the supervisory authorities of the respective countries. The equalisation reserves legally prescribed and locally created in some countries are not included in the Group accounts. As a rule, provisions for claims out- standing are not discounted. 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. 66
  • 19. CHANGES TO ACCOUNTING PRINCIPLES In the reporting period, various companies in which Winterthur Group has a majority interest (mainly finance and real estate companies) have been fully consolidated for the first time. Only nominal investments outside the insurance sector are still consolidated using the equity method or accounted for at cost. Deferred taxes are calculated based on the current tax rates on unrealised capital gains of the individual companies. EVENTS SINCE THE BALANCE SHEET DATE In January 2000, Winterthur Group acquired the Japanese life insurance company, Nicos Life. In the current business year (ending March 2000), Nicos Life is expected to achieve gross premiums of some CHF 447 m. Nicos Life will continue to operate as a legally independent company under its present name. Winterthur assumed the opera- tional management of the company on 31 March 2000. 67
  • 20. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Banking business Insurance business Total 1 SPLIT OF INCOME STATEMENT INTO BANKING 1999 1998 1999 1999 1998 1998 AND INSURANCE BUSINESS in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m Net interest income 5,252 5,152 0 5,252 5,152 0 Net commission and service fee income 10,870 8,327 0 10,870 8,327 0 Net trading income 6,578 2,378 0 6,578 2,378 0 Net income from insurance business 1, 2 1, 2 0 0 5,060 5,060 5,357 5,357 Other ordinary income 577 1,386 – 467 110 486 – 900 23,277 17,243 4,593 27,870 21,700 NET OPERATING INCOME 4,457 Salaries and other remuneration 10,331 7,587 1,225 11,556 8,919 1,332 Employee benefits 908 680 293 1,201 1,005 325 Other personnel expenses 515 438 237 752 662 224 1,755 1 1,881 1 Personnel expenses 11,754 8,705 13,509 10,586 Premises and real estate expenses 731 672 202 933 885 213 Expenses for IT, machinery, furnishings, vehicles and other equipment 853 784 249 1,102 921 137 Sundry operating expenses 2,442 1,841 752 3,194 2,667 826 1,203 2 1,176 2 Other operating expenses 4,026 3,297 5,229 4,473 Total operating expenses 15,780 12,002 2,958 18,738 15,059 3,057 7,497 5,241 1,635 9,132 6,641 GROSS OPERATING PROFIT 1,400 Depreciation and write-offs on non-current assets 929 567 116 1,045 657 90 Valuation adjustments, provisions and losses 1,540 3,175 0 1,540 3,175 0 Total depreciation, valuation adjustments, losses 2,469 3,742 116 2,585 3,832 90 GROUP PROFIT BEFORE EXTRAORDINARY 5,028 1,499 1,519 6,547 2,809 ITEMS AND TAXES 1,310 Extraordinary income 93 1,011 0 93 1,554 543 Extraordinary expenses 152 573 0 152 573 0 Taxes 809 204 340 1,149 575 371 4,160 1,733 1,179 5,339 3,215 GROUP PROFIT 1,482 Minority interests 28 36 90 118 147 111 4,132 1,697 1,089 5,221 3,068 NET PROFIT (AFTER MINORITY INTERESTS) 1,371 Expenses owing to the handling of both claims and investments are allocated to the income from insurance business. 1 personnel expenses CHF 618 m (previous year CHF 510 m) 2 other operating expenses CHF 487 m (previous year CHF 321 m) 68
  • 21. 1999 1998 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 2,646 2,606 2,808 2,344 –162 262 Net commission and service fee income 4,225 6,645 3,688 4,639 537 2,006 Net trading income 1,371 5,207 1,193 1,185 178 4,022 Income from insurance business 2,216 2,844 2,933 2,424 –717 420 Other ordinary income 264 –154 410 76 –146 –230 10,722 17,148 11,032 10,668 – 310 6,480 NET OPERATING INCOME Personnel expenses 3,785 9,724 3,563 7,023 222 2,701 Other operating expenses 2,025 3,204 1,755 2,718 270 486 5,810 12,928 5,318 9,741 492 3,187 TOTAL OPERATING EXPENSES 4,912 4,220 5,714 927 – 802 3,293 GROSS OPERATING PROFIT BEFORE TAXES % of total 54% 46% 86% 14% Taxes 381 768 274 301 107 467 % of total 33% 67% 48% 52% 4,531 3,452 5,440 626 – 909 2,826 GROSS OPERATING PROFIT AFTER TAXES % of total 57% 43% 90% 10% 1999 1998 Change Change 3 ANALYSIS OF EXTRAORDINARY INCOME in CHF m in CHF m in CHF m in % Release of reserves for general banking risks 21 933 – 912 – 98 Gains from the disposal of participations 11 553 – 542 – 98 Other extraordinary income 61 68 –7 –10 93 TOTAL EXTRAORDINARY INCOME 1,554 –1,461 – 94 1999 1998 Change Change 4 ANALYSIS OF EXTRAORDINARY EXPENSES in CHF m in CHF m in CHF m in % Creation of reserves for general banking risks 101 3 98 – World War II settlement 0 459 – 459 –100 Other extraordinary expenses 51 111 – 60 – 54 152 573 – 421 –73 TOTAL EXTRAORDINARY EXPENSES 69
  • 22. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1999 1998 Change Change 5 INCOME STATEMENT FOR BANKING BUSINESS Notes in CHF m in CHF m in CHF m in % 5,252 5,152 100 2 NET INTEREST INCOME 6 RESULT FROM COMMISSION AND SERVICE FEE ACTIVITIES 594 202 52 Commission income from lending business 392 10,523 2,493 31 Commission from securities and investment transactions 8,030 393 63 19 Commission from other services 330 640 215 51 Commission expenses 425 10,870 2,543 31 8,327 NET COMMISSION AND SERVICE FEE INCOME 6,578 4,200 177 2,378 NET TRADING INCOME 7 OTHER ORDINARY INCOME 505 –719 – 59 Income from the sale of financial investments 1,224 71 –23 –24 Income from investment activities 94 60 –23 –28 – of which from participations valued according to the equity method 83 11 0 0 – of which from other non-consolidated participations 11 33 5 18 Real estate income 28 403 81 25 Sundry ordinary income 322 435 153 54 Sundry ordinary expenses 282 577 – 809 – 58 1,386 OTHER ORDINARY INCOME 23,277 6,034 17,243 35 NET OPERATING INCOME 11,754 3,049 Personnel expenses 8,705 35 4,026 729 Other operating expenses 3,297 22 15,780 3,778 12,002 31 TOTAL OPERATING EXPENSES 7,497 2,256 5,241 43 GROSS OPERATING PROFIT 929 362 Depreciation and write-offs on non-current assets 567 64 87 5 – of which on real estate 82 6 842 362 – of which on other tangible and intangible fixed assets 480 75 0 –5 – of which on non-consolidated participations 5 –100 1,540 –1,635 Valuation adjustments, provisions and losses 3,175 – 51 8 2,469 –1 273 3,742 – 34 DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES 5,028 3,529 1,499 235 ANNUAL PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 93 – 918 Extraordinary income – 91 1,011 152 – 421 Extraordinary expenses –73 573 809 605 Taxes 297 204 4,160 2,427 140 1,733 ANNUAL PROFIT 28 –8 Minority interests –22 36 4,132 2,435 143 1,697 NET PROFIT (AFTER MINORITY INTERESTS) 70
  • 23. 1999 1998 Change Change 6 ANALYSIS OF THE RESULT FROM INTEREST BUSINESS in CHF m in CHF m in CHF m in % Interest and discount income Interest income on claims due from customers 10,241 11,365 –1,124 –10 Interest income on claims due from banks 5,540 6,479 – 939 –14 Interest income from money market claims 834 979 –145 –15 Credit commission treated as interest earnings 242 380 –138 – 36 Interest income from leasing operations 96 77 19 25 Total interest and discount income 16,953 19,280 –2,327 –12 Interest and dividend income from trading portfolios Interest income 3,488 5,093 –1,605 – 32 Dividend income 639 469 170 36 Total interest and dividend income from trading portfolios 4,127 5,562 –1,435 –26 Interest and dividend income from financial investments Interest income 524 348 176 51 Dividend income 132 77 55 71 Total interest and dividend income from financial investments 656 425 231 54 Interest expenses Interest expenses for liabilities due to customers 12,072 14,314 –2,242 –16 Interest expenses for liabilities due to banks 4,412 5,801 –1,389 –24 Total interest expenses 16,484 20,115 – 3,631 –18 – of which interest expenses for subordinated liabilities 858 650 208 32 5,252 5,152 100 2 TOTAL INTEREST INCOME 1998 1999 Change Change 7 ANALYSIS OF TRADING INCOME in CHF m in CHF m in CHF m in % Income from securities and commodities trading 1,289 4,700 3,411 265 Income from foreign exchange and banknote trading 140 1,345 1,205 – Income from precious metals trading 163 114 – 49 – 30 Income from trading in interest rate instruments 786 419 – 367 – 47 2,378 6,578 4,200 177 TOTAL TRADING INCOME 8 ANALYSIS OF VALUATION ADJUSTMENTS, 1999 1998 Change Change PROVISIONS AND LOSSES in CHF m in CHF m in CHF m in % For default risks (credit and country risks) 1,012 2,586 –1,574 – 61 For other business risks 450 488 – 38 –8 Losses 78 101 –23 –23 – of which losses from lending business 34 52 –18 – 35 1,540 3,175 –1,635 – 51 VALUATION ADJUSTMENTS, PROVISIONS AND LOSSES 71
  • 24. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1999 1998 Change Change 9 INCOME STATEMENT FOR INSURANCE BUSINESS Notes in CHF m in CHF m in CHF m in % NON-LIFE BUSINESS Premiums written 12,678 12,257 421 3 10 Change in provisions for unearned premiums and in actuarial provisions (health) – 576 – 454 –122 27 PREMIUMS EARNED 12,102 11,803 299 3 Claims and annuities paid – 8,873 – 8,157 –716 9 Change in provision for claims and annuities outstanding –271 –763 – 492 – 64 CLAIMS INCURRED – 9,144 – 8,920 –224 3 Dividends paid – 340 –229 –111 48 Change in provision for dividends 28 –106 134 –126 DIVIDENDS TO POLICYHOLDERS INCURRED – 312 – 335 23 –7 – 3,594 OPERATING EXPENSES – 3,771 177 –5 – 948 UNDERWRITING RESULT NON-LIFE –1,223 275 –22 Net investment income 1,942 2,261 – 319 –14 11 Interest on deposits and bank accounts (incl. exchange rate differences) 70 140 –70 – 50 Other interest paid –72 – 98 26 –27 Other income and expenses – 30 –180 150 – 83 962 PROFIT BEFORE TAXES AND MINORITY INTERESTS 900 62 7 LIFE BUSINESS Premiums written 14,171 14,674 – 503 –3 10 Change in provisions for unearned premiums –70 0 –70 – 14,101 PREMIUMS EARNED 14,674 – 573 –4 Claims paid –7,687 – 6,987 –700 10 Change in provisions for claims outstanding – 39 28 – 67 –239 –7,726 CLAIMS INCURRED – 6,959 –767 11 – 8,092 CHANGE IN ACTUARIAL PROVISIONS – 9,263 1,171 –13 Bonus allocation –1,546 –1,541 –5 0 Change in participation fund – 300 – 377 77 –20 –1,846 ALLOCATION TO PARTICIPATION –1,918 72 –4 –1,541 OPERATING EXPENSES –1,359 –182 13 Net investment income 5,865 5,758 107 2 11 Interest on deposits and bank accounts 124 207 – 83 – 40 Interest on bonuses credited to policyholders –130 –117 –13 11 Other interest paid –217 – 302 85 –28 Other income and expenses (incl. exchange rate differences) 29 –291 320 –110 567 PROFIT BEFORE TAXES AND MINORITY INTERESTS 430 137 32 72
  • 25. 1999 1998 Change Change INCOME STATEMENT FOR INSURANCE BUSINESS (continued) in CHF m in CHF m in CHF m in % SUMMARY Profit before taxes and minority interests (non-life business) 962 900 62 7 Profit before taxes and minority interests (life business) 567 430 137 32 PROFIT BEFORE TAXES, MINORITY INTERESTS, EXTRAORDINARY EXPENSES AND INTEREST ON BONDS 1,529 1,330 199 15 Interest on convertible bonds and warrant issues, goodwill –10 –20 10 – 50 Income from disposal of investments/business areas 0 543 – 543 100 Taxes – 340 – 371 31 –8 ANNUAL PROFIT BEFORE MINORITY INTERESTS 1,179 1,482 – 303 –20 Minority interests – 90 –111 21 –19 ANNUAL PROFIT AFTER MINORITY INTERESTS 1,089 1,371 –282 –21 10 ANALYSIS OF DIRECT BUSINESS, 1999 1998 Change Change GEOGRAPHICAL DISTRIBUTION in CHF m in CHF m in CHF m in % Europe Non-life 10,761 10,449 312 3 Life 14,114 14,484 – 370 –3 EUROPE, TOTAL 24,875 24,933 – 58 0 North America Non-life 2,627 2,350 277 12 Life 0 5 –5 –100 NORTH AMERICA, TOTAL 2,627 2,355 272 12 Asia-Pacific Non-life 243 225 18 8 Life 148 85 63 74 ASIA-PACIFIC, TOTAL 391 310 81 26 Other regions Non-life 42 46 –4 –9 Life 0 0 0 0 OTHER REGIONS, TOTAL 42 46 –4 –9 DIRECT BUSINESS, GROSS, TOTAL 27,644 27,935 291 1 Reinsurance assumed, gross Non-life 320 – 403 – 56 723 Life 2 –252 – 99 254 REINSURANCE ASSUMED, GROSS, TOTAL 322 – 655 – 67 977 TOTAL BUSINESS, GROSS 28,257 – 364 –1 28,621 Reinsurance ceded Non-life –1,315 221 –14 –1,536 Life – 93 61 – 40 –154 REINSURANCE CEDED, TOTAL –1,408 282 –17 –1,690 Business, net Non-life 12,678 421 3 12,257 Life 14,171 – 503 –3 14,674 TOTAL BUSINESS, NET 26,849 – 82 0 26,931 Home market, Switzerland Non-life 2,867 – 45 –2 2,912 Life 7,820 –1,134 –13 8,954 HOME MARKET, SWITZERLAND, TOTAL 10,687 –1,179 –10 11,866 73
  • 26. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1999 1998 Change Change 11 ANALYSIS OF NET INVESTMENT INCOME in CHF m in CHF m in CHF m in % Real estate Non-life 164 177 13 8 Life 393 3 1 390 REAL ESTATE, TOTAL 570 16 3 554 Mortgages Non-life 58 61 –3 –5 Life 408 387 21 5 MORTGAGES, TOTAL 466 448 18 4 Bonds and loans Non-life 935 950 –15 –2 Life 2,625 2,608 17 1 BONDS AND LOANS, TOTAL 3,560 3,558 2 0 Shares Non-life 291 131 160 122 Life 715 294 421 143 SHARES, TOTAL 1,006 425 581 137 Non-consolidated participations Non-life 27 9 18 200 Life 18 7 11 157 NON-CONSOLIDATED PARTICIPATIONS, TOTAL 45 16 29 181 Short-term investments Non-life 51 57 –6 –11 Life 49 59 –10 –17 SHORT-TERM INVESTMENTS, TOTAL 100 116 –16 –14 1,539 167 12 NON-LIFE 1,372 LIFE 4,208 463 12 3,745 5,747 630 12 INVESTMENT INCOME, TOTAL 5,117 Profits and losses on investments Realised gains on real estate 35 34 – 1 Realised losses on real estate – 46 –17 59 –29 Realised gains/realised losses (–) on other investments 536 – 496 – 48 1,032 Depreciation (–)/appreciation on investments –15 34 – 69 – 49 510 – 445 – 47 NON-LIFE 955 Realised gains on real estate 6 –1 –14 7 Realised losses on real estate 0 1 –100 –1 Realised gains/realised losses (–) on other investments 1,085 –1,188 – 52 2,273 Depreciation (–)/appreciation on investments 132 530 –133 – 398 1,223 – 658 – 35 LIFE 1,881 1,733 –1,103 – 39 2,836 PROFITS AND LOSSES ON INVESTMENTS, TOTAL Investment income 104 –3 –3 107 Profits and losses (–) 599 455 316 144 Net investment income where the investment risk is borne by the policyholders 703 452 180 251 Investment expenses Non-life –107 – 41 62 – 66 Life –269 –150 126 –119 – 376 –191 103 INVESTMENT EXPENSES, TOTAL –185 1,942 – 319 –14 NON-LIFE 2,261 5,162 – 345 –6 LIFE 5,507 NET INVESTMENT INCOME WHERE THE INVESTMENT RISK IS BORNE BY THE POLICYHOLDERS 703 452 180 251 7,807 –212 –3 NET INVESTMENT INCOME, TOTAL 8,019 74
  • 27. 31 Dec. 1999 31 Dec. 1998 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 11,966 19,669 –7,703 – 39 – of which treasury bills 6,028 16,243 –10,215 – 63 Other bills of exchange and money market paper 17,028 6,925 10,103 146 28,994 26,594 2,400 9 TOTAL MONEY MARKET CLAIMS 31 Dec. 1999 31 Dec. 1998 Change Change in CHF m 13 DUE FROM CUSTOMERS FROM LEASE FINANCING in CHF m in CHF m in % 417 Car leasing 362 55 15 490 Real estate leasing 292 198 68 1,294 Leasing of capital goods 903 391 43 2,201 1,557 644 41 TOTAL DUE FROM CUSTOMERS FROM LEASE FINANCING Other Without Mortgage Total collateral collateral collateral 14 ANALYSIS OF LOAN COLLATERAL AT 31 DECEMBER 1999 in CHF m in CHF m in CHF m in CHF m 104,931 Due from customers 59,452 39,615 5,864 86,553 Mortgages 86,553 Residential properties 60,054 Business and office properties 6,130 Commercial and industrial properties 9,985 Other properties 10,384 191,484 59,452 39,615 92,417 TOTAL LOAN COLLATERAL At 31 December 1998 53,581 43,406 183,741 86,754 31 Dec. 1999 31 Dec. 1998 Change Change 15 SECURITIES AND PRECIOUS METALS TRADING PORTFOLIOS in CHF m in CHF m in CHF m in % 79,636 Interest-bearing securities and rights 68,830 10,806 16 49,458 Listed on stock exchange 41,138 8,320 20 30,178 Unlisted 27,692 2,486 9 151 – of which own bonds and medium-term notes 333 –182 – 55 45,152 Equities 31,886 13,266 42 3,392 – of which own shares 2,344 1,048 45 1,958 Precious metals 1,799 159 9 126,746 102,515 24,231 24 TOTAL SECURITIES AND PRECIOUS METALS TRADING PORTFOLIOS – of which securities rediscountable or pledgeable at central banks 43,297 28,186 15,111 54 Substantial claims and liabilities included in other balance sheet positions. These are valued at fair value and any profit/loss on them is shown under trading income. Lent trading positions (Due from banks and customers) 0 44,959 – 44,959 –100 Borrowed trading positions (Due to banks and customers) 4,703 37,487 – 32,784 – 87 Positive replacement values of derivative instruments from trading activities (Other assets) 38,963 47,046 – 8,083 –17 Negative replacement values of derivative instruments from trading activities (Other liabilities) 41,175 50,413 – 9,238 –18 75
  • 28. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1999 1999 1998 1998 16 OWN SHARES INCLUDED IN SECURITIES TRADING PORTFOLIOS No. of shares in CHF m No. of shares in CHF m In registered share equivalents, including derivatives At beginning of financial year 427,516 92 477,971 108 At end of financial year 109,690 36 427,516 92 17 FINANCIAL INVESTMENTS FROM Book value Cost Market value BANKING BUSINESS IN CHF M 31 Dec. 1998 31 Dec. 1999 31 Dec. 1999 31 Dec. 1998 31 Dec. 1999 31 Dec. 1998 Interest-bearing securities and rights – 10,653 – – 11,118 – Listed on stock exchange – 9,204 – – 10,832 – Unlisted – 1,449 – – 286 – – of which valued according to the accrual method – 9,940 – – 7,308 – – of which valued at lower of cost or market value 737 713 734 3,878 3,810 3,812 – of which own bonds and medium-term notes – 2 – – 61 – Equities 6,440 6,111 8,767 4,793 4,558 7,201 – of which own shares – 204 – – 0 – – of which qualifying participations – 2,606 – – 817 – Precious metals 9 9 9 8 8 8 Real estate 2,203 2,055 2,055 1,924 1,783 1,783 TOTAL FINANCIAL INVESTMENTS FROM – 18,828 – – 17,467 – BANKING BUSINESS – of which valued at lower of cost or market value 9,389 8,888 11,565 10,603 10,159 12,804 – of which securities rediscountable or – pledgeable at central banks – 9,556 – – 10,002 – Borrowed financial investments 1 – 0 – – 3,067 – 1 shown in the consolidated balance sheet as due to banks or customers 31 Dec. 1999 31 Dec. 1998 Change Change 18 INVESTMENTS FROM INSURANCE BUSINESS in CHF m in CHF m in CHF m in % Real estate at market value Non-life 4,176 3,967 209 5 Life 8,839 8,820 19 0 13,015 REAL ESTATE AT MARKET VALUE, TOTAL 12,787 228 2 Mortgages at redemption value Non-life 1,336 1,274 62 5 Life 7,454 7,325 129 2 8,790 MORTGAGES AT REDEMPTION VALUE, TOTAL 8,599 191 2 Continued 21,805 21,386 76
  • 29. 31 Dec. 1999 31 Dec. 1998 Change Change 18 INVESTMENTS FROM INSURANCE BUSINESS in CHF m in CHF m in CHF m in % 21,386 21,805 Continued Bonds and loans at amortised cost Non-life 14,908 1,684 11 16,592 Life 44,139 4,338 10 48,477 59,047 6,022 10 65,069 BONDS AND LOANS AT AMORTISED COST, TOTAL Shares at market value 1,762 33 Non-life 5,375 7,137 6,098 35 Life 17,523 23,621 7,860 34 22,898 30,758 SHARES AT MARKET VALUE, TOTAL Non-consolidated participations at cost Non-life 357 347 –10 –3 Life 233 87 –146 – 63 590 434 –156 –26 NON-CONSOLIDATED PARTICIPATIONS AT COST, TOTAL Short-term investments at par value Non-life 1,446 1,201 –245 –17 Life 1,546 477 –1,069 – 69 2,992 1,678 –1,314 – 44 SHORT-TERM INVESTMENTS AT PAR VALUE, TOTAL 86 104 Investments where the investment risk is borne by the policyholders 18 21 Real estate at market value 678 788 110 16 Bonds and loans at amortised cost 3,118 4,912 1,794 58 Shares at market value 710 898 188 26 Short-term investments at par value INVESTMENTS WHERE THE INVESTMENT 4,592 6,702 2,110 46 RISK IS BORNE BY THE POLICYHOLDERS, TOTAL Less mortgages and non-consolidated participations not included in investments from insurance business 9,189 9,224 35 0 TOTAL INVESTMENTS FROM INSURANCE BUSINESS 102,316 117,222 14,906 15 ADDITIONAL DATA ON INVESTMENTS Real estate at cost value Non-life 3,580 256 8 3,324 Life 8,251 198 2 8,053 11,831 454 4 11,377 REAL ESTATE AT COST VALUE, TOTAL Shares at cost value Non-life 4,874 1,007 26 3,867 Life 15,761 3,244 26 12,517 20,635 4,251 26 16,384 SHARES AT COST VALUE, TOTAL Bonds and loans at market value Non-life 16,596 812 5 15,784 Life 48,736 1,896 4 46,840 65,332 2,708 4 62,624 BONDS AND LOANS AT MARKET VALUE, TOTAL 77
  • 30. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 19 OWN SHARES INCLUDED IN FINANCIAL INVESTMENTS 1999 1999 1998 1998 FROM BANKING AND INSURANCE BUSINESS No. of shares in CHF m No. of shares in CHF m Registered shares, at beginning of financial year 21,325 5 189,208 18 Additions (purchase price) 36,206 10 14,827 4 Disposals (selling price) 38,297 10 182,710 16 Registered shares, at end of financial year 19,234 6 21,325 5 31 Dec. 1999 Change Change 31 Dec. 1998 20 NON-CONSOLIDATED PARTICIPATIONS in CHF m in CHF m in % in CHF m Participations valued according to the equity method 1,415 736 108 679 Other non-consolidated participations 408 –244 – 37 652 1,823 492 37 1,331 TOTAL NON-CONSOLIDATED PARTICIPATIONS With market value 223 –27 –11 250 Without market value 1,600 519 48 1,081 Book Foreign ex- Book Write-offs/ value at Change in change diff. value at 21 ANALYSIS OF CAPITAL Historical accumulated 31 Dec. scope of Write-offs/ and reclassifi- 31 Dec. ASSETS IN CHF M value depreciation 1998 consolidation Additions Disposals depreciation cations 1999 Participations valued according to the equity method 680 –1 679 130 529 –109 0 186 1,415 Other non-consolidated participations 657 –5 652 – 476 208 –15 0 39 408 1,337 –6 1,331 – 346 737 –124 0 225 Non-consolidated participations 1,823 Premises used by the bank 4,475 – 664 3,811 1 143 –17 – 80 44 3,902 Other real estate 538 – 47 491 11 8 – 48 –7 10 465 5,013 –711 4,302 12 151 – 65 – 87 54 Real estate 4,367 3,677 –1,617 2,060 –3 1,158 – 58 –791 95 Other tangible fixed assets 2,461 921 –119 802 –3 2,242 – 55 –167 171 Intangible assets 2,990 10,948 –2,453 8,495 – 340 4,288 – 302 –1,045 545 11,641 TOTAL 31 Dec. 1999 Change Change 31 Dec. 1998 22 ADDITIONAL INFORMATION ON FIXED ASSETS in CHF m in CHF m in % in CHF m Fire insurance value of real estate 16,639 737 5 15,902 Fire insurance value of other tangible fixed assets 3,194 767 32 2,427 Future leasing instalments from operational leasing 145 52 56 93 31 Dec. 1999 Change Change 31 Dec. 1998 23 OTHER ASSETS in CHF m in CHF m in % in CHF m Positive replacement value of derivative instruments 39,780 –7,833 –16 47,613 – of which trading 38,963 – 8,083 –17 47,046 – of which other 817 250 44 567 Compensation account 235 235 –100 0 Deferred tax assets 1,935 717 59 1,218 Other 2,359 – 544 –19 2,903 44,309 –7,425 –14 51,734 TOTAL OTHER ASSETS 78
  • 31. 31 Dec. 1999 31 Dec. 1999 31 Dec. 1998 31 Dec. 1998 24 ANALYSIS OF ASSETS BY COUNTRY/GROUPS OF COUNTRIES in CHF m in % in CHF m in % Switzerland 195,699 27 184,429 28 EU, Liechtenstein and EFTA 244,400 34 203,006 31 – of which United Kingdom 96,869 13 82,298 13 Germany 61,213 8 17,236 3 France 16,761 2 14,776 2 Italy 18,490 3 13,413 2 Spain 8,184 1 8,137 1 Liechtenstein 1,421 ~ 1,533 ~ EFTA 1,375 ~ 958 ~ USA 184,467 26 153,599 24 Canada 3,953 ~ 3,038 ~ Mexico 1,348 ~ 1,263 ~ Japan 34,647 5 57,595 9 Australia 4,351 1 3,855 1 New Zealand 905 ~ 1,221 ~ South Africa 1,239 ~ 1,530 ~ Financial centres outside industrialised countries 18,722 3 16,903 3 – of which Hong Kong 2,720 ~ 2,061 ~ Singapore 4,111 1 2,776 ~ Bahamas 1,143 ~ 375 ~ Cayman Islands 4,791 1 7,396 1 Other Europe 6,641 1 7,970 1 – of which Russia 2,807 ~ 3,640 1 Czech Republic 396 ~ 312 ~ Poland 249 ~ 198 ~ Hungary 364 ~ 134 ~ Middle East countries 4,911 1 2,638 1 Central and South America 8,541 1 7,639 1 – of which Argentina 1,094 ~ 1,037 ~ Brazil 6,223 1 5,149 1 Asia-Pacific region 11,421 1 6,634 1 Africa 1,501 ~ 1,117 ~ 722,746 100 652,437 100 TOTAL ASSETS The above analysis is based on the location of assets and does not take any collateral or hedges through structured off-balance-sheet transactions into account. Market and credit risks can therefore not be judged on the basis of the above schedule. 25 ASSETS PLEDGED OR ASSIGNED AND 31 Dec. 1999 Change Change 31 Dec. 1998 ASSETS SUBJECT TO OWNERSHIP RESERVATION in CHF m in CHF m in % in CHF m Assets pledged and assigned as collateral 82,678 26,498 47 56,180 Actual commitments secured 73,344 47,105 180 26,239 No assets were under reservation of ownership either in 1999 or in previous years. 31 Dec. 1999 Change Change 31 Dec. 1998 26 LIABILITIES TO OWN PENSION FUNDS in CHF m in CHF m in % in % TOTAL 1,001 –237 –19 1,238 79
  • 32. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 Dec. 1999 31 Dec. 1998 Change Change 27 OUTSTANDING BONDS ISSUED – SUMMARY in CHF m in CHF m in CHF m in % Bonds 46,233 43,383 2,850 7 Bonds issued by the central issuing office 73 113 – 40 – 35 Mortgage bonds issued by the central mortgage bond institutions 1,599 1,457 142 10 47,905 44,953 2,952 7 TOTAL OUTSTANDING BONDS ISSUED 27a BONDS ISSUED BY CREDIT SUISSE GROUP Year Earliest date Par value Redemption Interest rate of issue callable in m 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 7 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 15.09.2008 3.50% 1998 CHF 500 02.07.2009 3.50% 1999 CHF 500 27b BONDS ISSUED BY SUBSIDIARIES Credit Suisse Group Finance (Guernsey) Ltd., Guernsey 24.02.2003 5.50% 1999 USD 250 17.02.2004 3.75% 1999 EUR 250 1 19.11.2002 4.88% Convertible bond 1992 USD 16 04.03.2004 2.50% 1999 CHF 250 29.07.2019 variable Floating rate notes 1999 EUR 400 All bonds issued by Credit Suisse Group Finance (Guernsey) Ltd. are guaranteed by Credit Suisse Group. Credit Suisse First Boston, Zurich 1 31.01.2000 7.25% 1990 CHF 150 15.09.2000 4.50% 1995 CHF 250 2 15.10.2000 5.75% 1997 USD 1,997 05.06.2001 7.25% 1990 CHF 170 1 31.07.2001 7.00% 1991 CHF 150 2 15.10.2001 5.75% 1997 USD 1,497 1 15.01.2002 7.00% 1992 CHF 100 200 1,6 20.02.2002 7.50% 1991 CHF 150 1,6 30.03.2002 7.25% 1990 30.03.2000 CHF 15.05.2002 6.75% 1992 CHF 60 100 1,6 15.01.2003 7.75% 1991 CHF 100 1,6 15.01.2003 7.25% 1992 CHF 170 1,6 01.02.2003 5.00% 1988 01.02.2000 CHF 1 31.03.2003 3.50% 1993 CHF 200 3 25.04.2003 variable 1996 USD 75 200 1,3 29.09.2003 6.25% 1993 USD 600 1,3 18.11.2003 6.13% 1993 DEM 22.04.2004 4.38% 1996 CHF 200 80
  • 33. BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 1,3 18.11.2004 8.50% 1994 USD 300 1,3 30.12.2004 6.13% 1994 DEM 100 6 02.02.2005 5.50% 1995 CHF 100 1 31.03.2005 5.75% 1995 CHF 225 3001,6,7 13.11.2005 3.13% 1995 CHF 3 17.11.2005 2.00% 1997 USD 100 3 10.11.2005 2.00% 1997 USD 200 1,4 30.06.2006 7.21% 1996 USD 238 1,4 30.06.2006 6.84% 1997 USD 95 1,3 perpetual 7.90% 1997 01.05.2007 USD 500 1,3 perpetual 6.50% 1997 12.06.2007 FRF 750 1,3 perpetual 6.50% 1997 12.06.2007 FRF 500 1 06.07.2007 5.25% 1995 CHF 150 1 06.07.2007 5.25% 1995 CHF 100 1,3 perpetual 4.38% 1997 23.07.2007 CHF 498 1 perpetual 7.74% 1997 10.07.2007 USD 100 1,6 08.02.2008 4.50% 1996 CHF 200 3 19.02.2008 2.00% 1998 USD 250 1,5 01.05.2008 6.50% 1998 USD 200 1,3 perpetual 8.25% 1997 10.07.2009 GBP 150 1,3 13.10.2009 6.25% 1999 EUR 225 1,3 15.12.2009 6.00% 1999 EUR 150 1,3 11.05.2010 5.75% 1998 DEM 415 1,4 29.06.2011 7.16% 1999 USD 125 1,3 22.10.2014 8.68% 1999 EUR 15 1 10.03.2016 5.00% 1986 10.03.2006 CHF 200 1,3 15.10.2019 7.15% 1999 EUR 12 1,3 03.01.2022 variable 1999 USD 5 1,3 30.12.2024 variable 1999 USD 24 1,3 02.01.2025 variable 1999 USD 15 1,3 02.01.2026 variable 1999 USD 20 1,3 30.12.2026 variable 1999 USD 46 1,3 30.12.2027 variable 1999 USD 19 1,3 03.01.2028 variable 1999 USD 40 1,3 perpetual 4.51% 1998 01.12.2028 JPY 10,000 1,3 15.10.2029 7.05% 1999 EUR 25 20.10.2029 9.35% 1999 EUR 25 1,3 Credit Suisse, Zurich 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 1 17.12.2001 2.75% 1993 CHF 125 16.03.2002 6.75% 1992 CHF 200 30.06.2002 7.25% 1992 CHF 100 1 25.09.2002 7.75% 1992 CHF 100 81
  • 34. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 31.03.2003 5.25% 1993 CHF 250 1 28.04.2005 5.75% 1995 CHF 120 1 12.10.2005 5.00% 1995 CHF 150 1 05.01.2006 4.38% 1996 CHF 150 1 31.07.2009 4.00% 1997 CHF 200 1 12.11.2009 5.00% 1999 CHF 600 Neue Aargauer Bank, Aarau 28.06.2002 4.25% 1996 CHF 100 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 2000/2001 4.5%–7.6% Central issuing office of the Association of Swiss Regional Banks 1992/1993 CHF 63 2000 –2007 3.3%–7.4% Mortgage bonds issued by the Swiss Mortgage 1990 –1999 CHF 1,000 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 Guernsey Branch, Guernsey 1 perpetual 6.25% 1999 9.7.2009 EUR 125 Credit Suisse First Boston Finance (Guernsey) Ltd., Guernsey 20.02.2000 0.00% 1990 CAD 500 31.10.2002 0.00% 1992 DEM 500 Credit Suisse First Boston International (Guernsey) Ltd., Guernsey 20.03.2000 various 1999 USD 100 20.03.2000 various 1999 USD 15 20.03.2000 various 1999 USD 5 03.04.2000 5.93% 1998 USD 10 14.07.2000 various 1999 USD 100 02.10.2000 various 1999 USD 325 02.04.2001 4.34% 1998 DEM 10 02.04.2001 4.23% 1998 DEM 3 29.08.2003 2.67% 1998 CHF 19 Credit Suisse First Boston Finance B.V., Amsterdam 22.02.2000 7.50% 1992 NLG 350 1 15.06.2000 7.75% 1993 LUF 2,000 1 01.07.2003 6.07% 1993 LUF 3,000 perpetual 5.69% 1986 USD 150 1 26.05.2003 5.88% 1993 USD 200 1 25.08.2003 5.50% 1993 USD 200 82
  • 35. BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m Credit Suisse First Boston (Cayman) Ltd., Cayman Islands 01.02.2000 variable 1998/1999 RUR 1,381 01.05.2000 variable 1999 RUR 174 01.07.2000 variable 1999 RUR 34 19.07.2000 10.00% 1997 USD 4 08.08.2000 10.00% 1997 USD 4 01.09.2000 variable 1998/1999 RUR 635 01.10.2000 variable 1998/1999 RUR 1,542 30.10.2000 variable 1997 USD 10 01.01.2001 variable 1998/1999 RUR 4,022 01.05.2001 variable 1998 USD 25 01.08.2001 variable 1998 RUR 670 01.09.2001 variable 1998/1999 RUR 3,333 01.12.2001 variable 1999 RUR 1,385 01.02.2002 variable 1999 RUR 518 01.03.2002 variable 1998 RUR 1 01.05.2002 variable 1999 RUR 462 01.06.2002 variable 1999 RUR 561 01.09.2002 variable 1999 RUR 417 01.10.2002 variable 1999 RUR 432 01.01.2003 variable 1999 RUR 610 01.02.2003 variable 1999 RUR 666 01.03.2003 variable 1998 RUR 2 01.05.2003 variable 1999 RUR 611 01.06.2003 variable 1999 RUR 569 01.09.2003 variable 1999 RUR 748 01.10.2003 variable 1999 RUR 424 01.01.2004 variable 1999 RUR 404 01.03.2004 variable 1998 RUR 67 01.03.2005 variable 1998 RUR 3 Credit Suisse First Boston Inc., New York 03.03.2000 6.15% 1993 USD 10 1 03.05.2000 5.60% 1995 DEM 147 15.09.2000 5.32% 1995 USD 25 01.10.2000 5.32% 1995 USD 35 01.10.2000 5.32% 1996 USD 15 1 02.11.2000 5.72% 1994 PTE 32 1 14.02.2001 5.92% 1996 DEM 136 1 26.03.2001 5.75% 1996 USD 5 1 17.04.2001 5.89% 1996 USD 20 1 30.04.2001 5.79% 1992 USD 200 1 06.06.2001 5.79% 1994 USD 52 1 08.08.2001 5.68% 1996 USD 2 1 08.08.2001 5.88% 1996 USD 10 16.08.2001 5.76% 1995 FRF 156 83
  • 36. 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 01.08.2002 6.07% 1994 USD 5 03.09.2002 7.83% 1992 USD 3 1 15.01.2003 6.54% 1993 USD 5 1 03.02.2003 6.50% 1993 USD 5 10.02.2003 6.45% 1993 USD 35 07.04.2003 6.07% 1992 USD 7 1 27.04.2003 5.69% 1993 USD 17 27.04.2003 5.50% 1996 USD 2 1 20.02.2004 6.08% 1994 USD 150 08.03.2004 8.95% 1992 USD 22 09.03.2004 8.75% 1992 USD 40 1 15.03.2004 5.71% 1994 USD 165 1 05.04.2004 5.96% 1995 DEM 107 30.04.2004 9.30% 1992 USD 100 1 27.10.2005 5.60% 1993 USD 200 1 07.11.2005 6.95% 1995 USD 5 1 15.05.2006 6.09% 1996 USD 269 1 27.02.2007 5.98% 1995 USD 15 1 27.02.2007 5.95% 1995 USD 15 1 28.02.2007 5.98% 1995 USD 15 1 28.02.2007 5.95% 1995 USD 15 15.02.2013 8.50% 1993 USD 3 1 02.04.2018 7.71% 1993 USD 5 1 various variable 1993 USD 154 1 various variable 1993 –1998 USD 36 1 various variable 1995/1996 USD 45 Credit Suisse First Boston International, London 2000 various 1997/1998 DEM 41 15.08.2000 variable 1999 EUR 6 21.12.2000 3.00% 1995 FIM 25 2000 various 1997–1999 GBP 42 2000 various 1999 HKD 2,851 2000 various 1997/1998 ITL 109,000 2000 various 1995 –1999 JPY 23,293 2000 0.00% 1994 –1998 NLG 67 2000 variable 1997/1998 PTE 6,750 2000 various 1998 SEK 197 2000 various 1992 –1999 USD 380 13.06.2001 6.50% 1997 BEF 100 2001 various 1996 –1998 DEM 100 2001 various 1994 –1999 EUR 18 28.01.2001 0.00% 1999 HKD 30 2001 various 1997/1998 ITL 125,000 2001 various 1995 –1999 JPY 16,817 24.09.2001 0.00% 1998 NLG 18 01.10.2001 various 1998 PTE 1,500 84
  • 37. BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 01.02.2001 various 1998 SEK 150 2001 various 1995 –1999 USD 652 1 15.08.2001 variable 1991 USD 109 1 31.10.2002 variable 1997 CHF 75 2002 various 1996 –1998 DEM 70 30.07.2002 0.00% 1997 EUR 10 1 19.12.2002 0.00% 1997 ITL 20,000 2002 various 1996 –1999 JPY 74,230 1 2002 various 1992 LUF 3,500 2002 various 1996 –1999 USD 153 01.08.2003 various 1998 ATS 400 13.06.2003 8.00% 1997 BEF 200 31.03.2003 5.20% 1998 EUR 7 06.11.2003 0.00% 1995 FRF 25 2003 various 1997/1998 GBP 39 16.04.2003 0.00% 1998 GRD 14,393 2003 various 1997/1998 ITL 139,000 2003 various 1997–1999 JPY 4,700 1 19.03.2003 7.63% 1993 LUF 1,500 2003 various 1995 –1998 USD 532 1 01.12.2004 0.00% 1994 CHF 13 2004 variable 1997 DEM 25 16.06.2004 8.50% 1997 EUR 3 1 01.12.2004 0.00% 1994 EUR 10 15.02.2004 variable 1999 GBP 5 2004 various 1997/1998 ITL 441,000 1 2004 0.00% 1997/1998 ITL 105,000 2004 various 1995 –1998 JPY 4,500 07.02.2004 0.00% 1997 NOK 70 2004 various 1996 –1998 USD 201 1 08.06.2005 8.25% 1995 BEF 200 1 27.09.2005 variable 1995 DEM 47 08.12.2005 0.00% 1997 FRF 200 2005 various 1997/1998 ITL 457,000 1 2005 various 1997/1998 ITL 70,000 2005 various 1996/1997 JPY 4,000 26.04.2005 variable 1998 PTE 500 1 2005 0.00% 1997 PTE 9,362 2005 various 1995 –1998 USD 1,286 1 2005 variable 1996 –1998 DEM 19 06.11.2006 0.00% 1997 FIM 50 16.02.2006 9.13% 1998 GBP 5 2006 various 1998 ITL 331,200 1 2006 0.00% 1998 ITL 10,020 19.12.2006 5.70% 1996 JPY 500 2006 various 1995 –1998 USD 108 1 28.07.2006 0.00% 1994 USD 40 85
  • 38. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 2007 various 1996/1997 CHF 120 2007 various 1997 DEM 70 1 23.05.2007 variable 1997 DEM 80 06.11.2007 0.00% 1997 FIM 50 2007 various 1997 ITL 103,600 2007 various 1996/1997 JPY 5,000 2007 various 1997/1998 USD 164 1 02.07.2007 variable 1997 USD 40 2008 various 1998 DEM 155 1 2008 0.00% 1993/1994 DEM 153 2008 0.00% 1998 ITL 68,000 1 24.02.2008 variable 1998 ITL 100,000 2008 various 1997/1998 JPY 1,200 02.06.2008 variable 1998 PTE 500 2008 various 1995 –1998 USD 261 2009 various 1997/1998 DEM 108 1 2009 0.00% 1994 –1996 DEM 213 24.08.2009 variable 1999 EUR 15 30.05.2009 variable 1997 ITL 17,000 2009 various 1996/1997 JPY 3,100 2009 various 1997/1998 USD 18 06.01.2010 0.00% 1997 DEM 20 1 20.06.2010 0.00% 1997 DEM 60 18.10.2010 0.00% 1998 ITL 27,500 1 01.03.2010 0.00% 1995 ITL 30,000 2010 various 1997/1998 USD 109 2011 various 1993 –1999 USD 74 04.06.2012 0.00% 1997 DEM 15 24.03.2012 various 1999 EUR 9 01.04.2012 variable 1998 ITL 12,000 1 30.04.2012 8.00% 1998 ITL 20,000 2012 various 1997/1998 USD 6 02.04.2013 variable 1998 ITL 27,500 2013 various 1998 JPY 13,600 1 20.12.2014 0.00% 1994 ITL 250,000 30.10.2014 0.00% 1995 USD 29 22.09.2016 variable 1998 USD 9 15.09.2017 0.00% 1997 DEM 15 15.05.2017 variable 1997 JPY 5,000 01.09.2017 0.00% 1997 PTE 1,700 1 16.02.2018 6.00% 1998 DEM 30 2018 variable 1997/1998 ITL 74,000 2018 various 1998 JPY 1,800 07.01.2020 variable 1996 CAD 162 19.09.2021 variable 1996 JPY 10,000 1 15.12.2021 0.00% 1995 USD 81 02.10.2022 0.00% 1997 DEM 40 86
  • 39. BONDS ISSUED BY SUBSIDIARIES (continued) Year Earliest date Par value Redemption Interest rate of issue callable in m 27.02.2025 0.00% 1998 USD 20 14.12.2028 10.76% 1998 USD 133 1 perpetual various 1995 –1998 CHF 130 1 perpetual various 1998 DEM 610 1 perpetual 10.25% 1995 GBP 100 1 perpetual variable 1998 ITL 50,000 1 perpetual variable 1993 –1995 JPY 20,000 1 perpetual various 1995 –1997 NLG 60,000 1 perpetual 0.00% 1998 PTE 1,650 1 perpetual variable 1992 –1997 USD 220 Bank Leu Ltd., Zurich 1 17.11.2006 5.00% 1986 CHF 100 Guaranteed by Credit Suisse Group DBV-Winterthur, Wiesbaden 28.07.2003 0.88% Convertible bonds 1998 DEM 100 28.07.2003 0.75% Convertible bonds 1998 DEM 100 1 subordinated bonds 2 credit-linked notes 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 5 issued by Credit Suisse First Boston New York branch 6 this bond has been partially or fully transferred to Credit Suisse as a subparticipation 7 issue of bonds with warrants: ex warrant 87
  • 40. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 Dec. 1999 31 Dec. 1998 Change Change 28 OTHER LIABILITIES in CHF m in CHF m in CHF m in % Negative replacement value of derivative instruments 41,632 50,682 – 9,050 –18 – of which trading 41,175 50,413 – 9,238 –18 – of which other 457 269 188 70 Compensation account 0 189 –189 –100 Other 10,945 6,133 4,812 78 52,577 57,004 – 4,427 –8 TOTAL OTHER LIABILITIES Change in Recoveries, Change New definition of endangered in the creation New 29 VALUATION ADJUSTMENTS AND Balance at Specific purpose interest, scope of charged to creation Balance at PROVISIONS/RESERVES FOR 31 Dec. usage and (reclassifi- currency con- income charged 31 Dec. GENERAL BANKING RISKS IN CHF M 1998 releases cation differences solidation statement to equity 1999 Valuation adjustments and provisions for –2,843 118 921 0 1,012 – 13,042 default risks (credit and country risk) 13,834 Valuation adjustments and provisions –189 – 39 88 0 211 – 949 for other business risks 878 Provisions for taxes and 1 2 – 977 –2 418 0 1,436 2,381 6,252 deferred taxes 2,996 – 342 32 19 0 47 – 239 Provisions for restructuring 483 – 309 – 85 32 0 151 – 576 Other provisions 787 – 4,660 24 1,478 0 2,857 2,381 18,978 21,058 Total Less valuation adjustments directly –13,308 –12,492 netted with assets TOTAL VALUATION ADJUSTMENTS AND 5,670 8,566 PROVISIONS AS PER BALANCE SHEET RESERVES FOR GENERAL 2,048 2,131 0 3 0 0 80 – BANKING RISKS 1 The increase in deferred tax assets (CHF 287) is not included in provisions for taxes and deferred taxes. 2 change owing to deferred taxes on unrealised gains on investments from the insurance business 88
  • 41. 30 TECHNICAL PROVISIONS FOR 31 Dec. 1999 31 Dec. 1999 31 Dec. 1998 31 Dec. 1998 Change Change INSURANCE BUSINESS IN CHF M gross net gross net gross net NON-LIFE Provision for unearned premiums 4,204 3,598 4,517 3,536 – 313 62 Actuarial provisions (health) 3,103 3,103 2,432 2,372 671 731 Provisions for claims outstanding 17,300 14,710 17,498 14,041 –198 669 Actuarial provision for annuities 839 832 696 688 143 144 Provision for dividends to policyholders 799 798 826 826 –27 –28 26,245 23,041 25,969 21,463 276 1,578 TOTAL NON-LIFE LIFE Provisions for unearned premiums 879 850 804 785 75 65 Actuarial provisions 70,607 70,078 64,417 63,423 6,190 6,655 Provisions for claims outstanding 399 394 413 388 –14 6 Participation fund 2,824 2,822 2,520 2,518 304 304 Bonuses left on deposit 3,652 3,652 3,421 3,421 231 231 78,361 77,796 71,575 70,535 6,786 7,261 TOTAL LIFE Technical provisions in life business where the investment risk is borne by the policyholders 6,724 6,724 4,654 4,654 2,070 2,070 TOTAL TECHNICAL PROVISIONS FOR 111,329 107,561 102,198 96,652 9,131 10,909 INSURANCE BUSINESS 89
  • 42. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1999 1998 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 1 60 5,382 5,322 Capital reserve 18 1,739 11,209 9,470 Retained earnings –122 –1,932 – 352 1,580 Revaluation reserves from insurance business 15 872 6,660 5,788 Reserves for general banking risks –29 – 842 2,048 2,890 Group profit 435 2,614 3,215 601 10 2,511 28,162 25,651 TOTAL SHAREHOLDERS’ EQUITY AT BEGINNING OF FINANCIAL YEAR Reclassification from valuation adjustments and provisions – 97 – 87 3 90 Release/creation of reserves for general banking risks, net 109 1,010 80 – 930 Dividends paid 2 27 –1,430 –1,457 Capital increases, par value and capital surplus –23 –232 759 991 Capital increases, minority interests 50 1 3 2 Acquisition of minority interests – –1,014 –1,015 –1 Changes in scope of consolidation affecting minority interests – 226 226 0 Consolidation of previously not fully consolidated subsidiaries – –71 –71 0 Foreign exchange differences 484 1,655 1,313 – 342 Change in revaluation reserves from insurance business, net 6 56 999 943 Group profit 66 2,124 5,339 3,215 22 6,206 34,368 28,162 TOTAL SHAREHOLDERS’ EQUITY AT END OF FINANCIAL YEAR Of which: share capital 1 62 5,444 5,382 capital reserve 6 703 11,696 10,993 minority interests in capital reserve – 91 –196 20 216 retained earnings 125 2,748 552 –2,196 minority interests in retained earnings –18 –230 1,014 1,244 revaluation reserves from insurance business 17 1,035 6,977 5,942 minority interests in insurance revaluation reserves –17 –123 595 718 reserves for own shares 0 0 600 600 reserves for general banking risks 4 83 2,131 2,048 Group profit 66 2,124 5,339 3,215 – of which minority interests –20 –29 118 147 31 Dec. 1999 31 Dec. 1998 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 61 46 15 33 Loans to the bank’s governing bodies comprise advances to members of the Board of Directors, the Executive Board and the Statutory Auditors. 90
  • 43. 33 MATURITY STRUCTURE OF CURRENT ASSETS, FINANCIAL Due Due Due within Due INVESTMENTS AND BORROWED FUNDS Redeemable within 3 within 3 to 12 months after AT 31 DECEMBER 1999 IN CHF M At sight by notice months 12 months to 5 years 5 years No maturity Total CURRENT ASSETS Cash and other liquid assets 3,141 – – – – – 3,141 Money market claims 0 11 23,312 5,661 10 0 28,994 Due from banks 8,282 2,160 145,507 4,239 2,120 2,593 164,901 Claims from insurance business 0 6,457 0 0 0 0 6,457 Due from customers 0 22,063 50,868 16,872 8,788 6,340 104,931 Mortgages 0 19,718 12,334 21,284 32,102 1,115 86,553 Securities and precious metals trading portfolios 126,746 – – – – – 126,746 138,169 50,409 232,021 48,056 43,020 10,048 521,723 TOTAL CURRENT ASSETS At 31 December 1998 111,888 51,614 210,564 37,768 43,121 7 ,842 462,797 21 1,300 1,188 6,937 1,208 18,828 6,120 1 2,054 TOTAL FINANCIAL INVESTMENTS At 31 December 1998 14 3,813 2,012 3,361 1,932 17,467 4,552 1,783 BORROWED FUNDS Liabilities in respect of money 0 18,219 2,491 1,410 0 22,120 0 market paper Due to banks 5,848 99,041 6,765 2,009 4,812 198,324 79,849 Commitments from insurance business 6,268 0 0 0 0 6,268 0 Due to customers, in savings and investment accounts 43,933 8 3 17 46 44,007 0 Due to customers, other 12,282 102,803 11,183 6,323 3,731 182,249 45,927 Medium-term notes – 491 1,169 2,128 97 3,885 – Bonds and mortgage-backed bonds 680 2,660 5,972 17,957 20,636 47,905 – 69,011 223,222 27,583 29,844 29,322 504,758 125,776 TOTAL BORROWED FUNDS At 31 December 1998 58,036 220,851 26,424 35,890 21,079 453,171 90,891 1 excluding investments from insurance business 34 SECURITIES LENDING AND BORROWING 31 Dec. 1999 31 Dec. 1998 Change Change AND REPURCHASE AGREEMENTS in CHF m in CHF m in CHF m in % Due from banks 49 34,349 – 34,300 –100 Due from customers 136 11,823 –11,687 – 99 185 46,172 – 45,987 –100 SECURITIES LENDING Due from banks 128,536 43,940 84,596 193 Due from customers 27,932 18,262 9,670 53 156,468 62,202 94,266 152 REVERSE REPURCHASE AGREEMENTS Due to banks 4,327 29,751 –25,424 – 85 Due to customers 709 15,592 –14,883 – 95 5,036 45,343 – 40,307 – 89 SECURITIES BORROWING Due to banks 63,093 38,819 24,274 63 Due to customers 33,641 21,080 12,561 60 96,734 59,899 36,835 61 REPURCHASE AGREEMENTS 91
  • 44. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Switzerland Abroad Switzerland Abroad Switzerland Abroad 35 BALANCE SHEET BY ORIGIN IN CHF M 31 Dec. 1999 31 Dec. 1999 31 Dec. 1998 31 Dec. 1998 Change Change ASSETS Cash and other liquid assets 573 2,568 2,064 504 324 249 Money market claims 24,782 4,212 2,710 1,502 898 23,884 Due from banks 162,478 2,423 3,359 – 936 25,685 136,793 Claims from insurance business 4,280 2,177 3,357 –1,180 155 4,125 Due from customers 74,635 30,296 25,545 4,751 – 3,003 77,638 Mortgages 11,858 74,695 68,722 5,973 22 11,836 Securities and precious metals trading portfolios 117,651 9,095 11,486 –2,391 26,622 91,029 Financial investments from banking business 15,124 3,704 3,942 –238 1,599 13,525 Investments from insurance business 62,496 54,726 49,185 5,541 9,365 53,131 Non-consolidated participations 1,386 437 606 –169 661 725 Tangible fixed assets 2,822 4,006 4,278 –272 738 2,084 Intangible assets 2,944 46 51 –5 2,193 751 Accrued income and prepaid expenses 7,275 1,748 1,622 126 –731 8,006 Other assets 38,743 5,566 7,502 –1,936 – 5,489 44,232 527,047 195,699 184,429 11,270 59,039 TOTAL ASSETS 468,008 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities in respect of money market paper 21,564 556 549 7 7,378 14,186 Due to banks 154,997 43,327 23,918 19,409 24,867 130,130 Commitments from insurance business 3,323 2,945 5,532 –2,587 443 2,880 Due to customers, in savings and investment accounts 4,103 39,904 42,323 –2,419 –192 4,295 Due to customers, other 130,399 51,850 58,334 – 6,484 10,172 120,227 Medium-term notes 0 3,885 5,844 –1,959 0 0 Bonds and mortgage-backed bonds 35,299 12,606 11,851 755 2,197 33,102 Accrued expenses and deferred income 11,196 3,720 3,214 506 2,632 8,564 Other liabilities 41,651 10,926 8,202 2,724 –7,151 48,802 Valuation adjustments and provisions 5,262 3,304 3,014 290 2,606 2,656 Technical provisions for insurance business 55,208 52,353 47,554 4,799 6,110 49,098 Shareholders’ equity (excluding minority interests) 16,476 14,196 16,145 1,949 4,835 11,641 Minority interests 1,683 56 64 8 – 586 2,269 481,161 224,587 241,585 16,998 53,311 TOTAL LIABILITIES 427,850 92
  • 45. 36 BALANCE SHEET BY CURRENCIES AT 31 DECEMBER 1999 IN CHF M Swiss francs US dollars Other currencies Total ASSETS Cash and other liquid assets 2,298 100 743 3,141 Money market claims 4,242 11,496 13,256 28,994 Due from banks 3,726 94,063 67,112 164,901 Claims from insurance business 2,177 659 3,621 6,457 Due from customers 31,523 55,640 17,768 104,931 Mortgages 75,205 6,842 4,506 86,553 Securities and precious metals trading portfolios 11,782 54,703 60,261 126,746 Financial investments from banking business 4,133 8,438 6,257 18,828 Investments from insurance business 54,726 3,823 58,673 117,222 Non-consolidated participations 546 860 417 1,823 Tangible fixed assets 4,013 2,105 710 6,828 Intangible assets 1,110 1,563 317 2,990 Accrued income and prepaid expenses 1,832 4,422 2,769 9,023 Other assets 5,122 16,105 23,082 44,309 202,435 260,819 259,492 722,746 TOTAL ASSETS At 31 December 1998 189,895 200,571 261,971 652,437 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities in respect of money market paper 10 15,820 6,290 22,120 Due to banks 25,732 92,475 80,117 198,324 Commitments from insurance business 2,945 50 3,273 6,268 Due to customers, in savings and investment accounts 43,876 1 130 44,007 Due to customers, other 39,689 98,184 44,376 182,249 Medium-term notes 3,885 0 0 3,885 Bonds and mortgage-backed bonds 12,993 20,728 14,184 47,905 Accrued expenses and deferred income 3,886 8,637 2,393 14,916 Other liabilities 11,271 18,181 23,125 52,577 Valuation adjustments and provisions 3,224 2,249 3,093 8,566 Technical provisions for insurance business 52,352 2,789 52,420 107,561 Shareholders’ equity (excluding minority interests) 16,222 7,101 9,298 32,621 Minority interests 68 261 1,418 1,747 216,153 266,476 240,117 722,746 TOTAL LIABILITIES At 31 December 1998 213,311 200,787 238,339 652,437 93
  • 46. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 37 PARTICIPATIONS AT 31 DECEMBER 1999 Principal fully consolidated participations Company (% of equity capital held by the company exercising control) Domicile Capital in m Business unit Credit Suisse Group Zurich 100.00 Credit Suisse Zurich CHF 3,114.7 CS/CSPB 100.00 Credit Suisse First Boston Zurich CHF 3,336.8 CSFB/CSAM 100.00 ‘Winterthur’ Swiss Insurance Company Winterthur CHF 193.7 Winterthur 98.63 Neue Aargauer Bank Aarau CHF 273.8 CS 50.00 Swisscard AECS AG Zurich CHF 0.1 CS 100.00 Bank Leu Ltd. Zurich CHF 200.0 CSPB 100.00 Bank Hofmann AG Zurich CHF 20.0 CSPB 88.03 Clariden Holding AG Zurich CHF 8.1 CSPB 100.00 Bank Leu (Luxembourg) SA Luxembourg CHF 25.0 CSPB 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 2.0 CSPB 66.67 IT Services AG Dübendorf CHF 2.4 100.00 Credit Suisse Group Finance (Guernsey) Ltd. Guernsey CHF ~ 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 100.00 CSFB RGP Zug CHF 0.1 CSFB 1 20.00 Credit Suisse First Boston International London USD 682.3 CSFB 88.05 Savoy Zurich CHF 7.5 100.00 Wincasa Winterthur CHF 1.5 100 Credit Suisse Zurich CHF 3,114.7 CS/CSPB 93 City Bank Zurich CHF 7.5 CS 100 Swiss Ship Mortgage Bank Basle CHF 15.0 CS 100 Credit Suisse 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 51 Swiss NetPay 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. Marina Bay GBP 5.0 CSPB 100 Credit Suisse (Bahamas) Ltd. Nassau USD 12.0 CSPB 87 Credit Suisse Hottinguer Paris EUR 52.9 CSPB 100 Credit Suisse (Deutschland) Aktiengesellschaft Frankfurt DEM 20.0 CSPB 100 Credit Suisse (Italy) S.p.A. Milan ITL 78,459.4 CSPB 100 Credit Suisse Gestion SGIIC SA Madrid EUR 2.4 CSPB 100 Credit Suisse Investment Consulting (Taiwan) Ltd. Taipei TWD 30.0 CSPB 100 Credit Suisse Investment Advisory (Hong Kong) Ltd. Hong Kong HKD 1.0 CSPB 100 Credit Suisse (Luxembourg) S.A. Luxembourg CHF 25.0 CSPB 100 Credit Suisse (Monaco) S.A.M. Monte Carlo EUR 9.9 CSPB 100 Credit Suisse Securities Ltd. London GBP 10.0 CSPB 100 Swiss American Corporation New York USD 38.9 CSPB 93 Swiss American Securities, Inc. New York USD 8.3 CSPB 100 Streetline Inc. New York USD 6.0 CSPB 1 80% held by Credit Suisse First Boston 94
  • 47. Principal fully consolidated participations (continued) Company (% of equity capital held by the company exercising control) Domicile Capital in m Business unit 100 Credit Suisse First Boston Zurich CHF 3,336.8 CSFB/CSAM 1 100 Credit Suisse First Boston, Inc. New York USD 187.0 CSFB 100 Credit Suisse First Boston Corp. New York USD ~ CSFB 100 Credit Suisse First Boston Mortgage Capital LLC New York USD ~ CSFB 100 Credit Suisse First Boston Equitech, Inc. New York USD ~ CSFB 100 Merchant GB, Inc. New York USD ~ CSFB 100 Credit Suisse First Boston Management Corp. New York USD ~ CSFB 100 Banco de Investimentos Credit Suisse First Boston Garantia S.A. São Paulo BRL 164.8 CSFB 100 Credit Suisse First Boston Garantia Ltd. Nassau USD 16.9 CSFB 100 Credit Suisse First Boston Pacific Capital Markets Ltd. Sydney AUD 10.0 CSFB 100 Credit Suisse First Boston Australia Securities Ltd. Sydney AUD 28.4 CSFB 100 Credit Suisse First Boston Canada Toronto CAD 157.3 CSFB 100 Credit Suisse First Boston Aktiengesellschaft Frankfurt DEM 215.0 CSFB 99 Credit Suisse First Boston (Moscow) A/O Moscow USD 36.6 CSFB 100 Credit Suisse First Boston (Cyprus) Limited Limassol USD 887.5 CSFB 100 Finanz AG Zurich Zurich CHF 15.0 CSFB 2 80 Credit Suisse First Boston International London USD 682.3 CSFB 100 Credit Suisse First Boston (International) AG Zug USD 37.5 CSFB 100 Credit Suisse First Boston (Singapore) Ltd. Singapore SGD 109.3 CSFB 100 Credit Suisse First Boston (Hong Kong) Ltd. Hong Kong HKD 381.1 CSFB 100 Credit Suisse First Boston Australia Limited Sydney AUD 0.1 CSFB 100 Credit Suisse First Boston Securities (Japan) Ltd. Tokyo USD 150.0 CSFB 100 Credit Suisse First Boston (Europe) Ltd. London USD 27.3 CSFB 100 Credit Suisse First Boston Equities Ltd. London GBP 15.0 CSFB 100 Credit Suisse First Boston International (Guernsey) Ltd. St. Peter Port GBP 0.2 CSFB 100 Credit Suisse First Boston (Latin America) Holdings LLC Grand Cayman USD 29.6 CSFB 100 Credit Suisse First Boston Australia (Finance) Ltd. Melbourne AUD 10.0 CSFB 100 Credit Suisse First Boston Finance (Guernsey) Ltd. St. Peter Port USD 0.2 CSFB 100 Credit Suisse First Boston Finance B.V. Amsterdam NLG ~ CSFB 100 Credit Suisse First Boston Australia (Holdings) Ltd. Sydney AUD 0.4 CSFB 100 Credit Suisse Bond Fund Management Company SA Luxembourg CHF 0.3 CSFB 100 Credit Suisse Equity Fund Management Company SA Luxembourg CHF 0.3 CSFB 100 Credit Suisse Money Market Fund Management Company SA Luxembourg CHF 0.3 CSFB 100 Credit Suisse Portfolio Fund Management Company SA Luxembourg CHF 0.3 CSFB 100 Credit Suisse Asset Management Funds Zurich CHF 7.0 CSFB 100 Credit Suisse Trust & Banking Co. Ltd. Tokyo JPY 9,000.0 CSAM 100 Credit Suisse Asset Management Ltd. London GBP ~ CSAM 100 Credit Suisse Asset Management (Australia) Sydney AUD 0.3 CSAM 3 100 Credit Suisse Asset Management LLC New York USD ~ CSAM 100 Credit Suisse Asset Management (Deutschland) GmbH Frankfurt DEM 5.0 CSAM 100 Credit Suisse Asset Management (France) S.A. Paris FRF 164.8 CSAM 100 Credit Suisse Asset Management SIM S.p.A. Milan ITL 12,000.0 CSAM 1 49% of voting rights held by Credit Suisse Group 2 20% held by Credit Suisse Group 3 after merger of Credit Suisse Assets Management and Warburg Pincus Asset Management; 30% of voting rights held by Credit Suisse Group 95
  • 48. 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 100 ‘Winterthur’ Swiss Insurance Company Winterthur CHF 193.7 Winterthur Switzerland 100 Winterthur Life Winterthur CHF 175.0 Winterthur 100 The Federal Zurich CHF 10.0 Winterthur 67 Winterthur Legal Assistance Winterthur CHF 9.0 Winterthur 100 Vitodurum Insurance Winterthur CHF 40.0 Winterthur 100 Swissline Wallisellen CHF 0.5 Winterthur 100 Winterthur International Winterthur CHF 1.0 Winterthur 100 Gartenhotel Winterthur CHF 2.5 Winterthur Germany 100 Winterthur Beteiligungsgesellschaft m.b.H. Wiesbaden DEM 0.1 Winterthur 100 WINCOM Versicherungs-Holding AG Wiesbaden DEM 102.7 Winterthur 69 DBV-Winterthur Gruppe Wiesbaden DEM 170.4 Winterthur Italy 100 Winterthur Holding Italia Milan ITL 260,000.0 Winterthur 100 Winterthur Assicurazioni Milan ITL 250,882.2 Winterthur 100 Winterthur Vita S.p.A. Milan ITL 95,000.0 Winterthur Spain 100 Hispanowin S.A. Barcelona ESP 14,762.4 Winterthur 100 Winterthur Inmuebles 2 Barcelona ESP 9,297.0 Winterthur 100 Winterthur Seguros Generales Barcelona ESP 6,044.3 Winterthur 100 Winterthur Inmuebles Barcelona ESP 9,453.0 Winterthur 100 Winterthur Ibérica Barcelona ESP 4,423.5 Winterthur 80 Winterthur Asistencia Barcelona ESP 515.0 Winterthur 100 Winterthur Vida Española Barcelona ESP 5,819.0 Winterthur 100 WINVALOR Agencia de Valores Barcelona ESP 150.0 Winterthur 100 Winterthur Salud de Seguros Barcelona ESP 1,379.0 Winterthur 100 Winterthur Pensiones Barcelona ESP 970.0 Winterthur Belgium 85 Winterthur-Europe Assurances Brussels BEF 8,000.0 Winterthur 100 Assurance Group Josi Brussels BEF 1,250.0 Winterthur 100 Assar Brussels BEF 70.0 Winterthur 99 Sofimmocentrale Brussels BEF 1,020.0 Winterthur 50 Touring Assurances Brussels BEF 1,125.0 Winterthur 51 Jean Verheyen Brussels BEF 5.0 Winterthur Luxembourg 100 Winterthur-Europe Vie Luxembourg LUF 177.2 Winterthur UK 100 Winterthur (UK) Holdings London GBP 42.6 Winterthur 100 Churchill Insurance Bromley GBP 60.0 Winterthur 93 Churchill Management Bromley GBP 2.6 Winterthur 100 Winterthur Life UK Holdings Basingstoke GBP ~ Winterthur 100 Winterthur Life UK Basingstoke GBP 26.4 Winterthur 100 Winterthur International London GBP 120.0 Winterthur 96
  • 49. 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) Austria 100 Winterthur Versicherungs-AG Vienna ATS 127.5 Winterthur 100 Winterthur Pensionskassen AG Vienna ATS 70.0 Winterthur 100 Wintisa Management und Consulting AG Vienna ATS 1.0 Winterthur Portugal 100 Europeia Seguros Lisbon PTE 3,948.0 Winterthur France 87 Rhodia Assurance Lyon FRF 60.0 Winterthur Czech Republic y 100 Bánsky a hutní penzijní fond a.s. Trinec CZK ~ Winterthur á 68 Winterthur pojist’ouna a.s. Prague CZK 363.0 Winterthur 86 Winterthur penzijní fond a.s. Brno CZK 142.4 Winterthur Hungary 65 Winterthur Erste Schweiz-Ungarische Kassenverwaltungs AG Budapest HUF 650.0 Winterthur 65 Winterthur Biztósitó Rt. Budapest HUF 1,000.0 Winterthur Poland 86 Winterthur S.A. Warsaw PLN 40.0 Winterthur 93 Winterthur Zycie Warsaw PLN 60.0 Winterthur 70 Winterthur PTE Warsaw PLN 10.0 Winterthur USA 100 Winterthur U.S. Holdings Wilmington, DE USD ~ Winterthur 100 Blue Ridge Simsbury, CT USD 3.6 Winterthur 100 General Casualty Sun Prairie, WI USD 3.0 Winterthur 100 Republic Financial Services Dallas, TX USD ~ Winterthur 100 Southern Guaranty Montgomery, AL USD 2.0 Winterthur 100 Unigard Bellevue, WA USD ~ 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 Administrações São Paulo BRL 19.4 Winterthur 100 Winterthur Internacional São Paulo BRL 11.0 Winterthur 100 Winterthur International (SA) Johannesburg ZAR 1.0 Winterthur 100 Winterthur International Argentina S.A. Buenos Aires USD 0.5 Winterthur 100 Winterthur Holdings Australia Sydney AUD 54.2 Winterthur 100 Winterthur International Sydney AUD 20.0 Winterthur 97 Winterthur Insurance (Far East) Singapore SGD 25.0 Winterthur 100 Winterthur Swiss Insurance (Asia) Hong Kong HKD 176.6 Winterthur 100 Winterthur Insurance (Asia) Hong Kong HKD 150.0 Winterthur 100 Winterthur Insurance Services Hong Kong HKD 38.8 Winterthur 60 Winterthur Life Indonesia Jakarta IDR 44,500.0 Winterthur 91 Winterthur International Hamilton, Bermuda USD 2.4 Winterthur 96 Winterthur Overseas Hamilton, Bermuda USD 0.3 Winterthur 100 Windsor Parc Ltd. Hamilton, Bermuda USD 1.0 Winterthur 100 Winterthur Swiss Insurance (Macau) Macau HKD 20.0 Winterthur 97
  • 50. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Principal participations at 31 December 1999 valued according to the equity method Equity interest Company Domicile Capital in m in % Credit Suisse Group Inreska Ltd. St. Peter Port GBP 3.0 100.0 Capital Union Dubai USD 30.0 25.0 Göhner Merkur AG Zurich CHF 80.0 33.2 Credit Suisse Cornèr Bank AG Lugano CHF 12.0 27.3 Innoventure Equity Partners AG Zurich CHF 0.2 30.0 Swiss Euro Clearing Bank GmbH Frankfurt DEM 15.0 12.5 Credit Suisse First Boston Valcambi SA Balerna CHF 12.0 100.0 Innovent Capital Ltd. Grand Cayman CHF 10.6 38.6 Swiss Euro Clearing Bank GmbH Frankfurt DEM 15.0 15.0 ‘Winterthur’ Swiss Insurance Company Norwich Winterthur Holdings Norwich GBP 54.5 48.5 Norwich Winterthur Reinsurance Corp. Norwich GBP 57.8 46.5 Commonwealth Insurance Grand Cayman USD 0.1 91.0 Auto-Bestandteil-Wiederverwertung AG Grolley CHF 0.2 50.0 Expertisa Columna Beratungen Winterthur CHF 0.2 100.0 IT Services AG Dübendorf CHF 2.4 33.3 Lehr- und Versuchswerkstätte Volketswil CHF 0.3 100.0 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 36.2 Winterthur Fund Management Co. Luxembourg LUF 5.0 100.0 Winterthur International Services Hamilton, Bermuda USD ~ 100.0 Zentrum Regensdorf Regensdorf CHF 4.5 50.0 98
  • 51. Principal participations at 31 December 1999 valued at cost Equity interest Company Domicile Capital in m in % Credit Suisse Group BGP Banca di Gestione Patrimoniale SA (operational from February 2000) Lugano CHF 50.0 100.0 Fides Information Services Zurich CHF 1.0 67.0 Credit Suisse Swiss Mortgage Bond Bank Zurich CHF 300.0 12.8 Swiss Steel AG Emmen CHF 137.7 30.7 Credit Suisse First Boston Banco General de Negocios Buenos Aires ARS 163.0 24.1 Banco Comercial SA Montevideo UYU 215.9 19.9 Telekurs Holding AG Zurich CHF 45.0 17.4 Swiss Financial Services Group AG Zurich CHF 46.0 10.6 SNOC Swiss Nominee Company Zurich CHF 2.0 25.0 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 North Bay Ltd. Nassau USD 8.0 100.0 SWIFT La Hulpe BEF 439.9 1.6 ‘Winterthur’ Swiss Insurance Company Winterthur Research SA Barcelona ESP 15.0 100.0 Winterthur-Service SA Barcelona ESP 25.0 100.0 Seguros ATLAS Mexico City MXN 50.0 30.0 Allgemeine Hypothekenbank AG Frankfurt DEM 170.0 10.0 99
  • 52. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year-end rate used Average rate used in the balance sheet at 31 Dec. in the income statement in FOREIGN CURRENCY TRANSLATION RATES IN CHF 1999 1999 1998 1998 1 US dollar (USD) 1.598 1.490 1.375 1.430 1 euro (EUR) 1.606 1.580 1.610 1.610 1 British pound sterling (GBP) 2.587 2.400 2.290 2.370 1 Canadian dollar (CAD) 1.101 1.000 0.888 0.970 1 Singapore dollar (SGD) 0.959 0.880 0.824 0.860 1 Hong Kong dollar (HKD) 0.206 0.191 0.178 0.185 100 Deutsche marks (DEM) 82.098 81.000 82.330 81.600 100 Dutch guilders (NLG) 72.863 71.900 73.070 72.350 100 French francs (FRF) 24.479 24.150 24.550 24.300 100 Italian lire (ITL) 0.0829 0.0820 0.0832 0.0825 100 Japanese yen (JPY) 1.563 1.310 1.210 1.100 100 Spanish pesetas (ESP) 0.965 0.952 0.968 0.956 100
  • 53. 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 1999. 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 based on the Swiss accounting rules for banks and the Swiss accounting and reporting recommendations (ARR) for the insurance business of the Group, which are explained in the notes to the consolidated financial statements, and comply with Swiss law. 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 R. Nelson Peter Hanimann Chartered Accountant Certified Accountant Auditors in Charge Zurich, 9 March 2000 101