ANNUAL REVIEW 2000 PART III
REVIEW OF BUSINESS UNITS




18
PART I

   2 Financial highlights 2000

   4 Editorial



PART II

  6   An overview of Credit Suisse Group
  8   Strategi...
REVIEW OF BUSINESS UNITS




Credit Suisse Financial Services


                                                          ...
Winterthur non-life business                                                                                         Previ...
REVIEW OF BUSINESS UNITS




Winterthur life business                                                                     ...
Credit Suisse income statement
                                                           2000       1999   Change       C...
REVIEW OF BUSINESS UNITS




Credit Suisse balance sheet information                                                    In...
Personal Financial Services Europe key performance indicators
                                                       Credi...
REVIEW OF BUSINESS UNITS




Credit Suisse Private Banking


                                           Market activity in...
MyCSPB – the personal
private bank online
MyCSPB is the innovative new private banking solu-
tion to perfectly round off t...
REVIEW OF BUSINESS UNITS




companies pursue diversified invest-        Check-Up Online is a straightforward
ment strateg...
Credit Suisse Asset Management


                                                           Credit Suisse Asset Management...
REVIEW OF BUSINESS UNITS




                    Global début

                    Credit Suisse Asset Management’s leader...
sion market, the unit’s Credit Suisse       Post Venture Fund and Credit Suisse
Investment Foundation (CSA) ended         ...
REVIEW OF BUSINESS UNITS




Credit Suisse First Boston


                                                                ...
Donaldson, Lufkin & Jenrette. The
equity and fixed income businesses
were integrated less than seven weeks
after the merge...
.credit-suisse Annual Review Part 3 Review of business units Credit Suisse Financial Services Credit Suisse Private Banking
.credit-suisse Annual Review Part 3 Review of business units Credit Suisse Financial Services Credit Suisse Private Banking
.credit-suisse Annual Review Part 3 Review of business units Credit Suisse Financial Services Credit Suisse Private Banking
.credit-suisse Annual Review Part 3 Review of business units Credit Suisse Financial Services Credit Suisse Private Banking
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.credit-suisse Annual Review Part 3 Review of business units Credit Suisse Financial Services Credit Suisse Private Banking

  1. 1. ANNUAL REVIEW 2000 PART III REVIEW OF BUSINESS UNITS 18
  2. 2. PART I 2 Financial highlights 2000 4 Editorial PART II 6 An overview of Credit Suisse Group 8 Strategic review 12 Organisation 14 Financial review PART III 18 Review of business units 20 Credit Suisse Financial Services 26 Credit Suisse Private Banking 29 Credit Suisse Asset Management 32 Credit Suisse First Boston 36 Risk management PART IV 38 Our broader responsibilities PART V 44 Consolidated results 46 Income statement 47 Balance sheet 48 Off-balance sheet business 48 Selected notes to the consolidated financial statements 52 Management 57 Main offices 58 Information for investors www.credit-suisse.com 19
  3. 3. REVIEW OF BUSINESS UNITS Credit Suisse Financial Services For the business year 2000, results are Credit Suisse Financial Services, the reported according to the previous struc- new business area created in mid- ture of Credit Suisse, Winterthur and 2000, posted net profit growth of 15% Personal Financial Services Europe. to CHF 1.7 billion. Its assets under management grew to CHF 303.0 billion (+8.9%), of which net new assets were Winterthur strengthens position in Thomas Wellauer CHF 8.1 billion. Excluding the Personal Europe and Asia Winterthur (comprising Winterthur Chief Executive Officer Financial Services Europe initiative, Insurance and Winterthur Life & which is still in investment mode, the Pensions in the new structure) business area’s net profit was CHF increased its net profit by 22% to CHF 2.0 billion. 1.3 billion. This good performance was Since 1 July 2000, the business area attributable to strong earnings growth Credit Suisse Financial Services includes in both areas of business. Reflecting Winterthur Insurance, Winterthur Life & portfolio strategy changes and market Pensions, Credit Suisse Banking, Credit conditions, Winterthur’s investment Suisse Personal Finance and Credit return stood at 7.1%, which was Suisse e-Business, as well as the infra- modestly higher than in 1999. Assets structure unit Technology and Services. under management grew by 12.6% to Overview of business area Credit Suisse Financial Services Personal Financial Credit Suisse 2000 Winterthur Winterthur Credit Services Financial in CHF m Insurance Life & Pensions Suisse Europe Services 3,459 1) 2,075 1) Operating income 3,925 61 9,520 2,160 1) 1,208 1) Operating expenses 2,450 317 6,135 1,299 1) 867 1) Gross operating profit 1,475 (256) 3,385 Depreciation and write-offs on non-current assets 2) 159 101 84 12 356 Valuation adjustments, provisions and losses 3) 0 0 562 1 563 Profit before extraordinary items, taxes 3) 1,140 766 829 (269) 2,466 Extraordinary expenses/(income), net 0 0 (20) 0 (20) Taxes 305 101 203 (62) 547 Net operating profit before minority interests 2) 835 665 646 (207) 1,939 Amortisation of acquired intangible assets, net of tax, and goodwill 16 15 12 5 48 Net profit before minority interests 819 650 634 (212) 1,891 Minority interests (90) (56) (1) 0 (147) Net profit 729 594 633 (212) 1,744 Net operating profit 1) 745 609 645 (207) 1,792 5,580 4) 10,093 4) Average allocated equity capital 4,401 112 26.3% 4) 18.7% 4) Return on average equity capital 14.4% n/a Return on average equity capital (operating) 2) 26.9% 4) 19.2% 4) 14.7% n/a Equity capital allocation as of 1.1.2001 9,149 4,697 27 13,873 Assets under management (in CHF bn) 32.5 116.1 147.8 6.6 303.0 – of which net new assets – 0.7 4.8 2.6 8.1 – of which discretionary 32.5 116.1 2.5 2.5 153.6 1) Defined as premiums earned (net), less claims incurred and expenses for processing claims, as well as actuarial provisions, less commissions (net), plus investment income from insurance business; expenses from the handling of both claims and investments are allocated to revenue; personnel expenses non-life: CHF 400 m, life: CHF 125 m, other operating expenses non-life: CHF 214 m, life: CHF 141 m. 2) Excl. amortisation of acquired intangible assets, net of tax, and goodwill. – – (151) – (151) 3) Net of allocation to (-)/release of (+) reserves for general banking risks. 4) For Winterthur Group, average invested capital is used for calculation of return on invested capital (ROIC). 20
  4. 4. Winterthur non-life business Previously Change to New basis reported previously 2000 1999 1999 reported in CHF m in CHF m in CHF m in % Gross premiums 16,508 13,901 13,993 13,993 18 Net premiums 14,632 12,604 12,678 12,678 15 Premiums earned, net 13,519 12,057 12,102 12,102 12 Claims incurred, net (10,432) (9,145) (9,144) (9,144) 14 Dividends to policyholders incurred, net (376) (387) (312) (312) 21 Operating expenses, net (including commissions paid) (3,969) (3,639) (3,591) (3,591) 11 Underwriting result, net (1,258) (1,114) (945) (945) 33 Net investment income 2,385 1,691 1,942 1,942 23 Interest on deposits and bank accounts 96 90 70 37 70 Other interest paid (136) (78) (75) (75) 81 Other income and expenses (including exchange rate differences) 1) 53 26 (35) (39) – Profit before extraordinary items and taxes 1,140 615 957 953 19 Technical provisions as of 31.12. 26,653 25,422 23,041 30,7923,041 16 Combined ratio (excl. dividends to policyholder) 106.5% 106.0% 105.2% 1 105.2% Claims ratio 77.2% 75.8% 75.6% 2 75.6% Expense ratio 29.4% 30.2% 29.7% 29.7%) (1 Insurance reserve ratio 197.2% 210.8% 190.4% 4 190.4% Assets under management as of 31.12. in CHF bn 32.5 31.4 31.6 3 Number of employees as of 31.12. 21,796 20,662 20,662 5 1) Excl. amortisation of goodwill. CHF 148.6 billion. The return on in- In non-life business Winterthur strong growth in southern Europe. In vested capital rose to 26.3%. achieved an 18% increase in gross pre- Germany – a key health insurance mar- In February 2001 Winterthur an- miums to CHF 16.5 billion, as a result ket – the growth in premiums was nounced the sale of its large multi- of higher premiums in the US, UK and hampered by health reform. Overall, national corporates insurance business, several countries in continental Europe. non-life business generated profit Winterthur International, for a total The UK market contributed additional before extraordinary items and taxes of consideration of USD 600 million. As a growth, with Winterthur now ranking CHF 1.1 billion, up 19%. result of this transaction, Winterthur will sixth in terms of premium volume Life business saw an 8% rise in its be able to concentrate fully on life and thanks to additional partnerships en- gross premium volume, with the weak non-life business with private clients tered into by Churchill and the acquisi- euro impacting negatively on premium and small and medium-sized compa- tion of NIG. Excluding acquisitions, pre- growth in Swiss francs. Fund-linked nies in Switzerland, Europe and other mium growth stood at 10%. The products posted very strong growth of selected markets. Subject to the expense ratio in non-life business was 90%, with their share of the total approval of the relevant authorities, the reduced further from 29.7% to 29.4%. volume advancing to 20%. With the transaction should be completed in the However, the combined ratio rose acquisition of Japanese insurer Nicos first half of 2001. slightly from 105.2% to 106.5% Life (renamed Credit Suisse Life) and Webinsurance, the award-win- resulting from a number of natural Colonial Life UK in Britain, as well as ning homeowners and property, motor, catastrophes in the UK, Switzerland and with its alliance with Chinese life insurer travel and life insurance offering from US Midwest; a backlog of claims from Tai Kang Life, Winterthur further ex- Winterthur, was extended to include the winter storms in Europe at end- panded its portfolio in attractive life the Italian and Belgian markets. This December 1999; and unfavourable loss insurance and pension markets. In online insurance package is now experiences in the motor insurance 2000, Winterthur became the first life available to clients in eight European business in Spain and Portugal. In insurer to develop a pan-European, countries and the US. health insurance, Winterthur posted Internet-based business system that www.credit-suisse.com 21
  5. 5. REVIEW OF BUSINESS UNITS Winterthur life business Previously Change to New basis reported previously 2000 1999 1999 reported in CHF m in CHF m in CHF m in % Gross premiums 15,452 14,182 14,264 8 Net premiums 15,172 14,089 14,170 7 Premiums earned, net 15,171 14,090 14,101 8 Claims incurred, net (9,734) (8,033) (7,726) 26 Change in actuarial provision, net (6,377) (7,944) (8,092) (21) Allocation to participation, net (1,982) (1,384) (1,846) 7 Operating expenses, net (including commissions paid) (1,680) (1,257) (1,535) 9 Net investment income 6,051 5,048 5,865 3 Interest on deposits and bank accounts 88 135 124 (29) Interest on bonuses credited to policyholders (116) (117) (130) (11) Other interest paid (239) (220) (217) 10 Other income and expenses (including exchange rate differences) 1) (416) (722) 17 – Profit before extraordinary items and taxes 766 (404) 561 37 Technical provisions as of 31.12. 105,522 88,559 84,519 25 Expense ratio 11.1% 8.9% 10.9% 2 Net return on technical provisions 68 bp (33) bp 65 bp 5 Claims incurred and change in actuarial provisions in relation to premiums earned 106.2% 113.4% 112.2% (5) Assets under management as of 31.12. in CHF bn 116.1 102.0 100.4 16 Number of employees as of 31.12. 6,562 5,167 5,167 27 1) Excl. amortisation of goodwill. simplifies processing and distribution. or 3.4%, was attributable to net new client advisors at 34 regional locations. This platform was introduced in assets. The risk profile of the credit These new, larger teams improve client Germany in mid-year, and other portfolio improved noticeably: actual service, while also facilitating the inter- launches in key European markets are valuation adjustments were CHF 151 nal exchange of knowledge and infor- planned for 2001. Despite large-scale million below the statistically anticipated mation. The new system establishes investments in strategic projects, profit value of CHF 565 million. sector teams, which offer clients added in life business, before extraordinary In private client business, the con- benefits through their expertise in items and taxes, increased by 37% to tinuing popularity of investment savings specific areas. In addition, Berne now CHF 766 million. was reflected by significant growth in boasts a central Business Center – a investment fund holdings (+14%) and contact unit with extended opening increased sales in the investment fund hours available free of charge to Credit Suisse significantly improves business (+18%). The Flex investment clients. return on equity Credit Suisse (Credit Suisse Banking in account, a new savings product Credit Suisse grew its position in the new structure) achieved net profit launched by Credit Suisse in spring the direct banking market even of CHF 633 million, up 40% on the 2000, attracted considerable interest further, with the number of Direct Net previous year. Return on equity rose and reached a volume of CHF 1 billion customers soaring to 262,000, a 53% from 10.3% to 14.4%. Despite high- by year-end. Private mortgage busi- increase on the previous year. 42% of level investment in strategic projects, ness (+6%) and leasing (+20%) both all orders for securities transactions are technology and e-business, the recorded strong growth, while the now placed electronically via Direct Net cost/income ratio improved from number of Credit Suisse credit card and youtrade, while the number of pay- 66.6% to 64.9%. Assets under man- holders climbed to 775,000 – an in- ment orders executed via the Internet agement grew by CHF 7.0 billion crease of 136,000. currently stands at 700,000 per (+5.0%) to stand at CHF 147.8 billion Credit Suisse reorganised its ser- month – an increase of 100%. January at end-2000; CHF 4.8 billion thereof, vicing of corporate clients, regrouping 2000 saw the launch of yourhome, an 22
  6. 6. Credit Suisse income statement 2000 1999 Change Change Financial Centers: in CHF m in CHF m in % in % Net interest income 2,378 2,227 7 7 flagships of future Net commission and service fee income 1,159 946 23 23 Net trading income 342 230 49 49 banking Other ordinary income 46 75 (39) (39 Operating income 3,925 3,478 13 13 Personnel expenses 1,535 1,401 10 10 Other operating expenses 915 866 6 6 Credit Suisse’s new Financial Centers Operating expenses 2,450 2,267 8 8 are a pioneering alternative to conven- Gross operating profit 1,475 1,211 22 22 tional branches. The first ever such Depreciation and write-offs on non-current assets 1) 84 38 121 121 centre, in Milan’s Piazza dei Mercanti, Valuation adjustments, provisions and losses 2) 562 610 (8) (8 enables clients to call up financial Profit before extraordinary items, taxes 1) 829 563 47 47 market data and product information Extraordinary expenses/(income), net (41 the latest technology — though via (20) (34) (41) Taxes 203 130 56 56 personal advice is, of course, readily Net operating profit before minority interests 1) 38 hand. Having opened its doors in on 646 467 38 March 2000, Milan’s Financial Center Amortisation of goodwill 12 13 (8) (8 had already attracted more than Net profit before minority interests 634 454 40 40 30,000 visitors by the end of the year. Minority interests (1) (3) (67) (67 Credit Suisse plans to set up similar Net profit 633 451 40 40 centres in other major European loca- tions as it grows its business with affluent clients. Net operating profit 1) 645 464 39 39 1) Excl. amortisation of goodwill. 2) Net of allocation (–)/release(+) of reserves for general banking risks. (151) (68) ) www.credit-suisse.com 23
  7. 7. REVIEW OF BUSINESS UNITS Credit Suisse balance sheet information Internet portal providing comprehensive information on homes and home 1999 31 Dec. 2000 31 Dec.1999 ownership. Attracting around 17,000 in CHF m in CHF m 4,411 visitors per month, this new offering 103,063 99,903 Total assets 4,611 has met with a positive response from 29,042 27,816 Due from customers 7.1% customers. 64,616 63,024 Mortgages 66.6% 33,511 36,330 66.3% Personal Financial Services Europe Due to customers in savings and investment accounts 31,391 28,530 Due to customers, other targets new markets 10.3% The Personal Financial Services 11,404 Europe initiative (Credit Suisse 16.8% Personal Finance and parts of Credit 61.8% Suisse e-Business) targets affluent 40.3% clients in selected European markets 239 via a multi-channel strategy. The Credit Suisse ratios/key performance indicators clients, who are typically seeking to 2.35% invest between EUR 50,000 and 2000 1999 7.8% 1 million, have access to a comprehen- Average allocated equity capital CHF m 4,401 4,411 71.4% sive palette of products and services to Allocated equity capital in CHF m (1.1.2001/2000) 4,697 4,611 141 meet all their financial needs. Ranging BIS tier 1 ratio as of 31.12. 1) 7.1% 6.8% from investment products and life Cost/income ratio 64.9% 66.6% insurance to loans and tax optimisation, Cost/income ratio 2) 64.6% 66.3% the offering also encompasses products from third-party providers. Return on average equity capital (reported) 14.4% 10.3% Return on average equity capital (operating) 2) Credit Suisse (Italy) continued 14.7% 10.6% to grow its presence in Italy, with net Number of employees as of 31.12. 11,701 11,404 new assets increasing 84.5% year-on- Pre-tax margin (reported) 21.3% 16.8% year to ITL 2,700 billion (CHF 2.2 Pre-tax margin (operating) 2) 21.6% 17.2% billion). Overall, assets under manage- Personnel expenses/operating expenses 62.7% 61.8% ment increased by 40% to stand at Personal expenses/operating income 39.1% 40.3% ITL 7,100 billion (CHF 5.6 billion). Number of branches as of 31.12. 235 239 The second half of the year saw pre- parations get underway for the launch Net interest margin 2.39% 2.35% of Credit Suisse Personal Finance in Loan growth 3.7% 7.8% Germany and Spain, scheduled for Deposit/loan ratio as of 31.12. 69.3% 71.4% 2001. Assets under management in CHF bn as of 31.12. 147.8 140.8 The e-business area of Personal Financial Services posted revenues of 1) Legal entity Credit Suisse. 2) Excl. amortisation of goodwill. CHF 38 million versus expenses of CHF 256 million, reflecting the heavy investment in an asset gathering strat- egy targeting affluent clients in Europe. The Swiss online broker youtrade grew its customer base by 164% to over 25,000. Assets under management stood at CHF 950 million at year-end. Personal Financial Services Europe posted a loss for the year of CHF 212 million. 24
  8. 8. Personal Financial Services Europe key performance indicators Credit Suisse (Italy) youtrade Total 31 Dec. 2000 31 Dec. 1999 31 Dec. 2000 31 Dec. 1999 31 Dec. 2000 31 Dec. 1999 Assets under management (in CHF bn) 5.6 4.0 1.0 0.5 6.6 4.5 Number of clients 18,587 12,395 25,228 9,603 43,815 21,998 Number of personal bankers 331 230 Banking goes mobile youtrade on WAP and youtrade on Palm are the latest addi- tions to Credit Suisse’s successful youtrade palette. Already Switzerland’s leading tool for share trading via telephone and the Internet, youtrade went portable in December 2000. Now customers can use a mobile phone or digital personal assistant to obtain quick market information, check on their safekeeping accounts or trade shares easily from any location. On average, Credit Suisse mobile banking registers 100,000 market data requests via mobile telephone every month. With new transmission technology and customised services, mobile banking is rapidly becoming a popular way for Credit Suisse to interact with and serve its customers. www.youtrade.com www.credit-suisse.com 25
  9. 9. REVIEW OF BUSINESS UNITS Credit Suisse Private Banking Market activity in 2000 was charac- 2000, total assets under management terised by high volume and volatility. amounted to CHF 488.2 billion. Total Developments were highly influenced revenues rose by 33% to CHF 6.3 bil- by the technology boom at the begin- lion and net profit increased by 38% to ning of the year and its subsequent over CHF 2.6 billion. This rise was correction, and by the general mainly attributable to interest income strengthening of the US dollar on the (+39%), commissions (+31%) and, to Oswald J. Grübel back of a strong US economy. In the a smaller extent, trading income Chief Executive Officer equity markets, 2000 was far from (+27%). Operating expenses in- rosy. Most international stock markets creased by 20%. The cost/income Credit Suisse Private Banking achieved ended the year below where they ratio improved from 47.3% to 42.6%. record results once again in 2000, started, as many sectors failed to live posting net profit of more than CHF up to market expectations. 2.6 billion (+38%). With innovative Innovative products and services Even against this backdrop, Credit Credit Suisse Private Banking products and premier service quality Suisse Private Banking succeeded in launched four affiliated alternative as its hallmarks, Credit Suisse Private reporting strong results for 2000. Net investment companies with a total vol- Banking has grown its international new asset growth doubled in compari- ume of CHF 4.0 billion in the course presence and further strengthened its son to the previous year to stand at of the year: Absolute Europe, Absolute position as one of the world’s leading CHF 21.0 billion, contributing 4.4% of Technology, Absolute U.S. and private banks. assets under management. At end- Absolute Private Equity. All of the Credit Suisse Private Banking income statement Change 1) Change 1999 1) 2000 in % in CHF m in CHF m in % 39 Net interest income 1,247 898 39 31 Net commission and service fee income 1) 4,171 3,187 31 27 Net trading income 752 592 27 113 Other ordinary income 1) 81 38 113 33 Operating income 6,251 4,715 33 22 Personnel expenses 1,734 1,418 22 15 Other operating expenses 883 768 15 20 Operating expenses 2,617 2,186 20 44 Gross operating profit 3,634 2,529 44 5 Depreciation and write-offs on non-current assets 2) 41 39 5 191 Valuation adjustments, provisions and losses 3) 160 55 191 41 Profit before extraordinary items, taxes 2) 3,433 2,435 41 (94) $ Extraordinary expenses/(income), net (1) (18) Taxes 766 516 48 Net operating profit before minority interests 2) 2,668 1,937 38 Amortisation of goodwill 7 7 0 Net profit before minority interests 2,661 1,930 38 Minority interests (29) (19) 53 Net profit 2,632 1,911 38 Net operating profit 2) 2,639 1,918 38 1) Reclassification of trust income from other ordinary income to net commission and service fee income beginning from 1.1.2000. 2) Excl. amortisation of goodwill. Net of allocation (-)/release (+) of reserves for general banking risks. (40) (31) 3) 26
  10. 10. MyCSPB – the personal private bank online MyCSPB is the innovative new private banking solu- tion to perfectly round off the relationship between client and advisor. At the click of a mouse, the pass- word-protected application www.cspb.com provides users with a full range of information, products, and primary and supplementary services — and can be customised directly in line with a client’s personal requirements. Comprising around twenty modules, this finance portal offers everything from share analysis to lifestyle issues, and can be combined with per- sonal account data. As well as enabling clients to keep track of their portfolios, MyCSPB also offers graphic analysis and customised news – and can even send out warnings via e-mail or SMS if speci- fied limits are exceeded. The first application of its kind anywhere in the world, www.cspb.com is setting new standards in the world of private banking. www.cspb.com www.credit-suisse.com 27
  11. 11. REVIEW OF BUSINESS UNITS companies pursue diversified invest- Check-Up Online is a straightforward ment strategies with a view to achiev- solution to assist clients in their finan- ing an attractive investment perform- cial planning. Fund Lab, the Internet ance irrespective of market climate. platform for comparing and selecting Dream Team is a comprehensive investment funds, was expanded to range of asset management and insur- cover around 830 funds from 32 in- ance services engineered by Credit vestment companies as of end-2000. Suisse Private Banking in response to What’s more, clients can now track the special financial needs of top and select 2,500 different equities sporting athletes. Credit Suisse Private using a range of criteria via Stock Banking also began offering advisory Tracker. A major step forward was the services and support for entrepreneurs introduction of Tradelink, which allows looking for growth capital or consider- clients to not only compare proprietary ing selling their business. and third-party investment products via Credit Suisse Private Banking has www.cspb.com, but also to buy and invested considerably in its client sell them directly via Fund Lab or services. One example is the new Stock Tracker. client management system FrontNet, which lightens the administrative load on advisors and allows them to devote more time to their clients. Continued Credit Suisse Private Banking balance sheet information investment is planned for 2001 to further enhance the quality of client service. 31 Dec. 1999 31 Dec. 2000 in CHF m in CHF m 99,651 101,153 Total assets Stronger international foothold Credit Suisse Private Banking contin- 31,902 33,717 Due from customers ued to grow its international presence, 7,667 9,206 – of which secured by mortgages 22,731 with the spotlight on Europe and Asia. 22,621 – of which secured by other collateral It underpinned its London-based opera- tions through the acquisition of JO Ratios/key performance indicators Hambro Investment Management 1999 2000 Limited (JOHIM), and transformed its 2,771 3,117 Average allocated equity capital in CHF m existing representative office in Vienna 2,875 3,031 Allocated equity capital in CHF m (1.1. 2001/2000) into an investment management com- 47.3% 42.6% Cost/income ratio pany. Looking eastwards, Credit Cost/income ratio 1) 47.2% 42.5% Suisse Private Banking obtained a 8,371 8,665 Number of employees as of 31.12. banking licence in Hong Kong. New representative offices also opened 51.9% 54.8% Pre-tax margin (reported) their doors in Jakarta, Cape Town and Pre-tax margin (operating) 1) 52.0% 54.9% Valencia, bringing the number of Fee income/operating income 2) 67.6% 66.7% offices outside Switzerland to over 40. Fee income/operating expenses 2) 145.8% 159.4% A further expansion of private banking 476.7 488.2 Assets under management in CHF bn as of 31.12. operations in Europe, Asia and Latin 18.4% 2.4% Growth in assets under management America is on the agenda for 2001. – of which net new assets 3) 2.9% 4.4% (2.0%) 15.5% – of which market movement and structural effects Setting the pace in Internet banking 44 bp 53 bp Net profit before minority interests/average AuM Credit Suisse Private Banking en- Net operating profit before minority interests/average AuM 1) 45 bp hanced its www.cspb.com site in 2000 54 bp with several new applications. Estate 1) Excl. amortisation of goodwill. Lab is a platform focusing on real es- 2) Incl. reclassified trust income. tate investments, while Financial 3) Excl. interests and dividends. 28
  12. 12. Credit Suisse Asset Management Credit Suisse Asset Management CHF 48 billion to overall assets un- increased its total assets under der management as of 31 December management by 14.7% in 2000 to 2000. Revenues increased by 36% finish the year at CHF 487.2 billion. to CHF 1.6 billion, which includes Discretionary assets under manage- two months of DLJ’s Asset ment grew to CHF 360.1 billion as of Management Group results. Revenue 31 December 2000, up CHF growth was strongly supported by the Phillip M. Colebatch 35.9 billion or 11.1% over 1999. Of strategic focus on higher margin Chief Executive Officer this amount, net new assets (exclusive assets in the equity and alternative of assets acquired in the DLJ acqui- investment classes. Net operating Credit Suisse Asset Management ex- sition) was CHF 24.4 billion, an in- profit rose 32% year-on-year to CHF panded its global position through crease of 31.9%. The retail and high- 338 million. strong organic growth and the acqui- net-worth individual segments sition of Donaldson, Lufkin & Jenrette recorded 24% growth over the year to Asset Management Group in the US Regional markets: strong growth CHF 161 billion. The acquisition of In the Americas, Credit Suisse Asset market. The unit made significant Donaldson, Lufkin & Jenrette Asset Management saw a year of market progress in building its domestic posi- Management Group in the US added volatility, including turbulence on the tion in all of its key markets in 2000. NASDAQ. Including the assets acquired with DLJ, assets under management grew from USD 76 bil- lion to USD 94 billion. The combina- tion provides Credit Suisse Asset Management’s US business with further access to the private client Credit Suisse Asset Management income statement business and the investment banking channel, and also enhances the 2000 1999 Change Change in CHF m in CHF m in % unit’s in % alternative investment product 1,006 757 33 33 Management and advisory fees platform. In the early part of 2000, 513 330 55 Net mutual fund fees Congress passed the Financial 43 62 (31) (31) Other revenues Modernization Act, which includ- 36 1,562 1,149 36 ed repealing the “firewall” rules which Operating income 40 had until then prevented Credit 656 467 40 Personnel expenses 28 Suisse Asset Management from 481 377 28 Other operating expenses 35 working with Credit Suisse First 1,137 844 35 Operating expenses 39 Boston. This puts the unit on level 425 305 39) Gross operating profit 32 terms with other major financial 1) 29 22 32 Depreciation and write-offs on non-current assets - groups in the US at a crucial time of 0 0 – Valuation adjustments, provisions and losses industry consolidation. As a more Profit before extraordinary items, taxes 1) 396 283 40 40 sophisticated population is seeking 1 2 (50) (50) Extraordinary expenses/(income), net ever more comprehensive financial Taxes 2) 57 24 138 138 advice, global distribution networks are in 32position to take an increasing a Net operating profit before minority interests 1) 338 257 32 share of the growing asset manage- Amortisation of acquired intangible assets, ment136 market. Credit Suisse Asset net of tax, and goodwill 2) 52 22 136) Management is now well positioned 286 235 22 22 Net profit before minority interests to leverage referral opportunities with 0 0 – - Minority interests Credit Suisse First Boston. 286 235 22 22 Net profit In Switzerland, Credit Suisse Asset Management remained a mar- Net operating profit 1) 338 257 32 ket leader, with strong retail growth and particular success in the institu- 1) Excl. amortisation of acquired intangible assets and goodwill. tional segment. In the pooled pen- 2) Tax impact on amortisation of acquired intangible assets CHF 1 m in 2000. www.credit-suisse.com 29
  13. 13. REVIEW OF BUSINESS UNITS Global début Credit Suisse Asset Management’s leadership in specialist equity products is typified by the worldwide rollout of its Global Post Venture Capital mutual fund through both retail and institutional distribution channels in 2000. The product was gained as part of the acquisition of Warburg Pincus Asset Management in 1999, and invests in companies which have passed through the initial venture capital stage. Already with top rankings in the US, Global Post Venture is now catching the attention of investors worldwide. In 2000, Global Post Venture funds were launched in retail markets in Australia, the UK and Japan. Institutional investors have also shown strong interest, with mandates signed or in the pipeline with leading institutions in Switzerland, Germany and the UK. 30
  14. 14. sion market, the unit’s Credit Suisse Post Venture Fund and Credit Suisse Investment Foundation (CSA) ended Portfolio Funds. These and other the year as market leader. Key equity products aim to capitalise on the grow- products, such as Swiss and European ing willingness of Japanese investors small & mid cap, Swiss and European to invest in mutual funds. Blue Chips, high-tech and pharmaceu- tical sector funds performed well. Looking ahead: equity products Equity and index products were ex- of interest panded to address market trends. The increasing emphasis on equities in Swiss Prime Site, a real-estate invest- sales of retail funds globally is shaping ment company newly-launched and Credit Suisse Asset Management’s listed on the stock exchange, gathered activities in the coming months. CHF 750 million. Prime New Energy, Further integration of DLJ’s Asset another listed investment company with Management Group and the accom- CHF 120 million in assets, was the panying cooperation with Credit Suisse first company launched in Switzerland First Boston’s distribution channels, in the year 2000 in the alternative en- particularly the online channel ergy sector. Also new in Switzerland is CSFBdirect, will be important in the CSA’s private equity investment fund for Americas. The fast-growing Australian small to medium-sized pension funds. market will continue to be a focus for Credit Suisse Asset Management the unit’s activities, while product Australia was named the Australian development and retail marketing fund manager of the year in 2000. across Europe will also continue to be Over the past two years the unit’s mar- developed in 2001. ket share has doubled. Total inflows Credit Suisse Asset Management ratios/ in the unit’s retail business were just under AUD 2.5 billion in 2000, and key performance indicators assets under management in the insti- 2000 1999 1999 tutional business grew by 52% to AUD 1,147 540 Average allocated equity capital in CHF m 540 15.3 billion over the year. 1,296 1,054 Allocated equity capital in CHF m (1.1. 2001/2000) 1,054 In Europe Credit Suisse Asset 78.0% 77.3% Cost/income ratio Management continues to build its or- Cost/income ratio 1) 74.6% 75.4% ganisation to take advantage of the op- 77.3% 6.3 bp 6.6 bp portunities of European convergence. Net profit/average AuM 75.4% Net operating profit 1)/average AuM 7.5 bp 7.2 bp The unit’s Luxembourg family of mutu- 6.6 bn al funds, which is one of the largest in 2,350 2,000 Number of employees as of 31.12. Europe, enjoyed 13% net new busi- 21.9% 22.5% Pre-tax margin (reported) 2,000 ness growth in 2000. This growth was Pre-tax margin (operating) 1) 25.3% 24.5% 2,000 enhanced by the successful addition of 57.7% 55.3% Personnel expenses/operating expenses an institutional share class and a regis- 2,000 42.0% 40.6% Personnel expenses/operating income tered share form, which broadened the 22.5% 487.2 424.6 Assets under management in CHF bn as of 31.12. base of potential investors. 55.3% 360.1 324.2 Discretionary funds in CHF bn as of 31.12. Product sales and client relation- 40.6% ships in Japan are set to improve 136.9 120.9 Mutual funds distributed in CHF bn as of 31.12. 425 after two difficult years in which growth 127.1 100.4 Advisory assets in CHF bn as of 31.12. 324 rates and net new inflows slowed sig- 14.7% 43.1% Growth in assets under management nificantly from their 1998-1999 levels. 121 11.1% 52.8% Growth in discretionary assets under management Together with a concentrated advertis- 100 7.5% 8.7% – of which net new assets ing campaign to promote the Credit 324 (8.1%) 27.1% – of which market movement Suisse Asset Management name, 11.7% 17.0% – of which acquisition several new funds were launched in Japan in 2000, including the Global 1) Excl. amortisation of acquired intangible assets and goodwill. www.credit-suisse.com 31
  15. 15. REVIEW OF BUSINESS UNITS Credit Suisse First Boston crease was supported primarily by the Credit Suisse First Boston’s merger Equity and Investment Banking divi- with Donaldson, Lufkin & Jenrette (DLJ) sions. The business unit also achieved in 2000 was completed in record time, record profitability, posting gross oper- and the two businesses have now ating profit of USD 2.8 billion (CHF been successfully integrated. The 4.7 billion), up 10% (24%), and net business unit also made great operating profit of USD 1.6 billion Allen D. Wheat progress in its equities businesses and (CHF 2.6 billion), up 20% (34%). Net Chief Executive Officer continued to expand its investment profit was USD 1.4 billion (CHF 2.4 banking franchise, strengthening client billion), 12% (25%) higher than in relationships and playing a leading role 1999. Credit Suisse First Boston’s in many significant transactions. global reach is apparent: while North Credit Suisse First Boston achieved America accounts for 51% of rev- record results in 2000. In US dollar enues, Europe supplies 36% and the terms, revenues rose 25% to USD rest of the world, 13%. 12.2 billion, and 40% in Swiss franc The main event of the year was terms to CHF 20.4 billion. This in- the merger with US investment bank Credit Suisse First Boston income statement 1) 2000 1999 Change 2000 1999 Change Change in CHF m in CHF m in % in USD m in USD m in % in % Fixed Income 4,874 6,651 (27) 2,919 4,464 (35) (26) Equity 8,477 4,786 77 5,076 3,212 58 58 Investment Banking 6,148 3,453 78 3,681 2,318 59 59 Financial Services Group 447 n/a – 268 n/a – Other 417 (358) – 250 (241) – n/a 6.756 Operating income 20,363 14,532 40 12,194 9,753 25 26 Personnel expenses 12,011 7,999 50 7,192 5,368 34 32 Other operating expenses 3,634 2,714 34 2,176 1,822 19 19 Operating expenses 15,645 10,713 46 9,368 7,190 30 29 Gross operating profit 4,718 3,819 24 2,826 2,563 10 2) Depreciation and write-offs on non-current assets 644 371 74 386 249 55 Valuation adjustments, provisions and losses 3) 537 786 (32) 322 527 (39) (39) Profit before extraordinary items, taxes 2) 3,537 2,662 33 2,118 1,787 19 n/a 4) Taxes 925 715 29 554 480 15 n/a Net operating profit before minority interests 2) 2,612 1,947 34 1,564 1,307 20 19 Amortisation of acquired intangible assets, 21 net of tax, and goodwill 4) 254 66 285 152 45 238 18 Net profit before minority interests 2,358 1,881 25 1,412 1,262 12 Minority interests (3) (1) 200 (2) 0 – 202 Net profit 2,355 1,880 25 1,410 1,262 12 12 - 2) Net operating profit 2,609 1,946 34 1,562 1,307 20 12 1) The business unit income statement differs from the Group’s legal accounts in presenting brokerage, execution and clearing expenses as part of operating expenses in common with US competitors, rather than netted against revenues. 2) Excl. amortisation of acquired intangible assets and goodwill. 6 0 4 0 3) Net of allocation (-)/release (+) of reserves for general banking risks. 4) Tax impact on amortisation of acquired intangible assets CHF 42 m in 2000, and CHF 2 m in 1999. 32
  16. 16. Donaldson, Lufkin & Jenrette. The equity and fixed income businesses were integrated less than seven weeks after the merger was announced on 30 August, and the transaction was New revenue generators completed on 3 November. Infra- structure and technology were put in place quickly to ensure a seamless One major gain for Credit Suisse First Boston through transition of services to clients. the merger with DLJ was the Financial Services Group, Credit Suisse First Boston now has which produced USD 2 billion in revenues in 2000. The over USD 10 billion (CHF 16.3 billion) unit added three businesses: Private Client Services, in allocated equity capital, 28,000 em- with 500 financial advisors servicing affluent individual ployees worldwide and total assets in investors, mainly in the US; the top-rated, full-service excess of USD 400 billion. On the in- online broker CSFBdirect; and Pershing, which alone stitutional side, the merger augments accounted for half the Financial Services Group rev- the unit’s rankings in a number of key enue. Pershing’s technology works behind the scenes, areas. In the US, Credit Suisse First clearing share trades and providing margin lending and Boston is now ranked number one in other related financial services to institutions, investment equity and high yield research, equity advisors and brokerage firms. With over 4 million active trading and high yield underwriting, customers worldwide, Pershing is a consistent source of and number two in equity underwriting revenue for the business unit and has strong growth po- and mergers and acquisitions (M&A). tential. The fourth Financial Services Group component, Credit Suisse First Boston also now asset management, was merged with Credit Suisse has Wall Street’s leading Private Equity Asset Management’s US business. franchise and is ranked number one in equity research in Europe. In addition, its financial services businesses (Pershing, Private Client Services and CSFBdirect) provide earnings diversification. Credit Suisse First Boston played a leading role in a number of pivotal deals around the world last year. Major transactions included the demutualisa- tion of Met Life, the acquisition of Orange by France Télécom, the restructuring of AT&T, the Texaco/ Chevron merger and Pacific Century CyberWorks’ merger with Cable & Wireless Hong Kong Telecom. Investment Banking increases global market share Division revenues increased 59%, led by M&A and equity capital markets. In the Americas, M&A revenues in- creased by 85% over 1999; Credit Suisse First Boston’s ranking improved to number two, with a pro-forma mar- ket share of 32%. Globally, it now ranks third in M&A with a pro-forma market share of 27%, versus a rank of www.credit-suisse.com 33

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