credit-suisse Business Review 2005Document Transcript
Credit Suisse Group
Business Review 2005
The vision of Credit Suisse is to become the world’s
premier bank, renowned for its expertise in investment
banking, private banking and asset management, and
most valued for its advice, innovation and execution.
Brand launch in Hong Kong
On January 16, 2006, we launched
our new Credit Suisse brand and
logo worldwide. The façades of
Credit Suisse buildings in Hong
Kong, London, New York, Singapore
and Zürich were illuminated to
celebrate the new brand.
Credit Suisse Group financial highlights
Year ended December 31, in CHF m, except where indicated 2005 2004 2003
Consolidated income statement
Net revenues 60,632 55,139 52,515
Income from continuing operations before
cumulative effect of accounting changes 5,863 5,684 1,585
Net income 5,850 5,628 770
Return on equity
Return on equity – Group 15.4% 15.9% 2.2%
Return on equity – Banking 16.2% 17.8% 12.6%
Return on equity – Winterthur 11.7% 9.2% (26.9%)
Earnings per share
Basic earnings per share in CHF 5.17 4.80 0.64
Diluted earnings per share in CHF 5.02 4.75 0.63
Net new assets in CHF bn 58.4 32.9 5.0
December 31, in CHF m, except where indicated 2005 2004
Assets under management in CHF bn 1,484.3 1,220.7
Consolidated balance sheet
Total assets 1,339,052 1,089,485
Shareholders’ equity 42,118 36,273
Consolidated BIS capital data
Risk-weighted assets 232,891 199,249
Tier 1 ratio 11.3% 12.3%
Total capital ratio 13.7% 16.6%
Number of employees
Switzerland – banking segments 20,194 19,558
Switzerland – insurance segments 5,928 6,147
Outside Switzerland – banking segments 24,370 21,606
Outside Switzerland – insurance segments 13,031 13,221
Number of employees (full-time equivalents) 63,523 60,532
Stock market data
Market price per registered share in CHF 67.00 47.80
Market price per American Depositary Share in USD 50.95 42.19
Market capitalization 75,399 53,097
Market capitalization in USD m 57,337 46,865
Book value per share in CHF 37.43 32.65
Share performance Market capitalization
Swiss Market Index (rebased) Credit Suisse Group As of end of reporting period (in CHF bn)
2003 2004 2005 97 98 99 00 01 02 03 04 05
Key Highlights 2005
Our 2005 results show
that we are making good CHF 5,850 million
progress in transforming Net income for 2005 totaled CHF 5,850 million,
up 4% compared to 2004.
the underlying profitability
of our business. Our new
integrated structure will
help us to further enhance
our growth and returns for
CHF 42.7 billion
our shareholders. Private Banking recorded net new assets of CHF 42.7 billion,
reflecting excellent inflows across all regions.
This corresponded to a strong annual growth rate of 7.9%.
CHF 1,484.3 billion
The Group’s total assets under management stood at
CHF 1,484.3 billion as of December 31, 2005, up 21.6% from
December 31, 2004.
As of year-end 2005, Credit Suisse Group employed 63,523
people, of which 44,564 in its banking business, Credit Suisse,
and 18,959 in its insurance business, Winterthur.
Credit Suisse Group
Business Review 2005
For a detailed presentation of Credit Suisse Group’s financial statement 2005,
its company structure, risk management, an in-depth review of the operating and
financial results and additional information on corporate governance, please refer
to the Annual Report 2005 and the Supplemental Information 2005.
Cover image: Daria Mihaesco,
Private Banking (Geneva)
4 Credit Suisse at a glance
6 Message from Walter B. Kielholz, Chairman of the Board of Directors
8 Message from Oswald J. Grübel, Chief Executive Officer
10 Our vision and our mission
11 Our three principles
12 A relentless focus on the needs of our clients
16 Teamwork must be at the heart of all we do
20 Our reputation is everything
24 Operating review
24 Credit Suisse Group and Credit Suisse
30 Aiming for Operational Excellence
32 Credit Suisse Group in society
36 Corporate governance and management
36 Corporate governance
38 Executive Boards of Credit Suisse Group and Credit Suisse
40 Summary of the responsibilities of the Board of Directors
and the Executive Boards of Credit Suisse Group and Credit Suisse
42 Financial tables
The content of this Business Review is for information purposes only and constitutes
neither an offer for sale of any product nor investment advice.
at a glance
As one of the world’s leading banks, Credit Suisse
provides its clients with investment banking,
private banking and asset management services
worldwide. Credit Suisse offers advisory services,
comprehensive solutions and innovative products to
companies, institutional clients and high-net-worth
private clients globally, as well as retail clients in
Switzerland. Credit Suisse is active in over 50
countries and employs more than 44,000 people
from 100 different nations.
Credit Suisse’s parent company, Credit Suisse
Group, is a leading global financial services
company headquartered in Zürich. Credit Suisse
Group also includes Winterthur, the leading
insurance company in Switzerland and one of the
top 10 composite insurers in Europe. Credit Suisse
Group’s registered shares (CSGN) are listed in
Switzerland and, in the form of American Deposi-
tary Shares (CSR), in New York.
In Investment Banking, Credit Suisse offers securities
products and financial advisory services to corporations,
governments and institutional investors. Operating in
69 locations in 33 countries, this business specializes
in creating innovative solutions to clients’ challenges,
drawing on expertise from across the full spectrum
of products: debt and equity underwriting, sales and
trading, mergers and acquisitions, investment research,
correspondent and prime brokerage services.
You can find further information about
Credit Suisse Group and Credit Suisse at
www.credit-suisse.com and further information
about Winterthur at www.winterthur.com.
4 Credit Suisse Group Business Review 2005
In Private Banking, Credit Suisse provides comprehen- In Asset Management, Credit Suisse manages
sive advice and a broad range of investment products portfolios, mutual funds and other investment vehicles
and services tailored to the complex needs of high-net- for a broad spectrum of clients globally, from
worth individuals all over the world. Credit Suisse’s governments, institutions and corporations to private
structured advisory process encompasses both asset individuals. It offers investment products across the full
and liability management. Furthermore, the bank is a range of asset classes, including equity and fixed
leading provider of innovative alternative investment income securities, commodities and multiple-asset class
products. Wealth management solutions include tax products. The bank is a world leader in providing
planning, pension planning, life insurance solutions, alternative asset solutions and offers alternative
wealth and inheritance advice, trusts and foundations. investments including real estate, hedge funds, private
Credit Suisse offers multiple booking platforms and equity and volatility management. This business is a
global execution capabilities. In Switzerland, Credit globally integrated network, sharing information across
Suisse supplies banking products and services to busi- borders to deliver our best investment ideas and
ness and retail clients as well as to private banking clients. capabilities to clients around the world.
Credit Suisse Group Business Review 2005 5
Message from the Chairman
Dear shareholders, clients and colleagues
The year 2006 marks the occasion of Credit Suisse’s 150th anniversary. This milestone
gives us an opportunity to thank those who have helped to build our company and
those who place their trust in us. At the same time, we want to continue to foster the
spirit of innovation that has been a hallmark of our bank.
Alfred Escher, who founded Credit Suisse in 1856, was one of the most important
politicians and commercial pioneers of his time. In addition to founding Credit Suisse,
he played a crucial role in the founding of two important railway lines, a technical
university, and two insurance companies. I am convinced that Escher’s strength
in innovation continues to influence us even now that we are a global institution.
Our ability to implement new ideas while maintaining the tried and tested is the golden
thread that runs through our 150-year history and one which will stand us in good stead
for the future.
Walter B. Kielholz
Chairman of the Board of Directors
Our long tradition of innovation is evident not only in the way we develop products and
Credit Suisse Group
services to meet our clients’ high expectations – but also in the way we developed a
response to our rapidly changing business environment in 2005.
Technology and the globalization of markets have increased the complexity of the
financial services industry and transformed the needs of our clients. In 2005 we
responded swiftly and effectively to this challenging environment by building an
organizational structure that enables us to combine our wealth of experience and
expertise of the financial markets from across our banking business to meet our clients’
demand for sophisticated and holistic solutions.
Credit Suisse began operating as an integrated global bank on January 1, 2006.
Focused on investment banking, private banking and asset management, we are now
well-placed to strengthen our competitive position globally and seize opportunities in our
Our 150 years of experience has been the solid foundation that has enabled us to
constantly look ahead, create novel solutions for our clients and define the marketplace
of the future. We are proud to have a strong Investment Banking business that is one
of the most innovative on Wall Street; a Private Banking business that is the benchmark
in terms of profitability and innovation, and an Asset Management business that is a
market leader in alternative investments. Our transition to an integrated structure means
we can use our resources more effectively and our people can work together on a
global basis – from all three areas of our bank – for the benefit of our clients.
Crucially, while implementing our strategic plan, we remained committed to enhancing
profitability and creating value for our shareholders. We reported net income of
CHF 5,850 million for the full year. The Board of Directors will propose a dividend of
CHF 2.00 per share to the Annual General Meeting on April 28, 2006.
6 Credit Suisse Group Business Review 2005
Two markets have, so far, accounted for a significant amount of our business volume:
Switzerland and the US. Both markets will remain very important to the bank. However,
we see a shift towards the emerging economies. We are operating in a global
environment; if we want to be close to our clients and the markets in which they
operate, we know we must increase our global footprint. This will complement the
strong bases we will continue to develop in our home markets.
Our global business strategy will be underpinned by our proximity to our clients, the
expertise and commitment of our people, and the effective use of technology. We are
therefore committed to investing in our global expansion, to recruiting and training the
very best people in our industry and to dedicating resources to technology. This will
enable us to create a competitive advantage through customized solutions and
economies of scale.
In 2005 we demonstrated our ability to deliver good results, while at the same time
refocusing our business. I am confident that with our integrated global structure, we will
be able to capitalize on our strong operating business and solid capital base to achieve
sustained and profitable growth.
Walter B. Kielholz
Credit Suisse Group Business Review 2005 7
Message from the Chief Executive Officer
Dear shareholders, clients and colleagues
Change is the driving dynamic of the banking business – change that is fueled by the
growth of an increasingly global economy and the new, wired world of global networks
and instant communications.
In our constantly changing business environment, it is all too easy for the individual
client to become marginalized, even neglected. That is why we are dedicated to putting
our clients first in every single phase of our business. Clients are at the heart of
everything we do. Meeting their needs, earning their trust and keeping that trust
through the successful delivery of products and services tailored to their requirements
are our highest priorities.
Our success depends upon our ability to unlock the considerable experience and
knowledge of the financial markets from across our organization. We have therefore
Oswald J. Grübel built an integrated global bank, focused on our core strengths in investment banking,
Chief Executive Officer private banking and asset management. Our new organizational structure, which we
Credit Suisse Group launched on January 1, 2006, enables our people to work together closely on a global
basis for the benefit of our clients.
Our ability to create innovative solutions has been evident throughout our 150-year
history. We think independently, finding new ways of solving problems and developing
new services in response to client-specific needs.
Preserving and enhancing our reputation is a major element of our service to clients.
We know that it can take decades to develop a reputation – and an instant to
lose it. Our reputation is determined by our capital and how we use it, by the ability
and integrity of our people, and by the results we achieve – the value we bring to
A relentless dedication to our clients, a ceaseless determination to earn and keep their
trust, and a deep commitment to teamwork and integrity – these are the foundation
stones of the integrated global Credit Suisse.
While we implemented our integration strategy in 2005 and prepared Credit Suisse for
future growth, we remained fully focused on our clients and succeeded in growing our
business. Net income for the full year reached CHF 5,850 million, strengthening the
underlying profitability of our business. We maintained strong capital ratios with a
consolidated BIS tier 1 ratio of 11.3% at year-end 2005. Net new assets of CHF 58.4
billion for the full year 2005 underscore the trust our clients place in us to increase and
protect their wealth. As of December 31, 2005, we had assets under management of
CHF 1,484.3 billion. These figures also include Winterthur, which further improved its
profitability in 2005.
8 Credit Suisse Group Business Review 2005
The year 2005 was decisive for Credit Suisse. I am convinced that we are now
in an excellent position to build on our success by meeting our clients’ demand
for sophisticated and holistic solutions across Investment Banking, Private Banking
and Asset Management.
In Investment Banking, we see attractive trends in areas in which we have historically
been strong, and we will stay focused on these strengths – such as in leveraged
finance, prime brokerage, advanced execution services and initial public offerings
(IPOs). The latter performed very well in 2005 and Credit Suisse was ranked first in the
global market share for IPOs for the full year, having participated in a number of high-
profile transactions, including the IPO for China Construction Bank, the world’s largest
IPO since 2001 and the largest IPO ever in China and in non-Japan Asia.
In Private Banking, we set the industry benchmark for profitability and we fully expect
to continue to do so. The demographics of this market are attractive, and we are
well-placed to benefit from projected growth. We are broadening our global footprint
in Private Banking: in 2005 we created a Private Banking hub in Dubai (United Arab
Emirates) – a further milestone in our global strategy to grow the wealth management
business. In addition, we opened local representative offices in Bangkok (Thailand),
Guangzhou (China), Mumbai (India) and St. Petersburg (Russia).
In Asset Management, the integration of our skills and know-how into one division
empowers us to take full advantage of our leading position in discretionary mandates
and alternative capital. It provides us with the opportunity to adjust swiftly and effectively
to each and every change in this dynamic industry. I am confident that as an integrated
bank, Credit Suisse will force the pace of innovation in asset management.
The future of our industry in today’s rapidly changing global marketplace will be shaped
by the banks that can stay close to their clients and their needs, by the banks that can
efficiently turn their expertise into effective products and solutions, and by the banks
that embrace change for the benefit of their shareholders, clients and employees. At
Credit Suisse, we understand this new marketplace. We have created the integrated
organization to thrive in it. And we have the talent and dedication to become the best
in our business.
Oswald J. Grübel
Credit Suisse Group Business Review 2005 9
Our vision and our mission
The vision of Credit Suisse is to become the world’s premier bank,
renowned for its expertise in investment banking, private banking
and asset management, and most valued for its advice, innovation
Our mission describes how we will achieve our vision. Credit Suisse
will set new standards: new standards in partnering with our clients
and new standards in providing them with innovative and integrated
solutions. Cultural diversity is essential to the success of Credit Suisse.
As an integrated global bank, Credit Suisse will empower people to
work openly and respectfully with each other and with clients to deliver
superior results that will lead to success and prosperity for all its
Charlene Yu, Roderick Ng,
Private Banking (Hong Kong)
10 Credit Suisse Group Business Review 2005
Our three principles
Three principles guide our actions, ambitions and decision-making:
we want to give our clients maximum value through our integrated
approach; we optimize the expertise from our Investment Banking,
Private Banking and Asset Management businesses through teamwork;
and we preserve and nurture our reputation at every opportunity.
A relentless focus The financial world is becoming ever more sophisticated and its clients consequently
more demanding: they expect superior results. Clients are at the center of what
on the needs of we do. We must understand their business, consider their goals from the outset,
our clients and anticipate their needs. Nothing short of excellence will suffice in helping them
to maximize their potential.
Teamwork must If we are to succeed in becoming an integrated global bank that delivers truly world-
class, innovative solutions to its clients, we must work together across our businesses
be at the heart in a spirit of respect and collaboration. We have an obligation to bring together the
of all we do combined intelligence of the entire organization to present a seamless service that
will set us apart in our industry.
Our reputation Reputations are built over decades but can be lost in an instant. Ours is built on trust,
and has enabled us to build a global business. We understand the past but are shaped
is everything by the future, so we must preserve and nurture our reputation at all times. Our
reputation is determined by our capital and how we use it; by our people, their integrity,
openness and respect; and, ultimately, by the results we achieve – the value we bring
to our clients.
Credit Suisse Group Business Review 2005 11
12 Credit Suisse Group Business Review 2005
A relentless focus
on the needs of our clients
The measure of our success
To build strong relationships with our clients, it is crucial that we understand their needs
– what they need today and what they will need in the future. But as their requirements
are rapidly changing, how do we stay ahead?
We make sure we understand their business inside out; asking the right questions;
finding the best solution. Like a team of Formula One engineers fine-tuning a car to
suit the driver and the requirements of the track, we take pride in providing the perfect
product and service to fulfill the client’s need and circumstance.
Our talent for innovation is born of a desire to continually find better ways of serving
our clients, to produce ideas triggered by the issues they face. We have pioneered
techniques and business practices that are now standard in the industry, thanks to the
imagination and creativity of our people in response to our clients’ objectives.
Through our experience in investment banking, private banking and asset management,
we can respond to the needs of a broad range of private, corporate and institutional
clients. Through the global scope of our business, we can be close to our clients and
their markets and we are able to give the service they expect.
Of course, it is no good just talking about it; actually achieving what we say we will is
the key to earning the satisfaction of our clients, by far the most important measure of
Yvonne Siu, Kehinde Longe,
Product Control (Hong Kong)
Credit Suisse Group Business Review 2005 13
Principle in action: client focus
Our relentless focus on the needs of our clients – coupled with our product and market
knowledge – means we can provide advice that works. This sounds fine in theory, but
how does it work in practice? The following cases show the first of our three principles
Innovative debt restructuring for Brazil
Our Investment Banking business managed a major Brazilian bond exchange in July
2005. The transaction’s success was largely due to its design, which grew out of our
Liability Management expertise, solid experience in Latin America, and two years’
ongoing dialogue with our client, the government of Brazil. We focused the transaction
on what the client wanted to accomplish – in effect, to retire the inefficient and
underperforming C Bond (Capitalization Bond – a widely-held issue with interest
accruing on the principal and capitalized interest) – one of the last reminders of the
country’s previous instability.
Our solution removed unpopular elements such as a call option, in return for a longer
Debt Capital Markets – Latin America,
maturity, yet retained many of the attractive features of the old bond. However, in terms
Investment Banking (New York)
of success, the really novel move was to offer this to investors in an auction based on
the maturity they would accept, rather than price.
This innovation was vindicated when the transaction achieved the highest participation
rate ever recorded for a Brazilian exchange, including every major holder, with over
80% of the old bonds retired. It extends the bond’s maturity by 3.75 years – and,
as well as retiring USD 4.3 billion of bonds that came out of the Brady plan debt
restructuring, it relieves Brazil of over USD 500 million in annual amortization payments
through 2009. With this transaction, Brazil could confirm its strengthening economic
prosperity, just 11 years after its restructuring.
Largest IPO in China…
We also showed marketing leadership and innovation when in October 2005 we
successfully priced and executed the largest initial public offering (IPO) in the world that
year, which was also the largest ever IPO in China: the USD 9.2 billion offering for
China Construction Bank. This was the first of China’s large state-owned banks to list
shares overseas and was also the largest ever for a bank. Investment Banking obtained
a high-quality and diverse investor base, actively addressing any enquiries and
concerns, and converting these to orders through roadshows and one-to-one meetings.
The offering, and the strong institutional demand for it, are seen as fresh evidence of
investor confidence in China’s booming growth.
… and in Russia
In 2005, Credit Suisse also handled the largest ever IPO in Russia, helping Sistema
raise USD 1.56 billion in the form of global depositary receipts traded on the London
Stock Exchange. The offering was more than 2.6 times oversubscribed in the face of
uncertain investor sentiment towards Russia. Sistema is the largest private sector
consumer services company in Russia and the Commonwealth of Independent States,
owning a 51% stake in Russia’s largest mobile phone company, plus additional
interests in telecoms, financial services, real estate, technology and media. The
company plans to use the proceeds to participate in the upcoming privatization of
national telecom holding company Svyazinvest and to consolidate its leadership
positions in selected industries.
14 Credit Suisse Group Business Review 2005
Crafting solutions to meet individual requirements
Our focus on clients’ needs runs through every part of the bank. Our Private Banking
clients have known for years that their dedicated relationship manager affords access
to the entire spectrum of knowledge and services Credit Suisse has to offer.
For one such client, Credit Suisse provided asset allocation, security selection and
trading services. We hedged and monetized a single stock position worth CHF 500
million – and we also helped him close on a USD 2 billion private equity transaction by
arranging a tailor-made escrow service. In addition, we structured a private investment
fund for his family and friends to participate in his investment activities, and have
arranged financing for a new yacht and private aircraft.
Similarly, another private client was looking to buy a medium-sized enterprise when he
retired from the Executive Board of a listed company. We assessed and recommended
several candidate firms whose owners were considering succession planning and we
arranged financing of CHF 5 million for the selected acquisition.
For a key executive of a South Asian company, colleagues from Credit Suisse’s Private
Banking and Investment Banking divisions cooperated in 2005 to complete a pioneer-
ing corporate equity derivative deal. The transaction allowed the executive to generate
cash to pay off a loan secured by shares in his company, while still maintaining upward
exposure to the company’s performance through the purchase of a call option. The
transaction was well received by the market with the stock opening higher than its
previous day close after the executive had disclosed the deal publicly.
One point of contact at a single bank is the most efficient way for many of our private
clients to manage their wealth. A Hong Kong client, with a significant investment
portfolio, used to deal separately with different divisions of leading financial institutions.
As such, his advisors often focused on promoting products rather than offering
objective advice. Now, with a single contact point at Credit Suisse to coordinate his
different needs, he enjoys comprehensive banking and wealth management services
based on our global resources.
New products, new ideas, new perspectives – for our clients
In 2005, our Asset Management division developed a high dividend yield equity product
to offer Japanese clients exposure to global markets. Faced with the low yield of
government bonds at around 1.5%, this product offers Japanese retail investors above
4.0% and pays a monthly dividend payment. We developed the product and won
the mandate in response to a request from Nikko Cordial, one of the top three
Japanese brokerage firms, for a product to distribute through their network to retail
clients. This is a good example of how we can design a specific new product to meet
the needs of clients in certain market environments.
Private Banking (Geneva)
Credit Suisse Group Business Review 2005 15
16 Credit Suisse Group Business Review 2005
Teamwork must be
at the heart of all we do
Combining our experience, knowledge and expertise
What use is an orchestra of talented musicians who play only solos? To perform well,
we must perform together. Teamwork creates enormous value. Our people collaborate
across the business with one common goal: bringing value to our clients.
Credit Suisse has a global reach – over 44,000 people in locations as diverse as
Mexico City, Tokyo and Geneva. Performing as one team is not always simple. It
requires dedication, determination and dialogue. It means we have to trust each other,
listen attentively and be generous with our talent and ideas. We have to understand and
believe in our goals, and recognize we are part of a global team.
We make our talent work for our clients by sharing our wealth of experience,
knowledge and expertise throughout the entire business in investment banking, private
banking and asset management.
Working as a team is not something we can choose to do some days but not others.
It is the means by which we can make the most of our inherent strengths – our global
reach, our first-class advice and our business experience – and reach our full potential
for the benefit of our clients and our shareholders.
Yong Cai, Charles Jin, Michael Daniel, Manish Kumar,
Collateralized Mortgage Obligations,
Investment Banking (New York)
Credit Suisse Group Business Review 2005 17
Principle in action: teamwork
Developing market-leading innovations – or acquiring them – represent two routes to
growth for large organizations such as Credit Suisse. Putting those innovations to work
successfully for different clients, internal and external, across a global, multi-business
company, can create huge competitive advantage. But it takes teamwork to develop
the structures, processes and relationships to pursue cross-business opportunities.
The following cases provide a practical demonstration of our teamwork and the tangible
benefits it can create for our clients.
Building on knowledge from experts and clients
HOLT, a platform to analyze the financial performance of companies, offers Credit
Suisse divisions and clients unique insights into corporate strategy, performance and
valuation, through one of the most advanced frameworks available, with a database
covering over 18,000 companies in more than 55 countries. It works on the premise
that stock markets set prices based on fundamentals such as cash flow, rather than
traditional accounting measures. Therefore, it removes accounting distortions and
HOLT, Investment Banking (Chicago)
inflation, and calculates performance on Cash Flow Return on Investment (CFROI).
Brought into the Cash Equities business of Credit Suisse in 2002, HOLT has lived a
broad vision from day one to become a shared resource, or strategic advisory boutique,
for many different areas within the bank. It is used for research, publications, structured
and tailored products, insights and sometimes purely to demonstrate the competitive
advantage of Credit Suisse to win pitches.
Better still, HOLT enjoys a natural upward spiral in quality every time it is used. Diverse
enough to cater for the needs of over 600 external clients, as well as our thousands
of internal users, the framework and database improve as more people look at it,
contributing their own unique insights, and customizing it to meet their own specific
needs. The moment each improvement is in the database, every HOLT user gets the
benefit of it. In effect, it is building a community that people want to be part of, bringing
the ability to create niche businesses within Credit Suisse, and becoming a case study
in how to engender innovation across a large organization.
Raising funds through teamwork
Coordinated team efforts feature across many parts of the bank. Since 2001, the
Leveraged Investment Group of our Alternative Capital business and colleagues from
Fixed Income have raised USD 4.8 billion of leveraged loan Collateralized Debt
Obligations (CDOs) across nine transactions. Private Banking played a critical role
in raising funds for several of these. The latest of these is Castle Garden Funding,
a USD 850 million CDO structured and underwritten by Fixed Income.
An integrated approach, a wealth of resources
Successful company executives and leaders of industry will, by the nature of their work,
have a strong relationship with an investment bank. Their very success means they will
also need private banking facilities. So it’s natural to choose a bank that can offer both
services – and where the two can work seamlessly together.
In 2005, our Paris office arranged a number of services for a client who owned a private
company. He wanted to monetize part of this wealth and also raise funds to grow
the company. Our investment bankers evaluated his options and found a buyer for two-
thirds of the company, then subsequently took the company public. In the end, the
client entrusted our Private Banking division with the task of structuring and managing
his private wealth.
HOLT, Investment Banking (New York)
18 Credit Suisse Group Business Review 2005
In addition, a number of other leading executives wanting to exercise stock options
could not find the specific and speedy cash management service they required from
their retail banks. Colleagues from the Investment Banking and Private Banking
divisions worked together before the transaction to arrive at the best approach for the
executives concerned, as well as the company and its employees. We then advised
each client from a tax and wealth organization perspective, including assets the clients
held with other banks.
Working in close partnership with our clients
Our work with Hiag Holding AG, a leading Swiss forestry products group and its
owners, provides a similar illustration of maintaining a client relationship across several
parts of the bank. We have worked with them for many years, including on the
establishment in 2000 of their joint venture Nybron Flooring International Corporation,
Europe’s leading wooden flooring company. In 2005, our clients, on the initiative of
their private equity partner in Nybron, decided to monetize their investment and awarded
Credit Suisse’s Investment Banking business the mandate. We ran a successful
divestiture process, which raised a sum considerably above the sellers’ target, while
also providing financing to the purchasers based on Nybron’s credit status, and pre-
hedging the expected euro proceeds into Swiss francs for Hiag and its owners. Here
again, thanks to our integrated approach, we were able to offer our clients not only
investment banking, but also private banking services.
Advice without boundaries
In asset management, there is no single product or selection that will suit every client.
So to reach our goal of bringing value to clients, we need close cooperation across the
business, generally coordinated by a relationship manager.
Our work for a German insurance company, who came to us with a quite specific
product request, crosses borders. With the relationship managed from Frankfurt, and
our teams there also taking care of reporting and compliance issues, we were able to
bring in our portfolio management team in London to work on a sophisticated solution.
This changed the structure of the product, keeping the out-performance ability the
client wanted, yet building in other features to provide a perfect fit for the client’s
Credit Suisse is a market leader in the field of alternative investments, managing over
USD 100 billion in a broad range of alternative asset classes, including real estate,
private equity and hedge funds, among others. The alternative investments area is
growing rapidly around the world, as both institutional and individual investors are
increasingly seeking new investment areas that provide diversification from traditional
Mergers and Acquisitions,
asset classes, and are shifting to a focus on absolute returns. Our experience in this
Investment Banking (London)
area allows us to advise clients on an ever broader selection of investment choices that
suit their circumstances and needs and put us at the forefront of an exciting new
opportunity for our clients.
Credit Suisse Group Business Review 2005 19
20 Credit Suisse Group Business Review 2005
Our most valuable asset
In today’s competitive financial services industry, complacency is not an option. We
are continually judged on the strength of the results we achieve, the attitude of our
people, the respect we show for others and the value we bring to our shareholders
and our clients.
Like a chess grandmaster planning a move, we take great care over the immediate
requirement, but always with an eye on the greater long-term consequences of our
actions. To earn and preserve the long-term trust and support of our clients, we must
anticipate, meet and beat their expectations. Their faith is crucial to our ability to grow
our business and meet our goals.
Our clients want more than just a product; they want a solution to their specific financial
needs. They want more than just information; they want guidance from a specialist with
an in-depth knowledge of their business.
We take pride in rising to the challenges they set. We care about the difference we
make. We serve our clients well and act professionally, and our experience shows that
our own success follows.
When our clients turn to us over and over again, it is because they enjoy working with
our people. They value our straightforward approach, our integrity and our willingness
to listen. They admire our commitment, energy and creativity. They appreciate our
desire for finding the answers to their complex and rapidly changing requirements,
supported by our wealth of experience in investment banking, private banking and
We want them to know that we have the talent and resources to provide outstanding
advice and expertise. And we want them to know that when we say we will do
something, we will do it.
Piers Cox, Richard Hitchcox, Shane O’Cuinn,
Investment Banking (London)
Credit Suisse Group Business Review 2005 21
Principle in action: reputation
Edyta Lopizzo, Ernest Durussel,
Trade Finance Services,
Private Banking (Geneva)
The knowledge that our reputation is everything is crucial to our ability to serve our
clients. Reputation is the third principle that guides us in our daily activities. In the final
part of this chapter, we look to our people and the way they interact with our clients to
illustrate this principle in action.
Meeting and beating clients’ expectations
Credit Suisse is reinforcing its reputation as an innovative partner for small and medium-
sized enterprises (SMEs) in Switzerland. We are meeting their demand for growth
financing options with some alternative forms of financing, which do not affect
ownership structure – CSA Mezzanine and Preferred Pooled Shares (PREPS).
Generally, SMEs are largely financed by bank loans, and it is difficult for many companies
to support their expansion plans, as they cannot access the capital markets. Credit
Suisse is therefore offering CSA Mezzanine financing, issued in the form of subordi-
nated loans from Credit Suisse Investment Foundation, and managed by experts in
the Asset Management division, as a vehicle for pension funds to tap into this
alternative investment segment. PREPS, on the other hand, give both institutional and
private investors a Pan-European platform to invest in larger SME companies in a
broadly diversified, pooled manner. Prior to this, access to the capital markets to obtain
resources similar to equity funding was unavailable for smaller companies.
Reliable partner for US pension funds
Credit Suisse is helping a growing number of US states with investment management
programs that use state pension funds to invest in small and start-up enterprises within
the state – these are often under-served by the large private equity firms. Central to
the concept is the belief each state has in the quality of its entrepreneurs, and the
endorsement of this by a global brand with the reputation of Credit Suisse.
22 Credit Suisse Group Business Review 2005
The state of Indiana chose Credit Suisse to manage a fund of funds, created to provide
capital for innovation and investment in the state’s wealth of intellectual property in life
sciences. Having raised USD 73 million, not just from the state employees’ pension
fund but also from corporate investors and educational institutes, Credit Suisse now
invests the money through carefully chosen venture capital firms.
On the strength of this success, Credit Suisse operates similar schemes in Oregon and
Ohio, with other states soon to follow. To demonstrate confidence in the funds, Credit
Suisse also invests, usually at far higher than the standard 1%. Our involvement adds
a confidence factor, which in itself can bring in greater investment, including from
outside the state. It also has the benefit of shining the spotlight on different areas of
entrepreneurial expertise within different states.
While the outcome of these programs is a boost to economic development within the
state, the main focus is the investment return for the states’ pension funds – and the
funds are monitored strictly with this in mind. This is where the in-depth knowledge and
experience of Credit Suisse plays such an important role. Clients place their faith in us
and trust us to deliver.
Finding new ways to improve client service
At Credit Suisse, our reputation for smooth-running client service is due in no small
part to our people, and the skills of every employee are important to us. We run a
series of training programs and efficiency initiatives to support our aims. For example,
Private Banking Switzerland runs the Next Pace initiative to improve staff familiarity
with our five-step customer advisory process, while Retail Banking’s Come On Camp
initiative helps client advisors position Credit Suisse as a committed bank that offers
Trusted advice, trusted relationships
Clients know we will rise to the challenge of their changing requirements, and we are
proud of the faith they put in us. A multi-billion dollar pension plan in the entertainment
industry is a case in point. Clients of Asset Management in New York, they expressed
concern about the future expected return environment for US fixed income.
Because of our strong relationship with them, we were able to work in partnership with
their investment consultant to discuss the potential to expand their investment guide-
lines to take in fixed income globally. This would bring the benefits of diversification,
plus the opportunity to take advantage of other markets. We introduced them to our
London team and they made the decision to exit US fixed income and move to
a global mandate.
So we retained the business, and the fund enjoyed the comfort of a seamless move.
They didn’t have to hire a new manager, and could continue working with the same
trusted firm to arrive at a different solution – and of course they retained all their
existing client services relationships with our New York office.
Private Banking (Geneva)
Credit Suisse Group Business Review 2005 23
Operating review: Credit Suisse Group and Credit Suisse
Our 2005 results show that we are making good progress
in transforming the underlying profitability of our business.
Our new integrated structure will help us to further
enhance our growth and returns for our shareholders.
The following discussion is based on the operational
and management structure in place in 2005.
2005 was a year of decisive change and significant progress for Credit Suisse Group.
In May 2005, Credit Suisse Group merged its two banking entities, Credit Suisse and
Credit Suisse First Boston, to create an integrated global bank. The integrated global
structure, combining the core businesses of Investment Banking, Private Banking and
Asset Management, began operations on January 1, 2006. On January 16, 2006, the
new Credit Suisse brand was launched.
Credit Suisse Group
While Credit Suisse Group implemented the integration strategy of its banking business
in CHF m, except where indicated 2005 2004
Net revenues 60,632 55,139 in 2005, the results for the full year demonstrate that it was at the same time making
Total operating expenses 27,954 24,534
good progress in strengthening the underlying profitability of its business. The Group
Net income 5,850 5,628
proved its ability to benefit from an increase in client activity and the continued favorable
Return on equity – Group 15.4% 15.9%
credit environment. Net income totaled CHF 5,850 million, up 4% compared to 2004.
Return on equity – Banking 16.2% 17.8%
This result includes a non-cash charge in the fourth quarter of 2005 of CHF 421
Return on equity – Winterthur 11.7% 9.2%
million after tax relating to a change in the Group’s accounting for share-based awards,
Basic earnings per share in CHF 5.17 4.80
as well as a CHF 624 million after-tax charge in Institutional Securities in 2005 to
BIS Tier 1 ratio 11.3% 12.3%
Number of employees (full-time equivalents) 63,523 60,532 increase the reserve for certain private litigation matters.
Assets under management in CHF bn 1484.3 1220.7
Credit Suisse Group’s return on equity was 15.4% in 2005. The Group maintained its
strong capitalization, with a consolidated BIS tier 1 ratio of 11.3% at year-end 2005.
Furthermore, Credit Suisse Group recorded net new assets of CHF 58.4 billion for the
full year 2005.
Private Banking provides wealth management products and services to high-net-
in CHF m, except where indicated 2005 2004
Net revenues 7,729 7,170 worth individuals in Switzerland and many other markets around the world.
Total operating expenses 4,431 4,143
Net income 2,647 2,473 This segment reported net income of CHF 2,647 million for 2005, up 7% compared to
Cost/income ratio 57.3% 57.8%
2004. The increase in net income primarily reflected improved commissions and fees
Gross margin 129.2 bp 133.7 bp
and trading revenues, partly offset by higher compensation and benefits.
Net new assets in CHF bn 42.7 26.4
Assets under management in CHF bn 659.3 539.1
As part of its growth in strategic key markets, Private Banking expanded its business
Number of employees (full-time equivalents) 13,077 12,342
during 2005 in areas such as Asia, the Middle East and Russia. A Private Banking hub
was created in Dubai (United Arab Emirates) – a further milestone in the global strategy
to grow the wealth management business. In addition, local representative offices were
opened in Bangkok (Thailand), Guangzhou (China), Mumbai (India) and St. Petersburg
(Russia). In 2006, Private Banking intends to establish a presence in Saudi Arabia by
entering into a joint venture with experienced local partners in the Saudi Swiss
Securities consortium, with an office in Riyadh.
Private Banking increased its net revenues by 8%. This improvement was mainly driven
by higher commissions and fees, reflecting the increase in assets under management
and higher brokerage volumes. Furthermore, Private Banking recorded higher trading
revenues, reflecting higher client transaction volume.
The segment recorded higher costs, with a 7% increase in total operating expenses
compared to 2004. This increase was mainly due to higher compensation and benefits,
while other expenses increased only marginally. Compensation and benefits increases
were driven by higher performance-related compensation, in line with higher pre-tax
income and ongoing strategic investments in growth markets, including front-office
24 Credit Suisse Group Business Review 2005
The gross margin for 2005 was 129.2 basis points. Compared to 2004, the gross
margin decreased 4.5 basis points, mainly related to lower net interest income.
Assets under management were CHF 659.3 billion as of December 31, 2005, an
increase of 22% compared to December 2004. The main drivers of this growth were
strong net new asset inflows, the impact of favorable foreign exchange rate fluctuations
and higher equity valuations.
Private Banking continued to achieve healthy money inflows from strategic key markets
in Asia and from the onshore business in Europe, where double-digit growth rates were
achieved. The segment recorded CHF 42.7 billion of net new assets for 2005.
Corporate & Retail Banking
Corporate & Retail Banking, which offers banking products and services to
in CHF m, except where indicated 2005 2004
Net revenues 3,458 3,348 Corporate & Retail clients in Switzerland, reported a 19% increase in net income to
Total operating expenses 2,186 2,051
CHF 1,069 million, a record result.
Net income 1,069 901
Cost/income ratio 63.2% 61.3%
Net revenues for 2005 were up 3% versus 2004, reflecting strong increases in
Return on average allocated capital 20.7% 18.0%
commissions and fees from increased brokerage volumes and increased trading
Number of employees (full-time equivalents) 8,469 8,314
revenues. Net interest income remained stable as an increase in lending volume was
offset by margin pressure in the low interest rate environment.
Key drivers for the segment’s strong result were stable net reserves and releases of
provisions in 2005 compared to net provisions for credit losses in 2004. For 2005, net
releases of provisions for credit losses of CHF 96 million were recorded compared to
net provisions of CHF 122 million in 2004. The release of provisions reflected the
ongoing favorable credit environment for lenders.
For 2005, total operating expenses increased 7% compared to 2004, due to higher
performance-related compensation in line with higher pre-tax income, while other
expenses only marginally increased.
Corporate & Retail Banking achieved a strong return on average allocated capital of
20.7% in 2005, which was well above the mid-term target of 15%.
In 2005, Corporate & Retail Banking further expanded its Swiss residential mortgage
business, reporting growth of approximately 9%. The growth in this business reflected
increased marketing efforts and Credit Suisse’s wide range of mortgage products.
In line with the strategic aim of gaining market share in the high-end retail business,
particularly in investment products, Credit Suisse launched a new investment product
during 2005: Credit Suisse Triamant. This new product combines the advantages of
professional asset management with those of an investment fund by providing actively
managed asset allocation, broad diversification and transparent reporting, and,
furthermore, underscores Corporate & Retail Banking’s strategy to provide more
innovative investment products to retail clients.
Credit Suisse Group Business Review 2005 25
Operating review: Credit Suisse (continued)
Institutional Securities provides securities and investment banking services to
institutional, corporate and government clients worldwide.
Institutional Securities reported net income of CHF 1,080 million in 2005, a decrease
in CHF m, except where indicated 2005 2004
Net revenues 15,102 13,120 of 18% compared to 2004. Excluding the CHF 624 million after-tax charge in the
Total operating expenses 13,643 11,375
second quarter of 2005 to increase the reserve for certain private litigation matters,
Net income 1,080 1,313
net income for the full year was CHF 1,704 million, an increase of 30% compared to
Cost/income ratio 90.3% 86.7%
2004. This improvement, excluding the litigation charge, was driven by higher revenues,
Pre-tax margin 10.1% 13.6%
lower income tax expenses and lower credit provisions (including the release of
Return on average allocated capital 8.6% 12.8%
significant credit provisions), offset in part by higher operating expenses. Net income
Number of employees (full-time equivalents) 18,809 16,498
for 2005 was positively impacted by certain tax-related items.
Institutional Securities increased its revenues by 15% versus 2004, reflecting higher
investment banking and trading revenues and increased industry-wide activity. This
improvement demonstrates Credit Suisse’s strength and leadership position in key
business areas, including initial public offerings (IPOs), leveraged finance, advanced
execution services, emerging markets, prime brokerage and the increasingly important
financial sponsor client base.
Investment banking net revenues include debt underwriting, equity underwriting and
advisory and other fees. Total investment banking revenues improved 16% in 2005.
This strong investment banking performance reflected the impact of the newly
established financing platform, which integrated the capital markets, leveraged finance
origination and structuring teams. Institutional Securities also benefited from a leading
position in the financial sponsors business.
Debt underwriting revenues were up 8% versus 2004, primarily reflecting higher results
in investment grade capital markets, leveraged finance and residential mortgage-backed
securities. Equity underwriting revenues increased 25%. These improvements were due
to higher industry-wide equity issuance activity and increased IPO market share in the
Americas and Europe. Advisory and other fees increased 23%, due primarily to an
increase in industry-wide activity and increased market share.
Total trading revenues increased 14% compared to 2004. The increase in fixed income
trading revenues reflected improvements in commercial and residential mortgage-
backed securities as well as Latin America and other emerging markets trading, all of
which are key growth areas in the industry. The increase in equity trading revenues
reflected higher revenues in prime services, the global cash business and proprietary
Institutional Securities reported a 20% increase in total operating expenses versus
2004. This included the impact of the CHF 960 million charge in 2005 to increase the
reserve for certain private litigation matters. Excluding the impact of this litigation
charge, total operating expenses in 2005 increased 11%, primarily reflecting higher
compensation accruals in line with higher revenues and higher other expenses.
26 Credit Suisse Group Business Review 2005
Credit Suisse was ranked first in the global market share for IPOs for the full year
2005, having participated in a number of high-profile transactions, including the USD
9.2 billion IPO for China Construction Bank, the world’s largest IPO since 2001 and
the largest IPO ever in China and in non-Japan Asia. Other notable transactions include
the USD 1.8 billion IPO for chemical company Huntsman, the IPO of Neustar, the
landmark USD 21 billion sale of AT&T, the historic USD 4.4 billion “Brady Bond”
exchange for Brazil, and the leveraged buyout of SunGard Data Systems, which was
the largest ever technology buyout.
Wealth & Asset Management
Wealth & Asset Management offers international asset management services –
in CHF m, except where indicated 2005 2004
Net revenues 5,234 4,202 including a broad range of investment funds – to institutional and private investors.
Total operating expenses 2,687 2,539
It also provides financial advisory services to corporate clients.
Net income 663 530
Total assets under management in CHF bn 608.8 482.4
The Wealth & Asset Management segment reported net income of CHF 663 million in
Total net new assets in CHF bn 11.5 2.6
2005, an increase of 25% compared to 2004. The increase primarily reflected a higher
Number of employees (full-time equivalents) 3,035 2,981
level of investment-related gains in Alternative Capital.
Wealth & Asset Management measures business performance based on assets under
management, discretionary assets under management and net new assets. Assets
under management as of December 31, 2005 amounted to CHF 608.8 billion, up
26.2% versus December 31, 2004, while discretionary assets under management
increased 28.7%. Wealth & Asset Management had a net asset inflow of CHF 11.5
billion, a significant improvement from the 2004 net asset inflow of CHF 2.6 billion.
Wealth & Asset Management increased its net revenues in 2005 by 25% compared
to 2004. Revenues before investment-related gains increased 5% from 2004, due
to higher placement fees in Alternative Capital and higher management fees in Credit
Suisse Asset Management. Investment-related gains increased 28% in 2005, driven
by a higher level of private equity gains resulting from the sale of private equity
Operating expenses in 2005 increased 6% from 2004, primarily reflecting higher pro-
fessional fees in Alternative Capital. The increase in professional fees was due primarily
to consulting fees paid to managers who continue to assist in managing portfolios of
certain funds spun off from Alternative Capital. Compensation and benefits expenses
increased slightly in 2005, reflecting higher performance-related compensation, offset
in part by lower severance costs.
Detailed information on the financial results of Credit Suisse Group can be found in the
Annual Report 2005 and the Supplemental Information 2005.
Credit Suisse Group Business Review 2005 27
Operating review: Winterthur
Winterthur achieved good progress in 2005 as it improved
its overall financial results and strengthened its operating
performance. This underscores the effectiveness of the
measures implemented over the past three years.
Winterthur still has further potential to grow and to
enhance its profitability.
Winterthur is the leading insurance company in Switzerland and is one of the top 10
composite insurers in Europe. Building on its 130-year history, Winterthur operates its
Life & Pensions and Non-Life businesses primarily in Western Europe, as well as in
Central and Eastern Europe, the US and Asia. It distributes a well-balanced product
portfolio through multiple channels and focuses on private clients and small and
medium-sized enterprises (SMEs). The Winterthur brand reflects a straightforward and
entrepreneurial approach to business, a commitment to high-quality products and
superior customer services.
Winterthur is active in 17 countries and has approximately 19,000 employees serving
13 million clients worldwide.
Credit Suisse Group’s strategy regarding Winterthur is to secure its leading market
position in Switzerland and to strengthen its international operations. The Group
continues to manage Winterthur as a financial investment and is preparing it for
a potential capital markets transaction.
2005 was a successful year for Winterthur, which strongly contributed to Credit Suisse
Group’s results. Considerable efforts, initiated in 2002, to systematically improve
Winterthur’s risk profile and to implement strict and selective underwriting processes
have proved beneficial. Solid operational progress contributed in 2005 to a significant
increase in net income. The return on equity reached 11.7% in 2005 after 9.2% in the
Life & Pensions
Both reporting segments, Life & Pensions and Non-Life, succeeded in further
in CHF m, except where indicated 2005 2004
Net revenues 18,197 16,618 strengthening the underlying business performance in 2005. Life & Pensions continued
Total operating expenses 1,883 1,776
its focus on technical performance, reflected by an improved risk margin, while
Total business volume 17,685 16,777
maintaining good growth dynamics. For the full year 2005, Life & Pensions reported
Net income 490 522
net income of CHF 490 million. This 6% decrease compared to 2004 was primarily
Number of employees (full-time equivalents) 6,913 6,524
attributable to specific effects related to taxes and changes in actuarial models and
assumptions. In Non-Life, net income for 2005 increased from CHF 206 million
Non-Life to CHF 578 million. This improvement was partly driven by the after-tax charge of
CHF 242 million booked in the fourth quarter of 2004 to increase provisions for
in CHF m, except where indicated 2005 2004
Net revenues 11,688 11,533 contingencies related to the sale of Winterthur International in 2001. The main factors
Total operating expenses 2,850 3,134
contributing to the improvement of Non-Life’s operating performance were a favorable
Net income 578 206
claims experience and continued strict cost and claims management.
Combined ratio 96.6% 100.1%
Number of employees (full-time equivalents) 12,046 12,844
Winterthur has not only achieved a solid level of profitable growth but has also
succeeded in further strengthening its business portfolio. It withdrew from the Canadian
market in 2005, while further improving its position in promising pension markets in
Central and Eastern Europe via the acquisition of the Polish pension fund Dom, for
which regulatory approval is expected in 2006. A significant milestone was the
completion in December 2005 of the seasoning process relating to the sale of
Winterthur International to XL Insurance (Bermuda) Limited in 2001. Substantial
progress has also been made in other areas, including the establishment by Credit
Suisse Group of a new Board of Directors for Winterthur and the preparations for
a potential listing of Winterthur on the stock market. In view of the accomplishments in
2005, Winterthur is well-positioned to successfully seize new business opportunities.
28 Credit Suisse Group Business Review 2005
The market environment in which Winterthur operates is characterized by sustained low
interest rates and competitive pressure. Strict cost management, flexibility and, crucially,
the spirit to shape market trends are key to coping with these challenges. Winterthur’s
expertise with regard to risk and asset-liability management will provide a true
competitive advantage as it captures new Life & Pensions opportunities resulting from
growing pension markets and demographic trends. In Non-Life, the continued focus on
customer needs and service quality, the streamlining of administration processes and
the sophisticated underwriting approach set the foundations for Winterthur to achieve its
target of generating profitable growth across the insurance cycle.
In both Life & Pensions and Non-Life, Winterthur’s initiatives continue to be based on
common business sense, hands-on entrepreneurial leadership and proximity to clients –
as well as creativity and skillful execution. Winterthur will continue to focus on retail
customers and SMEs, which will allow the insurer to further standardize processes and
products. Winterthur will pursue its targeted underwriting policy and further develop
pricing and claims-handling processes.
Detailed information on Winterthur and its financial results can be found in the Credit
Suisse Group and Winterthur Group Annual Reports 2005.
Credit Suisse Group Business Review 2005 29
Aiming for Operational Excellence
Operational Excellence is a key business initiative that aims
to support the growth strategy of Credit Suisse and to
promote innovation through the implementation of more than
300 targeted projects in all areas of the bank. The individual
projects focus on the improvement of customer service,
profitability and processes and aim to generate results within
several months of their launch.
Operational Excellence was launched at Credit Suisse in fall 2004 and initially
introduced to Private Banking. After conducting benchmarking analysis, particularly in
the US, Credit Suisse selected Lean Sigma as the basis for its Operational Excellence
initiative. This is a well-established, systematic methodology for the improvement of
business processes and service quality. Credit Suisse was one of the first companies in
the European financial services industry to implement a full-scale Lean Sigma program.
Lean Sigma provides Credit Suisse with a common language for the execution of
its Operational Excellence activities and thus supports its efforts to better align key
processes to client needs and expectations. These measures are focused on the
client’s perspective and begin with a systematic, fact-based analysis of client
requirements. Before initiating any improvements, Credit Suisse first asks its clients
and then takes actions to best improve service, increase quality or minimize errors.
Credit Suisse is now rolling out Operational Excellence within the entire bank and will
coordinate the initiative across its Investment Banking, Private Banking and Asset
Management divisions as well as across the bank’s support functions (Shared
Services). The positive momentum of Operational Excellence in Private Banking and
the experience gained so far will benefit the entire organization. In addition, it will be
possible to incorporate the evaluation of client satisfaction into the assessment of a
manager’s performance, whereas performance-related compensation was previously
determined exclusively on the basis of financial results.
Operational Excellence is, of course, an ongoing and long-term initiative. Its aim is to
create and foster a culture of continuous improvement focused on delivering excellent
client service, leading to profitable and sustainable growth. While the first series of
projects focused on urgent issues or on improvements that could be realized rapidly,
Credit Suisse is now addressing areas that may be less prominent internally but have a
significant impact on client service. To date, around 200 employees have been trained
as Lean Sigma project leaders or “Black Belts” and Credit Suisse has provided more
than 6,000 days of project training for senior management and team members.
In terms of benefits arising from our Operational Excellence projects, we have so far
identified a net income contribution of around CHF 150 million per annum. 70% of the
total benefits are expected to come from revenue increases, while the other 30% will
stem from efficiency improvements. This underscores the key role of Operational
Excellence as a driver of Credit Suisse’s growth strategy.
Ali Baradar, Richard Shilling,
Product Control (London)
30 Credit Suisse Group Business Review 2005
Equities, Investment Banking (Hong Kong)
Credit Suisse is renowned for its innovative strength. Operational Excellence also serves
to promote innovation by providing a platform for the realization of new ideas. Its
standard Lean Sigma methodology supports the implementation of new solutions and
thus leads to continuous advances in product and service quality. This is of particular
importance within growth areas, where Operational Excellence ensures the smooth
functioning of new processes.
Operational Excellence reflects Credit Suisse’s commitment to placing its clients at the
center of all that it does. It also serves to strengthen its reputation by ensuring flawless
execution and promotes the principle of teamwork by fostering cooperation across the
bank. Credit Suisse will continue to roll out further strategically-aligned Operational
Excellence projects and to train more employees in Lean Sigma. Going forward
Operational Excellence will be central to the way Credit Suisse works.
Credit Suisse Group Business Review 2005 31
Credit Suisse Group in society
The key function of a business is to create value for its
shareholders, clients and employees. This way, it can
contribute to the prosperity of society by meeting the
demand for goods and services; by providing a source
of income and retirement provision; and by paying taxes.
As it is exposed to competition, the company must
continuously enhance productivity and develop new ideas,
so adding to the pool of collective knowledge and helping
to devise solutions for the challenges of society.
Credit Suisse Group is aware of its responsibility towards its various stakeholder groups:
shareholders, clients and employees, as well as the local community and the broader
social environment. We strive to achieve economic success by consciously addressing
external expectations regarding our profitability and environmental and social activities,
as well as by making decisions that take account of the current and future needs
The Credit Suisse Group Code of Conduct contains binding values that all employees
are expected to observe. Together with the company’s sustainability policy, it
demonstrates our commitment to the principle of sustainability and also refers to related
international conventions that we have pledged to uphold. These include the United
Nations Environment Programme (UNEP) Declaration for Financial Services Providers,
and the United Nations Global Compact, an initiative under which companies commit
themselves to 10 principles relating to environmental protection, working conditions,
human rights and anti-corruption efforts.
In this section of the review we elaborate on key factors relating to sustainability,
contributing to long-term business success:
– Sustainability-oriented products and services
– A prudent approach to business
– The efficient use of resources
– A responsible human resources policy
Legal and Compliance (Zürich)
– An active exchange of views and ideas with society
Among the wide variety we offer, sustainability-oriented investment products represent
a small, yet innovative, selection.
The Credit Suisse Global Sustainability Fund and Credit Suisse Fellowship Fund are
geared towards sustainable, ethical and ecological investing. Our Global Water Basket
and Alternative Energy Basket (launched in 2005) provide topical investment
opportunities in the fields of environmental technology and eco-efficiency, seen against
the shortage of natural resources and demands for a reduction in greenhouse gas
emissions. The Leu Prima Cat Bond allows for the financial hedging of risks such as
flooding and hurricanes that are difficult to insure in the traditional insurance market.
Finally, the responsAbility Global Microfinance Fund, available for public sale in
Switzerland since March 2005 – on time for the UN Year of Microcredit – provides
loans for micro-entrepreneurs in developing and newly-industrialized countries.
The newest products with a social benefit are Charity Notes, launched in November
2005. These generate a return for the investor, while enabling the charitable foundation
Symphasis to combat youth unemployment in Switzerland. Services such as individual
portfolio screening with specialist advice complement our sustainability offerings.
32 Credit Suisse Group Business Review 2005
responsAbility Global Microfinance Fund: key facts
– Launched in November 2003; available for public sale in Switzerland since March 2005
– Volume as of December 31, 2005: USD 45 million
– Assets managed in the fund reach 95 microfinance institutions worldwide,
which supply micro loans to around 65,000 small businesses;
69% of these micro-entrepreneurs are women
– The largest direct investments are made in Georgia, Russia, Kyrgyzstan,
Mexico and Ecuador
– Investment return in 2005: 3.91% (Fund currency USD)
A prudent approach to business
As well as complying with all relevant legislation, considering the environmental and
social aspects of corporate activity is a prerequisite for business success. The
corresponding due diligence requirements are therefore very important, and also
safeguard the company’s reputation.
As we operate internationally, we must prevent our products and services from being
abused, while still respecting the privacy of our clients. Besides all relevant local laws,
everywhere we operate we apply the robust Swiss regulations for preventing money
laundering and terrorist financing. Furthermore, financial intermediaries are subject to
growing demands regarding their credibility and trustworthiness. For these purposes we
are helping to establish industry-wide standards, as one of 12 international banks in the
Concerning the ecological and social implications of our business activities, it is
essential we consider credit-, liability- and reputation-related risks as an integral part
of risk management. Examining ecological risks when making credit decisions has
been standard practice for several years. In addition to internal directives, we have
adopted the Equator Principles, a voluntary agreement between financial services
providers to address ecological and social risks in project finance in accordance
with World Bank guidelines.
Credit Suisse has been included in the Dow Jones Sustainability Indexes and the
FTSE4Good Index Series for several years. These indices, which are reviewed annually,
are based on ratings that evaluate companies according to various aspects of
You can also consult a comprehensive sustainability reporting package – comprising
a description of the environmental management system and indicators, as well as
milestones in 2005 – to evaluate the performance of Credit Suisse. This information
is available at: www.credit-suisse.com/responsibility.
Efficient use of resources
Credit Suisse strives to ensure that its internal processes make careful use of natural
resources. To monitor the appropriate measures centrally and set targets, we run an
environmental management system, certified under ISO 14001 since 1997, which also
includes key external partners such as facility management and catering services.
Credit Suisse Group Business Review 2005 33
Several examples illustrate our resource-saving activity in 2005: replacing tube monitors
with flat screens has reduced our energy consumption throughout Switzerland; installing
water-saving tap fittings has halved water consumption, without any loss of comfort;
increasing the proportion of our paper produced using sustainable forestry practices
has further added to a reduction in environmental impacts; and we have reached a
milestone in our pilot project (see panel) aimed at achieving greenhouse gas neutrality.
These measures contribute to the more efficient handling of natural resources, while
also saving money.
The company’s environmental management efforts have also received public recog-
nition in the award from the Climate Group, presented in Montreal in December 2005,
to acknowledge the continuous improvements we have achieved in recent years.
Greenhouse gas neutral in Switzerland from 2006
Private Banking (Hong Kong)
In 2005, we launched a pilot project aimed at achieving greenhouse gas neutrality in our activities
in Switzerland from 2006, based on:
1. Increasing energy-efficiency by consciously optimizing operations and controlling investments
at existing facilities
2. Substitution measures (e.g. the purchase of “green” electricity)
3. Offsetting of the remaining amount through emission certificates
A responsible human resources policy
Employees are vital to the success of Credit Suisse: they provide the service and advice
that our clients require, and they represent the company. As banking grows increasingly
complex, it is important not only that we acquire employees who have the requisite
skills, but also that we train them and help them develop. Our training activity is run by
Credit Suisse Business School, which aligns various sales and management training
programs to our business strategy. For example, Campus Asia, which opened in
Singapore in 2005, prepares employees for their roles in the Asian growth market.
The School also offers specialist training in conjunction with external partners.
Promoting equal opportunity is particularly important and units dedicated to diversity
management support our efforts in meeting the requirements of our Code of Conduct
with regard to a work environment that is free from discrimination. These measures
enable us to serve a diverse global clientele with our employees’ wide range of
experience and perspectives. In 2005 we received external recognition for our efforts
from the US magazine Working Mother and the UK organization Opportunity Now.
Credit Suisse Business School: key facts
– Opened January 1, 2004
– Comprises Business Faculty and Leadership Faculty
– Present on two continents: Europe (Zürich) and Asia (Singapore, Hong Kong)
– Awarded Corporate Learning Improvement Process (CLIP) certification by European Foundation
for Management Development in spring 2005 – the first bank worldwide to receive this
– In 2005, a total of 3,469 courses involving 4,719 days of training and 45,137 participants
were carried out
– Over the last eight years, Credit Suisse in Switzerland has, on average, had:
– 600 commercial and IT apprenticeships
– 350 positions for high school and university graduates
34 Credit Suisse Group Business Review 2005
Active exchange of views and ideas with society
In addition to shareholders, clients, analysts and the media, Credit Suisse also
exchanges views and ideas with competitors, regulators, associations, government
representatives, international bodies and non-governmental organizations (NGOs),
creating understanding and helping to find solutions to social challenges. Regular
studies produced by our Economic Research department – about current issues such
as family policy, the eastward expansion of the EU and innovative approaches to tax
reforms – attract considerable attention. There is also a great deal of interest in the
Credit Suisse Sorgenbarometer, an annual survey of the Swiss public’s concerns. In
2005 it identified unemployment, healthcare and retirement provision as the main
sources of worry.
Discussions with NGOs enable us to present our viewpoint and also to critically examine
our own perspective, as in the case of the meeting we hosted in February 2005
regarding the implementation of the Equator Principles. All of these exchanges enable
us to identify new developments, trends and expectations that could be relevant in the
future. The large number of our employees who hold positions in associations, specialist
groups and political bodies also help to actively shape society.
The varied charitable commitments of Credit Suisse as a company, as well as those
of its employees, are born of a sense of responsibility for our global community and
in an effort to preserve a stable environment. Various foundations and donations
departments, each with a thematic or geographic focus, make contributions to promote
artistic talent, to support the integration of people with disabilities, to construct and
equip schools and libraries, to mentor young people, and to address the needs of the
sick and elderly.
A number of devastating natural disasters occurred in late 2004 and 2005. Credit
Suisse and many of its employees provided emergency financial aid to enable
immediate support for the victims of these catastrophes. In the context of corporate
volunteering, many employees also lent a helping hand in their spare time. Activities
ranged from assisting in the renovation of playgrounds and community centers, cleaning
up green spaces, performing craftwork with children, tutoring young people with their
homework or mentoring students at the start of their careers. Credit Suisse’s
sponsorship of sports and culture on a national and international level is yet another
component of our interaction with society, and ensures that Credit Suisse is recognized
by a broad public.
Rebuilding after the tsunami
In October 2005 and January 2006, two teams of 20 Credit Suisse employees
volunteered with Habitat for Humanity, an international NGO focused on providing
affordable housing, to help rebuild homes near Galle, Sri Lanka, a region severely
affected by the tsunami. This was in addition to financial aid to support reconstruction
efforts provided by the Credit Suisse Group Foundation, which was endowed with
USD 10 million.
During one week, the volunteers worked alongside local families to construct new
homes. Under the guidance of Habitat for Humanity, employees produced concrete
components, laid foundations, erected concrete walls and built wooden roofs. Their
efforts helped the population return to a normal life, and gave them hope for the future.
Internal Audit (New York)
Credit Suisse Group Business Review 2005 35
The way we interact with our stakeholders has a
fundamental impact on our business and, ultimately, on
our reputation. We therefore strive to act with integrity,
responsibility, fairness, transparency and discretion at
all times in order to secure the trust of our shareholders,
clients and employees and other members of the
financial community, as well as the broader public.
Credit Suisse Group’s corporate governance policies and procedures comply with
high international standards. We are committed to safeguarding the interests of our
stakeholders and recognize the importance of corporate governance in achieving this.
Transparent disclosure helps stakeholders to assess the quality of our business and
management and assists our investors in their investment decisions.
Abiding by the rules
We adhere to the principles set out in the Swiss Code of Best Practice. In connection
with our primary listing on the SWX Swiss Exchange, we are subject to the SWX
Directive governing the disclosure of information on corporate governance. Our shares
are also listed on the New York Stock Exchange (NYSE) in the form of American
Depositary Shares. As a result, we are subject to certain US rules and regulations.
Moreover, we adhere to the NYSE Corporate Governance rules, with a few minor
exceptions where the rules are not applicable to foreign private issuers.
Our corporate governance policies and procedures are defined in a series of documents
governing the organization and management of the company. Our Board of Directors
has adopted a set of Corporate Governance Guidelines, designed to explain and
promote an understanding of our governance structures. Other important corporate
governance documents include the Articles of Association, the Regulations Governing
the Conduct of Business, the Board of Directors’ Committee Charters and the Code
Code of Conduct
Our Code of Conduct focuses on 12 core ethical and performance values, which are
applicable to all of our employees and guide them in their activities. We are present
in over 50 countries and employ individuals from over 100 different nations. The
Code is therefore intended to promote a sense of unity and to help our employees
to identify with our shared values, methods and objectives. It also plays an important
role in guiding our efforts to inspire and maintain the trust and confidence of all
Involving our shareholders
As investors and bearers of risk, our shareholders have the right to decide on key
issues within our Group at the Annual General Meeting. We want our investors to know
that they can depend on the accuracy and transparency of our reporting publications.
We are therefore committed to producing precise, reliable and comprehensible financial
reports that clearly explain our performance, our mission and our strategic rationale.
36 Credit Suisse Group Business Review 2005
Our Board of Directors
Our Board of Directors is responsible for the overall direction, supervision and control of
the Group. It regularly assesses our competitive position and approves our strategic and
financial plans. The Board is actively involved in significant Group projects. The Board
consists solely of directors who have no executive function within the Group and
includes a majority of independent directors. The Board holds at least six ordinary
meetings per year and, in addition, convenes as often as required to discuss any urgent
matters. It has established four committees that support the Board in appropriately
discharging its responsibilities: the Chairman’s and Governance Committee, the Audit
Committee, the Compensation Committee and the Risk Committee.
The Board of Directors delegates management authority and the power to implement
its resolutions to executive management bodies or executive officers. The most senior
executive body is the Group Executive Board, which – under the lead of the Group
Chief Executive Officer – is responsible for the operational management of the Group.
Our Risk Management function contributes to our company’s success by promoting a
disciplined risk culture and creating the appropriate transparency. It also ensures that we
adopt a prudent and intelligent approach to risk-taking that appropriately balances risk
and return and optimizes the allocation of capital throughout the Group to benefit
shareholders and other stakeholders. A significant number of employees and
considerable technological resources are focused on ensuring that Credit Suisse Group
remains a leader in the field of risk management. Moreover, through our proactive risk
management culture and the appropriate qualitative and quantitative tools, we strive to
minimize the potential for undesired risk exposure in our operations.
Committed to compliance
Our employees are committed to maintaining the highest standards of compliance
with all legal, regulatory and internal requirements and they observe strict standards
of professional conduct at all times. The implementation of compliance begins when
selecting employees and ranges from training, detailed processes and rules to effective
supervisory and control systems.
We are committed to employing a compensation philosophy that rewards excellence,
encourages personal contribution and professional growth and aligns the employees’
values with the Group’s core ethical and performance values and thus motivates the
creation of shareholder value. Long-term corporate success depends on the strength
of human capital and our goal is to therefore be the employer of choice in the markets
and business segments in which we operate.
Further information on corporate governance can be found in the Credit Suisse Group
Annual Report 2005.
Credit Suisse Group Business Review 2005 37
Executive Boards of
Credit Suisse Group and Credit Suisse
1 2 3 4 5 6
1 Thomas J. Sanzone*** 2 Tobias Guldimann** 3 Renato Fassbind*
Chief Information Officer, Chief Risk Officer, Chief Financial Officer,
Credit Suisse Credit Suisse Group Credit Suisse Group and
4 Leonhard H. Fischer** 5 Brady W. Dougan* 6 Oswald J. Grübel*
Chief Executive Officer, Chief Executive Officer, Chief Executive Officer,
Winterthur Investment Banking and Credit Suisse Group and
Chief Executive Officer, Credit Suisse
Credit Suisse Americas
* Member of the Executive Boards of Credit Suisse Group and Credit Suisse
** Member of the Executive Board of Credit Suisse Group
*** Member of the Executive Board of Credit Suisse
38 Credit Suisse Group Business Review 2005
7 8 9 10 11 12 13
7 Walter Berchtold* 8 David J. Blumer* 9 Urs Rohner*
Chief Executive Officer, Chief Executive Officer, General Counsel, Credit Suisse
Private Banking Asset Management Group and Credit Suisse,
Chief Operating Officer,
10 D. Wilson Ervin*** 11 Ulrich Körner*** 12 Michael G. Philipp***
Chief Risk Officer, Chief Executive Officer, Chief Executive Officer,
Credit Suisse Credit Suisse Switzerland Credit Suisse Europe,
Middle East and Africa
13 Paul Calello***
Chief Executive Officer,
Credit Suisse Asia-Pacific
Credit Suisse Group Business Review 2005 39
Summary of the responsibilities of the Board of Directors and
the Executive Boards of Credit Suisse Group and Credit Suisse
Credit Suisse Group Board of Directors
Credit Suisse Group’s Board of Directors is responsible for the overall direction,
supervision and control of the company. The Board regularly assesses the Group’s
competitive position and approves its strategic and financial plans.
The Board holds at least six regular meetings per year. In addition, the Board convenes
as often as required to discuss any urgent matters.
At each meeting, the Board receives a status report on the financial results of the
Group. In addition, the Board regularly receives information on the performance and
financial status of the Group, risk reports and updates on key issues. All members of
the Board have access to all information concerning the Group.
The Board also reviews and approves significant changes in the Group’s structure and
organization and is actively involved in significant projects including acquisitions,
divestitures and investments and other major projects. The Board and its committees
are entitled to engage independent advisors to look into any matters subject to their
authority, as they deem appropriate. The Board also performs a self-assessment once
Walter B. Kielholz Peter Brabeck-Letmathe Aziz R. D. Syriani
Chairman Born 1944 Born 1942
Born 1951 Austrian citizen Canadian citizen
Noreen Doyle David W. Syz
Hans-Ulrich Doerig Born 1949 Born 1944
Vice-Chairman US and Irish citizen Swiss citizen
Swiss citizen Jean Lanier Ernst Tanner
Born 1946 Born 1946
Thomas W. Bechtler French citizen Swiss citizen
Swiss citizen Anton van Rossum Peter F. Weibel
Born 1945 Born 1942
Robert H. Benmosche Dutch citizen Swiss citizen
The Board of Directors has proposed Mr. Richard E. Thornburgh for election to the
Board of Directors at the Annual General Meeting of April 28, 2006.
40 Credit Suisse Group Business Review 2005
Executive Board of Credit Suisse Group
Effective January 1, 2006, Credit Suisse realigned its executive management bodies.
The most senior executive body of Credit Suisse Group is the Group Executive Board.
The Group Executive Board under the lead of the Group Chief Executive Officer is
responsible for the day-to-day operational management of the Group as a whole and
the implementation of the principal business strategy and the financial plans approved
by the Board. It coordinates significant Group-wide initiatives, projects and business
developments and establishes general Group-wide policies.
Oswald J. Grübel Brady W. Dougan Tobias Guldimann
Chief Executive Officer, Chief Executive Officer, Chief Risk Officer,
Credit Suisse Group Investment Banking Credit Suisse Group
Walter Berchtold Renato Fassbind Urs Rohner
Chief Executive Officer, Chief Financial Officer, General Counsel,
Private Banking Credit Suisse Group Credit Suisse Group
and Credit Suisse
David J. Blumer Leonhard H. Fischer
Chief Executive Officer, Chief Executive Officer,
Asset Management Winterthur
Executive Board of Credit Suisse
Effective January 1, 2006, the most senior executive body of the banking organization
is the Executive Board of Credit Suisse. It is responsible for the day-to-day operational
management of the Group’s banking business. It develops and implements the
strategic business plans for the bank subject to approval by the Board and reviews and
coordinates significant initiatives and projects in the divisions and regions or in the
Shared Services functions.
The Executive Board is comprised of the heads of Credit Suisse’s business divisions
(Investment Banking, Private Banking and Asset Management) as well as the heads of
its Shared Services functions (the Chief Financial Officer, the Chief Operating Officer
and General Counsel, the Chief Risk Officer and the Chief Information Officer) and the
heads of its geographic regions (the Americas; Asia-Pacific; Europe, Middle East and
Africa; and Switzerland).
These members report directly to Oswald J. Grübel in his role as Chief Executive
Officer of Credit Suisse.
Oswald J. Grübel Brady W. Dougan Ulrich Körner
Chief Executive Officer, Chief Executive Officer, Chief Executive Officer,
Credit Suisse Investment Banking, and Credit Suisse Switzerland
Chief Executive Officer,
Walter Berchtold Credit Suisse Americas Urs Rohner
Chief Executive Officer, General Counsel
Private Banking D. Wilson Ervin and Chief Operating Officer,
Chief Risk Officer, Credit Suisse
David J. Blumer Credit Suisse
Chief Executive Officer, Michael G. Philipp
Asset Management Renato Fassbind Chief Executive Officer,
Chief Financial Officer, Credit Suisse Europe,
Paul Calello Credit Suisse Middle East and Africa
Chief Executive Officer,
Credit Suisse Asia-Pacific Thomas J. Sanzone
Chief Information Officer,
Credit Suisse Group Business Review 2005 41
Consolidated statements of income
Year ended December 31, in CHF m 2005 2004 2003
Interest and dividend income 40,928 30,953 28,341
Interest expense (29,335) (19,006) (16,637)
Net interest income 11,593 11,947 11,704
Commissions and fees 14,617 13,577 12,917
Trading revenues 7,507 4,559 3,528
Realized gains/(losses) from investment securities, net 1,489 1,143 1,527
Insurance net premiums earned 20,970 20,580 21,443
Other revenues 4,456 3,333 1,396
Total noninterest revenues 49,039 43,192 40,811
Net revenues 60,632 55,139 52,515
Policyholder benefits, claims and dividends 23,569 22,295 24,184
Provision for credit losses (140) 78 600
Total benefits, claims and credit losses 23,429 22,373 24,784
Insurance underwriting, acquisition and administration expenses 4,307 4,103 4,419
Banking compensation and benefits 13,971 11,951 11,042
Other expenses 9,672 8,395 8,949
Goodwill impairment 0 0 1,510
Restructuring charges 4 85 135
Total operating expenses 27,954 24,534 26,055
Income from continuing operations before taxes, minority interests,
extraordinary items and cumulative effect of accounting changes 9,249 8,232 1,676
Income tax expense/(benefit) 1,356 1,421 (11)
Dividends on preferred securities for consolidated entities 0 0 133
Minority interests 2,030 1,127 (31)
Income from continuing operations before extraordinary
items and cumulative effect of accounting changes 5,863 5,684 1,585
Income/(loss) from discontinued operations, net of tax (27) (50) (256)
Extraordinary items, net of tax 0 0 7
Cumulative effect of accounting changes, net of tax 14 (6) (566)
Net income 5,850 5,628 770
Basic earnings per share, in CHF
Income from continuing operations before extraordinary items and cumulative effect of accounting changes 5.18 4.85 1.34
Income/(loss) from discontinued operations, net of tax (0.02) (0.04) (0.22)
Extraordinary items, net of tax 0.00 0.00 0.01
Cumulative effect of accounting changes, net of tax 0.01 (0.01) (0.49)
Net income available for common shares 5.17 4.80 0.64
Diluted earnings per share, in CHF
Income from continuing operations before extraordinary items and cumulative effect of accounting changes 5.03 4.79 1.32
Income/(loss) from discontinued operations, net of tax (0.02) (0.04) (0.22)
Extraordinary items, net of tax 0.00 0.00 0.01
Cumulative effect of accounting changes, net of tax 0.01 0.00 (0.48)
Net income available for common shares 5.02 4.75 0.63
42 Credit Suisse Group Business Review 2005
Consolidated balance sheets
December 31, in CHF m 2005 2004
Cash and due from banks 27,577 25,648
Interest-bearing deposits with banks 6,143 4,947
Central bank funds sold, securities purchased under resale agreements
and securities borrowing transactions 352,281 267,169
Securities received as collateral 23,950 20,289
Trading assets (of which CHF 151,793 m and CHF 110,047 m encumbered) 435,250 346,469
Investment securities (of which CHF 2,456 m and CHF 2,346 m encumbered) 121,565 100,365
Other investments 20,736 22,258
Loans, net of allowance for loan losses of CHF 2,241 m and CHF 3,038 m 205,671 184,399
Premises and equipment 7,427 7,231
Goodwill 12,932 11,564
Intangible assets 3,091 3,689
Assets held for separate accounts 11,875 4,490
Other assets (of which CHF 4,860 m and CHF 4,785 m encumbered) 110,554 90,967
Total assets 1,339,052 1,089,485
Liabilities and shareholders’ equity
Deposits 364,238 299,341
Central bank funds purchased, securities sold under repurchase agreements
and securities lending transactions 309,803 239,724
Obligation to return securities received as collateral 23,950 20,289
Trading liabilities 194,225 150,130
Short-term borrowings 19,472 15,343
Provisions from the insurance business 148,414 137,161
Long-term debt 132,975 106,261
Liabilities held for separate accounts 11,875 4,489
Other liabilities 84,135 74,296
Minority interests 7,847 6,178
Total liabilities 1,296,934 1,053,212
Common shares 624 607
Additional paid-in capital 24,639 23,435
Retained earnings 24,584 20,501
Treasury shares, at cost (5,823) (4,547)
Accumulated other comprehensive income/(loss) (1,906) (3,723)
Total shareholders’ equity 42,118 36,273
Total liabilities and shareholders’ equity 1,339,052 1,089,485
Credit Suisse Group Business Review 2005 43
Ticker symbols/Stock exchange listings
Bloomberg Reuters Telekurs
SWX Swiss Exchange/virt-x CSGN VX CSGN.VX CSGN,380
New York Stock Exchange (ADS) 1) CSR US CSR.N CSR,065
CSG share ADS
Swiss security number 1213853 570660
ISIN number CH0012138530 US2254011081
CUSIP number 225 401 108
1 ADS represents 1 registered share.
Moody’s Standard & Poor’s Fitch Ratings
Credit Suisse Group Short term – A-1 F1+
Long term Aa3 A AA-
Outlook Stable Positive Stable
Credit Suisse 1) Short term P-1 A-1 F1+
Long term Aa3 A+ AA-
Outlook Stable Positive Stable
Winterthur strength A1 A- A+
Outlook Negative Stable Stable
The ratings refer to the merged bank.
December 31 2005 2004
Shares issued 1,247,752,166 1,213,906,217
Treasury shares (122,391,983) (103,086,736)
Shares outstanding 1,125,360,183 1,110,819,481
in CHF 2005 2004 2003
High (closing price) 68.50 49.50 48.70
Low (closing price) 46.85 37.35 20.70
Annual General Meeting Friday, April 28, 2006
First quarter results 2006 Tuesday, May 2, 2006
Dividend payment Thursday, May 4, 2006
Second quarter results 2006 Wednesday, August 2, 2006
Third quarter results 2006 Thursday, November 2, 2006
The following table shows principal Swiss franc foreign exchange rates:
Closing rate Average rate
in CHF 31.12.05 31.12.04 2005 2004 2003
1 US dollar (USD) 1.3137 1.1320 1.24 1.24 1.35
1 Euro (EUR) 1.5572 1.5439 1.55 1.54 1.52
1 British pound sterling (GBP) 2.2692 2.1834 2.26 2.28 2.20
100 Japanese yen (JPY) 1.1190 1.1023 1.13 1.15 1.16
44 Credit Suisse Group Business Review 2005
Credit Suisse Group
Ian Roundell, Tel. +41 44 333 17 48
Marc Buchheister, Tel. +41 44 333 31 69
Manuela Luzio, Tel. +41 44 332 60 98
Credit Suisse Group
Charles Naylor, Andrés Luther
Tel. +41 844 33 88 44
Editorial: Credit Suisse Group, Corporate Communications
Design: addison corporate marketing, London
Production: Management Digital Data AG, Zürich
Printer: NZZ Fretz AG, Zürich
Credit Suisse Group’s Business Review 2005 is printed on totally chlorine-free (TCF)
paper and is fully recyclable.
The English photographer John Wildgoose captured images of Credit Suisse
employees and locations worldwide during January and February 2006. Credit Suisse
Group’s financial reports published in 2006 are illustrated with the work that resulted
from this project.
Cautionary statement regarding forward-looking information
This Business Review contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In addition, in the future we,
and others on our behalf, may make statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to
– Our plans, objectives or goals;
– Our future economic performance or prospects;
– The potential effect on our future performance of certain contingencies; and
– Assumptions underlying any such statements.
Words such as “believes,” “anticipates,” “expects,” “intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means
of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable securities laws.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other
outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include:
– Market and interest rate fluctuations;
– The strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations in particular;
– The ability of counterparties to meet their obligations to us;
– The effects of, and changes in, fiscal, monetary, trade and tax policies, and currency fluctuations;
– Political and social developments, including war, civil unrest or terrorist activity;
– The possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations;
– The ability to maintain sufficient liquidity and access capital markets;
– Operational factors such as systems failure, human error, or the failure properly to implement procedures;
– Actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations;
– The effects of changes in laws, regulations or accounting policies or practices;
– Competition in geographic and business areas in which we conduct our operations;
– The ability to retain and recruit qualified personnel;
– The ability to maintain our reputation and promote our brands;
– The ability to increase market share and control expenses;
– Technological changes;
– The timely development and acceptance of our new products and services and the perceived overall value of these products and services by users;
– Acquisitions, including the ability to integrate successfully acquired businesses;
– The adverse resolution of litigation and other contingencies; and
– Our success at managing the risks involved in the foregoing.
We caution you that the foregoing list of important factors is not exclusive. When evaluating forward-looking statements, you should carefully consider the foregoing factors and other
uncertainties and events, as well as the information set forth in our Form 20-F Item 3 – Key Information – Risk factors.
CREDIT SUISSE GROUP