credit-suisse Slides - Presentation

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credit-suisse Slides - Presentation

  1. 1. Q4 AND FULL YEAR RESULTS 2002 Slide 0
  2. 2. PRESENTATION S INTRODUCTION S CONSOLIDATED RESULTS S CREDIT SUISSE FINANCIAL SERVICES S CREDIT SUISSE FIRST BOSTON S SUMMARY S CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Slide 1
  3. 3. RESULTS OVERVIEW 2002 4Q/02 2001 3Q/02 in CHF million Credit Suisse Financial Services (165) 3,585 705 (1,165) Credit Suisse First Boston (1,862) (1,388) (1,252) (679) Corporate Center & adjustments (1,282) (610) (403) (304) Group reported net profit/(loss) (3,309) 1,587 (950) (2,148) including: Amortization of acquired (1,440) (348) intangible assets and goodwill (1,563) (333) (1,581) (1,462) Exceptional items (1,428) (119) 373 190 Tax impact 604 56 Cumulative effect of change in 520 520 accounting principles - - Slide 2
  4. 4. SPECIAL ITEMS AFFECTING NET PROFIT in CHF million Special Items Q4 2002 2002 Equity-related investment 99 (2,392) losses in insurance units (1) Downsizing CSFB and (290) (409) restructuring PB Europe quot;Legacyquot; assets (2) (289) (1,206) SEC settlement and (649) (649) litigation reserve (390) (390) Pershing loss (92) (422) Retention payments Net gains/(losses) 202 183 on investments Cumulative effect of 520 520 accounting change (889) (4,765) TOTAL (2) non-continuing businesses: real estate and distressed (1) assuming break-even of insurance units based on current investment income only trading, and quot;legacyquot; private equity Slide 3
  5. 5. UPDATE ON KEY PRIORITIES (1/2) Update as of Q4 2003 Objective S Successful issuance of Mandatory Ensure S Positive impact from Pershing Convertible Securities adequate sale S Continued balance sheet capital S Internal capital generation resources management S Full effect from USD 500 m cost reduction program at CSFB S CSFB costs down by USD 2.7 bn Continue S Savings from consolidation of or 23% vs 2001 to reduce Swiss Securities and Treasury costs in S Series of cost reduction measures Infrastructure banking underway in CSFS's businesses S Further cost reductions at CSFS banking S Exposure down to USD 3.0 bn '02 Resolve S Earnings drag now largely quot;legacyquot; – reduction of USD 2.3 bn in 2002 behind us assets and USD 750 m in Q4/02 Slide 4
  6. 6. UPDATE ON KEY PRIORITIES (2/2) Update as of Q4 2003 Objective S Refocus local businesses in S Significantly reduced cost base Refocus Germany and Spain on Private S Focused client approach and European Banking clients Private services S Reduced infrastructure, IT and Banking S Leverage of core capabilities personnel expenses Return to profitability: S Reported profit in Q4 S Reduction of administration expenses in Swiss head office S Stabilized investment income Return S Focused management structure Winterthur S Improvement in operational to S Positive pricing environment in performance profitability non-life business S Exit from sub-scale markets S Further focusing of business and product portfolio Slide 5
  7. 7. WINTERTHUR: BACKGROUND OF ANNOUNCED MEASURES S Paradigm shift in the European insurance industry No more easy returns from the stock markets B Capital base eroded, limiting growth options B Increased focus on technical results and costs B S At Winterthur, a number of measures already initiated Investment strategy adapted B Premium increases, cost reduction programs B Selective re-underwriting to re-price/remove underperforming business B Divestitures of several smaller operations B Slide 6
  8. 8. WINTERTHUR: KEY STRATEGY ELEMENTS S Focus on cost management and profitability B Leverage existing strengths and positions B Prudently manage capital and risks S Aligned management model B Life and non-life divisions brought together in selected countries B Realize synergies in distribution and support functions B One Executive Board, one corporate center S Operational excellence throughout the company B Starting at the corporate center: focused support for market units - reduction of around 350 job positions in 2003 B Rigorous implementation of all measures already initiated S Continued focus on selected core markets Slide 7
  9. 9. WINTERTHUR: NEW EXECUTIVE BOARD CEO L. Fischer Technical CFO CIO Services J. Dacey S. Moser H. Lauber Switzerland Switzerland DBV- Market Market Churchill Non-Life Life Winterthur Group I Group II H. Nickel- W. Schmidt- Ph. Egger R. Hefti M. Long Ch. Schnor Waninger Soelch Slide 8
  10. 10. PRESENTATION S INTRODUCTION S CONSOLIDATED RESULTS S CREDIT SUISSE FINANCIAL SERVICES S CREDIT SUISSE FIRST BOSTON S SUMMARY S CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Slide 9
  11. 11. REVENUES Change vs Change vs Operating Income in CHF billion Q3/02 Q4/01 2001 8.2 8.3 7.6 5.7 6.4 CSG total 13% (22%) (28%) 7.4 7.4 6.8 Banking* (2%) (22%) (24%) 1.9 2.2 5.4 5.3 1.6 Interest income (7%) 20% 19% 2.1 1.9 Fees & 4.4 4.4 4.4 commission 0% (25%) (15%) 3.3 3.3 1.2 0.1 0.0 Trading 173% (87%) (75%) 0.9 0.9 1.6 1.0 1.4 0.5 0.5 Insurance* 192% (12%) (47%) Q4 Q4 Q1 Q2 Q3 2001 2002 * excluding other ordinary result Slide 10
  12. 12. OPERATING EXPENSES AND DEPRECIATION Change vs Change vs in CHF billion Q3/02 Q4/01 2001 7.6 7.0 7.0 5.9 Total (3%) (24%) (21%) 5.7 4.6 4.8 4.8 3.8 3.5 (9%) (25%) (23%) Personnel expenses 2.3 Other operating 6% (28%) (21%) 1.6 1.6 1.7 1.8 expenses 0.7 0.6 0.6 0.5 0.5 Depreciation 7% (9%) (1%) Q4 Q4 Q1 Q2 Q3 2001 2002 Slide 11
  13. 13. PROVISIONS Valuation Adjustments, Provisions and Losses in CHF million Total (1) 1,440 973 Inherent loss allowance 778 892 155 662 73 Non credit-related 106 562 24 471 164 Credit-related at CSFS 51 734 81 819 129 471 88 Credit-related at CSFB 387 213 (18) Q4 Q4 Q1 Q2 Q3 2001 2002 (1) totals include Corporate Center and adjustments but exclude exceptional provisions of CHF 397 m in Q4/01 and CHF 984 m in Q4/02 Slide 12
  14. 14. CSFB CREDIT-RELATED PROVISIONS S Record US default rates drove 22% increase in corporate credit provisions S Provisions for quot;legacyquot; assets (sales and writedowns) to reduce exposure CSFB Credit-Related Valuation Adjustments, Provisions and Losses (1) 2,335 in CHF million Inherent loss 530 +530 allowance 241 +305 1,214 +286 quot;Legacyquot; assets 1,564 Credit-related (2) 1,278 +22% (64) 2002 2001 Change in Change New credit- in quot;legacyquot; inherent loss related assets reserve provisions (1) excluding restructuring-related charges of CHF 397 m in 2001 and CHF 984 m in 2002 (2) excluding quot;legacyquot; assets shown separately Slide 13
  15. 15. IMPAIRED LOANS Total Impaired Loans in CHF billion 15.6 14.5 13.0 12.3 12.4 6.0 5.7 5.0 5.0 5.5 CSFB 9.5 8.8 8.0 7.3 6.9 CSFS 12/01 03/02 06/02 09/02 12/02 6.0% 5.0% 5.1% 4.6% 4.9% Impaired loans as % of due from banks and customers (1) 59.5% 60.4% 60.2% 60.0% 62.3% Valuation allowance as % of impaired loans (1) due from banks and customers and mortgages (excluding securities lending and reverse repurchase agreements) Slide 14
  16. 16. BANKING CAPITAL RATIOS AS OF DECEMBER 31, 2002 CSG CSG Credit Suisse (1) in CHF million (1) (2) Banking Consol. Credit Suisse First Boston Book equity 7,589 19,789 29,846 31,394 Deduction of goodwill (288) (9,098) (9,953) (11,035) Other tier 1 adjustments (1’183) (95) (198) (816) Tier 1 capital 6,118 10,596 19,695 19,544 (3) acquired intangible assets 74 3,234 3,304 3,304 hybrid capital 0 1,023 2,162 2,162 BIS risk-weighted assets 82,728 103,308 196,485 201,466 Tier 1 capital ratio 7.4% 10.3% 10.0% 9.7% excl. acquired intangible assets 7.3% 7.4% 8.5% 8.2% S Pershing transaction to raise CSFB's and Group's tier 1 ratio by approximately 1% and 0.5%, respectively (1) consolidated banking entities Credit Suisse and Credit Suisse First Boston (2) including holding company and other banking units (e.g. independent private banks) (3) net of tax liability Slide 15
  17. 17. WINTERTHUR GROUP EU SOLVENCY MARGIN AS OF DECEMBER 31, 2002 EU Solvency Capital and Requirements 10.5 in CHF billion 0.5 3.3 +67% 6.3 5.6 1.1 2.4 Non-Life Business 3.9 Life Business Share- Altern. Real Net Total Required holders' solvency estate adjust- solvency solvency equity capital reserves ments capital capital Slide 16
  18. 18. PRESENTATION S INTRODUCTION S CONSOLIDATED RESULTS S CREDIT SUISSE FINANCIAL SERVICES S CREDIT SUISSE FIRST BOSTON S SUMMARY S CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Slide 17
  19. 19. CREDIT SUISSE FINANCIAL SERVICES OVERVIEW S CSFS net operating profit of CHF 535 m in Q4 and net operating loss of CHF 136 m for 2002 Results S Net profit of CHF 705 m in Q4 includes cumulative effect of 2002 change in accounting principles of CHF 266 m and exceptional items of CHF -73 m (CHF -192 m in 2002) S Operating income in banking segments decreased 8% y-o-y, only partially offset by reduced expenses of 3% Key drivers S Operating income suffered from lower asset base (down CHF in banking segments 67 bn in 2002), lower transaction volumes and low interest rate environment S Lower investment income with a NOP impact of CHF -3.3 bn Key drivers versus 2001 in insurance S Continued strong premium growth and operational segments improvements Slide 18
  20. 20. PRIVATE BANKING Segment result (1) Key Profit & Loss Items in CHF million Change vs Change vs 634 579 2002 2001 Q4/02 Q3/02 486 6,461 (11%) 1,477 Operating income 3% 339 303 Operating expenses (3,862) (4%) (951) 2% 12% 1,762 (23%) 339 Segment result 12% (41%) S 2002 operating income negatively affected by decreased Gross- AuM base (down CHF 59 bn in 2002), reduced securities turnover and low interest rate environment margin 131 133 127 114 118 (bp) (1) S Reduced NNA inflow, negatively impacted by increased attention surrounding CSG’s financial performance in the NNA course of 2002 8.6 9.2 5.6 3.4 0.5 (CHF bn) S Reduction of cost base by CHF 162 m vs 2001 despite Q4 Q1 Q2 Q3 Q4 international expansion 2001 2002 S Good progress in refocusing European Private Banking (1) before exceptional items, cumulative effect of change in accounting principles and minority interests Slide 19
  21. 21. CORPORATE & RETAIL BANKING (1) Segment result Key Profit & Loss Items in CHF million 120 Change vs Change vs 102 2002 2001 Q4/02 Q3/02 95 2,435 575 Operating income 2% (7%) Operating expenses (1,585) (2%) (421) 8% 46 45 (293) (72) Provisions(3) (5%) 3% (55%) 2% 363 46 Segment result 19% (55%) C/I- (2) ratio (%) 74.6 60.6 69.8 67.6 77.6 S Operating income CHF 37 m (2%) higher vs 2001 but ROE (2) down 7% in Q4 due to lower transaction-based income 4.6 12.1 9.5 10.5 4.8 (%) S Expenses down CHF 35 m (2%) vs 2001 but up 8% in Q4 Q1 Q2 Q3 Q4 Q4 due to project costs; cost/income ratio 2002 of 2002 2001 68.7%, down 2.4 ppts vs 2001 (1) before exceptional items, cumulative effect of change in S ROE 2002 of 9.3%, up 1.5 ppts vs 2001 accounting principles and minority interests (2) operating (3) valuation adjustments, provisions and losses (provisions based on ACP) Slide 20
  22. 22. LIFE & PENSIONS Segment result (1) Key Profit & Loss Items in CHF million Change vs 2002 93 80 2001 15 19,019 Gross premiums written 9% (20,442) Benefits & claims (3) 9% (427) 1,758 Policyholder dividends n.m. (2,179) (1,081) Operating expenses 17% 9.9%(2) Investment income (4) Expense 10.9% 1,438 (70%) ratio (full-year) (1,400) Segment result n.m. Return on invested 2.5 3.2 0.1 1.2 1.2 SImpact of lower investment income on assets (%) segment result vs 2001: CHF -1.6 bn Q2 Q3 Q4 Q1 Q4 SSegment result of CHF 93 m in Q4 includes CHF 220 m 2002 2001 impact from deferred tax assets on net operating losses SStrong premium growth of 9.2% (1) before exceptional items, cumulative effect of change in accounting principles and minority interests (organic 10.4% in local currency) (2) excluding DAC/PVFP writedown, reported 11.5% SExcluding DAC/PVFP writedown of CHF 292 m, expense (3) death and other benefits incurred & change in provision for future policyholder benefits (technical) ratio down to 9.9% for full year (4) excluding separate account business Slide 21
  23. 23. INSURANCE Segment result (1) Key Profit & Loss Items Change vs in CHF million 2002 2001 82 6 15,703 Net premiums earned 5% (11,749) Claims & annuities 2% 106 Policyholder dividends n.m. (147) (4,488) Operating expenses 4% (361) (10) Investment income n.m. (490) (992) Segment result n.m. Combined 105.6% 103.4% S Impact of lower investment income on ratio (full-year) segment result vs 2001: CHF -1.7 bn S Segment result of CHF 6 m in Q4 includes Return on CHF 276 m impact from deferred tax assets on net invested 6.3 1.2 (3.8) 1.6 0.5 operating losses assets (%) S Impact from discontinued/divested business of CHF -90 m net of tax in Q4 (2002: CHF -251 m) Q4 Q1 Q2 Q3 Q4 S Net premiums earned up 4.6% 2002 2001 (organic 9.4% in local currency) S Combined ratio down 2.2 ppts to 103.4% (claims ratio (1) before exceptional items, cumulative effect of change in down 1.9 ppts, expense ratio down 0.3 ppts) accounting principles and minority interests Slide 22
  24. 24. CSFS OBJECTIVES FOR 2003 Overall: S Strong efforts initiated to further reduce cost base Private Banking: S Lower asset base with impact on operating income Corporate & Retail Banking: S Some increase in credit risk costs likely Winterthur: S Measures taken to allow profitability for the full year S However, quarterly results likely to be impacted by volatility in financial markets Slide 23
  25. 25. PRESENTATION S INTRODUCTION S CONSOLIDATED RESULTS S CREDIT SUISSE FINANCIAL SERVICES S CREDIT SUISSE FIRST BOSTON S SUMMARY S CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Slide 24
  26. 26. CREDIT SUISSE FIRST BOSTON OVERVIEW S Net operating profit of USD 11 m in Q4/02 and USD 140 m in 2002 S Revenue decline of 21% due to protracted downturn in the markets S Operating expenses down USD 2.7 bn (23%) vs 2001 Results S Exceptional charges of USD 890 m (USD 813 m after tax) and positive cumulative effect of change in accounting principles amounting to USD 162 m S Reached agreement in principle to settle US Regulatory probe into industry research practices Significant S Definitive agreement to sell Pershing Events S Continued to right-size platform to match market reality S Substantially reduced exposure to legacy assets S Maintain revenue-generating capabilities and market positions S Drive further expense efficiencies Objectives S Manage risk exposure for flexibility in face of geopolitical uncertainty S Generate sustained profitability Slide 25
  27. 27. CSFB RESULTS Net Operating Profit (1) Earnings Drivers in USD million in USD million Change vs Change vs 229 2002 2001 Q4/02 Q3/02 155 11,769 (21%) 2,361 (11%) Revenues 11 Operating expenses 9,277 (23%) 1,870 (14%) (114) 1,679 84% 657 Provisions 17% (255) S Revenues reflect weak market environment and (1) writedown on legacy portfolio ROE (in %) (5.0) 6.9 9.9 (11.8) 0.4 S Continued to right-size and reduce expenses S Provisions reflect Q4 Q1 Q2 Q3 Q4 2001 2002 record credit defaults for industry, particularly in B the US establishment of USD 340 m reserve for losses B (1) excluding exceptional items, cumulative effect of inherent in non-impaired portfolio change in accounting principles and amortization of acquired intangible assets and goodwill Slide 26
  28. 28. CSFB NET OPERATING PROFIT CONTRIBUTION 2001 2002 in USD million Q4 2002 Q4 Q1 Q2 Q3 2001 63 394 Institutional Securities (83) 218 296 (183) 918 48 226 CSFB Financial Services 121 70 71 37 259 111 620 Subtotal 38 288 367 (146) 1,177 (138) (109) (100) (647) (480) Acquisition-related costs (152) (133) (1) 11 140 Net operating profit/(loss) (114) 155 229 (255) 530 (1) excluding exceptional items, cumulative effect of change in accounting principles and amortization of acquired intangible assets and goodwill Slide 27
  29. 29. CSFB NET PROFIT/(LOSS) Q4/02 Q4/01 in USD million Net operating profit/(loss) 11 (114) Covers estimated exposure (150) Regulatory agreement (100) related to research, Enron and (450) Civil litigation provision - certain IPO allocation practices (86) Pershing (pre-tax) - Continue to right-size the firm; (204) Restructuring (745) reduced headcount by approx. (165) Severance-related (583) 1,500 during Q4/02 (21) Excess facilities charges (103) (18) Exit charges for non-core business (59) 77 Tax impact 199 Total exceptional items (813) (646) Cumulative effect of change in 162 accounting principles - Amortization of acquired (171) intangibles assets and goodwill (179) Net profit/(loss) (811) (939) Slide 28
  30. 30. REVENUES S Decline of 47% vs Q3/02 – developed credit products, Fixed Income Division USD bn 1.3 incl. NCFE, lower securitization results and widened 1.3 1.1 spreads 0.8 0.6 S Decline in emerging markets, particularly in Brazil S Lower interest rate products, incl. seasonal effect Equities Division S Decline of 22% vs. Q3/02 USD m S Stable cash business but lower EDCU revenues due to 855 760 718 699 562 limited arbitrage opportunities, equity market uncertainty and reduced customer trading Investment Banking Division S Increase of 68% vs. Q3/02 – primarily Private Equity gain on sale of Swiss Re, with improvement across banking USD m 695 871 813 589 products 485 S M&A and equity new issuance activity remain depressed Financial Services Segment S Decline of 3% vs. Q3/02 USD m S Lower global equity market values, net asset outflows at 597 536 553 501 484 CSAM and lower trading and customer debit volumes at Pershing and PCS Q4 Q1 Q2 Q3 Q4 2001 2002 Slide 29
  31. 31. MARKET SHARES REMAIN STRONG 2002 2001 Rank Share Rank Share 3 16.8% Global M&A 4 22.6% 4 8.2% Global Equity 5 10.0% 2 7.9% Global Debt 3 8.4% 1 15.5% High Yield 1 16.4% Equity Research 1 21RA Global 3 18 RA Fixed Income Research 2 31 RA North America 3 32 RA RA = Ranked analysts Slide 30
  32. 32. CSFB FINANCIAL SERVICES REVENUE DRIVERS S Net asset outflow reduced vs. Q3/02 S Year-on-year AuM adversely impacted by performance, net asset outflows and sale of CSFBdirect (USD 21 bn) S Lower customer activity at Private Client Services Q4/02 2002 Q3/02 Q4/01 2001 (in USD billion) (5.8) (20.1) Institutional asset management (7.9) 1.1 5.5 1.8 5.1 Private client services 0.1 2.7 9.3 (4.0) (15.0) Total net new assets (7.8) 3.9 14.8 350 Assets under management 336 382 Private Client Services: 630 742 1,172 Avg. debit balances (USD m) 692 887 1.4 Trading volume (USD bn) 1.7 Slide 31
  33. 33. SUBSTANTIAL RIGHT-SIZING OF EXPENSE BASE S Expenses down USD 2.7 bn (23%) vs 2001 S Headcount reduced 14% during 2002; 23% since 2000 S Progress in bringing compensation/revenue ratio more in line with peers S Cost reductions achieved while maintaining revenue-generating capabilities and market positions Change vs 2001 2002 2001 (in USD billion) in USD billion in % 6,191 Personnel expenses (1) 8,125 (1,934) (24) 3,086 Other operating expenses 3,852 (766) (20) 9,277 Total operating expenses 11,977 (2,700) (23) 23,424 Headcount (period-end) 27,302 (3,878) (14) 52.6% Compensation/revenue (2) 54.4% (1) excludes amortization of retention payments and exceptional items (2) excludes acquisition interest, amortization of retention payments and exceptional items Slide 32
  34. 34. quot;LEGACYquot; ASSETS EXPOSURE REDUCED BY 45% S 2002 results include charges of quot;Legacyquot; Assets Impact On: USD 1.1 bn from quot;legacyquot; assets Q4/02 2002 in USD million Net operating profit drag of B Revenues (281) (919) USD 773 m Provisions 8 (154) S Exposure reduced in 2002 by USD Total (273) (1,074) 2.3 bn to USD 3.0 bn Taxes 76 301 B Q4/02 reduction of USD 0.8 bn Net operating profit (196) (773) quot;Legacyquot; Assets Net Exposure S Q4/02 charges of USD 273 m offset 12/01 12/02 by USD 309 m Swiss Re gains in USD billion 12/99 12/00 1.5 Real estate 8.9 4.8 2.9 0.5 Distressed 2.0 1.5 1.1 S 2003 P&L charges expected to be 1.0 Private equity (1) 1.0 substantially lower 1.7 1.3 Total 11.9 8.0 5.3 3.0 (1) only non-continuing business, excluding unfunded commitments of USD 1.2 bn, 1.0 bn, 0.9 bn and 0.8 bn as of 12/99, 12/00, 12/01 and 12/02 respectively, of which USD 0.4 bn represents employee commitments as of 12/01 and 12/02 Slide 33
  35. 35. CSFB OBJECTIVES FOR 2003 S Will build on strong franchise and market share S Lower expense base in line with expected revenues S Earnings drag from quot;legacyquot; assets largely behind us S Provisions expected to decrease but vulnerable to general credit cycle S Well positioned for improved return on equity Slide 34
  36. 36. PRESENTATION S INTRODUCTION S CONSOLIDATED RESULTS S CREDIT SUISSE FINANCIAL SERVICES S CREDIT SUISSE FIRST BOSTON S SUMMARY S CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Slide 35
  37. 37. SUMMARY S In the 4th quarter, we took further steps towards returning to profitability addressed a number of exceptional cost items B strengthened our balance sheet and improved capital base B S Core businesses continued to hold leadership positions in key markets S Economic and geopolitical outlook remains uncertain S Measures taken in 2002 expected to restore the Group to profitability in 2003 Slide 36
  38. 38. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This presentation contains statements that constitute forward-looking statements. In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating to our plans, objectives or goals; our future economic performance or prospects; the potential effect on our future performance of certain contingencies; and assumptions underlying any such statements. Words such as “believes,” “anticipates,” “expects,” quot;intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable laws. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include (i) market and interest rate fluctuations; (ii) the strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations in particular; (iii) the ability of counterparties to meet their obligations to us; (iv) the effects of, and changes in, fiscal, monetary, trade and tax policies, and currency fluctuations; (v) political and social developments, including war, civil unrest or terrorist activity; (vi) the possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations; (vii) the ability to maintain sufficient liquidity and access capital markets; (viii) operational factors such as systems failure, human error, or the failure to properly implement procedures; (ix) actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations; (x) the effects of changes in laws, regulations or accounting policies or practices; (xi) competition in geographic and business areas in which we conduct our operations; (xii) the ability to retain and recruit qualified personnel; (xiii) the ability to maintain our reputation and promote our brands; (xiv) the ability to increase market share and control expenses; (xv) technological changes; (xvi) the timely development and acceptance of our new products and services and the perceived overall value of these products and services by users; (xvii) acquisitions, including the ability to integrate successfully acquired businesses; (xviii) the adverse resolution of litigation and other contingencies; and (xix) our success at managing the risks involved in the foregoing. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, as well as the risks identified in our most recently filed Form 20-F and reports on Form 6-K furnished to the US Securities and Exchange Commission. Slide 37

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