Prepared and filed by St Ives Burrups

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Private Issuer

Dated February 12, 2004

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of February 12, 2004

Commission File Number 001-15244

CREDIT SUISSE GROUP
(Translation of registrant's name into English)

Paradeplatz 8, P.O. Box 1, CH-8070 Zurich, Switzerland
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F        Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):       

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):       

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes        No  

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-       

 

 

Media Relations

CREDIT SUISSE GROUP
P.O. Box 1
CH-8070 Zurich

Telephone +41-1-333 8844
Fax             +41-1-333 8877

e-mail media.relations@credit-suisse.com
 


CREDIT SUISSE GROUP REPORTS NET PROFIT OF
CHF 5.2 BILLION FOR FULL YEAR 2003

Credit Suisse Financial Services Records Strong 2003 Results
In Both Banking And Insurance

Credit Suisse First Boston Achieves Remarkable Turnaround
From 2002 With Solid Profits in 2003


Group Achieves Significant Cost Reductions in 2003

Financial Highlights                        
 
in CHF million 4Q2003   4Q2002   Change in %   12 months   12 months   Change in % vs  
          vs 4Q2002   2003   2002   12 mths 2002  
 
 
 
 
Operating income 5,721   6,395   -11   26,825   28,038   -4  
 
 
 
 
 
 
Operating expenses 4,423   5,111   -13   18,901   23,529   -20  
 
 
 
 
 
 
Net profit 1,166   -950   n/ a   5,209   -3,309   n/ a  
 
 
 
 
 
 
Return on equity in % 14.6   -13.0   n/ a   17.2   -10.0   n/ a  
 
 
 
 
 
 
Earnings per share in CHF 0.94   -0.80   n/ a   4.31   -2.78   n/ a  
 
 
 
 
 
 
n/ a: not applicable                        

Zurich, February 12, 2004 – Credit Suisse Group today announced a net profit of CHF 5.2 billion for 2003, representing a significant turnaround from the net loss of CHF 3.3 billion in 2002. The Group’s fourth quarter 2003 net profit amounted to CHF 1.2 billion, compared to a net loss of CHF 950 million in the fourth quarter of 2002. At Credit Suisse Financial Services, a lower fourth quarter 2003 result in the banking segments was more than offset by strong investment results in the insurance segments; net profit for 2003 amounted to CHF 4.3 billion. Credit Suisse First Boston reported a net profit of USD 870 million (CHF 1.2 billion) for 2003 and had steady operating income in the fourth quarter, demonstrating strong investment banking results and sustainable business activity.

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Oswald J. Gruebel, Co-CEO of Credit Suisse Group and CEO of Credit Suisse Financial Services, and John J. Mack, Co-CEO of Credit Suisse Group and CEO of Credit Suisse First Boston, stated, “At the end of 2002, we defined the measures necessary to return the Group to profitability. Those measures included reducing costs in our banking business, realigning our onshore private banking activities in Europe, returning Winterthur to profitability, strengthening our capital base and reducing the impact of the legacy asset portfolios at Credit Suisse First Boston. We are pleased that, thanks to our strong management teams and dedicated staff, the Group has successfully completed these measures and more in 2003.”

Oswald J. Gruebel added, “Credit Suisse Financial Services achieved a strong performance last year, with a remarkable turnaround at Winterthur and continued good results in Private Banking and Corporate & Retail Banking. We will continue to strive to offer our clients outstanding service, while keeping costs firmly under control and actively capturing market opportunities to further enhance revenues in 2004.”

John J. Mack concluded, “2003 was clearly a critical turning point for CSFB. We set out to be consistently profitable, and we were. Now that we have strict and effective cost controls in place, we will focus on growing revenues and continuing to build a one-firm culture that emphasizes and rewards effective teamwork. I am confident that CSFB is now well positioned to build on its progress and achieve growth in 2004 as global markets rebound.”

Swiss GAAP Changes

As pre-announced with the third quarter 2003 results, the Group adopted mandatory changes in Swiss Federal Banking Commission guidelines (Swiss GAAP) in the fourth quarter of 2003, which were retroactively applied as of January 1, 2003. Significant changes for Credit Suisse Group relate to accounting for own shares and derivatives. The total impact of these changes in the fourth quarter of 2003 was a decrease of CHF 189 million in the Group’s net profit.

Capital Management

Credit Suisse Group strengthened its balance sheet and its capital base in 2003 through earnings generation and the divestitures at Winterthur, as well as the sale of Credit Suisse First Boston’s settlement and clearing platform Pershing. The Group’s consolidated BIS tier 1 ratio stood at 11.7% as of December 31, 2003, up from 11.1% as of September 30, 2003 – reflecting earnings generation and a reduction of risk-weighted assets – and up from 9.0% as of December 31, 2002.

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Credit Suisse Financial Services

CSFS Business Unit Results                        
 
in CHF million 4Q2003   4Q2002   Change in %   12 months   12 months   Change in % vs  
          vs 4Q2002   2003   2002   12 mths 2002  
 
Operating income 2,801   3,566   -21   14,395   12,152   18  
 
Operating expenses 1,977   2,378   -17   8,501   9,569   -11  
 
Net profit 977   620   58   4,310   -271   n/ a  
 
Net operating profit 1,091   514   112   4,471   -151   n/ a  
 

Note: net operating profit is net profit excluding the amortization of acquired intangible assets and goodwill, exceptional items and the cumulative effect of changes in accounting principles, all net of tax.

Credit Suisse Financial Services posted a net profit of CHF 977 million in the fourth quarter of 2003. This compared to a net profit of CHF 620 million in the fourth quarter of 2002 and a net profit of CHF 1.8 billion in the third quarter of 2003, which included an after-tax gain of CHF 1.3 billion net of related provisions from divestitures at Winterthur, and certain provisions of CHF 383 million related to its current and former international business portfolio. Included in the fourth quarter 2003 result are: a charge of CHF 46 million after tax related to the further realignment of European Private Banking; extraordinary income of CHF 106 million (CHF 81 million after tax) from a divestiture at Private Banking; and a tax credit of CHF 782 million in the insurance segments related to tax law changes in Germany, which – after the related increase in dividends to policyholders incurred of CHF 711 million – resulted in a positive impact on net profit of CHF 71 million. For the full year 2003, the business unit recorded a net profit of CHF 4.3 billion compared to a net loss of CHF 271 million in 2002.

CSFS Segment Results                        
 
in CHF million 4Q2003   4Q2002   Change in %   12 months   12 months   Change in % vs  
          vs 4Q2002   2003   2002   12 mths 2002  
 
Private Banking 508   314   62   1,914   1,696   13  
 
Corporate & Retail Banking 120   50   140   565   414   36  
 
Life & Pensions 369   93   297   723   -1,400   n/ a  
 
Insurance 153   6   n/ a   1,338   -992   n/ a  
 

At Private Banking, fourth quarter 2003 operating income increased 5% compared to the fourth quarter of 2002 but was down 9% from the third quarter of 2003. This decline was primarily due to lower commission income, impacted by the weaker US dollar, as well as fewer trading days and lower transaction volumes.

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For the full year 2003, operating income was down slightly to CHF 5.9 billion. Operating expenses decreased 7% compared to the fourth quarter of 2002 and remained almost unchanged compared to the third quarter of 2003. For the full year 2003, operating expenses were down 8%. The cost/income ratio decreased 3.3 percentage points to 59.8% for the full year 2003. The gross margin was almost stable at 121.3 bp for the full year 2003.

At Corporate & Retail Banking, operating income increased 7% compared to the fourth quarter of 2002 and remained almost unchanged compared to the third quarter of 2003. Operating income also remained virtually unchanged for the full year 2003 compared to 2002. Operating expenses decreased 9% in the fourth quarter of 2003 compared to the fourth quarter of 2002 but rose 7% compared to the third quarter of 2003 due mainly to IT project costs and marketing activities. For the full year 2003, operating expenses were 9% lower than in 2002, and the cost/income ratio improved 5.9 percentage points to 67.2% in 2003.

The insurance segments achieved a strong recovery in 2003, driven primarily by significant improvements in investment performance, substantially reduced administration costs and improved underwriting results and claims management. Life & Pensions reported a 9% decrease in gross written premiums in 2003, due primarily to profit-oriented underwriting reflecting market conditions. Adjusted for divestitures and exchange rate impacts, premium volumes were down 3%. Total operating expenses, comprising acquisition and administration costs, declined 9% in 2003 compared to 2002, reflecting ongoing efficiency measures. Administration costs decreased 24% over the same period. The total return on invested assets rose to 5.2% in 2003, from 1.4% in 2002.

The Insurance segment recorded a 7% decrease in net premiums earned in 2003. Adjusted for divestitures and exchange rate impacts, net premiums earned increased 6% due primarily to tariff increases across all major markets. The segment’s net underwriting result before dividends to policyholders incurred rose by CHF 392 million in 2003 compared to 2002, and the combined ratio improved by 2.4 percentage points to 101.0% over the same period. In the fourth quarter of 2003, the combined ratio fell below 100% for the first time to stand at 98.3%. Administration costs decreased 17% in 2003 compared to 2002. The total return on invested assets was 3.8% in 2003, compared to -0.1% in 2002.

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Credit Suisse First Boston

CSFB Business Unit Results                        
 
in USD million 4Q2003   4Q2002   Change in %   12 months   12 months   Change in % vs  
          vs 4Q2002   2003   2002   12 mths 2002  
 
Operating income 2,420   2,326   4   10,783   11,559   -7  
 
Operating expenses 1,957   1,816   8   8,124   9,052   -10  
 
Net profit 220   -795   n/ a   870   -1,178   n/ a  
 
Net operating profit 344   27   n/ a   1,389   156   n/ a  
 
                       
Excluding Swiss GAAP changes                      
 
in USD million 4Q2003   4Q2002   Change in %   12 months   12 months   Change in % vs  
          vs 4Q2002   2003   2002   12 mths 2002  
 
Operating income 2,567   2,326   10   10,930   11,559   -5  
 
Net profit 283   -795   n/ a   933   -1,178   n/ a  
 
Net operating profit 545   27   n/ a   1,590   156   n/ a  
 

Credit Suisse First Boston reported a net profit of USD 870 million (CHF 1.2 billion) in 2003, a substantial improvement from the net loss of USD 1.2 billion (CHF 1.8 billion) in 2002. Net operating profit for 2003 – which excludes the amortization of goodwill and acquired intangible assets and the related impairment charge, the cumulative effect of changes in accounting principles from prior periods and, for the fourth quarter of 2002, exceptional items, all net of tax – rose to USD 1.4 billion (CHF 1.9 billion), from USD 156 million (CHF 245 million) in 2002. Excluding the impact of mandatory Swiss GAAP changes, full year 2003 net profit would have been USD 933 million (CHF 1.3 billion) and net operating profit would have totaled USD 1.6 billion (CHF 2.1 billion).

For the fourth quarter of 2003, Credit Suisse First Boston reported a net profit of USD 220 million (CHF 290 million), compared to a net loss of USD 795 million (CHF 1.2 billion) in the fourth quarter of 2002. The fourth quarter 2003 results include an impairment of USD 200 million (CHF 270 million), or USD 130 million (CHF 176 million) net of tax, of acquired intangible assets related to Credit Suisse First Boston’s high-net-worth asset management business. Net operating profit was USD 344 million (CHF 455 million) for the fourth quarter of 2003, up from USD 27 million (CHF 40 million) in the fourth quarter of 2002. Excluding the impact of the mandatory Swiss GAAP changes, fourth quarter 2003 net profit would have been USD 283 million (CHF 375 million), representing a significant improvement from the loss in the fourth quarter of 2002, and net operating profit would have increased significantly to USD 545 million (CHF 726 million) from USD 27 million (CHF 40 million) in the fourth quarter of 2002.

Page 5 of 10

As previously announced, Credit Suisse Group now expenses stock options, and Credit Suisse First Boston has introduced a three-year vesting period for share awards in line with its long-term retention strategy as well as industry practice. As a result of its updated compensation policies, Credit Suisse First Boston increased the amount of compensation deferred in the form of shares, versus its previous practice of combining share awards with other performance-based plans as well as option awards.

CSFB Segment Results                        
 
in USD million 4Q2003   4Q2002   Change in %   12 months   12 months   Change in % vs  
          vs 4Q2002   2003   2002   12 mths 2002  
 
Institutional Securities 286   78   267   1,420   407   249  
 
CSFB Financial Services 92   49   88   201   227   -11  
 
                         
Institutional Securities segment results excluding Swiss GAAP changes          
 
in USD million 4Q2003   4Q2002   Change in %   12 months   12 months   Change in % vs  
          vs 4Q2002   2003   2002   12 mths 2002  
 
Operating income 2,260   1,863   21   9,775   9,568   2  
 
Segment result 487   78   n/ a   1,621   407   298  
 

The Institutional Securities segment reported a 2% increase in operating income for the full year 2003 excluding Swiss GAAP changes compared to 2002, as favorable Fixed Income markets were partially offset by volume declines and margin compression in the US cash equity business as well as lower equity new issuance and M&A investment banking fees. Full year 2003 operating expenses decreased 4% compared to 2002, primarily as a result of reduced headcount and cost containment efforts. Segment profit was up 298% in 2003, excluding Swiss GAAP changes, compared to 2002. In the fourth quarter of 2003, the Institutional Securities segment recorded strong operating income compared to the fourth quarter of 2002, primarily as a result of improvements in Fixed Income and lower write-downs related to the legacy portfolio despite a one-time gain on the sale of a private equity investment in the fourth quarter of 2002. Fourth quarter 2003 operating expenses were up 18% compared to the fourth quarter of 2002 as a result of higher compensation costs related to increased operating income, partially offset by lower operating expenses from cost containment efforts.

Page 6 of 10

Within the CSFB Financial Services segment, Credit Suisse Asset Management reported a 3% increase in operating income for the full year 2003, mainly reflecting an increase in assets under management on a US dollar basis. The segment’s operating expenses decreased over the same period primarily due to the sale of Pershing. Furthermore, the sale of its interest in a Japanese online broker generated USD 99 million (CHF 134 million), or USD 71 million (CHF 96 million) net of tax.

Net New Assets

Net New Assets and Assets under Management (AuM) for the full year 2003      
 
in CHF billion Net New Assets   Total AuM   Change in AuM in  
          % vs 2002  
 
Private Banking 17.9   511.7   9.9  
Corporate & Retail Banking -1.4   70.0   -0.4  
Life & Pensions 0.0   112.9   1.9  
Insurance n/ a   25.8   -16.0  
 
Credit Suisse Financial Services 16.5   720.4   6.3  
 
Institutional Securities 2.3   29.8   -4.8  
CSFB Financial Services -14.0   448.8   -0.5  
 
Credit Suisse First Boston -11.7   478.6   -0.8  
 
             
 
Credit Suisse Group 4.8   1,199.0   3.4  
 

Credit Suisse Group’s net new asset inflow for the fourth quarter and full year 2003 was driven primarily by inflows from Private Banking of CHF 4.2 billion and CHF 17.9 billion, respectively. For the full year 2003, Corporate & Retail Banking reported a net asset outflow of CHF 1.4 billion. CSFB Financial Services recorded a net asset outflow of CHF 14.0 billion for 2003, only slightly offset by a net new asset inflow of CHF 2.3 billion from the Institutional Securities segment. The net result for Credit Suisse Group was a net new asset inflow of CHF 2.9 billion in the fourth quarter of 2003 and of CHF 4.8 billion for the full year 2003. As of December 31, 2003, the Group’s total assets under management amounted to CHF 1,199.0 billion, an increase of 3.4% compared to December 31, 2002, and flat compared to September 30, 2003.

Dividend Proposal

The Board of Directors of Credit Suisse Group has decided to propose a reduction in par value of CHF 0.50 per share for the financial year 2003 in lieu of a dividend to the Annual General Meeting on April 30, 2004. This compares to a dividend of CHF 0.10 per share for the financial year 2002. If approved by the shareholders at the Annual General Meeting on April 30, 2004, this capital reduction is expected to be paid out on July 12, 2004.

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Change In Primary Accounting Standard

As a result of its long-term plan to move to an internationally recognized accounting standard, as well as the requirement of the Swiss Exchange for listed companies to adopt US GAAP or IFRS, Credit Suisse Group switched from Swiss GAAP to US GAAP for all its business activities on January 1, 2004. Credit Suisse Group’s reconciled 2003 US GAAP net profit will differ substantially from its 2003 net profit reported under Swiss GAAP. These differences include, among other factors, the difference in the accounting treatment of the combination of Credit Suisse Group and Winterthur in 1997, which was accounted for as a ‘pooling of interest’ under Swiss GAAP and as a ‘purchase’ under US GAAP. This alone will result in a reduction of over CHF 3 billion in the 2003 net profit under US GAAP versus Swiss GAAP, due primarily to the movement in the balance of goodwill related to the combination when accounted for in accordance with US GAAP, as announced in the third quarter 2003 earnings release. The charge in the US GAAP net profit related to this movement in goodwill is absorbed by corresponding additional shareholders' equity under US GAAP, which resulted from the 'purchase accounting' treatment of the combination between Credit Suisse Group and Winterthur in 1997. Other factors contributing to a differing reconciled net profit under US GAAP include accounting for derivatives, software capitalization, taxation and pension costs.

Going forward, the primary drivers in the Group’s businesses remain unchanged. Credit Suisse Group plans to publish its reconciled 2003 US GAAP results on its website on April 27, 2004. Key first quarter 2004 results will be pre-released in connection with the Annual General Meeting on April 30, 2004, and first quarter 2004 results will be disclosed in full on May 5, 2004.

Outlook

Given Credit Suisse Group’s return to sound profitability in 2003, the Group is well positioned to compete successfully in its primary markets. While the Group’s businesses remain tied to fluctuations and risks in the capital markets, management is optimistic about 2004 given the current levels of client activity and improving economic conditions. The Group’s accomplishments were significant in 2003 and it expects to continue to make progress towards achieving leading performance in its respective businesses.

Page 8 of 10

Enquiries

Credit Suisse Group, Media Relations Telephone+41 1 333 8844
Credit Suisse Group, Investor Relations Telephone+41 1 333 4570
Internet www.credit-suisse.com

Commentary On Results – Non-GAAP Financial Information

For additional information with respect to Credit Suisse Group’s results for the fourth quarter and the full year 2003, we refer you to the Group’s Quarterly Report Q4 2003, as well as the Group’s slide presentation for analysts and press, posted on the Internet at www.credit-suisse.com/results. This press release contains non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under Swiss GAAP (as well as other related information) is also included in the Quarterly Report Q4 2003. The operating basis business unit results described above reflect the results of the separate segments constituting the respective business units and certain acquisition-related and other costs not allocated to the segments.

Credit Suisse Group

Credit Suisse Group is a leading global financial services company headquartered in Zurich. The business unit Credit Suisse Financial Services provides private clients and small and medium-sized companies with private banking and financial advisory services, banking products, and pension and insurance solutions from Winterthur. The business unit Credit Suisse First Boston, an investment bank, serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group’s registered shares (CSGN) are listed in Switzer­land and in the form of American Depositary Shares (CSR) in New York. The Group employs around 60,800 staff worldwide. As of December 31, 2003, it reported assets under management of CHF 1,199.0 billion.

Cautionary Statement Regarding Forward-Looking Information

This press release 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,” "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.

Page 9 of 10

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.

Cautionary Statement Regarding Non-GAAP Financial Information

This press release contains non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under generally accepted accounting principles is available in Credit Suisse Group’s Quarterly Report Q4 2003 posted on the Internet at http://www.credit-suisse.com/sec.html .

Page 10 of 10

Today’s Presentation of the Results

Analysts’ Presentation, Zurich (English)

• February 12, 2004, 9.00 a.m. CET / 8.00 a.m. GMT / 3.00 a.m. EST at the Credit Suisse Forum St. Peter, Zurich
• Internet:
  - Live broadcast at www.credit-suisse.com/results
  - Video playback available approximately 3 hours after the event
• Telephone:
  - Live audio dial-in on +41 91 610 5600 (Europe), +44 207 107 0611 (UK), or
+1 866 291 4166 (USA), ask for “Credit Suisse Group quarterly results”; please dial in 10 minutes before the start of the presentation
  - Telephone replay available approximately 1 hour after the event on
+41 91 612 4330 (Europe), +44 207 866 4300 (UK) or +1 412 858 1440 (USA), conference ID 153#

Speakers

• Oswald J. Gruebel, Co-CEO of Credit Suisse Group and Chief Executive Officer of
Credit Suisse Financial Services
• John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive Officer of
Credit Suisse First Boston
• Philip K. Ryan, Chief Financial Officer of Credit Suisse Group
• Ulrich Koerner, Chief Financial Officer of Credit Suisse Financial Services
• Barbara Yastine, Chief Financial Officer of Credit Suisse First Boston

Media Conference, Zurich (English/German)

• February 12, 2004, 11.00 a.m. CET / 10.00 a.m. GMT / 5.00 a.m. EST at the Credit Suisse Forum St. Peter, Zurich
• Simultaneous interpreting: German – English, English – German
• Internet:
  - Live broadcast at www.credit-suisse.com/results
  - Video playback available approximately 3 hours after the event
• Telephone:
  - Live audio dial-in on +41 91 610 5600 (Europe), +44 207 107 0611 (UK), or
+1 866 291 4166 (USA), ask for “Credit Suisse Group quarterly results”; please dial in 10 minutes before the start of the presentation
  - Telephone replay available approximately 1 hour after the event on
+41 91 612 4330 (Europe), +44 207 866 43 00 (UK) or +1 412 858 1440 (USA), conference ID 246# (English)or 283# (German)

Speakers

• Oswald J. Gruebel, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse Financial Services
• John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive Officer of Credit Suisse First Boston
• Philip K. Ryan, Chief Financial Officer of Credit Suisse Group
• Ulrich Koerner, Chief Financial Officer of Credit Suisse Financial Services
• Barbara Yastine, Chief Financial Officer of Credit Suisse First Boston

Page 11 of 10









QUARTERLY REPORT Q4






Credit Suisse Group is a leading global financial services company headquartered in Zurich. The business unit Credit Suisse Financial Services provides private clients and small and medium-sized companies with private banking and financial advisory services, banking products, and pension and insurance solutions from Winterthur. The business unit Credit Suisse First Boston, an investment bank, serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group’s registered shares (CSGN) are listed in Switzerland and in the form of American Depositary Shares (CSR) in New York. The Group employs around 60,800 staff worldwide.





QUARTERLY REPORT
EDITORIAL
CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q4/2003
AN OVERVIEW OF CREDIT SUISSE GROUP
Equity capital
Net new assets
Operating income and expenses
Stock awards
Valuation adjustments, provisions and losses
Taxes
Swiss GAAP changes
Dividend proposal
Change in primary accounting standard
Outlook
RISK MANAGEMENT
Overall Risk Trends
Trading risks
Credit risk exposure
REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES
Private Banking
Corporate & Retail Banking
Life & Pensions
Insurance
REVIEW OF BUSINESS UNITS | CREDIT SUISSE FIRST BOSTON
Institutional Securities
CSFB Financial Services
RECONCILIATION OF OPERATING RESULTS TO SWISS GAAP
Introduction
Credit Suisse Financial Services business unit
Credit Suisse First Boston business unit
CONSOLIDATED RESULTS | CREDIT SUISSE GROUP
LOANS
INFORMATION FOR INVESTORS



This symbol is used to indicate topics on which further information is available on our website. Go to www.credit-suisse.com/results/bookmarks.html to find links to the relevant information. The additional information -indicated is openly accessible and does not form part of the Quarterly Report. Some areas of Credit Suisse Group’s websites are only available in English.

Cautionary statement regarding forward-looking information

This Quarterly Report 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," "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.

Cautionary statement regarding non-GAAP financial information

This Quarterly Report contains non-GAAP financial information. A reconciliation of such non-GAAP financial information to the most directly comparable measures under generally accepted accounting principles is contained in this report and is posted on our website at www.credit-suisse.com/sec.html.


EDITORIAL


Oswald J. Grübel
Co-CEO Credit Suisse Group
Chief Executive Officer
Credit Suisse Financial Services


John J. Mack
Co-CEO Credit Suisse Group
Chief Executive Officer
Credit Suisse First Boston

Dear shareholders

In 2003, Credit Suisse Group fulfilled its pledge to return to sound profitability. The Group reported a net profit of CHF 5.2 billion for 2003 and CHF 1.2 billion for the fourth quarter of 2003.

In the third quarter of 2002, we defined the measures we would take to return the Group to profitability. Those measures included aligning costs with revenues, refocusing the onshore European private banking activities, returning Winterthur to profitability, strengthening the capital base and reducing the legacy asset portfolios at Credit Suisse First Boston. We are pleased that the Group has completed these measures successfully.

In 2003, the Group benefited from a better market environment and higher transaction volumes in certain areas and reported improvements in all business segments. Private Banking’s segment result for the full year 2003 increased 13% compared to the prior year. Private Banking’s continued leading market position in performance and innovation, together with a reduction in overall cost levels and a recovery in net new assets from the second half of 2002, contributed to this year’s good performance. Corporate & Retail Banking benefited from continued efficiency improvements, stable net interest margins and the expansion of its private mortgage business. Compared to the full year 2002, Corporate & Retail Banking’s segment result increased 36% in 2003. Winterthur’s strong recovery in 2003 was mainly attributable to increased investment income, reflecting its goal of more dynamically managing its investment portfolio. Additionally, Winterthur continued to improve its underwriting result and claims management and made significant progress in reducing administration costs. The full year result for 2003 at Winterthur of CHF 2.1 billion was positively impacted by an after-tax gain from divestitures in the third quarter of 2003 in the amount of CHF 1.3 billion net of related provisions, compared with a net loss of CHF 2.4 billion in 2002.

Credit Suisse First Boston reported a net profit of CHF 1.2 billion for the full year 2003, a successful turnaround from 2002. In 2003, Credit Suisse First Boston focused on profitability and cost discipline and received notable recognition in several areas including the number one market share in high yield debt. Significant progress was also made during the year towards building an equity compensation culture by changing the incentive equity award strategy, while maintaining a strong risk culture. In 2003, the Institutional Securities segment benefited from stable operating income, while CSFB Financial Services was impacted by disposals.

The focus on cost management was a key priority throughout the Group during the entire year. In 2003, the implementation of efficiency measures resulted in a 12% reduction in operating expenses at Credit Suisse Financial Services, while Credit Suisse First Boston reduced operating expenses by 15% on a US dollar basis. As a result of a markedly improved credit environment, credit provisions decreased significantly for the year compared to 2002, particularly at Credit Suisse First Boston.

The Group’s earnings in 2003, combined with managed balance sheet growth and the divestitures at Winterthur, resulted in a stronger capital position. The Group’s Board of Directors decided to propose a reduction in par value of CHF 0.50 per share for the financial year 2003, which compares to a dividend of CHF 0.10 per share for the financial year 2002.

Given our return to sound profitability in 2003, Credit Suisse Group is well positioned to compete successfully in its primary markets. While our businesses remain tied to fluctuations and risks in the capital markets, we are optimistic about 2004, given the current levels of client activity and improving economic conditions. We are proud of what our employees have accomplished in 2003 and expect to continue to make progress towards achieving leading performance in our respective businesses.
Oswald J. Grübel John J. Mack
February 2004


CREDIT SUISSE GROUP FINANCIAL HIGHLIGHTS Q4/2003


Consolidated income statement  
    ChangeChange  Change
    in % fromin % from  in % from
     12 months 
in CHF m4Q20033Q20034Q20023Q20034Q2002200320022002
Operating income5,7216,5316,395(12)(11)26,82528,038(4)
Gross operating profit1,2982,1441,284(39)17,9244,50976
Net profit/(loss)1,1662,045(950)(43)–5,209(3,309)–


Return on equity  
    ChangeChange  Change
    in % fromin % from  in % from
     12 months 
in %4Q20033Q20034Q20023Q20034Q2002200320022002
Return on equity14.626.3(13.0)(44)–17.2(10.0)–


Consolidated balance sheet  
    ChangeChange
    in % fromin % from
in CHF m31.12.0330.09.0331.12.0230.09.0331.12.02
Total assets962,121994,555955,656(3)1
Shareholders' equity34,99234,87331,394011
Minority interests in shareholders' equity3,0412,9712,87826


Capital data  
    ChangeChange
    in % fromin % from
in CHF m31.12.0330.09.0331.12.0230.09.0331.12.02
BIS risk-weighted assets 190,761197,412196,486(3)(3)
BIS tier 1 capital22,39421,90117,613227
   of which non-cumulative perpetual
    preferred securities		 2,1692,1842,162(1)0
BIS total capital33,20732,01028,311417


Capital ratios  
in % 31.12.0330.09.0331.12.02
BIS tier 1 ratioCredit Suisse 8.27.67.4
 Credit Suisse First Boston 1)13.612.210.3
 Credit Suisse Group 2)11.711.19.0
BIS total capital ratio Credit Suisse Group17.416.214.4


Assets under management/client assets  
    ChangeChange
    in % fromin % from
in CHF bn31.12.0330.09.0331.12.0230.09.0331.12.02
Advisory assets under management609.6615.1577.9(1)5
Discretionary assets under management589.4584.1582.111
Total assets under management1,199.01,199.21,160.003
Client assets 1,342.91,299.41,757.93(24)


Net new assets  
    ChangeChange  Change
    in % fromin % from  in % from
     12 months 
in CHF bn4Q20033Q20034Q20023Q20034Q2002200320022002
Net new assets2.94.0(6.3)(28)–4.8(1.4)–
1) Ratio is based on a tier 1 capital of CHF 12.1 bn (30.09.03: CHF 12.1 bn; 31.12.02: CHF 10.6 bn), of which non-cumulative perpetual preferred securities is CHF 1.0 bn (30.09.03: CHF 1.0 bn; 31.12.02: CHF 1.0 bn).
2) Ratio is based on a tier 1 capital of CHF 22.4 bn (30.09.03: CHF 21.9 bn; 31.12.02: CHF 17.6 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (30.09.03: CHF 2.2 bn; 31.12.02: CHF 2.2 bn).


Number of employees (full-time equivalents)
      ChangeChange
      in % fromin % from
  31.12.0330.09.0331.12.0230.09.0331.12.02
Switzerlandbanking19,66120,04221,270(2)(8)
 insurance6,4266,6497,063(3)(9)
Outside Switzerlandbanking20,31020,17825,0571(19)
 insurance14,44014,46325,0670(42)
Total employees Credit Suisse Group60,83761,33278,457(1)(22)


Share data 
    ChangeChange
    in % fromin % from
 31.12.0330.09.0331.12.0230.09.0331.12.02
Shares issued 1,195,005,9141,194,682,3301,189,891,72000
To be issued upon conversion of MCS 1)40,413,83840,413,83840,413,83800
Own shares, net 2)(21,220,018)––––
Shares outstanding 1,214,199,7341,235,096,1681,230,305,558(2)(1)
Share price in CHF 45.2542.2530.00751
Market capitalization in CHF m54,94352,18336,909549
Book value per share in CHF26.3125.8323.18214
1) Maximum number of shares related to Mandatory Convertible Securities (MCS) issued by Credit Suisse Group Finance (Guernsey) Ltd. in December 2002.
2) Reflects applied mandatory changes in Swiss Federal Banking Commission guidelines.


Share price  
            Change  Change        Change 
            in % from  in % from        in % from 
                 12 months  
in CHF   4Q2003  3Q2003  4Q2002  3Q2003  4Q2002  2003  2002  2002 
High (closing price)  48.70  48.65  35.70  0  36  48.70  73.60  (34) 
Low (closing price)  42.10  34.75  20.60  21  104  20.70  20.60  0 
   

Calculation of earnings per share (EPS)  
            Change  Change        Change 
            in % from  in % from        in % from 
                 12 months  
   4Q2003  3Q2003  4Q2002  3Q2003  4Q2002  2003  2002  2002 
Net profit/(loss) in CHF m  1,166  2,045  (950)  (43)  –  5,209  (3,309)  – 
Diluted net profit/(loss) in CHF m  1,166  2,045  (950)  (43)  –  5,209  (3,309)  – 
Weighted average shares outstanding  1,235,316,285  1,230,710,975  1,193,153,538  0  4  1,209,297,2902)1,190,206,2071)2 
Dilutive impact   24,736,572  19,673,449  03)26  –  31,562,9452)03)– 
Weighted average shares, diluted  1,260,052,857  1,250,384,424  1,193,153,538  1  6  1,240,860,2352)1,190,206,207  4 
Basic earnings per share in CHF  0.94  1.66  (0.80)  (43)  –  4.31  (2.78)  – 
Diluted earnings per share in CHF  0.93  1.64  (0.80)  (43)  –  4.20  (2.78)  – 
1) Adjusted for weighted average shares repurchased.
2) Reflects applied mandatory changes in Swiss Federal Banking Commission guidelines retroactively as of January 1, 2003.
3) The calculation for the diluted loss per share excludes the effect of the potential exchange of convertible bonds and the potential exercise of options to purchase shares, as the effect would be anti-dilutive.




AN OVERVIEW OF CREDIT SUISSE GROUP




Credit Suisse Group reported a net profit of CHF 1.2 billion in the fourth quarter of 2003 and CHF 5.2 billion for the full year 2003. This compares with a net profit of CHF 2.0 billion in the third quarter of 2003, which included an after-tax gain of CHF 1.3 billion net of related provisions from divestitures at Winterthur, and a net loss of CHF 3.3 billion for the full year 2002. Credit Suisse Financial Services recorded a net profit of CHF 4.3 billion in 2003, compared to a net loss of CHF 271 million in 2002, and reported a significant increase in its fourth quarter 2003 net profit to CHF 977 million compared to the third quarter 2003 net profit excluding the after-tax gain of CHF 1.3 billion mentioned above, as the strong investment results in the insurance segments more than offset the lower quarterly results in the banking segments. Credit Suisse First Boston reported stable operating income in the fourth quarter 2003 compared with the previous quarter. Net profit declined 6% to CHF 290 million in the fourth quarter of 2003, compared to CHF 308 million in the previous quarter. For the full year 2003, Credit Suisse First Boston reported a net profit of CHF 1.2 billion compared with a net loss of CHF 1.8 billion for the previous year. As a result of the measures taken in 2002 and 2003, the Group’s full year result represents a return to sound profitability.



Credit Suisse Group reported a net profit of CHF 1.2 billion in the fourth quarter of 2003, compared to the previous quarter’s net profit of CHF 2.0 billion, which included an after-tax gain of CHF 1.3 billion net of related provisions from divestitures at Winterthur , and compared to a net loss of CHF 950 million in the fourth quarter of 2002. The Group’s fourth quarter 2003 net profit was impacted by several items including an impairment of acquired intangible assets in respect of Credit Suisse First Boston’s high-net-worth asset management business in the amount of CHF 270 million, markedly improved investment performance within the Credit Suisse Financial Services insurance segments, extraordinary gains from disposals at CSFB Financial Services and Private Banking as well as the mandatory changes in Swiss Federal Banking Commission guidelines (Swiss GAAP) discussed on page 8. Net profit for the fourth quarter of 2003 was also impacted by the changes in German tax legislation, which resulted in a tax benefit of CHF 782 million and a corresponding increase in dividends to policyholders of CHF 711 million.

Net profit for the full year 2003 was CHF 5.2 billion, compared to a net loss of CHF 3.3 billion for 2002. The turnaround in earnings in 2003 was driven by a decrease in operating expenses of CHF 4.6 billion, or 20%, for the full year, lower valuation adjustments, provisions and losses, a turnaround in investment income in the insurance segments and gains from divestitures. The results also reflect the successful completion of measures taken in 2002 and 2003 to return the Group to profitability.

Earnings per share for the fourth quarter of 2003 were CHF 0.94, compared to CHF 1.66 for the third quarter of 2003, and a loss per share of CHF 0.80 for the fourth quarter of 2002. Earnings per share for the full year 2003 amounted to CHF 4.31, compared to a loss per share of CHF 2.78 for 2002. The Group’s return on equity was 14.6% in the fourth quarter of 2003 versus 26.3% in the third quarter of 2003 and 17.2% for the full year 2003 versus –10.0% for the full year 2002.

Credit Suisse Financial Services posted a net profit of CHF 977 million in the fourth quarter of 2003. This result compares with a net profit of CHF 1.8 billion in the third quarter of 2003, which included the after-tax gain of CHF 1.3 billion mentioned above. Net profit for the fourth quarter of 2003 increased 58% from CHF 620 million in the fourth quarter of 2002. Net profit for the fourth quarter of 2003 included an extraordinary gain of CHF 106 million, or CHF 81 million net of tax, from the disposal of a minority investment reported within the Private Banking segment. Operating expenses in the banking segments increased in the fourth quarter of 2003 compared to the third quarter of 2003, but significant cost reductions were made compared to the fourth quarter of 2002. Private Banking reported net new assets of CHF 17.9 billion in 2003. Winterthur’s 2003 result reflects a strong investment performance at Life & Pensions and substantially reduced administration costs in both insurance segments.

Credit Suisse First Boston reported a net profit of CHF 290 million for the fourth quarter of 2003, which was 6% below the previous quarter’s net profit of CHF 308 million, but significantly improved compared to a net loss of CHF 1.2 billion reported in the fourth quarter of 2002. Credit Suisse First Boston’s fourth quarter 2003 net profit included the negative impact of Swiss GAAP changes in the amount of CHF 85 million net of tax discussed on page 8. Excluding these changes, net profit for the fourth quarter was CHF 375 million, an increase of 22% versus the third quarter of 2003. In addition, Credit Suisse First Boston’s fourth quarter 2003 result includes a writedown of CHF 270 million, or CHF 176 million net of tax, on acquired intangible assets related to CSFB Financial Services’ high-net-worth asset management business, and extraordinary income of CHF 166 million, or CHF 120 million net of tax, including the sale of a 50% interest in a Japanese online broker. Institutional Securities’ fourth quarter 2003 result includes strong Investment Banking operating income.

Equity capital
Credit Suisse Group’s consolidated BIS tier 1 ratio was 11.7% as of December 31, 2003, up from 11.1% as of September 30, 2003. This increase is attributable to continued earnings generation in the fourth quarter of 2003 as well as a reduction of risk-weighted assets.

The Group strengthened its balance sheet and its capital base during 2003 through earnings generation and the sale of Winterthur’s Republic operations in the US, its Churchill operations in the UK and Winterthur Italy, as well as the divestiture of Credit Suisse First Boston’s settlement and clearing platform, Pershing. The Group aims to remain one of the best capitalized financial institutions in its peer group and will continue to build capital, particularly in light of the transition to US GAAP and the new Basel II capital accord.

Net new assets
Credit Suisse Group’s net new asset inflow in the fourth quarter of 2003 was driven by a net new asset inflow from Private Banking of CHF 4.2 billion. For the full year 2003, the inflow of net new assets was dominated by a net new asset inflow of CHF 17.9 billion from Private Banking, whereas Corporate & Retail Banking recorded a net asset outflow of CHF 1.4 billion. CSFB Financial Services recorded a net asset outflow of CHF 14.0 billion for 2003, only slightly offset by a net new asset inflow of CHF 2.3 billion from the Institutional Securities segment.

For Credit Suisse Group, the net result was a net new asset inflow of CHF 2.9 billion in the fourth quarter of 2003 and CHF 4.8 billion for the full year 2003. As of December 31, 2003, the Group’s total assets under management amounted to CHF 1,199.0 billion, an increase of 3.4% compared to December 31, 2002.

Operating income and expenses
Credit Suisse Group’s operating income was CHF 5.7 billion in the fourth quarter of 2003, a decline of 12% from the previous quarter and 11% from the fourth quarter of 2002. The decrease compared with the third quarter of 2003 was primarily due to higher dividends to policyholders incurred at Winterthur as a result of changes in German tax legislation in the amount of CHF 711 million, which, in terms of net profit, was more than offset by a corresponding tax credit of CHF 782 million. For the full year 2003, the Group’s operating income was CHF 26.8 billion, down 4% from 2002.

The Group’s operating expenses of CHF 4.4 billion in the fourth quarter of 2003 were almost unchanged compared to the previous quarter and decreased 13% from the fourth quarter of 2002, reflecting continued strict cost management. In the fourth quarter of 2003, personnel expenses declined 3% overall compared with the previous quarter and 12% compared with the same quarter in the previous year. For the Group, operating expenses in 2003 declined 20% from the previous year. At Credit Suisse Financial Services, the continued focus on productivity improvements resulted in a year-on-year decrease in operating expenses of 12%. For Credit Suisse First Boston, the year-on-year decrease in operating expenses was 15% on a US dollar basis.

Amortization of acquired intangible assets and goodwill for the fourth quarter of 2003 reflected an impairment of CHF 270 million, or CHF 176 million net of tax, in respect of the intangible assets related to Credit Suisse First Boston’s high-net-worth asset management business.

Stock awards
In 2003, Credit Suisse Group adopted the fair value method of expensing stock option awards, changed the vesting of stock option awards across the Group and changed the vesting of share awards at Credit Suisse First Boston. As a result of the changes in share plans and vesting, Credit Suisse First Boston increased the amount of compensation deferred in the form of shares and replaced performance-based plans and option awards with share awards. In 2003, Credit Suisse First Boston deferred USD 873 million of compensation in the form of shares to future periods, compared to USD 869 million of value awarded in 2002 that was deferred or otherwise not expensed (in the case of options).

Valuation adjustments, provisions and losses
The Group’s total valuation adjustments, provisions and losses were CHF 282 million in the fourth quarter of 2003, up 31% compared to the low level in the third quarter of 2003. The full year 2003 valuation adjustments, provisions and losses were CHF 861 million, down from CHF 4.4 billion in 2002, primarily reflecting an improved credit environment and lower litigation provisions. In the fourth quarter of 2003, net credit-related valuation allowances and provisions increased to CHF 192 million compared to the low level of CHF 96 million in the third quarter of 2003, and the high level of CHF 1.4 billion in the fourth quarter of 2002. The increase from the third to the fourth quarter of 2003 was due mainly to two major defaults partially offset by a release of valuation allowances. Total net credit-related valuation allowances and provisions for the full year 2003 decreased to CHF 575 million from CHF 3.1 billion in 2002, as a result of the aforementioned reasons.

Taxes
Credit Suisse Group reported a notable tax benefit in the fourth quarter of 2003, mainly as a result of tax credits reported at Winterthur. Winterthur’s taxes were significantly impacted by the change in German tax legislation in December 2003, which now allows life and health insurance companies to deduct impairments and realized losses on equity investments. The change in tax legislation allowed a retroactive deduction of 80% of all impairments and realized losses incurred from equity investments since 2001. This resulted in a tax benefit, recorded in the fourth quarter of 2003, of CHF 782 million. This tax benefit, net of the related increase in dividends to policyholders of CHF 711 million, resulted in a positive net impact on net profit before minority interests in the amount of CHF 71 million. Credit Suisse First Boston’s effective tax rate in the fourth quarter of 2003 was also reduced as a result of a favorable geographic mix of taxable profits in the fourth quarter.

Swiss GAAP changes
Reported earnings in the fourth quarter of 2003 were affected by mandatory changes in Swiss Federal Banking Commission guidelines (Swiss GAAP), that were retroactively applied as of January 1, 2003. Significant changes for Credit Suisse Group relate to the accounting for own shares and derivatives. In line with US GAAP, the changes in accounting related to derivatives imposed more prescriptive requirements with respect to hedge effectiveness for derivatives hedging transactions. The majority of the Group’s derivative transactions are entered into for trading purposes and are therefore not affected by these changes in Swiss GAAP. The Group also uses derivatives to hedge risks associated with certain lending and funding activities. Certain of these hedges no longer qualify for hedge accounting under Swiss GAAP and, accordingly, changes in the fair value of such hedges must be reflected in earnings.

The changes in accounting for own shares resulted in the reclassification of treasury shares from assets to shareholders’ equity and the recognition in shareholders’ equity of realized gains and losses on trading in own shares. In addition, obligations to deliver shares in respect of share compensation plans are no longer recorded as a liability but reclassified to shareholders’ equity.

The impact from the change in accounting for own shares resulted in a decrease of CHF 94 million in net profit for the Group, accounted for in the Corporate Center, and a decrease in shareholders’ equity of CHF 396 million in the fourth quarter of 2003. The change in accounting for derivatives resulted in a decrease of CHF 258 million in the Group’s fourth quarter 2003 net profit and a cumulative positive effect of the change in accounting for periods prior to 2003 of CHF 319 million, or CHF 187 million net of tax.

Dividend proposal
Credit Suisse Group’s Board of Directors decided to propose a reduction in par value of CHF 0.50 per share for the financial year 2003 in lieu of a dividend, to the Annual General Meeting on April 30, 2004. This compares to a dividend of CHF 0.10 per share for the financial year 2002. If approved by the shareholders at the Annual General Meeting on April 30, 2004, this capital reduction will be paid out on July 12, 2004.

Change in primary accounting standard
As a result of its long-term plan to move to an internationally recognized accounting standard, as well as the requirement of the Swiss Exchange for listed companies to adopt US GAAP or IFRS, Credit Suisse Group switched from Swiss GAAP to US GAAP for all its business activities on January 1, 2004. Credit Suisse Group’s reconciled 2003 US GAAP net profit will differ substantially from its 2003 net profit reported under Swiss GAAP. These differences include, among other factors, the difference in the accounting treatment of the combination of Credit Suisse Group and Winterthur in 1997, which was accounted for as a ‘pooling of interest’ under Swiss GAAP and as a ‘purchase’ under US GAAP. This alone is expected to result in a reduction of over CHF 3 billion in the 2003 net profit under US GAAP versus Swiss GAAP, due primarily to the movement in the balance of goodwill related to the combination when accounted for in accordance with US GAAP, as announced in the third quarter of 2003. The charge in the US GAAP net profit related to this movement in goodwill is absorbed by corresponding additional shareholders’ equity under US GAAP, which resulted from the ’purchase accounting’ treatment of the combination between Credit Suisse Group and Winterthur in 1997. Other factors contributing to a differing reconciled net profit under US GAAP include accounting for derivatives, software capitalization, taxation and pension costs.

Going forward, the primary drivers in the Group’s businesses remain unchanged. Credit Suisse Group plans to publish its reconciled 2003 US GAAP results on its website on April 27, 2004. Key first quarter 2004 results will be pre-released in connection with the Annual General Meeting on April 30, 2004, and first quarter 2004 results will be disclosed in full on May 5, 2004.

Outlook
Given Credit Suisse Group’s return to sound profitability in 2003, the Group is well positioned to compete successfully in its primary markets. While the Group’s businesses remain tied to fluctuations and risks in the capital markets, management is optimistic about 2004 given the current levels of client activity and improving economic conditions. The Group’s accomplishments were significant in 2003, and it expects to continue to make progress towards achieving leading performance in its respective businesses.


Overview of Credit Suisse Group 1)
  Credit Suisse Financial Services  Credit Suisse First Boston  Corporate Center  Credit Suisse Group 
in CHF m  4Q2003  3Q2003  4Q2002  4Q2003  3Q2003  4Q2002  4Q2003  3Q2003  4Q2002  4Q2003  3Q2003  4Q2002 
Operating income  2,827  3,387  3,628  2,953  3,113  3,082  (59)  31  (315)  5,721  6,531  6,395 
Personnel expenses  1,202  1,385  1,447  1,785  1,681  1,933  55  59  84  3,042  3,125  3,464 
Other operating expenses  775  732  933  612  594  858  (6)  (64)  (144)  1,381  1,262  1,647 
Operating expenses  1,977  2,117  2,380  2,397  2,275  2,791  49  (5)  (60)  4,423  4,387  5,111 
Gross operating profit  850  1,270  1,248  556  838  291  (108)  36  (255)  1,298  2,144  1,284 
Depreciation of non-current assets 2)  277  279  335  162  125  155  82  67  144  521  471  634 
Amortization of acquired intangible assets and goodwill  25  25  92  472  211  308  (3)  2  3  494  238  403 
Valuation adjustments, provisions and losses  232  104  190  48  111  1,977  2  0  257  282  215  2,424 
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes   316  862  631  (126)  391  (2,149)  (189)  (33)  (659)  1  1,220  (2,177) 
Extraordinary income/(expenses), net   83  1,164  (38)  166  2  220  43  2  187  292  1,168  369 
Cumulative effect of change in accounting principle  1  0  266  318  0  254  0  0  0  319  0  520 
Taxes 3)  636  (256)  (290)  (49)  (65)  467  63  4  141  650  (317)  318 
Net profit/(loss) before minority interests   1,036  1,770  569  309  328  (1,208)  (83)  (27)  (331)  1,262  2,071  (970) 
Minority interests  (59)  8  51  (19)  (20)  (19)  (18)  (14)  (12)  (96)  (26)  20 
Net profit/(loss)  977  1,778  620  290  308  (1,227)  (101)  (41)  (343)  1,166  2,045  (950) 
1) Business unit results in accordance with Swiss GAAP. For a reconciliation of operating basis business unit results (reflecting the results of the separate segments comprising the business units) to Swiss GAAP basis, please refer to “Reconciliation of operating results to Swiss GAAP”. In 4Q2003 Credit Suisse Group applied mandatory changes in Swiss Federal Banking Commission guidelines retroactively as of January 1, 2003. In line with these guidelines, prior periods have not been restated. For additional discussion see page 8.
2) Includes amortization of Present Value of Future Profits (PVFP) from the insurance business within Credit Suisse Financial Services.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002 for Credit Suisse Financial Services of CHF –607 m, for Credit Suisse First Boston of CHF 269 m, and for Credit Suisse Group of CHF –197 m.

In the “Overview of Credit Suisse Group”, the business unit results are presented in accordance with Swiss GAAP. Elsewhere in this Quarterly Report, business unit results are presented on an operating basis.

For a reconciliation of operating basis business unit results (reflecting the results of the separate segments comprising the business units) to the Swiss GAAP basis, a discussion of the material reconciling items and a discussion of the purpose of the operating basis results and the reasons why management believes they provide useful information for investors, please refer to “Reconciliation of operating results to Swiss GAAP” on pages 35 – 39.


Assets under management/client assets  1)
                Change   Change  
                in % from   in % from  
in CHF bn   31.12.03   30.09.03   31.12.02   30.09.03   31.12.02  
Credit Suisse Financial Services                      
   Private Banking                      
   Assets under management   511.7   505.1   465.7   1.3   9.9  
      of which discretionary   133.0   129.2   121.5   2.9   9.5  
   Client assets   540.7   532.3   494.8   1.6   9.3  
   Corporate & Retail Banking                      
   Assets under management   70.0   69.4   70.3   0.9   (0.4)  
   Client assets   95.2   90.3   86.9   5.4   9.6  
   Life & Pensions                      
   Assets under management (discretionary)   112.9   112.3   110.8   0.5   1.9  
   Client assets   112.9   112.3   110.8   0.5   1.9  
   Insurance                      
   Assets under management (discretionary)   25.8   27.1   30.7   (4.8)   (16.0)  
   Client assets   25.8   27.1   30.7   (4.8)   (16.0)  
Credit Suisse Financial Services                      
Assets under management   720.4   713.9   677.5   0.9   6.3  
   of which discretionary   272.9   269.8   264.2   1.1   3.3  
Client assets   774.6   762.0   723.2   1.7   7.1  
Credit Suisse First Boston                      
   Institutional Securities                      
   Assets under management   29.8   29.1   31.3   2.4   (4.8)  
      of which Private Equity on behalf of clients
       (discretionary)		   19.5   19.7   20.9   (1.0)   (6.7)  
   Client assets   101.5   73.3   83.3   38.5   21.8  
   CSFB Financial Services 2)                      
   Assets under management   448.8   456.2   451.2   (1.6)   (0.5)  
      of which discretionary   290.4   288.9   289.6   0.5   0.3  
   Client assets   466.8   464.1   951.4   0.6   (50.9)  
Credit Suisse First Boston                      
Assets under management   478.6   485.3   482.5   (1.4)   (0.8)  
   of which discretionary   316.5   314.3   317.9   0.7   (0.4)  
Client assets   568.3   537.4   1,034.7   5.7   (45.1)  
Credit Suisse Group                      
Assets under management   1,199.0   1,199.2   1,160.0   0.0   3.4  
   of which discretionary   589.4   584.1   582.1   0.9   1.3  
Client assets   1,342.9   1,299.4   1,757.9   3.3   (23.6)  
1) In 4Q2003 Credit Suisse Group applied mandatory changes in Swiss Federal Banking Commission guidelines retroactively as of January 1, 2003. In line with these guidelines, prior periods have not been restated.
2) Excluding assets managed on behalf of other entities within Credit Suisse Group.


Net new assets 1)
                Change   Change           Change  
                in % from   in % from           in % from  
                12 months    
in CHF bn   4Q2003   3Q2003   4Q2002   3Q2003   4Q2002   2003   2002   2002  
Credit Suisse Financial Services                                  
   Private Banking   4.2   8.4   0.9   (50.0)   366.7   17.9   19.1   (6.3)  
   Corporate & Retail Banking   (0.3)   1.8   (0.2)   –   50.0   (1.4)   (3.6)   (61.1)  
   Life & Pensions   (2.0)   (0.7)   (1.3)   185.7   53.8   0.0   3.4   (100.0)  
Credit Suisse Financial Services   1.9   9.5   (0.6)   (80.0)   –   16.5   18.9   (12.7)  
Credit Suisse First Boston                                  
   Institutional Securities   1.3   0.1   –   –   –   2.3   1.9   21.1  
   CSFB Financial Services 2)   (0.3)   (5.6)   (5.7)   (94.6)   (94.7)   (14.0)   (22.2)   (36.9)  
Credit Suisse First Boston   1.0   (5.5)   (5.7)   –   –   (11.7)   (20.3)   (42.4)  
Credit Suisse Group   2.9   4.0   (6.3)   (27.5)   –   4.8   (1.4)   –  
1) In 4Q2003 Credit Suisse Group applied mandatory changes in Swiss Federal Banking Commission guidelines retroactively as of January 1, 2003. In line with these guidelines, prior periods have not been restated.
2) Excluding assets managed on behalf of other entities within Credit Suisse Group.

 



Impact on income statement from mandatory Swiss GAAP changes 
 CreditCredit  
 SuisseSuisseCor- 
 FinancialFirstporateTotal
4Q2003, in CHF mServicesBostonCenterchanges
Operating income6(199)(106)(299)
Personnel expenses0088
Valuation adjustments, provisions and losses01970197
Cumulative effect of change in accounting principle13180319
Taxes(2)(7)5(4)
Net profit/(loss)5(85)(109)(189)


RISK MANAGEMENT


Credit Suisse Group’s overall position risk, measured on the basis of Economic Risk Capital (ERC), decreased 6% in the fourth quarter of 2003 compared with the previous quarter. The reduction was largely due to the impact of the lower US dollar – Swiss franc exchange rate as well as a significant reduction in Winterthur’s risk profile driven by lower interest rate, foreign exchange and real estate risks. The more narrowly defined average Value-at-Risk (VaR) in US dollar terms for the trading book of Credit Suisse First Boston decreased 24% during the fourth quarter of 2003, due mainly to lower interest rate positions, a reduction in market volatility and the introduction of a refined methodology for mortgages during the third quarter of 2003. The Group’s credit-related balance sheet exposure decreased 6% as of December 31, 2003, compared with September 30, 2003.



Overall Risk Trends
Credit Suisse Group’s 1-year, 99% position risk ERC decreased 6% in the fourth quarter of 2003 compared with the previous quarter. The reduction was largely due to two factors. First, the decrease in the US dollar – Swiss franc exchange rate impacted Credit Suisse First Boston’s ERC in Swiss franc terms (6% lower versus a 2% increase in US dollar terms). Second, Winterthur’s ERC decreased 11% in the fourth quarter of 2003, mainly due to lower interest rate and foreign exchange rate risks, as well as lower real estate exposures.

At the end of the fourth quarter of 2003, 52% of the Group’s position risk ERC was with Credit Suisse First Boston, 44% was with Credit Suisse Financial Services (of which 28% was with the insurance units and 16% with the banking units) and 4% was with the Corporate Center.

Trading risks
The table below shows the trading-related market risk for Credit Suisse First Boston, Credit Suisse Financial Services and Credit Suisse Group on a consolidated basis, as measured by a 10-day VaR scaled to a 1-day holding period and 99% confidence level. Credit Suisse Group assumes trading risks through the trading activities of the Institutional Securities segment of Credit Suisse First Boston and – to a lesser extent – the trading activities of the banking segments of Credit Suisse Financial Services.

Credit Suisse First Boston’s average 1-day, 99% VaR in the fourth quarter of 2003 was CHF 51.3 million, compared to CHF 69.3 million during the third quarter of 2003. In US dollar terms, Credit Suisse First Boston’s average 1-day, 99% VaR decreased 24% during the fourth quarter (USD 39.9 million compared to USD 52.4 million during the third quarter), primarily due to reduced interest rate positions, a reduction in market volatility observed over the last two years (third quarter 2001 data falling out of the rolling two-year data set used to compute VaR) and the introduction of a refined methodology for mortgages during the third quarter of 2003 (a portion of the third quarter VaR figures were calculated on the basis of the old methodology, which resulted in higher VaR figures). Favorable market conditions at the end of the fourth quarter of 2003 resulted in the period-end VaR being observed at the higher end of the quarterly range. As shown on the backtesting chart, which shows actual 1-day, 99% VaR versus backtesting profit and loss, Credit Suisse First Boston had no backtesting exceptions over the last 12 months (an accurate 1-day, 99% VaR model should have no more than 4 exceptions on an annual basis).

Credit Suisse Financial Services’ average 1-day, 99% VaR in the fourth quarter of 2003 was CHF 12.5 million compared to CHF 15.0 million during the previous quarter. The decrease mainly reflects the higher degree of portfolio diversification within the equity portfolio and across risk types following the transfer of the securities and treasury execution platform in Switzerland from Credit Suisse First Boston to Credit Suisse Financial Services during the third quarter of 2003.

Credit risk exposure
Credit Suisse Group’s total credit-related exposure was 6% lower at December 31, 2003, compared with September 30, 2003. Exposure at Credit Suisse Financial Services was largely unchanged, while exposure at Credit Suisse First Boston was 10% lower, partially due to a decline in the value of the US dollar.

Compared to September 30, 2003, non-performing and total impaired loans at Credit Suisse Group declined 22% and 18%, respectively, as of the end of the fourth quarter of 2003, with reductions reported in both business units. The significant reduction in non-performing loans at Credit Suisse First Boston was largely attributable to higher write-offs of older, highly reserved non-performing loans while the reduction in total impaired loans additionally reflects a reduction in potential problem loans. Non-performing loans declined 11% at Credit Suisse Financial Services, while total impaired loans declined 4%, as potential problem loans increased 13%, with much of the increase associated with one major counterparty in the corporate credit business in Switzerland. The decline in non-performing loans is more pronounced in comparison to December 31, 2002, as non-performing loans declined 46% at Credit Suisse Group, 65% at Credit Suisse First Boston and 33% at Credit Suisse Financial Services in 2003.

The net credit-related valuation allowances and provisions charged to the income statement for the fourth quarter of 2003 was CHF 192 million, an increase from the CHF 96 million recorded for the third quarter of 2003, but significantly below the CHF 1.4 billion recorded for the fourth quarter of 2002, particularly at Credit Suisse First Boston. Additions to the loan valuation allowance were largely attributable to the exposures to the above-mentioned counterparty in Switzerland and to Parmalat, with the total additions partially offset by a release of valuation allowances no longer required. Additionally, as further discussed in the Credit Suisse First Boston section, much of the Parmalat credit expense was offset by a gain from credit default swaps, which was included in net trading income. Presented on page 13 are the additions, releases, and recoveries included in calculating the net credit-related expense.

Coverage of non-performing loans by the valuation allowances was essentially unchanged at Credit Suisse Group, while coverage of total impaired loans declined slightly on a consolidated basis. Coverage of both non-performing loans and total impaired loans declined at Credit Suisse First Boston as a result of the increased write-offs, while coverage improved at Credit Suisse Financial Services. The quality of the credit exposure for Credit Suisse Group, as measured by counterparty rating, was slightly improved from the third quarter of 2003 as a result of the reduction in impaired loans.
   

Key position risk trends 
        Change Analysis: Brief Summary
  Change in % from  
in CHF m 4Q2003 3Q2003 4Q2002 4Q2003 vs 3Q2003
Real Estate ERC &      
   Structured Asset ERC 1) 3,445   (14%)   (20%)   Lower exposures at Winterthur (revaluation of investments in Switzerland and sales) and CSFB (loans sold via securitization and lower risk in CDO portfolio)
Developed Market Fixed Income &      
   Foreign Exchange ERC 3,222   (11%)   3%   Lower interest rate and foreign exchange exposures at Winterthur
Equity Investment ERC 2,631 (10%) (32%) Lower positions in CHF terms at CSFB due to the impact of the lower USD plus lower exposure at Winterthur (sales and hedges)
International Lending ERC 2,662 (2%) (31%) Lower positions in CHF terms at CSFB due to the impact of the lower USD (2% increase in USD terms)
Swiss & Retail Lending ERC 1,831 (4%) (13%) Write-offs of old impaired exposures at Corporate & Retail Banking
Emerging Markets ERC 1,699 8% (11%) Higher CSFB exposures in South Africa and Brazil
Insurance Underwriting ERC 2) 650 1% (31%) No material change
Simple sum across risk categories 16,140 (7%) (20%)  
Diversification benefit (5,405) (10%) (24%)  
Total position risk ERC 10,735 (6%) (18%)  

1-year, 99% position risk ERC, excluding foreign exchange translation risk. For an assessment of the total risk profile, operational risk ERC and business risk ERC have to be considered as well. For a more detailed description of the Group’s ERC model, please refer to Credit Suisse Group's Annual Report 2002, which is available on the website: www.credit-suisse.com. Note that comparatives have been restated for methodology changes in order to maintain consistency over time.
1) This category comprises the real estate investments of Winterthur, Credit Suisse First Boston’s commercial real estate exposures, Credit Suisse First Boston’s residential real estate exposures, Credit Suisse First Boston’s asset-backed securities exposures as well as the real estate acquired at auction and real estate for own use in Switzerland.
2) Excludes ERC for discontinued businesses.
   

Trading exposures (1-day, 99% VaR) 1)
Credit Suisse Credit Suisse
Financial Services First Boston 2) Credit Suisse Group 3)
in CHF m 4Q2003 3Q2003 4Q2003 3Q2003 4Q2003 3Q2003
Total VaR          
Period end 13.5 19.1 58.3 50.4 56.1 55.1
Average 12.5 15.0 51.3 69.3 52.5 56.3
Maximum 18.7 19.7 63.1 152.5 56.1 58.7
Minimum 10.1 11.3 38.5 35.1 45.5 55.1
             
in CHF m 31.12.03 30.09.03 31.12.03 30.09.03 31.12.03 30.09.03
VaR by risk type          
Interest rate 4.7 7.0 58.2 43.7 58.9 47.9
Foreign exchange 2.0 2.2 15.9 18.3 16.8 18.6
Equity 12.7 15.5 23.6 28.1 24.9 27.2
Commodity 0.5 0.5 0.9 1.5 0.8 1.3
Subtotal 19.9 25.2 98.6 91.6 101.4 95.0
Diversification benefit (6.4) (6.1) (40.3) (41.2) (45.3) (39.9)
Total 13.5 19.1 58.3 50.4 56.1 55.1
1) Represents 10-day VaR scaled to a 1-day holding period.
2) The CSFB VaR is calculated using the USD as the base currency. For the purpose of this disclosure, the CSFB VaR estimates are translated into CHF using the respective currency translation rates. Specifically, the average, maximum and minimum daily VaR estimates in CHF are calculated using the respective month end closing rates; the period end VaR and the risk type breakdown at period end are calculated using the CSG closing rate at quarter end.
3) As Credit Suisse Group does not manage its trading portfolios on a consolidated level, consolidated VaR calculations are performed on a monthly basis only. The average, maximum and minimum values therefore are based on the three month-ends during the quarter. The consolidated VaR calculations for Credit Suisse Group are net of diversification benefits between Credit Suisse First Boston and Credit Suisse Financial Services.




Total credit risk exposure 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m31.12.0330.09.0331.12.0231.12.0330.09.0331.12.0231.12.0330.09.0331.12.02
Due from banks 2)39,28742,51233,30653,58866,78543,46247,18558,51139,469
Due from customers and mortgages 2)139,425138,060132,35350,17170,17582,395188,259206,794213,206
Total due from banks and customers, gross 2)178,712180,572165,659103,759136,960125,857235,444265,305252,675
Contingent liabilities12,08111,74312,34933,46838,14727,86240,83640,98139,104
Irrevocable commitments 3)3,9003,3412,26368,55277,67681,88472,75981,37085,333
Total banking products194,693195,656180,271205,779252,783235,603349,039387,656377,112
Loans held for sale 4)00–15,39017,028–15,39017,028–
Derivative instruments 5)4,5714,4015,01852,14054,28351,60055,82656,87754,757
Securities lending – banks 6)1,6520058,1540058,39000
Securities lending – customers 6)5,7720025,1051,7826430,8781,78264
Reverse repurchase agreements – banks 6)3,3365,2326,28385,041168,498154,53187,269169,427156,397
Reverse repurchase agreements – customers 6)1,5967,74514,52837,14741,09456,98738,67648,76771,384
Forward reverse repurchase agreements00012,53710,1157,61712,53710,1157,617
Total traded products16,92717,378 25,829270,124275,772 270,799283,576286,968 290,219
Total credit risk exposure, gross211,620213,034206,100491,293545,583506,402648,005691,652667,331
Loan valuation allowances and provisions(3,159)(3,098)(4,092)(1,494)(2,831)(3,817)(4,655)(5,932)(7,911)
Total credit risk exposure, net208,461209,936202,008489,799542,752502,585643,350685,720659,420
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.
2) Excluding loans held for sale, securities lending and reverse repurchase transactions.
3) Excluding forward reverse repurchase agreements.
4) Effective 1Q2003, loans held for sale are presented net of the related loan valuation allowances.
5) Positive replacement values considering netting agreements.
6) In 4Q2003 Credit Suisse Group applied mandatory changes in Swiss Federal Banking Commission guidelines retroactively as of January 1, 2003. In line with these guidelines, prior periods have not been restated.


Total loan portfolio exposure and allowances and provisions for credit risk 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m31.12.0330.09.0331.12.0231.12.0330.09.0331.12.0231.12.0330.09.0331.12.02
Non-performing loans 1,9172,2913,0049961,6793,3512,9133,9706,355
Non-interest earning loans1,5171,5772,1082464372171,7632,0152,325
Total non-performing loans3,4343,8685,1121,2422,1163,5684,6765,9858,680
Restructured loans242252256327229280349281
Potential problem loans1,6411,4481,7233617301,6852,0012,1783,408
Total other impaired loans1,6651,4701,7756171,0571,9142,2812,5273,689
Total impaired loans5,0995,3386,8871,8593,1735,4826,9578,51212,369
Total due from banks and customers, gross178,712180,572165,659103,759136,960125,857235,444265,305252,675
Valuation allowance3,1233,0614,0531,3912,7273,6474,5165,7907,703
   of which on principal 2,5562,4543,2011,1842,4663,4163,7424,9216,617
   of which on interest 5676078522072612317748691,086
Total due from banks and customers, net175,589177,511161,606102,368134,233122,210230,928259,515244,972
Provisions for contingent liabilities and irrevocable commitments363739103104170139142208
Total valuation allowances and provisions3,1593,0984,0921,4942,8313,8174,6555,9327,911
Ratios         
Valuation allowances as % of total non-performing loans90.9%79.1%79.3%112.0%128.9%102.2%96.6%96.7%88.7%
Valuation allowances as % of total impaired loans61.2%57.3%58.9%74.8%85.9%66.5%64.9%68.0%62.3%


Roll forward of loan valuation allowance 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m4Q20033Q20034Q20024Q20033Q20034Q20024Q20033Q20034Q2002
At beginning of period3,0613,4464,0012,7272,9283,3765,7906,3737,377
Additions4262134753711418258053531,323
Releases(202)(133)(106)(407)(105)(44)(613)(238)(151)
Net additions charged to income statement22480369(36)367811921151,172
Gross write-offs(194)(438)(313)(1,207)(239)(334)(1,400)(676)(647)
Recoveries88101122192131
Net write-offs(186)(430)(303)(1,206)(227)(313)(1,391)(655)(616)
Balances acquired/(sold)200(5)00(3)00
Provisions for interest511753319583126
Foreign currency translation impact and other 17(36)(31)(142)(41)(206)(130)(74)(256)
At end of period3,1233,0614,0531,3912,7273,6474,5165,7907,703


Net credit-related valuation allowances and provisions 1)
Credit Suisse Financial ServicesCredit Suisse First BostonCredit Suisse Group
in CHF m4Q20033Q20034Q20024Q20033Q20034Q20024Q20033Q20034Q2002
Net additions to loan valuation allowances22480369(36)367811921151,172
Net additions to provisions for contingent liabilities and irrevocable commitments 2)(4)6246(26)2210(19)244
Total net credit-related valuation allowances and provisions charged to income statement22086393(30)101,002192961,416
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.
2) For 2003, net additions for valuation allowances against debt securities are no longer included in net additions to provisions for contingent liabilities and irrevocable commitments.


REVIEW OF BUSINESS UNITS | CREDIT SUISSE FINANCIAL SERVICES






Credit Suisse Financial Services reported a net profit of CHF 977 million in the fourth quarter of 2003. For the full year 2003, Credit Suisse Financial Services recorded a net profit of CHF 4.3 billion. The lower results in the banking segments in the fourth quarter of 2003 versus the previous quarter were more than offset by a strong performance in the insurance segments. Assets under management stood at CHF 720.4 billion at the end of the fourth quarter of 2003, up 6.3% versus the end of the previous year. The Private Banking segment recorded net new assets of CHF 4.2 billion for the fourth quarter and CHF 17.9 billion for the full year 2003.



In the fourth quarter of 2003, Credit Suisse Financial Services reported a net profit of CHF 977 million, compared to CHF 1.8 billion in the previous quarter, which included divestiture gains of CHF 1.3 billion net of related provisions, and compared to CHF 620 million in the fourth quarter of 2002. Following a net loss of CHF 271 million for 2002, Credit Suisse Financial Services returned to sound profitability in 2003 and recorded a net profit of CHF 4.3 billion for the full year. This strong recovery was due primarily to significant cost reductions of CHF 1.1 billion as well as a marked improvement in investment income in both insurance segments.

Assets under management were up by 0.9% to CHF 720.4 billion in the fourth quarter of 2003 and rose 6.3% versus year-end 2002, due mainly to stronger equity markets, partially offset by the weaker US dollar. Assets under management increased despite the reduction of CHF 14.1 billion due to divestitures at Winterthur . Furthermore, the business unit recorded a net new asset inflow of CHF 1.9 billion in the fourth quarter and of CHF 16.5 billion for the full year 2003. The Private Banking segment recorded net new assets of CHF 4.2 billion in the fourth quarter and of CHF 17.9 billion for the full year 2003.

As noted on page 5, the results of the Credit Suisse Financial Services business unit and its segments are discussed on an operating basis. For a reconciliation of operating basis business unit results to Swiss GAAP and a discussion of the material reconciling items, the purpose of the operating results and the reasons why management believes they provide useful information for investors, please refer to the “Reconciliation of operating results to Swiss GAAP” on pages 35 – 39.

Private Banking
In the fourth quarter of 2003, Private Banking reported a segment profit of CHF 508 million, down 2% versus the previous quarter but up 62% versus the corresponding period of 2002. The results for the fourth quarter of 2003 include extraordinary income of CHF 106 million from the disposal of a minority investment, with an after-tax impact of CHF 81 million on segment profit. For the full year 2003, Private Banking recorded a segment profit of CHF 1.9 billion, up CHF 218 million, or 13%, versus 2002.

Operating income in the fourth quarter of 2003 decreased 9% to CHF 1.4 billion compared to the previous quarter, due primarily to lower commission income, impacted by the weaker US dollar, as well as fewer trading days and lower transaction volumes. These effects were only partially offset by income related to the increased asset base. For 2003, operating income was CHF 5.9 billion, down 2% versus 2002. This decrease was also mainly attributable to lower commission income primarily as a result of a lower average asset base in 2003, which was partially offset by higher trading income.

Operating expenses in the fourth quarter of 2003 amounted to CHF 822 million, almost unchanged compared to the previous quarter, with significantly lower personnel expenses in line with lower incentive-related compensation. The increase in other operating expenses in the fourth quarter was partially related to IT project costs and marketing activities. Additionally, operating expenses and depreciation rose as a result of costs related to the realignment of the European activities, with an after-tax impact of CHF 46 million on segment profit. For the full year 2003, operating expenses decreased to CHF 3.3 billion, down 8% from CHF 3.6 billion in 2002.

The cost/income ratio increased 7.1 percentage points to 62.2% in the fourth quarter of 2003 versus the previous quarter but was down 3.3 percentage points for the full year 2003, to 59.8%.

Private Banking recorded a gross margin of 111.5 bp in the fourth quarter of 2003, down 13.3 bp quarter-on-quarter due mainly to lower commission income. Year-on-year, the gross margin was almost stable, at 121.3 bp.

Net new assets of CHF 4.2 billion were recorded in the fourth quarter, versus a strong CHF 8.4 billion inflow in the third quarter of 2003. For the full year 2003, Private Banking’s net new assets totaled CHF 17.9 billion. Assets under management stood at CHF 511.7 billion at the end of 2003, up CHF 6.6 billion, or 1.3%, versus the end of the third quarter of 2003 and up CHF 46.0 billion, or 9.9%, versus year-end 2002.

Corporate & Retail Banking
Corporate & Retail Banking reported a segment profit of CHF 120 million for the fourth quarter of 2003, representing a decrease of 29% versus the previous quarter and an increase of 140% versus the fourth quarter of 2002. The segment profit for the full year 2003 amounted to CHF 565 million, representing an increase of CHF 151 million, or 36%, compared to 2002.

Operating income amounted to CHF 785 million in the fourth quarter of 2003, practically unchanged compared to the previous quarter and up 7% compared to the corresponding period of 2002. The positive trend in commission and service fee income as well as in trading income was offset by a decrease in net interest income and other ordinary income. For the full year 2003, operating income also remained virtually unchanged compared to the previous year. The net interest margin was 210 bp in the fourth quarter of 2003, down 5 bp versus the previous quarter, and stood at 212 bp for the full year 2003, nearly unchanged compared to 2002.

Operating expenses amounted to CHF 516 million in the fourth quarter of 2003, up 7% versus the previous quarter, but down 9% versus the fourth quarter of 2002. While personnel expenses remained practically unchanged quarter-on-quarter, other operating expenses increased CHF 32 million, or 18%, to CHF 213 million in the fourth quarter, related mainly to IT project costs and marketing activities. A comparison of 2003 versus 2002 demonstrates a notable reduction in costs at Corporate & Retail Banking, operating expenses declined 9% to CHF 2.0 billion year-on-year. The cost/income ratio increased 5.4 percentage points to 69.8% in the fourth quarter of 2003 versus the previous quarter but decreased 11.3 percentage points compared to the fourth quarter of 2002. For the full year 2003, the cost/income ratio was down 5.9 percentage points to 67.2%.

Valuation adjustments, provisions and losses based on statistical valuation adjustments increased CHF 27 million in the fourth quarter of 2003 compared to the previous quarter, due partly to an increased provision for consumer loans related to the new consumer lending law in Switzerland. The actual net credit-related valuation allowances and provisions amounted to CHF 226 million for the fourth quarter of 2003, CHF 139 million above the statistical credit-related valuation adjustments. This deviation was due to one major default in the corporate credit business in Switzerland in the fourth quarter of 2003, which was partially offset by a release of valuation allowances in the recovery portfolio no longer required. For the full year 2003, the actual net credit-related valuation allowances and provisions amounted to CHF 398 million, CHF 119 million above the statistical credit-related valuation adjustments. In the fourth quarter of 2003, impaired loans were reduced by a further CHF 189 million versus the end of the third quarter of 2003 and were down CHF 1.7 billion versus year-end 2002.

The return on average allocated capital decreased 3.9 percentage points in the fourth quarter of 2003 to 9.7% compared to the third quarter of 2003, but increased 5.6 percentage points compared to the fourth quarter of 2002. For the full year 2003, the return on average allocated capital improved by 3.4 percentage points to 11.6%.

Corporate & Retail Banking recorded a net asset outflow of CHF 0.3 billion in the fourth quarter of 2003 and a net asset outflow of CHF 1.4 billion for the full year 2003. This was attributable to shifts from the time deposit accounts of corporate clients to transaction accounts that do not qualify as assets under management. Assets under management stood at CHF 70.0 billion as of year-end 2003, up CHF 0.6 billion versus the end of the third quarter of 2003 and down CHF 0.3 billion versus year-end 2002.

Corporate & Retail Banking together with Private Banking, continued to achieve strong growth in the private mortgage business, with a net increase in volume of CHF 6.0 billion in 2003.

Life & Pensions
Life & Pensions reported a segment profit of CHF 723 million for the full year 2003, compared to a segment loss of CHF 1.4 billion in 2002. The strong year-on-year recovery was driven primarily by a significant improvement in investment performance, as well as a substantial reduction in administration costs. In addition, the segment profit for 2003 includes an after-tax gain of CHF 57 million from the divestiture of Winterthur Italy. For the fourth quarter of 2003, Life & Pensions recorded a segment profit of CHF 369 million, up from a segment profit of CHF 126 million in the third quarter of 2003. The improvement in the segment result quarter-on-quarter is mainly attributable to higher investment income, primarily reflecting favorable market conditions.

Life & Pensions reported a decrease in gross premiums written of 9%, or CHF 1.7 billion, to CHF 17.3 billion in 2003, compared to the previous year. Adjusted for divestitures and exchange rate impacts, premium volumes decreased 3% in 2003. The decline in reported premium volumes was due to profit-oriented underwriting reflecting market conditions. Included in the gross premiums written for 2003 are premiums of CHF 701 million from Winterthur Italy, which was divested in the third quarter of 2003. No net new assets were recorded in 2003, compared to CHF 3.4 billion in 2002, reflecting lower premium volumes and higher surrenders.

In 2003, total operating expenses, comprising acquisition and administration costs, decreased 9% versus the previous year despite higher amortization and write-downs of deferred acquisition costs (DAC) and present value of future profits (PVFP) due to lowered expectations for long-term investment returns. Administration costs decreased 24% in 2003, from CHF 1.5 billion to CHF 1.1 billion, compared to the previous year, mainly due to ongoing efficiency measures. The expense ratio for 2003 remained almost unchanged from 2002 at 11.4%.

Net investment income improved by CHF 3.9 billion to CHF 5.4 billion in 2003 compared to the previous year, due primarily to significantly reduced losses on equity investments. In 2003, the total return on invested assets was 5.2%, compared to 1.4% in 2002. Current income was 4.1%, whereas realized gains/losses and other income/expenses were 1.1%.

Life & Pensions reported a tax credit in the fourth quarter of 2003, resulting from changes in German tax law, which, after the related increase in dividends to policyholders incurred, had a positive net impact on segment profit of CHF 53 million.

The Life & Pensions segment remains exposed to the volatility of the financial markets due to the nature of its business. The implementation of the new employee benefit model, as well as the Swiss government’s further reduction of the guaranteed rate of return for the employee benefit business to 2.25%, effective January 1, 2004, is expected to partially mitigate the impact of the volatility.

Insurance
Insurance recorded a segment profit of CHF 1.3 billion for the full year 2003, compared to a segment loss of CHF 992 million in the previous year. The 2003 segment profit reflects a significant improvement in investment performance, as well as the positive development of its underwriting result before dividends to policyholders incurred and lower administration costs. The full year segment result also included after-tax gains recorded in the third quarter of 2003 from the divestitures of Insurance’s US subsidiary Republic Financial Services, Churchill Insurance Group in the UK and Winterthur Italy of CHF 1.3 billion net of related provisions and certain provisions of CHF 383 million for Winterthur’s current and former international business portfolio. For the fourth quarter of 2003, Insurance reported a segment profit of CHF 153 million, versus a segment profit of CHF 991 million in the third quarter of 2003.

In 2003, Insurance’s net premiums earned decreased by CHF 1.1 billion, or 7%, to CHF 14.6 billion compared to the previous year. Adjusted for divestitures and exchange rate impacts, net premiums earned increased 6%, primarily due to tariff increases across all major markets. Net premiums earned in 2003 included premium income of CHF 4.5 billion from the aforementioned divestitures.

In 2003, Insurance improved its underwriting result before dividends to policyholders incurred by CHF 392 million compared to the previous year. The combined ratio improved by 2.4 percentage points to 101.0% in 2003 and stood at 98.3% in the fourth quarter of 2003. The year-on-year decrease was mainly due to a decline in the claims ratio of 1.7 percentage points to 73.1%, mainly reflecting improved pricing, continued selective underwriting and more efficient claims management. In addition, a lower level of losses resulting from natural catastrophes was reported in 2003.

Administration costs decreased 17%, to CHF 1.6 billion in 2003, reflecting progress in efficiency measures. The expense ratio improved 1.4 percentage points to 25.7% in the fourth quarter of 2003 versus the previous quarter. For the full year 2003, the expense ratio improved to 27.9%, down 0.7 percentage points compared to the previous year.

Insurance reported net investment income of CHF 1.2 billion in 2003, compared to a net investment loss of CHF 10 million in 2002, due primarily to a significant decrease in losses on equity investments. In 2003, the total return on invested assets was 3.8%, compared to –0.1% in 2002. Current income was 3.9%, whereas realized gains/losses and other income/expenses were –0.1%.

Insurance reported a tax credit in the fourth quarter of 2003 resulting from changes in German tax law, which, after the related increase in dividends to policyholders incurred, had a positive net impact on segment profit of CHF 18 million.


Credit Suisse Financial Services business unit income statement – operating 1)
    ChangeChange  Change
    in % fromin % from  in % from
     12 months 
in CHF m4Q20033Q20034Q20023Q20034Q2002200320022002
Operating income 2)2,8014,5483,566(38)(21)14,39512,15218
Personnel expenses1,2021,3851,444(13)(17)5,4345,944(9)
Other operating expenses7757329346(17)3,0673,625(15)
Operating expenses1,9772,1172,378(7)(17)8,5019,569(11)
Gross operating profit8242,4311,188(66)(31)5,8942,583128
Depreciation of non-current assets169177257(5)(34)672739(9)
Amortization of Present Value of Future Profits (PVFP)1081026267430026712
Valuation adjustments, provisions and losses11390105268374390(4)
Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes4342,062764(79)(43)4,5481,187283
Extraordinary income/(expenses), net 109324–35412748165
Taxes 3) 4)607(260)(325)––(135)(1,517)(91)
Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests1,1501,805463(36)1484,540(282)–
Amortization of acquired intangible assets and goodwill(25)(25)(37)0(32)(102)(139)(27)
Exceptional items00(73)–(100)0(192)(100)
Cumulative effect of change in accounting principle10266–(100)1266(100)
Tax impact0114(100)(100)216(88)
Business unit result before minority interests1,1261,781633(37)784,441(331)–
Minority interests(59)851––(69)151–
Business unit result 5)1,0671,789684(40)564,372(180)–
Increased/(decreased) credit-related valuation adjustments, net of tax 6)901164–416291(32)
Net profit/(loss)9771,778 620(45)584,310(271)–
       
1) The operating basis business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle, not allocated to the segments are included in the business unit results. Certain other items, including credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions and gains/losses from sales of investments within the insurance business are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”. In 4Q2003 Credit Suisse Group applied mandatory changes in Swiss Federal Banking Commission guidelines retroactively as of January 1, 2003. In line with these guidelines, prior periods have not been restated. The impact on the results of Credit Suisse Financial Services was not considered material.
2) For the purpose of the consolidated financial statements, operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business. Gains or losses related to sales of investments within the insurance business are recorded as operating income at the business unit level and reclassified to extraordinary income/(expenses) in the consolidated financial statements in accordance with Swiss GAAP.
3) In 4Q2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 4Q2002 of CHF –642 m.
4) Excluding tax impact on amortization of acquired intangible assets and goodwill as well as exceptional items.
5) Represents net profit/(loss) excluding credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions, net of tax.
6) Increased/(decreased) credit-related valuation adjustments before tax of CHF 119 m, CHF 14 m, CHF 85 m, CHF 82 m and CHF 120 m for 4Q2003, 3Q2003, 4Q2002, 12 months 2003 and 12 months 2002, respectively.


Reconciliation to net operating profit/(loss)       
    ChangeChange  Change
    in % fromin % from  in % from
     12 months 
in CHF m4Q20033Q20034Q20023Q20034Q2002200320022002
Business unit result1,0671,789684(40)564,372(180)–
Amortization of acquired intangible assets and goodwill, net of tax2524364(31)1001161)(14)
Exceptional items, net of tax0060–(100)0179(100)
Cumulative effect of change in accounting principle, net of tax(1)0(266)–(100)(1)(266)(100)
Net operating profit/(loss)1,0911,813514(40)1124,471(151)–
1) Excluding a CHF 20 m write-off relating to a participation.


Credit Suisse Financial Services business unit key information 
   12 months
 4Q20033Q20034Q200220032002
Cost/income ratio 1)79.7%70.7%74.8%71.1%87.2%
Cost/income ratio – operating 2) 3)76.6%50.4%73.9%63.7%84.8%
Cost/income ratio – operating, banking 2)64.9%58.2%73.1%62.4%66.5%
Return on average allocated capital 1)27.5%48.1%4)17.7%31.1%(3.4%)
Return on average allocated capital – operating 2)30.6%49.0%4)14.4%32.3%(2.4%)
Average allocated capital in CHF m15,05614,7204)12,87414,05912,519
Growth in assets under management0.9%0.5%(1.3%)6.3%(9.5%)
   of which net new assets 0.3%1.3%(0.1%)2.4%2.5%
   of which market movement and structural effects 0.6%1.1%(1.3%)6.0%(11.8%)
   of which acquisitions/(divestitures) –(1.9%)0.1%(2.1%)(0.2%)
   of which discretionary 0.4%(1.3%)(0.7%)1.3%(2.0%)
      
  31.12.0330.09.0331.12.02
Assets under management in CHF bn 720.4713.9677.5
Number of employees (full-time equivalents) 41,19541,83454,378
1) Based on the business unit results on a Swiss GAAP basis.
2) Based on the operating basis business unit results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments and reflect certain reclassifications discussed in the “Reconciliation of operating results to Swiss GAAP”.
3) Excluding amortization of PVFP from the insurance business within Credit Suisse Financial Services.
4) Restated.


Overview of business unit Credit Suisse Financial Services – operating 1)
     Credit
  Corporate  Suisse
 Private& RetailLife & Financial
4Q2003, in CHF mBankingBankingPensionsInsuranceServices
Operating income 2)1,4327851404442,801
Personnel expenses5123031672201,202
Other operating expenses310213125127775
Operating expenses8225162923471,977
Gross operating profit610269(152)97824
Depreciation of non-current assets68323534169
Amortization of Present Value of Future Profits (PVFP)––1062108
Valuation adjustments, provisions and losses2192––113
Net operating profit before extraordinary items, acquisition-related costs, cumulative effect of change in accounting principle and taxes521145(293)61434
Extraordinary income/(expenses), net 108100109
Taxes 3)(121)(26)66292607
Net operating profit before acquisition-related costs, cumulative effect of change in accounting principle and minority interests5081203691531,150
Amortization of acquired intangible assets and goodwill    (25)
Cumulative effect of change in accounting principle    1
Tax impact    0
Business unit result before minority interests    1,126
Minority interests    (59)
Business unit result 4)    1,067
     
Other data:    
Average allocated capital 5)3,0934,9656,998  15,056
1) The operating basis business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. Certain other items, including credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions and gains/losses from sales of investments within the insurance business, are presented in the operating basis business unit results based on the Group’s segment reporting principles. For a reconciliation and a discussion of the material reconciling items, please refer to “Reconciliation of operating results to Swiss GAAP”. In 4Q2003 Credit Suisse Group applied mandatory changes in Swiss Federal Banking Commission guidelines retroactively as of January 1, 2003. The impact on the results of Credit Suisse Financial Services was not considered material.
2) Operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business. Gains or losses related to sales of investments within the insurance business are recorded as operating income at the business unit level and reclassified to extraordinary income/(expenses) in the consolidated financial statements in accordance with Swiss GAAP.
3) Excluding tax impact on amortization of acquired intangible assets and goodwill.
4) Represents net profit excluding credit-related valuation adjustments resulting from the difference between the statistical and actual credit provisions.
5) Amount relating to Life & Pensions and Insurance segments represents the average shareholders' equity of “Winterthur” Swiss Insurance Company.


Private Banking income statement 1)
    ChangeChange  Change
    in % fromin % from  in % from
     12 months 
in CHF m4Q20033Q20034Q20023Q20034Q2002200320022002
Net interest income326334335(2)(3)1,3511,374(2)
Net commission and service fee income 9151,038918(12)(0)3,8474,121(7)
Net trading income16718899(11)6967051530
Other ordinary income 241114118715361(13)
Operating income1,4321,5711,366(9)55,9216,071(2)
Personnel expenses512560531(9)(4)2,1932,261(3)
Other operating expenses31025935120(12)1,1301,332(15)
Operating expenses8228198820(7)3,3233,593(8)
Gross operating profit