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credit-suisse Business Review 2005

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1. Credit Suisse Group Business Review 2005 2. Our vision The vision of Credit Suisse is to become the world’s premier bank, renowned for its expertise in investment…
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  • 1. Credit Suisse Group Business Review 2005
  • 2. Our vision The vision of Credit Suisse is to become the world’s premier bank, renowned for its expertise in investment banking, private banking and asset management, and most valued for its advice, innovation and execution. Brand launch in Hong Kong On January 16, 2006, we launched our new Credit Suisse brand and logo worldwide. The façades of Credit Suisse buildings in Hong Kong, London, New York, Singapore and Zürich were illuminated to celebrate the new brand.
  • 3. Credit Suisse Group financial highlights Year ended December 31, in CHF m, except where indicated 2005 2004 2003 Consolidated income statement Net revenues 60,632 55,139 52,515 Income from continuing operations before cumulative effect of accounting changes 5,863 5,684 1,585 Net income 5,850 5,628 770 Return on equity Return on equity – Group 15.4% 15.9% 2.2% Return on equity – Banking 16.2% 17.8% 12.6% Return on equity – Winterthur 11.7% 9.2% (26.9%) Earnings per share Basic earnings per share in CHF 5.17 4.80 0.64 Diluted earnings per share in CHF 5.02 4.75 0.63 Net new assets in CHF bn 58.4 32.9 5.0 December 31, in CHF m, except where indicated 2005 2004 Assets under management in CHF bn 1,484.3 1,220.7 Consolidated balance sheet Total assets 1,339,052 1,089,485 Shareholders’ equity 42,118 36,273 Consolidated BIS capital data Risk-weighted assets 232,891 199,249 Tier 1 ratio 11.3% 12.3% Total capital ratio 13.7% 16.6% Number of employees Switzerland – banking segments 20,194 19,558 Switzerland – insurance segments 5,928 6,147 Outside Switzerland – banking segments 24,370 21,606 Outside Switzerland – insurance segments 13,031 13,221 Number of employees (full-time equivalents) 63,523 60,532 Stock market data Market price per registered share in CHF 67.00 47.80 Market price per American Depositary Share in USD 50.95 42.19 Market capitalization 75,399 53,097 Market capitalization in USD m 57,337 46,865 Book value per share in CHF 37.43 32.65 Share performance Market capitalization Swiss Market Index (rebased) Credit Suisse Group As of end of reporting period (in CHF bn) 75 100 90 60 80 50 70 60 40 50 40 30 30 20 10 2003 2004 2005 97 98 99 00 01 02 03 04 05
  • 4. Key Highlights 2005 Our 2005 results show that we are making good CHF 5,850 million progress in transforming Net income for 2005 totaled CHF 5,850 million, up 4% compared to 2004. the underlying profitability of our business. Our new integrated structure will help us to further enhance our growth and returns for CHF 42.7 billion our shareholders. Private Banking recorded net new assets of CHF 42.7 billion, reflecting excellent inflows across all regions. This corresponded to a strong annual growth rate of 7.9%. CHF 1,484.3 billion The Group’s total assets under management stood at CHF 1,484.3 billion as of December 31, 2005, up 21.6% from December 31, 2004. 63,523 As of year-end 2005, Credit Suisse Group employed 63,523 people, of which 44,564 in its banking business, Credit Suisse, and 18,959 in its insurance business, Winterthur.
  • 5. Credit Suisse Group Business Review 2005
  • 6. For a detailed presentation of Credit Suisse Group’s financial statement 2005, its company structure, risk management, an in-depth review of the operating and financial results and additional information on corporate governance, please refer to the Annual Report 2005 and the Supplemental Information 2005. Cover image: Daria Mihaesco, Private Banking (Geneva)
  • 7. Contents 4 Credit Suisse at a glance 6 Message from Walter B. Kielholz, Chairman of the Board of Directors 8 Message from Oswald J. Grübel, Chief Executive Officer 10 Our vision and our mission 11 Our three principles 12 A relentless focus on the needs of our clients 16 Teamwork must be at the heart of all we do 20 Our reputation is everything 24 Operating review 24 Credit Suisse Group and Credit Suisse 28 Winterthur 30 Aiming for Operational Excellence 32 Credit Suisse Group in society 36 Corporate governance and management 36 Corporate governance 38 Executive Boards of Credit Suisse Group and Credit Suisse 40 Summary of the responsibilities of the Board of Directors and the Executive Boards of Credit Suisse Group and Credit Suisse 42 Financial tables The content of this Business Review is for information purposes only and constitutes neither an offer for sale of any product nor investment advice.
  • 8. Credit Suisse at a glance Credit Suisse As one of the world’s leading banks, Credit Suisse provides its clients with investment banking, private banking and asset management services worldwide. Credit Suisse offers advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as retail clients in Switzerland. Credit Suisse is active in over 50 countries and employs more than 44,000 people from 100 different nations. Credit Suisse’s parent company, Credit Suisse Group, is a leading global financial services company headquartered in Zürich. Credit Suisse Investment Group also includes Winterthur, the leading insurance company in Switzerland and one of the top 10 composite insurers in Europe. Credit Suisse Banking Group’s registered shares (CSGN) are listed in Switzerland and, in the form of American Deposi- tary Shares (CSR), in New York. In Investment Banking, Credit Suisse offers securities products and financial advisory services to corporations, governments and institutional investors. Operating in 69 locations in 33 countries, this business specializes in creating innovative solutions to clients’ challenges, drawing on expertise from across the full spectrum of products: debt and equity underwriting, sales and trading, mergers and acquisitions, investment research, correspondent and prime brokerage services. You can find further information about Credit Suisse Group and Credit Suisse at www.credit-suisse.com and further information about Winterthur at www.winterthur.com. 4 Credit Suisse Group Business Review 2005
  • 9. Private Asset Banking Management In Private Banking, Credit Suisse provides comprehen- In Asset Management, Credit Suisse manages sive advice and a broad range of investment products portfolios, mutual funds and other investment vehicles and services tailored to the complex needs of high-net- for a broad spectrum of clients globally, from worth individuals all over the world. Credit Suisse’s governments, institutions and corporations to private structured advisory process encompasses both asset individuals. It offers investment products across the full and liability management. Furthermore, the bank is a range of asset classes, including equity and fixed leading provider of innovative alternative investment income securities, commodities and multiple-asset class products. Wealth management solutions include tax products. The bank is a world leader in providing planning, pension planning, life insurance solutions, alternative asset solutions and offers alternative wealth and inheritance advice, trusts and foundations. investments including real estate, hedge funds, private Credit Suisse offers multiple booking platforms and equity and volatility management. This business is a global execution capabilities. In Switzerland, Credit globally integrated network, sharing information across Suisse supplies banking products and services to busi- borders to deliver our best investment ideas and ness and retail clients as well as to private banking clients. capabilities to clients around the world. Credit Suisse Group Business Review 2005 5
  • 10. Message from the Chairman Dear shareholders, clients and colleagues The year 2006 marks the occasion of Credit Suisse’s 150th anniversary. This milestone gives us an opportunity to thank those who have helped to build our company and those who place their trust in us. At the same time, we want to continue to foster the spirit of innovation that has been a hallmark of our bank. Alfred Escher, who founded Credit Suisse in 1856, was one of the most important politicians and commercial pioneers of his time. In addition to founding Credit Suisse, he played a crucial role in the founding of two important railway lines, a technical university, and two insurance companies. I am convinced that Escher’s strength in innovation continues to influence us even now that we are a global institution. Our ability to implement new ideas while maintaining the tried and tested is the golden thread that runs through our 150-year history and one which will stand us in good stead for the future. Walter B. Kielholz Chairman of the Board of Directors Our long tradition of innovation is evident not only in the way we develop products and Credit Suisse Group services to meet our clients’ high expectations – but also in the way we developed a response to our rapidly changing business environment in 2005. Technology and the globalization of markets have increased the complexity of the financial services industry and transformed the needs of our clients. In 2005 we responded swiftly and effectively to this challenging environment by building an organizational structure that enables us to combine our wealth of experience and expertise of the financial markets from across our banking business to meet our clients’ demand for sophisticated and holistic solutions. Credit Suisse began operating as an integrated global bank on January 1, 2006. Focused on investment banking, private banking and asset management, we are now well-placed to strengthen our competitive position globally and seize opportunities in our key markets. Our 150 years of experience has been the solid foundation that has enabled us to constantly look ahead, create novel solutions for our clients and define the marketplace of the future. We are proud to have a strong Investment Banking business that is one of the most innovative on Wall Street; a Private Banking business that is the benchmark in terms of profitability and innovation, and an Asset Management business that is a market leader in alternative investments. Our transition to an integrated structure means we can use our resources more effectively and our people can work together on a global basis – from all three areas of our bank – for the benefit of our clients. Crucially, while implementing our strategic plan, we remained committed to enhancing profitability and creating value for our shareholders. We reported net income of CHF 5,850 million for the full year. The Board of Directors will propose a dividend of CHF 2.00 per share to the Annual General Meeting on April 28, 2006. 6 Credit Suisse Group Business Review 2005
  • 11. Two markets have, so far, accounted for a significant amount of our business volume: Switzerland and the US. Both markets will remain very important to the bank. However, we see a shift towards the emerging economies. We are operating in a global environment; if we want to be close to our clients and the markets in which they operate, we know we must increase our global footprint. This will complement the strong bases we will continue to develop in our home markets. Our global business strategy will be underpinned by our proximity to our clients, the expertise and commitment of our people, and the effective use of technology. We are therefore committed to investing in our global expansion, to recruiting and training the very best people in our industry and to dedicating resources to technology. This will enable us to create a competitive advantage through customized solutions and economies of scale. In 2005 we demonstrated our ability to deliver good results, while at the same time refocusing our business. I am confident that with our integrated global structure, we will be able to capitalize on our strong operating business and solid capital base to achieve sustained and profitable growth. Yours sincerely Walter B. Kielholz Credit Suisse Group Business Review 2005 7
  • 12. Message from the Chief Executive Officer Dear shareholders, clients and colleagues Change is the driving dynamic of the banking business – change that is fueled by the growth of an increasingly global economy and the new, wired world of global networks and instant communications. In our constantly changing business environment, it is all too easy for the individual client to become marginalized, even neglected. That is why we are dedicated to putting our clients first in every single phase of our business. Clients are at the heart of everything we do. Meeting their needs, earning their trust and keeping that trust through the successful delivery of products and services tailored to their requirements are our highest priorities. Our success depends upon our ability to unlock the considerable experience and knowledge of the financial markets from across our organization. We have therefore Oswald J. Grübel built an integrated global bank, focused on our core strengths in investment banking, Chief Executive Officer private banking and asset management. Our new organizational structure, which we Credit Suisse Group launched on January 1, 2006, enables our people to work together closely on a global basis for the benefit of our clients. Our ability to create innovative solutions has been evident throughout our 150-year history. We think independently, finding new ways of solving problems and developing new services in response to client-specific needs. Preserving and enhancing our reputation is a major element of our service to clients. We know that it can take decades to develop a reputation – and an instant to lose it. Our reputation is determined by our capital and how we use it, by the ability and integrity of our people, and by the results we achieve – the value we bring to our clients. A relentless dedication to our clients, a ceaseless determination to earn and keep their trust, and a deep commitment to teamwork and integrity – these are the foundation stones of the integrated global Credit Suisse. While we implemented our integration strategy in 2005 and prepared Credit Suisse for future growth, we remained fully focused on our clients and succeeded in growing our business. Net income for the full year reached CHF 5,850 million, strengthening the underlying profitability of our business. We maintained strong capital ratios with a consolidated BIS tier 1 ratio of 11.3% at year-end 2005. Net new assets of CHF 58.4 billion for the full year 2005 underscore the trust our clients place in us to increase and protect their wealth. As of December 31, 2005, we had assets under management of CHF 1,484.3 billion. These figures also include Winterthur, which further improved its profitability in 2005. 8 Credit Suisse Group Business Review 2005
  • 13. The year 2005 was decisive for Credit Suisse. I am convinced that we are now in an excellent position to build on our success by meeting our clients’ demand for sophisticated and holistic solutions across Investment Banking, Private Banking and Asset Management. In Investment Banking, we see attractive trends in areas in which we have historically been strong, and we will stay focused on these strengths – such as in leveraged finance, prime brokerage, advanced execution services and initial public offerings (IPOs). The latter performed very well in 2005 and Credit Suisse was ranked first in the global market share for IPOs for the full year, having participated in a number of high- profile transactions, including the IPO for China Construction Bank, the world’s largest IPO since 2001 and the largest IPO ever in China and in non-Japan Asia. In Private Banking, we set the industry benchmark for profitability and we fully expect to continue to do so. The demographics of this market are attractive, and we are well-placed to benefit from projected growth. We are broadening our global footprint in Private Banking: in 2005 we created a Private Banking hub in Dubai (United Arab Emirates) – a further milestone in our global strategy to grow the wealth management business. In addition, we opened local representative offices in Bangkok (Thailand), Guangzhou (China), Mumbai (India) and St. Petersburg (Russia). In Asset Management, the integration of our skills and know-how into one division empowers us to take full advantage of our leading position in discretionary mandates and alternative capital. It provides us with the opportunity to adjust swiftly and effectively to each and every change in this dynamic industry. I am confident that as an integrated bank, Credit Suisse will force the pace of innovation in asset management. The future of our industry in today’s rapidly changing global marketplace will be shaped by the banks that can stay close to their clients and their needs, by the banks that can efficiently turn their expertise into effective products and solutions, and by the banks that embrace change for the benefit of their shareholders, clients and employees. At Credit Suisse, we understand this new marketplace. We have created the integrated organization to thrive in it. And we have the talent and dedication to become the best in our business. Yours sincerely Oswald J. Grübel Credit Suisse Group Business Review 2005 9
  • 14. Our vision and our mission The vision of Credit Suisse is to become the world’s premier bank, renowned for its expertise in investment banking, private banking and asset management, and most valued for its advice, innovation and execution. Our mission describes how we will achieve our vision. Credit Suisse will set new standards: new standards in partnering with our clients and new standards in providing them with innovative and integrated solutions. Cultural diversity is essential to the success of Credit Suisse. As an integrated global bank, Credit Suisse will empower people to work openly and respectfully with each other and with clients to deliver superior results that will lead to success and prosperity for all its stakeholders. Charlene Yu, Roderick Ng, Private Banking (Hong Kong) 10 Credit Suisse Group Business Review 2005
  • 15. Our three principles Three principles guide our actions, ambitions and decision-making: we want to give our clients maximum value through our integrated approach; we optimize the expertise from our Investment Banking, Private Banking and Asset Management businesses through teamwork; and we preserve and nurture our reputation at every opportunity. A relentless focus The financial world is becoming ever more sophisticated and its clients consequently more demanding: they expect superior results. Clients are at the center of what on the needs of we do. We must understand their business, consider their goals from the outset, our clients and anticipate their needs. Nothing short of excellence will suffice in helping them to maximize their potential. Teamwork must If we are to succeed in becoming an integrated global bank that delivers truly world- class, innovative solutions to its clients, we must work together across our businesses be at the heart in a spirit of respect and collaboration. We have an obligation to bring together the of all we do combined intelligence of the entire organization to present a seamless service that will set us apart in our industry. Our reputation Reputations are built over decades but can be lost in an instant. Ours is built on trust, and has enabled us to build a global business. We understand the past but are shaped is everything by the future, so we must preserve and nurture our reputation at all times. Our reputation is determined by our capital and how we use it; by our people, their integrity, openness and respect; and, ultimately, by the results we achieve – the value we bring to our clients. Credit Suisse Group Business Review 2005 11
  • 16. 12 Credit Suisse Group Business Review 2005
  • 17. A relentless focus on the needs of
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