3Q09 and 9M09 performance confirms strength of Credit Suisse’s client-focused, capital-efficient strategy; reduced-risk business model provides foundation for sustainable, high-quality, lower volatility earnings
. Total net new assets of CHF 16.7 billion in 3Q09 as Credit Suisse’s capital strength and integrated model continue to attract clients globally
. Solid Private Banking performance with pre-tax income of CHF 0.9 billion in 3Q09:
- Net new assets of CHF 13.1 billion in Private Banking, with inflows in international and Swiss businesses
- Assets under management of CHF 902 billion, up 4.6% vs. 2Q09

Strong results from differentiated Investment Banking strategy and realigned platform in 3Q09:
- Continued strong profitability: pre-tax income of CHF 1.7 billion and high pre-tax return on capital of 35.1%
- Continued disciplined approach to risk management: risk-weighted assets declined vs. 2Q09 to USD 137 billion with shift in composition to support growth in client-focused businesses; average one-day, 99% Value-at-Risk in CHF decreased 25% vs. 2Q09

Asset Management recorded pre-tax income of CHF 0.3 billion in 3Q09 benefiting from valuation gains; continued progress in refocusing business
- Net new assets of CHF 3.9 billion, including good net inflows of CHF 3.9 billion in multi-asset class solutions, CHF 2.0 billion in Swiss advisory and CHF 1.4 billion in alternative investment strategies, partially offset by net outflows in money market assets

Results in 9M09 underscore value of Credit Suisse’s strategy and business model and sustainability of performance:
- Net income of CHF 5.9 billion
- Return on equity of 21.8%
- Total net new assets of CHF 31.7 billion
- Tier 1 ratio improved by 310 basis points to 16.4% as of end-3Q09 from 13.3% at beginning of year
- Collaboration revenues from integrated bank were CHF 3.6 billion



Zurich, October 22, 2009 Credit Suisse Group reported net income attributable to shareholders of CHF 2,354 million in 3Q09 compared to CHF 1,571 million in 2Q09. Core net revenues were CHF 8,917 million in 3Q09 compared to CHF 8,610 million in 2Q09. The return on equity attributable to shareholders was 25.1% in 3Q09 and diluted earnings per share were CHF 1.81. The tier 1 ratio was 16.4% as of the end of 3Q09.

Brady W. Dougan, Chief Executive Officer, said: “Credit Suisse has responded to the changes in the industry over the past two years with the accelerated implementation of our client-focused, capital-efficient strategy and reduced-risk business model. Our third-quarter performance, including our strong return on equity of 25.1%, shows that our approach continues to work well and is providing the foundation for sustainable, high-quality, lower volatility earnings. Our strategy and business model and industry-leading capital strength, demonstrated by our tier 1 ratio of 16.4%, position Credit Suisse to prosper in the new competitive landscape.”

On Private Banking’s performance, he noted: “We had a solid quarter in Private Banking, with strong asset inflows across all regions. Our business model in wealth management enables us to deliver our expertise as an integrated bank through a scalable, global platform and will help us to benefit from a market recovery. Wealth management is a very attractive growth market and, while client activity has picked up in selected areas, risk appetite has improved only moderately; however, we remain confident that overall levels of demand for comprehensive investment solutions will recover in the medium term. We will therefore continue to invest in our international expansion as well as in our Swiss home market, where our integrated model is producing strong results.”

With regard to Investment Banking’s results, he said: “Our differentiated strategy has been affirmed by strong profitability throughout the first nine months of the year. In the third quarter we achieved very good performances in our client and flow-based businesses, as well as in our repositioned businesses. We also remained disciplined regarding risk and capital allocation. Our decision a year ago to accelerate the implementation of a client-focused, capital-efficient strategy in Investment Banking in the changed environment is yielding strong benefits.”

On the performance of Asset Management, he said: “Our Asset Management business saw good net inflows, particularly in our focus areas such as multi-asset class solutions, Swiss advisory and alternative investment strategies. Over the last 12 months we have aligned our Asset Management business with the integrated bank. Our progress shows that our focus on asset allocation, the Swiss businesses and alternative investment strategies is benefiting our integrated model.”

He added: “One of our priorities is to play a responsible role in economic recovery, both in Switzerland where we remain an important and committed lender to corporate and institutional clients, and as a positive force in global capital markets. As part of this responsible approach we have announced a new compensation structure, consistent with the best practice guidelines from the G-20. We are also actively engaged in discussions with regulators to foster a globally coordinated approach to regulation in an effort to build a more robust financial sector that can promote global economic prosperity.”

He concluded: “We are confident about our business model and our competitive position. If markets remain constructive, we expect to be able to maintain our momentum. Even if markets become more difficult, we believe that Credit Suisse is still positioned to perform well.”

Segment Results

Private Banking
Private Banking, which comprises the Wealth Management Clients and Corporate & Institutional Clients businesses1 , reported income before taxes of CHF 867 million in 3Q09. While this was a solid result, it was 7% below the 2Q09 level. This reflected a 4% decline in net revenues to CHF 2,833 million, mainly due to lower net interest income, while costs remained stable.

The Wealth Management Clients business reported income before taxes of CHF 723 million in 3Q09, down 5% from 2Q09. Net revenues were 3% lower than in 2Q09. Recurring revenues were stable, as lower net interest income was offset by higher asset-based commissions and fees. Transaction-based revenues declined 7%; this was mainly due to significantly lower integrated solutions revenues compared to the very strong performance in 2Q09. Excluding the impact of integrated solutions revenues, transaction-based revenues would have grown 6% compared to 2Q09. The gross margin was 125 basis points, down 10 basis points from 2Q09, mainly reflecting the decrease in net interest income and in integrated solutions revenues while average assets under management increased.

The Corporate & Institutional Clients business reported income before taxes of CHF 144 million in 3Q09, down 18% from 2Q09. Net revenues declined 10% compared to 2Q09, mainly due to fair value losses related to Clock Finance, a synthetic collateralized loan portfolio. Net provision for credit losses was a moderate CHF 40 million in 3Q09, despite some further deterioration in the credit environment, compared to CHF 59 million in 2Q09.

Investment Banking
Investment Banking reported income before taxes of CHF 1,746 million in 3Q09, up 5% compared to 2Q09, as the business continued to execute its client-focused, capital-efficient strategy and maintain market share momentum across products and regions. Net revenues were CHF 5,046 million, the bulk of which was generated in key client and repositioned businesses, driven by good results in global rates and foreign exchange, cash equities, US leveraged finance, US residential mortgage-backed securities (RMBS) secondary trading, prime services, and flow and corporate derivatives. Compared to 2Q09, net revenues declined 16%, reflecting reduced market activity, including the normal seasonal slowdown in many of the flow businesses. Investment Banking’s results reflected net fair value losses on Credit Suisse debt of CHF 251 million in 3Q09, compared to CHF 269 million in 2Q09. The pre-tax income margin was 34.6% compared to 27.5% in 2Q09. The pre-tax return on capital was 35.1% in 3Q09, compared to 31.5% in 2Q09.

Investment Banking is investing in its businesses and technology infrastructure while maintaining its focus on expense discipline and efficiency improvement. Non-compensation expenses increased 12% from 2Q09, excluding litigation charges of CHF 383 million in 2Q09 and litigation charges of CHF 47 million in 3Q09, mainly due to IT investment costs. Compensation expenses were CHF 2,129 million in 3Q09, down 22% from 2Q09, primarily due to lower performance-related compensation.

Investment Banking continued to reallocate capital from its exit businesses to its ongoing businesses. Risk-weighted assets of USD 137 billion as of the end of 3Q09 declined from the 2Q09 level and there was a shift in composition to support growth in the client-focused businesses. Risk-weighted assets in ongoing businesses increased to USD 119 billion from USD 113 billion as of the end of 2Q09. Risk-weighted assets in exit businesses declined to USD 18 billion from USD 26 billion as of the end of 2Q09. Average one-day, 99% Value at Risk in CHF decreased 25% compared to 2Q09.

Asset Management
Asset Management reported income before taxes of CHF 311 million in 3Q09 compared to CHF 55 million in 2Q09. The improved results benefited from a gain of CHF 207 million related to the completion of the sale of part of Credit Suisse’s traditional investment strategies business to Aberdeen Asset Management, as well as investment-related gains of CHF 97 million, compared to investment-related losses of CHF 28 million in 2Q09, primarily reflecting unrealized gains in credit strategies and private equity. Asset Management’s results also reflected an increasing asset base, improved performance and its focus on its core alternative investment and asset allocation businesses. Asset management fees increased, particularly in multi-asset class solutions and other traditional investment strategies. Net revenues were CHF 765 million, up 76% compared to 2Q09. As of the end of 3Q09, the fair value of the balance sheet exposure to securities previously purchased from Credit Suisse’s money market funds was CHF 252 million, down CHF 279 million, or 53%, from 2Q09, and gains were CHF 42 million. Excluding the purchased securities and investment-related gains/(losses), net revenues rose 49% compared to 2Q09. Total operating expenses increased 20% compared to 2Q09, as a 3% decrease in general and administrative expenses was offset by a 28% increase in compensation and benefits, partly due to higher deferred compensation.

Net New Assets
Private Banking recorded net new assets of CHF 13.1 billion in 3Q09, benefiting from inflows across all regions from a broad client base, of which CHF 7.5 billion were generated in the international businesses and CHF 5.6 billion in the Swiss businesses. The annualized quarterly growth rate in net new assets in Wealth Management Clients was 5.9% in 3Q09.

Asset Management reported net new assets of CHF 3.9 billion, which included inflows of CHF 3.9 billion in multi-asset class solutions, CHF 2.0 billion in Swiss advisory and CHF 1.4 billion in alternative investment strategies, partially offset by outflows of CHF 3.4 billion in money market assets.

The Group’s total assets under management from continuing operations were CHF 1,225.3 billion as of the end of 3Q09, up 4.3% from the end of 2Q09, primarily reflecting favorable market performance and positive net new assets in Private Banking and Asset Management, partially offset by adverse foreign exchange-related movements.

Benefits of the integrated bank
Credit Suisse generated CHF 1.1 billion in collaboration revenues from the integrated bank in 3Q09 compared to CHF 1.5 billion in 2Q09, bringing the total in 9M09 to CHF 3.6 billion.

Capital position
Credit Suisse’s capital position remains very strong. The tier 1 ratio was 16.4% as of the end of 3Q09, compared to 15.5% as of the end of 2Q09.

First nine months of 2009
Credit Suisse Group reported net income attributable to shareholders of CHF 5,931 million in 9M09, compared to a loss of CHF 2,194 million in the prior-year period. Core net revenues were CHF 27,084 million compared to CHF 13,692 million in the prior-year period. The return on equity attributable to shareholders was 21.8% and diluted earnings per share were CHF 4.59. Total net new assets were CHF 31.7 billion.

1 Following a realignment of Credit Suisse’s client coverage in Switzerland in 3Q09, Swiss private client coverage is part of Wealth Management Clients, which covers all individual clients, including affluent, high-net-worth and ultra-high-net-worth clients. Corporate & Institutional Clients provides banking services to corporates and institutions in Switzerland. Reclassifications have been made to prior periods to conform to the current presentation.