credit-suisse Annual Report Part 2

FINANCIAL REPORT

44 Comments to the financial statements

46 Consolidated income statement

48 Consolidated balance sheet

50 Consolidated statement of source

and application of funds

51 Consolidated off-balance sheet business

53 Notes to the consolidated financial statements

61 Notes to the banking and insurance business

63 Notes to the banking business

65 Notes to the insurance business

68 Notes to the consolidated financial statements

93 Report of the Group’s auditors

94 Income statement (parent company)

95 Balance sheet before allocation of

retained earnings (parent company)

96 Notes to the financial statements (parent company)

100 Proposed allocation of retained earnings

101 Report of the statutory auditors

43

COMMENTS TO THE FINANCIAL STATEMENTS

44

Credit Suisse Group’s Annual Report contains two sets of financial statements: the

consolidated annual financial statements of Credit Suisse Group at 31 December 1997

and the annual financial statements of Credit Suisse Group, parent company, for the

financial year ended 31 March 1998. It is the latter set of statements which forms the

basis for resolutions voted on by the Annual General Meeting of Shareholders. Both

sets of statements have been examined by independent auditors. Their reports are pre-

sented on pages 93 and 101.

The consolidated financial statements include the Credit Suisse First Boston sub-

group, the Credit Suisse sub-group, Neue Aargauer Bank, the Private Banks, the

Winterthur sub-group, CS Life and the financial subsidiaries and long-term holdings of

Credit Suisse Group. The consolidated financial statements include individual reporting for

the banking and insurance units. The merger of “Winterthur” Swiss Insurance Company

(Winterthur) was treated as a “pooling of interests”; its financial results have been in-

cluded in the consolidated income statement and balance sheet. Income statement and

balance sheet notes relating specifically to insurance activity are also detailed separately.

The 1997 financial year The closing of the announced merger with Winterthur oc-

curred on 15 December 1997. As at 31 December 1997, Credit Suisse Group owned

99.9% of the outstanding shares of Winterthur. Former Winterthur shareholders re-

ceived 7.3 shares of Credit Suisse Group for each registered share of “Winterthur”

Swiss Insurance Company. As a result, the share capital of Credit Suisse Group was

increased by the issuance of 70,714,107 registered shares at a nominal value of

CHF 20 per share. Winterthur is included in the consolidated reporting of Credit Suisse

Group under the “pooling of interests method”.

As of the 1997 financial year, Credit Suisse Group applied a new dynamic

provisioning method for the management of credit risks. It was originally intended to

include the dynamic credit provisions in the annual income statement. However, the

final regulatory guidelines for applying dynamic credit provisioning methods to the finan-

cial statements has led to the decision that this method will be used only for

management accounting. Because the credit situation in the Swiss market remains

difficult, especially in the real estate area, it was necessary to make a provision of

around CHF 1.1 bn for pre-existing non-performing loans. In 1997, CHF 1,186 m was

released from the reserves for general banking risks and included in the income state-

ment as extraordinary income. Extraordinary expense of CHF 1,629 m was also added

to the reserves for general banking risks during the year.

A reserve of CHF 1 bn was created in 1996 for the expected restructuring costs

of Credit Suisse Group. Costs of CHF 298 m in 1996 and CHF 450 m in 1997 were

incurred and charged to this reserve. Additional obligations incurred in connection with

the restructuring required an additional extraordinary provision of CHF 349 m, leaving

a reserve balance of CHF 467 m as at 31 December 1997. At Credit Suisse First

Boston, an extraordinary provision of CHF 332 m (CHF 237 m after tax) was created

for expected restructuring costs associated with the acquisition of the European

investment banking business of BZW. An extraordinary provision of CHF 115 m

(CHF 82 m after tax) was created to implement the new organisational structure at

Bank Leu, which became effective 1 January 1998. An extraordinary provision of

CHF 488 m (CHF 401 m after tax) was created for technology, primarily for expenses

related to the additional data processing requirements associated with the introduction

of the euro and the modification of systems to prepare for the year 2000. The provision

consisted of CHF 220 m (CHF 147 m after tax) for the international banking business,

CHF 198 m for the Swiss banking business and CHF 70 m (CHF 56 m after tax) for

the insurance business. A provision of CHF 375 m (CHF 300 m after tax) was made

for integration and restructuring costs for the insurance business. Total extraordinary

restructuring costs amounted to CHF 1,659 m (CHF 1,369 m after tax).

The sale of Electrowatt Ltd. contracted last year was completed on 29 December

1997. After obtaining an additional 53.3% of the remaining Electrowatt Ltd. shares

existing in the market through a public offering at a price of CHF 550 per share, Credit

Suisse Group held 99% of the outstanding shares. These shares were tendered to the

buyers, Siemens AG and an energy consortium consisting of Nordostschweizerische

Kraftwerke, Bayernwerk AG, Energie Baden-Württemberg AG and Credit Suisse

Group. Credit Suisse Group holds a 20% stake in this consortium.

On 30 September 1997, Fides Informatik was sold to EDS, an international infor-

mation services firm. Credit Suisse Group retained a 67% stake in Fides Information

Services, which was spun off from Fides Informatik at the same time and which is

active in electronic banking and financial information services.

The annual financial statement for Credit Suisse Asset Management International

Fund Holding, Zurich, includes approximately CHF 29 m in non-recurring after-tax pro-

fit, which is a result of moving the closing dates of all the company’s mutual fund

management subsidiaries to 31 December 1997.

A provision of CHF 27.5 m was made for Göhner Merkur to reflect continued

stagnating economic activity in Switzerland and pressure from the increased number of

foreclosures in the real estate market.

CS Life has been fully consolidated in the income statement for 1997 and prior

years.

Events after year-end As of 1 January 1998, the business activities of Bank Leu

Ltd. were focused on private banking. Commercial relationships and individual

customers were transferred to the responsibility of Credit Suisse.

45

Notes 1997 1996 Change Change(p. 61 ff) in CHF m in CHF m in CHF m in %

RESULT FROM INTEREST BUSINESS

Interest and discount income 18,761 17,829 932 5

Interest and dividend income from trading portfolios 5,764 6,108 –344 –6

Interest and dividend income from financial investments from banking activities 406 318 88 28

Interest expenses from banking activities 20,352 20,767 –415 –2

NET INTEREST INCOME 1, 2, 6 4,579 3,488 1,091 31

RESULT FROM COMMISSION AND SERVICE FEE BUSINESS

Commission income from lending activities 387 313 74 24

Commissions from securities and investment transactions 6,389 4,751 1,638 34

Commissions from other services 307 320 –13 –4

Commission expenses 491 442 49 11

NET COMMISSION AND SERVICE FEE INCOME 1, 2 6,592 4,942 1,650 33

NET TRADING INCOME 1, 2, 7 5,312 3,901 1,411 36

NET INCOME FROM INSURANCE BUSINESS

Premiums earned, net 25,258 24,307 951 4

Claims incurred and actuarial provisions 25,557 23,866 1,691 7

Commission expenses, net 2,277 2,192 85 4

Investment income from insurance business 7,395 5,890 1,505 26

NET INCOME FROM INSURANCE BUSINESS 1, 2, 9, 10 4,819 4,139 680 16

OTHER ORDINARY INCOME

Income from the sale of financial investments 82 256 –174 –68

Income from investment activities 81 130 –49 –38

– of which from participations valued according to the equity method 30 77 –47 –61

– of which from other non-consolidated participations 51 53 –2 –4

Real estate income 45 27 18 67

Sundry ordinary income 407 442 –35 –8

Sundry ordinary expenses 893 658 235 36

OTHER ORDINARY INCOME 1, 2 –278 197 –475 –

NET OPERATING INCOME 1, 2 21,024 16,667 4,357 26

CONSOLIDATED INCOME STATEMENT

46

Notes 1997 1996 Change Change(p. 61 ff) in CHF m in CHF m in CHF m in %

NET OPERATING INCOME CONTINUED 1, 2 21,024 16,667 4,357 26

Personnel expenses 9,901 8,087 1,814 22

Other operating expenses 3,847 3,244 603 19

TOTAL OPERATING EXPENSES 1, 2 13,748 11,331 2,417 21

GROSS OPERATING PROFIT 7,276 5,336 1,940 36

Depreciation and write-offs on non-current assets 1 590 676 –86 –13

Valuation adjustments, provisions and losses from banking business 1, 8 2,624 1,251 1,373 110

DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES 3,214 1,927 1,287 67

GROUP PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 4,062 3,409 653 19

Extraordinary income 1, 3 1,323 1,340 –17 –1

Extraordinary expenses 1, 4 3,534 5,407 –1,873 –35

Taxes 1, 2 1,250 1,172 78 7

GROUP PROFIT/GROUP LOSS 601 –1,830 2,431 –

Minority interests 204 252 –48 –19

NET PROFIT/NET LOSS (AFTER MINORITY INTERESTS) 397 –2,082 2,479 –

47

Notes 31 Dec. 1997 31 Dec. 1996 Change Change(p. 61 ff) in CHF m in CHF m in CHF m in %

ASSETS

Cash and other liquid assets 33 3,404 2,932 472 16

Money market claims 12, 33 24,013 20,077 3,936 20

Due from banks 33 145,778 122,645 23,133 19

Claims from the insurance business 33 6,424 6,017 407 7

Due from customers 13, 14, 33, 34 144,491 159,291 –14,800 –9

Mortgages 14, 33 78,904 78,073 831 1

Securities and precious metals trading portfolios 15, 16, 33 103,826 85,380 18,446 22

Financial investments from the banking business 17, 19 15,770 11,581 4,189 36

Investments from the insurance business 18, 19 93,387 81,113 12,274 15

Non-consolidated participations 20, 21 1,192 1,990 –798 –40

Tangible fixed assets 21 6,271 6,239 32 1

Intangible assets 21 181 110 71 65

Accrued income and prepaid expenses 9,419 7,503 1,916 26

Other assets 23 56,508 41,445 15,063 36

TOTAL ASSETS 24, 25, 35, 36 689,568 624,396 65,172 10

Total subordinated claims 2,566 1,616 950 59

Total due from non-consolidated participations 43 128 –85 –66

CONSOLIDATED BALANCE SHEET

48

Notes 31 Dec. 1997 31 Dec.1996 Change Change(p. 61 ff) in CHF m in CHF m in CHF in %

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities in respect of money market paper 33 12,520 11,236 1,284 11

Due to banks 33 180,236 194,572 –14,336 –7

Commitments from the insurance business 33 6,045 5,012 1,033 21

Due to customers in savings and investment accounts 33 48,533 47,296 1,237 3

Due to customers, other 26, 33 195,571 166,563 29,008 17

Medium-term notes (cash bonds) 33 7,216 8,681 –1,465 –17

Bonds and mortgage-backed bonds 27, 33 45,594 27,580 18,014 65

Accrued expenses and deferred income 11,677 8,749 2,928 33

Other liabilities 28 58,168 43,176 14,992 35

Valuation adjustments and provisions 29 7,129 4,820 2,309 48

Technical provisions for the insurance business 30 91,228 83,850 7,378 9

Reserves for general banking risks 29, 31 2,890 2,388 502 21

Share capital 31 5,322 3,886 1,436 37

Capital reserve 31 9,366 10,200 –834 –8

Revaluation reserves from the insurance business 31 5,337 3,163 2,174 69

Retained earnings 31 334 3,462 –3,128 –90

Minority interests in shareholders’ equity 31 1,801 1,592 209 13

Group profit/Group loss 31 601 –1,830 2,431 –

– of which minority interests 31 204 252 –48 –19

Total shareholders’ equity 31 25,651 22,861 2,790 12

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 35, 36 689,568 624,396 65,172 10

Total subordinated liabilities 16,636 13,397 3,239 24

Total liabilities due to non-consolidated participations 567 263 304 116

49

1997 1996Source Application Net in/outflow Source Application Net in/outflow

in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m

FROM OPERATIONS, EQUITY TRANSACTIONS AND INVESTMENTS –24 365

OPERATING ACTIVITIES 8,317 7,672

Net profit for the year/net loss for the year 601 1,830

Provisions for credit and other risks 2,617 1,132

Losses 133 180

Provisions for taxes 1,250 1,101

Depreciation and write-offs 617 661

Creation of extraordinary valuation adjustments and provisions 3,330 5,016

Extraordinary income 1,213 0

Income from participations valued according to the equity method 30 77

Accrued income and prepaid expenses 1,916 1,692

Accrued expenses and deferred income 2,928 3,181

EQUITY TRANSACTIONS 1,746 551

Share capital 1,436 115

Capital surplus and retained earnings 1,358 582

Dividends paid 1,114 1,055

Foreign exchange differences 38 1,164

Minority interests 104 255

INVESTMENTS IN LONG-TERM ASSETS 93 –486

Investments in companies 813 411

Real estate 280 209

Other tangible and intangible fixed assets 1,000 688

FINANCIAL INVESTMENTS, PROVISIONS, OTHER ASSETS AND LIABILITIES –10,180 –7,372

Investments from banking business 4,189 4,263

Investments from insurance business 12,274 16,170

Valuation adjustments and provisions 1,198 866

Technical provisions1 7,378 13,767

Other assets 14,889 13,763

Other liabilities 14,992 13,923

FROM OTHER BALANCE SHEET ITEMS 18,942 23,646

ASSETS –15,833 –71,422

Money market claims 3,936 6,723

Due from banks 23,133 8,566

Claims from the insurance business 407 929

Due from customers 13,870 47,740

Mortgages 2,227 7,464

LIABILITIES 34,775 95,068

Liabilities in respect of money market paper 1,284 4,488

Due to banks 14,336 49,032

Commitments from the insurance business 1,033 919

Due to customers in savings and inv. accounts 1,237 3,462

Due to customers, other 29,008 36,767

Bonds and medium-term notes 16,549 400

CHANGE IN LIQUID ASSETS 18,918 24,011

Securities and precious metals trading portfolios 18,446 23,156

Cash and accounts with central banks 472 855

1 In line with insurance practice, the change in the technical provisions is shown as a total amount under changes in provisions affecting the cash flow.

CONSOLIDATED STATEMENT OF SOURCE AND APPLICATION OF FUNDS

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31 Dec. 1997 31 Dec. 1996 Change Changein CHF m in CHF m in CHF m in %

CONTINGENT LIABILITIES

Credit guarantees in form of avals, guarantees and indemnity liabilities 9,852 9,703 149 2

Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees 4,965 6,738 –1,773 –26

Irrevocable commitments in respect of documentary credits 3,112 3,491 –379 –11

Other contingent liabilities 5,508 3,320 2,188 66

TOTAL CONTINGENT LIABILITIES 23,437 23,252 185 1

IRREVOCABLE COMMITMENTS 64,490 59,545 4,945 8

LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY 63 76 –13 –17

CONFIRMED CREDITS 473 510 –37 –7

CONSOLIDATED OFF-BALANCE SHEET BUSINESS

Mortgage Other Withoutcollateral collateral collateral Total

ANALYSIS OF COLLATERAL AT 31 DECEMBER 1997 in CHF m in CHF m in CHF m in CHF m

CONTINGENT LIABILITIES

Credit guarantees in form of avals, guarantees and indemnity liabilities 37 4,586 5,229 9,852

Bid bonds, delivery and performance bonds, letters of indemnity, other performance-related guarantees 161 1,366 3,438 4,965

Irrevocable commitments in respect of documentary credits 0 313 2,799 3,112

Other contingent liabilities 108 546 4,854 5,508

TOTAL CONTINGENT LIABILITIES 306 6,811 16,320 23,437

At 31 December 1996 221 7,431 15,600 23,252

IRREVOCABLE COMMITMENTS 383 25,151 38,956 64,490

At 31 December 1996 160 25,139 34,246 59,545

LIABILITIES FOR CALLS ON SHARES AND OTHER EQUITY 0 0 63 63

At 31 December 1996 0 0 76 76

CONFIRMED CREDITS 0 10 463 473

At 31 December 1996 0 0 510 510

31 Dec. 1997 31 Dec. 1996 Change Changein CHF m in CHF m in CHF m in %

FIDUCIARY TRANSACTIONS 32,581 29,162 3,419 12

51

31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31 Dec. 199631 Dec. 1997 Positive gross Negative gross 31 Dec. 1996 Positive gross Negative gross

Notional replacement replacement Notional replacement replacementamount value value amount value value

in CHF bn in CHF bn in CHF bn in CHF bn in CHF bn in CHF bn

DERIVATIVE INSTRUMENTS

INTEREST RATE PRODUCTS

Forward rate agreements 193.7 0.3 0.1 163.9 0.1 0.3

Swaps 1,551.1 39.5 38.2 1,141.1 34.0 30.7

Options bought and sold (OTC) 598.3 5.1 5.0 357.8 3.1 3.3

Forwards 0.1 0.0 0.0 16.3 0.1 0.0

Futures 420.8 0.0 0.0 195.2 0.0 0.0

Options bought and sold (traded) 219.0 0.0 0.0 82.1 0.0 0.0

TOTAL INTEREST RATE PRODUCTS 2,983.0 44.9 43.3 1,956.4 37.3 34.3

FOREIGN EXCHANGE PRODUCTS

Forwards 667.6 19.2 17.7 792.9 15.8 16.9

Swaps 212.9 9.2 10.3 165.6 7.7 8.8


Futures 0.4 0.0 0.0 0.0 0.0 0.0


TOTAL FOREIGN EXCHANGE PRODUCTS 1,415.2 33.7 33.7 1,311.0 25.9 28.4

PRECIOUS METALS PRODUCTS

Forwards 26.3 1.6 2.0 15.7 0.5 0.6


Futures 1.8 0.0 0.0 7.0 0.0 0.0


TOTAL PRECIOUS METALS PRODUCTS 36.7 2.1 2.7 33.5 0.5 1.2

EQUITY/INDEX-RELATED PRODUCTS

Forwards 1.1 0.1 0.0 0.1 0.0 0.0


Futures 20.6 0.0 0.0 12.5 0.0 0.0


TOTAL EQUITY/INDEX-RELATED PRODUCTS 288.3 10.2 10.2 179.2 3.9 4.2

OTHER PRODUCTS

Forwards 0.0 0.0 0.0 0.0 0.0 0.0


Futures 9.5 0.0 0.0 0.6 0.0 0.0


TOTAL OTHER PRODUCTS 13.2 0.1 0.0 6.5 0.1 0.0

OVERALL TOTAL, GROSS 4,736.4 91.0 89.9 3,486.6 67.7 68.1

TOTAL REPLACEMENT VALUESACCORDING TO THE BALANCE SHEET 49.8 1 50.7 1 36.0 1 37.1

1 positive replacement value after deduction of CHF 3.1 bn (1996: CHF 2.1 bn) of assets pledged as security: negative replacement values of CHF 1.0 bn for traded derivatives

CONSOLIDATED OFF-BALANCE SHEET BUSINESS

52

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SCOPE AND METHOD OF CONSOLIDATION

The assets and liabilities, off-balance sheet transactions and income and expenses of

all the banking, insurance and financial institutions in which Credit Suisse Group has a

direct or an indirect interest of more than 50% as of the balance sheet date are fully

consolidated in the financial statements. For the “Winterthur” Swiss Insurance Company,

Winterthur, legal entity, the capital is consolidated according to the pooling-of-interests

method. For the other Group companies the capital is consolidated according to the

purchase method as of 1 January 1990 (or later, if acquired thereafter). Inter-company

transactions and unrealised gains therefrom are eliminated. Minority interests in share-

holders’ equity and net profit are indicated separately, but are viewed as forming an

integral part of the corporate base. Other companies in which the Group has a stake of

20% or more are accounted for using the equity method. Long-term holdings which are

designated for resale are booked as “Financial investments”. Subsidiaries and long-term

holdings outside of the core business and less significant holdings are not consolidated.

GENERAL PRINCIPLES

The Group financial statements are drawn up in accordance with the accounting rules

of the Implementing Ordinance to the Swiss Federal Law on Banks and Savings Banks

of 1 February 1995 and the Federal Banking Commission guidelines of 14 December

1994 (with the amendments of 14 November 1996 and 22 October 1997), supple-

mented by the pooling-of-interests method and the provisions of the Swiss accounting

and reporting recommendations with respect to insurance companies (FER 14). As

required by the pooling-of-interests method, the consolidated financial statement of

Credit Suisse Group shows the combined results of Credit Suisse Group and Winterthur

as if the merger had been effective for all previous periods shown. In addition, the con-

solidation and valuation policies reflect the accounting principles set out in the Swiss

stock exchange listing regulations; they also largely conform to the provisions of the

4th and 7th EU directives and the EU directive governing the financial statements of

banks. The financial year for the Group ends on 31 December. Group companies with

a different closing date prepare interim financial statements as of 31 December for

consolidation purposes. Goodwill (the amount paid in excess of the equity acquired

when purchasing an interest in a company) was directly written off to shareholders’

equity until the end of 1996. Winterthur charges such goodwill (accumulated amount

1997: CHF 1,480 m) against revaluation reserves from insurance business. Credit

Suisse Group has restated this treatment and charged the accumulated amount to

retained earnings. For subsidiaries acquired after 1 January 1997, goodwill is stated in

the balance sheet under “Intangible assets” and written off over its estimated useful life

(not exceeding 20 years) on the income statement.

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CHANGES TO THE SCOPE OF CONSOLIDATION

The scope of consolidation has undergone the following changes:

“Winterthur” Swiss Insurance Company, Winterthur

In accordance with the agreement of 10 August 1997 between Credit Suisse Group

and Winterthur, the merger was accounted for on the basis of the pooling-of-interests

method. The figures for all applicable previous periods have been adjusted accordingly.

CS Life, Zurich

CS Life has been fully consolidated retroactively. The figures for all applicable previous

periods have been adjusted accordingly.

Banque Hottinguer, Paris

Purchased as of 2 October 1997 and subsequently merged with Credit Suisse

(France) SA, Paris, to form Credit Suisse Hottinguer.

FOREIGN CURRENCY TRANSLATIONS

In the annual accounts of the individual Group companies, income and expense items

denominated in foreign currencies are translated into the relevant local reporting curren-

cies on the basis of the exchange rate as of the transaction date. Assets, liabilities and

off-balance sheet items are translated as of the year-end rate. Hedged assets and liabi-

lities are carried at their forward hedging rates. For the purposes of consolidation, the

balance sheets of foreign Group companies are translated into Swiss francs at the

year-end exchange rate, and their income statements are translated using the average

exchange rate for the financial year. Translation differences are credited or debited to

shareholders’ equity and are shown separately in the statement of shareholders’ equity.

The key foreign exchange rates are listed in the notes to the consolidated financial state-

ments on page 60.

DEVIATIONS FROM THE RELEVANT EU DIRECTIVES

The Swiss accounting rules for banks conform in essence to EU directives and guidelines.

The areas in which Group accounting policies deviate from the accounting principles set

out in the directives of the European Union (4th and 7th EU directives and the EU

directive governing the financial statements of banks) can be summarised as follows:

– The classification criteria used in the balance sheet and the income statement differ

from those set out in the EU directive governing the financial statements of banks.

– The proportions of overall income and expenditure for operations outside Switzerland

are not detailed by geographical location but are provided as combined totals.

– No specific information is given concerning compensation or liabilities towards

Members of the Board of Directors or Members of the Executive Board of Credit

Suisse Group.

– Securities and precious metals treated as trading positions are valued at market.

Historical differences between cost and current market values are not disclosed in

the notes to the consolidated financial statements.

– Subsidiaries and long-term holdings which are not in the banking, finance or insur-

ance sectors are not consolidated.

– There is no formal management report on the business year.

The following are significant deviations from the EU directives governing the financial

statements of insurance companies:

– The classification and presentation used in the financial statements have been ad-

justed from those set out in the EU directives governing the financial statements of

insurance companies. Winterthur Group publishes an annual report which focuses on

the presentation of the result of the insurance business.

– Unrealised gains on life business investments are taken to revaluation reserves as

part of shareholders’ equity and not to funds for future distribution to shareholders

and policyholders.

GENERAL ACCOUNTING AND VALUATION PRINCIPLES

REPO BUSINESS

Transactions involving monetary assets Repurchase and reverse repurchase trans-

actions are accounted for on the balance sheet as advances against securities serving

as collateral or as cash deposits against own pledged securities. These transactions are

shown in the balance sheet in the same way as those involving non-monetary assets.

Transactions involving non-monetary assets Claims and liabilities from lending and

borrowing transactions of non-monetary assets such as money market paper, precious

metals or commodities and those arising from securities lending and borrowing are marked

to market and, depending on the counterparty, are shown as claims on, or liabilities

towards, banks or customers. Securities positions arising as a result of securities lend-

ing and borrowing are included in the securities and precious metals trading portfolios.

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Cash, bank balances, money market paper and loans These positions are carried

at nominal value. The necessary provisions for recognisable risks and potential losses

are normally deducted from the appropriate asset items in the balance sheet. Interest

and commission income from customers and banks which is more than 90 days in

arrears is not booked as “Interest from income business”. Instead, it is only included in

the income statement following payment. Provisions with regard to claims subject to

country risk, default risks and other bank risks are booked to “Valuation adjustments

and provisions”. This position contains no undisclosed reserves.

Leasing All leased items (capital goods, vehicles and real estate) are valued using the

annuity method and are stated as a separate item under lendings. The depreciation

charges contained in the rental income are set off directly against the book values of

the corresponding leased assets, so that only the interest portion of the rental income

is shown in the income statement.

Real estate Real estate is valued at the cost (including capital improvements) less

depreciation over its useful life (40–67 years). No depreciation is charged on land

except where valuation adjustments have been made to allow for a reduction in the

market value.

Other tangible fixed assets Other tangible fixed assets such as computers, machin-

ery, furnishings, vehicles and other equipment, as well as alterations and improvements

to rented premises, are depreciated using the straight line method over their estimated

useful life (3–5 years).

Intangible assets The goodwill included in this balance sheet position arises from

the majority holdings acquired from 1 January 1997 in connection with the capital

consolidation. This goodwill is written down over its estimated useful life (maximum

20 years).

Pension fund As a rule, employees are affiliated to legally autonomous staff pension

funds which are independent of the Group. The requisite contributions are made to the

pension funds and posted under “Personnel expenses”.

Taxes Tax expense is calculated on the basis of the annual results posted in the indi-

vidual financial statements of the Group companies. Deferred tax assets and liabilities

are established for the expected future tax implications of temporary differences be-

tween the carrying amounts and the tax bases of assets and liabilities. Deferred tax

assets and liabilities calculated at the expected tax rate on the basis of adjustments in

the valuation of assets and liabilities for Group purposes are charged to tax expense

and recorded as other assets or provisions. No provision is made for non-recoverable

withholding taxes on undistributed profits of Group companies outside Switzerland nor is

a deferred tax asset recognised arising from tax losses brought forward in the case of

Swiss Group companies.

Claims and liabilities of related companies Claims and liabilities in respect of

related companies towards Group companies which are accounted for using the equity

method are reported in the notes to the consolidated financial statements.

VALUATION AND ACCOUNTING POLICIES IN RELATION

TO BANK-SPECIFIC POSITIONS

Securities trading portfolio The trading portfolio consists of balances held in

connection with the trading of readily realisable securities, securities acquired as a

result of underwriting activities and holdings of precious metals. Securitised and non-

securitised options are shown under “Other assets”.

Trading balances in bonds, shares and similar securities and precious metal

accounts and holdings are marked to market as of the balance sheet date. Balances

for which there is no representative market are valued according to the lowest value

principle. Profits and losses from the valuation of the trading portfolio and realised

gains and losses on these positions are shown under “Income from trading”. Interest

and dividend income from the trading portfolio is credited to “Result from interest

business”.

Financial investments from the banking business This balance sheet item com-

prises securities and precious metal positions purchased as a long-term investment. It

also includes real estate and holdings assumed from the lending business and desig-

nated for resale. Fixed-interest debt securities which are being held until final maturity

are valued according to the accrual method. In this case, premiums and discounts are

accrued or deferred over the term of the instrument until final maturity in the relevant

balance sheet position. Realised profits or losses which are interest related and which

arise from the early disposal or redemption of the instrument are accrued or deferred

over the remaining term of the instrument, i.e. to the original final maturity, and credited

to or debited from “Result from interest business” as appropriate. Investment holdings

of equities and debt securities which are designated for resale and which do not consti-

tute trading balances are valued according to the lowest value principle. The notes to

the consolidated financial statements include details of both the cost price and the

market value of these holdings. Real estate assumed from the lending business and

designated for resale is valued according to the lowest value principle.

Reserves for general banking risks Reserves for general banking risks are pre-

cautionary reserves charged to “Extraordinary expenses” to hedge against latent risks in

the bank’s operating activities.

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Derivatives These transactions are marked to market as of the year end. Unrealised

gains or losses are booked to the income statement as trading income, with the

counter-positions shown in “Other assets” or “Other liabilities” as appropriate. Hedging

transactions are valued using the same procedures as for the underlying transactions

they hedge.

Derivative financial instruments which form part of the trading portfolio are marked

to market provided they are traded on a stock exchange or form part of a representa-

tive market. If this is not the case, they are valued according to the lowest value prin-

ciple. Strategic positions are valued according to the lowest value principle.

Derivative financial instruments which are deployed in the context of interest rate

risk management are valued according to the accrual method. The interest component

is accrued or deferred over the term of the instrument according to the annuity method.

Realised profits or losses which are interest related and which arise from the early

disposal or redemption of the instrument are also accrued or deferred over the re-

maining term of the instrument, i.e. to the original final maturity.

CHANGES AGAINST 1996

Balance sheet, income statement, off-balance sheet business

Federal Banking Commission guidelines of 14 December 1994, with amendments of

14 November 1996 and 22 October 1997, apply to the annual financial statement for

1997. The changes primarily affect the following positions.

FINANCIAL INVESTMENTS

Fixed-interest deposits Fixed-interest deposits constituting financial investments are

valued according to the accrual method. Debt securities which were not acquired with

the intention of being held until final maturity are now valued according to the lowest

value principle. As the implications for the Group financial statement are minimal, the

figures for the previous year have not been adjusted.

Real estate taken over from lending business and designated for resale Real

estate taken over from lending business and designated for resale is now stated under

“Financial investments” rather than under “Tangible fixed assets”. The figures for the

previous year have been adjusted accordingly for the following positions of the Group

financial statement.

Adjustments 1996 in CHF m

Tangible fixed assets –1,137

Financial investments 1,137

Sundry ordinary expenses 158

Depreciation and write-offs on non-current assets –158

OTHER

Intangible assets As of 1 January 1997, purchased goodwill is no longer charged

against shareholders’ equity, but is stated in the balance sheet under “Intangible

assets”.

Securities and precious metals trading portfolios Holdings of precious metals are

no longer valued at the average price for December but are marked to market as of the

year-end balance sheet date. No adjustment has been made to the figures for the pre-

vious year since the amount involved is insignificant.

VALUATION AND ACCOUNTING POLICIES IN RELATION

TO INSURANCE-SPECIFIC POSITIONS

INVESTMENTS IN RESPECT OF INSURANCE BUSINESS

Real estate Real estate is valued at the market price. The market value of a property

is calculated as its capitalised rental income at the interest rate applied in the country

or market in question. Undeveloped plots of land and buildings under construction are

carried at cost.

Bonds and loans Bonds and loans are valued according to the amortised cost

method. The difference between the purchase price and the redemption value is

distributed over the remaining life so that a constant yield is achieved. The correspond-

ing valuation adjustment is shown under the position “Net investment income from

insurance business”. Default risk is accounted for through the use of write-downs.

Inter-company transactions and unrealised gains have been eliminated, with the

exception of assets booked as investments from insurance business.

Shares Listed shares are marked to market at year-end. Unlisted shares are valued

at cost. If the yield or intrinsic value is endangered, a valuation adjustment is made.

Derivatives Derivatives and other financial instruments are generally used to hedge

the exposure to changes in the fair value of recognised assets, liabilities and firm

commitments. Any gains and losses are therefore recognised in the income statement

together with the offsetting loss or gain on the hedged item.

Investments for the benefit of life insurance policyholders who bear the invest-

ment risk Investments for the benefit of life insurance policyholders who bear the

investment risk are carried at their market value.

59

60


Statement of higher and lower values arising from the uniform valuation of

investments in the Group accounts and revaluation reserves Higher or lower

values arising from the uniform valuation of investments in the Group accounts in com-

parison with the figures contained in the statutory accounts are recorded as follows:

Valuation differences resulting from the revaluation of fixed-interest securities and

mortgages, unlisted shares and non-consolidated long-term holdings are included in

the income statement (under “Net investment income from insurance business”).

In the case of listed shares and real estate, compensated write-downs in respect

of the difference between the balance sheet value in the statutory accounts and the

cost value are stated in the income statement (“Net investment income from insurance

business”). Valuation differences between cost and market values are allocated to

shareholders’ equity (“Revaluation reserves from the insurance business”) directly, with-

out affecting the income statement, after deferred tax has been taken into account. In

the life insurance business, policyholders normally share in the gains realised on the

basis of statutory accounts.

Technical provisions The valuation of technical provisions is determined by pre-

sumed liabilities in respect of policyholders and claimants. As a rule, calculations are

made individually, i.e. per insurance contract or claim. Statistical or mathematical

calculation methods are applied if these produce approximately the same results and if

they conform to the procedures approved by the supervisory authorities of the individual

countries in question. Technical provisions for life business are calculated with regard

to local regulations. The surplus due to policyholders is accounted for on the basis of

the resolutions passed by the individual companies as to the distribution of profit.

Year-end rate used Average rate usedin the balance sheet 31 Dec. in the income statement

FOREIGN CURRENCY TRANSLATION RATES IN CHF 1997 1996 1997 1996

1 US dollar (USD) 1.44 1.34 1.44 1.22

1 British pound sterling (GBP) 2.41 2.27 2.35 1.90

1 Canadian dollar (CAD) 1.01 0.98 1.04 0.89

1 Singapore dollar (SGD) 0.854 0.96 0.97 0.87

1 Hong Kong dollar (HKD) 0.1852 0.1700 0.185 0.1575

100 Deutsche marks (DEM) 80.90 86.60 82.90 81.30

100 Dutch guilders (NLG) 71.36 76.46 73.65 72.50

100 French francs (FRF) 24.02 25.45 24.60 23.90

100 Italian lire (ITL) 0.0817 0.0870 0.0840 0.0790

100 Japanese yen (JPY) 1.11 1.16 1.19 1.12

100 Spanish pesetas (ESP) 0.9455 1.0135 0.977 0.961

1 SPLIT OF INCOME STATEMENT INTO BANKING Banking business Insurance business TotalAND INSURANCE BUSINESS 1997 1996 1997 1996 1997 1996

Net interest income 4,579 3,488 0 0 4,579 3,488

Net commission and service income 6,592 4,942 0 0 6,592 4,942

Net trading income 5,312 3,901 0 0 5,312 3,901

Net income from insurance business 0 0 4,819 4,139 4,819 4,139

Other ordinary income 346 393 –624 –196 –278 197

NET OPERATING INCOME 16,829 12,724 4,195 3,943 21,024 16,667

Salaries and other compensation 6,967 5,191 1,371 1,509 8,338 6,700

Employee benefits 632 582 310 264 942 846

Other personnel expenses 412 348 209 193 621 541

Personnel expenses 8,011 6,121 1,890 1,966 9,901 8,087

Premises and real estate expenses 531 480 242 243 773 723

Expenses for IT, machinery, furnishing,vehicles and other equipment 689 396 166 166 855 562

Sundry operating expenses 1,600 1,341 619 618 2,219 1,959

Other operating expenses 2,820 2,217 1,027 1,027 3,847 3,244

Total operating expenses 10,831 8,338 2,917 2,993 13,748 11,331

GROSS OPERATING PROFIT 5,998 4,386 1,278 950 7,276 5,336

Depreciation and write-offs on non-current assets 573 675 17 1 590 676

Valuation adjustments, provisions and losses 2,624 1,251 0 0 2,624 1,251

Total depreciation, valuation adjustments,losses 3,197 1,926 17 1 3,214 1,927

GROUP PROFIT BEFORE EXTRAORDINARYITEMS AND TAXES 2,801 2,460 1,261 949 4,062 3,409

Extraordinary income 1,323 1,340 0 0 1,323 1,340

Extraordinary expenses 3,089 5,407 445 0 3,534 5,407

Taxes 842 833 408 339 1,250 1,172

GROUP PROFIT/GROUP LOSS 193 –2,440 408 610 601 –1,830

Minority interests 114 157 90 95 204 252

NET PROFIT/NET LOSS (AFTER MINORITY INTERESTS) 79 –2,597 318 515 397 –2,082

NOTES TO THE BANKING AND INSURANCE BUSINESS

61

1997 1996 Change2 INCOME AND EXPENSES FROM Switzerland Abroad Switzerland Abroad Switzerland Abroad

ORDINARY ACTIVITIES BY ORIGIN in CHF m in CHF m in CHF m in CHF m in CHF m in CHF m

Net interest income 2,539 2,040 2,443 1,045 96 995

Net commission and service income 3,539 3,053 2,883 2,059 656 994

Net trading income 883 4,429 958 2,943 –75 1,486

Income from insurance business 1,768 3,051 1,226 2,913 542 138

Other ordinary income –124 –154 349 –152 –473 –2

NET OPERATING INCOME 8,605 12,419 7,859 8,808 746 3,611

Personnel expenses 3,489 6,412 3,583 4,504 –94 –1,908

Other operating expenses 1,620 2,227 1,480 1,764 140 463

TOTAL OPERATING EXPENSES 5,109 8,639 5,063 6,268 46 2,371

GROSS OPERATING PROFIT BEFORE TAXES 3,496 3,780 2,796 2,540 700 1,240

% of total 48% 52% 52% 48%

Taxes 194 1,056 289 883 –95 173

% of total 16% 84% 25% 75%

GROSS OPERATING PROFIT AFTER TAXES 3,302 2,724 2,507 1,657 795 1,067

% of total 55% 45% 60% 40%

1997 1996 Change Change3 ANALYSIS OF EXTRAORDINARY INCOME in CHF m in CHF m in CHF m in %

Gains from the disposal of participations 27 1,255 –1,228 –98

Other extraordinary income 1,296 85 1,211 –

– of which reclassification of reserves for general banking risks 1,186 0 1,186 –

TOTAL EXTRAORDINARY INCOME 1,323 1,340 –17 –1

1997 1996 Change Change4 ANALYSIS OF EXTRAORDINARY EXPENSES in CHF m in CHF m in CHF m in %

Realised losses from the disposal of participations 42 0 42 –

Restructuring cost CREDIT SUISSE GROUP 839 1,000 –161 –16

Restructuring cost BZW 332 0 332 –

Restructuring cost due to merger CS/SVB, CSFB Inc. 0 97 –97 –100

Information technology, year 2000, euro 488 0 488 –

Creation of reserves for general banking risks 1,629 1,763 –134 –8

Creation of provisions for risks from lending and emerging market trading 0 1,446 –1,446 –100

Depreciation on real estate acquired at auction, bank premises and IT 0 859 –859 –100

Other extraordinary expenses 204 242 –38 –16

TOTAL EXTRAORDINARY EXPENSES 3,534 5,407 –1,873 –35

NOTES TO THE BANKING AND INSURANCE BUSINESS

62

1997 1996 Change Change5 INCOME STATEMENT OF BANKING BUSINESS Notes in CHF m in CHF m in CHF m in %

NET INTEREST INCOME 6 4,579 3,488 1,091 31

RESULT FROM COMMISSION AND SERVICE FEE ACTIVITIES

Commission income from lending activities 387 313 74 24

Commissions from securities and investment transactions 6,389 4,751 1,638 34

Commissions from other services 307 320 –13 –4

Commission expenses 491 442 49 11

NET COMMISSION AND SERVICE FEE INCOME 6,592 4,942 1,650 33

NET TRADING INCOME 7 5,312 3,901 1,411 36

OTHER ORDINARY INCOME

Income from the sale of financial investments 82 256 –174 –68

Income from investment activities 57 89 –32 –36

– of which from participations valued according to the equity method 30 77 –47 –61

– of which from other non-consolidated participations 27 12 15 125

Real estate income 45 27 18 67

Sundry ordinary income 282 257 25 10

Sundry ordinary expenses 120 236 –116 –49

OTHER ORDINARY INCOME 346 393 –47 –12

NET OPERATING INCOME 16,829 12,724 4,105 32

Personnel expenses 8,011 6,121 1,890 31

Other operating expenses 2,820 2,217 603 27

TOTAL OPERATING EXPENSES 10,831 8,338 2,493 30

GROSS OPERATING PROFIT 5,998 4,386 1,612 37

Depreciation and write-offs on non-current assets 573 675 –102 –15

– of which on real estate 120 123 –3 –2

– of which on other tangible fixed assets 453 538 –85 –16

– of which on non-consolidated participations 0 14 –14 –

Valuation adjustments, provisions and losses 8 2,624 1,251 1,373 110

DEPRECIATION, VALUATION ADJUSTMENTS, LOSSES 3,197 1,926 1,271 66

GROUP PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 2,801 2,460 341 14

Extraordinary income 1,323 1,340 –17 –1

Extraordinary expenses 3,089 5,407 –2,318 –43

Taxes 842 833 9 1

GROUP PROFIT/GROUP LOSS 193 –2,440 2,633 –

Minority interests 114 157 –43 –27

NET PROFIT/NET LOSS (AFTER MINORITY INTERESTS) 79 –2,597 2,676 –

NOTES TO THE BANKING BUSINESS

63

NOTES TO THE BANKING BUSINESS

6 ANALYSIS OF THE RESULT FROM 1997 1996 Change ChangeINTEREST BUSINESS in CHF m in CHF m in CHF m in %

Interest and discount income

Interest income on claims due from customers 9,634 9,463 171 2

Interest income on claims due from banks 7,934 7,415 528 7

Interest income from money market claims 775 597 178 30

Credit commissions treated as interest earnings 330 264 66 25

Interest income from leasing operations 79 90 –11 –12

Total interest and discount income 18,761 17,829 932 5

Interest and dividend income from trading portfolios

Interest income 5,685 5,990 –305 –5

Dividend income 79 118 –39 –33

Total interest and dividend income from trading portfolios 5,764 6,108 –344 –6

Interest and dividend income from financial investments

Interest income 389 245 144 59

Dividend income 17 73 –56 –77

Total interest and dividend income from financial investments 406 318 88 28

Interest expense

Interest expenses for liabilities due to customers 11,900 8,956 2,944 33

Interest expenses for liabilities due to banks 8,452 11,811 –3,359 –28

Total interest expense 20,352 20,767 –415 –2

– of which interest expenses for subordinated liabilities 757 497 260 52

NET INTEREST INCOME 4,579 3,488 1,091 31

1997 1996 Change Change7 ANALYSIS OF TRADING INCOME in CHF m in CHF m in CHF m in %

Income from securities and commodities trading 3,115 2,373 742 31

Income from foreign exchange and banknote trading 1,014 844 170 20

Income from precious metals trading 210 97 113 116

Income from trading in interest rate instruments 973 587 386 66

NET TRADING INCOME 5,312 3,901 1,411 36

8 ANALYSIS OF VALUATION ADJUSTMENTS, 1997 1996 Change ChangePROVISIONS AND LOSSES in CHF m in CHF m in CHF m in %

For default risks (credit and country risks) 2,193 908 1,285 142

For other business risks 298 163 135 83

Losses 133 180 –47 –26

– of which losses from lending activities 64 109 –45 –41

VALUATION ADJUSTMENTS, PROVISIONS AND LOSSES 2,624 1,251 1,373 110

64

1997 1996 Change Change9 INCOME STATEMENT OF INSURANCE BUSINESS Notes in CHF m in CHF m in CHF m in %

NON-LIFE BUSINESS

Premiums written 10 13,694 13,414 280 2

Change in provisions for unearned premiumsand in actuarial provisions (health) –397 –343 –54 16

PREMIUMS EARNED 13,297 13,071 226 2

Claims and annuities paid –8,940 –8,605 –335 4

Change in provision for claims and annuities outstanding –1,214 –1,182 –32 3

CLAIMS INCURRED –10,154 –9,787 –367 4

Dividends paid –189 –245 56 –23

Change in provision for dividend –106 –144 38 –26

DIVIDENDS TO POLICYHOLDERS INCURRED –295 –389 94 –24

OPERATING EXPENSES –3,955 –3,998 43 –1

UNDERWRITING RESULT NON-LIFE –1,107 –1,103 –4 0

Net investment income 11 2,144 1,614 530 33

Interest on deposits and bank accounts (incl. exchange rate differences) 128 129 –1 –1

Other interest paid –71 –64 –7 11

Other income and expenses –190 42 –232 –

PROFIT BEFORE TAX AND MINORITY INTERESTS 904 618 286 46

LIFE BUSINESS

Premiums written 10 12,072 11,279 793 7

Change in provisions for claims outstanding –111 –43 –68 158

PREMIUMS EARNED 11,961 11,236 725 6

Claims paid –6,038 –5,538 –500 9

Change in provisions for claims outstanding –113 –20 –93 465

CLAIMS INCURRED –6,151 –5,558 –593 11

CHANGE IN ACTUARIAL PROVISIONS –7,305 –6,582 –723 11

Bonus allocation –1,420 –1,402 –18 1

Change in participation fund –208 –130 –78 60

ALLOCATION TO PARTICIPATION –1,628 –1,532 –96 6

OPERATING EXPENSES –1,251 –1,187 –64 5

Net investment income 11 5,029 4,079 950 23

Interest on deposits and bank accounts 118 109 9 8

Interest on bonuses credited to policyholders –124 –159 35 –22

Other interest paid –189 –151 –38 25

Other income and expenses (incl. exchange rate differences) –61 120 –181 –

PROFIT BEFORE TAX AND MINORITY INTERESTS 399 375 24 6

NOTES TO THE INSURANCE BUSINESS

65

NOTES TO THE INSURANCE BUSINESS

1997 1996 Change Change9 INCOME STATEMENT OF INSURANCE BUSINESS Notes in CHF m in CHF m in CHF m in %

SUMMARY

Profit before tax and minority interests (non-life business) 904 618 286 46

Profit before tax and minority interests (life business) 399 375 24 6

PROFIT BEFORE TAX, MINORITY INTERESTS, EXTRAORDINARYEXPENSES AND INTEREST ON BONDS 1,303 993 310 31

Interest on convertible bonds and warrant issues –42 –44 2 –4Extraordinary expenses –445 0 –445 –Tax –408 –339 –69 20

ANNUAL PROFIT BEFORE MINORITY INTERESTS 408 610 –202 –33

Minority interests –90 –95 5 –5

ANNUAL PROFIT AFTER MINORITY INTERESTS 318 515 –197 –38

10 ANALYSIS OF DIRECT BUSINESS, 1997 1996 Change ChangeGEOGRAPHICAL DISTRIBUTION in CHF m in CHF m in CHF m in %

Europe

Non-life 10,064 10,046 18 0Life 11,587 10,968 619 6

EUROPE, TOTAL 21,651 21,014 637 3

North America

Non-life 2,498 2,179 319 15Life 17 5 12 240

NORTH AMERICA, TOTAL 2,515 2,184 331 15

Asia-Pacific

Non-life 1,559 1,454 105 7Life 54 36 18 50

ASIA-PACIFIC, TOTAL 1,613 1,490 123 8

Other regions

Non-life 48 48 0 0Life 0 0 0 0

OTHER REGIONS, TOTAL 48 48 0 0

DIRECT BUSINESS, GROSS, TOTAL 25,827 24,736 1,091 4

Reinsurance assumed, gross

Non-life 1,309 1,722 –413 –24Life 472 416 56 13

REINSURANCE ASSUMED, GROSS, TOTAL 1,781 2,138 –357 –17

TOTAL BUSINESS, GROSS 27,608 26,874 734 3

Reinsurance ceded

Non-life –1,784 –2,035 251 –12Life –58 –146 88 –60

REINSURANCE CEDED, TOTAL –1,842 –2,181 339 –16

Business, net

Non-life 13,694 13,414 280 2Life 12,072 11,279 793 7

TOTAL BUSINESS, NET 25,766 24,693 1,073 4

Home market Switzerland

Non-life 2,820 2,801 19 1Life 6,489 6,221 268 4

HOME MARKET SWITZERLAND, TOTAL 9,309 9,022 287 3

66

1997 1996 Change Change11 ANALYSIS OF NET INVESTMENT INCOME in CHF m in CHF m in CHF m in %

Real estate

Non-life 201 199 2 1

Life 366 372 –6 –2

REAL ESTATE, TOTAL 567 571 –4 –1

Mortgages

Non-life 60 66 –6 –9

Life 389 405 –16 –4

MORTGAGES, TOTAL 449 471 –22 –5

Bonds and loans

Non-life 1,011 955 56 6

Life 2,541 2,383 158 7

BONDS AND LOANS, TOTAL 3,552 3,338 214 6

Shares

Non-life 120 125 –5 –4

Life 323 294 29 10

SHARES, TOTAL 443 419 24 6

Non-consolidated participations

Non-life 13 24 –11 –46

Life 11 17 –6 –35

NON-CONSOLIDATED PARTICIPATIONS, TOTAL 24 41 –17 –41

Short-term investments

Non-life 78 60 18 30

Life 48 58 –10 –17

SHORT-TERM INVESTMENTS, TOTAL 126 118 8 7

NON-LIFE 1,483 1,429 54 4

LIFE 3,678 3,529 149 4

INVESTMENT INCOME, TOTAL 5,161 4,958 203 4

Profits and losses on investments

Realised gains on real estate 1 10 –9 –90

Realised losses on real estate –9 –9 0 0

Realised gains (+)/realised losses (–) on other investments 865 280 585 209

Depreciation (–)/appreciation (+) on investments –96 –26 –70 269

NON-LIFE 761 255 506 198

Realised gains on real estate 17 21 –4 –19

Realised losses on real estate –5 –1 –4 400

Realised gains (+)/realised losses (–) on other investments 1,545 547 998 182

Depreciation (–)/appreciation (+) on investments –108 77 –185 –

LIFE 1,449 644 805 125

PROFITS AND LOSSES ON INVESTMENTS, TOTAL 2,210 899 1,311 146

Investment expenses

Non-life –100 –70 –30 43

Life –98 –94 –4 4

INVESTMENT EXPENSES, TOTAL –198 –164 –34 21

NON-LIFE 2,144 1,614 530 33

LIFE 5,029 4,079 950 23

TOTAL 7,173 5,693 1,480 26

67

31 Dec. 1997 31 Dec. 1996 Change Change12 MONEY MARKET CLAIMS in CHF m in CHF m in CHF m in %

Bills of exchange and money market paperrediscountable or pledgeable at central banks 8,585 13,488 –4,903 –36

– of which treasury bills 3,691 8,831 –5,140 –58

Other bills of exchange and money market paper 15,428 6,589 8,839 134

TOTAL MONEY MARKET CLAIMS 24,013 20,077 3,936 20

31 Dec. 1997 31 Dec. 1996 Change Change13 DUE FROM CUSTOMERS FROM FINANCIAL LEASES in CHF m in CHF m in CHF m in %

TOTAL 817 1,240 –423 –34

Mortgage Other Withoutcollateral collateral collateral Total

14 ANALYSIS OF LOAN COLLATERAL AT 31 DECEMBER 1997 in CHF m in CHF m in CHF m in CHF m

Due from customers 7,950 92,370 44,171 144,491

Mortgages 78,904 78,904

Residential properties 51,112

Business and office properties 9,216

Commercial and industrial properties 10,057

Other properties 8,519

TOTAL LOAN COLLATERAL 86,854 92,370 44,171 223,395

At 31 December 1996 85,793 105,848 45,723 237,364

31 Dec. 1997 31 Dec. 1996 Change Change15 SECURITIES AND PRECIOUS METALS TRADING PORTFOLIOS in CHF m in CHF m in CHF m in %

Interest bearing securities and rights 72,597 57,323 15,274 27

listed on stock exchange 41,009 47,960 –6,951 –14

unlisted 31,588 9,363 22,225 237

– of which own bonds and medium-term notes 1,185 23 1,162 –

Equities 29,624 26,085 3,539 14

– of which own shares 1,951 1,893 58 3

Precious metals 1,605 1,972 –367 –19

TOTAL SECURITIES AND PRECIOUS METALS TRADING PORTFOLIOS 103,826 85,380 18,446 22

– of which securities rediscountable or pledgeable at central banks 29,508 22,022 7,486 34

Substantial claims and liabilities included in other balance-sheetpositions. These are valued at market rates and any profit/loss on themis shown under trading income.

Lent trading positions (Due from banks and customers) 34,244 16,758 17,486 104

Borrowed trading positions (Due to banks and customers) 31,120 6,721 24,399 363

Positive replacement values of derivative instruments from tradingactivities (Other assets) 51,384 37,804 13,580 36

Negative replacement values of derivative instruments from trading activities (Other liabilities) 51,316 36,988 14,328 39


68

1997 1997 1996 199616 OWN SHARES INCLUDED IN SECURITIES TRADING PORTFOLIOS No. of shares in CHF m No. of shares in CHF m

In registered shares equivalents, including derivatives

at beginning of financial year 296,514 41 3,885,372 459

at end of financial year 477,971 108 296,514 41

17 FINANCIAL INVESTMENTS FROM THE Book value Cost Market valueBANKING BUSINESS 31 Dec. 1997 31 Dec. 1996 31 Dec. 1997 31 Dec. 1996 31 Dec. 1997 31 Dec. 1996

Interest bearing securities and rights 9,861 8,274 – – – –

listed on stock exchange 6,112 7,214 – – – –

unlisted 3,749 1,060 – – – –

– of which valued according to the accrual method 5,661 0 1 – – – –

– of which valued at lower of cost or market 4,200 0 1 4,201 01 4,203 0 1

– of which own bonds and medium-term notes 379 22 – – – –

Equities 4,342 2,158 4,480 01 7,132 0 1

– of which own shares 2 2 – – – –

– of which qualifying participations 706 4 – – – –

Precious metals 9 12 9 01 9 0 1

Real estate 1,558 1,137 1,805 01 1,558 0 1

TOTAL FINANCIAL INVESTMENTS FROM THEBANKING BUSINESS 15,770 11,581 – – – –

– of which valued at lower of cost or market 10,109 0 1 10,495 01 12,902 0 1

– of which securities rediscountable or – pledgeable at central banks 9,150 2,231 – – – –

Borrowed financial investments 2 2,726 0 – – 0 0

1 not available2 shown in the consolidated balance sheet as due to banks or customers

31 Dec. 1997 31 Dec. 1996 Change Change18 INVESTMENTS FROM THE INSURANCE BUSINESS in CHF m in CHF m in CHF m in %

Real estate at market value

Non-life 4,139 4,267 –128 –3

Life 8,406 8,166 240 3

REAL ESTATE AT MARKET VALUE, TOTAL 12,545 12,433 112 1

Mortgages at redemption value

Non-life 1,261 1,260 1 0

Life 6,787 6,672 115 2

MORTGAGES AT REDEMPTION VALUE, TOTAL 8,048 7,932 116 1

continued 20,593 20,365

69


31 Dec. 1997 31 Dec. 1996 Change Change18 INVESTMENTS FROM THE INSURANCE BUSINESS in CHF m in CHF m in CHF m in %

continued 20,593 20,365

Bonds and loans at amortised cost

Non-life 15,197 13,616 1,581 12

Life 40,047 36,728 3,319 9

BONDS AND LOANS AT AMORTISED COST, TOTAL 55,244 50,344 4,900 10

Shares at market value

Non-life 5,640 4,165 1,475 35

Life 17,287 11,444 5,843 51

SHARES AT MARKET VALUE, TOTAL 22,927 15,609 7,318 47

Non-consolidated participations at cost

Non-life 402 917 –515 –56

Life 282 439 –157 –36

NON-CONSOLIDATED PARTICIPATIONS AT COST, TOTAL 684 1,356 –672 –50

Short-term investments at par value

Non-life 1,483 1,462 21 1

Life 1,188 1,265 –77 –6

SHORT-TERM INVESTMENTS AT PAR VALUE, TOTAL 2,671 2,727 –56 –2

Less mortgages and non-consolidated participations not included in investments from the insurance business 8,732 9,288 –556 –6

TOTAL INVESTMENTS FROM THE INSURANCE BUSINESS 93,387 81,113 12,274 15

Investments in life business where the investment risk isborne by policyholders, total 2,756 1,843 913 50

ADDITIONAL DATA ON INVESTMENTS

Real estate at cost value

Non-life 3,508 3,572 –64 –2

Life 7,502 6,979 532 7

REAL ESTATE AT COST VALUE, TOTAL 11,010 10,551 459 4

Shares at cost value

Non-life 4,318 3,541 777 22

Life 12,819 9,964 2,855 29

SHARES AT COST VALUE, TOTAL 17,137 13,505 3,632 27

Bonds and loans at market value

Non-life 15,850 14,158 1,692 12

Life 41,944 38,283 3,661 10

BONDS AND LOANS AT MARKET VALUE, TOTAL 57,794 52,441 5,353 10

70

19 OWN SHARES INCLUDED IN FINANCIAL INVESTMENTS 1997 1997 1996 1996FROM THE BANKING AND INSURANCE BUSINESS No. of shares in CHF m No. of shares in CHF m

Registered shares, at beginning of financial year 2,442,401 321 1,941,849 217

Additions (purchase price) 239,776 35 2,952,000 377

Disposals (selling price) 2,492,969 501 2,451,448 313

Registered shares, at end of financial year 189,208 18 2,442,401 321

31 Dec. 1997 31 Dec. 1996 Change Change20 NON-CONSOLIDATED PARTICIPATIONS in CHF m in CHF m in CHF m in %

Participations valued according to the equity method 458 521 –63 –12

Other non-consolidated participations 734 1,469 –735 –50

TOTAL NON-CONSOLIDATED PARTICIPATIONS 1,192 1,990 –798 –40

With market value 244 859 –615 –72

Without market value 948 1,131 –183 –16

Foreign ex- BookWrite-offs/ Change in change diff. value at

21 ANALYSIS OF CAPITAL Historical accumulated Book value at scope of Write-offs/ and reclassifi- 31 Dec.ASSETS IN CHF M value depreciation 31 Dec. 1996 consolidation Additions Disposals depreciation 1 cations 1997

Participations valued according to the equity method 521 0 521 –15 4 –66 0 14 458

Other non-consolidatedparticipations 1,469 0 1,469 0 89 –407 0 –417 734

Non-consolidatedparticipations 1,990 0 1,990 –15 93 –473 0 –403 1,192

Bank premises 4,839 –744 4,095 41 142 –286 –105 –247 3,640

Other real estate 524 –28 496 –3 10 –28 –19 91 547

Real estate 5,363 –772 4,591 38 152 –314 –124 –156 4,187

Other tangible fixed assets 3,572 –1,924 1,648 104 831 –84 –477 62 2,084

Leasing assets 0 0 0 0 0 0 0 0 0

Intangible assets 152 –42 110 0 102 –10 –16 –5 181

TOTAL 11,077 –2,738 8,339 127 1,178 –881 –617 –502 7,644

1 write-offs in the amount of CHF 27 million in extraordinary expenses

31 Dec. 1997 31 Dec. 1996 Change Change22 ADDITIONAL INFORMATION ON FIXED ASSETS in CHF m in CHF m in CHF m in %

Fire insurance value of real estate 15,347 16,886 –1,539 –9

Fire insurance value of other tangible fixed assets 2,358 2,098 260 12

Future leasing installments from operating leases 197 1,089 –892 –82

31 Dec. 1997 31 Dec. 1996 Change Change23 OTHER ASSETS in CHF m in CHF m in CHF m in %

Positive replacement value of derivative instruments 52,913 38,166 14,747 39

– of which trading 51,384 37,804 13,580 36

– of which other 1,529 362 1,167 322

Compensation account 24 0 24 –

Other 3,571 3,279 292 9

TOTAL OTHER ASSETS 56,508 41,445 15,063 36

71


31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31 Dec. 199624 ANALYSIS OF ASSETS BY COUNTRY/GROUPS OF COUNTRIES in CHF m in % in CHF m in %

Switzerland 183,361 27 179,131 29

EU 195,485 28 228,812 37

United States 176,459 26 138,013 22

Canada 3,464 1 5,039 1

Mexico 2,078 0 1,312 0

Japan 39,264 6 26,926 4

Other industrialised countries 14,645 2 10,699 2

Financial centres outside the industrialised countries 37,678 5 13,435 2

– of which Hong Kong 3,991 1 3,962 1

Singapore 8,045 1 2,616 0

Other 25,642 3 6,857 1

Oil-producing countries 4,369 1 1,849 0

Newly industrialised countries 29,551 4 16,552 3

– of which Eastern Europe and Commonwealth of Independent States 13,020 2 7,762 1

Asia 5,521 1 3,336 1

South America 9,285 1 4,637 1

Other 1,725 0 817 0

Other countries 3,214 0 2,628 0

TOTAL ASSETS 689,568 100 624,396 100

31 Dec. 1997 31 Dec. 199625 ASSETS PLEDGED OR ASSIGNED AND 31 Dec. 1997 actual commit- 31 Dec. 1996 actual commit-

ASSETS SUBJECT TO OWNERSHIP commitment ment secured commitment ment securedRESERVATION in CHF m in CHF m in CHF m in CHF m

Total assets not at free disposal 51,740 23,752 20,823 16,037

– of which due from banks/customers 1,387 1,368 888 848

– of which securities (trading and investment) 6,231 2,228 3,745 1,173

– of which mortgages 1,842 1,387 4,063 3,643

– of which other 1 42,280 18,769 12,127 10,373

Assets under retention of ownership 0 0 0 0

TOTAL 51,740 23,752 20,823 16,037

1 notably, assets pledged as security for CSFB’s international business activities in compliance with local regulations

31 Dec. 1997 31 Dec. 1996 Change Change26 LIABILITIES TO OWN PENSION FUNDS in CHF m in CHF m in CHF m in %

TOTAL 1,263 976 287 29

72

31 Dec. 1997 31 Dec. 1996 Change Change27 OUTSTANDING BONDS ISSUED – SUMMARY in CHF m in CHF m in CHF m in %

Bonds 44,131 25,994 18,137 70

Bonds issued by the central issuing office 160 271 –111 –41

Mortgage bonds issued by the central mortgage bond institutions 1,303 1,315 –12 –1

TOTAL 45,594 27,580 18,014 65

27a BONDS ISSUED BY CREDIT SUISSE GROUP

Year Earliest date Par valueRedemption Interest rate of issue callable in m

20.07.1998 3.50% 1989 CHF 300

23.02.2000 7.00% 1990 CHF 200

28.02.2000 2.25% Convertible Bond 1997 CHF 400 1

06.08.2001 2.25% 1993 CHF 500

15.12.2003 6.00% 1994 CHF 250 1

31.10.2006 4.00% 1997 CHF 800

23.05.2007 4.00% 1997 CHF 1,000

27b BONDS ISSUED BY SUBSIDIARIES

Year Earliest date Par valueRedemption Interest rate of issue callable in m

Credit Suisse Group Finance (Guernsey) Ltd., Guernsey

16.02.1998 8.00% 1995 USD 200

29.07.1999 6.75% 1994 DEM 400

19.11.2002 4.88% Convertible Bond 1992 USD 31 1

All bonds issued by Credit Suisse Group Finance (Guernsey) Ltd. are guaranteed by Credit Suisse Group.

Credit Suisse First Boston, Zurich

01.02.1998 4.75% 1988 CHF 80 1

10.04.1998 7.00% 1990 CHF 6

05.07.1998 7.00% 1990 CHF 4

10.1998 6.09% 1997 USD 1,498 2

24.10.1998 7.25% 1990 CHF 3

21.12.1998 7.50% 1990 CHF 5

11.03.1999 7.00% 1991 CHF 5

15.05.1999 6.50% 1991 CHF 5

08.09.1999 5.00% 1994 CHF 200

16.09.1999 6.75% 1991 CHF 4

31.01.2000 7.25% 1990 CHF 150 1

31.01.2000 6.75% 1990 31.01.1998 CHF 40

15.09.2000 3.25% 1986 15.09.1998 CHF 100 1

15.09.2000 4.50% 1995 CHF 250

10.2000 6.09% 1997 USD 1,994 2

26.10.2000 5.00% 1988 26.10.1998 CHF 230 1

26.10.2000 5.00% 1988 26.10.1998 CHF 70 1

05.06.2001 7.25% 1990 CHF 170

31.07.2001 7.00% 1991 CHF 150 1

15.09.2001 6.00% 1989 15.09.1999 CHF 200 1

15.01.2002 7.00% 1992 CHF 100

20.02.2002 7.50% 1991 CHF 75 1

15.05.2002 6.75% 1992 CHF 60

73


BONDS ISSUED BY SUBSIDIARIES (continued)Year Earliest date Par value

Redemption Interest rate of issue callable in m

10.2002 6.09% 1997 USD 1,495 2

31.03.2003 3.50% 1993 CHF 75 1

31.03.2003 3.50% 1993 CHF 125 1

29.09.2003 6.13% 1993 USD 200 1

18.11.2003 6.25% 1993 DEM 600 1

20.02.2004 5.00% 1989 20.02.1999 CHF 180 1

22.04.2004 4.38% 1996 CHF 200 1

18.11.2004 8.50% 1994 USD 300 1

30.12.2004 6.13% 1994 DEM 100 1

31.03.2005 5.75% 1995 CHF 225 1

16.11.2005 2.00% 1997 11.2000 USD 200

17.11.2005 2.00% 1997 11.2000 USD 100

30.03.2006 7.21% 1996 USD 238 1

30.03.2006 6.84% 1997 USD 95 1,4

06.07.2007 5.25% 1995 CHF 150 1

06.07.2007 5.25% 1995 CHF 100 1

10.03.2016 5.00% 1986 10.03.2006 CHF 200 1

perpetual 7.90% 1997 05.2007 USD 500 1,3

perpetual 6.50% 1997 06.2007 FRF 1,250 1,3

perpetual 7.74% 1997 06.2007 USD 100 1

perpetual 4.38% 1997 07.2007 CHF 500 1,3

perpetual 8.25% 1997 07.2009 GBP 150 1,3

Credit Suisse, Zurich

10.08.1998 7.00% 1990 CHF 100 1

15.09.1998 3.00% 1988 CHF 100 1

15.01.1999 7.50% 1991 CHF 100

05.05.1999 4.50% 1994 CHF 100

31.10.1999 5.50% 1994 CHF 100

18.04.2000 7.25% 1990 CHF 110 1

20.02.2001 7.50% 1991 CHF 150 1

28.07.2001 5.00% 1994 CHF 200

17.09.2001 7.00% 1991 CHF 150 1

17.12.2001 2.75% 1993 CHF 125

20.02.2002 7.50% 1991 CHF 125 1

16.03.2002 6.75% 1992 CHF 200

30.03.2002 7.25% 1990 30.03.2000 CHF 150 1

30.06.2002 7.25% 1992 CHF 100

25.09.2002 7.75% 1992 CHF 100 1

15.01.2003 7.75% 1991 CHF 100 1

15.01.2003 7.25% 1992 CHF 100 1

01.02.2003 5.00% 1988 01.02.2000 CHF 100 1

01.02.2003 5.00% 1988 01.02.2000 CHF 70 1

31.03.2003 5.25% 1993 CHF 250

20.02.2004 5.00% 1989 20.02.1999 CHF 120 1

02.02.2005 5.50% 1995 CHF 100

28.04.2005 5.75% 1995 CHF 120 1

74



12.10.2005 5.00% 1995 CHF 125 1

12.10.2005 5.00% 1995 CHF 25 1

13.11.2005 3.13% 1995 CHF 300 1

05.01.2006 4.35% 1996 CHF 150 1

08.02.2008 4.50% 1996 CHF 200 1

31.07.2009 4.00% 1997 CHF 200 1

1998–2009 3.3%–7.4% Mortgage bonds issued by the Swiss Mortgage 1983–1997 CHF 509Bond Bank, Zurich

Neue Aargauer Bank, Aarau

28.06.2002 4.25% 1996 CHF 100

11.07.1998 4.63% Central issuing office of the Association of Swiss Regional Banks 1988 CHF 5 1




1998–2001 4.5%–7.6% Central issuing office of the Association of Swiss Regional Banks 1988–1993 CHF 138


Credit Suisse (Luxembourg) S.A., Luxembourg

31.12.2001 9.13% 1991 LUF 2,500 1

06.08.2003 7.25% 1993 LUF 1,500 1

Credit Suisse First Boston Finance (Guernsey) Ltd., Guernsey

01.02.2000 0.00% 1990 CAD 500

22.10.2002 0.00% 1992 DEM 500

Credit Suisse First Boston International (Guernsey) Ltd., Guernsey

01.10.1998 5.61% 1997 USD 500

07.10.1998 5.62% 1997 USD 300

09.11.1998 5.62% 1997 USD 125

18.11.1998 5.71% 1997 USD 200

Credit Suisse First Boston Finance B.V., Amsterdam (The Netherlands)

13.11.1998 9.00% 1992 USD 67

31.03.1999 6.07% 1993 USD 250

22.03.1999 5.25% 1993 USD 103

21.09.1999 6.05% 1992 USD 56

22.09.1999 6.05% 1992 USD 85

22.02.2000 7.50% 1992 USD 173

15.06.2000 7.75% 1993 USD 54 1

01.07.2003 7.75% 1993 USD 81 1

26.05.2003 5.88% 1993 USD 200 1

25.08.2003 5.50% 1993 USD 200 1

perpetual 5.69% 1986 USD 150 1

75




Credit Suisse First Boston Inc., New York

09.02.1998 6.81% 1993 USD 5

17.02.1998 5.93% 1996 USD 5

02.03.1998 7.25% 1992 USD 5

09.03.1998 6.22% 1993 USD 2

02.04.1998 5.72% 1996 USD 250

29.04.1998 5.83% 1996 USD 5

15.05.1998 8.18% 1992 USD 4

01.07.1998 6.63% 1992 USD 10

07.07.1998 5.90% 1995 USD 25

27.07.1998 6.42% 1995 DEM 107 1

07.10.1998 6.37% 1994 USD 150 1

08.10.1998 6.19% 1993 USD 50 1

09.11.1998 0.92% 1994 JPY 9

13.11.1998 8.28% 1992 USD 4

15.01.1999 6.01% 1995 USD 35

15.01.1999 6.01% 1996 USD 15

15.01.1999 5.98% 1997 USD 25

27.01.1999 6.26% 1994 USD 8 1

15.06.1999 9.25% 1992 USD 170 1

01.07.1999 5.65% 1997 USD 2

01.10.1999 6.55% 1992 USD 5

15.10.1999 7.23% 1992 USD 5 1

15.10.1999 6.50% 1992 USD 10

04.01.2000 6.45% 1994 USD 25 1

03.03.2000 6.43% 1993 USD 10

03.05.2000 6.41% 1995 DEM 147 1

02.11.2000 6.25% 1994 PTE 32 1

14.02.2001 6.40% 1996 DEM 136 1

15.03.2001 6.49% 1996 USD 8

26.03.2001 6.41% 1996 USD 5 1

17.04.2001 6.30% 1996 USD 20 1

30.04.2001 6.39% 1992 USD 200 1

22.05.2001 6.13% 1996 USD 17

06.06.2001 6.48% 1994 USD 52 1

07.06.2001 6.09% 1996 USD 8 1

08.08.2001 6.28% 1996 USD 10 1

08.08.2001 6.08% 1996 USD 2 1

16.08.2001 6.23% 1995 FRF 156 1

21.12.2001 6.59% 1995 USD 20 1

01.08.2002 6.48% 1994 USD 5 1

03.09.2002 7.83% 1992 USD 3

15.01.2003 7.23% 1993 USD 5 1

03.02.2003 7.19% 1993 USD 5 1

10.02.2003 6.33% 1993 USD 35

07.04.2003 6.76% 1992 USD 7

76



27.04.2003 6.60% 1993 USD 21 1

28.05.2003 6.05% 1996 USD 11

11.02.2004 6.44% 1994 USD 150 1

08.03.2004 8.95% 1992 USD 11

09.03.2004 8.75% 1992 USD 42

15.03.2004 6.42% 1994 USD 165 1

05.04.2004 6.41% 1995 DEM 107

30.04.2004 9.30% 1992 USD 100

27.10.2005 6.51% 1993 USD 200 1

07.11.2005 6.95% 1995 USD 5 1

15.05.2006 6.56% 1996 USD 337 1

27.02.2007 6.61% 1995 USD 15 1

27.02.2007 6.58% 1995 USD 15 1

28.02.2007 6.61% 1995 USD 15 1

28.02.2007 6.58% 1995 USD 15 1

15.02.2013 8.50% 1993 USD 3

02.04.2018 7.71% 1993 USD 5 1

various 6.50% var. USD 6 1

various variable 1993 USD 156 1

various variable 1993–1995 USD 10 1

various variable 1995–1996 USD 56 1

various variable 1994 USD 40 1

Credit Suisse Financial Products, London

1998 various 1996–1997 CHF 75

30.09.1998 0.00% Zero Coupon Notes 1996 DEM 19

23.10.1998 variable Floating Rate Notes 1995 FRF 400

15.01.1998 0.00% Zero Coupon Notes 1997 HKD 18

29.05.1998 0.00% Zero Coupon Notes 1997 ITL 40,000 1

1998 various 1995–1997 JPY 33,633

1998 various 1997 PTE 14,500

1998 various 1997 SEK 359

1998 various 1992–1997 USD 276

31.08.1998 0.00% Zero Coupon Notes 1991 USD 109 1

1999 various 1996–1997 CHF 23

1999 various 1995–1997 DEM 91

1999 1.25% 1994 GBP 60

1999 various 1996–1997 ITL 17,000

1999 various 1996–1997 JPY 1,085

1999 various 1994 NLG 46

1999 various 1997 SEK 210

1999 various 1992–1997 USD 291

30.04.1999 7.75% 1992 XEU 47 1

10.08.2000 4.00% 1997 DEM 28

21.12.2000 3.00% Index–linked Notes 1995 21.12.1999 FIM 25

77




06.11.2000 7.50% 1997 GBP 25

2000 various 1997 ITL 110,000

2000 various 1995–1997 JPY 20,717

27.09.2000 0.00% Zero Coupon Index–linked Notes 1994 NLG 25

11.07.2000 variable Floating Rate Notes 1997 PTE 5,000

2000 various 1992–1997 USD 279

13.06.2001 6.50% 1997 BEF 100

07.03.2001 variable Floating Rate Notes 1997 09.03.1998 CHF 10

2001 various 1997 ITL 108,000

2001 various 1995–1997 JPY 15,569

2001 various 1994–1997 USD 545

10.05.2001 variable Floating Rate Notes 1994 XEU 15

31.10.2002 variable Floating Rate Notes 1997 CHF 75 1

2002 various 1996–1997 DEM 83


2002 various 1996–1997 JPY 163,940

2002 various 1992 LUF 3,500 1

2002 various 1996–1997 USD 490

30.07.2002 0.00% Zero Coupon Notes 1997 XEU 10

13.06.2003 8.00% 1997 BEF 200

06.11.2003 0.00% Zero Coupon Notes 1995 FRF 25

04.02.2003 0.00% Zero Coupon Notes 1997 GBP 19

31.10.2003 2.00% 1997 ITL 30,000

2003 various 1997 JPY 1,700

19.03.2003 7.63% 1993 LUF 1,500 1

2003 various 1994–1997 USD 215

2004 0.00% Zero Coupon Notes 1994 CHF 13 1

2004 variable Floating Rate Notes 1997 DEM 25

2004 various 1996–1997 ITL 293,000

2004 0.00% Zero Coupon Notes 1997 ITL 35,000 1

2004 various 1995–1997 JPY 12,300

2004 0.00% Zero Coupon Notes 1997 NOK 110

2004 various 1995–1997 USD 116

16.06.2004 8.50% 1997 XEU 3

01.12.2004 0.00% Zero Coupon Notes 1994 XEU 10 1

08.06.2005 8.25% 1995 BEF 200 1

27.09.2005 variable Floating Rate Notes 1995 DEM 47 1

08.12.2005 0.00% Zero Coupon Bonds 1997 FRF 200

2005 0.00% Zero Coupon Notes 1997 ITL 90,000


2005 various 1996–1997 JPY 8,400

19.12.2005 0.00% Zero Coupon Notes 1997 07.06.1999 NOK 160

2005 0.00% Zero Coupon Notes 1997 PTE 9,362 1

2005 various 1995–1997 USD 272

78




06.11.2006 0.00% Zero Coupon Notes 1997 17.04.1998 FIM 50

2006 various 1997 ITL 64,280

19.12.2006 5.70% Dual Currency Bonds 1996 JPY 500

2006 various 1995–1997 USD 83

28.07.2006 0.00% Zero Coupon Bonds 1994 USD 40 1

2007 various 1996–1997 CHF 120

2007 various 1997 DEM 70


06.11.2007 0.00% Zero Coupon Notes 1997 17.10.2000 FIM 50

2007 various 1997 ITL 113,600

2007 various 1996–1997 JPY 9,500

2007 various 1995–1997 USD 193

02.07.2007 variable Floating Rate Notes 1997 USD 40 1

2008 0.00% Zero Coupon Notes 1993–1994 DEM 153 1

2008 various 1997 ITL 63,000

15.10.2008 variable Floating Rate Notes 1997 02.1998 ITL 15,000 1

2008 various 1997 JPY 600

2008 various 1995–1997 USD 64

2009 various 1997 DEM 92

2009 0.00% Zero Coupon Notes 1994–1996 DEM 213 1

30.05.2009 variable Floating Rate Notes 1997 ITL 17,000

2009 various 1996–1997 JPY 4,500

2009 0.00% Zero Coupon Notes 1997 USD 85


20.06.2010 0.00% Zero Coupon Bonds 1997 DEM 60 1

01.03.2010 0.00% Zero Coupon Bonds 1995 ITL 30,000 1

2010 0.00% Zero Coupon Notes 1997 USD 67

2011 various 1993–1997 USD 147

2012 0.00% Zero Coupon Notes 1997 DEM 35

2012 various 1996–1997 USD 27

2013 various 1995–1997 USD 67

20.12.2014 0.00% Zero Coupon Bonds 1994 ITL 250,000 1

30.10.2014 0.00% Zero Coupon Notes 1995 USD 29

12.06.2015 variable Floating Rate Notes 1997 USD 42


15.05.2017 variable Floating Rate Notes 1997 JPY 5,000

01.09.2017 0.00% Zero Coupon Bonds 1997 PTE 1,700

30.08.2017 0.00% Zero Coupon Bonds 1997 USD 28

15.01.2018 variable Floating Rate Notes 1997 ITL 50,000

07.01.2020 variable Floating Rate Notes 1996 CAD 162

19.09.2021 variable Floating Rate Notes 1996 19.09.1999 JPY 10,000

15.12.2021 0.00% Zero Coupon Bonds 1995 USD 81 1

02.10.2022 0.00% Zero Coupon Bonds 1997 DEM 40

08.10.2027 0.00% Zero Coupon Bonds 1997 DEM 50

79




perpetual various 1995 CHF 80 1

perpetual 10.25% 1995 17.08.2015 GBP 100 1

perpetual variable Floating Rate Notes 1993–1995 JPY 20,000 1

perpetual various 1995–1997 NLG 60 1

perpetual variable Floating Rate Notes 1992–1997 USD 220 1

Bank Leu Ltd., Zurich

17.11.2006 5.00% 1986 CHF 100 1

23.01.1998 0.00% 1996 CHF 10

23.01.1998 0.00% 1996 CHF 14


“Winterthur” Swiss Insurance Company, Winterthur

1998 4.25% Issue of bonds with warrants 1990 CHF 507

Winterthur Finance Ltd., British Virgin Islands

1999 2.25% Issue of bonds with warrants 1994 CHF 300

HIH Winterthur International Holdings Ltd., Sydney

2001 8.00% Convertible bond issue 1996 AUD 123

1 subordinated bonds2 issued by Credit Suisse First Boston Guernsey branch3 issued by Credit Suisse First Boston London branch4 issued by Credit Suisse First Boston Nassau branch

80

31 Dec. 1997 31 Dec. 1996 Change Change28 OTHER LIABILITIES in CHF m in CHF m in CHF m in %

Negative replacement value of derivative instruments 52,684 37,060 15,624 42

– of which trading 51,316 36,988 14,328 39

– of which other 1,368 72 1,296 –

Other 5,484 6,116 –632 –10

TOTAL OTHER LIABILITIES 58,168 43,176 14,992 35

Change in Recoveries,definition of doubtful New creation Releases

29 VALUATION ADJUSTMENTS AND Specific purpose interest, charged to New creation credited toPROVISIONS/RESERVES FOR Balance at usage and (reclassifi- currency income charged to income Balance atGENERAL BANKING RISKS IN CHF M 31 Dec. 1996 releases cation) 2 differences statement equity statement 31 Dec. 1997

Valuation adjustments and provisions for default risks (credit and country risk) 10,586 –1,106 278 552 2,193 0 0 12,503

Valuation adjustments and provisions for other business risks 835 –54 –509 9 641 0 0 922

Provisions for taxes and deferredtaxes1 2,094 –1,449 363 100 1,424 699 0 3,231

Provisions for restructuring 702 –498 37 1 1,179 0 0 1,421

Other provisions 322 –70 258 –7 263 0 0 766

Total 14,539 –3,177 427 655 5,700 699 0 18,843

Less valuation adjustments directlynetted with assets –9,719 –11,714

TOTAL VALUATION ADJUSTMENTS ANDPROVISIONS AS PER BALANCE SHEET 4,820 7,129

RESERVES FOR GENERALBANKING RISKS 2,388 0 59 0 1,629 0 –1,186 2,890

1 CHF 174 m deviation to tax expense due to deferred tax assets that are not included in the provisions 2 CHF 486 m reclassified from other balance sheet positions

81


30 TECHNICAL PROVISIONS FOR 31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31 Dec. 1996 Change ChangeTHE INSURANCE BUSINESS IN CHF M gross net gross net gross net

NON-LIFE

Provision for unearned premiums 4,835 4,162 4,852 4,186 –17 –24

Actuarial provisions (health) 2,012 2,003 1,809 1,800 203 203

Provisions for claims outstanding 1 18,791 16,406 17,717 15,597 1,074 809

Actuarial provision for annuities 614 599 551 540 63 59

Provision for dividends to policyholders 700 700 640 640 60 60

Equalisation reserve prescribed by law 335 335 316 316 19 19

NON-LIFE, TOTAL 27,287 24,205 25,885 23,079 1,402 1,126

LIFE

Provisions for unearned premiums 746 735 712 725 34 10

Actuarial provisions 61,269 60,584 55,294 54,527 5,975 6,057

Provisions for claims outstanding 430 393 441 397 –11 –4

Participation fund 2,155 2,142 2,070 2,067 85 75

Bonuses left on deposit 3,169 3,169 3,055 3,055 114 114

LIFE, TOTAL 2 67,769 67,023 61,572 60,771 6,197 6,252

TECHNICAL PROVISIONS FOR THEINSURANCE BUSINESS, TOTAL 95,056 91,228 87,457 83,850 7,599 7,378

1 of which undiscounted provisions for claims outstanding 3,065 2,224 841

impact of discounting –439 –367 –72

Discounted provisions for claims outstanding 2,626 1,857 769

2 of which technical provisions in life businesswhere the investment risk is borne by policyholders 2,846 2,846 1,827 1,827 1,019 1,019

82

1997 1996 Change Change31 STATEMENT OF SHAREHOLDERS’ EQUITY in CHF m in CHF m in CHF m in %

SHAREHOLDERS’ EQUITY AT BEGINNING OF FINANCIAL YEAR

Share capital 3,886 3,771 115 3

Capital reserve 10,455 10,381 74 1

Retained earnings 4,713 2,970 1,743 59

Revaluation reserves from the insurance business 3,249 2,796 453 16

Reserves for general banking risks 2,388 432 1,956 453

Group loss/Group profit –1,830 2,027 –3,857 –

TOTAL SHAREHOLDERS’ EQUITY AT BEGINNING OF FINANCIAL YEAR 22,861 22,377 484 2

Reclassification from valuation adjustments and provisions 59 193 –134 –69

Creation of reserves for general banking risks, net 443 1,763 –1,320 –75

Dividends paid –1,114 –1,055 –59 6

Capital increases, par value and capital surplus 1,508 606 902 149

Capital increases, minority interests 87 2 85 –

Acquisition of minority interests –238 –475 237 –50

Pooling adjustment –1,298 0 –1,298 –

Goodwill 0 –330 330 –100

Foreign exchange differences –38 1,164 –1,202 –

Change in revaluation reserves from the insurance business 2,539 453 2,086 460

Valuation adjustments relating to subsidiaries –151 –7 –144 –

Capital surplus increase in Winterthur prior to merger 392 0 392 –

Group profit/Group loss 601 –1,830 2,431 –

TOTAL SHAREHOLDERS’ EQUITY AT END OF FINANCIAL YEAR 25,651 22,861 2,790 12

of which: Share capital 5,322 3,886 1,436 37

Capital reserve 9,366 10,200 –834 –8

Minority interests in capital reserve 104 255 –151 –59

Retained earnings –266 2,862 –3,128 –

Minority interests in retained earnings 1,246 1,251 –5 0

Revaluation reserves from the insurance business 5,337 3,163 2,174 69

Minority interests in insurance revaluation reserves 451 86 365 424

Reserves for own shares 600 600 0 0

Reserves for general banking risks 2,890 2,388 502 21

Group profit/Group loss 601 –1,830 2,431 –

– of which minority interests 204 252 –48 –19

31 Dec. 1997 31 Dec. 1996 Change Change32 LOANS TO THE BANK’S GOVERNING BODIES in CHF m in CHF m in CHF m in %

Loans to the bank’s governing bodies 86 257 –171 –67

Loans to the bank’s governing bodies comprise advances to members of the Board of Directors, the Executive Board as well as the Statutory Auditors andcompanies controlled by these individuals or legal entities.

83


33 MATURITY STRUCTURE OFCURRENT ASSETS, FINANCIAL Due Due Due within DueINVESTMENTS AND BORROWED Redeemable within 3 within 3 to 12 months afterFUNDS AT 31 DECEMBER IN CHF M At sight by notice months 12 months to 5 years 5 years Real estate Total

CURRENT ASSETS

Cash and other liquid assets 3,404 – – – – – 3,404

Money market claims 3 0 17,361 6,592 57 0 24,013

Due from banks 5,514 2,966 123,932 9,926 3,350 90 145,778

Claims from the insurance business 105 6,319 0 0 0 0 6,424

Due from customers 4,472 11,752 95,293 18,187 10,293 4,494 144,491

Mortgages – 21,651 11,687 17,707 25,846 2,013 78,904

Securities and precious metalstrading portfolios 103,826 – – – – – 103,826

TOTAL CURRENT ASSETS 117,324 42,688 248,273 52,412 39,546 6,597 0 506,840

At 31 December 1996 111,673 41,026 206,562 69,693 36,868 8,593 0 474,415

TOTAL FINANCIAL INVESTMENTS 1 4,351 1,230 3,224 1,497 3,222 688 1,558 15,770

At 31 December 1996 2,282 0 1,426 1,743 3,569 1,424 1,137 11,581

BORROWED FUNDS

Liabilities in respect of money market paper 0 0 9,236 3,051 233 0 12,520

Due to banks 47,462 3,682 116,911 10,067 2,044 70 180,236

Commitments from insurance business 25 6,020 0 0 0 0 6,045

Due to customers in savings andinvestment accounts 0 48,257 276 0 0 0 48,533

Due to customers, other 31,204 2,206 136,905 17,529 4,816 2,911 195,571

Medium-term bank notes – – 449 1,285 5,061 421 7,216

Bonds and mortgage-backed bonds – – 1,735 4,591 23,430 15,838 45,594

TOTAL BORROWED FUNDS 78,691 60,165 265,512 36,523 35,584 19,240 0 495,715

At 31 December 1996 69,111 64,722 260,320 31,731 21,761 13,295 0 460,940

1 excluding investments from the insurance business

34 SECURITIES BORROWING AND LENDING 31 Dec. 1997 31 Dec. 1996 Change ChangeAND REPURCHASE AGREEMENTS in CHF m in CHF m in CHF m in %

Due from banks 29,556 13,011 16,545 127

Due from customers 5,618 4,587 1,031 22

SECURITIES LENDING 35,174 17,598 17,576 100

Due from banks 74,663 69,302 5,361 8

Due from customers 56,861 81,198 –24,337 –30

REVERSE REPURCHASE AGREEMENTS 131,524 150,500 –18,976 –13

Due to banks 10,100 8,083 2,017 25

Due to customers 21,832 5,263 16,569 315

SECURITIES BORROWING 31,932 13,346 18,586 139

Due to banks 71,076 81,969 –10,893 –13

Due to customers 46,365 46,801 –436 –1

REPURCHASE AGREEMENTS 117,441 128,770 –11,329 –9

84

35 BALANCE SHEET BY ORIGIN Switzerland Abroad Switzerland Abroad Switzerland AbroadIN CHF M 31 Dec. 1997 31 Dec. 1997 31 Dec. 1996 31. Dec. 1996 Change Change

ASSETS

Cash and other liquid assets 2,316 1,088 2,571 361 –252 724

Money market claims 3,155 20,858 4,051 16,026 –896 4,832

Due from banks 4,633 141,145 4,642 120,831 –9 20,314

Claims from the insurance business 3,048 3,376 2,334 3,681 878 –469

Due from customers 26,781 117,710 29,836 129,455 –3,055 –11,745

Mortgages 67,484 11,420 68,087 9,987 –603 1,433

Securities and precious metalstrading portfolios 11,190 92,636 8,826 76,554 2,364 16,082

Financial investments from the banking business 4,589 11,181 3,173 7,271 1,416 3,910

Investments from the insurance business 42,655 50,732 34,820 43,464 8,029 7,074

Non-consolidated participations 583 609 1,184 807 –601 –198

Tangible fixed assets 4,775 1,496 5,414 2,072 –639 –576

Intangible assets 0 181 0 0 0 181

Accrued income and prepaid expenses 1,726 7,693 1,448 6,056 278 1,637

Other assets 10,426 46,082 12,745 28,700 –2,319 17,382

TOTAL ASSETS 183,361 506,207 179,131 445,265 4,591 60,581


Liabilities in respect of money market paper 503 12,017 499 10,737 4 1,280

Due to banks 17,544 162,692 16,822 177,750 722 –15,058

Commitments from the insurance business 3,124 2,921 2,514 2,499 610 422

Due to customers in savings and investment accounts 44,290 4,243 43,403 3,893 887 350

Due to customers, other 63,567 132,004 43,797 122,766 19,770 9,238

Medium-term notes 7,216 0 8,681 0 –1,465 0

Bonds and mortgage-backed bonds 12,771 32,823 12,665 14,915 106 17,908

Accrued expenses and deferred income 3,496 8,181 1,878 6,871 1,618 1,310

Other liabilities 9,441 48,727 12,753 30,422 –3,312 18,305

Valuation adjustments and provisions 3,712 3,417 3,382 1,438 330 1,979

Technical provisions for the insurance business 43,802 47,426 40,001 43,849 3,801 3,577

Shareholders’ equity (excluding minority interests) 11,289 12,357 11,992 9,025 –703 3,332

Minority interests 47 1,958 45 1,799 2 159

TOTAL LIABILITIES 220,802 468,766 198,432 425,964 22,370 42,802

85


36 BALANCE SHEET BY CURRENCIES AT 31 DECEMBER 1997 IN CHF M Swiss francs US dollars Other currencies Total

ASSETS

Cash and other liquid assets 2,007 893 504 3,404

Money market claims 3,235 8,477 12,301 24,013

Due from banks 11,037 63,334 71,407 145,778

Claims from the insurance business 2,031 570 3,823 6,424

Due from customers 32,211 62,233 50,047 144,491

Mortgages 68,197 6,768 3,939 78,904

Securities and precious metals trading portfolios 22,273 39,423 42,130 103,826

Financial investments from the banking business 5,148 3,973 6,649 15,770

Investments from the insurance business 35,014 5,935 52,438 93,387

Non-consolidated participations 429 138 625 1,192

Tangible fixed assets 4,164 901 1,206 6,271

Intangible assets 0 0 181 181

Accrued income and prepaid expenses 1,661 3,256 4,502 9,419

Other assets 12,482 42,456 1,570 56,508

TOTAL ASSETS 199,889 238,357 251,322 689,568

At 31 December 1996 180,360 264,265 179,771 624,396


Liabilities in respect of money market paper 28 10,055 2,437 12,520

Due to banks 17,010 68,104 95,122 180,236

Commitments from the insurance business 2,945 196 2,904 6,045

Due to customers in savings and investment accounts 48,257 261 15 48,533

Due to customers, other 47,746 85,855 61,970 195,571

Medium-term notes 7,216 0 0 7,216

Bonds and mortgage-backed bonds 13,865 19,626 12,103 45,594

Accrued expenses and deferred income 3,620 4,993 3,064 11,677

Other liabilities 16,417 30,301 11,450 58,168

Valuation adjustments and provisions 3,615 2,010 1,504 7,129

Technical provisions for the insurance business 39,650 4,697 46,881 91,228

Shareholders’ equity (excluding minority interests) 5,957 7,472 10,217 23,646

Minority interests 56 387 1,562 2,005

TOTAL LIABILITIES 206,382 233,957 249,229 689,568

At 31 December 1996 187,541 273,113 163,742 624,396

86

37 PARTICIPATIONS, principal fully consolidated participations at 31 December 1997Company(% of equity capital held by the company exercising control) Domicile Capital in m Business unit

Credit Suisse Group Zurich

99.98 Credit Suisse Zurich CHF 3,114.7 CS/CSPB

99.99 Credit Suisse First Boston Zurich CHF 3,148.8 CSFB/CSAM

99.90 “Winterthur” Swiss Insurance Company Winterthur CHF 193.7 Winterthur

98.63 Neue Aargauer Bank Aarau CHF 273.8 CS

100.00 Bank Leu Ltd. Zurich CHF 400.0 CSPB

100.00 Bank Hofmann AG Zurich CHF 20.0 CSPB

86.69 Clariden Holding AG Zurich CHF 6.5 CSPB

100.00 Affida Bank Zurich CHF 7.0 CSPB

100.00 Bank Heusser & Cie AG Basle CHF 10.0 CSPB

100.00 Banque Leu (Luxembourg) SA Luxembourg CHF 25.0 CSPB

100.00 CS Life Zurich CHF 25.0 Winterthur

100.00 Credit Suisse Fides Zurich CHF 5.0 CSPB

100.00 Credit Suisse Trust AG Zurich CHF 5.0 CSPB

100.00 Credit Suisse Trust Holdings Ltd. St. Peter Port GBP 5.0 CSPB

66.67 IT Services AG Dübendorf CHF 2.4

100.00 Credit Suisse First Boston Private Equity Zug CHF 0.1 CSFB

100.00 Merban Equity Zug CHF 0.1 CSFB

100.00 CSFB IGP Zug CHF 0.1 CSFB

99.98 Credit Suisse Zurich CHF 3,114.7 CS/CSPB

89 City Bank Zurich CHF 5.0 CS

100 Denaro-Hypo Bank Aarau CHF 5.0 CS

100 Schweizerische Schiffshypothekenbank Basle CHF 15.0 CS

100 CS Leasing AG Zurich CHF 31.0 CS

100 CS Immobilien Leasing AG Zurich CHF 3.0 CS

90 Innoventure Capital AG Zurich CHF 10.0 CS

100 WECO Inkasso AG Zurich CHF 0.5 CS

100 ABZ Finanz- und Beteiligungsgesellschaft AG Zug CHF 4.0 CS

100 Bank für Handel und Effekten Zurich CHF 30.0 CSPB

100 Credit Suisse (UK) Ltd. London GBP 16.5 CSPB

100 Credit Suisse (Guernsey) Ltd. St. Peter Port GBP 3.0 CSPB

100 Credit Suisse (Gibraltar) Ltd. Gibraltar GBP 5.0 CSPB

100 Credit Suisse (Bahamas) Ltd. Nassau USD 12.0 CSPB

87 Credit Suisse Hottinguer Paris FRF 346.9 CSPB

100 Credit Suisse (Deutschland) AG Frankfurt DEM 10.0 CSPB

100 Credit Suisse (Italia) S.p.A. Milan ITL 25,000.0 CSPB

100 Credit Suisse Securities Ltd. London GBP 10.0 CSPB

100 Swiss American Corporation New York USD 38.9 CSPB

100 Credit Suisse Asset Management Inc. New York USD 19.3 CSAM

93 Swiss American Securities, Inc. New York USD 8.3 CSPB

87


Principal fully consolidated participations (continued)Company(% of equity capital held by the company exercising control) Domicile Capital in m Business unit

99.99 Credit Suisse First Boston Zurich CHF 3,148.8 CSFB/CSAM

100 Credit Suisse First Boston, Inc. New York USD 2.2 CSFB

100 Credit Suisse First Boston (International) AG Zug CHF 37.5 CSFB

100 Credit Suisse First Boston Canada Toronto CAD 157.3 CSFB

100 Credit Suisse First Boston Aktiengesellschaft Frankfurt DEM 155.0 CSFB

99 Credit Suisse First Boston (Moscow) A/O Moscow USD 20.0 CSFB

100 Credit Suisse First Boston Custody (Moscow) Ltd. Moscow USD 0.5 CSFB

100 Credit Suisse (Luxembourg) S.A. Luxembourg LUF 624.0 CSFB

100 Credit Suisse First Boston (Cyprus) Limited Limassol USD 60.0 CSFB

75 Credit Suisse First Boston (India) Securities Private Ltd. Mumbai INR 238.5 CSFB

100 Credit Suisse First Boston (Ukraine) Kiev USD 15.0 CSFB

100 Finanz AG Zurich CHF 15.0 CSFB

100 Credit Suisse First Boston Bullion (Japan) Ltd. Tokyo JPY 1,000.0 CSFB

51 Finorafa AG Chiasso CHF 4.0 CSFB

100 Credit Suisse First Boston Finanziaria S.p.A. Milan ITL 1,000.0 CSFB

80 Credit Suisse Financial Products London USD 482.3 CSFB

100 Credit Suisse First Boston International (Guernsey) Ltd. St. Peter Port USD 350.1 CSFB

100 CSFB Investment (Guernsey) Limited St. Peter Port USD 200.0 CSFB

100 CSFB (Latin America) Holdings LLC Grand Cayman USD 84.6 CSFB

100 Credit Suisse First Boston Australia (Finance) Ltd. Melbourne AUD 10.0 CSFB

100 Boomskill Limited London GBP 2.5 CSFB

100 Credit Suisse First Boston Finance Ltd. Hong Kong USD 1.9 CSFB

100 Veryfinance AG Zug CHF 0.5 CSFB

100 Credit Suisse First Boston Finance (Panama) S.A. Panama City USD 0.3 CSFB

100 Credit Suisse First Boston Finance (Gibraltar) Ltd. Marina Bay GBP 0.1 CSFB

100 Credit Suisse First Boston Finance (Guernsey) Ltd. St. Peter Port USD 0.2 CSFB

100 Limpa AG Zurich CHF 0.1 CSFB

100 Credit Suisse Financial Services Inc. Wilmington USD ~ CSFB

100 Credit Suisse First Boston Finance B.V. Amsterdam NLG ~ CSFB

100 Credit Suisse First Boston Australia (Holdings) Ltd. Sydney AUD 42.6 CSFB

100 Credit Suisse Asset Management International Fund Holding Zurich CHF 20.0 CSAM

100 Credit Suisse Trust & Banking Co. Ltd. Tokyo JPY 9,000.0 CSAM

100 Credit Suisse Asset Management (UK) Holding Ltd. London GBP 11.0 CSAM

100 Credit Suisse Asset Management Ltd. London GBP ~ CSAM

100 Credit Suisse Gestion SGIIC, S.A. Madrid ESP 200.0 CSAM

100 Credit Suisse Asset Management (Guernsey) Ltd. St. Peter Port GBP 1.0 CSAM

100 Credit Suisse Asset Management (Nederland) Holding B.V. Amsterdam NLG 1.7 CSAM

100 Credit Suisse Asset Management (Polska) Sp.z.o.o. Warsaw USD 0.9 CSAM

100 Credit Suisse Asset Management (Praha) s.r.o. Prague CZK 1.0 CSAM

100 Credit Suisse Asset Management (Australia) Sydney AUD 0.3 CSAM

100 Credit Suisse Investment Corporation Wilmington USD ~ CSAM

100 Credit Suisse Capital Corporation New York USD ~ CSAM

100 BEA Associates New York USD 6.7 CSAM

88


99.90 “Winterthur” Swiss Insurance Company Winterthur CHF 193.7 Winterthur

Switzerland

100 Winterthur Life Winterthur CHF 150.0 Winterthur

100 The Federal Zurich CHF 10.0 Winterthur

100 Winterthur Legal Assistance Winterthur CHF 6.0 Winterthur

100 Vitodurum Insurance Winterthur CHF 40.0 Winterthur

100 Vitodurum Holding Winterthur CHF 5.0 Winterthur

100 Swissline Wallisellen CHF 0.5 Winterthur

67 Winterthur Columna Winterthur CHF 1.5 Winterthur

100 Winterthur International Winterthur CHF 1.0 Winterthur

Germany

100 Winterthur Beteiligungsgesellschaft m.b.H. Wiesbaden DEM 70.0 Winterthur

75 WINCOM Versicherungs-Holding AG Wiesbaden DEM 102.7 Winterthur

61 DBV-Winterthur Group Wiesbaden DEM 169.4 Winterthur

Italy

100 Winterthur Holding Italia Milan ITL 10,000.0 Winterthur

100 Winterthur Assicurazioni Milan ITL 345,000.0 Winterthur

100 Winterthur Vita S.p.A. Milan ITL 81,500.0 Winterthur

Spain

100 Hispanowin S.A. Barcelona ESP 11,798.5 Winterthur

100 Winterthur Seguros Generales Barcelona ESP 5,744.3 Winterthur

80 Winterthur Asistencia Barcelona ESP 420.0 Winterthur

100 Winterthur Vida Espanola Barcelona ESP 5,819.0 Winterthur

100 Winterthur Salud de Seguros Madrid ESP 1,205.7 Winterthur

100 Equitativa Riesgos Diversos Madrid ESP 2,322.6 Winterthur

100 Winterthur Pensiones Barcelona ESP 600.0 Winterthur

Belgium

85 Winterthur-Europe Assurances Brussels BEF 1.9 Winterthur

100 Assurance Group Josi Brussels BEF 291.3 Winterthur

100 ASG Accidents du Travail Brussels BEF 60.0 Winterthur

Luxembourg

100 Winterthur-Europe Life Luxembourg LUF 132.0 Winterthur

UK

100 Winterthur (UK) Holdings London GBP 42.6 Winterthur

100 Churchill Insurance Bromley GBP 60.0 Winterthur

100 Winterthur Life UK Holdings Basingstoke GBP ~ Winterthur

100 Winterthur Life UK Basingstoke GBP 26.4 Winterthur

100 Winterthur International London GBP 35.0 Winterthur

Austria

100 Winterthur Versicherungen Vienna ATS 127.5 Winterthur

100 Winterthur Pensionskassen Vienna ATS 70.0 Winterthur

100 Wintisa Vienna ATS 1.0 Winterthur

Portugal

100 Europeia Seguros Lisbon PTE 2,220.0 Winterthur

89



“Winterthur” Swiss Insurance Company (continued)

France

50 Assurcrédit Paris FRF 75.0 Winterthur

75 Rhodia Assurance Lyon FRF 60.0 Winterthur

Czech Republic

65 Winterthur pojist’ouna, a.s. Prague CZK 363.0 Winterthur

65 Winterthur penzijní fond, a.s. Brno CZK 61.5 Winterthur

Hungary

65 Winterthur Pénztárszolgáltató Rt. Budapest HUF 370.0 Winterthur

100 Winterthur Biztosito Rt. Budapest HUF 1,000.0 Winterthur

Poland

45 Azur Ostoja Warsaw PLN 1.0 Winterthur

45 Azur Zycie Warsaw PLN 7.5 Winterthur

USA

100 Winterthur U.S. Holdings Wilmington USD 30.0 Winterthur

100 Blue Ridge Simsbury USD 6.1 Winterthur

100 General Casualty Sun Prairie USD 3.0 Winterthur

100 Republic Financial Services Dallas USD 5.0 Winterthur

100 Southern Guaranty Montgomery USD 2.0 Winterthur

100 Unigard Bellevue USD 3.0 Winterthur

100 Winterthur Reinsurance of America New York USD 3.0 Winterthur

100 Winterthur Life U.S. Holdings Wilmington USD 30.0 Winterthur

100 Winterthur Life Re Dallas USD 1.5 Winterthur

Canada

100 Winterthur Canada Financial Toronto CAD ~ Winterthur

100 The Citadel General Toronto CAD 34.1 Winterthur

100 L’Unique Quebec CAD 7.0 Winterthur

Other countries

100 Winterthur Empreendimentos e Participações São Paulo BRL 1.6 Winterthur

100 Winterthur International (SA) Johannesburg ZAR 37.0 Winterthur

100 Winterthur International Argentina S.A. Buenos Aires USD 0.5 Winterthur

100 Winterthur Holdings Australia Sydney AUD 54.1 Winterthur

51 HIH Winterthur International Holdings Ltd. Sydney AUD 78.5 Winterthur

97 Winterthur Insurance (Far East) Singapore SGD 17.5 Winterthur

100 Winterthur Swiss Insurance (Asia) Hong Kong HKD 150.0 Winterthur

100 Winterthur Insurance (Asia) Hong Kong HKD 150.0 Winterthur

60 Winterthur Life Indonesia Jakarta IDR 16,500.0 Winterthur

91 Winterthur International Hamilton, Bermuda USD 2.4 Winterthur

92 Winterthur Overseas Hamilton, Bermuda USD 0.3 Winterthur

100 Windsor Parc Ltd. Hamilton, Bermuda USD 1.0 Winterthur

29 Harrington Holdings Hamilton, Bermuda USD 70.0 Winterthur

100 Winterthur Finance Ltd. British Virgin Islands GBP ~ Winterthur

90

Principal participations at 31 December 1997 valued according to the equity methodCompany Domicile Capital in m Equity interest in %

Credit Suisse Group

Inreska Ltd. St. Peter Port GBP 3.0 100.0

Göhner Merkur AG Zurich CHF 80.0 33.2

Credit Suisse

Winterthur-Columna Zurich CHF 1.5 33.3

Cornèr Bank Ltd. Lugano CHF 12.0 27.3

Innoventure Equity Partners AG Zurich CHF ~ 30.0

Credit Suisse First Boston

Valcambi S.A. Balerna CHF 12.0 100.0

Innovent Capital Ltd. Grand Cayman CHF 36.3 38.6

Premex AG Zurich CHF 1.5 33.3

Reinsurance Finance Consultants AG Zurich CHF 0.8 33.3

“Winterthur” Swiss Insurance Company

Norwich Winterthur Holdings Norwich GBP 54.5 48.5

Norwich Winterthur Reinsurance Corp. Norwich GBP 57.8 86.4

Commonwealth Insurance Grand Cayman USD 0.1 91.0

Winterthur Internacional Brasil S.A. São Paulo BRL 2,300.0 100.0

91


Principal participations at 31 December 1997 valued at costCompany Domicile Capital in m Equity interest in %

Credit Suisse Group

Fides Information Services Zurich CHF 1.0 66.7

Capital Union Dubai USD 30.0 25.0

Credit Suisse

Swiss Mortgage Bond Bank Zurich CHF 300.0 16.8

Credit Suisse First Boston

Banco General de Negocios Buenos Aires ARS 38.0 19.7

Banco Exterior Suiza S.A. Zurich CHF 115.0 10.0

Banco Comercial S.A. Montevideo UYU 215.9 17.4

Telekurs Holding AG Zurich CHF 45.0 17.4

Intersettle Swiss Corp. Zurich CHF 36.0 9.5

SEGA Schweiz. Effekten Giro Olten CHF 10.0 19.8

SNOC Swiss Nominee Company Zurich CHF 2.0 25.0

Swiss Online AG Zurich CHF 5.0 6.0

Euro-Clear Clearance System Ltd. London GBP 2.5 6.0

NCO Dealer Soc. Fin. Lisbon PTE 500.0 18.0

San Luis Financial and Investment Co. Ltd. Panama City PAB 0.5 12.1

Cedel Luxembourg USD 78.5 0.7

Link Telecom Ltd. St. Peter Port USD ~ 50.0

SWIFT La Hulpe BEF 439.9 1.6

“Winterthur” Swiss Insurance Company

Auto-Bestandteil-Wiederverwertung AG Grolley CHF 0.2 50.0

Expertisa Vorsorge-Beratungen Winterthur CHF 0.1 100.0

Gartenhotel Winterthur CHF 2.5 100.0

Intershop Holding Zurich CHF 137.2 24.2

Intershop Properties USA AG Zurich CHF 62.0 10.0

IT Services AG Dübendorf CHF 2.4 33.3

Lehr-und Versuchswerkstätte Volketswil CHF 0.3 100.0

RFC Reinsurance Finance Consultants Zurich CHF 0.8 33.3

Tertianum Management AG Herrenschwanden CHF 0.5 14.9

Technopark Immobilien Zurich CHF 40.0 25.0

Wincare Versicherungen Winterthur CHF 0.1 100.0

Winterthur Financial Services Winterthur CHF 0.5 100.0

Zürcher Freilager AG Zurich CHF 4.0 36.1

DBV Allgemeine Dilbeek near Brussels BEF 500.0 100.0

Winterthur Financial Services Luxembourg LUF 25.0 100.0

Winterthur Fund Management Co. Luxembourg LUF 5.0 100.0

Winterthur Research SA Barcelona ESP 15.0 100.0

Winterthur-Service SA Barcelona ESP 25.0 100.0

Chiyoda Fire & Marine Insurance Tokyo JPY 18,390.8 6.3

Winterthur International Services Hamilton, Bermuda USD ~ 100.0

Seguros ATLAS Mexico City MXN 50.0 30.0

92

REPORT OF THE GROUP’S AUDITORS TO THE ANNUAL GENERAL MEETING OF CREDIT SUISSE GROUP, ZURICH

As auditors of the Group, we have audited the consolidated financial statements (income statement, balance sheet, statement of source and

application of funds and notes) of Credit Suisse Group for the year ended 31 December 1997.

These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on

these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional

qualification and independence.

Our audit was conducted in accordance with auditing standards promulgated by the profession in Switzerland and with the

International Standards on Auditing issued by the International Federation of Accountants (IFAC), which require that an audit be planned and

performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We

have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also

assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We

believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the financial position, results of operations and the

source and application of funds in accordance with Swiss accounting rules for banks, modified for the use of pooling-of-interests method of

accounting for a business combination and the Swiss accounting and reporting recommendations (ARR) for the insurance business of the

Group, both of which are explained in the notes to the consolidated financial statements, and comply with Swiss law and the Listing Rules of

the Swiss Exchange. Furthermore, the consolidated financial statements comply with European Union directives (4th, 7th and directive for

banks), except for the deviations described in the notes to the consolidated financial statements.

We recommend that the consolidated financial statements submitted to you be approved.

KPMG Klynveld Peat Marwick Goerdeler SA

Brendan Nelson Bruce A. Mathers

Chartered Accountant Chartered Accountant

Auditors in Charge

Zurich,16 March 1998

93

Economy & Finance

credit-suisse Annual Report Part 2