Wealth Management USA

In fourth quarter 2004, Wealth Management USA’s pre-tax profit rose to CHF 77 million from CHF 43 million in third quarter 2004. Before acquisition costs, pre-tax profit was CHF 187 million, up 11% from CHF 169 million in third quarter 2004. On the same basis, but in US dollars, the operating result was 20% higher in fourth quarter 2004 than in third quarter 2004.

Business Group Reporting

	Quarter ended			% change from		Year ended

CHF million, except where indicated	31.12. 2004	30.9. 2004	31.12. 2003	3Q04	4Q03	31.12. 2004	31.12. 2003


Private client revenues	1,205	1,173	1,220	3	(1)	4,906	4,959¹
Municipal finance revenues	80	106	113	(25)	(29)	372	462
Net goodwill funding	(39)	(48)	(50)	19	22	(180)	(231)


Income	1,246	1,231	1,283	1	(3)	5,098	5,190
Adjusted expected credit loss²	0	(1)	(1)	100	100	(5)	(8)


Total operating income	1,246	1,230	1,282	1	(3)	5,093	5,182


Personnel expenses³	820	813	909	1	(10)	3,437	3,627
General and administrative expenses	198	202	180	(2)	10	800	719
Services to / from other business units	63	76	106	(17)	(41)	302	433
Depreciation	17	18	18	(6)	(6)	71	72
Amortization of goodwill and other intangible assets	71	78	79	(9)	(10)	304	336


Total operating expenses	1,169	1,187	1,292	(2)	(10)	4,914	5,187


Business Group performance before tax	77	43	(10)	79		179	(5)

Business Group reporting excluding acquisition costs and significant financial events

	Quarter ended			% change from		Year ended

CHF million, except where indicated	31.12. 2004	30.9. 2004	31.12. 2003	3Q04	4Q03	31.12. 2004	31.12. 2003


Total operating income	1,246	1,230	1,282	1	(3)	5,093	5,021⁴
Add back: Net goodwill funding⁵	39	48	50	(19)	(22)	180	231


Operating income excluding acquisition costs	1,285	1,278	1,332	1	(4)	5,273	5,252


Total operating expenses	1,169	1,187	1,292	(2)	(10)	4,914	5,187
Retention payments	0	0	(62)		100	(99)	(263)
Amortization of goodwill and other intangible assets	(71)	(78)	(79)	9	10	(304)	(336)


Operating expenses excluding acquisition costs	1,098	1,109	1,151	(1)	(5)	4,511	4,588


Business Group performance before tax and acquisition costs	187	169	181	11	3	762	664

1 Includes significant financial event: gain on disposal of Correspondent Services Corporation of CHF 161 million.
2 In management accounts, adjusted expected credit loss rather than credit loss is reported for the Business Groups (see Note 2 to the Financial Statements).
3 Includes retention payments in respect of the PaineWebber acquisition. There have been no further retention payments after second quarter 2004.
4 Excludes significant financial event: gain on disposal of Correspondent Services Corporation of CHF 161 million.
5 Goodwill and intangible asset-related funding, net of risk-free return on the corresponding equity allocated.

	Quarter ended			% change from		Year ended

KPI's	31.12. 2004	30.9. 2004	31.12. 2003	3Q04	4Q03	31.12. 2004	31.12. 2003


Invested assets (CHF billion)	639	654	634	(2)	1


Net new money (CHF billion)¹	6.8	5.3	7.8			17.1	21.1
Interest and dividend income (CHF billion)²	4.5	4.1	4.0	10	13	16.0	15.8
Gross margin on invested assets (bps)³	77	75	81	3	(5)	79	86
Gross margin on invested assets excluding acquisition costs and SFEs (bps)⁴	80	78	85	3	(6)	81	87


Cost / income ratio (%)⁵	93.8	96.4	100.7			96.4	99.9
Cost / income ratio excluding acquisition costs and SFEs (%)⁶	85.4	86.7	86.4			85.5	87.2


Recurring fees⁷	494	522	506	(5)	(2)	2,057	1,927
Financial advisor productivity (CHF thousand)⁸	162	160	155	1	5	655	579

Additional Information				% change from

As at	31.12. 2004	30.9. 2004	31.12. 2003	3Q04	4Q03


Client assets (CHF billion)	679	685	690	(1)	(2)
Regulatory equity allocated (average)	4,850	5,150	5,400	(6)	(10)
Headcount (full-time equivalents)	17,388	17,210	17,435	1	0
Financial advisors (full-time equivalents)	7,519	7,343	7,766	2	(3)

1 Excludes interest and dividend income.
2 For purposes of comparison with US peers.
3 Income (annualized as applicable) / average invested assets.
4 Income (annualized as applicable), add back net goodwill funding and less significant financial events / average invested assets.
5 Operating expenses /income.
6 Operating expenses less the amortization of goodwill and other intangible assets, retention payments and significant financial events/income, add back net goodwill funding and less significant financial events.
7 Asset-based fees for portfolio management and fund distribution, account-based and advisory fees.
8 Private client revenues less significant financial events / average number of financial advisors.

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