Global Asset Management

Full-year 2005 pre-tax profit was CHF 1,057 million, up from CHF 681 million (before goodwill) a year earlier. This reflected net new money inflows, which featured a very strong increase in the wholesale intermediary business, combined with continued strong inflows from institutional clients. It was additionally helped by a sharp rise in asset-based fees, which benefited from improving financial markets.

Pre-tax profit in fourth quarter 2005 was CHF 305 million, a marginal decline of 1% compared with the all-time quarterly high of CHF 308 million reported in third quarter 2005. Although higher general and administrative expenses offset the increase in revenues, it was another strong quarter, as asset-based fees again rose, reflecting a strong net new money result of CHF 10.9 billion and improving financial markets. Alternative and quantitative investments also posted performance fees in fourth quarter 2005 that were close to the highs of third quarter 2005.

Operating income

Total operating income in fourth quarter 2005 was CHF 698 million, up 4% from CHF 671 million in the previous quarter. Institutional revenues totaled CHF 388 million in fourth quarter 2005, up from CHF 363 million in third quarter, a result of higher management fees in traditional investments and real estate, coupled with continued solid performance fees in alternative and quantitative investments. Wholesale intermediary revenues were CHF 310 million in fourth quarter 2005, up from CHF 308 million in third quarter, a result of higher assetbased fees in real estate and traditional investments.

Operating expenses

Total operating expenses increased to CHF 393 million in fourth quarter 2005, up from CHF 363 million a quarter earlier. Personnel expenses were CHF 266 million in fourth quarter 2005, up from CHF 261 million in third quarter 2005, mainly reflecting the increased number of employees. General and administrative expenses increased to CHF 89 million in fourth quarter 2005 from CHF 73 million in third quarter, reflecting project and business expansion costs in the real estate and traditional investment platforms, higher IT costs, premises expenses in fund services, travel and entertainment and professional fees. Net charges from other business units were CHF 31 million in fourth quarter, up by CHF 7 million from third quarter, mainly from Global Wealth Management & Business Banking operations and ITI.