Group results

2Q08 vs 2Q07:

Total operating expenses were CHF 8,110 million, down by 18% from CHF 9,909 million. This decline was driven by lower accruals on performance-related compensation and the reversal of CHF 256 million in accruals recognized in first quarter 2008 relating to changes to the forfeiture provisions of future equity ownership plan (EOP) awards. Under the new forfeiture provisions, EOP awards will be amortized over their vesting period and not accrued during the year preceding the award date. Further details regarding this adjustment can be found on this page of this report. This was partially offset by provisions made for the expected costs of the repurchase of auction rate securities and related costs, including fines, of USD 900 million (CHF 919 million).

First half 2008 vs first half 2007:

Total operating expenses were CHF 15,957 million, down by 17% from CHF 19,289 million.

Personnel expenses

2Q08 vs 2Q07:

Personnel expenses decreased by 36% to CHF 4,612 million from CHF 7,253 million, reflecting primarily lower accruals on performance-related compensation and an adjustment relating to changes to the forfeiture provisions of future equity ownership plan (EOP) awards. This adjustment of CHF 256 million for the Group, of which the majority was attributed to the Investment Bank, represents a reversal of accruals made in first quarter 2008. Further details regarding this adjustment can be found on this page of this report.

First half 2008 vs first half 2007:

Personnel expenses decreased by 31% to CHF 9,887 million from CHF 14,347 million, reflecting primarily lower accruals on performance-related compensation.

General and administrative expenses

2Q08 vs 2Q07:

At CHF 2,831 million, general and administrative expenses increased by CHF 561 million from CHF 2,270 million, as lower expenses in most categories were offset by provisions made for the expected costs of the repurchase of auction rate securities and related costs of USD 900 million (CHF 919 million), including fines. The most significant cost reductions came from lower travel and entertainment spending, mainly in the Investment Bank, as well as lower professional fees and outsourcing of IT and other services. Marketing and public relations expenses declined as cuts were made to advertising costs.

First half 2008 vs first half 2007:

At CHF 5,074 million, general and administrative expenses increased by CHF 902 million from CHF 4,172 million. Provisions for auction rate securities as well as legal provisions and related legal fees mainly offset cost reductions in all other categories made throughout first half 2008.

Depreciation, amortization and impairment

2Q08 vs 2Q07:

Depreciation of property and equipment was CHF 277 million, down by CHF 45 million, reflecting leasehold improvements and lower depreciation in IT Infrastructure (ITI). At CHF 49 million, amortization of intangible assets declined by CHF 15 million from CHF 64 million.

A goodwill impairment charge of CHF 341 million was recorded in second quarter 2008, relating to the exiting of the municipal securities business and was attributed to the Investment Bank. For further information on the municipal securities business and the transfer of secondary market activities for these securities to Wealth Management US, refer to this page. There was no goodwill impairment charge in second quarter 2007.

First half 2008 vs first half 2007:

Depreciation of property and equipment was CHF 558 million, down by CHF 64 million, reflecting leasehold improvements and lower depreciation in ITI. At CHF 98 million, amortization of intangible assets declined by CHF 50 million from CHF 148 million.

A goodwill impairment charge of CHF 341 million was recorded in first half 2008, as described above (no impairment charge in first quarter 2008). There was no goodwill impairment charge in first half 2007.

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