Total operating expenses increased by 5% to CHF 26,935 million
in 2004 from CHF 25,613 million in 2003.
Personnel expenses increased by CHF 958 million or 6%
to CHF 18,189 million in 2004 from CHF 17,231 million in
2003. The rise was driven by higher performance-related
compensation reflecting the better performance in most of
our businesses. For 2004, approximately 49% of personnel expenses
took the form of bonus or variable compensation, up
from 44% in 2003. Average variable compensation per head
in 2004 was 17% higher than in 2003. Salary expenses rose
due to the 2% increase in headcount over the year.
At CHF 6,577 million in 2004, general and administrative
expenses increased CHF 491 million from CHF 6,086 million
in the same period a year ago. The increase was driven by
higher provisions, which rose due to specific operational and
legal provisions (including the civil penalty levied by the Federal
Reserve Board relating to our banknote trading business),
higher IT and other outsourcing expenses as well as professional
fees, the latter due to higher legal and project costs.
Depreciation was CHF 1,282 million in 2004, down 5%
from CHF 1,353 million in 2003. This was the lowest level ever,
reflecting falling IT-related charges as well as lower writedowns
of equipment.
At CHF 887 million, amortization of goodwill and other intangible
assets was down 6% from CHF 943 million a year
earlier, reflecting lower amortization charges and the weakening
of the US dollar against the Swiss franc.
We incurred a tax expense of CHF 2,086 million in 2004,
reflecting an effective tax rate of 19.9% for the full year, compared
to last year’s full-year rate of 17.9% (before significant
financial events).
