Global Asset Management’s pre-tax profit was CHF 87 million in third quarter 2003, a decrease of CHF 2 million from second quarter 2003. Positive market developments and higher performance fees were major contributing factors to growing revenues, although they were offset by increased general and administrative and personnel expenses, reflecting higher incentive-based compensation. This resulted in a higher cost / income ratio of 82% in third quarter, up from 80% in second quarter.
Operating income
Operating income in third quarter 2003 was CHF 471 million, up 8% from CHF 437 million in second quarter 2003, reflecting positive market movements and higher performance-related revenues.
Institutional revenues were CHF 253 million in third quarter 2003, up from CHF 243 million in second quarter 2003. The increase was due to higher performance-related revenues, partially offset by lower seed capital gains at O’Connor.
Positive market movements and a shift towards higher margin asset classes benefited Wholesale Intermediary revenues, which rose to CHF 218 million in third quarter 2003 from CHF 194 million in second quarter 2003.
Operating expenses
Operating expenses in third quarter 2003 were CHF 384 million, up 10% from CHF 348 million in second quarter 2003. Personnel expenses in third quarter 2003 were CHF 221 million, up CHF 14 million from second quarter 2003, due to higher incentive-based compensation reflecting increased performance-related revenues. General and administrative expenses were CHF 116 million in third quarter 2003, a CHF 20 million increase from CHF 96 million in second quarter 2003. The increase was mainly due to higher professional fees and fund advertising costs in Europe as well as operational provisions. Information technology costs increased due to the purchase of additional licensing fees for global trading and client relationship systems and investments in a new fund administration platform.
Headcount
Headcount was 2,674 on 30 September 2003, down by 40 from 2,714 on 30 June 2003. The decline in headcount was mainly due to cost control initiatives in Europe and the US. Compared with a year earlier, headcount has fallen 3%.
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