Wealth Management USA

In third quarter 2003, Wealth Management USA’s pre-tax loss was CHF 43 million compared to pre-tax income of CHF 143 million in second quarter 2003. Excluding acquisition costs and a divestment gain in second quarter, pre-tax profit decreased 12% to CHF 170 million. On the same basis, but in US dollars, the operating result was 13% lower than the record US dollar performance achieved in second quarter, reflecting an industry-wide decline in the municipal securities business and the absence of revenues from the Correspondent Services business, which was sold in second quarter 2003. The performance in the private clients business remained strong, with US dollar recurring fees reaching record levels.

Interactive Report

Business Group Reporting

	Quarter ended			% change from		Year to date

CHF million, except where indicated	30.9. 2003	30.6. 2003	30.9. 2002	2Q03	3Q02	30.9. 2003	30.9. 2002


Income	1,284	1,457¹	1,315	(12)	(2)	3,907¹	4,346
Credit loss expense ²	(2)	(3)	(6)	(33)	(67)	(7)	(11)


Total operating income	1,282	1,454	1,309	(12)	(2)	3,900	4,335


Personnel expenses ³	970	924	1,010	5	(4)	2,782	3,318
General and administrative expenses	229	263	278	(13)	(18)	738	986
Depreciation	42	38	36	11	17	118	113
Amortization of goodwill and other intangible assets	84	86	109	(2)	(23)	257	350


Total operating expenses	1,325	1,311	1,433	1	(8)	3,895	4,767


Business Group performance before tax	(43)	143	(124)		65	5	(432)



Business Group Reporting excluding significant financial events

Total operating income	1,282	1,293⁴	1,309	(1)	(2)	3,739⁴	4,335
Add back: Net goodwill funding⁵	62	58	95	7	(35)	181	301


Operating income excluding acquisition costs	1,344	1,351	1,404	(1)	(4)	3,920	4,636


Total operating expenses	1,325	1,311	1,433	1	(8)	3,895	4,767
Retention payments	(67)	(67)	(81)	0	17	(201)	(271)
Amortization of goodwill and other intangible assets	(84)	(86)	(109)	2	23	(257)	(350)


Operating expenses excluding acquisition costs	1,174	1,158	1,243	1	(6)	3,437	4,146


Business Group performance before tax and excluding acquisition costs	170	193	161	(12)	6	483	490

1 Includes significant financial event: gain on disposal of Correspondent Services Corporation of CHF 161 million.
2 In management accounts, statistically derived actuarial expected loss adjusted by deferred releases rather than the net IFRS actual credit loss is reported in the Business Groups (see Note 2 to the Financial Statements).
3 Includes retention payments in respect of the PaineWebber acquisition. 3Q03: CHF 67 million. 2Q03: CHF 67 million. 3Q02: CHF 81 million.
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.

KPI's	Quarter ended			% change from		Year to date

	30.9. 2003	30.6. 2003	30.9. 2002	2Q03	3Q02	30.9. 2003	30.9. 2002


Invested assets (CHF billion)	626	622	597	1	5


Net new money (CHF billion) ¹	5.7	3.9	3.4			13.3	12.2
Interest and dividend income (CHF billion) ²	4.0	3.8	5.3	5	(25)	11.8	14.5
Gross margin on invested assets (bps) ³	82	98	85	(16)	(4)	87	83
Gross margin on invested assets excluding acquisition costs and SFEs (bps) ⁴	86	91	91	(5)	(5)	87	89


Cost/income ratio (%) ⁵	103	90	109			100	110
Cost/ income ratio excluding acquisition costs and SFEs (%) ⁶	87	86	88			88	89


Recurring fees ⁷	512	455	522	13	(2)	1,421	1,713
Financial advisors (full-time equivalents)	8,001	8,284	8,587	(3)	(7)

Additional Information				% change from

As at	30.9. 2003	30.6. 2003	30.9. 2002	2Q03	3Q02


Client assets (CHF billion)	668	658	661	2	1
Regulatory equity allocated (average)	5,550	5,750	7,000	(3)	(21)
Headcount (full-time equivalents)	18,204	18,566	19,363	(2)	(6)

1 Excludes interest and dividend income.
2 For purposes of comparison with US peers.
3 Annualized income/average invested assets.
4 Annualized income, 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 and advisory revenues including fees from mutual funds, wrap fee products and insurance products.

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