Results

Global Asset Management continues to perform well, with this quarter’s result the second best since 2000. Pre-tax profit was CHF 131 million in second quarter, down 9% from the record of CHF 144 million set in the prior quarter. The decrease was mainly attributable to lower performance fees compared to a strong first quarter 2004, declining seed capital revenues, and higher IT expenses.

Operating income

Operating income in second quarter 2004 was CHF 498 million, down 2% from CHF 507 million in first quarter. Institutional revenue, at CHF 264 million in second quarter 2004, decreased by CHF 16 million from first quarter, mainly due to lower performance fees in the core investment management business, which had record revenue in first quarter. Revenues in the alternative and quantitative investments business decreased slightly, as strong performance fees in the currency and rates strategies were offset by lower performance fees in the equity and multi-manager businesses, as well as declining seed capital gains. Wholesale Intermediary revenues were CHF 234 million in second quarter 2004, up CHF 7 million from CHF 227 million in first quarter. This reflected higher revenues in the real estate and fund administration businesses, as well as higher fee income due to the ongoing improvement in our asset mix.

Operating expenses

Operating expenses stood at CHF 367 million in second quarter 2004, marginally higher than CHF 363 million in first quarter. Personnel expenses and general and administrative expenses were unchanged from the levels of the prior quarter. At CHF 34 million, services from other business units in second quarter 2004 increased by CHF 2 million from a quarter earlier. This was mainly due to higher costs for IT services.

Headcount

Headcount was 2,604 on 30 June 2004, essentially unchanged from 2,600 on 31 March 2004.