Wealth Management USA

In second quarter 2004, Wealth Management USA’s pre-tax profit was CHF 16 million compared to a pre-tax profit of CHF 43 million in first quarter 2004. This reflects a decline in transactional revenue on lower client activity. Before acquisition costs, second quarter pre-tax profit fell 14% from first quarter to CHF 188 million. On the same basis and in US dollar terms, it was the second best quarterly result ever.

Interactive Report

Business Group Reporting

	Quarter ended			% change from		Year to date

CHF million, except where indicated	30.6. 2004	31.3. 2004	30.6. 2003	1Q04	2Q03	30.6. 2004	30.6. 2003


Private client revenues	1,222	1,306	1,391¹	(6)	(12)	2,528	2,496¹
Municipal finance revenues	100	86	124	16	(19)	186	246
Net goodwill funding	(47)	(46)	(58)	(2)	19	(93)	(119)


Income	1,275	1,346	1,457	(5)	(12)	2,621	2,623
Adjusted expected credit loss²	(1)	(3)	(3)	67	67	(4)	(5)


Total operating income	1,274	1,343	1,454	(5)	(12)	2,617	2,618


Personnel expenses³	878	926	903	(5)	(3)	1,804	1,770
General and administrative expenses	208	192	197	8	6	400	375
Services to / from other business units	78	85	108	(8)	(28)	163	218
Depreciation	16	20	17	(20)	(6)	36	34
Amortization of goodwill and other intangible assets	78	77	86	1	(9)	155	173


Total operating expenses	1,258	1,300	1,311	(3)	(4)	2,558	2,570


Business Group performance before tax	16	43	143	(63)	(89)	59	48

Business Group Reporting excluding acquisition costs and significant financial events

Total operating income	1,274	1,343	1,293⁴	(5)	(1)	2,617	2,457⁴
Add back: Net goodwill funding⁵	47	46	58	2	(19)	93	119


Operating income excluding acquisition costs	1,321	1,389	1,351	(5)	(2)	2,710	2,576


Total operating expenses	1,258	1,300	1,311	(3)	(4)	2,558	2,570
Retention payments	(47)	(52)	(67)	10	30	(99)	(134)
Amortization of goodwill and other intangible assets	(78)	(77)	(86)	(1)	9	(155)	(173)


Operating expenses excluding acquisition costs	1,133	1,171	1,158	(3)	(2)	2,304	2,263


Business Group performance before tax and excluding acquisition costs	188	218	193	(14)	(3)	406	313

1 Includes significant financial event: Gain on disposal of Correspondent Services Corporation of CHF 161 million.
2 In management accounts, adjusted expected credit loss rather than credit loss is reported for the Business Groups (see Note 2 to the Financial Statements).
3 Includes retention payments in respect of the PaineWebber acquisition. There will be no further retention payments after the 2nd quarter of 2004.
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

	30.6. 2004	31.3. 2004	30.6. 2003	1Q04	2Q03	30.6. 2004	30.6. 2003


Invested assets (CHF billion)	652	663	622	(2)	5


Net new money (CHF billion) ¹	2.2	2.8	3.9			5.0	7.6
Interest and dividend income (CHF billion)²	3.6	3.8	3.8	(5)	(5)	7.4	7.8
Gross margin on invested assets (bps)³	78	83	98	(6)	(20)	81	89
Gross margin on invested assets excluding acquisition costs and SFEs (bps) ⁴	80	86	91	(7)	(12)	84	87


Cost/income ratio (%)⁵	98.7	96.6	90.0			97.6	98.0
Cost/ income ratio excluding acquisition costs and SFEs (%)⁶	85.7	84.1	85.5			84.9	87.7


Recurring fees ⁷	523	518	455	1	15	1,041	909
Financial advisors (full-time equivalents)⁸	165	172	145	(4)	14	336	272

Additional Information				% change from

As at	30.6. 2004	31.3. 2004	30.6. 2003	1Q04	2Q03


Client assets (CHF billion)	696	711	658	(2)	6
Regulatory equity allocated (average)	5,250	5,250	5,750	0	(9)
Headcount (full-time equivalents)	17,087	17,095	18,011	0	(5)
Financial advisors (full-time equivalents)	7,360	7,451	8,284	(1)	(11)

1 Excludes interest and dividend income.
2 For purposes of comparison with US peers.
3 Income (annualized) / average invested assets.
4 Income (annualized), 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 Assetbased fees for portfolio management and fund distribution, account-based and advisory fees.
8 Private client revenues less significant financial events / average number of financial advisors.

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