Wealth Management & Business Banking

Marcel Rohner Chairman and CEO Wealth Management & Business Banking

Wealth Management

Despite the weakening of the US dollar against the Swiss franc, Wealth Management’s full-year 2004 pre-tax profit, at CHF 3,435 million, was up 32% from 2003. This increase re- flects the growth momentum in the business and the recovery in major financial markets that started in mid-2003, driving a 13% increase in revenues through higher asset-based fees. Rising interest income, a reflection of the expansion of margin lending activities, also bolstered revenues. At the same time, expenses, up just 2% in 2004 from 2003, were kept under tight control.

Net new money inflows for the year totaled CHF 42.3 billion, up 42% from CHF 29.7 billion in 2003. Gains were reported in all geographical areas, especially from Asian clients. The CHF 13.7 billion inflow into the European wealth management business was again high, driven by a particularly strong contribution from the UK and Germany.

The gross margin on invested assets was 103 basis points in 2004, up 2 basis points from 101 basis points a year earlier, as revenues increased more than the average asset base. Overall, recurring income made up 76 basis points of the margin in 2004, up from 71 basis points in 2003. Non-recurring income comprised 27 basis points of the margin in 2004, against 30 basis points in 2003.

Our European wealth management business continued to make significant progress. Income was CHF 437 million, up 64% from a year earlier, reflecting our growing asset base. The level of invested assets was a record CHF 82 billion on 31 December 2004, almost double the CHF 46 billion a year earlier, reflecting healthy inflows of net new money and the integration of acquisitions made during the year.

Business Banking Switzerland

Business Banking Switzerland reported a pre-tax profit of CHF 2,045 million for full-year 2004, down 5% from the record result achieved in 2003. It was achieved despite a CHF 184 million fall in income, driven mainly by lower interest income, and shows the continued tight management of costs. Lower credit loss expenses reflected the structural improvement in the domestic loan portfolio in recent years.

During the course of 2004, CHF 7 billion in assets were transferred from the Business Banking Switzerland to the Wealth Management unit, reflecting the increasing needs of clients through their life cycle.

The cost / income ratio was 59.1%, 2.4 percentage points above the ratio of 56.7% in 2003, reflecting falling interest income in the low interest rate environment.

Business Banking Switzerland’s loan portfolio was CHF 137 billion on 31 December 2004, down CHF 1 billion from the previous year. An increase in volumes of private client mortgages was offset by lower credit demand from corporate clients and a further reduction in the recovery portfolio.

Business Group /Business Unit reporting