Credit Suisse reported a loss in its third quarter 2008 results, driven by significant writedowns in its Investment Bank division. The Investment Bank suffered losses of CHF 3.2 billion due to writedowns of CHF 2.4 billion on exposures to leveraged finance, structured products and commercial mortgages. Trading losses were also incurred due to adverse market conditions in September. However, Credit Suisse's Wealth Management and Corporate and Retail Banking divisions performed resiliently. Credit Suisse also maintained a strong capital position and continued reducing risk exposures in challenging market conditions.
2. Cautionary statement
Cautionary statement regarding forward-looking and non-GAAP information
This presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks
and uncertainties, and we might not be able to achieve the predictions, forecasts,
projections and other outcomes we describe or imply in forward-looking statements.
A number of important factors could cause results to differ materially from the plans,
objectives, expectations, estimates and intentions we express in these forward-looking
statements, including those we identify in quot;Risk Factorsquot; in our Annual Report on Form 20-
F for the fiscal year ended December 31, 2007 filed with the US Securities and Exchange
Commission, and in other public filings and press releases. We do not intend to update
these forward-looking statements except as may be required by applicable laws.
This presentation contains non-GAAP financial information. Information needed to reconcile
such non-GAAP financial information to the most directly comparable measures under
GAAP can be found in Credit Suisse Group's third quarter report 2008.
Slide 2
3. Introduction
Brady W. Dougan, Chief Executive Officer
Third quarter 2008 results
Renato Fassbind, Chief Financial Officer
Investment Bank results update
Paul Calello, Chief Executive Officer Investment Bank
Summary
Brady W. Dougan
Slide 3
4. Introduction
Brady W. Dougan, Chief Executive Officer
Third quarter 2008 results
Renato Fassbind, Chief Financial Officer
Investment Bank results update
Paul Calello, Chief Executive Officer Investment Bank
Summary
Brady W. Dougan
Slide 4
5. Pre-tax results by division
Private Banking Investment Banking Asset Management
Pre-tax income in CHF m
3Q07 2Q08 3Q08
1,099
1)
1,289 1,220
789 281 167
45
6
(58)
(3,225)
! Strong asset gathering with ! Writedowns of CHF 2.4 bn in ! Stable fee-based gross
CHF 14.5 bn of net inflows leveraged finance and margin
structured products
! Successful hiring trends in ! Strong inflows in alternative
! Several businesses affected by
international locations investments
extremely adverse trading
! Continue to implement ! Reduced 'liftout' assets
conditions in September
international growth strategy
1) Excluding provisions of CHF 310 m relating to settlement agreements for auction rate securities
Slide 5
7. Strong net new asset growth in Wealth Management
Net new assets (NNA)
CHF bn
40.2
15.4
13.5
12.0 EMEA
12.2
11.3
9.7 6.2%
Asia Pacific
rolling four qtr 8.9
NNA growth
rate
Americas
10.0
Switzerland
9.1
3Q07 4Q07 1Q08 2Q08 3Q08 9M08
Slide 7
8. Wealth Management continues to attract top talent
Relationship managers
at period-end
4,100 ! Since 2007 entered 4 new local
markets and opened 15 new offices
3,480
globally
3,140
+110 in
! More than 40% of current net new
3Q08
2,540
assets from hires made over the last
three years
+340 in
! Investments into international
9M08
growth of above CHF 350 m
annually
+200 p.a.
Goal
2004 2007 3Q08
2010
Slide 8
9. Corporate & Retail Banking achieves strong and stable results
Pre-tax income
CHF m
! Strong results reflect stable economic
environment in Switzerland
1,254
1,220
! Net new assets of CHF 3.2 bn from
Swiss institutional and retail clients
+3%
+3%
400
389 390
+3%
9M07 9M08 3Q07 2Q08 3Q08
Pre-tax income margin in %
41.5 41.3 39.7 39.5 39.6
Slide 9
10. Asset Management with good inflows in higher margin
businesses
Assets under management Net new assets Gross margin by asset class
Before gains/losses from money market funds and
CHF bn CHF bn
private equity in 3Q08
9M08
3Q08
Asset 1)
39
(40.5)
Management (16.5)
578
Division
Alternative
67
170
investment 2.2 11.9
strategies (AI)
Multi-asset
37
153 (8.4)
(5.1)
class solutions
(MACS)
Global 1)
24
255 (13.6) (44.0)
investors (GI)
1) Including CHF 23.9 bn outflows from the institutional pension advisory business and money market funds
Slide 10
11. Solid funding structure
Asset and liabilities by category Private banking and other customer deposits
CHF bn at end of 3Q08 CHF bn
1,394 1,394
288
Reverse 379 Repo 338
261
repo +10%
Trading 187
Trading 515
and liquid Short-term 114
assets
Long-term 165
debt
Private 288
Loans 239 banking & other
121%
deposits
coverage
Other 263
Other 261
Equity 39 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
Assets Capital & liabilities
Slide 11
12. Capital strength as competitive advantage
Tier 1 capital and tier 1 capital ratio
(CHF bn and %)
13.7%
! Dramatic changes in the strategic
landscape of the financial services
10.2% 10.4%
Tier 1 9.8% industry with increased capital
capital ratio 42.2
requirements
! Have taken pro-active steps by
32.2
30.8
29.4
raising CHF 10 bn of capital
Hybrid tier 1
! Strongly positioned to continue
capital
building client franchises and take
advantage of targeted growth
Core tier 1
opportunities
capital
1Q08 2Q08 3Q08 3Q08
proforma
Slide 12
13. Introduction
Brady W. Dougan, Chief Executive Officer
Third quarter 2008 results
Renato Fassbind, Chief Financial Officer
Investment Bank results update
Paul Calello, Chief Executive Officer Investment Bank
Summary
Brady W. Dougan
Slide 13
14. Investment Banking results
! Investment bank reported a third quarter loss of CHF 3.2 bn
! Further reduction of risk exposures
! Writedowns on CMBS, leveraged finance and other structured
products exposures of CHF 2.4 bn
! Losses and fair value declines incurred as a consequence of
extremely adverse trading conditions
Slide 14
15. Further exposure reduction but additional writedowns due to
deteriorating credit markets
Net (writedowns)/
1)
Exposures writebacks
Business area (in CHF bn) 3Q08 2Q08 Change 3Q08 2Q08
Origination- Leveraged finance 11.9 14.3 (0.9) (0.1)
(17%)
based
(exposures
Commercial mortgages 12.8 15.0 (1.0) (0.5)
(15%)
shown gross)
Residential mortgages and
Trading-
based CDO Trading 2) 6.8 6.5 5% (0.5) +0.5
(exposures
of which US subprime 2.1 1.9 11%
shown net)
Total (2.4) (0.0)
1) Index hedges of CHF 7.0 bn (2Q08; CHF 6.6 bn) held in the origination areas. Hedges reference non-investment grade, crossover credit and mortgage indices only; excludes other indices
(e.g. investment grade) and single name hedges; trading based hedges embedded in the net exposures shown above
2) Global non-agency business, including higher quality residential mortgage segments (Alt-A and prime); CDO trading positions relate to US subprime only. Total US subprime gross long positions of
CHF 6.2 bn (2Q08; CHF 6.3 bn) and short positions of CHF 4.1bn (2Q08; CHF 4.4 bn)
Slide 15
16. Substantial exposure reduction continues
Leveraged finance Commercial mortgages
CHF bn CHF bn
Funded
59 36
(64)%
Unfunded
(80)% 26
35 19
15 13
21
14 12
3Q07 4Q07 1Q08 2Q08 3Q08 3Q07 4Q07 1Q08 2Q08 3Q08
Risk reduction plan
! Continue to reduce pre-Sept 2007 ! Continue to reduce exposures,
commitments (CHF 10.7 bn) including portfolio sales
! Focus on smaller, “fast-to-market” ! Future business to be focused on
deals lead-managed by Credit Suisse more liquid US markets and trading
! Avoid larger, multi-bank deals
particularly if extended regulatory
approval is required
Slide 16
17. Significant 3Q08 trading losses
Area CHF bn Comment
! Conservatorship led to losses in GSE preferred securities and
Financial (0.4)
institutions resulted in loss of confidence in similar securities of other
securities financial institutions
! Short selling restrictions and deleveraging contributed to
Convertible (0.7)
broader sell-off in this asset class
securities
Long/ (0.5)
Equity trading
! Collateral sales following the default events in September led
short
strategies
to reduced valuations across many assets and arbitrage
Event strategies
(0.1)
and risk ! Exacerbated by subsequent deleveraging by hedge funds
arbitrage
GSE = Government Sponsored Enterprises
Slide 17
18. Financial institutions preferred and hybrid securities
GSE preferreds market conditions
! Conservatorship led to losses in preferred
FRE 5.7 R
50
securities of Fannie Mae and Freddie Mac
FNM 8.25 S
40
! Resulted in loss of confidence in similar securities
30
of other financial institutions
20
10
! Consequent loss of CHF 367 m related to
0
investments in preferred and hybrid securities
Dec-07 Mar-08 Jun-08 Sep-08
Financial services preferreds market conditions Risk reduction plan
Wachovia hybrid and preferred index ! Investment by US Government in the major
25
US banks has stabilized this asset class
! Work down positions, eliminating approx.
20
USD 500 m of preferred securities positions
15
10
Dec-07 Mar-08 Jun-08 Sep-08
Slide 18
19. Convertible securities
Convertibles market conditions
! Significant decline in convertible valuations in
Jefferies active convertible index
September
160
− Short selling restrictions impacted trading in
convertible securities of financial stocks
− Deleveraging by hedge funds contributed to
broader sell-off in this asset class,
150
exacerbated by more limited funding eligibility
! Consequent loss of CHF 706 m in our
convertibles trading books
140
Risk reduction plan
! Substantially reduce size of convertibles trading
book, focusing business on client flow facilitation
130
and supporting primary issuance
Dec-07 Mar-08 Jun-08 Sep-08
! Trading book has been reduced by 17% in 3Q08
– will be reduced significantly further by 1Q09
Slide 19
20. Equity trading strategies
Tremont Indices 3Q08: Market performance
! Risk aversion and accelerated deleveraging by
market participants led to reduced valuations
Overall Long/short Event driven
across many assets and arbitrage trades
Index equity index index
! Fundamental long/short trading lost CHF 469 m
in 3Q08, with a further CHF 140 m lost in a
combination of risk arbitrage and event positions
Risk reduction plan
! Fundamental long/short trading positions
(8)%
(10)% reduced in size by over 50% since 2Q08 and
will be cut further
(13)%
! Event and risk arbitrage trading positions have
also been reduced during 2008
! Resulting business will be significantly smaller
and focused on more liquid strategies, including
statistical arbitrage trading, which continued to
be profitable in 3Q08
Slide 20
21. Corporate loan book marked down on a fair value basis
Actual revenues under fair value accounting (in CHF m) ! Corporate loan book is a diversified portfolio of
term loans and commitments marked on a fair
MTM loans, other CDS gains
value basis; 79% investment grade
Net revenues ! Deterioration in the credit markets resulted in a
+855
+509
3Q08 (922) CHF 1.4 bn fair value decline in loan valuation,
(1,431)
which was only partly offset by CHF 0.5 bn gain
9M08 (1,224)
(2,079)
on the related CDS single name and index
hedges
3Q08 9M08
! In these market conditions, fair value is a more
Proforma revenues under accrual accounting (in CHF m) conservative approach than accrual accounting
in which revaluation of loans are only recognized
MTM loans, other CDS gains when credit is impaired
Net revenues
! Current credit experience remains good with
3Q08 +562 very limited defaults in 3Q08; however, default
9M08 +998 rates implied by current market prices (and
+53 +143 +855
+509
reflected in our fair value marks) are significantly
3Q08 9M08 higher than in any major recent recession
Slide 21
22. Strong growth in client businesses
Global rates/FX revenues 1)
Electronic trading revenues Prime services client balances
CHF m CHF m CHF bn
369
1,080
335
+108%
+52% +74%
1Q 2Q 3Q 4Q 2Q 3Q 1Q 2Q 3Q 4Q 2Q 3Q 1Q 2Q 3Q 4Q 2Q 3Q
1Q 1Q 1Q
2007 2008 2007 2008 2007 2008
! Record volumes set in September ! Record results in 3Q08 due to ! Strong growth in client balances and
across global AES high volatility with wider bid/offer new client mandates
spreads and significant ! Balances increased 44% in 9M08, and
! Credit Suisse's CrossFinder rebalancing by clients CHF 117 bn in 3Q08; over 60% from
product is the #2 dark pool trading
new clients with majority of remainder
! Significant profits in intraday
tool in the U.S. (more than 160
from long-time targets
million shares/day crossed) trading with minimal risk and client
! Credit Suisse viewed as strong
crossing
! Trend for increasing number of counterparty and “safe haven” given
financial products will move to strength of funding and liquidity
electronic trading platforms
! Remain selective; 40% acceptance rate
1) Excluding derivative rate exposures
Slide 22
23. Active reduction in risk capital usage and trading risks
Risk-weighted assets (in USD bn)
! Investment Bank Basel 2 risk-weighted
236 230
assets reduced by USD 43 bn or 18%
214
during 9M08
193
March-30 June-30 Sept-30
Dec-31
2008 2008 2008
2007
Average Value-at-Risk (in USD m)
186
174
! Total Investment Bank trading VaR down
Dataset /
methodology effect 158
150
15% vs. peak in 2Q08
Positioning
90
! When adjusted for methodology and data
79
62
set changes, VaR has been reduced by
42% since 1Q08
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
Slide 23
24. Priorities for Investment Banking 2008 to 2009
Priorities Key initiatives
! Accelerate risk reduction program in 4Q08 and 2009
Reduce risk and volatility ! Continue to diversify business mix to reduce
fundamental volatility
! Developing less capital-intensive client businesses
Increase client revenues ! Increased collaboration revenues with Private Banking
and Asset Management
! Ongoing focus on reducing non-compensation
expenses
Drive efficiency
! Implementing risk capital-adjusted compensation model
Slide 24
25. Introduction
Brady W. Dougan, Chief Executive Officer
Third quarter 2008 results
Renato Fassbind, Chief Financial Officer
Investment Banking results update
Paul Calello, Chief Executive Officer Investment Banking
Summary
Brady W. Dougan, Chief Executive Officer
Slide 25
28. Fixed income trading with significant valuation reductions
! 3Q08 affected by net valuation reductions
Fixed income trading net revenues
in commercial mortgages, leveraged
CHF m
finance and other structured products
6,568 totaling CHF 2.2 bn 1)
! Results also reflected losses in the
corporate lending business of CHF 922 m
and writedowns of CHF 367 m resulting
from investments in preferred shares and
hybrid capital securities of certain financial
514 institutions
320
! Strong revenues in global rates, foreign
(1,109)
exchange and global high grade
(2,365)
! 3Q08 fair value gain on own debt of
9M07 9M08 3Q07 2Q08 3Q08 CHF 1,688 m
1) Further writedowns of CHF 0.2 bn are recorded in debt underwriting and other revenues
Slide 28
29. Equity trading impacted by extreme market volatility
Equity trading net revenues ! Decline primarily due to losses of CHF 706 m in
convertibles reflecting the adverse impact of short
CHF m
selling restrictions
! Results also reflected losses of CHF 469 m in
5,683 fundamental long/short equity and CHF 140 m event
and risk arbitrage strategies
! Lower revenues in global cash business due to
weaker 3Q08 markets despite continued momentum
3,799 in AES
! Strong revenues in equity derivatives, driven by
strength in all regions and products
2,255
! Prime services showed exceptionally strong growth
in client balances and new client mandates.
1,037 Balances have increased by 44% YTD 2008,
165
including CHF 117 bn in 3Q08
! 3Q08 fair value gain on own debt of CHF 188 m
9M07 9M08 3Q07 2Q08 3Q08
Slide 29
30. Underwriting fees adversely affected by seasonality and market
conditions
Advisory and other fees Underwriting fees
CHF m CHF m
1,583 Debt underwriting
Equity underwriting
1,523
1,118
439
440 85
1,051
358
364
87
216
605
327 245 188
9M07 9M08 3Q07 2Q08 3Q08 9M07 9M08 3Q07 2Q08 3Q08
Slide 30
31. Leveraged finance exposures
! Total exposure down 17% to CHF 11.9 bn
Gross exposure 1) (CHF bn) 3Q08 2Q08
during 3Q08, driven primarily by continued
Unfunded commitments 8.9 11.0
sales activity (down 25% in USD)
Funded positions 2.8 3.0
! All positions are fair valued with typical loan
Equity bridges 0.2 0.3
prices below 75% of par; bonds valued even
Total gross exposure 2) 11.9 14.3
lower
Roll-forward (CHF bn) Unfunded Funded
! Term financing used only in a small proportion
Exposures 2Q08 11.0 3.0 of sales (cumulative total of CHF 4.1 bn)
New exposures 3.4 –
! High proportion (70%) of exposure is senior
Fundings (5.3) 5.3
secured lending
Sales, terminations,
writedowns and FX (0.2) (5.5)
Exposures 3Q08 8.9 2.8
3Q08 2Q08
(CHF m)
Net writedowns (0.9) (0.1) 1) Non-investment grade exposures, at fair value
2) Figures exclude term financing to support certain sales transactions
Slide 31
32. Commercial mortgage (CMBS) exposures
! Gross exposure reduced 15% to CHF 12.8 bn
3Q08 2Q08
(CHF bn)
during 3Q08 (down 22% in USD)
Warehouse exposure 1) 12.8 15.0
! Continued challenging market environment leading
to further write-downs across all regions
Roll-forward of exposure (CHF bn)
! Positions carried at fair value, taking into
Exposure 2Q08 15.0
consideration prices for cash trading and relevant
New loan originations 0.2
indices (e.g. CMBX), as well as specific asset
Sales, terminations,
fundamentals
writedowns & FX (2.4)
Exposure 3Q08 12.8 ! CHF 2 bn of loan sales; CHF 0.8 bn in Asia
3Q08 2Q08
(CHF bn)
(1.0) (0.5)
Net writedowns
1) Includes both loans in the warehouse as well as securities in syndication
Slide 32
33. Commercial mortgage (CMBS) portfolio analysis
Total exposure by geography Weighted average loan-to-value (LTV) ratio
%
US
73
28% Other continental 71 69
Asia Europe 58
19% 21%
UK Germany
3% 29%
US Europe Asia Total
Exposure by loan type
Other 5%
! Portfolio with solid LTV origination ratios
Industrial 1%
Healthcare 7%
! Exposure to continental Europe at 50% of
the portfolio, with the largest contribution
Multifamily 12%
Office 40%
from Germany
! Development loans are less than 5% of our
Hotel 14%
portfolio with an average LTV of 54%
Retail 21%
Slide 33
34. Residential mortgages and CDO trading
! Exposures are fair valued based on market
Net exposure 1) 3Q08 2Q08
(CHF bn)
levels
US subprime 2.1 1.9
! Exposures modest in overall scale; largely
US Alt-A 1.1 1.1
unchanged versus 2Q08 (down slightly in
US prime 0.9 0.7
USD terms)
Europe 1.8 2.1
! Net loss in 3Q08 includes
Asia 0.9 0.7
− Markdowns in Europe for ongoing trading
Total net exposure 6.8 6.5
(i.e. excludes CDO trading run-off book)
− Run-off CDO portfolio losses with basis
3Q08 2Q08
(CHF bn)
risks widening
Net (writedowns)/writebacks (0.5) +0.5
1) All non-agency business, including higher quality segments and CDO subprime only
Slide 34
35. US subprime vintage, rating and sensitivity analysis
Net exposures by vintage and rating Exposure Long Short Net
(CHF bn)
Vintage 3Q08 6.2 (4.1) 2.1
(CHF bn)
Pre 2006 2006 2007 of which legacy CDO 2.8 (1.8) 1.0
AAA 0.5 (0.6) 1.5
2Q08 6.3 (4.4) 1.9
AA 0.3 (0.4) –
of which 3.0 (1.5) 1.5
–
A 0.2 –
! Exposure to “basis risk” between long and
BBB and below 0.2 (0.1)
short positions remains steady
Note: Exposure to securities only, excluding loans
! Some exposure to basis risks if values shift
Sensitivities (CHF bn)
among vintage / rating buckets, but
Potential scenario Estimated loss
buckets are relatively well-balanced
20% drop in ABS subprime (0.4)
! Sample sensitivities to possible adverse
10% wider cash/CDS basis (0.4)
market developments shown at lower left
2006 vintage outperforms by 10% (0.1)
AAA underperforms by 10% (0.1)
Slide 35
36. Asset Management: money market “liftout” portfolio
Securities transferred to bank balance sheet
! No additional liftouts during 3Q08
Gross exposure (CHF bn) 3Q08 2Q08
! Redemption pressure for money market
Structured Inv. Vehicles (SIVs) 0.7 1.1
funds in September led to USD 2.2 bn
Asset Backed Securities (ABS) 0.2 0.2
investment in units issued by a fund
Corporates 0.1 0.2
Total 1.0 1.5 ! Portfolio reduced by 33% in 3Q08 largely
of which subprime-related 0.1 0.2 due to restructuring and sale of a SIV
position
Roll-forward of exposure (CHF bn)
! Positions now carried at a weighted
Exposure 2Q08 1.5 average value of approx. 56% to par
Sales, maturities, writedowns and FX (0.5)
! We continue to focus on reducing positions
Exposure 3Q08 1.0
while maximizing value
3Q08 2Q08
(CHF bn)
Net (writedowns)/writebacks (0.0) 0.1
Slide 36
37. Additional information
Valuation gains/(reductions) on structured products businesses and leveraged loan
commitments are included in Investment Banking net revenues as follows:
3Q08 2Q08 1Q08 9M08 2007 Description
CHF m
Net revenues (2,428) (22) (5,281) (7,731) (3,187)
of which
Fixed income trading (2,236) (391) (4,523) (7,150) (2,283) Net value gains/(reductions)
from structured products
and leveraged finance
Debt underwriting (68) 61 (49) (56) (349) Net value gains/(reductions)
from structured products
and fee revenues/(losses)
from leveraged finance
Other revenues (124) 308 (709) (525) (555) Net value gains/(reductions)
from leveraged finance
Slide 37