Credit Suisse Group AG (CS) 2006 Q4 法說會逐字稿

Ladies and gentlemen, this morning the Credit Suisse Group Board announced that our Chief Executive, Oswald Grubel, will retire as per the date of this year's Shareholder Meeting. At the same time, the Board did appoint Brady Dougan as the new Chief Executive.

Brady, as you all know, is at present the Chief Executive of our Investment Banking Division. He is now based in New York. He is with the Group for -- in various functions and in several locations, among that in Europe, in America and in Japan, Asia, since 17 years. But, most important, he, after the departure of John Mack, put what I would call the lackluster performance of the Investment Bank back on track. And you will realize in the Q4 results how successful he has been to put that in order.

The appointment of Brady Dougan is, first and foremost, a sign of continuity. Continuity in management by selecting the most experienced out of a strong team in the Executive Board, but also continuity strategically by selecting a co-designer, if you want, a co-designer of the present strategic direction and organizational set-up of our institution, and continuity also in style. Brady has a solid, pragmatic management style, a management style Ozzie has declared, or has established, as a standard in the Bank.

Brady had two jobs in the Executive Board. He was Head of Investment Banking and he was Head of the Region Americas. The Board has made two appointments to succeed him. Paul Calello, Head of the region Asia Pacific, will take over as Chief Executive in New York of the Investment Bank. He has also 17 years of service. He also has a very wide range of experience in various businesses of the Investment Bank, and he has been the man behind Credit Suisse all banking businesses' successful position it has established and achieved in Asia.

At the same time, the Board is appointing [Robin Schaeffer], until recently Member of the Lehman Brothers Executive Committee. And he will join Credit Suisse in summer to take over or assume the role of Head of Region Americas and become Member of the Executive Board of Credit Suisse. And I am very happy that we are in a position to place -- to replace Brady Dougan in his present role with a formidable successor internally in Investment Banking and, at the same time, have a strong top banker from external -- from externally, who will complement the skill set in our executive team. Both Brady and Paul are in the room today and they will say a few words at the end of the result presentation, and are available to you afterwards.

It is now, however, the moment to say a few words, and I mean a few words, because Ozzie is not known for being a man in favor of many words. So I'll say a few words about Ozzie, our Ozzie. This morning I wrote to all our employees worldwide, and I quote, 'Above everything else, this is the moment to pay tribute to our departing CEO.' I can hardly imagine a person who has served Credit Suisse more loyally than our Ozzie. He has dedicated practically his entire professional life to Credit Suisse, over almost 40 years, with many high points and some low points and an exemplary sense of duty he has grasped and solved his respective challenges all along his career. In the turbulent times of 2002, he has served as a head of a company when the Company needed him most.

Ozzie has decided to announce his retirement. This moment coincides with the announcement of a record result for 2006 which, better than anything else, is evidence of the extraordinary leadership of Ozzie and his team. He will continue to have full responsibility for the leadership of the Company until our Annual Shareholders' Meeting.

I think there is very little else I have to add here without actually running the risk to have too many words. And so, Ozzie, you will now take over with -- present the results of the fourth quarter together with Chief Financial Officer, and the result for 2006. Ozzie, the floor is yours.

Thank you. Morning, ladies and gentlemen. And thank you very much, Walter, for these nice words and nearly made me blush though. I had some very satisfying years as the Chief Executive of the Company and I'm very pleased to [first be mentioned around] the Company with our Executive Board. And especially considering that we got [acquitted] at the beginning of the total process. And so it's more satisfying than ever that we can say today we achieved then to be back with all our peers and we achieved what we set out to do so.

So I would like thank you, like to thank my Executive Board, and I am not retiring because I think we are at the top of a market. On the contrary, I think the market top is not even yet in sight, and I certainly don't think that the top of Credit Suisse is in sight. So, because there is a lot more to come, but that is for much younger people to experience and I wish them a lot of fun. And I'm sure they will prove to you what I have told you all the time, that our stock is much too cheap and is a great investment.

Now, before I make too much advertisements here, let's go over to the results and prove to you what I have said before.

2006 was a record year for Credit Suisse, a year marked both by major achievements and excellent financial results. We increased our net revenues by 23% to CHF34.9b in 2006. This strong revenue growth significantly outpaced a 5% rise in operating expenses, resulting in a pre-tax income of CHF10.7b from continued operations. This was double our pre-tax income in 2005.

Our income from continuing operations, which is the result for the Banking business alone, was CHF8.3b. The result for Winterthur, which is reported as income from discontinued operations, was CHF3.1b. This results in net income of CHF11.3b for 2006, namely up 94% from 2005.

So, basic earnings per share, which is a number everybody should look at, from continuing operations went up to CHF7.53 in 2006. And basic earnings per share, which are a key indicator of our growth and profitability that now including the Winterthur result, doubled to CHF10.30. Our return on equity was 27.5%. Excluding the Winterthur, the return on equity was 23.1%. But there you have to naturally add the equity we got back from Winterthur; that's why the number is relatively low.

These results clearly demonstrate the accelerated progress we made in growing our business and improving profitability in 2006, also while strengthening our operating efficiency.

Turning to our individual segments, in Investment Banking we performed very well in terms of both revenue growth and efficiency. Private Banking is going through an investment cycle, investing in its international expansion. But, even during this time, I expect Private Banking to remain ahead of the competition in terms of profitability.

Asset Management is completing its realignment. It is aimed at 2011 with a good platform to achieve strong profit growth and coming back to normal profitability.

Our integrated banking model proved very successful and provided us with an effective platform to capture the growth opportunities resulting from high levels of client activity. Most important, our clients responded well to our integrated approach.

Ladies and gentlemen, 2006 was a record year in terms of our financial results. But, looking back, I believe we should be most proud of the strong foundations we have laid for future growth. We achieved very good results in Investment Banking in 2006, reflecting a strong performance in all key businesses and regions amid favorable market conditions, high levels of client activity and improved market share in a range of products. Against this backdrop, we generated record revenues in advisory and debt and equity underwriting, and significantly increased our trading revenues.

Highlights in Investment Banking in 2006 included our continued leadership position in some of the world's fast-growing emerging markets such as China, Russia, Brazil and Mexico. We also maintained our leadership position in other important growth areas such as commercial mortgage-backed securities, leveraged finance and financial sponsors.

In our Private Banking segment, which comprises Wealth Management and Corporate and Retail Banking businesses, we delivered very strong results with significantly higher net revenues compared to last year, 2005. This revenue growth outpaced an increase in total operating expenses, driven partly by ongoing strategic investment in the Wealth Management business. We continued to expand our global reach in Wealth Management through 2006, and announced the launch of new onshore operations in Brazil, Russia, Australia, Qatar and Lebanon.

Now, Asset Management segment. We generated strong net new assets of nearly CHF51b in 2006, including alternative investment assets of CHF12.5b. Our net revenues before private equity and other investment-related gains increased due to higher Asset Management revenues and private equity commissions and fees. We achieved further progress in the realignment of Asset Management during the fourth quarter of the year, as part of the previously announced repositioning of the business with low profitability, reshaped the product offering, improved the investment and sales processes and reduced the overall cost base.

We continued to invest in expanding the geographic footprint of our Asset Management businesses in key markets in 2006. But we also took steps to broaden our alternative investment business with a series of strategic alliances aimed at adding new capabilities and at increasing our product offering. Asset Management plays a crucial role within the integrated bank as an area of product innovation and as an important distribution channel. In 2006, we made the necessary changes to prepare our Asset Management division for the vital part it will play in the global expansion of Credit Suisse.

Based on our good performance in 2006, I am very confident that we can achieve our goals. But let me stress how important our integrated business model and our global investments are. Without this platform we would not be able to realize our ambitious growth plans. In 2006 we will further accelerate the expansion of our business. For this purpose we have defined three clear strategic priorities.

We will continue to capitalize our integrated business model by building on a series of targeted internal initiatives that drive revenue growth and reduce costs. We will deploy our capital as efficiently as possible. The target for our investments is an annual rate of return of at least 20%.

We will continue to expand our activities in high-growth markets and products. For example, we signed an agreement to acquire the Brazilian asset manager Hedging-Griffo in the fourth quarter of 2006. This strategic step will help us to leverage our integrated banking model in Brazil to provide our comprehensive range of Investment Banking, Private Banking and Asset Management services to onshore clients in this market.

We also aim to realize our third priority, through measures, such as the expansion of our activities in dynamic emerging markets and the growth of leading businesses and products, including alternative investments and structured products. Our objective is to generate long-term sustainable returns. We will therefore focus on investments in businesses which fit our model and are in line with that objective.

Ladies and gentlemen, I am very pleased about what we have achieved in 2006. We have improved our profitability and created a platform on which we can operate efficiently, regardless of the market environment. I am conscious of the gaps we need to close. Given our recent performance, I am very confident that we will close them relatively rapidly. I am very positive about our opportunities. Credit Suisse has a wide business model, with the global presence, the capital, and, most importantly, the people to create value for our clients and for our shareholders.

So now we will go into some more detailed explanation of our results with our CFO, who will take over from me now.

Please, the stage.

Good morning to everyone. Thank you, Ozzie. I will walk you through in more detail through the financials of the Group over the next few minutes. And I will start with the overview of the performance, on slide five, of the Group.

Credit Suisse recorded record income of CHF4.67b for the fourth quarter. Our pre-tax income stood at close to CHF3.4b, again a record result and a significant increase compared to the previous quarter as well as the same period last year.

For the last time, the P&L includes the contribution from Winterthur within the results from discontinued operations. This contribution amounted to CHF2.1b in the fourth quarter, which included a gain of the sale -- on the sale of CHF1.8b, as indicated to you already on our Investor Day. Income from continuing operations, that means the Banking businesses, stood at CHF2.6b. This line item will be the basis for the comparison of our performance during 2007 and going forward.

Earnings per share, again excluding the insurance business, increased to CHF2.42 for the quarter.

Strong performance this quarter was driven by the record pre-tax income of CHF2.3b achieved in Investment Banking, as shown on top of this chart. This reflected strong results in all key businesses and regions, amid high levels of client activity and improved market share in a range of products.

Private Banking recorded a pre-tax income of CHF1.14b in an environment that was characterized by strong equity markets, leading to strong client activity and a good increase in revenues. Operating expenses also increased, reflecting the ongoing strategic investments in respect of international growth in Wealth Management, and new business initiatives in Corporate and Retail Banking. The pre-tax income in Asset Management was down to CHF89m. This reflected lower private equity gains compared to the strong fourth quarter of 2005 and higher operating expenses, partly due to realignment costs.

Slide six shows the earning progression of our businesses over the last three years. When excluding the litigation charges and related insurance settlements received, pre-tax income for Investment Banking more than doubled to CHF5.4b in 2006. Private Banking continued to show a strong annual pre-tax income growth of 16%, which included a 22% increase in Wealth Management. Results in Asset Management reflected a year where our focus was on realigning the business for future growth. We expect the Asset Management division to return to more normal profitability levels during 2007.

Let's have a look at Investment Banking, starting on slide seven. We produced record fourth quarter and full-year results in both revenues and pre-tax income. We made progress in implementing our strategy to deliver a more profitable franchise. Consequently, we have achieved a number of the financial objectives set out for this business two years ago, while continuing to make incremental progress in other areas of our strategy. While delivering strong revenue growth, we also began to see signs of early progress in our cost management initiatives during 2006.

Let's look at the businesses in detail, starting with the underwriting and advisory businesses on slide eight. Combined advisory and underwriting fees were a record in the quarter and were up 65% from the fourth quarter last year, driven by high levels of deal activity and volumes, and improved market shares in M&A and equities. These strong results also reflected our participation in several high profile underwriting and advisory transactions, and the increase in the breadth and diversity of our businesses. Noticeably, advisory fees were up 75% in the fourth quarter compared to last year, due to increased activity and a number of high-fee transactions. For the full year, combined advisory and underwriting fees stood at CHF5.4b, an increase of 38% from 2005.

Let me now continue with the trading results on slide number nine. Fixed income markets were favorable in the fourth quarter as credit spreads remained tight, supporting continued liquidity and buoyant activity levels. Revenues during the quarter increased 76% from last year to CHF2.8b, and represents the second-best performance ever in this area. Only the first quarter of 2006 saw higher revenue levels. These results reflect a strong contribution from CMBS, emerging markets, foreign exchange and leveraged finance.

The commodities business also showed further progress in the quarter. The CMBS business benefited from a number of large deals in the quarter, while the leveraged finance trading business was positively impacted by significant new issues in the high yield market.

For the full year, fixed income trading revenues were up 37%. We are continuing to see greater geographical diversification in the revenue base, as well as making good progress in contribution from those businesses where we have revenue gaps compared to our peers.

Now let's look at equity trading results on slide 10. Revenues of CHF1.6b in the fourth quarter were up 56% from the same period last year, and were also the second-highest level of quarterly revenues for this business. Contribution from derivatives showed a significant improvement, supported by better market conditions and high levels of client activity. The cash businesses contributed strong results, benefiting from an increase in activity in most regions, stronger secondary markets and continued strength in our AES business. Proprietary trading also reported strong results across most strategies and regions in the quarter.

Before we leave the trading results, let me briefly review our value-at-risk numbers. As you could see in our publication, the Investment Banking average value at risk in the fourth quarter was down CHF9m from the prior quarter to CHF71m, mainly due to reduced equity and interest rate exposures, while the commodity risk increased. We continue to conservatively manage our risk with controlled growth when we see the right opportunities in the market.

Let me now go on to expenses in Private Banking -- in Investment Banking, as set out on slide 11. We are pursuing sustainable long-term cost/income ratio reductions, as we have said many times. Given the strong performance in the fourth quarter, we were able to reduce the compensation-to-revenue ratio in that fourth quarter to 42.2%, which is significantly below the accrued level in the first three quarters of the year. This reduced the full-year rate -- ratio to 50.1%. In addition, our level of non-compensation costs is down compared to the same quarter last year and from the previous quarter. We are starting to see initial results from the cost management initiative and expect to see continued progress in 2007.

Now let's see how this is reflected in the pre-tax margins on slide 12. We have significantly increased our pre-tax margin in 2006 and, as mentioned at the Investor Day, we will continue to reduce the remaining gap against peer performance. We believe that there is still significant upside for the business to come. But the performance in the fourth quarter also shows that we are able to achieve a pre-tax margin level which is comparable to our peers.

When adjusting for the insurance settlements received, the full-year pre-tax margin was 27%, above our original pre-tax margin target of 20%, as you may remember. We recently increased our mid-term pre-tax margin target to 30% for Investment Banking. We will continue to build up on our existing strong franchises, which include emerging markets, leveraged finance and our CMBS businesses.

During 2006, we maintained our leading position in some of the fastest-growing emerging markets. In addition, we will continue to grow businesses where there are gaps for peers, such as prime services, commodities and derivatives. This will also further diversify our revenue mix and reduce earnings volatility. With this foundation in place, we are well positioned to leverage revenue synergies obtained through the integrated bank with a strong focus on delivering solutions and support to Private Banking and Asset Management clients.

Let me now move to Private Banking, which starts on slide 13. Private Banking achieved record profitability in 2006 and in the fourth quarter Wealth Management and Corporate and Retail Banking showed strong performances. We remain focused on our strategy to provide more value to our clients through the integrated bank model, actively growing the global footprint and maintaining a market-leading position in the Wealth Management business.

In addition to increasing the scope and geographic reach of our franchise, we are also dedicated to providing more value to our clients through the continuing improvement of existing services and new innovative products. In response to client demand, we introduced more than 350 tailor-made solutions in structured investment products in the last quarter alone.

Let me move to Wealth Management on the next slide. The fourth quarter of 2006 was generally characterized by very good equity markets, which led to strong client activity. Pre-tax income in Wealth Management increased to CHF811m. This good result was primarily driven by strong revenues, which were the second best quarterly revenues ever, despite the seasonal slowdown in December. Full-year pre-tax income increased 22% to CHF3.24b. In particular, we achieved overall profitability in our European onshore Wealth Management businesses one year ahead of our original plans.

Net revenues, as shown on slide 15, increased to CHF2.1b in the fourth quarter, mainly from higher brokerage and product issuance fees, reflecting the stronger client activity. Interest income also increased as a result of higher margins and volumes on the liability side. The gross margin recovered to 109 basis points in the quarter. For the full year, the gross margin stood at 112 basis points, almost the same level as achieved in 2005, despite continuing strong growth in net new assets.

This brings me to the next slide. In the fourth quarter, Wealth Management net new assets amounted to CHF8.6b, mainly driven by inflows in the European onshore business and in Asia. This reflected the seasonal slowdown but was an increase of CHF1.8b compared to the fourth quarter of 2005. Despite the seasonal slowdown in the fourth quarter, net new assets for the full year were a record CHF51b and represent a growth rate of 7.3%, exceeding our 6% mid-term target.

These results further provide evidence of our continued momentum in asset gathering. At the year end, assets under management amounted to CHF784b, an increase of CHF91b or 13%, as a result of strong net new assets growth and higher valuations.

Let me move to slide 17, where you can see operating expenses, which increased 12% during 2006. This was in line with the strategic investments made in building our global franchise and higher performance-related compensation expenses, in line with the better results. During the year we added a net of 115 relationship managers, primarily outside Switzerland. The total number of relationship managers now stands above 2,800. The full-year pre-tax income margin improved 2.3 percentage points to almost 40%.

We now make a few comments on slide 18 on the Corporate and Retail Bank. Pre-tax income remained fairly stable at CHF332m. Revenues improved 4% during the year due to an increase in asset-based commissions and fees. The increase in net interest income was largely due to an increase in liability margins and asset and liability volumes, partially offset by lower asset margins. Net releases of provisions for credit losses amounted to CHF24m in the fourth quarter. Future releases of credit provisions are expected to slow down due to a decline, of course, in the amount of impaired loans.

In Corporate and Retail Banking we consolidated our Consumer Financing business to form an independent subsidiary with its own banking license and a new brand called Bank Now. Independent status will enable it to position itself more clearly as an efficient and specialized supplier to this market segment. We are now able to provide a more targeted response to our clients' financing needs, which have grown constantly over the last few years, and to strengthen the current market position. Bank Now has a market share of around 27% in the private credit business and 10% in car leasing.

Let me move to Asset Management, starting with slide 19. In our Asset Management division, results were affected by two key factors. First, we incurred realignment costs of CHF225m during the year, consisting of severance payments and non-cash impairments of intangible assets amounting to CHF140m. In addition, this year's private equity gains were around CHF200m lower than in 2005, which was considered a very strong year for our Private Equity business.

We generated healthy net new assets of CHF51b in 2006, including alternative investment inflows of close to CHF13b. Significant progress was achieved in the realignment as part of our strategy to strengthen and reposition franchises with low profitability. We have been reshaping our product offering while improving the investment and sales processes. And, in addition, we continue to invest in expanding the geographic footprint in key markets.

We have taken steps to broaden our alternative investment business with a number of strategic alliances aimed at adding new capabilities and increasing our product offerings. The acquisition of Hedging-Griffo as the leading and well established onshore business to the high-growth market of Brazil. Hedging-Griffo manages over CHF9b in assets under management for high net worth individuals and has increased assets at average annual growth rate of 39% over the past three years.

While I mention this transaction with the results of the Asset Management division, this transaction will also benefit other businesses under the integrated bank as it adds capabilities to our leading Investment Banking franchise, Garantia in Brazil, and also provides onshore capabilities in Wealth Management.

Asset management revenues and private equity commissions, as shown on slide 20, increased 18% compared to the fourth quarter last year and 12% for the full year. This increase was mainly driven by the growth in assets under management, higher year-end performance fees and placement fees for Private Equity fundraising commitments. Private equity and investment-related gains decreased to CHF92m in the fourth quarter and CHF502m for the year. Fourth quarter included the write-down of CHF36m on a single investment. The gross margin on assets under management, excluding the gains, was lower at 37.3 basis points for the full year, primarily as a result of the change in asset mix.

I will come back to that point after we discuss the net new asset trends on slide 21. We recorded net outflows in the fourth quarter of CHF2.9b as we experienced the usual cyclical year-end redemptions in U.S. money market funds. These outflows normally flow back into our organization in the first quarter. For the full year, net new assets of close to CHF51b included money market assets of CHF33b and alternative investments of close to CHF13b. These substantial asset inflows demonstrate our asset-gathering capabilities, despite the realignments taking place throughout the year at the same time.

Total change in assets under management is shown on slide 22. We have experienced a 58% or CHF37b growth from money market assets. Now, these assets carry a lower gross margin and thus somewhat dilute our overall gross margin. The net contribution of these asset classes is nevertheless value enhancing, as we are running this business very profitability at a critical size out of our U.S. operations. As we continue to establish more very valuable client relationships, we also see increased cross-selling opportunities of other high-margin asset classes into this client base.

Second highest growth, both in percentage and in absolute amount, we experienced in the alternative investments area. This asset class now accounts for 21% of our assets under management and is expected to show continued high growth rates.

This concluded my discussion of the divisional results. Before Ozzie will wrap up the presentation, I will review the Bank's capital position and our performance indicators.

Our dividend plans are shown on the top left of slide 23, we already announced on our Investor Day in January. The regular dividend increased by CHF0.24 to CHF2.24 is in line with our policy to show a steady increase in dividend per share payouts over time. We will also propose a CHF0.46 capital return in form of a par value reduction. We also announced our plans to launch a new three-year program to repurchase stock worth up to CHF8b. And we also expect to complete in full the current CHF6b program by April this year.

With the completion of the current CHF6b program, we will have returned over CHF13b of capital to our shareholders over a two-year period. This total capital return represents an impressive 30% of our shareholders' equity, as of the year end 2006. As also shown on the right-hand side of the chart, our Tier 1 ratio at year end stood at 13.9%, as we no longer have to deduct 50% of Winterthur's net asset value because we got the cash for it.

Also, the positive contribution from the quarter's net income was offset by additional dividend accruals and a deduction for share repurchases.

Slide 24 shows our net -- a new set of performance indicators, as shown to you at the Investor Day. We will measure and report our Bank's results based on these indicators in the future. In addition to the long-existing minimum return on equity target of 20% and the target Tier 1 ratio of at least 10%, we have introduced additional measures as we adopt an integrated approach in looking at the performance of the Bank as a whole.

Most importantly, we have set a double-digit annualized earnings per share growth mid-term target. In terms of efficiency, we will continue to drive sustainable improvements in order to achieve a top quartile cost/income ratio.

And, last but not least, we believe that our strategy will provide superior total returns to our shareholders, measured in terms of share price appreciation and dividend returns. As mentioned, we will report on these measures not only here in the slide presentation but also in our quarterly reports.

That concludes my part of the presentation and I will now hand back to Ozzie. Thank you very much.

Thank you very much, Renato. There you go, you've got all the figures now. Before we go into Q&A session, and we will start with the analysts first and after a break then have the media, I would like to ask Brady Dougan and Paul Calello to say a few words about their new responsibilities. So, Brady, please.

Thanks very much, Ozzie, and thank you, Walter, for your comments earlier. Over the past two and a half years we have made remarkable progress and I think our 2006 results are proof of that progress. We have created an integrated bank with one brand. We've built a powerful platform for serving our clients and one with tremendous growth prospects.

The seeds of this success were sewn back in 2004 by Walter, Ozzie and the Board. They set out a vision for the Bank which was embraced by the management team and under Ozzie's leadership we have built an integrated bank organization. While we have begun to see the benefits of the strategy, I firmly believe that we are just scratching the surface. I think that we can continue to execute on our strategy and continue to build Credit Suisse into one of the world's premier financial institutions.

We owe an enormous debt of gratitude to Ozzie for his leadership in driving the strategy and the creation of the one bank model. He was uniquely qualified to lead Credit Suisse at an important moment in its history and we're a better organization because of the culture of teamwork, excellence and success that he instilled. He raised the bar. He brought out the best in all of us. And I'm certainly personally grateful for the support and the guidance that he's given me.

I'm also honored by the confidence that Walter, Ozzie and the Board have shown in me by appointing me to this leadership position. I think we're extremely well positioned for further growth and achieving our vision of becoming one of the world's premier global financial institutions.

We have the right strategy. We have great people who are completely focused on what our clients want and the right platform to deliver our ambitions. I'm excited to have been chosen to lead Credit Suisse, to build on our achievements and continue the momentum. I believe that the continued growth of Credit Suisse as an integrated global bank is one of the greatest value-creation opportunities in our industry.

This, of course, depends on getting it right with clients and there is clear evidence that with one bank we are doing just that. It also depends on us all working as a team across Credit Suisse to deliver this and there are very encouraging signs that this is happening.

As I assume this new post, I am extremely fortunate to be working with a senior management team that I respect immensely and have come to know well. And I'm looking forward to being based here in Zurich. I'm not a newcomer to the city, having traveled here extensively over the past 17 years, and I've always loved it here.

With that, I will turn it over to my friend and colleague of the last 20 years, Paul Calello, who, as Walter mentioned, will be taking over as CEO of the Investment Bank from me.

Thank you, Brady, and thank Walter and Ozzie and my fellow Executive Board members. I'm honored, delighted to be -- have this opportunity to run the Investment Bank. It's a great honor. As Brady said, I've also been with Credit Suisse for 17 years. I've had the opportunity to spend over 12 of those years outside of the U.S. in Hong Kong, Tokyo and London. And, through that experience, had an enormous opportunity to work with many of my colleagues now in the leadership position throughout the Investment Bank. So I know that part of the business very well. And, of course, as Brady just said, we have worked together for about 20 years.

But I think this latest -- last five years as regional head, CEO, of Asia Pacific region has been extraordinarily rewarding. And it really has given me the opportunity to work very closely with my colleagues in Asset Management, in Private Banking and the shared service area, and really get to know the rest of the firm, working more closely with my colleagues on the Executive Board in that capacity. And probably, and as well most importantly, it's also really demonstrated to me just the power of the integrated bank. And I've seen it, as we have looked to deliver the integrated bank model to our clients in the Asia Pacific region.

So, as I step into this Investment Banking division role, I believe we can bring that strategy of the integrated bank model into the division. And, again, I'm honored to have that opportunity, to be given that opportunity, to take advantage of the momentum and success that's been created in the Investment Banking division, and leverage that to take it to the next level for Credit Suisse. Thank you and thank you for your support.

Ozzie?

Thank you, Paul and Brady. So now we go over to the question session and please we have only the financial analysts now. And we will take the questions first from the floor and then from the phone.

We will now start taking questions from analysts. [OPERATOR INSTRUCTIONS].

Philipp Zieschang from UBS. I would have two areas to focus on. One is the Investment Bank and one is Asset Management. Just quickly on the Investment Bank, obviously you ended the year with a full year comp revenue ratio of around 50%, which is accruing 53.5% in the first three quarters. You've mentioned at the Investors' Day that versus the first nine-month level you wanted to reduce the comp ratio level. Is the 50% something you would expect going forward as well?

Second question on the Investment Bank in terms of revenues. Were there any particularly lumpy items in there in the [diluted] quarter? And obviously the markets were great but could you also, a bit in hindsight, comment what particular changes you have made over the past two and a half years which have enabled you to benefit from these good markets to such a great extent?

Turning to Asset Management, just one question. Is there any kitchen sinking element in Q4? And you've mentioned that you mean that you returned back to normal profitability levels. I remember there's a CHF1.1b pre-tax target, or at least it used to be communicated for Asset Management. Is there any reason why we shouldn't believe this is still in sight?

There is no reason.

Good, thanks.

Brady, you want to answer the Investment Banking questions? I think that was an obvious one, the cost/income ratio -- not cost/income ratio, the comp revenue ratios, yes.

Yes. Obviously we were -- with the results of 2006 we were pleased to bring the comp revenue ratio down to 50.1%. We said over time that we're going to continue to be disciplined about our cost base in general and that certainly includes the compensation line. I think obviously that result, the 50.1% result, is a result of a very good performance in the year and in the fourth quarter.

We'll obviously continue to try to be disciplined in bringing down that comp to revenue ratio but we're certainly -- we're not going to start accruing certainly in 2007 at that kind of level; it will probably be a higher level. But probably to the extent the business performs, we'll be looking to continue to show discipline in that number.

With regard to the other part of your question on the Investment Bank, the fourth quarter was really an exceptional performance across -- very broadly across our businesses. There were really no particularly lumpy areas there. We had really strong performances across all of our business areas. You can see from the numbers fixed income trading had a very strong quarter, as did equity trading, as did our banking businesses. So it was really a very good performance across a very broad spread of businesses.

And I think, in terms of what we've done to produce that, it's really, I think, a lot of what we set out on Investor Day, which is we've taken our strong franchises, we've invested in them, we've built them out globally around the world. We've worked hard to try to close some of our gap areas. We've pushed hard on the profitability of some of our other businesses, and we've also focused on the cost side. And all of those things, I think, came together in the fourth quarter.

Clearly, not every quarter is going to be that strong and we'll see some variability going forward. But our belief is that this shows that we are making progress in building our platform to produce consistent earnings going forward. So we believe it's very strong evidence of good progress.

We also hope some quarters going forward will be even stronger, so. But it was not achieved taking more risk or whatever, it was good business conditions only and -- do we have any other questions in here? There was somebody over here. Yes.

Kilian Maier from NZB Neue Zurcher Bank. In the past you always mentioned that you will improve your prop trading operations and obviously that was a part of your strong results as well. Are you now there? Are there -- is there more to come or are you satisfied with what you have achieved now? And how much -- how big is the impact on the results?

I don't think we are there yet, what we want to achieve there but, as far as I know, it -- prop trading had only a certain part to do with the fourth quarter results. But I think Brady can give you more convincing details there.

I mean on the prop trading side we -- as we stated, part of our strategy is to continue to build out a diversified disciplined selection of prop trading businesses. I think in the fourth quarter we continued to make progress towards that. I think as Ozzie mentioned, though, it wasn't a particularly large feature of our fourth quarter performance. But it was an area where we continue to make progress. But it is still a process where we're building, again, a diversified set of proprietary trading businesses where we can take disciplined risk and over time make very consistent returns. So that certainly showed continued progress in the fourth quarter but it wasn't a major element of the fourth quarter earnings.

If there are no further questions here, we'll take questions now over the phone.

The first question is from Mr. Derek De Vries, Merrill Lynch. Please go ahead, sir.

Good morning. I have two questions. The first is in the Investment Banking business. I was wondering if you could quantify and then qualify your exposure to sub-prime mortgages and sub-prime mortgage providers in the U.S.

And then the second question is on the Private Banking, where you said you were going into an investment phase. And I guess you used the Private Bank to plug some holes in places in past years, so it makes sense to invest there. My question is if you could elaborate a little bit more on -- obviously you'll hit your 20% hurdle. But what areas you're looking at and what kind of return on investments you'd expect in year one and two of those investments?

Okay. I'm sure, Brady, you are pleased to give some advice on sub-prime mortgages to Merrill Lynch.

I don't know if I would get into details about quantifying our sub prime exposure. What I would say is that obviously the residential mortgage, backed securitization business, is an important business for us in the U.S. We are, however, in a business of securitizing and selling out -- originating, securitizing and selling out residential whole loans and clearly we are active in the sub prime area as well.

We have -- that business has continued to perform well for us because of the fact that we are not in a buy and hold business. We are in a securitization business. We basically did see signs that clearly the market was weakening late last year. We really took action on it at that time, in terms of reducing our originations and making sure the quality of our originations were good. And, as a result, our residential mortgage backed business had flattish revenue performance last year, but in our view that was pretty good performance given the conditions in the market.

So we clearly do have a portion of our business in the sub prime area. We originate, securitize and sell them, however, and the -- and our business, actually, in that area is performing pretty well.

Do you want to say something about the outlook of the business, going forward?

Our view is that clearly this is going to continue to be an important business sector over time. We actually probably feel that it's closer to a bottom in terms of the issues in that market, but some of the problems may continue for a bit longer. But we think it's probably closer to a bottom. But we do believe that longer term that's going to be -- it's going to continue to be an important and a growing market over time. And so that's something that we want to continue to participate in from a securitization point of view.

Thank you. Walter?

Okay. It works, okay. Just quickly on the growth prospects of Private Banking and our investments, obviously outlined those on the Investor Day. We are targeting roughly about [700] relationship managers till 2009. Normally it takes about between 18 and 24 months to make it profitable. The underlying target for us is a pre-tax margin of 40%, so during these cycles, and a net new asset growth roughly about 6%. So that's about the growth prospects we have going forward.

Great, thank you very much.

Thank you. Next one, please.

The next question is from Mr. Matt Spick, Deutsche Bank. Please go ahead, sir.

Good morning. Just a couple of small questions, firstly in the Investment Bank, obviously incredibly strong overall. But one number I was hoping you could help me with a little bit was the other revenues from the loan portfolio, which was negative. And I understand that that's because you would have lost money on the credit hedge portfolio that you've got in place there. But it looks like that number would have been slightly negative even without those hedges. So what's the underlying drivers of that line? And what would the number be, or would it be positive or negative if there was no change in credit spreads in the quarter?

Just a second question as well, quite detailed, on the Asset Management division. You commented that you lost CHF22m on a third party hedge fund. I was just wondering if you could elaborate on whether that was a hedge fund you'd had a long-term relationship with, whether it was something that you'd sold to your clients and you'd perhaps underwritten that effectively for the clients and redeemed them for the losses there, or if you could give some more comments on your strategy for third party hedge funds.

And then, just finally, on the sub prime point. I guess, as well as the comments you've made, if you could confirm that you've bid for ResMAE Mortgage, the sub-prime mortgage lender in the U.S? I know that's a small transaction but I guess that underpins the point you're making, that you believe in the business long term. Thanks.

We certainly believe in sub prime business long term and, as you heard, Brady [inaudible] that we think the market is nearer bottom than the top. And do we have anything to say, always me or? That is a transaction, I think, where we had -- a person shouldn't say anything, so you have to go by the press report. And now we go to Asset Management. David?

The one point, I mean that's a policy. The third party hedge fund, the fund product, which we sold to the private bank, and we built a provision for that due to an expected loss there, that's all.

Brady, on the other problems.

Yes. I think in the fourth quarter the other -- in the fourth quarter numbers in 'other', I believe are simply as a result of the CDS hedging portfolio against the loan book. So I believe that's certainly the bulk of the fourth quarter performance there that was negative. So that's happened in the fourth quarter.

If you're looking at the full year performance, I think that number compared to last year is also a little lower because of lower realizations on legacy private equity positions. So I don't know if your question was specifically to the fourth quarter or to the full year, but the fourth quarter is really CDS. The full year might include also some reductions as a result of lower legacy private equity gains.

Okay.

Could I just ask a follow-up question on the CHF22m in the Asset Management business? Is that what I should consider an exceptional action? Or would you generally take a provision against losses and hedge fund the fund products sold to your Private Bank? Thanks.

No, certainly it's -- that's an exception. It's the first time that we had to take such a step and usually this is not something we'd expect to happen going forward. So it's a one-off.

Thank you.

Okay. Thank you, Mr. Spick. Next one, please.

The next question is from Mrs. Fiona Swaffield, Execution, London. Please go ahead, ma'am.

Hi. Just coming back to the staff cost to revenue ratio within the Investment Bank of 50%. Could you talk a bit more about why you decided to have a step change? Because obviously it could have been 52%, it's quite an aggressive level. Is it something to do with revenue mix? Is it something to do -- I think at the Investor Day you talked about a deferral of comp -- or staff-based expenses -- share-based expenses, sorry, the fact that you're upping the share compensation portion. So has that had a big impact potentially?

And in terms of the Private Bank, could you talk a bit more about the growth in relationship managers? It seems pretty low relative to very aggressive growth seen at your peer group. Is that because you're losing or is it because you just don't think that the growth opportunities are there, relative to your peers?

And then the third issue is you talked at the Investor Day about your revenue growth split between, I think it was gap, strengths and ranges of other businesses. I wonder if you could talk whether there's been a considerable change in the full year numbers now. Is it that the gap businesses are performing particularly well relative to what they were at the nine-month stage? Or has there been a change? Or is it, as you said, absolutely everything is doing well? Thanks.

Taking the last one first, certainly I think you can see when you analyze the numbers that we closed some gaps in the fourth quarter, and -- like the performance gap and which we had in Investment Bank to our peers and -- but also in some -- if you look at the numbers on how much we increased revenues in some areas. But closing gaps is not one thing you do in one quarter, and that has to happen over a longer period. And so I'm sure we still have some gaps [technical difficulty] work on to close them over the coming year.

And coming back to the comp revenue ratio, so in the past year certainly we had more or less throughout the year the same fixed comp revenue ratio. I think probably going forward, like all investment banks, our comp revenue ratio will move in a way as the business is producing more or less revenues and --

So we -- it is not so long ago and if I can remind you when -- namely when we created the integrated bank and the division of Investment Banking. Though when we started there our comp ratio in 2005 or so was way above 56% in Investment Banking because it has no Asset Management and certain things we took out there. So we moved it down to around 50%, where most of our peers are. And also going forward I think we want to have peer performance there in that respect.

So sometimes I presume some quarters will grow a bit probably a bit higher, and the months and quarters probably will be a bit lower. Walter?

On the relationship manager side for 2006, we obviously had a slow start at the beginning of the year. We catched up very well at the second half of the year. Going forward, we do think we're very comfortable achieving our targets of roughly 230 new add-ons. I just would like to stress, it's not just going to be relationship managers coming from other banks. We will do lateral hire, corporate bankers, investment bankers which are increasingly needed in -- on the Private Banking side, and clearly as well develop and train our own people.

Could I just come back to the comp -- the staff comp ratio, just whether there's been an issue with the share-based compensation, whether you're paying people bonuses more in shares, so that's flattering the ratio short term? Is that a factor or --?

No, that is not a factor.

Okay, thanks.

No, would be nice if it were. Do we have another question on the phone?

The next question is from Mr. Matthew Clark, KBW. Please go ahead, sir.

Good morning and congratulations.

Thank you.

The first question on non-compensation costs in the Investment Bank, which had a very impressive decline in the fourth quarter. I was just wondering how much of that was due to timing issues, where maybe expenses related to business carried out earlier on in the year was booked earlier on the year, but the revenues didn't flow through till the fourth quarter. And what kind of level we should look at as a base for future years?

Second question is just on Hedging-Griffo and where that business is going to be booked within your division. So is it all in Asset Management or will some be in the Wealth Management division?

And then just a third question. I was wondering if you could give us the Investment Banking division headcount in absolute terms, how that's changed over the last 12 months and what your plans are for the next 12 months. Thank you.

So, Brady, now you are in trouble. You have to say what your plans are for the next 12 months in Investment Banking.

Well, yes. Well, first of all, on the non-comp costs, the fourth quarter results were -- is not the result of any kind of a timing issue. In fact, as you may recall, in the fourth quarter a year ago we actually had an issue where in the fourth quarter more costs got piled up, sort of delayed during the year or so. We have been trying to be much more disciplined about making sure that the expenses, as they are incurred, are expensed in those quarters, so. But, no, the fourth quarter is not a result of some revenues that then will give rise to costs later. We continue to take a very disciplined approach to expenses and we hope to continue to bring those down over time and we'll see how that works.

In terms of the headcount -- specific headcount numbers and my -- do you want to answer the other question while I just get the number? I can give you a general qualitative response but --

In Hedging-Griffo, the Private Banking part is booked in Private Banking and the Asset Management part is booked in Asset Management.

Okay, thanks.

I think -- I don't actually have the headcount right here, I can maybe get it. But basically we had -- I'd say we had a moderate increase in heads last year during the year. We're trying to be disciplined about adding headcount in areas that we're looking to grow and not in areas where we're not looking to grow. And I think that will continue to be the outlook for '07.

We clearly have -- as we stated in our strategy, we have, we think, a lot of growth opportunities and we'll need to hire people to pursue those. But we're being very disciplined about making sure that those are in areas where we see real growth.

Thanks. Would you be willing to provide the absolute headcount number to IR, so that we can get it after the call perhaps?

Yes, sure.

Certainly we will.

Thank you.

Thank you. Next question, please.

The next question is from Mr. Jeremy Sigee, Citigroup. Please go ahead, sir.

Thanks very much. You've obviously beaten your '07 target a year early. I was just wondering, do you start to change your language a bit and emphasize the greater than CHF8.2b? And similarly on your Private Bank -- sorry, your Investment Banking profit margin, should we start to view the 30% more as a near-term objective?

Secondly, just coming back to the Investment Bank non-comp, you're obviously encouraging us to look at that in absolute terms. Should we -- it sounds like you're saying we should expect that number to come down further from the CHF1.2b a quarter run rate that it's been at. So could you just comment on that?

About this wretched CHF8.2b. So clearly we're showing continued operations excluding any Winterthur earnings or gains, CHF8.3b this year, but there is included this insurance recovery. So if you take that out, I could argue we are not yet there. But as I said on Investor Day, I'm very confident that we will get there this year. And I'm also very confident that we will try everything possible to do a lot more, but we won't know until the end of the year how much more it will be. Brady, on the other questions.

On the non-comp number, I guess the reason we look at it in absolute terms is obviously when you have quarter-to-quarter variations in revenue the whole non-comp to revenue percentage is a little less relevant. So obviously in the fourth quarter, where our revenues were obviously quite strong, then the non-comp to revenue percentage is going to go down obviously.

So our focus internally certainly is to continue to bring down the absolute levels of cost. They do clearly, though, vary somewhat. As your revenues grow, you do need to incur non-comp costs. But we certainly are looking at it, not just as a percentage of revenues, because that obviously will vary more.

If I could just follow up, the strength in revenues in the fourth quarter, does that -- should we factor in an increase in non-comp in any way driven by that? Or should we just continue to focus on the savings opportunity on non-comp?

Well, again, in the fourth quarter, even with the increase in revenues, actual costs went down from the third quarter and from the year before. And again, we feel that there are efficiency opportunities throughout the organization. We're going to continue to be working to drive those costs down and hopefully we'll be able to realize that over time.

Sounds good. Thank you.

Thank you. Can I have the next question, please?

The next question is from Mr. Christopher Wheeler, Bear Stearns. Please go ahead, sir.

Yes, good morning, everybody.

Morning.

A couple of questions. The first one, a fairly speculative question, I suppose. But clearly, going through the final quarter of the Investment Bank, clearly very strong momentum given to you by your relationships with the financial sponsors, and obviously [Steve Cantor's] presentation at the Investor Day reinforced that. But a couple of questions there. Really, given that obviously you're not going to tell us quite how much of your earnings comes from that area, but first of all, we've got some mixed messages on the private equity market at the moment.

On the one hand we're hearing CHF500m will be raised this year -- CHF500b will be raised this year against CHF430b last year, so it's positive. On the other hand, obviously we saw a fairly aggressive auction for EOP, which is telling us how difficult it is to get hold of targets. And indeed, today, we have the CEO of [Primara] meeting with the head of the biggest trade union in the United Kingdom to try and discuss the fact that they've accused him of being an asset stripper. On the one hand, you're in positive, on the other hand some questions being raised. I would be interested on your views on exactly how long you think this particular -- that the strength of this market will continue.

And I think secondly, and perhaps more interestingly, there must be now a comparison towards what you experienced in the early part of the decade. You had a fantastic business in TMT. That market slowed, it hurt you a great deal. What lessons did you learn from that you think you can actually -- can help you mitigate when we do see a slowdown in this obviously [variable] market? That's the first question.

The second one, which is a bit simpler, is that the head of Wealth Management at Deutsche Bank very kindly told us how much he lost in PCS in Deutsche Bank last year. Could you give us any clues as to what you actually lost in that business this year and, perhaps more importantly, what the movement was between '05 and '06? Just to give us a feel about whether -- what is the underlying performance of your core business. Thank you very much.

Thank you very much and let me make a quick guess on what we think how the private equity market will develop. And as long as you have interest rates where they are, and as long as you have central banks measuring inflation on mainly imported goods, imported tradable goods, and not what's going on necessarily in the real estate market, and some of the other stuff which cannot be produced in Asia, and as long as you have equity levels measured on the cash flow they're producing at the levels where they are currently, I think the private equity market will continue to boom and -- so from current levels, I cannot see why the private equity market will not go on as it is presently for the next one or two years. Brady, for the rest of the question.

I would just say I agree with Ozzie that our view is that there's a lot of certainly equity to be invested and there will continue to be a lot of activity in this area. And I think it is right to note that our financial sponsors' activities, we're one of the leaders in that area. Our whole leveraged finance business certainly benefited from that. So that is something that we benefit from.

I would say, though, that it's not too -- it's not an overly large part of our business. It's clearly an important part of our business but, again, we have and we continue to work to build a diversified set of businesses. And I think that clearly we are -- we continue to look at those specific businesses to make sure that we're taking appropriate risk in them, but also to make sure that we're building out a balanced portfolio of businesses.

And that's something we've made progress but also something that we're going to continue to work to make progress on over time. And as we outlined in Investor Day, building additional engines of profitability with a diversified base is a very important goal of ours.

Thank you.

So generally I would say in the Investment Bank what you have seen in the fourth quarter is -- the result you have seen is all the different departments and the different business we have in Investment Bank worked reasonably well. And which wasn't necessarily the case in the past but I'm sure that you're surprised about that. We are less surprised about it because that's what we wanted to achieve. Walter.

On the PCS business, I guess you refer to our onshore U.S. business. All I can tell you is that we are targeting to be breakeven in 2008. Some of the numbers, we have added roughly about 56 new relationship managers this year, and we brought in 12b of net -- over 12b of net new assets. So the growth is in place and we're quite confident to reach that breakeven point.

But the business is still, and was still, making a loss in 2006, even if the loss was reduced a little bit from 2005. Thank you very much. Can we please have the next questions?

The next question is from Mrs. Joanna Nader, Lehman Brothers. Please go ahead, madam.

Hi, good morning. Two questions. Sorry to harp on this sub prime point, but just wondering, Brady, if you have any comments on whether you're concerned about contagion risk to any other asset classes, or whether you think the economic conditions in the U.S. mitigate sufficiently against this.

And then also, for Paul, now that you're in charge of the Investment Bank and you obviously have a lot of experience in Asia with the cooperation between the Investment Bank and Private Bank, just wondering if you have any thoughts or ideas about what you might do to enhance that cooperation in the other regions.

Thank you very much. Brady?

Well, I think, with regard to the sub prime markets and contagion risk, we're always obviously concerned and looking at the markets. I think our view now is that clearly, given conditions in the markets around the world, liquidity conditions, we feel relatively constructive about how the markets will progress, even with these specific issues. So while we're obviously concerned and always looking at things, I think right now our view is that there's not a high likelihood of a lot of contagion out of that area.

Paul?

Yes. As I had mentioned before and on Investor Day, we've had just an enormous amount of success in pushing forward the integrated bank. But I think we're really only scratching the surface. And certainly I look forward, in my role in the Investment Bank, working very closely with Mr. Blumer and Berchtold across Asset Management and Private Banking to make sure that we continue to get a little bit further than the surface and continue to see the gains that the integrated bank can bring to Credit Suisse.

Okay. We are running out of time here. May we have the last few questions, please, another two.

The next question is from Mr. Jon Peace, FPK. Please go ahead, sir.

Hi, good morning. The first question is just on the gross margin in the Wealth Management business. I know you've moved away from a gross margin target in favor of a net margin target. But when you first moved to your new disclosure about a year ago, I think you indicated that 112 basis points you felt would be about the right level, which is what, of course, you did for the full year. As you look forward to next year, do you think that's still a number that you'll be able to achieve on average? Or are you seeing, like UBS indicated yesterday, a mix shift perhaps in your clients which could be putting a little bit of pressure on that?

The second question is just on the run rate in Investment Bank revenues. I know you've highlighted that prop wasn't a big contribution to the fourth quarter and that the good result reflects the strong environment. I just wondered whether you'd be prepared to comment whether you see this strong environment extending nicely into the first quarter.

I think the start of the year, as we said, was very good and so there's a little bit probably of a slowdown compared to the first quarter but it is nothing to worry about. And generally what we can say so far is, and what we think, that certainly the high activity levels -- relatively high activity levels will continue throughout the first quarter, then we see again.

About your gross margin, you want to go up to it?

We're obviously managing our business on a pre-tax margin basis now. I would assume that we will -- part of that pre-tax margin is obviously to have margins around 110 to 112. But as I mentioned as well on the Investor Day, increasingly we will start generating more and more revenues in both Asset Management and Investment Banking division as an add-on.

If you want to have my five cents worth on -- any gross margin is only the result of actually the quality of the offer and nothing else.

Thank you.

Thank you. The last question.

The last question is from Mr. Kian Abouhossein from JP Morgan. Please go ahead, sir.

First of all, congratulations. Two questions. The first one is maybe prop trading. I think in 2005 you gave an indication you have about 120 prop traders. I was wondering where do we stand at this point in terms of prop trading employees. And how does your trading efficiency compare to the peers, which historically has been lagging a few years ago?

And the second question is on the return on investment. You're indicating target of 20% medium term. I struggle to find anything close to that in any market, so I'm quite interested. What markets, what businesses do you see an opportunity over the next three years in terms of 20% return on investment? Thanks.

Starting with the last question first, and there are certainly some businesses, as we just have proved in the fourth quarter, who have a return on investments of -- on capital of -- or on equity of 20% plus. And certainly that is changing; it has something to do with the expertise you have in the Company. It has something to do with how you build up your business over a certain period and, for example, CMBS business I think has a return on capital of 20% and more.

But we also very clearly said on Investor Day that we can't achieve that and don't see that the market is bringing that. So we will return the money in the form of share buybacks and -- so that is something to look forward to.

Do you want to say something additional, Renato?

Yes. Just to be absolutely clear, that's a target on return on equity and not on investments, because investments are usually leveraged. So you get more out of -- on your equity. So that's to be absolutely clear not to be misunderstood here.

Okay.

Brady?

With regard to prop, maybe I should -- I'd just like to clarify my comments from before. The fourth quarter we had a very good performance in the prop trading. I guess what I meant to say is that it wasn't a disproportionate portion of our earnings. We had very good performance and I think a very good progression. We continue to build out that business. I think right now we're probably at 180 people or something in the proprietary business. So we've continued to build it and I think build it well and, again, in a disciplined fashion.

I think our trading efficiency is actually quite good. So, if you looked at our trading revenues versus our VAR, or however you want to look at it, I think in the fourth quarter it'd probably be quite good. As I've mentioned before, it's probably more about scale. Our equity prop business is, I think, excellent, has scale and is among the leaders. Fixed income is the area that we've been building up. I think our efficiency's actually been good, it's just the scale is not quite where we would like it to be.

So, thank you very much and thank you very much for your interesting questions. We know for our part that we still have a lot to do, and not only closing some gaps but one quarter's behind us, a new one is already half over. And very soon we will show you new numbers. So thank you very much and we make now five minute break and then we go over to the media.