Credit Suisse : Financial Report 2Q21

Media Release

Zurich, July 29, 2021

Ad hoc announcement pursuant to article 53 LR

Credit Suisse posts CET1 ratio of 13.7% and pre-tax income of CHF 813 mn in 2Q21

"Credit Suisse delivered resilient underlying second quarter results and strong capital ratios as we are benefitting from having taken decisive actions to address the challenges raised by the Archegos and Supply Chain Finance Funds matters. We take these two events very seriously and we are determined to learn all the right lessons. We have significantly reduced our RWA and leverage exposure and improved the risk profile of our Prime Services business in the Investment Bank, as well as strengthened the overall risk capabilities across the bank. Our underlying business performance remains solid with a record level of assets under management in our Wealth Management and Asset Management businesses, supporting strong growth in recurring commissions and fees. Together with our more conservative approach to risk and a less favorable trading environment compared to the second quarter of 2020, we delivered a resilient underlying performance in the Investment Bank. We continue to invest in people and technology across Wealth Management, notably in APAC, as well as Asset Management and the Investment Bank. Over the coming months, we will continue to develop our long-term vision for the bank that will serve as our compass for the years ahead. Our objectives are clear: whilst we aim to further strengthen our risk culture, we remain committed to serving all our private, corporate and institutional clients with best-in-class service and advice and to creating value for our shareholders."

Thomas Gottstein, Chief Executive Officer of Credit Suisse Group AG

	Credit Suisse Group
	Reported Results			2Q21		1Q21		2Q20		∆2Q20				1H21		1H20		∆1H20
	(CHF m n, unless otherwise specified)
	Net revenues			5,103		7,574		6,194		(18)%				12,677		11,970		6%
	o/w Wealth Management-related			3,609		3,882		3,548		2%				7,491		7,314		2%
	o/w Investment Bank in USD mn			1,761		3,888		2,981		(41)%				5,649		5,136		10%
	Provision for credit losses			(25)		4,394		296		-				4,369		864		-
	Total operating expenses			4,315		3,937		4,347		(1)%				8,252		8,354		(1)%
	Pre-tax incom e / (loss)			813		(757)		1,551		(48)%				56		2,752		(98)%
Net incom e / (loss) attributable to		253		(252)		1,162		(78)%				1		2,476		(100)%
shareholders
	Return on tangible equity attributable to			2.6%		(2.6)%		11.0%		-				0.0%		12.0%		-
	shareholders
	CET1 ratio			13.7%		12.2%		12.5%		-				13.7%		12.5%		-
	Tier 1 leverage ratio1			6.0%		5.5%		6.2%		-				6.0%		6.2%		-
	Adjusted excluding significant item s			2Q21		1Q21		2Q20		∆2Q20				1H21		1H20		∆1H20
	and Archegos* (CHF m n)
	Net revenues			5,226		7,430		6,060		(14)%				12,656		11,568		9%
	Pre-tax income			1,313		3,596		1,481		(11)%				4,909		2,427		102%

Highlights for the second quarter 2021

Resilient financial performance despite more conservative risk appetite and weaker environment for transactions vs 2Q20

• Reported net income attributable to shareholders of CHF 253 mn and reported pre-tax income of CHF 813 mn. Adjusted pre-tax income, excluding significant items and Archegos*, of CHF 1.3 bn, 11% lower than 2Q20
• Adjusted net revenues, excluding significant items and Archegos*, down 14% year on year as higher AM revenues and stable SUB revenues, were offset by lower APAC, IWM and IB revenues
• Adjusted operating expenses, excluding significant items and Archegos*, down 6% year on year, mainly driven by lower variable compensation
• Comprehensive focus on enhanced risk approach implemented in 2Q21 following the Archegos and supply chain finance funds (SCFF) matters and substantial reduction in RWA and leverage exposure in the Investment Bank by USD 20 bn and USD 41 bn, respectively, compared to end of 1Q21 levels
• Additional pre-taxlosses of USD 653 mn (CHF 594 mn) relating to Archegos; publication of an independent external investigation report commissioned by the Board of Directors (see separate media release)
• Focus on returning cash to investors in the SCFF with investors receiving a total of approximately USD 5.9 bn following the upcoming fourth payment of liquidation proceeds planned for the first half of August 2021

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Media Release

Zurich, July 29, 2021

Strong capital position and higher Assets under Management (AuM)

• Strong capital base, with CET1 ratio at 13.7%, benefitting from Mandatory Convertible Notes (MCN) issuance, the impact from the Allfunds Group IPO combined with the reduction in our investment to less than 10%, a proactive reduction in RWA in the IB and the removal of the temporary RWA add-on related to Archegos; Tier 1 leverage ratio has risen to 6.0%; CET1 leverage ratio stands at 4.2%
• Joint Board of Directors and Executive Board long-term vision and mid-term plan expected to be finalized by the end of the year
• Record Group Assets under Management (AuM) of over CHF 1.6 trn at the end of 2Q21; net asset outflows of CHF 4.7 bn with net new assets in SUB and AM more than offset by net asset outflows in APAC, mainly driven by proactive de- risking, and a small net asset outflow in IWM
• Record Wealth Management AuM at CHF 853 bn, supporting recurring commissions and fees' growth of 19% year on year; client business volumes at higher levels

Highlights for the first half 2021

• Despite the challenging first half, a total Archegos-related loss of CHF 5.0 bn and our more conservative approach to risk, we concluded the period with a positive pre-taxincome of CHF 56 mn; this demonstrates the underlying resilience of our franchise
• Adjusted pre-tax income, excluding significant items and Archegos*, doubled year on year to CHF 4.9 bn, driven by growth in adjusted pre-taxincome, excluding significant items and Archegos*, across all divisions; a net release of CHF 227 mn in CECL-relatedprovision for credit losses; as well as lower adjusted operating expenses, excluding significant items and Archegos*, down 5%
• Adjusted net revenues, excluding significant items and Archegos*, up 9% year on year, at CHF 12.7 bn, driven by underlying2 growth in APAC, IB and AM
• NNA of CHF 23.7 bn compared to CHF 15.6 bn in 1H20 across the Group; NNA of CHF 7.1 bn across Wealth Management businesses in 1H21, compared to CHF 7.2 bn in 1H20

Outlook

Overall, we continue to expect more normal levels of market volumes in the coming quarters of 2021 compared to the elevated levels seen in 2020. Furthermore, for the course of the ongoing review of the Group's business strategy, we expect to continue to adopt a more conservative approach to risk.

In Wealth Management, we expect recurring commissions and fees to continue to benefit from higher levels of AuM as well as increased levels of mandate penetration, together with broadly stable net interest income. For the Investment Bank, we would expect the third quarter to reflect the usual seasonal slowdown in market activity, as well as some further impact from the resizing of our Prime Services business. We have a strong M&A advisory pipeline up both sequentially and notably on a year on year basis and our pipelines across ECM and leveraged finance are also robust.

The ongoing recovery in the global economy could allow us to continue to release part of our allowance for credit losses, which was built in the early months of the COVID-19 crisis last year, under the CECL accounting methodology. As we noted at the end of the first quarter, we would, though, expect the effective tax rate to remain significantly elevated for the remainder of the year. Following significant strengthening of our capital ratios in 2Q21, we continue to intend to operate with a CET1 ratio of at least 13% and a CET1 leverage ratio of at least 4%.

ARCHEGOS AND SUPPLY CHAIN FINANCE FUNDS UPDATE

The Board of Directors commissioned two externally led investigations into the Archegos and supply chain finance funds matters, both of which were supervised by a special committee. The investigation into the supply chain finance funds matter is still ongoing and is expected to be completed in 3Q21. Today we announced the outcome of the independent investigation into the Archegos matter and published the full externally-led report commissioned by the Board of Directors' special committee. A summary of the findings can be found in the separate media releasepublished at 06.45 CEST on July 29, 2021.

Select key findings from the independent investigation into Archegos include failure to:

• Effectively manage risk in our Prime Services business by both first and second lines of defense
• Escalate risks and to control limit excesses across first and second lines of defense
• Discharge supervisory responsibilities across first and second lines of defense

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Media Release

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• Prioritize risk mitigation and enhancement measures (including dynamic margining)

However, the investigation also found that, this was not a situation where the business and risk personnel engaged in fraudulent or illegal conduct or acted with ill intent. Nor was it one where the architecture of risk controls and processes was lacking, or the existing risk systems failed to operate sufficiently to identify critical risks and related concerns.

Of the selected key recommendations presented by the independent authors of the report, we have completed or are in progress of completing the following:

• Change leadership in the Investment Bank, including Prime Services, and Risk
• Invest in additional resources to improve risk management
• Clearly define roles, responsibilities and accountability
• Strengthen existing processes to protect Credit Suisse from risk
• Re-examinecounterparty risk appetite and controls
• Improve quality of risk information and access
• Conduct a read-across and further improve risk culture

All of the remaining long and short positions in Archegos were exited in early June and Credit Suisse took appropriate HR-related actions, including terminations and monetary penalties. The financial impact of Archegos on Credit Suisse's pre-tax income was CHF 594 mn (USD 653 mn) in 2Q21 and CHF 5.0 bn in 1H21. Moreover, Credit Suisse reserves its right to pursue claims against various third parties.

On the SCFF matter, returning cash to investors and maximizing recoveries remain CSAM's top priority. Taking into account the upcoming fourth distribution, planned for the first half of August, of approximately USD 0.4 bn, the total cash distribution to investors will stand at approximately USD 5.9 bn. Together with the cash distributed to date and cash remaining in the funds, the cash position is equivalent to approximately USD 6.6 bn, or 66%, of the funds' net asset value at the time of their suspension. With regard to the three 'focus' areas3, where we expect recovery to be more complex and take more time, we are in advanced negotiations with certain debtors on restructuring to maximize recovery, and we have set up dedicated teams of more than 60 internal and external experts as part of our efforts to maximize and expedite asset recovery. In respect of our non-focus areas, we expect overall recovery of more than 90%4. Finally, on insurance, we continue to work on filing insurance claims with the aid of Greensill Bank.

2Q21 Results - Review of Performance

We posted a pre-tax income of CHF 813 mn in 2Q21 and a net income attributable to shareholders of CHF 253 mn, impacted by a significantly elevated effective tax rate. We expect the tax rate to remain at a significantly elevated level for the remainder of the year due to only a partial tax recognition of the Archegos loss. We also recorded a release in provision for credit losses of CHF 25 mn, including CHF 168 mn of CECL-relatedreleases primarily reflecting the continued improved macroeconomic outlook. Our reported results include pre-taxlosses of USD 653 mn (CHF 594 mn) relating to Archegos as well as a pre-taxgain related to our equity investment in Allfunds Group of CHF 298 mn. The underlying business results5 were solid, given a strong comparable in 2Q20 and our more conservative approach to risk. Our adjusted net revenues, excluding significant items and Archegos*, of CHF 5.2 bn, were down 14% year on year, and our adjusted pre-tax income, excluding significant items and Archegos*, of CHF 1.3 bn, was down 11%.

Our Wealth Management-relatedbusinesses reported net revenues of CHF 3.6 bn, up 2% year on year. On an adjusted basis, excluding significant items*, revenues were down 5%. We saw strong momentum in recurring commissions and fees, up 15%, benefitting from AuM and Client Business Volume growth and an increased mandate penetration at 30%, up from 28% in 2Q20, offset by lower transaction and performance-based revenues, down 16%, due to lower client activity compared to 2Q20 and lower revenues in Global Trading Solutions (GTS). We also recorded lower net interest income, down 5% year on year, impacted by flat-to- negative net new loans in the quarter and the MCN issuance costs and lower USD interest rates. Asset Management had a particularly strong net revenue performance, up 12% year on year, driven mainly by higher management fees.

Our Investment Bank delivered a resilient underlying performance6 notwithstanding a weaker trading environment, compared to an exceptional 2Q20, a slowdown in client activity and the deliberate actions taken with regard to reductions to RWA and leverage exposure, reflecting our more conservative approach to risk and capital management. Net revenues of USD 1.8 bn were down 41% year on year. IB results included pre-tax losses of USD 653 mn (CHF 594 mn) relating to Archegos. Adjusted net revenues, excluding Archegos*, were down 23%, though the effect on our adjusted pre-tax income, excluding Archegos*, was partially offset by releases of provision for credit losses. Fixed Income Sales & Trading revenues were down 33% year on year; Equity Sales & Trading revenues, excluding Archegos*, were down 17%7; Capital Markets revenues were down 6%, or increased 23% excluding the Leveraged Finance mark-to-market gains in 2Q208; and Advisory revenues were down 34%. Revenues in GTS, our collaboration between the IB and our wealth management businesses, declined, in part due to our more conservative risk appetite in the IB as well as an exceptional

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Media Release

Zurich, July 29, 2021

comparable in 2Q20. In terms of outlook, we have a strong M&A advisory pipeline up both sequentially and notably on a year on year basis and our pipelines across ECM and leveraged finance are also robust.

Operating expenses for the Group of CHF 4.3 bn decreased by 1% year on year, reflecting lower variable compensation accruals due to the impact of the Archegos loss; adjusted operating expenses, excluding significant items and Archegos*, decreased by 6%.

We continued to deliver on key business investments in wealth management, including building out our mainland China franchise and expanding our Private Banking coverage teams, most notably in APAC. We continue to invest in technology and people in the Investment Bank, and have also further built out the IWM mid-market advisory capabilities and continue to invest in deepening our wealth management footprint in fast growing markets like Brazil, India, Russia and the Middle East. Furthermore, we have ongoing investments in CSX, our SUB digital platform for retail and affluent clients as well as in our ultra-high-net-worth (UHNW) and high- net-worth (HNW) franchises. This is in addition to investing in enhanced IT platforms, building out our cloud technology and strengthening our cyber security as well as driving digitalization and automation.

The Group reported a higher level of AuM totaling CHF 1.63 trn at the end of 2Q21, up 2% quarter on quarter, with mandate penetration at 30%, up from 28% in 2Q20, supporting our recurring commissions and fees. We saw net asset outflows of CHF 4.7 bn in 2Q21, compared to NNA of CHF 9.8 bn in 2Q20 and CHF 28.4 bn in 1Q21. We have seen outflows in a number of individual cases across our wealth management businesses; additionally, some of the outflows can be attributed to our de-risking efforts, especially in APAC.

We delivered a substantial improvement in our capital ratios with a CET1 ratio of 13.7% at the end of 2Q21, compared to 12.2% at the end of 1Q21, and a CET1 leverage ratio of 4.2% at the end of 2Q21, compared to 3.8% at the end of 1Q21. Our CET1 and CET1 leverage ratios benefitted from the MCN issuance, the impact from the Allfunds Group IPO combined with the reduction in our investment to less than 10%, the removal of the temporary RWA add-on related to Archegos and the proactive reduction of RWA and leverage exposure in the Investment Bank; with IB RWA reduction of USD 20 bn and IB leverage exposure reduction of USD 41 bn in 2Q21.

1H21 Results - Review of Performance

Despite the significant losses related to the Archegos matter of CHF 5.0 bn, our resilient underlying performance in both quarters allowed us to achieve a small net income attributable to shareholders of CHF 1 mn for 1H21. This illustrates the underlying resilience of our franchise even when taking into consideration our significant de-risking approach, particularly in the Investment Bank. Our provision for credit losses for 1H21 was CHF 4.4 bn, which included losses related to Archegos and a net release in CECL-related provision for credit losses of CHF 227 mn, mainly due to CECL-related adjustments reflecting the continued improved macroeconomic outlook.

Our 1H21 adjusted net revenues, excluding significant items and Archegos*, were up 9% year on year, at CHF 12.7 bn, driven by revenue growth in APAC, IB and AM, with stable revenues in SUB and lower revenues in IWM.

In 1H21, our adjusted pre-tax income, excluding significant items and Archegos*, doubled year on year, to CHF 4.9 bn, driven by growth in adjusted pre-taxincome, excluding significant items and Archegos*, across all divisions, and also reflecting the net release in CECL-relatedprovision for credit losses and lower adjusted operating expenses, excluding significant items and Archegos*, down 5%, mainly reflecting lower variable compensation accruals.

Our Wealth Management-relatedbusinesses reported net revenues of CHF 7.5 bn, up 2% year on year. On an adjusted basis, excluding significant items*, revenues were up 1%, driven by higher recurring commissions and fees, up 9% year on year, and higher transaction and performance-based revenues, up 2%, partly offset by lower net interest income, down 7%.

Our Investment Bank reported net revenues of USD 5.6 bn, up 10% year on year. Our adjusted net revenues, excluding Archegos*, were up 21%. Fixed Income Sales & Trading revenues were down 4% year on year; Equity Sales & Trading revenues, excluding Archegos*, were up 5%9; Capital Markets revenues were up 109%, or 93% excluding Leveraged Finance mark-to-market gains in 1H21 and Leveraged Finance mark-to-market losses in 1H2010; and Advisory revenues were up 2%.

NNA for 1H21 were CHF 23.7 bn, up compared to CHF 15.6 bn in 1H20 with contributions from SUB of CHF 6.7 bn, IWM of CHF 6.9 bn, and AM of CHF 11.6 bn, slightly offset by net asset outflows in APAC of CHF 1.1 bn.

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Media Release

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Detailed Divisional Summaries

Swiss Universal Bank (SUB)

Reported results (in CHF mn)	2Q21	1Q21	2Q20	∆2Q20		1H21	1H20	∆1H20
Net revenues	1,477	1,449	1,474	-		2,926	2,928	-
Provision for credit losses	(21)	26	28	-		5	152	(97)%
Operating expenses	773	758	790	(2)%		1,531	1,589	(4)%
Pre-tax income	725	665	656	11%		1,390	1,187	17%
Cost/income ratio (%)	52%	52%	54%	-		52%	54%	-
Net New Assets (bn)	0.6	6.1	0.0	-		6.7	0.6	-
o/w Private Clients (bn)	(0.9)	2.2	(1.6)	-		1.3	(5.8)	-
Adjusted results, excluding significant
items*	2Q21	1Q21	2Q20	∆2Q20		1H21	1H20	∆1H20
(in CHF mn)
Net revenues	1,329	1,406	1,340	(1)%		2,735	2,769	(1)%
Operating expenses	758	749	790	(4)%		1,507	1,588	(5)%
Pre-tax income	592	631	522	13%		1,223	1,029	19%
Cost/income ratio (%)	57%	53%	59%	-		55%	57%	-

2Q21

• Adjusted pre-tax income, excluding significant items*, was CHF 592 mn, up 13% year on year. This was driven by a release in provision for credit losses, mainly due to CECL-related adjustments, as well as lower adjusted operating expenses, excluding significant items*, down 4%, partially offset by lower adjusted net revenues, excluding significant items*, down 1%. Despite our ongoing cost discipline, reflected by our adjusted cost/income ratio, excluding significant items*, of 57%, we continue to invest in digitalization and products
• Net revenues of CHF 1.5 bn were stable and included a gain of CHF 95 mn related to our equity investment in Allfunds Group and an insurance claim refund of CHF 49 mn relating to a major litigation case. Additionally, 2Q20 included a gain of CHF 134 mn related to a revaluation of our equity investment in Pfandbriefbank. Adjusted net revenues, excluding significant items,* decreased slightly to CHF 1.3 bn with recurring commissions and fees up 13% year on year, offset by lower transaction-based revenues, down 13%, and lower net interest income, down 2%
• NNA of CHF 0.6 bn with contributions from Corporate & Institutional Clients of CHF 1.5 bn, from our external asset managers and pension business, partly offset by net asset outflows of CHF 0.9 bn in Private Clients driven by a small number of individual cases in the UHNW and HNW client segments
• SUB Private Clients recorded higher client business volumes of CHF 401 bn, up 9% year on year

1H21

• Strong adjusted pre-tax income, excluding significant items*, at CHF 1.2 bn, up 19% year on year, driven by lower provision for credit losses due to CECL-related adjustments and lower adjusted operating expenses, excluding significant items*, down 5%
• Stable reported net revenue performance compared to 1H20; adjusted net revenues, excluding significant items*, of CHF 2.7 bn, down 1%, driven by lower transaction-based revenues and lower net interest income nearly offset by higher recurring commissions and fees
• NNA of CHF 6.7 bn reflecting an annualized growth rate of 2%

International Wealth Management (IWM)

Reported results (in CHF mn)	2Q21	1Q21	2Q20	∆2Q20		1H21	1H20	∆1H20
Net revenues	930	987	905	3%		1,917	1,937	(1)%
Provision for credit losses	(25)	0	32	-		(25)	71	-
Operating expenses	615	579	617	-		1,194	1,265	(6)%
Pre-tax income	340	408	256	33%		748	601	24%
Cost/income ratio (%)	66%	59%	68%	-		62%	65%	-
Net New Assets (bn)	(0.3)	7.2	1.8	-		6.9	5.5	-
Adjusted results, excluding significant
items*	2Q21	1Q21	2Q20	∆2Q20		1H21	1H20	∆1H20
(in CHF mn)

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