Credit Suisse : announces first quarter 2021 financial results

Media Release

Zurich, April 22, 2021

First quarter 2021 financial results

Net loss of CHF 252 mn in 1Q21, reflecting significant charge with respect to the US-based hedge fund matter in 1Q21, offsetting positive performance across wealth management and investment banking; capital position with CET1 ratio of 12.2% to be further strengthened by successful placement of 203 mn shares via two series of Mandatory Convertible Notes

Credit Suisse Group

Reported Results (CHF m n, unless otherwise specified)

Net revenues

o/w Wealth Management-related o/w Investment Bank in USD mn

Provision for credit losses

Total operating expenses

Pre-tax incom e / (loss)

Net incom e / (loss) attributable to shareholders

Return on tangible equity attributable to shareholders

CET1 ratio

Tier 1 leverage ratio1

Adjusted excluding significant item s and the US-based hedge-fund m atter* (CHF m n)

Net revenues

Pre-tax incom e

1Q21	1Q20	∆1Q20
7,574	5,776	31%
3,882	3,766	3%
3,888	2,155	80%
4,394	568	-
3,937	4,007	(2)%
(757)	1,201	-
(252)	1,314	-
(2.6)%	13.1%	-
12.2%	12.1%	-
5.5%	5.3%	-
1Q21	1Q20	∆1Q20
7,430	5,508	35%
3,596	946	280%

Thomas Gottstein, Chief Executive Officer of Credit Suisse Group AG, commented: "Our results for the first quarter of 2021 have been significantly impacted by a CHF 4.4 bn charge related to a US-basedhedge fund. The loss we report this quarter, because of this matter, is unacceptable. Together with the Board of Directors, we have taken significant steps to address this situation as well as the supply chain finance funds matter. Among other decisive actions, we have made changes in our senior business and control functions; we have enhanced our risk review across the bank; we have launched independent investigations into these matters by external advisors, supervised by a special committee of the Board; and we have taken several capital-relatedactions. We will work to ensure Credit Suisse emerges stronger. However, it is also important to recognize that our underlying 1Q21 financial performance2, across all divisions, was strong, supported by solid results in Switzerland, and strong growth in APAC and investment banking. We expect that our successful MCN placement today will further strengthen our balance sheet and enable us to support the momentum in our core franchises. Our underlying result is a testament to the earnings power of Credit Suisse and to the commitment of our employees. And it makes it all the more important that we quickly and decisively resolve the issues we are currently dealing with."

Financial highlights

• Strong revenue generation across Wealth Management-relatedbusinesses and the Investment Bank; reported net revenues up 31% year on year
• Strong 1Q21 Net New Assets (NNA) for the Group of CHF 28.4 bn, of which WM NNA of CHF 14.4 bn, equal to a 7% annualized growth rate with positive contributions across all three WM businesses
• CET1 ratio of 12.2% and CET1 leverage ratio of 3.8% at the end of 1Q21, with intention to achieve approx. 13% CET1 ratio and a minimum of 4.0% CET1 leverage ratio
• Successfully placed 203 mn shares via two series of MCNs, leading to an estimated uplift of ~55-60bps to the CET1 ratio3

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Business highlights for 1Q21

• Continued momentum in Wealth Management (WM)-related businesses with pre-taxincome growth, on an adjusted basis, excluding significant items*, of 59% year on year and an adjusted RoRC, excluding significant items*, of 29%
• Strong growth in Asia Pacific (APAC) with pre-taxincome growth, on an adjusted basis and excluding significant items*, of 164% year on year and an adjusted RoRC, excluding significant items*, of 52%, on a USD basis
• Investment Bank (IB) results significantly impacted by US- based hedge fund charge of CHF 4.4 bn; net revenues grew by 80% year on year; reported pre-taxloss of USD 2.6 bn
• Group-wideAuM of CHF 1.6 trn at end of 1Q21, up 6% vs 4Q20; WM AuM of CHF 841 bn, up 6% vs 4Q20; WM Client Business Volume of CHF 1.3 trn, up 7% vs 4Q20
• Supply Chain Finance (SCF) Funds matter: returning cash to investors in the four supply SCF funds remains CSAM's priority; to date, total cash distributions to investors of USD 4.8 bn; progress updates to be provided over the coming months

Media Release

Zurich, April 22, 2021

SUMMARY

1Q21 Results

As per our trading updates in March and April, we absorbed several items during the quarter that had a considerable impact on the reported results. We recorded a pre-tax loss of CHF 757 mn in 1Q21 and a net loss attributable to shareholders of CHF 252 mn, including a pre-tax charge of CHF 4.4 bn relating to the US-based hedge fund matter.4 The underlying business results5 have been strong with adjusted net revenues excluding significant items and the US-basedhedge-fund matter* were CHF 7.4 bn, up 35% year on year, and higher adjusted pre-tax income, excluding significant items and the US-basedhedge-fund matter*, of CHF 3.6 bn, up 280%. As per close of business on April 21, 2021, we have now exited 97% of the related positions and expect to take an additional loss in 2Q21 of approximately CHF 0.6 bn in connection with the US-based hedge fund matter.

In our Wealth Management-relatedbusinesses, we delivered strong growth across our franchise and reported net revenues of CHF 3.9 bn, up 3% year on year, with transaction-based revenues up 18%, recurring commissions

• fees up 3% and lower net interest income, down 9%. Adjusted total Wealth-Management-related net revenues, excluding significant items*, of CHF 3.7 bn were up 7% year on year.

Our Investment Bank continued to demonstrate momentum as revenues increased to USD 3.9 bn, up 80% year on year, benefitting from a strong performance across all products: Fixed Income Sales & Trading was up 29% year on year, Equity Sales & Trading was up 23%, and Capital Markets & Advisory6 was up significantly. Global Trading Solutions (GTS), our collaboration between the IB and our wealth management businesses, also recorded increased net revenues, up 10% year on year, underlining the strength of our strategy as we continue to drive collaboration across divisions and business areas.

Operating expenses for the Group of CHF 3.9 bn decreased by 2% year on year, mainly reflecting lower compensation expenses; on an adjusted* basis, operating expenses decreased by 3%. Provision for credit losses in 1Q21 increased significantly year on year, and quarter on quarter, due to the US-based hedge fund matter. We recorded CHF 4.4 bn of provision for credit losses, compared to CHF 568 mn in 1Q20 and CHF 138 mn in 4Q20. The vast majority of the quarter's provisions are reflected in the IB and relate to this specific matter.

The Group recorded NNA of CHF 28.4 bn in 1Q21, this compares to CHF 5.8 bn in 1Q20 and CHF 8.4 bn in 4Q20. Strong asset gathering across our wealth management businesses with Swiss Universal Bank (SUB) Private Clients recording CHF 2.2 bn, International Wealth Management (IWM) Private Banking recording CHF 7.2 bn and APAC recording USD 5.4 bn. Group Assets under Management (AuM) totaled CHF 1.6 trn at the end of 1Q21, up from CHF 1.5 trn at the end of 4Q20.

As of the end of 1Q21, our CET1 ratio was 12.2%. For 1Q21, CHF 5.8 bn in risk-weighted assets were related to our remaining exposure in the US-based hedge fund matter, and a Pillar 2 capital add-on of CHF 1.9 bn relating to the supply chain finance funds matter was required by FINMA. During 2Q21, as we exit the hedge fund-related positions, the amount of the associated risk-weighted assets will be reduced accordingly. We would expect the required risk-weighted assets to be reduced to zero during 2Q21.

On April 22, 2021, we announced an offering of two series of mandatory convertible notes (MCNs), Series A MCNs and Series B MCNs, which will be convertible into 100 million shares and 103 million shares of Credit Suisse Group AG, respectively. The offering is expected to further strengthen our capital position and to close on or around May 12, 2021.

The shares of Credit Suisse Group AG underlying the Series A MCNs will be issued from Credit Suisse Group AG's current conditional capital. The shares of Credit Suisse Group AG underlying the Series B MCNs will be issued from Credit Suisse Group AG's current authorized capital. As the full amount of the current authorized capital is expected to be utilized for such issuance, the Board has decided to withdraw, at the Annual General Meeting (AGM) 2021, its proposal for a moderate increase and the extension of the authorized capital.

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Media Release

Zurich, April 22, 2021

CAPITAL RETURNS TO SHAREHOLDERS

As previously announced on April 6, 2021, the Board of Directors amended its dividend proposal to shareholders at the AGM on April 30, 2021. It is proposing to distribute an ordinary total dividend of CHF 0.10 gross per registered share, half from retained earnings and half out of the capital contribution reserves. This proposal will help to preserve our strong capital positon. Following the completion of share buybacks in 1Q21 of CHF 305 mn of shares, we have suspended the share buyback program. Subject to 2021 financial performance, the Board of Directors would intend to restore the dividend in 2021 before any resumption of share buybacks.

OUTLOOK

Overall, we would expect market volumes to return to lower, and more normal, levels in the coming quarters. We expect a residual impact of approximately CHF 0.6 bn from the US-based hedge fund matter in 2Q21, as we have now exited 97% of the related positions.

In Wealth Management, we anticipate broadly stable net interest income and improving recurring commissions and fees benefiting from higher levels of AuM. For the Investment Bank, we would expect the second quarter to reflect a slowdown in market activity, as well as the adverse impact from the US-based hedge fund matter, particularly from the resizing of our Prime Services business.

Signs of recovery in the global economy could allow us to progressively release part of our allowance for credit losses under the CECL accounting methodology that was built in the early months of the COVID-19 crisis last year. Additionally, we expect the effective tax rate to remain significantly elevated for the remainder of the year. Including the benefit of the MCN-related capital raise as well as other proactive capital actions, we intend to achieve a CET1 ratio of approximately 13% and a minimum 4% CET1 leverage ratio.

DECISIVE ACTIONS TAKEN FOLLOWING RECENT EVENTS

As previously announced in trading updates in March and April, the Credit Suisse Board of Directors and the Executive Board have taken action to address the supply chain finance funds and US-based hedge fund matters directly. FINMA and other regulators were kept informed. These include:

Senior management changes:

• Replacing Brian Chin, CEO Investment Bank, and Lara Warner, Chief Risk and Compliance Officer
• Christian Meissner appointed CEO of the Investment Bank and member of the Executive Board, effective May 1, 2021
• Joachim Oechslin appointed Chief Risk Officer and member of the Executive Board, in each case on an ad- interim basis, effective April 6, 2021
• Thomas Grotzer appointed interim Global Head of Compliance, reporting to the Group CEO, effective April 6, 2021
• Ulrich Körner appointed CEO of Asset Management and member of the Executive Board, effective April 1, 2021
• And a number of other executive changes in the Investment Bank and the CRCO function

Enhanced review of risk across the bank:

• Extensive review across our Prime Services business focused on underlying risk positions, as well as related counterparties
• Enhanced due diligence across Asset Management following supply chain finance funds matter
• Group-widereview of risk positions and of business and risk processes in close cooperation with Board of Directors and external advisors
• Applying lessons learned from recent matters across the bank

Launched independent investigations into supply chain finance funds matter and US-based hedge fund matter

• The Board of Directors has launched two independent investigations, carried out by external advisors, into the supply chain finance funds matter and the significant US-based hedge fund matter

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Media Release

Zurich, April 22, 2021

• These investigations are being supervised by a special committee of the Board of Directors and will not only focus on the direct issues arising from those matters, but also reflect on the broader consequences and lessons learned

Capital related actions:

• Suspension of share buyback program
• Reduction of ordinary total dividend proposal to CHF 0.10 gross per registered share
• Successful placement of two series of MCNs
• Close engagement with FINMA and all relevant regulators; FINMA has initiated two enforcement proceedings (with regards to the US-based hedge fund and supply chain finance funds matters)

UPDATE ON LITIGATION

On April 19, 2021, Credit Suisse entered into a settlement with U.S. Bank as trustee in two legacy legal actions in New York state court relating to residential mortgage-backed securities from 2006 for the aggregate amount of USD 500 mn on claims of over USD 1.3 bn. Credit Suisse is fully reserved and no further charge will be incurred. The settlement remains subject to approval through a separate court proceeding to be brought by the trustee. This resolution also removes two of the largest exposures remaining on Credit Suisse's legacy RMBS docket.

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Media Release

Zurich, April 22, 2021

DETAILED DIVISIONAL SUMMARIES

Swiss Universal Bank (SUB)

Reported results (in CHF mn)	1Q21	1Q20	∆1Q20
Net revenues	1,449	1,454	(0)%
Provision for credit losses	26	124	-
Total operating expenses	758	799	(5)%
Pre-tax income	665	531	25%
Cost/income ratio (%)	52%	55%	-
Net New Assets	6.1	0.6	-
o/w Private Clients	2.2	(4.2)	-
Adjusted results, excluding significant items* (in CHF mn)	1Q21	1Q20	∆1Q20
Net revenues	1,406	1,429	(2)%
Total operating expenses	749	798	(6)%
Pre-tax income	631	507	24%
Cost/income ratio (%)	53%	56%	-

1Q21 Results

• Strong pre-tax income for SUB in 1Q21, reflecting stable net revenues; continued positive momentum compared to 4Q20 with resilient performance across all major revenue categories, including net interest income
• Record quarterly adjusted pre-tax income, excluding significant items*, of CHF 631 mn, up 24% year on year, with limited CECL-related provision for credit losses as well as a decreased adjusted* operating expenses, down 6% year on year, driven by ongoing cost discipline
• Resilient adjusted net revenues, excluding significant items*, up 13% compared to 4Q20; down 2% compared to 1Q20, driven by lower deposit income, partially offset by higher recurring commissions & fees
• Strong NNA flows of CHF 6.1 bn with positive contributions from Private Clients and Corporate & Institutional Clients
• SUB recorded higher client business volumes of CHF 1.0 trn, up 5% compared to 4Q20
• Private Clients adjusted pre-tax income, excluding significant items*, of CHF 286 mn, up 3% year on year, driven by decreased adjusted* operating expenses, down 7%, and lower provision for credit losses; adjusted net revenues, excluding significant items*, down 4%, driven by lower transaction-based revenues, down 10%, from decreased client activity, decreased net interest income, down 3%, from lower deposit income, and lower recurring commissions & fees, down 2%, mainly from our investment in Swisscard
• Corporate & Institutional Clients adjusted pre-tax income, excluding significant items*, of CHF 345 mn, up 51% year on year, driven by lower provision for credit losses, decreased adjusted* operating expenses, down 5%, as well as increased adjusted net revenues, excluding significant items*, up 1%, driven by higher recurring commissions & fees, up 7%, due to higher fees from lending activities, with stable net interest income and slightly lower transaction-based revenues, down 1%, compared to 1Q20

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