Investor Presentation - Choose Your Location · · 2017-07-07Statement regarding capital,...
Transcript of Investor Presentation - Choose Your Location · · 2017-07-07Statement regarding capital,...
2
Disclaimer
Cautionary statement regarding forward-looking statements
This presentation contains forward-looking statements that involve inherent risks and uncertainties, and we might not be able to achieve the predictions, forecasts, projections and
other outcomes we describe or imply in forward-looking statements. A number of important factors could cause results to differ materially from the plans, objectives, expectations,
estimates and intentions we express in these forward-looking statements, including those we identify in "Risk Factors" in our Annual Report on Form 20-F for the fiscal year ended
December 31, 2015 filed with the US Securities and Exchange Commission, and in other public filings and press releases. We do not intend to update these forward-looking
statements except as may be required by applicable law.
We may not achieve the benefits of our strategic initiatives
We may not achieve all of the expected benefits of our strategic initiatives. Factors beyond our control, including but not limited to the market and economic conditions, changes in
laws, rules or regulations and other challenges discussed in our public filings, could limit our ability to achieve some or all of the expected benefits of these initiatives.
Statement regarding purpose and basis of presentation
This presentation contains certain historical information that has been re-segmented to approximate what our results under our new structure would have been, had it been in place
from 2015. In addition, "Illustrative,“ “Ambition” and “Goal” presentations are not intended to be viewed as targets or projections, nor are they considered to be Key Performance
Indicators. All such presentations are subject to a large number of inherent risks, assumptions and uncertainties, many of which are outside of our control. Accordingly, this
information should not be relied on for any purpose. In preparing this presentation, management has made estimates and assumptions which affect the reported numbers. Actual
results may differ. Figures throughout presentation may also be subject to rounding adjustments.
Statement regarding non-GAAP financial measures
This presentation also contains non-GAAP financial measures, including adjusted results. Information needed to reconcile such non-GAAP financial measures to the most directly
comparable measures under US GAAP can be found in this presentation, which is available on our website at credit-suisse.com.
Statement regarding capital, liquidity and leverage
As of January 1, 2013, Basel 3 was implemented in Switzerland along with the Swiss “Too Big to Fail” legislation and regulations thereunder. As of January 1, 2015, the Bank for
International Settlements (BIS) leverage ratio framework, as issued by the Basel Committee on Banking Supervision (BCBS), was implemented in Switzerland by FINMA. Our related
disclosures are in accordance with our interpretation of such requirements, including relevant assumptions. Changes in the interpretation of these requirements in Switzerland or in any
of our assumptions or estimates could result in different numbers from those shown in this presentation. Capital and ratio numbers for periods prior to 2013 are based on estimates,
which are calculated as if the Basel 3 framework had been in place in Switzerland during such periods. Unless otherwise noted, leverage exposure is based on the BIS leverage ratio
framework and consists of period-end balance sheet assets and prescribed regulatory adjustments. Beginning in 2015, the Swiss leverage ratio is calculated as Swiss total capital,
divided by period-end leverage exposure. The look-through BIS tier 1 leverage ratio and CET1 leverage ratio are calculated as look-through BIS tier 1 capital and CET1 capital,
respectively, divided by end-period leverage exposure.
November 2016
3
Content
1 Credit Suisse in a nutshell
2 Strategic actions
4
15
Page
A Strengthen capital base
B Reduce fixed costs
C Rebalance our business mix
16
17
21
3 3Q16 results 23
4 Appendix 34
November 2016
4
Credit Suisse Group: key metrics
November 2016
CET1 = Common equity tier 1. PB = Private Banking. CIB = Corporate & Institutional Banking. 1 Relates to our senior unsecured debt and are subject to change without notice. Latest rating action on July 20, 2016. 2 Excluding Corporate Center and SRU. Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix.
9M16 2015 2014
Net revenues 15.1 23.8 26.2
Pre-tax income/(loss) (0.1) (2.4) 3.6 Pre-tax income
excluding adjustment items 0.4 2.1 5.0
Net income/(loss) attributable to shareholders (0.1) (2.9) 1.9
Return on equity attributable to shareholders 0% (7)% 4%
Net new assets 34.5 46.9 27.9
Assets under management 1,255 1,214 1,369
Total assets 807 821 921
Net loans 275 273 273
Financial
Performance In CHF bn
3Q16 2015 2014
CET1 ratio 12.0% 11.4% 10.1%
CET1 leverage ratio 3.4% 3.3% 2.5%
Tier 1 leverage ratio 4.6% 4.5% 3.5%
Short- Long-
term term Outlook
Moody’s P-1 A2
S&P A-1 A
Fitch Ratings F1 A
Stable
Stable
Stable
Capital ratios Basel 3 look-through
A balanced business portfolio
21%
23%
33%
21%
2%
2015 adjusted pre-tax
income2
47,690
employees as of 3Q16
22%
15%
28%
6%
24%
3,790
relationship
managers as of 3Q16
1,980
650
1,160
Swiss Universal Bank International Wealth Management Asia Pacific
Global Markets Investment Banking & Capital Markets
Senior Credit Ratings1
Credit Suisse AG (the Bank)
o/w 1,500 PB
o/w 480 CIB CC & SRU
5%
Credit Suisse in a nutshell
5
Credit Suisse Core results by business activity
39%
9% 6%
46%
Net revenues
Note: Core Results do not include revenues and expenses from our Strategic Resolution Unit. 1 Excluding Corporate Center net revenues of CHF 87 mn, total operating expenses (incl. provisions for credit losses) of CHF 496 mn and pre-tax income/(loss) of CHF (409) mn. 2 Including provision for credit losses.
Private banking
Reported results by business activity1 – 9M16
CHF 16.1 bn
34%
7%
6%
53%
Total operating
expenses2
CHF 12.9 bn
59% 20%
5%
16%
Pre-tax
income
CHF 3.2 bn
Corporate & institutional banking
Asset management Investment banking
Credit Suisse in a nutshell
November 2016
6
2.3% 2.6% 2.9% 3.2% 3.5% 0.7% 0.9% 1.1% 1.3% 1.5% 1.0%
2.0% 3.0%
4.0% 5.0%
CET1 Additional tier 15
(incl. high-trigger Tier 1 and Tier 2, and low-trigger Tier 1 instruments)
Bail-in debt instruments6
4.0%
5.5%
8.5%
10.0%
7.0%
8.125% 9.0% 9.46% 9.68% 10.0%
2.625% 3.0% 3.4% 3.9% 4.3% 3.5%
6.2%
8.9% 11.6%
14.3%
2016 2017 2018 2019 2020
14.25%
18.2%
25.18%
28.6%
21.76%
Goin
g
conce
rn
Gone
conce
rn
Goin
g
conce
rn
Gone
conce
rn
3.4%
1.2%
2.8%
3Q16
7.5%
Credit Suisse look-through
11.9%
4.3%
9.9%
3Q16
26.1%
Leve
rage r
atio
1
Capita
l ratio
2
7 4
3
New TBTF capital requirements for internationally operating
SIBs in Switzerland – phase-in requirements
November 2016
TBTF = “Too Big to Fail”. SIBs = Systemically important banks. CET1 = Common Equity Tier 1. AT1 = Additional Tier 1. Note: Rounding differences may occur. 1 In percentage of leverage exposure. 2 In percentage of risk-weighted assets (RWA). 3 Based on end 3Q16 look-through leverage exposure of CHF 949 bn. 4 Based on end 3Q16 look-through Swiss RWA of CHF 271 bn. 5 Includes CHF 5.8 bn of additional Tier 1 high-trigger capital instruments, CHF 5.1 bn of additional Tier 1 low-trigger capital instruments and CHF 0.7 bn of Tier 2 high-trigger capital instruments. 6 Includes CHF 22.7 bn of bail-in debt instruments and CHF 4.2 bn of Tier 2 low-trigger capital instruments. 7 Effective July 1, 2016. 8 Effective as of January 1 for the applicable year. Note: In May 2016 the Swiss Federal Council amended the Capital Adequacy Ordinance (CAO) which recalibrates and expands the existing “Too Big to Fail” regime in Switzerland. The amended CAO came into effect on July 1, 2016, subject to phase-in and grandfathering provisions for certain outstanding instruments, and has to be fully applied by January 1, 2020. Figures do not include the effects of the countercyclical buffers and any rebates for resolvability and for certain Tier 2 low-trigger instruments recognized in gone concern capital. After January 1, 2020, the low-trigger Tier 2 (LT T2) instruments receive gone concern treatment and the Group’s gone concern requirement is reduced by a factor of 0.5 for the outstanding amount of these instruments in relation to RWA and Leverage Exposure. In effect, the LT T2 instruments receive 1.5x value in the gone concern ratio.
Le
ve
rag
e r
ati
o
req
uir
em
en
ts8
Cap
ital ra
tio
re
qu
ire
me
nts
8
Credit Suisse in a nutshell
7
32.2 33.2
11.6 14.2
26.9
47.4
Requirements3
by 1.1.2020
Credit Suisse
end 3Q16
70.7
94.9
Through 2019 we expect to replace existing callable capital instruments with fully compliant going concern high-trigger AT1 capital instruments
We expect to replace a portion of maturing Bank (OpCo) instruments through 2019 with ~CHF 21 bn of TLAC instruments to reach our estimated gone concern requirement
Going concern
Gone concern
Shortfall
(20.5)4
(2.6)
(1.0) CET1
Additional tier 12
(incl. high-trigger Tier 1 and Tier 2, and low-trigger Tier 1
instruments)
Bail-in debt instruments1
New TBTF capital requirements for internationally operating
SIBs in Switzerland – Credit Suisse shortfall/issuance requirement
November 2016
TBTF = “Too Big to Fail”. SIBs = Systemically important banks. CET1 = Common Equity Tier 1. AT1 = Additional Tier 1. 1 Includes CHF 22.7 bn bail-in debt instruments and CHF 4.2 bn of Tier 2 low-trigger capital instruments. 2 Includes CHF 5.8 bn of additional Tier 1 high-trigger capital instruments, CHF 5.1 bn of additional Tier 1 low-trigger capital instruments and CHF 0.7 bn of Tier 2 high-trigger capital instruments. 3 Based on end 3Q16 look-through leverage exposure of CHF 949 bn. 4 Does not reflect maturities of outstanding bail-in debt instruments that could impact gone concern eligibility. Note: In May 2016 the Swiss Federal Council amended the Capital Adequacy Ordinance (CAO) which recalibrates and expands the existing “Too Big to Fail” regime in Switzerland. The amended CAO came into effect on July 1, 2016, subject to phase-in and grandfathering provisions for certain outstanding instruments, and has to be fully applied by January 1, 2020.
Capital adequacy amounts, Swiss look-through in CHF bn
Credit Suisse in a nutshell
8
3.7
5.0 4.6
1.7
5.4 4.4
3Q16 3Q16
Private Banking Businesses Net New Asset generation with good margins
Adjusted Gross margin in bps
104 106 110 84 84 87
Adjusted Net margin in bps
25 28 27 17 19 23
NNA growth (annualized)
6% 2% 8% 12% 9% 13%
3Q15 2Q16 3Q15 2Q16
IWM PB APAC PB
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix.
Regularization outflows
included in NNA in CHF bn
(1.5) (0.3) (1.0) (0.9) (0.1) (0.1)
Average AuM in CHF bn
304 295 294 165 144 155
Credit Suisse in a nutshell
8.5
11.3 9.2
3Q16
109 114 115
27 28 31
6% 5% 8%
3Q15 2Q16
Total Private Banking
(2.8) (0.7) (1.4)
712 683 690
NNA in CHF bn
3.1
0.9 0.2
3Q16
134 141 140
35 34 42
0% 5% 2%
3Q15 2Q16
SUB PB
(0.4) (0.3) (0.3)
243 243 241
November 2016
9
Swiss Universal Bank – Switzerland core to the strategy
(U)HNWI = (Ultra)-high-net-worth individuals. 1 Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix. 2 Market conditions permitting, any IPO would involve the sale of a minority stake and would be subject to, among other things, all necessary approvals and would be intended to generate / raise additional capital for Credit Suisse AG or Credit Suisse (Schweiz) AG. 3 Advisory and discretionary mandates as percentage of total AuM, excluding AuM from the external asset manager (EAM) business.
1.6 1.6 1.4
2.3
2014 2015 2018 target
Credit Suisse in a nutshell
Focus on High-net-worth individuals and capture synergies with mid/large SMEs by becoming the “Bank for Entrepreneurs”
Exploit growth opportunities in UHNWI
Key
Priorities
Main
Initiatives
20%
to 30%
IPO
Optimize footprint
Relationship
managers
UHNWI lending book
Ambition
2018 from 2014 base
Mandates
penetration
Planning partial IPO of the Legal Entity Credit Suisse (Schweiz) AG by the end of 20172
Expected positive group capital impact of roughly CHF 2 to 4 bn including other management actions
Converting approx. 45 branches into advisory branches without teller
Hire approx. 80 HNWI relationship managers
+30% UHNWI relationship managers
Double lending book and deal related revenues
Cost/income ratio improvement from 68% to approx. 56%
Steadily increase mandates penetration3; increased 14ppt to 29% as of end 3Q16 compared to 15% as of end 2014 primarily driven by Credit Suisse Invest
Drive
efficiency
Increase cost efficiency through optimized footprint, automation and operational leverage
End-to-end accountability and responsibility over Swiss costs and investments
Focus to
simplify Concentrate on Swiss-domiciled clients
Invest in
brand Further strengthening of brand and reputation in
Switzerland
Empower
to grow
Adjusted pre-tax income development1 in CHF bn
9M16
November 2016
10
International Wealth Management – replicate our success
(U)HNWI = (Ultra)-high-net-worth individuals UHNWI = CHF >50mn AuM or total wealth >250mn. Premium HNWI = CHF > 5mn AuM. Entry HNWI = CHF >1m AuM. 1 Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix. 2 Credit volume / Assets under Management.
Ambition
2018
Lending penetration2 to 15% from 12% end 2014
Increase relationship manager headcount by 300 to 1,500 (from 1,180 end 2015). Majority of hires planned in emerging markets
Adjusted pre-tax income development1 in CHF bn
2.1
2014 2015 2018 target
1.2 1.0
Credit Suisse in a nutshell
Key
Priorities
Deliver
client value
Integrate coverage of private banking, investment banking and asset management
Leverage investment and research capabilities Invest in additional resources and broaden lending
activities to address clients’ sophisticated financing needs
Enhance
client
proximity
Grow sales force Expand “hub and spokes” model
Increase
client time
Simplify and de-layer organization to bring decision-making closer to point of advice
Invest in technology and automation to increase client face time
Main
Initiatives
Top Clients
Strengthen footprint
Lending
Grow HNWI
offshore
clients
Asset
Management
Launch dedicated team to secure landmark deals
Strategic Client Partners to generate CHF 300 mn incremental revenues
Enhance client proximity by aligning footprint across regions and leveraging “hubs and spokes” model
Strategically expand lending capabilities covering corporate and private angle
Focus coverage on international HNWI offshore clients
Develop a multi-channel service model with a strong RM offering capability and required digital capabilities
Grow fee-based revenues, extend product suite and distribution
0.8
9M16
November 2016
11
Asia Pacific – The Trusted Entrepreneurs’ Bank
HNWI = High-net-worth individuals. UHNWI = Ultra-high-net-worth individuals. NNA = Net new assets. RMs = Relationship Managers. 1 Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix.
Ambition
2018
U/HNWI NNA of approx. CHF 25 bn in year 2018
Reach approx. 800 relationship managers
Adjusted pre-tax income development1 in CHF bn
0.9 1.1
0.7
2.1
2014 2015 2018 target
13.9
10.3 11.8
Number of relationship managers
650 460 460 510 580
17.5 17.8
Credit Suisse in a nutshell
Key
Priorities
Deliver
client
critical
equities &
financing
capabilities
Continue to deliver new investment products and services from our investment banking platform
Prudently build out quality credit and equity strategic financing, while remaining mindful of market volatility
Grow broad
base of
business
profitability
Continue to grow existing business franchises where we have deep client relationships and strong, profitable market positions
Grow recurring fee-income base by leveraging integrated, advisory-led model
Adjust business model for new market entry or business acquisition to drive incremental growth
Focus on
UHNWI
Main
Initiatives
Expand
footprint
Replicate success of integrated bank approach in South East Asia
Expand footprint in Greater China (China onshore, scaling up China offshore, Taiwan)
Address Japan savings opportunity with integrated solutions
NNA
Development In CHF bn
9M16
Leverage investment banking connectivity to offer unique proposition for UHNWI
November 2016
2012 2013 2014 2015 9M16
12
Global Markets – increased connectivity with the Group
1 Return on regulatory capital is calculated using income after tax, reflects ‘worst of' return on RWA or leverage exposure 2 Scenarios based on varying macro-economic assumptions
Credit Suisse in a nutshell
Key
Priorities
Investing in
Core
Businesses
Reconfigured product portfolio focused on core Institutional clients and enhancing
connectivity across IBCM, IWM, APAC and SUB
Investing to defend core Equities franchise; reinvesting leverage exposure with key
clients in Prime Services
Extending low-cost, multi-asset class electronic offering
Focus resources in Credit to defend profitability and drive IBCM strategic objectives
Capitalizing on opportunities to provide Emerging Markets access to the key GM
and IWM clients
Reduced risk
profile and
resized
capital
footprint
Substantially reduced risk exposure through portfolio sales, strategic hedges and
inventory reductions; achieved target of reducing expected quarterly pre-tax loss
by 50% in adverse stressed scenario
Operating within 2016-2018 RWA and leverage exposure ceilings
Rescaled
footprint
10.0%
15.0%
Downside NormalizedMarkets
Target average1,2
Improving the risk-adjusted performance of
the portfolio to generate more stable
structural returns and higher quality of
earnings
2015 year-end vs. target cost reductions in USD bn
6.6 6.0 5.4
2015 2016 2018
(20)%
Risk-weighted assets as reported in USD bn Leverage exposure as reported in USD bn
Key Metrics
67 61 64 53
2013 2014 2015 3Q16
377 280 296
2013 2014 2015 3Q16
not available
(21)% (21)%
Pre-Q2 restatements Post-Q2 restatements
November 2016
13
UHNWI High connectivity in the Americas and EMEA
Ability to deliver banking products and investment opportunities
IBCM – goal to drive incremental revenues in the Americas and
EMEA while maintaining returns in excess of cost of capital
IBCM = Investment Banking & Capital Markets. EMEA = Europe, Middle East and Africa. (Non)-IG = (Non)-Investment Grade. (U)HNWI = (Ultra)-high-net-worth individuals. M&A = Mergers & Acquisitions 1 Includes Americas and Europe, Middle East and Africa; excludes Switzerland. Return on Capital (return on regulatory capital) calculated using income after tax, assuming tax rate of 30%, and capital allocated using worst of 10% of year-end Basel 3 risk-weighted assets or 3.5% of year-end leverage exposure, respectively. 2014 calculated based on Swiss Leverage.
Credit Suisse in a nutshell
Key
Priorities
Optim ize
client
coverage
footprint
Targeted plans for investment grade corporates, non-investment grade corporates and financial sponsors
Develop our emerging markets team that will integrate geographical coverage across all industries and products
Rebalance
product mix
towards
M&A
advisory and
equity
underwriting
Rebalance the product mix to better support clients’ strategic goals, and transition to a more diversified and less volatile revenue mix
Launch new
initiative for
UHNWI in
the US
Investing in
IBCM:
rationale
Return ambition1 Return on Capital (based on risk-weighted assets)
2014 2018
27% 27%
Return on Capital (based on leverage exposure)
2014 2018
30%
48%
10% cost of capital
Capital
Usage
Profitability
Selectively use capital where Credit Suisse is well positioned to benefit from the largest growth opportunities
Continue to focus on capital efficiency and returns
Limited regulatory headwinds expected to continue
Aim to deliver sustainable, profitable growth through a rebalanced product mix
Seek to grow IG and Non-IG corporate coverage while building on strong track record in leveraged finance and sponsors
Goal: continue to deliver returns in excess of cost of capital
Develop capabilities for coverage and servicing of UHNWI in the US
November 2016
14
Content
1 Credit Suisse in a nutshell
2 Strategic actions
4
15
Page
A Strengthen capital base
B Reduce fixed costs
C Rebalance our business mix
16
17
21
3 3Q16 results 23
4 Appendix 34
November 2016
15
Summary of strategic actions
Strengthen capital base Strengthen equity capital base with focus on maximizing free capital generation
A
EM = Emerging Markets. RWA = Risk-weighted assets. 1 Making no provision for significant litigation expenses. 2 “Adjusted operating expenses at constant FX rates” and “adjusted non-compensation operating expenses at constant FX rates” include adjustments as made in all our disclosures for restructuring expenses, major litigation expenses and a goodwill impairment taken in 4Q15 as well as adjustments for FX, applying the following main currency exchange rates for 1Q15: USD/CHF 0.9465, EUR/CHF 1.0482, GBP/CHF 1.4296, 2Q15: USD/CHF 0.9383, EUR/CHF 1.0418, GBP/CHF 1.4497, 3Q15: USD/CHF 0.9684, EUR/CHF 1.0787, GBP/CHF 1.4891, 1Q16: USD/CHF 0.9928, EUR/CHF 1.0941, GBP/CHF 1.4060, 2Q16: USD/CHF 0.9756, EUR/CHF 1.0956, GBP/CHF 1.3845, 3Q16: USD/CHF 0.9728, EUR/CHF 1.0882, GBP/CHF 1.2764. These currency exchange rates are unweighted, i.e. a straight line average of monthly rates. We apply this calculation consistently for the periods under review. Adjusted non-compensation expenses are adjusted operating expenses excluding compensation and benefits. To calculate adjusted non-compensation expenses at constant FX rates, we subtract compensation and benefits (adjusted at constant FX rates in the manner described above) from adjusted operating expenses at constant FX rates. 3 Until we reach our capital target, we will recommend CHF 0.70 per share with a scrip alternative; we will discontinue the scrip once we have clarity on regulatory requirements and litigation risks. In any event, we will not continue with the scrip beyond 2017.
approx. 13% CET 1 ratio
end-2018 target
approx. 5 to 6% Tier 1 leverage ratio
end-2018 target
Fixed costs reduction2
Cost reduction program primarily related to fixed cost base
B
Rebalancing
businesses Optimize resource allocation and focus on high-returning businesses with scale
C
Switzerland increase profitability of
the stable and high
return cash flows in
home market
Asia Pacific
and other EM
increase resource allocation to Asia Pacific and replicate
our success in other Emerging Markets
Returning capital
to shareholders D
Intend to move to 40%
operating FCG payout as capital targets are met
Investment
Banking
businesses Right-sizing with significant reduction where returns do
not exceed cost of capital; Global Markets to operate
within ceilings of
USD 60 bn of RWA
and USD 290 bn
of leverage exposure
maintain 11-12%1
CET 1 ratio in 2016
Gross cost reductions: CHF 1.7 bn by end-2016 and CHF 4.3 bn by end-2018
Net cost reductions: CHF 1.4 bn by end-2016 and CHF >3.0 bn by end-2018
Recommending
CHF 0.70 per share
dividend with scrip option3
Strategic actions
Operating cost base: CHF 19.8 bn by end-2016 and CHF <18 bn by end-2018
November 2016
16
Measures to ensure delivery of our capital goals A Strategic actions: Strengthen capital base
1 Market conditions permitting, any such IPO would involve the sale of a minority stake and would be subject to, among other things, all necessary approvals and would be intended to generate / raise additional capital for Credit Suisse AG or Credit Suisse (Schweiz) AG.
CS Legal Entity Switzerland
minority IPO1
On track for 2H17; expected capital impact of
CHF 2 – 4 bn
Business, real estate and other
disposals / actions Potential scope to raise at least CHF 1 bn by end 2016
Global Markets wind-down Free up CHF 0.4 bn of capital by end 2017
Measures in place to strengthen
our capital base
Net cost savings Increased from CHF 2.0 bn to > CHF 3.0
November 2016
17
Cost savings target will support a more resilient operating model
1 “Adjusted operating expenses at constant FX rates” and “adjusted non-compensation operating expenses at constant FX rates” include adjustments as made in all our disclosures for restructuring expenses, major litigation expenses and a goodwill impairment taken in 4Q15 as well as adjustments for FX, applying the following main currency exchange rates for 1Q15: USD/CHF 0.9465, EUR/CHF 1.0482, GBP/CHF 1.4296, 2Q15: USD/CHF 0.9383, EUR/CHF 1.0418, GBP/CHF 1.4497, 3Q15: USD/CHF 0.9684, EUR/CHF 1.0787, GBP/CHF 1.4891, 1Q16: USD/CHF 0.9928, EUR/CHF 1.0941, GBP/CHF 1.4060, 2Q16: USD/CHF 0.9756, EUR/CHF 1.0956, GBP/CHF 1.3845, 3Q16: USD/CHF 0.9728, EUR/CHF 1.0882, GBP/CHF 1.2764. These currency exchange rates are unweighted, i.e. a straight line average of monthly rates. We apply this calculation consistently for the periods under review. Adjusted non-compensation expenses are adjusted operating expenses excluding compensation and benefits. To calculate adjusted non-compensation expenses at constant FX rates, we subtract compensation and benefits (adjusted at constant FX rates in the manner described above) from adjusted operating expenses at constant FX rates. 2 Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix.
Target gross cost savings in CHF bn
1.7
4.3
Target net cost savings in CHF bn
End 2018 End 2016
Target end 2016
2015 Target end 2018
> 3.0
1.4
21.2 19.8
< 18.0
Adjusted Operating Expenses1 in CHF bn
B Strategic actions: Reduce fixed costs
End 2018 End 2016 4Q15 2016E 2017E
0.3 1Q16
Guidance on restructuring costs in CHF bn
0.1 2Q16
0.4
1.0
0.6
9M16
4.8 1Q16
4.9 2Q16
14.5
Target end 2018
9M16
6.0 5.4
Global Markets Adjusted2 Operating Expenses in USD bn
1.3 1Q16
1.5 2Q16
Target end 2016
4.0
4Q16e
0.1 3Q16
4.8 3Q16
1.2 3Q16
November 2016
18
Further restructuring expected to result in increased cost savings
B Strategic actions: Reduce fixed costs
Overview of key savings initiatives in CHF bn
CC: 1.0
IWM: 0.2 SUB: 0.4
SRU: 1.5
GM & IBCM:
1.2
Corporate
Center1
Shared
Services
Other Front Office
and SRU Expenses 2018 gross
cost savings target
1.0
0.9
1.6
4.3
Corp. Center
Substantial completion of major
programs including
regulatory projects
Services
Efficiencies from workforce
strategy and London right-sizing, etc.
SRU & Exits
Wind-down of SRU portfolio, business exits, and associated
costs
1
2
3
SUB = Swiss Universal Bank IWM = International Wealth Management APAC = Asia Pacific GM = Global Markets IBCM = Investment Banking & Capital Markets CC = Corporate Center SRU = Strategic Resolution Unit 1 Includes rundown of realignment costs.
Gross cost savings
~ 0.5 – 1.0
> 3.0
2018 net
cost savings target
Reinvestment
Sources of cost savings Investments to facilitate growth
Reinvestment plan
prioritized for relationship manager
recruitment and growth priorities in
APAC and IWM
November 2016
19
9M16 net savings of CHF 1.46 bn, reaching full year 2016 target of
CHF 1.4 bn
Average
quarter
2015
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix 1 “Adjusted operating expenses at constant FX rates” and “adjusted non-compensation operating expenses at constant FX rates” include adjustments as made in all our disclosures for restructuring expenses, major litigation expenses and a goodwill impairment taken in 4Q15 as well as adjustments for FX, applying the following main currency exchange rates for 1Q15: USD/CHF 0.9465, EUR/CHF 1.0482, GBP/CHF 1.4296, 2Q15: USD/CHF 0.9383, EUR/CHF 1.0418, GBP/CHF 1.4497, 3Q15: USD/CHF 0.9684, EUR/CHF 1.0787, GBP/CHF 1.4891, 1Q16: USD/CHF 0.9928, EUR/CHF 1.0941, GBP/CHF 1.4060, 2Q16: USD/CHF 0.9756, EUR/CHF 1.0956, GBP/CHF 1.3845, 3Q16: USD/CHF 0.9728, EUR/CHF 1.0882, GBP/CHF 1.2764. These currency exchange rates are unweighted, i.e. a straight line average of monthly rates. We apply this calculation consistently for the periods under review. Adjusted non-compensation expenses are adjusted operating expenses excluding compensation and benefits. To calculate adjusted non-compensation expenses at constant FX rates, we subtract compensation and benefits (adjusted at constant FX rates in the manner described above) from adjusted operating expenses at constant FX rates. 2 Cost savings comparing 9M16 adjusted operating expenses at constant FX rates to 75% of full year 2015 cost base of CHF 21.2 bn.
2016
2015
Adjusted operating expenses at constant FX rates1 in CHF bn
9M16 net expense savings of CHF 1.46 bn2, reaching full year 2016 net savings target of CHF 1.4 bn, mainly driven by:
− Net headcount reductions of 5,400 departed and notified contractor, consultant and employee headcount as part of the cost program
− CHF 0.6 bn of lower deferred compensation expenses
− CHF 0.2 bn of decreased professional services cost from the reduction of contractors and consultants
− CHF 0.2 bn of reduced compensation expenses from lower employee headcount
Committed to delivering 2016 cost target supported by planned further net headcount reductions of 600 in 4Q16 to reach 6,000 total net reduction in 2016
Key messages
5.3
4.8
3Q16 75% of
full year
2015
15.9
14.5
9M16
2016 cost target of CHF 19.8 bn; avg. of 4.95/quarter
B Strategic actions: Reduce fixed costs
November 2016
20
Variable compensation reduced in line with lower performance;
decreased deferrals in upcoming periods
Variable compensation in CHF bn Unrecognized variable compensation in CHF bn
3.1
2.3 0.4
Unrecognized
end 2014
Amortized in
2015
Forfeitures Awarded in
2015
Unrecognized
end 2015
2016 2017 2018
26% reduction
While we have reduced the awarded variable incentive
compensation over the past years, this has not yet been
visible in the income statement, but reduced deferrals will…
…lead to a smaller portion being recognized in the income
statements of upcoming periods.
Estimated unrecognized compensation expenses to be amortized in future
periods1
Note: rounding differences may occur. 1 Represent mark-to-market adjustments in 2015 not included as unrecognized expense at the end of 2014.
1.6 1.7
2.2 2.4
2013 2014 2015
3.8 4.1 4.0
Variable incentive compensation expensed (in respective years)
2.3
Unrestricted
Deferred from prior periods
1.7
Deferral rates
1.6 1.7
2.0 1.6
2013 2014 2015
3.6 3.3
2.9
Variable incentive compensation awarded (in respective years)
Unrestricted
Deferred into future periods
56% 48% 41%
1.7
1.2
1.2
1
1.9
2.3
(0.1)
1.5
0.6
0.2
B Strategic actions: Reduce fixed costs
November 2016
21
Strategic Resolution Unit established to facilitate rapid wind-down
and reduce drag on overall Group performance
RWA in USD bn
Litigation expenses in CHF mn
2Q16
(3.1)
Pre-tax losses in CHF bn
2014 2015
Leverage exposure in USD bn
C Strategic actions: Rebalance our business mix
1Q16
(2.7)
(1.3) (0.8)
(2,536)
(417) (23) (47)
2Q16 2014 2015 1Q16
2Q16 2014 2015 1Q16
254
170 167
148
2Q16 2014 2015 1Q16
79
73
67
58
(30)% (53)%
3Q16
(0.9) (334)
3Q16
3Q16
55
119
3Q16
November 2016
22
Content
1 Credit Suisse in a nutshell
2 Strategic actions
4
15
Page
A Strengthen capital base
B Reduce fixed costs
C Rebalance our business mix
16
17
21
3 3Q16 results 23
4 Appendix 34
November 2016
23
Adju
sted
Results overview
Credit Suisse Group results 3Q16 2Q16 3Q15 9M16 9M15
Net revenues 5,396 5,108 5,985 15,142 19,587
Provision for credit losses 55 (28) 110 177 191
Total operating expenses 5,119 4,937 5,023 15,028 15,377
Pre-tax income/(loss) 222 199 852 (63) 4,019
Fair value on own debt - - (623) - (995)
Real estate gains (346) - - (346) (23)
(Gains)/losses on business sales - - - 56 -
Restructuring expenses 145 91 - 491 -
Major litigation expenses 306 - 203 306 257
Net revenues 5,050 5,108 5,362 14,852 18,569
Provision for credit losses 55 (28) 110 177 191
Total operating expenses 4,668 4,846 4,820 14,231 15,120
Pre-tax income 327 290 432 444 3,258
Net income/(loss) attributable to shareholders 41 170 779 (91) 2,884
Diluted Earnings/(loss) per share in CHF 0.02 0.08 0.44 (0.05) 1.64
Return on Tangible Equity1 0.4% 1.7% 8.9% (0.3)% 11.2%
Note: All values shown are in CHF mn unless otherwise specified. Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix 1 Based on tangible shareholders’ equity attributable to shareholders, a non-GAAP financial measure, which is calculated by deducting goodwill and other intangible assets from total shareholders’ equity attributable to shareholders as presented in our balance sheet. Management believes that the return on tangible shareholders’ equity attributable to shareholders is meaningful as it allows consistent measurement of the performance of businesses without regard to whether the businesses were acquired.
3Q16 results
November 2016
24
PB
Swiss Universal Bank Pre-tax income up YoY despite reduced client activity
Adjusted pre-tax income up 8% compared to 3Q15:
− Continued YoY profit growth
− Revenues down 3% driven by low client activity partly offset by rebound in net interest income
− Operating expenses down 7% despite continuous investment in regulatory, compliance and digitalization in Wealth Management
Focus on growing ‘Bank for Entrepreneurs’; targeting HNWI/UHNWI in Wealth Management and SME in C&IB, in addition to our leading Swiss corporates franchise
Wealth Management
Credit Suisse Invest driving mandates penetration of 29%, up 5 percentage points vs. 3Q15
Selected exits in the External Asset Manager (EAM) business and regularization outflows impacting NNA by CHF (0.5) bn and CHF (0.4) bn, respectively
Corporate & Institutional Banking
Continued strong results including benefits from reduced operating expenses, supported by lower corporate functions cost, and lower provisions for credit losses
NNA impacted by outflows from a small number of individual cases
Key metrics in CHF bn
Key messages Adjusted key financials in CHF mn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Adj. net margin in bps 35 42 34 (7) 1
Net new assets 0.2 0.9 3.1
Mandates penetration 29% 28% 24%
Net loans 167 165 163 +1% +3%
Net new assets C&IB (1.2) 0.7 1.9
Risk-weighted assets 66 65 59 +1% +10%
Leverage exposure 246 245 234 - +5%
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Private Banking 814 840 857 (3)% (5)%
Corp. & Inst. Banking 507 497 507 +2% -
Net revenues 1,321 1,337 1,364 (1)% (3)%
Provision for credit losses 30 9 39
Total operating expenses 860 871 925 (1)% (7)%
Pre-tax income 431 457 400 (6)% +8%
Cost/income ratio 65% 65% 68%
Return on regulatory capital 14% 15% 13%
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix
3Q16 results
November 2016
25
Swiss Universal Bank Private Banking and Corporate & Institutional Banking
Private Banking Adjusted key financials in CHF mn C&IB Adjusted key financials in CHF mn
Key metrics in CHF bn Key metrics in CHF bn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net interest income 278 242 256 +15% +9%
Recurring commissions & fees 118 123 117 (4)% +1%
Transaction-based 124 146 144 (15)% (14)%
Other revenues (13) (14) (10)
Net revenues 507 497 507 +2% -
Provision for credit losses 17 2 25
Total operating expenses 273 292 286 (6)% (5)%
Pre-tax income 217 203 196 +7% +11%
Cost/income ratio 54% 59% 56%
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Adj. net margin in bps 35 42 34 (7) 1
Net new assets 0.2 0.9 3.1
Assets under management 245 241 237 +1% +3%
Mandates penetration 29% 28% 24%
Number of RM 1,500 1,530 1,570 (30) (70)
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net new assets (1.2) 0.7 1.9
Assets under management 285 281 263 +1% +8%
Number of RM 480 470 470 +10 +10
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net interest income 446 441 452 +1% (1)%
Recurring commissions & fees 243 240 255 +1% (5)%
Transaction-based 125 159 151 (21)% (17)%
Other revenues - - (1)
Net revenues 814 840 857 (3)% (5)%
Provision for credit losses 13 7 14
Total operating expenses 587 579 639 +1% (8)%
Pre-tax income 214 254 204 (16)% +5%
Cost/income ratio 72% 69% 75%
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix
3Q16 results
November 2016
26
PB
Key messages Adjusted key financials in CHF mn
International Wealth Management Robust performance in challenging markets and continued NNA momentum
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Private Banking 789 811 785 (3)% +1%
Asset Management 292 334 308 (13)% (5)%
Net revenues 1,081 1,145 1,093 (6)% (1)%
Provision for credit losses - 16 11
Total operating expenses 840 869 835 (3)% +1%
Pre-tax income 241 260 247 (7)% (2)%
Cost/income ratio 78% 76% 76%
Return on regulatory capital 20% 22% 21%
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Adj. net margin in bps 25 27 28 (2) (3)
Net new assets 4.4 5.4 1.7
Mandates penetration 29% 29% 29%
Number of RM 1,160 1,170 1,190 (10) (30)
Net loans 43 43 41 - +5%
Net new assets AM 5.0 3.5 5.6
Risk-weighted assets 33 34 32 - +4%
Leverage exposure 89 95 94 (7)% (5)%
Key metrics in CHF bn
Higher Wealth Management revenues vs. 3Q15 offset by growth investments and higher risk and compliance costs
Asset Management with higher pre-tax income vs. 3Q15 reflecting effective cost control
Continued NNA momentum across businesses and regions
Wealth Management
Strong net interest income reflecting cumulative benefit of loan growth and higher margins
Recurring revenues down vs. 3Q15 but broadly stabilized for last three quarters, while transaction revenues remained adversely affected in a challenging market environment
NNA of CHF 4.4 bn (net of regularization outflows of CHF 1.5 bn) with inflows from emerging markets and Europe; AuM up 9% YoY
Significant upgrade of RMs with senior and experienced hires offset by managed reductions and attrition
Asset Management
24% higher pre-tax income vs. 3Q15 driven by 10% lower expenses, resulting in a 4 pp. improvement in cost/income ratio
Higher investment-related gains and broadly stable management fees were offset by lower investment and partnership income vs. 3Q15
NNA of CHF 5.0 bn with strong contribution from emerging markets and fixed income products
3Q16 results
November 2016
27
Private Banking Adjusted key financials in CHF mn Asset Management Adjusted key financials in CHF mn
Key metrics in CHF bn Key metrics in CHF bn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net interest income 326 304 259 +7% +26%
Recurring commissions & fees 267 273 292 (2)% (9)%
Transaction- and perf.-based 197 236 235 (17)% (16)%
Other revenues (1) (2) (1)
Net revenues 789 811 785 (3)% +1%
Provision for credit losses - 16 11
Total operating expenses 599 598 568 - +5%
Pre-tax income 190 197 206 (4)% (8)%
Cost/income ratio 76% 74% 72%
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Adj. net margin in bps 25 27 28 (2) (3)
Net new assets 4.4 5.4 1.7
Assets under management 311 299 287 +4% +9%
Net loans 43 43 41 - +5%
Number of RM 1,160 1,170 1,190 (10) (30)
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Management fees 218 220 224 (1)% (3)%
Performance & placement rev. 41 42 35 (2)% +17%
Investment & partnership inc. 33 72 49 (54)% (33)%
Net revenues 292 334 308 (13)% (5)%
Total operating expenses 241 271 267 (11)% (10)%
Pre-tax income 51 63 41 (19)% +24%
Cost/income ratio 83% 81% 87%
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net new assets 5.0 3.5 5.6
Assets under management 324 315 315 +3% +3%
International Wealth Management Private Banking and Asset Management
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix
3Q16 results
November 2016
28
PB
Adjusted key financials in CHF mn
Asia Pacific Pre-tax income up YoY with continued investment in Wealth Management growth
Strong client activity levels with UHNWIs and Entrepreneurs across Wealth Management and Underwriting & Advisory
Growth in WM with NNA of CHF 4.6 bn in 3Q16 and record level AuM; high level of collaboration between WM and IB
Increase in operating expenses from investment in RMs and risk and compliance functions, partially offset by YoY cost reductions in IB
YoY capital usage reflects growth in lending activities to UHNW/Entrepreneur clients
Wealth Management
Revenue increase supported by higher loan volumes and AuM of CHF 169 bn
Net margin down 2 bps vs. 3Q15 with growth in net interest income and transactional revenues offset by higher operating expenses and credit provisions
Increase in provision for credit losses relates to a small number of share-based loans in Hong Kong
Investment Banking
Stronger revenues in Underwriting & Advisory driven by Entrepreneur clients and improving markets
Equities sales and trading weaker YoY, albeit stable QoQ
Solid fixed income revenues reflecting strength in financing activities and gains on structured deposits
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Private Banking 346 337 303 +3% +14%
Investment Banking 571 574 582 (1)% (2)%
Net revenues 917 911 885 +1% +4%
Provision for credit losses 34 3 24
Total operating expenses 708 692 699 +2% +1%
Pre-tax income 175 216 162 (19)% +8%
Cost/income ratio 77% 76% 79%
Return on regulatory capital 13% 16% 13%
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Adj. net margin in bps 17 23 19 (6) (2)
Net new assets 4.6 5.0 3.7
Number of RM 650 650 550 - +100
Net loans 39 38 34 +2% +12%
Risk-weighted assets 32 32 27 +2% +21%
Leverage exposure 108 108 100 +1% +8%
Key metrics in CHF bn
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix
Key messages
3Q16 results
November 2016
29
Asia Pacific Private Banking and Investment Banking
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix
Private Banking Adjusted key financials in CHF mn Investment Banking Adjusted key financials in USD mn
Key metrics in CHF bn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net interest income 159 143 114 +11% +39%
Recurring commissions & fees 67 70 65 (4)% +3%
Transaction- and perf.-based 120 124 103 (3)% +17%
Other revenues - - 21
Net revenues 346 337 303 +3% +14%
Provision for credit losses 38 2 24
Total operating expenses 239 245 210 (2)% +14%
Pre-tax income 69 90 69 (23)% -
Cost/income ratio 69% 73% 69%
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Adj. net margin in bps 17 23 19 (6) (2)
Net new assets 4.6 5.0 3.7
Assets under management 169 158 139 +7% +22%
Number of RM 650 650 550 - +100
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Fixed income sales & trading 152 172 101 (12)% +50%
Equity sales & trading 349 350 468 - (25)%
Underwriting & advisory 118 102 60 +16% +97%
Other revenues (32) (34) (26)
Net revenues 587 590 603 (1)% (3)%
Provision for credit losses (4) 1 -
Total operating expenses 482 458 505 +5% (5)%
Pre-tax income 109 131 98 (17)% +11%
Cost/income ratio 82% 78% 84%
3Q16 results
November 2016
30
Results reflect continued execution of our strategy, evidenced by strong share of wallet gains:
− 9M16 share of wallet2 up versus 2015 in all key products
− Top 5 rank3 in each of announced M&A, ECM and Leveraged Finance for 9M16
− Continued momentum with investment grade corporates
Net revenues of USD 479 mn up 16% YoY driven by higher revenues in debt and equity underwriting, partially offset by lower advisory revenues
Adjusted operating expenses up 25% YoY due to higher variable compensation; 9M16 adjusted expenses of USD 1.3 bn broadly stable vs. prior year period
Risk-weighted assets of USD 19 bn, up 21% YoY, driven primarily by an increase in IBCM’s share of the Corporate Bank
In 3Q16, global advisory and underwriting revenues of USD 945 mn, up 22% YoY, outperforming the industry-wide fee pool (up 4%)3
Key messages
Investment Banking & Capital Markets Results driven by increased underwriting activity; Top 5 ranks in all key products
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix 1 Gross global revenues from advisory, debt and equity underwriting generated across all divisions before cross-divisional revenue sharing agreements 2 Source: Dealogic for the period ending September 30, 2016; includes Americas and EMEA only 3 Source: Dealogic for the period ending September 30, 2016
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Risk-weighted assets 19 17 15 +10% +21%
Leverage exposure 46 45 37 +2% +25%
Adjusted key financials in USD mn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net revenues 479 558 414 (14)% +16%
Provision for credit losses (9) - -
Total operating expenses 434 426 346 +2% +25%
Pre-tax income 55 132 68 (59)% (19)%
Cost/income ratio 91% 76% 84%
Return on regulatory capital 9% 21% 13%
Key metrics in USD bn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Global advisory and underwriting
revenues1 945 1,075 777 (12)% +22%
Total Advisory and Underwriting revenues1 in USD mn
3Q16 results
November 2016
31
Key messages Adjusted key financials in USD mn
Global Markets Positive momentum in credit products offset by challenging equity market conditions
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Equities 330 550 536 (40)% (38)%
Credit 740 758 723 (2)% +2%
Solutions 359 423 414 (15)% (13)%
Other (33) (60) (40)
Net revenues 1,396 1,671 1,632 (16)% (14)%
Provision for credit losses (6) (17) 15
Total operating expenses1 1,251 1,480 1,214 (15)% +3%
Pre-tax income 150 208 403 (28)% (63)%
Cost/income ratio 90% 89% 74%
Return on regulatory capital 4% 6% 10%
Higher YoY credit products results, improved emerging markets revenues, notably in Latin America, and sustained market share through restructuring
− Maintained #1 asset finance2 rank vs. 3Q15 despite significant rescaling of franchise
− Awarded Most Innovative Bank for Leveraged Finance and securitized products3 and Structured Product Bank of the Year4
Weakness in equity derivatives reflecting low volatility and muted client activity; cash and prime services revenues resilient in the Americas offset by weak trading results, particularly in EMEA
Adjusted operating expenses up 3% YoY due to higher variable compensation
− 9M16 adjusted expenses of USD 4.1 bn, down 6% YoY
− Expected to approach end-2018 target of USD 5.4 bn by end-2016, reflecting substantial progress on accelerated cost reductions and lower costs in the UK
RWA broadly stable compared to 2Q16, operating below end-2016 ceiling of USD 60 bn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Risk-weighted assets 53 52 63 +1% (16)%
Leverage exposure 296 286 313 +3% (6)%
Key metrics in USD bn
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix 1 Does not include restructuring expenses of USD 52 mn in 2Q16 and USD 53 mn in 3Q16 and major litigation of USD 7 mn and USD 132 mn in 3Q15 2 Thomson Reuters 3 The Banker, Investment Banking Awards 2016 4 GlobalCapital
3Q16 results
November 2016
32
Adju
sted
Key messages
Strategic Resolution Unit Substantial reduction in RWA and leverage exposure; adjusted expenses down 47% YoY
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in the Appendix
Key financials in USD mn
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Net revenues (170) (371) (90) +54% (89)%
Provision for credit losses 6 (38) 21
Total operating expenses 351 424 661 (17)% (47)%
Pre-tax loss (527) (757) (772)
Restructuring expenses 23 21 -
Major litigation expenses 324 - 27
Pre-tax loss reported (874) (778) (799)
3Q16 2Q16 3Q15 Δ 2Q16 Δ 3Q15
Risk-weighted assets 55 58 75 (5)% (27)%
RWA excl. operational risk 35 38 56 (9)% (37)%
Leverage exposure 119 148 196 (20)% (40)%
Key metrics in USD bn
Substantial progress in reducing leverage exposure and RWA in 3Q16 by USD 29 bn and USD 3 bn, respectively:
− Loan and financing exposure reduced by more than 15% in the quarter through the sale of loans and facilities, in addition to the sale of Credit Suisse Park View BDC, Inc.
− Bilateral derivatives trade count reduced by ~30% in the quarter through CDS step-outs; compression and unwinds across the macro and emerging market portfolios
Adjusted pre-tax income improved by USD 230 mn vs. 2Q16:
− Reduced revenue losses compared to 2Q16, driven by a recovery from 1H16 adverse credit markets, partially offset by losses on life insurance and a credit provision on ship finance portfolios
− Exit costs at ~1% of RWA due to constructive market conditions
− Continued progress on expense reductions; 3Q16 expenses down USD 73 mn vs. prior quarter
Increase in major litigation provisions of USD 324 mn
On a year-on-year basis, leverage exposure and RWA reduced by USD 78 bn and USD 20 bn, respectively; adjusted operating expenses lower by USD 310 mn, mainly driven by the exit from US Private Banking onshore business and reduced footprint in legacy Investment Banking businesses
3Q16 results
33
Content
1 Credit Suisse in a nutshell
2 Strategic actions
4
15
Page
A Strengthen capital base
B Reduce fixed costs
C Rebalance our business mix
16
17
21
3 3Q16 results 23
4 Appendix 34
November 2016
34
45%
42%
6% 7%
47%
26%
13%
14%
Currency mix capital metric4
A 10% strengthening of the USD (vs. CHF) would
have a (0.3) bps impact on the “look-through”
BIS CET1 ratio
Contribution Applying a +/- 10% movement on the average FX rates for 9M16, the sensitivities are:
USD/CHF impact on 9M16 pre-tax income by CHF + 212 / (212) mn
EUR/CHF impact on 9M16 pre-tax income by CHF + 149 / (149) mn Swiss Universal Bank
Net revenues 4,360 79% 12% 7% 1% 1%
Total expenses2 2,717 86% 3% 3% 3% 5%
International Wealth Management
Net revenues 3,399 27% 38% 23% 2% 10%
Total expenses2 2,609 42% 23% 13% 10% 12%
Net revenues 16,211 29% 41% 13% 2% 15%
Total expenses2 13,410 32% 34% 5% 12% 17%
46%
39%
8% 7%
Currency mix & Group capital metrics
1 As reported 2 Total expenses include provisions for credit losses 3 Sensitivity analysis based on weighted average exchange rates of USD/CHF of 0.98 and EUR/CHF of 1.09 for the 9M16 results 4 Data based on September 2016 month-end currency mix and on a look-through basis 5 Reflects actual capital positions in consolidated Group legal entities (net assets) including net asset hedges less applicable Basel 3 regulatory adjustments (e.g. goodwill)
Asia Pacific
Net revenues 2,735 2% 44% 1% 1% 52%
Total expenses2 2,113 5% 22% -% 2% 71%
Global Markets
Net revenues 4,232 1% 59% 23% 2% 15%
Total expenses2 4,189 3% 61% 4% 25% 7%
Investment Bank & Capital Markets
Net revenues 1,398 -% 90% 4% 4% 2%
Total expenses2 1,286 19% 57% 5% 14% 5%
Sensitivity analysis on Core results3 Credit Suisse Core results1
Core results
9M16
in CHF mn
Bas
el 3
Ris
k-w
eig
hte
d a
ssets
Sw
iss
leve
rage e
xposu
re
CHF
EUR
Other
USD
US
D
CE
T1
cap
ital
5
CHF USD EUR GBP Other
Appendix - 3Q16
November 2016
35
Credit Suisse Group – a diversified loan book portfolio
104 or 38%
Consumer finance
Loans collateralized by securities
Real Estate
Financial institutions
Commercial and
industrial loans
Governments and
public institutions
Consumer2
CHF 146 bn or 53% Corporate & institutional1
CHF 130 bn or 47%
38 or 14%
4 or 1% 26 or 9%
82 or 30%
18 or 7%
4 or 1%
SUB = Swiss Universal Bank. IWM = International Wealth Management. APAC = Asia Pacific. GM = Global Markets. IBCM = Investment Banking & Capital Markets. 1 Classified by counterparty type. 2 Classified by product type. 3 Excludes loans carried at fair value. 4 Impaired loans and allowance for loan losses are only based on loans that are not carried at fair value. 5 Not shown: Strategic Resolution Unit (SRU) gross loans of CHF 11.2 bn as of end 3Q16. Data points are only shown for major classes. 6 Including SRU.
Mortgages
Loan metrics 3Q16 2Q16
Total non-performing and non-interest-
earning loans / Gross loans3 0.7% 0.6%
Gross impaired loans / Gross loans3 0.9% 0.9%
Allowance for loan losses / Gross loans3,4 0.3% 0.3%
Specific allowance for loan losses /
Gross impaired loans3,4 27% 27%
Development 3Q16 vs. 4Q15
Mortgages +1%
Loans collateralized by securities (1)%
Consumer finance +4%
Real Estate (2)%
Commercial and industrial loans +5%
Financial institutions (15)%
Governments and public institutions +13%
Total 1%
Gross loans in CHF bn, 3Q16
Foreign
Switzerland
Gross loans by location
(inner pie chart)
58%
42% CHF
276 bn
Divisional5 gross loans in CHF bn, 3Q16
SUB
99 or 59%
CHF
167 bn
24 or 14%
29 or 17%
IWM
17or 40%
CHF
43 bn
18 or 42%
APAC
12 or 32%
CHF
39 bn 22 or 57%
GM
4 or 45%
CHF
9 bn
4 or 44%
IBCM
5 or 82%
CHF
6 bn
Mortgages
Real Estate Commercial
and industrial
loans
Gross loan book reported at fair value
Commercial and industrial loans
Loans
collateralized
by securities
Loans collateralized by securities
Commercial and industrial loans
Financial
institutions
Commercial and
industrial loans
Commercial
and industrial
loans
SUB IWM APAC GM IBCM Total6
0% 1% 13% 63% 54% 7%
Appendix - 3Q16
November 2016
36
Credit Suisse legal entity structure
November 2016
US Holding Co4
Simplified
view1
Funding Entity3
UK Subsidiary5
Credit Suisse AG Operating Bank with branches2
Credit Suisse Group AG Holding Company
Swiss Legal Entity6
Legal Entity program goals
Designed to meet future requirements for global recovery and resolution planning; less complex and more efficient operating infrastructure for the bank
In support of FINMA’s “single point of entry” bail-in strategy, debt will be issued from Credit Suisse Group AG3.
Better aligns the booking of Investment Banking business on a regional basis, from a client and risk management perspective
Evolution of Legal Entity structure
Incorporated Credit Suisse (Schweiz) AG, a wholly-owned subsidiary of Credit Suisse AG
Received banking license on October 14, 2016
Expect the entity to start its business operations as an independent Swiss bank on November 20, 2016
Planned partial initial public offering (20-30%) by year-end 2017, market conditions permitting7
1
3
2
Started issuance of senior unsecured bail-in
instruments by a wholly-owned subsidiary of the Group and guaranteed by the Group in 2015
2
Newly established branch of Credit Suisse AG in
Dublin to become the primary hub for prime services
business in Europe
3
1
1 Organizational structure shows main operating entities only. The Credit Suisse legal entity program has been approved by the Board of Directors of Credit Suisse Group AG, but is subject to final regulatory approval. Implementation of the program is well
underway, with a number of key components to be implemented through to 2017. 2 Hub for Asia Pacific Investment Banking business in Singapore branch. 3 Funding may be issued either at the holding company level or at the level of an entity that will
be substituted by the holding company in a restructuring event. 4 US Service Co activities will be housed here. 5 Credit Suisse is planning that the business of its two principal UK operating subsidiaries (Credit Suisse Securities (Europe) Limited and
Credit Suisse International) will be consolidated into one single subsidiary. 6 In Switzerland, Credit Suisse has created a subsidiary for its Swiss-booked business (primarily wealth management, retail and corporate and institutional clients as well as the
product and sales hub in Switzerland). Swiss-booked business from International Wealth Management, Asia Pacific and Strategic Resolution Unit will remain in Credit Suisse AG. 7 Any such IPO would involve the sale of a minority stake and would be
subject to, among other things, all necessary approvals and would be intended to generate / raise additional capital for Credit Suisse AG or Credit Suisse (Schweiz) AG.
Credit Suisse Holdings (USA), Inc. established as
Intermediate Holding Company (IHC) in the US on July 1, 2016, with the requisite capital, liquidity, infrastructure and governance, including its newly
established board of directors
4
4
Appendix - 3Q16
37
The new legal entity Switzerland (LE CH)1 will form the backbone of
SUB and the planned IPO in 20172
LE CH received its banking licence as of October 14, 2016, and is expected to commence its business operations as an independent
Swiss bank on November 20, 2016
LE CH to cover all Swiss-booked clients of SUB (from today’s Credit Suisse AG) as well as SUB product areas and central SUB Functions
Swiss-booked business from IWM/APAC/SRU will remain in Credit Suisse AG
Swisscard, BANK-now, NAB planned to be subsidiaries to LE CH
1 Credit Suisse (Schweiz) AG. 2 Market conditions permitting, any such IPO would involve the sale of a minority stake and would be subject to, among other things, all necessary approvals and would be intended to generate / raise additional capital for Credit Suisse AG or Credit Suisse (Schweiz) AG. 3 The underwriting business is not part of the LE CH. 4 Functions: including COO; Finance; Comm./Marketing; Chief of Staff; IT; Operations; GC; CRO; CCO; HR. 5 Product areas: including Products & Inv. Services; Solution Partners; Sales & Trading Services CH; MACS CH. 6 Credit Suisse Group with 50% equity interest in Swisscard AECS AG
IPO perimeter (LE CH & subsidiaries in scope for IPO)
Swiss UB
Business in LE CH Subsidiary of LE CH Partly in LE CH
Functions4
Product areas5
Private & Wealth
Management Clients
(HNWI / Affluent / Retail clients Switzerland)
Premium Clients
(UHNWI Switzerland) IBD Switzerland3
Corporate & Institutional
Clients Switzerland NAB
BANK-now
Swisscard6 External Asset Management
Switzerland
IPO Perimeter
Appendix - 3Q16
November 2016
38
Credit Suisse Core – results by business divisions
Note: Core Results do not include revenues and expenses from our Strategic Resolution Unit. Rounding differences may occur. 1 Excluding Corporate Center net revenues of CHF 87 mn, total operating expenses (including provision for credit losses) of CHF 496 mn, pre-tax income/(loss) of CHF (409) mn, RWA of CHF 17 bn and leverage exposure of CHF 59 bn. 2 Including provision for credit losses
Results by business divisions1 – 9M16
Swiss Universal Bank International Wealth Management Asia Pacific Global Markets Investment Banking & Capital Markets
27% 21%
17%
26%
9%
21%
20%
16%
32%
10%
51%
25% 19%
1% 3%
33%
17%
16%
26%
9%
32% 11%
14%
37%
6%
Net
Revenues
CHF
16.1 bn
Pre-tax
Income
CHF
3.2 bn
Total
Operating
Expenses2
CHF 12.9 bn
RWA
CHF
200 bn
Leverage
Exposure
CHF 775 bn
40%
48%
13%
Assets under
Management
CHF 1,334 bn
Appendix - 3Q16
Capital and Assets under Management – 2Q16
November 2016
39
Reconciliation of adjustment items (1/2)
CS Group in CHF mn SRU in CHF mn Corp. Ctr. in CHF mn SUB PB in CHF mn IWM PB in CHF mn APAC PB in CHF mn
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Net revenues reported 23,797 26,242 511 1,838 561 680 3,696 3,990 3,224 3,318 1,178 1,037
Fair value on own debt (298) (543) - - (298) (543) - - - - - -
Real estate gains (95) (414) - - - - (95) (414) - - - -
(Gains)/losses on business sales (34) (101) - - - - (10) (24) (11) (77) - -
Net revenues adjusted 23,370 25,184 511 1,838 263 137 3,591 3,552 3,213 3,241 1,178 1,037
Provision for credit losses 324 186 137 33 (1) 1 49 60 5 12 18 4
Total operating expenses reported 25,895 22,429 3,026 4,912 862 654 2,772 2,683 2,678 2,463 816 723
Goodwill impairment (3,797) - - - - - - - - - - -
Restructuring expenses (355) - (156) - - - (33) - (32) - (1) -
Major litigation provisions (820) (2,436) (290) (2,325) - - (25) - (268) (51) (6) -
Total operating expenses adjusted 20,923 19,993 2,580 2,587 862 654 2,714 2,683 2,378 2,412 809 723
Pre-tax income/(loss) reported (2,422) 3,627 (2,652) (3,107) (300) 25 875 1,247 541 843 344 310
Total adjustments 4,545 1,378 446 2,325 (298) (543) (47) (438) 289 (26) 7 -
Pre-tax income/(loss) adjusted 2,123 5,005 (2,206) (782) (598) (518) 828 809 830 817 351 310
A full reconciliation of all quarters from 2014 to 3Q16 is available in the time series.
Appendix - 2015
November 2016
40
Reconciliation of adjustment items (2/2)
A full reconciliation of all quarters from 2014 to 3Q16 is available in the time series.
Appendix - 2015
SUB C&IB in CHF mn IWM AM in CHF mn APAC IB in CHF mn GM in CHF mn IBCM in CHF mn
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Net revenues reported 2,025 1,922 1,328 1,624 2,661 2,298 6,826 7,426 1,787 2,109
Fair value on own debt - - - - - - - - - -
Real estate gains - - - - - - - - - -
(Gains)/losses on business sales (13) - - - - - - - - -
Net revenues adjusted 2,012 1,922 1,328 1,624 2,661 2,298 6,826 7,426 1,787 2,109
Provision for credit losses 89 34 - - 17 36 10 7 - (1)
Total operating expenses reported 1,136 1,111 1,146 1,207 2,611 1,672 8,747 5,405 2,101 1,599
Goodwill impairment - - - - (756) - (2,661) - (380) -
Restructuring expenses (9) - - - (2) - (96) - (22) -
Major litigation provisions - - (4) - - - (231) (60) - -
Total operating expenses adjusted 1,127 1,111 1,142 1,207 1,853 1,672 5,759 5,345 1,699 1,599
Pre-tax income/(loss) reported 800 777 182 417 33 590 (1,931) 2,014 (314) 511
Total adjustments (4) - 4 - 758 - 2,988 60 402 -
Pre-tax income/(loss) adjusted 796 777 186 417 791 590 1,057 2,074 88 511
November 2016
41
Reconciliation of adjustment items (1/2)
CS Group in CHF mn SRU in USD mn Corp. Ctr. in CHF mn SUB PB in CHF mn IWM PB in CHF mn APAC PB in CHF mn
3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15
Net revenues reported 5,396 5,108 5,985 (170) (371) (90) 72 (95) 752 1,160 840 857 789 811 785 346 337 303
Fair value on own debt - - (623) - - - - - (623) - - - - - - - - -
Real estate gains - - - - - - - - - - - - - - - - - -
(Gains)/losses on business sales (346) - - - - - - - - (346) - - - - - - - -
Net revenues adjusted 5,050 5,108 5,362 (170) (371) (90) 72 (95) 129 814 840 857 789 811 785 346 337 303
Provision for credit losses 55 (28) 110 6 (38) 21 - (2) 1 13 7 14 - 16 11 38 2 24
Total operating expenses reported 5,119 4,937 5,023 698 445 688 279 142 211 603 582 639 593 611 618 242 245 210
Goodwill impairment - - - - - - - - - - - - - - - - - -
Restructuring expenses 145 91 - 23 21 - - - - 16 3 - 13 13 - 3 - -
Major litigation provisions 306 - 203 324 - 27 - - - - - - (19) - 50 - - -
Total operating expenses adjusted 4,668 4,846 4,820 351 424 661 279 142 211 587 579 639 599 598 568 239 245 210
Pre-tax income/(loss) reported 222 199 852 (874) (778) (799) (207) (235) 540 544 251 204 196 184 156 66 90 69
Total adjustments 105 91 (420) 347 21 27 - - (623) (330) 3 - (6) 13 50 3 - -
Pre-tax income/(loss) adjusted 327 290 432 (527) (757) (772) (207) (235) (83) 214 254 204 190 197 206 69 90 69
A full reconciliation of all quarters from 2014 to 3Q16 is available in the time series
Appendix - 3Q16
November 2016
42
Reconciliation of adjustment items (2/2)
SUB C&IB in CHF mn IWM AM in CHF mn APAC IB in CHF mn APAC IB in USD mn GM in USD mn IBCM in USD mn
3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15 3Q16 2Q16 3Q15
Net revenues reported 507 497 507 292 334 308 571 574 582 587 590 603 1,396 1,671 1,632 479 558 414
Fair value on own debt - - - - - - - - - - - - - - - - - -
Real estate gains - - - - - - - - - - - - - - - - - -
(Gains)/losses on business sales - - - - - - - - - - - - - - - - - -
Net revenues adjusted 507 497 507 292 334 308 571 574 582 587 590 603 1,396 1,671 1,632 479 558 414
Provision for credit losses 17 2 25 - - - (4) 1 - (4) 1 - (6) (17) 15 (9) - -
Total operating expenses reported 276 293 286 243 273 267 489 457 489 503 468 505 1,310 1,532 1,346 450 417 346
Goodwill impairment - - - - - - - - - - - - - - - - - -
Restructuring expenses 3 1 - 2 2 - 20 10 - 21 10 - 52 52 - 16 (9) -
Major litigation provisions - - - - - - - - - - - - 7 - 132 - - -
Total operating expenses adjusted 273 292 286 241 271 267 469 447 489 482 458 505 1,251 1,480 1,214 434 426 346
Pre-tax income/(loss) reported 214 202 196 49 61 41 86 116 93 88 121 98 92 156 271 39 141 68
Total adjustments 3 1 - 2 2 - 20 10 - 21 10 - 59 52 132 16 (9) -
Pre-tax income/(loss) adjusted 217 203 196 51 63 41 106 126 93 109 131 98 150 208 403 55 132 68
A full reconciliation of all quarters from 2014 to 3Q16 is available in the time series
Appendix - 3Q16
November 2016
43
Swisscard deconsolidation impact Impact of the deconsolidation on the Swiss Universal Bank
Note: Adjusted results are non-GAAP financial measures. A reconciliation to reported results is included in this presentation on slides 49/50 This is an illustrative pro-forma presentation of the impact of the deconsolidation of the card issuing business on the historical results of SUB as if it had occurred on December 31, 2014. Given that as of July 1, 2015 the business has been deconsolidated and transferred to the equity method investment, Swisscard AECS GmbH and the transaction does not qualify for discontinued operations, the historical results are not restated in this respect. The reduction in pre-tax income in the Private Banking business of Swiss Universal Bank, is offset by the reduction in minority interest from the deconsolidation at the Group level, therefore there is no material impact on the Group’s net income attributable to shareholders. These illustrative figures cannot be seen as being indicative of future trends or results 1 Pro-forma impact of the card issuing business deconsolidation
in CHF mn 1Q15 2Q15 1Q15 2Q15 1Q15 2Q15
Net interest income 611 685 9 9 602 676
Recurring commissions & fees 412 412 56 59 356 353
Transaction-based revenues 382 349 8 7 374 342
Other revenues (5) (7) - (5) (7)
Net revenues 1,400 1,439 73 75 1,327 1,364
Provision for credit losses 23 33 - - 23 33
Total operating expenses 934 961 61 63 873 898
Pre-tax income 443 445 12 12 431 433
Return on regulatory capital† 14% 14% - - 14% 14%
SUB adjusted Swisscard Impact1 SUB adj. ex
Swisscard
Appendix - 3Q16
November 2016