FINANCIAL INSTITUTIONS

ISSUER COMMENT5 February 2016

Contacts

Michael Eberhardt,CFA

44-20-7772-8611

VP-Sr Credit Officermichael.eberhardt@moodys.com

David Fanger 212-553-4342Senior Vice Presidentdavid.fanger@moodys.com

Credit Suisse Group AGEarnings Commentary - Fourth Quarter 2015

Credit Suisse Group AG reported a 6.4 billion pre-tax loss in the fourth quarter, driven inpart by a CHF 3.8 billion goodwill impairment charge, reflecting a significant restructuringof the bank in line with management’s strategic plan announced in October 2015, and aCHF 0.7 billion fair value loss on own debt. However, even excluding these items, quarterlyresults were still quite weak, reflecting losses in the bank’s Strategic Resolution Unit, higherlitigation and restructuring charges, and significant weakness in the bank’s Global Marketsdivision where volatile market conditions and wider credit spreads led to significant mark-to-market losses in the bank’s still sizeable credit and securitized products businesses. Revenuedeclines across a number of other businesses also reflected reduced client activity in the faceof a more challenged macroeconomic environment. On a Moody's adjusted basis pretaxnet income from continuing operations was a loss of CHF2.1 billion, excluding the goodwillimpairment, fair value losses on own debt, and CHF 0.1 billion in gains on property sales andthe sale of a business.

Our recent downgrade of Credit Suisse’s baseline credit assessment to baa2 from baa1reflects our expectation that weaker profitability levels over the next two years, driven byhigher restructuring charges and exit costs, and well as the execution risk associated withsuccessfully implementing the firm’s new strategy pose greater near-term risks for creditors.We also noted at the time that environmental factors beyond management's control couldstill derail or delay success; the bank’s fourth quarter results highlighted such risks. Shouldthe strategic plan’s 2018 earnings targets be achieved on a sustainable basis, we believethe improved profitability would be positive for creditors and could result in upward ratingspressure. Nonetheless, at present the near-term risks outweigh this potential future benefit.

As a partial offset to the risks posed during the implementation of the new strategic plan,Credit Suisse issued CHF 6 billion in new common equity in December 2015, significantlyboosting the bank's leverage ratio and capital position. The bank’s Basel III commonequity tier 1 (CET1) ratio on a look-through basis increased 120 basis points versus theprevious quarter to 11.3%, based on the Swiss capital rules (11.4% on a BIS basis). While animprovement due to the capital raise, the ratio reflects the consumption of a net CHF2.4billion in capital in the quarter. Risk-weighted assets increased 2% during the quarter to CHF295 billion, primarily a result of internal methodology changes in treatment of operationalrisk and the balance of external methodology changes, model updates and increased marketrisk levels. While Credit Suisse’s CET1 ratio remains at the lower-end of its peers, it is more inline with or even above peers with the inclusion of the considerable amount of high-triggercontingent capital instruments the bank has issued. Including high-trigger instruments, thebank reported a look-through Swiss buffer capital ratio (CET1 plus high-trigger instruments)of 14.5%.

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This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 5 February 2016 Credit Suisse Group AG: Earnings Commentary - Fourth Quarter 2015

The bank reported a look-through Swiss CET1 leverage ratio of 3.3% for the quarter and a Tier 1 leverage ratio (including CET1 plusadditional Tier 1 securities) of 4.5%, up 50 basis points and 60 basis points respectively from last quarter, and now more in line withpeers. While the bank’s Swiss total capital leverage ratio was higher at 5.2%, it includes dated contingent capital instruments inaddition to CET1 and AT1 securities. These capital levels are now at or ahead of management targets set for end-2015. Total leverageexposure declined 5.4% from the prior quarter to CHF 993.5 billion at quarter end, due largely to reductions in leverage exposurein Global Markets, Strategic Resolution Unit and Corporate Center, against increased leverage in IBCM and International WealthManagement.

As part of management’s strategy update, Credit Suisse reconfigured its reporting structure during the quarter from two core divisions(excluding Corporate Center) to five core divisions (excluding Corporate Center) and the addition of a Strategic Resolution Unit. Withinthe new business segments, key financial and operating trends were as follows –

Swiss Universal Bank (“SUB”) reported adjusted pre-tax profits of CHF 336 million, up 25% from the quarter a year ago. On a reportedbasis, results are down 48%, largely reflecting CHF414 million of real estate gains in the fourth quarter of 2014, as well as restructuringand litigation expenses in the fourth quarter of 2015. SUB Private Banking’s adjusted pre-tax profits improved 40%, a result of theSwisscard deconsolidation benefit as well as higher net interest income. Reported pre-tax profits from SUB Corporate and InstitutionalBanking increased 20% (adjusted +16%) versus the prior year as revenues increased due to higher net interest income and higherrecurring commissions and fees. Assets under management (AUM) in Private Banking were increased by CHF 4 billion over the quarterlargely due to reclassifications reflecting an updated AUM policy introduced in the prior quarter, as well as outflows associated withclients taking advantage of local tax amnesty programs (“regularization”). In Corporate and Institutional Banking, net new assetsincreased by CHF 4.2 billion, due to inflows from Swiss pension funds.

International Wealth Management (“IWM”) reported adjusted pre-tax profits of CHF 230 million for the fourth quarter, down 35%from the quarter a year ago. On a reported basis, the division made losses of CHF 20 million, with adjustments due to significantlitigation provisions and restructuring in the fourth quarter of 2015. Within IWM, Private Banking adjusted pre-tax income in thequarter was up 4% versus the prior year. Reported Private Banking income was lower largely due to charges for litigation brought byclients who have claimed their former relationship manager in Switzerland exceeded his investment authority. We believe this reflectsa weakness in internal controls, a factor we have previously cited as a risk for creditors at Credit Suisse. In Asset Management, reportedpre-tax income was down 79% for the quarter versus the prior year. This was largely a result of lower revenues following the sale ofan Italian business and change in fund management in Brazil where the firm's Hedging-Griffo Asset Management unit launched asa new firm in the fourth quarter of 2014, but also reflects a more challenging environment for alternative investment products inwhich the business is concentrated. In Private Banking, net new asset outflows of CHF4.2 billion occurred in the quarter, of whichCHF 2.3 billion were related to outflows associated with clients taking advantage of local tax amnesty programs (“regularization”). InAsset Management, net new asset inflows of CHF 3.6 billion brought total net new assets to CHF 26.5 billion for 2015, primarily in toAlternatives and Credit Suisse’s JV in China and index products.

Asia Pacific (“APAC”) reported adjusted pre-tax profits of CHF 148 million in the fourth quarter, a 21% increase compared to the prioryear. On a reported basis, APAC made losses of CHF 617 million, largely due to a CHF 756 million goodwill impairment in the APACInvestment Banking sub-segment. In APAC Private Banking, adjusted pre-tax income fell 18% as increased net interest income wasoffset by lower transaction based revenues and increased operating expenses, which reflect the hiring of new relationship managers.This is a key area of investment by Credit Suisse towards achieving its 2018 profitability targets for APAC and the broader Group.APAC Investment Banking reported pre-tax losses for the quarter of USD675 million largely reflecting the aforementioned goodwillimpairment. On an adjusted basis, pre-tax income of USD 92 million was up 56% for the quarter versus the prior year, reflectingimproved revenues in fixed income and equity sales. Private Banking net new assets inflow of CHF 3.0 billion reflected inflows primarilyfrom Greater China and South East Asia markets.

Global Markets (“GM”) reported a USD 3.5 billion pretax loss in the fourth quarter of 2015. Excluding a USD2.7 billion goodwillimpairment, restructuring expenses of USD105 million and USD 51 million of litigation charges, the division would have reported an

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3 5 February 2016 Credit Suisse Group AG: Earnings Commentary - Fourth Quarter 2015

adjusted pre-tax loss of USD 664 million. The underlying results reflect difficult trading conditions where a significant market selloffin key markets exposed the business to substantial losses in its global credit, corporate banking and securitized products portfolios,contributing to a sharp decline in fixed income sales and trading revenues during the quarter. Management indicated considerabledeleveraging of the capital markets portfolio, resulting in a reduction in leverage exposure of CHF 35 billion during the quarter. Equitysales and trading declined 28% in the quarter versus the prior year. Management highlighted its oil and gas exposures of approximatelyUSD 11 billion, including $9.1 billion net exposure in its corporate banking book where, although only 22% is funded. Nearly half of theportfolio consists of exposure to the higher risk Exploration & Production and Oilfield Services sectors. Although much of that exposureis secured, we believe an extended period of low oil prices could result in greater losses in that portfolio.

Investment Banking and Capital Markets (“IBCM”) reported a USD 503 million loss for the fourth quarter of 2015 due largely togoodwill and restructuring charges. On an adjusted basis, IBCM generated a USD 97 million loss, as net revenues were down 22%for the fourth quarter versus the prior year. This was largely due to declines in debt (-22%) and equity underwriting revenues (-33%)reflecting generally lower market volumes, and mark-downs in the underwriting and corporate bank portfolios. One bright spot wasadvisory revenues, which were up 29% in the fourth quarter versus the prior year and exceeded any other quarter in at least the pastthree years. Risk-weighted assets in IBCM increased USD 4 billion to USD 18 billion, a result of increased underwriting commitments ininvestment grade and speculative grade transactions.

The newly created Strategic Resolution Unit (“SRU”), which largely consists of investment banking activities which were deemednon-core during the October 2015 strategy review, reported a pre-tax loss of CHF 1,122 million in the quarter, slightly larger than theprior year. This loss is due to restructuring charges from the transfer of the U.S. Private Bank and higher provisions for credit losses onpositions in the Private Banking and Asset Management portfolio.

Corporate Center reported adjusted pre-tax losses of CHF 381 million in the quarter, excluding the CHF697 million of fair value losseson own debt. This widening of loss relative to the loss of CHF 70 million in the fourth quarter a year ago largely reflects increasedoperating expenses.

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4 5 February 2016 Credit Suisse Group AG: Earnings Commentary - Fourth Quarter 2015

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