EX-99 2 a140206g4q-ex99_1.htm 99.1 CREDIT SUISSE FINANCIAL REPORT 4Q13 99.1 Credit Suisse Financial Report 4Q13











Financial highlights
  in / end of % change in / end of % change
4Q13 3Q13 4Q12 QoQ YoY 2013 2012 YoY
Net income (CHF million)  
Net income attributable to shareholders 267 454 263 (41) 2 3,069 1,349 128
   of which from continuing operations  269 304 294 (12) (9) 2,924 1,389 111
Earnings per share (CHF)  
Basic earnings per share from continuing operations 0.08 0.17 0.11 (53) (27) 1.57 0.82 91
Basic earnings per share 0.08 0.26 0.09 (69) (11) 1.65 0.79 109
Diluted earnings per share from continuing operations 0.08 0.17 0.11 (53) (27) 1.57 0.82 91
Diluted earnings per share 0.08 0.26 0.09 (69) (11) 1.65 0.79 109
Return on equity (%, annualized)  
Return on equity attributable to shareholders 2.5 4.3 2.9 7.5 3.9
Core Results (CHF million)  1
Net revenues 5,986 5,449 5,627 10 6 25,283 23,251 9
Provision for credit losses 41 41 70 0 (41) 155 170 (9)
Total operating expenses 5,517 4,720 5,172 17 7 20,667 21,193 (2)
Income from continuing operations before taxes 428 688 385 (38) 11 4,461 1,888 136
Core Results statement of operations metrics (%)  1
Cost/income ratio 92.2 86.6 91.9 81.7 91.1
Pre-tax income margin 7.2 12.6 6.8 17.6 8.1
Effective tax rate 35.3 53.5 22.1 33.4 24.6
Net income margin 2 4.5 8.3 4.7 12.1 5.8
Assets under management and net new assets (CHF billion)  
Assets under management from continuing operations 1,253.4 1,239.3 1,197.8 1.1 4.6 1,253.4 1,197.8 4.6
Net new assets from continuing operations 4.2 8.8 7.1 (52.3) (40.8) 36.1 11.4 216.7
Balance sheet statistics (CHF million)  
Total assets 872,602 895,169 924,280 (3) (6) 872,602 924,280 (6)
Net loans 247,065 245,232 242,223 1 2 247,065 242,223 2
Total shareholders' equity 42,907 42,162 35,498 2 21 42,907 35,498 21
Tangible shareholders' equity 3 34,698 33,838 26,866 3 29 34,698 26,866 29
Book value per share outstanding (CHF)  
Total book value per share 26.97 26.48 27.44 2 (2) 26.97 27.44 (2)
Tangible book value per share 3 21.81 21.25 20.77 3 5 21.81 20.77 5
Shares outstanding (million)  
Common shares issued 1,596.1 1,595.4 1,320.8 0 21 1,596.1 1,320.8 21
Treasury shares (5.2) (3.0) (27.0) 73 (81) (5.2) (27.0) (81)
Shares outstanding 1,590.9 1,592.4 1,293.8 0 23 1,590.9 1,293.8 23
Market capitalization  
Market capitalization (CHF million) 43,526 44,066 29,402 (1) 48 43,526 29,402 48
Market capitalization (USD million) 49,224 48,741 32,440 1 52 49,224 32,440 52
BIS statistics (Basel III)  
Risk-weighted assets (CHF million) 273,846 269,263 292,481 2 (6) 273,846 292,481 (6)
CET 1 ratio (%) 16.0 16.3 14.2 16.0 14.2
Tier 1 ratio (%) 17.1 17.0 15.2 17.1 15.2
Dividend per share (CHF)  
Dividend per share 0.70 4 0.75 5
Number of employees (full-time equivalents)  
Number of employees 46,000 46,400 47,400 (1) (3) 46,000 47,400 (3)
1
Refer to "Credit Suisse Reporting structure and Core Results" in I – Credit Suisse results – Credit Suisse for further information on Core Results.
2
Based on amounts attributable to shareholders.
3
A non-GAAP financial measure. Tangible shareholders' equity is calculated by deducting goodwill and other intangible assets from total shareholders' equity.
4
Proposal of the Board of Directors to the Annual General Meeting on May 9, 2014; to be paid out of reserves from capital contributions.
5
Paid out of reserves from capital contributions.










Brady W. Dougan, Chief Executive Officer (left) and Urs Rohner, Chairman of the Board of Directors.



Dear shareholders
In 2013, our priorities were to further improve profitability, continue to strengthen our capital position and reduce risks and leverage exposure while expanding market share in targeted markets. We made strong progress towards these objectives, while at the same time taking a number of additional strategic measures, both on a Group level and in our two divisions, to continue the transformation of our business.
For the full-year of 2013, underlying* Core pre-tax income was CHF 5,810 million, up 16% from 2012, and the return on equity was 10%. Including significant items, such as certain litigation provisions recognized in the fourth quarter, as well as realignment costs and fair value losses on own debt due to the improvement in our own credit spreads, reported Core pre-tax income for the full year was CHF 4,461 million, compared to CHF 1,888 million in 2012, and the reported return on equity was 8%.
In October 2013, we created non-strategic units within our two divisions and separated non-strategic items in the Corporate Center to further accelerate our reduction of capital and costs associated with non-strategic activities and to shift resources to focus on our strategic businesses and growth initiatives. Under this new reporting structure, our strategic businesses reported Core pre-tax income of CHF 7,145 million for the full-year 2013. The return on equity of 13% for our strategic businesses in the full year 2013 demonstrates the strength of our core franchises within our two divisions. In addition, we showed continued cost discipline with compensation and benefits expense down 8% from 2012 for the Group and down 10% in Investment Banking.
Our result for the fourth quarter of 2013 reflects strong profitability in Private Banking & Wealth Management and a solid performance in the strategic businesses of Investment Banking, with particular strength in Equities and Underwriting. On an underlying* basis, Core pre-tax income for the quarter was CHF 1,321 million and return on equity was 9%. Reported Core pre-tax income was CHF 428 million for the fourth quarter and return on equity was 3%.





Strategic achievements in 2013
In 2013, we made significant progress in transforming our business to the changing environment through a number of strategic measures. We accelerated the shift of resources to focus on growth in high-returning businesses − particularly in Private Banking & Wealth Management − by creating non-strategic units. This also represented an important step toward achieving a more balanced allocation of capital between our two divisions.
During the year, we made significant further progress in our efforts to address the “Too Big to Fail” topic. We largely completed the capital plan announced in July 2012 and ended the year with a Look-through Basel III CET1 ratio of 10.3%. At the same time, we further reduced leverage exposure and reported a Look-through Swiss Total Capital leverage ratio of 3.8% at year end. Based on our preliminary assessment, the Basel Committee’s revised guidelines on the calculation of the leverage ratio would increase our year-end 2013 ratio to around 4%, which would meet the 2019 Swiss requirement. We completed the exchange of CHF 3.8 billion of hybrid tier 1 notes into high-trigger capital instruments, successfully issued CHF 6 billion of low-trigger capital notes and are now just approximately CHF 3 billion away from meeting the Swiss 2019 progressive capital requirement. Furthermore, as part of our 2013 compensation structure, we introduced a similar instrument which aligns compensation incentives to the capital strength of the Group, as well as providing additional tier 1 benefits. In November 2013, we announced our program to evolve the Group’s legal entity structure, which is designed to both meet future requirements for global recovery and resolution planning and result in a substantially less complex and more efficient operating infrastructure in view of the new regulatory requirements.
In Private Banking & Wealth Management, we improved the profitability of our strategic businesses in 2013, also completing the integration of our former Private Banking and Asset Management divisions. The integrated Private Banking & Wealth Management division allows us to better manage the alignment of the products, advice and services that we deliver to our clients and is expected to further enhance the productivity and efficiency of our businesses. With this integrated value chain, we can support our highly scalable business model in Private Banking & Wealth Management, which is suited to the new regulatory environment. The pre-tax income in the strategic businesses of Asset Management increased 32% from 2012 to 2013, which underscores the strength of the ongoing business and its importance in profit generation within the Private Banking & Wealth Management franchise.
In 2013, we continued to reallocate resources to growth areas, with a particular focus on emerging markets businesses, our global ultra-high-net-worth individual (UHNWI) client franchise and on leveraging our strong market position in Switzerland. In 2013, net new assets from Wealth Management Clients were CHF 18.9 billion, with emerging markets growing at 8%, and continued strong growth in the UHNWI client segment. We also recorded CHF 15.0 billion in net new assets from Asset Management, reflecting significant inflows from higher-margin products and we continued to see strong inflows of CHF 8.8 billion from the Corporate & Institutional Clients business.
During 2013, we continued to adapt our onshore client service model for Western Europe, adjusting capacity to meet client needs, efficiently managing costs across our businesses and improving our overall market position. We announced the sale of our domestic private banking business booked in Germany in December, while at the same time remaining highly committed to serving the German wealth management market.
We will remain focused on further improving the profitability of our Private Banking & Wealth Management businesses by delivering growth in emerging markets and continuing to adjust our capacity in mature markets to client needs.
In Investment Banking, we continued to see the benefit of our sustained market share positions across our high-returning businesses, combined with a reduced cost base and lower leverage and capital usage. In October 2013, we announced the restructuring of our Rates business, given the increasing focus of regulators on leverage exposures and in view of the fundamental changes in the Rates market. This step forms part of the evolution of our Investment Banking business model and is expected to provide us with a simplified and more capital-efficient business, with a focus on meeting client liquidity needs. In connection with this measure, we also announced the creation of a cross-asset Global Macro Products group, combining our Rates, Foreign Exchange and Commodities businesses into a single platform. This set-up offers clients a comprehensive approach across the macro asset classes and allows us to focus our resources on those areas and products that matter most to them.
We believe that our Investment Banking division, featuring a top-three Equities franchise, a strong and profitable Underwriting & Advisory business and a Fixed Income franchise focused on high-returning yield businesses, is well positioned to continue to serve our clients’ needs and deliver strong returns and profitability in 2014.





Performance of our businesses in the fourth quarter and the full-year 2013
In Private Banking & Wealth Management, we delivered pre-tax income of CHF 1,057 million for our strategic businesses in the fourth quarter of 2013 and a return on Basel III allocated capital of 34%. Pre-tax income for Private Banking & Wealth Management in the fourth quarter was CHF 870 million, taking into account litigation provisions of CHF 175 million in connection with the SEC-related aspect of the US tax matter, where we are working towards a resolution. Net revenues of CHF 3,438 million in the fourth quarter were higher compared to the prior quarter and last year’s fourth quarter, driven by stronger transaction- and performance-based revenues with robust performance fees and an increase in management fees in Asset Management. Total operating expenses increased, reflecting the higher litigation provisions.
For the full year, Private Banking & Wealth Management reported increased pre-tax income of CHF 3,636 million for its strategic businesses, driven by the successful restructuring of Asset Management business and growth in emerging markets and in the Wealth Management Clients business. Pre-tax income for the full-year 2013 was CHF 3,686 million.
In Investment Banking, we delivered pre-tax income of CHF 485 million for our strategic businesses in the fourth quarter of 2013 and a return on Basel III allocated capital of 10%. Including litigation provisions of CHF 339 million relating to ongoing mortgage litigation recognized in the fourth quarter, Investment Banking reported a pre-tax loss of CHF 40 million. Net revenues of CHF 2,725 million increased compared to both the prior quarter and the fourth quarter of 2012. This increase reflected solid performance in the strategic businesses, with particular strength in our Equities, Credit and Underwriting franchises, and reduced revenue losses from the non-strategic unit, partially offset by lower Rates results. Total operating expenses increased compared to both the third quarter of 2013 and the fourth quarter of 2012, primarily driven by the higher litigation provisions.
For the full year, Investment Banking reported increased pre-tax income of CHF 3,870 million for its strategic business. Continued sustained market share positions across our high-returning businesses, combined with a reduced cost base and lower leverage and capital usage, helped us achieve a return on Basel III allocated capital of 19% for 2013. Reported pre-tax income for 2013 was CHF 2,243 million. Total compensation and benefit expense was 10% lower in 2013 than in 2012. Since the fourth quarter of 2012, we reduced Basel III risk-weighted assets by USD 11 billion to USD 176 billion. Business reductions of USD 27 billion in 2013 were partially offset by increases relating to methodology changes and parameter updates of CHF 10 billion and, in the fourth quarter, an operational risk-related add-on of USD 6 billion.
We are confident that the continued momentum we see in our strategic businesses, combined with the successful execution of the run-off of positions and losses in our non-strategic units, will allow us to achieve our targeted return on equity of 15% over the cycle.
Given the progress that we have made in executing our capital plan and in reducing leverage and risk-weighted asset usage while, at the same time, improving the operational efficiency of the bank, the Board of Directors will propose a cash distribution of CHF 0.70 per share to be paid out of reserves from capital contributions for the financial year 2013 at the annual general meeting of Credit Suisse Group on May 9, 2014. This is intended to provide a basis for future progression in our dividend payments as we continue to execute our strategy and resolve legacy issues.
We would like to thank our shareholders and clients for the trust they have placed in Credit Suisse and, in particular, our employees for their contribution to the success of our business.

Sincerely

Urs Rohner                        Brady W. Dougan

February 2014



* Underlying results are non-GAAP financial measures. For a reconciliation of our underlying results to the most directly comparable US GAAP measures, see the following table.





Reconciliation of underlying results
  Core pre-tax income Net income attributable to shareholders
end of 4Q13 3Q13 4Q12 2013 2012 4Q13 3Q13 4Q12 2013 2012
Overview of significant items (CHF million)
Reported results  428 688 385 4,461 1,888 267 454 263 3,069 1,349
Reported return on equity  2.5% 4.3% 2.9% 7.5% 3.9%
Reconciling items
   Fair value impact from movement in own credit spreads  202 163 376 315 2,939 169 143 304 261 2,261
   Realignment costs  131 38 285 394 680 98 30 190 290 477
   IT architecture simplification  69 40 0 128 0 57 31 0 103 0
   Certain litigation provisions  473 0 227 473 363 338 0 134 338 230
   Business disposals  6 (14) 37 9 (388) 19 (144) 27 (96) (336)
   Impairment and other losses  80 18 30 98 68 52 11 18 63 41
   Gain on sale of real estate  (68) 0 (151) (68) (533) (61) 0 (120) (61) (445)
   UK deferred tax asset reduction  0 0 0 0 0 0 173 0 173 160
Underlying results  1,321 933 1,189 5,810 5,017 939 698 816 4,140 3,737
Underlying return on equity  8.7% 6.6% 8.7% 10.1% 10.4%




As of January 1, 2013, Basel III was implemented in Switzerland along with the Swiss “Too Big to Fail” legislation and regulations thereunder. Our related disclosures are in accordance with our current 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 herein. Capital and ratio numbers for periods prior to 2013 are based on estimates, which are calculated as if the Basel III framework had been in place in Switzerland during such periods. For Private Banking & Wealth Management’s strategic businesses, return on Basel III allocated capital is calculated using income after tax denominated in Swiss francs and assumes (i) a tax rate of 30% in 4Q13 and 29% in 2013; and (ii) that capital is allocated at 10% of average Basel III risk-weighted assets. For Investment Banking’s strategic businesses, return on Basel III allocated capital is calculated using income after tax denominated in US dollars and assumes (i) a tax rate of 30% in 4Q13 and 28% in 2013; and (ii) that capital is allocated at 10% of average Basel III risk-weighted assets.

Unless otherwise noted, leverage ratio, leverage exposure and total capital amounts included herein are based on the current FINMA framework. The Swiss Total Capital leverage ratio is calculated as Swiss Total Capital, divided by a three-month average leverage exposure, which consists of balance sheet assets, off-balance sheet exposures, which consist of guarantees and commitments, and regulatory adjustments, which include cash collateral netting reversals and derivative add-ons.

All references to pre-tax income for Core results refer to income from continuing operations before taxes.








Financial Report 4Q13







For purposes of this report, unless the context otherwise requires, the terms “Credit Suisse,” “the Group,” “we,” “us” and “our” mean Credit Suisse Group AG and its consolidated subsidiaries. The business of Credit Suisse AG, the Swiss bank subsidiary of the Group, is substantially similar to the Group, and we use these terms to refer to both when the subject is the same or substantially similar. We use the term “the Bank” when we are only referring to Credit Suisse AG, the Swiss bank subsidiary of the Group, and its consolidated subsidiaries.

Abbreviations are explained in the List of abbreviations in the back of this report.

Publications referenced in this report, whether via website links or otherwise, are not incorporated into this report.

In various tables, use of “–” indicates not meaningful or not applicable.







Credit Suisse at a glance

Credit Suisse
As one of the world’s leading financial services providers, we are committed to delivering our combined financial experience and expertise to corporate, institutional and government clients and to high-net-worth individuals worldwide, as well as to private clients in Switzerland. Founded in 1856, today we have a global reach with operations in over 50 countries and 46,000 employees from approximately 150 different nations. Our broad footprint helps us to generate a geographically balanced stream of revenues and net new assets and allows us to capture diverse growth opportunities around the world. We serve our diverse clients through our two divisions, which cooperate closely to provide holistic financial solutions, including innovative products and specially tailored advice.

Private Banking & Wealth Management
Private Banking & Wealth Management offers comprehensive advice and a wide range of financial solutions to private, corporate and institutional clients. The Private Banking & Wealth Management division comprises the Wealth Management Clients, Corporate & Institutional Clients and Asset Management businesses. In Wealth Management Clients we serve ultra-high-net-worth and high-net-worth individuals around the globe and private clients in Switzerland. Our Corporate & Institutional Clients business serves the needs of corporations and institutional clients, mainly in Switzerland. Asset Management offers a wide range of investment products and solutions across diverse asset classes and investment styles, serving governments, institutions, corporations and individuals worldwide.

Investment Banking
Investment Banking provides a broad range of financial products and services, including global securities sales, trading and execution, prime brokerage and capital raising services, corporate advisory and comprehensive investment research, with a focus on businesses that are client-driven, flow-based and capital-efficient. Clients include corporations, governments, institutional investors, including hedge funds, and private individuals around the world. Credit Suisse delivers its investment banking capabilities via regional and local teams based in major global financial centers. Strongly anchored in Credit Suisse’s integrated model, Investment Banking works closely with Private Banking & Wealth Management to provide clients with customized financial solutions.








Credit Suisse results
Operating environment
Credit Suisse
Core Results
Private Banking & Wealth Management
Investment Banking
Corporate Center
Assets under management
7




Operating environment

Global economic activity remained robust in 4Q13. Equity markets ended the quarter stronger and volatility remained at low levels. Government bond yields remained stable. The performance of the US dollar against most major currencies was mixed in 4Q13.


Economic environment
The global economic environment was robust in 4Q13. The negative effects of a government shutdown in the US during October on US economic growth were limited. Leading indicators in the US remained at relatively high levels and improved further. Indicators for the labor and housing market in the US continued to show further strength. The mild recovery in the Eurozone continued, though there was a growing divergence between the accelerated growth in Germany and the weaker data in France towards the end of the year. In the emerging markets, China displayed further signs of growth stabilizing at robust levels, while business confidence in the manufacturing sectors of Russia and Brazil was more muted.
At its meeting in mid-December 2013, the US Federal Reserve (Fed) decided to reduce the pace of its monthly asset purchases from USD 85 billion to USD 75 billion effective as of January 2014. It also continued to signal its intent to keep the federal funds rate low for the foreseeable future. The European Central Bank (ECB) cut its main refinancing rate in early November in reaction to very low inflation rates in the Eurozone. In Latin America, central banks pursued diverging courses, with Mexico and Chile lowering rates and Brazil increasing them for the sixth time in 2013. In Asia, Indonesia and India raised rates further, while central banks in Eastern Europe left rates largely unchanged.
Global equity markets had positive returns in 4Q13. Developed markets, led by Japan, the US and Germany, continued to outperform emerging markets despite good performance from China and India (refer to the charts “Equity markets”). All global sectors had gains during the quarter. In general, the more cyclical sectors such as IT, industrials and consumer discretionary continued to outperform the global market reflecting the improved global growth outlook. Equity market volatility, as measured by the Chicago Board Options Exchange Market Volatility Index (VIX), continued at low levels for most of the quarter. Risk appetite increased and the Credit Suisse Hedge Fund Index increased 4.2% in 4Q13.

8



Benchmark bond yields moved slightly higher in 4Q13 (refer to the charts “Yield curves”). The US debt ceiling debate in October temporarily increased market uncertainties and kept bond yields lower; however, once an agreement on the debt ceiling was reached, improving economic data helped to push global benchmark bond yields higher again. With the global improvement of macroeconomic indicators and a supportive liquidity market, credit markets posted a good performance in 4Q13 (refer to the chart “Credit spreads”). Emerging market sovereign bonds were more volatile, especially in local currency, mainly as a result of exchange rate volatility.
US dollar performance in 4Q13 against most major currencies was mixed. The euro, Swiss franc and British pound appreciated against the US dollar, helped by signs of economic recovery in Europe. However, commodity currencies such as the Australian and Canadian dollars weakened, as growth in both countries remained weak. The Japanese yen continued to weaken against the US dollar as higher US interest rates provided the US dollar with support. Currencies of certain emerging market economies, such as the Brazilian real, the South African rand and the Turkish lira weakened. The Chinese yuan continued its strengthening trend against the US dollar.
Commodity markets were mixed in 4Q13. In the first half of the quarter, commodity prices declined, partly driven by seasonality and higher bond yields. In the second half, the overall commodity index recovered, driven by oil and gas markets as well as industrial metals which benefited from recovering economic growth and strengthening demand. In contrast, gold prices declined during November and December as concerns about the Fed’s tapering of future asset purchases resulted in further investment outflows.

9



Market volumes (growth in %)
  Global Europe
end of 4Q13 QoQ YoY QoQ YoY
Equity trading volume 1 11 11 13 17
Announced mergers and acquisitions 2 (9) (13) (9) (24)
Completed mergers and acquisitions 2 16 (10) (9) 2
Equity underwriting 2 62 60 244 91
Debt underwriting 2 (4) (17) 16 5
Syndicated lending - investment grade 2, 3 6 14
1
London Stock Exchange, Borsa Italiana, Deutsche Börse, BME and Euronext. Global also includes New York Stock Exchange and NASDAQ.
2
Dealogic.
3
2013 vs 2012.



Sector environment
After outperforming the broader market in the beginning of the quarter, European bank stocks increased 8% in 4Q13, in line with global equity markets as measured by the MSCI World index, while North American bank stocks increased 9% (refer to the charts “Equity Markets”).
In private banking, clients maintained a cautious investment stance, with cash deposits remaining high despite the low interest rates. The low interest rate environment continued to adversely impact earnings. Although the Swiss National Bank (SNB) reiterated concerns about the build-up of imbalances in mortgage and real estate markets in Switzerland, Swiss mortgage rates remained at low levels. Overall the wealth management sector continued to adapt to further industry-specific regulatory changes.
For investment banking, global equity trading volumes increased compared to 3Q13, driven by higher volumes across European and US cash equities and equity derivatives. Compared to 4Q12, volumes were higher across European cash equities, but weaker across US cash equities and equity derivatives. Global announced mergers and acquisitions (M&A) volumes decreased compared to 3Q13 and 4Q12 as the pace of new announcements decreased in December. Global completed M&A volumes increased compared to 3Q13 and remained stable versus 4Q12. Global equity underwriting volumes increased significantly versus both 3Q13 and 4Q12, driven by increased initial public offering (IPO) issuance activity levels. Global debt underwriting volumes decreased compared to both 3Q13 and 4Q12. US fixed income volumes decreased compared to 3Q13 with lower corporate and mortgage-backed volumes partially offset by higher volumes of federal agency and stable treasuries. Compared to 4Q12, weaker federal agency and mortgage-backed volumes were partially offset by higher volumes of treasuries and corporates.

10



Credit Suisse

In 4Q13, we recorded net income attributable to shareholders of CHF 267 million. Diluted earnings per share were CHF 0.08 and return on equity attributable to shareholders was 2.5%. For 2013, we had net income attributable to shareholders of CHF 3,069 million and return on equity attributable to shareholders was 7.5%, up from 3.9% in 2012.
As of the end of 4Q13, our CET1 ratio under Basel III was 16.0% and 10.3% on a look-through basis. Our risk-weighted assets increased slightly compared to 3Q13 to CHF 273.8 billion.


Results
  in / end of % change in / end of % change
4Q13 3Q13 4Q12 QoQ YoY 2013 2012 YoY
Statements of operations (CHF million)  
Net revenues  6,205 5,676 5,706 9 9 25,922 23,611 10
Provision for credit losses  41 41 70 0 (41) 155 170 (9)
Compensation and benefits 2,820 2,532 2,649 11 6 11,269 12,303 (8)
General and administrative expenses 2,331 1,771 2,106 32 11 7,707 7,246 6
Commission expenses 389 422 433 (8) (10) 1,738 1,702 2
Total other operating expenses 2,720 2,193 2,539 24 7 9,445 8,948 6
Total operating expenses  5,540 4,725 5,188 17 7 20,714 21,251 (3)
Income from continuing operations before taxes  624 910 448 (31) 39 5,053 2,190 131
Income tax expense 151 368 85 (59) 78 1,490 465 220
Income from continuing operations  473 542 363 (13) 30 3,563 1,725 107
Income/(loss) from discontinued operations (2) 150 (31) (94) 145 (40)
Net income  471 692 332 (32) 42 3,708 1,685 120
Net income attributable to noncontrolling interests 204 238 69 (14) 196 639 336 90
Net income attributable to shareholders  267 454 263 (41) 2 3,069 1,349 128
   of which from continuing operations  269 304 294 (12) (9) 2,924 1,389 111
   of which from discontinued operations  (2) 150 (31) (94) 145 (40)
Earnings per share (CHF)  
Basic earnings per share from continuing operations 0.08 0.17 0.11 (53) (27) 1.57 0.82 91
Basic earnings per share 0.08 0.26 0.09 (69) (11) 1.65 0.79 109
Diluted earnings per share from continuing operations 0.08 0.17 0.11 (53) (27) 1.57 0.82 91
Diluted earnings per share 0.08 0.26 0.09 (69) (11) 1.65 0.79 109
Return on equity (%, annualized)  
Return on equity attributable to shareholders 2.5 4.3 2.9 7.5 3.9
Return on tangible equity attributable to shareholders 1 3.1 5.4 3.9 9.5 5.2
Number of employees (full-time equivalents)  
Number of employees 46,000 46,400 47,400 (1) (3) 46,000 47,400 (3)
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. 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.

11



Credit Suisse and Core Results 
  Core Results Noncontrolling interests without SEI Credit Suisse
in 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12
Statements of operations (CHF million)  
Net revenues  5,986 5,449 5,627 219 227 79 6,205 5,676 5,706
Provision for credit losses  41 41 70 0 0 0 41 41 70
Compensation and benefits 2,801 2,529 2,634 19 3 15 2,820 2,532 2,649
General and administrative expenses 2,327 1,769 2,105 4 2 1 2,331 1,771 2,106
Commission expenses 389 422 433 0 0 0 389 422 433
Total other operating expenses 2,716 2,191 2,538 4 2 1 2,720 2,193 2,539
Total operating expenses  5,517 4,720 5,172 23 5 16 5,540 4,725 5,188
Income from continuing operations before taxes  428 688 385 196 222 63 624 910 448
Income tax expense 151 368 85 0 0 0 151 368 85
Income from continuing operations  277 320 300 196 222 63 473 542 363
Income/(loss) from discontinued operations (2) 150 (31) 0 0 0 (2) 150 (31)
Net income  275 470 269 196 222 63 471 692 332
Net income attributable to noncontrolling interests 8 16 6 196 222 63 204 238 69
Net income attributable to shareholders  267 454 263 267 454 263
   of which from continuing operations  269 304 294 269 304 294
   of which from discontinued operations  (2) 150 (31) (2) 150 (31)
Statement of operations metrics (%)  
Cost/income ratio 92.2 86.6 91.9 89.3 83.2 90.9
Pre-tax income margin 7.2 12.6 6.8 10.1 16.0 7.9
Effective tax rate 35.3 53.5 22.1 24.2 40.4 19.0
Net income margin 1 4.5 8.3 4.7 4.3 8.0 4.6
1
Based on amounts attributable to shareholders.



Information and developments
Format of presentation and changes in reporting
In managing the business, revenues are evaluated in the aggregate, including an assessment of trading gains and losses and the related interest income and expense from financing and hedging positions. For this reason, individual revenue categories may not be indicative of performance.
As of January 1, 2013, the Basel Committee on Banking Supervision (BCBS) Basel III framework was implemented in Switzerland along with the Swiss “Too Big to Fail” legislation and regulations thereunder. Our related disclosures are in accordance with our current 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 report. Our calculations of 4Q12 capital and ratio amounts, which are presented in order to show meaningful comparative information, use estimates as of December 31, 2012, as if the Basel III framework had been implemented in Switzerland as of such date.
References to Swiss leverage exposure refer to the aggregate of balance sheet assets, off-balance sheet exposures, consisting of guarantees and commitments, and regulatory adjustments, including cash collateral netting reversals and derivative add-ons.
> Refer to “Swiss leverage ratio” in II – Treasury, risk, balance sheet and off-balance sheet – Capital management – Capital metrics under Swiss requirements for further information.

Beginning in 1Q13, assets within the Private Banking & Wealth Management and Investment Banking segments exclude intra-Group balances between the segments. Prior periods have been reclassified to conform to the current presentation.

Strategic development of our businesses
In 4Q13, we created non-strategic units within our Investment Banking and Private Banking & Wealth Management divisions and separated non-strategic items in the Corporate Center to further accelerate our reduction of capital and costs associated with non-strategic activities and positions and to shift resources to focus on our strategic businesses and growth initiatives. The results are disclosed separately within the divisional results and we have implemented a governance structure to accelerate position and expense reductions. We believe this new reporting structure, which clearly delineates between strategic and non-strategic results, enhances the transparency of our financial disclosures while providing increased focus on our strategic businesses within the business divisions and on the Group level. Prior periods have been restated to conform to the current presentation.
We decided to retain these non-strategic units within the divisions, rather than establishing a single non-strategic unit, so as to benefit from senior management’s expertise and focus. The non-strategic units have separate management within each division and a clear governance structure through the establishment

12



of a Non-Strategic Oversight Board. As a result, we expect that the establishment of these non-strategic units will drive further reductions in Swiss leverage exposure and risk-weighted assets. It is also expected to free up capital for future growth in Private Banking & Wealth Management, accelerating a move towards a more balanced capital allocation between Investment Banking and Private Banking & Wealth Management, and to allow us to return capital to our shareholders.

Non-strategic activities and positions are defined as:

activities with significant capital absorption under new regulations and returns below expectations;
activities with significant leverage exposures identified for de-risking;
activities no longer feasible or economically attractive under emerging regulatory frameworks;
assets and liabilities of business activities we are winding down;
infrastructure associated with activities deemed non-strategic or redundant; and
other items reported in the Corporate Center, which we do not consider representative of our core performance.

In Private Banking & Wealth Management, we established a non-strategic unit which includes positions relating to the restructuring of the former Asset Management division, run-off operations relating to our small markets exit initiative and certain legacy cross-border related run-off operations, litigation costs, primarily related to the US tax matter, the impact of restructuring our German onshore operations, other smaller non-strategic positions formerly in our Corporate & Institutional Clients business and the run-off and active reduction of selected products.
In Investment Banking, we transferred into the divisional non-strategic unit our fixed income wind-down portfolio, legacy rates business, primarily capital instruments that are not compliant with the Basel III capital framework and capital-intensive structured positions, legacy funding costs associated with non-Basel III compliant debt instruments, as well as certain legacy litigation costs and other small non-strategic positions.
In the Corporate Center, we separately present non-strategic items, which we do not consider representative of our core performance. Such items include the valuation impacts from movements in credit spreads on our own liabilities carried at fair value, certain business realignment costs and IT architecture simplification expenses, certain litigation provisions, business wind-down costs and impairments not included in the divisional non-strategic units and legacy funding costs associated with non-Basel III compliant debt instruments not included in the results of the Investment Banking non-strategic unit. Corporate Center items previously disclosed as adjustments from our reported to underlying results are now presented as non-strategic items, with the exception of business divisions’ non-strategic realignment costs, which beginning 4Q13 are reported directly in the relevant divisional non-strategic unit. Strategic business division realignment costs will continue to be reported in the Corporate Center.

Discontinued operations
The Private Banking & Wealth Management division completed the sale of our Customized Fund Investment Group (CFIG) business in January 2014, and in 4Q13 announced the sale of our domestic private banking business booked in Germany to ABN AMRO, which is expected to close in the course of 2014. These transactions qualify for discontinued operations treatment in 4Q13 under US generally accepted principles (US GAAP), and revenues and expenses of these businesses and the relevant gains on

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disposal are classified as discontinued operations in the Group’s consolidated statements of operations. In the Private Banking & Wealth Management segment, the gains and expenses related to the business disposals are included in the segment’s non-strategic results. The reclassification of the revenues and expenses from the segment results to discontinued operations for reporting at the Group level is effected through the Corporate Center. Prior periods for the Group’s results have been restated to conform to the current presentation.

Board of Directors and Management changes
As of December 31, 2013, Tobias Guldimann stepped down from the Executive Board and his position as Chief Risk Officer. Effective January 1, 2014, Joachim Oechslin assumed the role of Chief Risk Officer and joined the Executive Board.

Capital distribution proposal
At the Annual General Meeting on May 9, 2014, the Board of Directors will propose a cash distribution of CHF 0.70 per share to be paid out of reserves from capital contributions for the financial year 2013. The distribution out of reserves from capital contributions will be free of Swiss withholding tax and will not be subject to income tax for Swiss resident individuals holding the shares as a private investment.

Evolution of legal entity structure
Since 2012, we have been developing a program to evolve the Group’s legal entity structure to meet developing and future regulatory requirements. This has been prepared in discussion with our primary regulator Swiss Financial Market Supervisory Authority FINMA (FINMA) and will address regulations in Switzerland, the US and the UK with respect to future requirements for global recovery and resolution planning by systemically important banks such as Credit Suisse that will facilitate resolution of an institution in the event of a failure. We expect these changes will result in a substantially less complex and more efficient operating infrastructure for the Group. Furthermore, Swiss banking law provides for the possibility of a limited reduction in capital requirements in the event of an improvement in resolvability which this program intends to deliver.
The key components of the program are:

in Switzerland we plan to create a subsidiary for our Swiss-booked business (primarily wealth management, retail and corporate and institutional clients as well as the product and sales hub in Switzerland);
our UK operations will remain the hub of our European investment banking business and we are planning that our two principal UK operating subsidiaries will be consolidated into a single subsidiary. The program will look to align non-European business to the appropriate entities in the Americas and in Asia Pacific;
in the US, our existing broker-dealer subsidiary is planned to remain a subsidiary of our existing US holding company. The holding company will hold its US-based operating businesses and be subject to the Fed final rules for supervision of foreign banking operations in the US. Additionally, subject to US regulatory approvals, our US derivatives business, currently booked in one of the above noted UK operating subsidiaries, is anticipated to be transferred to the existing US broker-dealer;
we intend to create a separately capitalized global infrastructure legal entity in Switzerland and a US subsidiary of the above noted US holding company. In principle, these will include all Shared Services functions; and
once the legal framework is finalized, we plan to issue bail-in eligible debt out of the existing Group holding company to enable a single point of entry bail-in resolution strategy.

The program has been approved by the Board of Directors of the Group, but is subject to final approval by FINMA. Implementation of the program is underway, with a number of key components expected to be implemented from mid-2015.

Allocations and funding
Responsibility for each product is allocated to a segment, which records all related revenues and expenses. Revenue-sharing and service level agreements, which aim to reflect the pricing structure of unrelated third-party transactions, govern the compensation received by one segment for generating revenue or providing services on behalf of another. Corporate services and business support are provided by the Shared Services area and these costs are allocated to the segments and Corporate Center based on their requirements and other relevant measures.
We centrally manage our funding activities, with new securities for funding and capital purposes issued primarily by the Bank which lends funds to our operating subsidiaries and affiliates. Capital is distributed to the segments considering factors such as regulatory capital requirements, utilized economic capital and the historic and future potential return on capital. Transfer pricing, using market rates, is used to record net revenues and expenses relating to this funding in each of the segments, and our businesses are also credited to the extent they provide long-term stable funding.
> Refer to “Allocations and funding” in II – Operating and financial review – Core Results in the Credit Suisse Annual Report 2012 for further information.

Fair valuations
Fair value can be a relevant measurement for financial instruments when it aligns the accounting for these instruments with how we manage our business. The levels of the fair value hierarchy as defined by the relevant accounting guidance are not a measurement of economic risk, but rather an indication of the observability of prices or valuation inputs.
> Refer to “Note 1 – Summary of significant accounting policies” and “Note 27 – Financial instruments” in III – Condensed consolidated financial statements – unaudited for further information.

Models were used to value financial instruments for which no prices are available and which have little or no observable inputs (level 3). Models are developed internally and are reviewed by functions

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independent of the front office to ensure they are appropriate for current market conditions. The models require subjective assessment and varying degrees of judgment depending on liquidity, concentration, pricing assumptions and risks affecting the specific instrument. The models consider observable and unobservable parameters in calculating the value of these products, including certain indices relating to these products. Consideration of these indices is more significant in periods of lower market activity.
As of the end of 4Q13, 47% and 33% of our total assets and total liabilities, respectively, were measured at fair value.
While the majority of our level 3 assets are recorded in Investment Banking, some are recorded in Private Banking & Wealth Management’s Asset Management business, specifically certain private equity investments. Total assets at fair value recorded as level 3 decreased by CHF 0.1 billion during 4Q13, primarily due to a decrease in other investments and loans held-for-sale, partially offset by an increase in loans. The decrease in other investments primarily reflected net sales partially offset by realized and unrealized gains. The decrease in loans held-for-sale primarily reflected net sales and net settlements. The increase in loans primarily reflected net issuances.
Our level 3 assets, excluding assets attributable to noncontrolling interests and assets of consolidated variable interest entities (VIEs) that are not risk-weighted assets under the Basel framework, were CHF 29.8 billion, compared to CHF 29.2 billion as of the end of 3Q13. As of the end of 4Q13, these assets comprised 4% of total assets and 8% of total assets measured at fair value, both adjusted on the same basis, compared to 3% and 7%, respectively, as of the end of 3Q13.
We believe that the range of any valuation uncertainty, in the aggregate, would not be material to our financial condition, however, it may be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

Regulatory developments and proposals
Government leaders and regulators continued to focus on reform of the financial services industry, including capital, leverage and liquidity requirements, changes in compensation practices and systemic risk.
In October 2013, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued a proposed rule to introduce the Basel III liquidity coverage ratio (LCR) in the US, applicable to certain large US banking organizations. The US LCR proposal is generally consistent with the LCR published by the BCBS in January 2013, but it is stricter in certain respects and would be phased in between January 1, 2015 and January 1, 2017. If Credit Suisse is required to form an intermediate holding company under the Fed’s proposed rules for foreign banking organizations, it might be required to comply with the US LCR proposal.
On November 14, 2013, staff of the US Commodity Futures Trading Commission (CFTC) published an advisory stating that CFTC “transaction-level” requirements, such as mandatory clearing, mandatory exchange trading, real-time public reporting and external business conduct, apply to a swap between a non-US swap dealer, such as Credit Suisse International (CSI) or Credit Suisse Securities Europe Limited (CSSEL), and another non-US person if the swap is arranged, negotiated or executed by US personnel or agents of the non-US swap dealer. This advisory is currently scheduled to go into effect on September 15, 2014, and the CFTC has requested public comments on it. If this advisory is not rescinded or modified, it could result in some market disruption and impose significant compliance costs on CSI and CSSEL. In light of this advisory, on December 4, 2013, several US financial trade associations filed a lawsuit in the US District Court for the District of Columbia challenging the advisory and the CFTC’s July 2013 guidance regarding the cross-border application of its swaps rules. The lawsuit asks the court to vacate the July 2013 guidance and enjoin the CFTC from enforcing its rules outside the US. Depending on the outcome of this lawsuit, the extent to which CSI and CSSEL are subject to CFTC rules may differ significantly from the framework currently applicable under the CFTC’s guidance. We are monitoring the progress of the lawsuit and assessing our contingency plans for the different scenarios that could result from it.
On November 20, 2013, the Swiss Federal Council approved the final Ordinance Against Excessive Compensation (Compensation Ordinance). The Compensation Ordinance came into effect on January 1, 2014 and implements key elements of the so-called “Minder Initiative”. It imposes restrictions and requirements on board and executive compensation for Swiss public companies, implements criminal sanctions in certain cases of intentional noncompliance and is generally intended to strengthen shareholder rights. Specifically, the board members, board chairperson and the compensation committee members must now be directly elected by shareholders annually, for the first time at the annual general meeting in 2014.
On December 10, 2013, US regulators released the final version of the so-called “Volcker Rule”, which limits the ability of banking entities to sponsor or invest in certain private equity or hedge funds and to engage in certain types of proprietary trading. The final rule extended the end of the conformance period for the Volcker Rule until July 21, 2015 (with the possibility of extensions under certain circumstances), by which time financial institutions subject to the rule must bring their activities and investments into compliance. We are analyzing the final rule, assessing how it affects our businesses, and re-initiating an implementation program to come into compliance.
On December 11, 2013, the European Parliament reached a political agreement with the European Council Presidency on a legislative proposal for a directive establishing a framework for the recovery and resolution of credit institutions and investment firms, known as the Bank Recovery and Resolution Directive. The framework will give national regulators wide-ranging powers (notably new bail-in powers) to intervene where an entity is likely to fail in order to avoid adverse effects on wider financial stability. It is anticipated that the Bank Recovery and Resolution Directive will enter

15



into force on January 1, 2015 and the bail-in powers will become effective on January 1, 2016 at the latest. Our EU subsidiaries will be affected to varying degrees.
On December 13, 2013, the Swiss Federal Council launched a consultation process for a new act to be named Financial Market Infrastructure Act (FMIA). The core purpose of the FMIA is to adjust Swiss regulation of financial market infrastructure and derivatives trading to market developments and international requirements, in particular the regulation on over-the-counter (OTC) Derivatives, Central Counterparties and Trade Repositories (also known as the European Market Infrastructure Regulation, or EMIR) of the EU. In addition, it proposes to amend the Swiss Federal Law on Banks and Savings Banks of November 8, 1934, as amended (Bank Law), seeking to subject parent companies of financial groups or conglomerates and certain unregulated companies of the group domiciled in Switzerland to the Swiss resolution regime that applies to banks. If enacted, Credit Suisse Group would, and certain of its unregulated subsidiaries could, become subject to the Swiss bank resolution regime and the resolution authority of FINMA. The consultation process on FMIA is scheduled to run until March 31, 2014.
On December 18, 2013, the UK Financial Services Act 2013 (Banking Reform Act) was enacted. The Banking Reform Act provides for the creation of a “retail ring-fence” that will prohibit large retail deposit banks from engaging in a broad range of investment and other banking activities in the same entity. However, it is expected that our Private Banking & Wealth Management business in the UK may benefit from the de minimis exemption from the retail ring-fence requirements which is anticipated to exclude certain banks holding core deposits of below £25 billion. The Banking Reform Act also introduces certain other reforms, including requirements for primary loss absorbing capacity in order to facilitate the use of the new bail-in tool, which is itself introduced by the Banking Reform Act. The Banking Reform Act will also establish a more stringent regulatory regime for certain senior personnel of the bank, as well as create a new criminal offense for reckless mismanagement in the banking industry. Secondary legislation to fully implement the Banking Reform Act is expected to be completed by May 2015. The governance rules and the bail-in tool will impact our UK entities, such as CSI and CSSEL.
On December 18, 2013, the Swiss Federal Council adopted the mandate for negotiations regarding a revision of the taxation of savings agreement between the EU and Switzerland. The envisaged revision should bring the agreement in line with the planned revision of the EU Savings Directive and close current perceived gaps. Switzerland and the EU have officially started negotiations on January 17, 2014.
On December 20, 2013, the CFTC made comparability determinations for some swap dealer entity-level and transaction-level requirements for certain jurisdictions, including the EU. As a result of these determinations, CSI and CSSEL may comply with local EU rules in lieu of certain CFTC requirements regarding risk management, internal controls, chief compliance officer duties and reports, recordkeeping, swap confirmations, portfolio reconciliation and compression, and swap valuation. In addition, the CFTC issued two no-action letters deferring certain CFTC requirements, most notably with respect to trade reporting for swaps with non-US persons, thereby allowing the CFTC more time to consider the comparability of similar rules in other jurisdictions. If the CFTC does not ultimately grant substituted compliance for reporting of swaps with non-US persons, CSI and CSSEL could incur significant operational costs and may lose swap business from non-US clients who do not wish for their trades to be reported to US regulators.
On January 14, 2014, the European Commission, Parliament and Council reached a political agreement on a revised EU Markets in Financial Instruments Directive (MiFID II) and related regulation (MiFIR), which are likely to be enacted in 1Q14. It is expected that the provisions thereof will have to be implemented in the member states and come into effect during the second half of 2016.  Although the final text has not yet been published, the European Commission announced that an agreement has been reached to introduce an EU harmonized regime for the cross-border provision of investment services to professional and eligible counterparties in the EU. This new regime for granting access to EU markets for financial services providers based in third countries, including Switzerland, would be based on the positive equivalence determination of the relevant third country jurisdiction by the European Commission and allow for an EU wide passport when providing professional services. Third country financial services providers would be able to continue to provide services and activities to such clients in member states in accordance with national regimes over a transitional period of three years and then pending European Commission’s equivalence decisions.
On January 16, 22 and 27, 2014, specified types of interest rate swaps and index credit default swaps (CDS) were deemed “made available to trade” by CFTC-registered swap execution facilities (SEFs). As a result, effective 30 days after those determinations, those types of swaps must be executed on a SEF or designated contract market, unless an exception or exemption applies. It is possible that certain classes of market participants, including some clients of Credit Suisse, will not be prepared to satisfy this requirement, which could result in market disruption and a loss of swap trading revenue for Credit Suisse.
> Refer to “Regulation and supervision” in I – Information on the company in the Credit Suisse Annual Report 2012 for further information.
> Refer to “Regulatory developments and proposals” in II – Treasury, risk, balance sheet and off-balance sheet – Capital management – Regulatory capital framework and “Liquidity and funding management” in II – Treasury, risk, balance sheet and off-balance sheet for further information.

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Core Results

In 4Q13, we recorded net income attributable to shareholders of CHF 267 million. Net revenues were CHF 5,986 million and total operating expenses were CHF 5,517 million.
In our strategic businesses, we reported income from continuing operations before taxes of CHF 1,461 million and in our non-strategic businesses we reported a loss from continuing operations before taxes of CHF 1,033 million in 4Q13.

Core Results
  in / end of % change in / end of % change
4Q13 3Q13 4Q12 QoQ YoY 2013 2012 YoY
Statements of operations (CHF million)  
Net interest income 1,742 1,919 1,930 (9) (10) 8,100 7,126 14
Commissions and fees 3,430 3,021 3,461 14 (1) 13,249 12,751 4
Trading revenues 356 273 (155) 30 2,819 1,162 143
Other revenues 458 236 391 94 17 1,115 2,212 (50)
Net revenues  5,986 5,449 5,627 10 6 25,283 23,251 9
   of which strategic results  6,064 5,692 6,083 7 0 25,569 25,493 0
   of which non-strategic results  (78) (243) (456) (68) (83) (286) (2,242) (87)
Provision for credit losses  41 41 70 0 (41) 155 170 (9)
Compensation and benefits 2,801 2,529 2,634 11 6 11,234 12,267 (8)
General and administrative expenses 2,327 1,769 2,105 32 11 7,695 7,224 7
Commission expenses 389 422 433 (8) (10) 1,738 1,702 2
Total other operating expenses 2,716 2,191 2,538 24 7 9,433 8,926 6
Total operating expenses  5,517 4,720 5,172 17 7 20,667 21,193 (2)
   of which strategic results  4,567 4,282 4,342 7 5 18,329 19,099 (4)
   of which non-strategic results  950 438 830 117 14 2,338 2,094 12
Income/(loss) from continuing operations before taxes  428 688 385 (38) 11 4,461 1,888 136
   of which strategic results  1,461 1,390 1,691 5 (14) 7,145 6,267 14
   of which non-strategic results  (1,033) (702) (1,306) 47 (21) (2,684) (4,379) (39)
Income tax expense 151 368 85 (59) 78 1,490 465 220
Income from continuing operations  277 320 300 (13) (8) 2,971 1,423 109
Income/(loss) from discontinued operations (2) 150 (31) (94) 145 (40)
Net income  275 470 269 (41) 2 3,116 1,383 125
Net income attributable to noncontrolling interests 8 16 6 (50) 33 47 34 38
Net income/(loss) attributable to shareholders  267 454 263 (41) 2 3,069 1,349 128
   of which strategic results  1,070 969 1,279 10 (16) 5,073 4,796 6
   of which non-strategic results  (803) (515) (1,016) 56 (21) (2,004) (3,447) (42)
Statement of operations metrics (%)  
Return on Basel III capital 1 4.5 7.1 3.9 11.6 4.6
Cost/income ratio 92.2 86.6 91.9 81.7 91.1
Pre-tax income margin 7.2 12.6 6.8 17.6 8.1
Effective tax rate 35.3 53.5 22.1 33.4 24.6
Net income margin 2 4.5 8.3 4.7 12.1 5.8
Number of employees (full-time equivalents)  
Number of employees 46,000 46,400 47,400 (1) (3) 46,000 47,400 (3)
1
Calculated using income after tax denominated in CHF; assumes tax rate of 30% in 4Q13 and 3Q13, 28% in 2013, 25% in 4Q12 and 2012 and capital allocated at 10% of average risk-weighted assets.
2
Based on amounts attributable to shareholders.

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Strategic and non-strategic results 
  Strategic results Non-strategic results Core Results
in / end of 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12
Statements of operations (CHF million)  
Net revenues  6,064 5,692 6,083 (78) (243) (456) 5,986 5,449 5,627
Provision for credit losses  36 20 50 5 21 20 41 41 70
Compensation and benefits 2,612 2,376 2,328 189 153 306 2,801 2,529 2,634
Total other operating expenses 1,955 1,906 2,014 761 285 524 2,716 2,191 2,538
Total operating expenses  4,567 4,282 4,342 950 438 830 5,517 4,720 5,172
Income/(loss) from continuing operations before taxes  1,461 1,390 1,691 (1,033) (702) (1,306) 428 688 385
Income tax expense/(benefit) 383 405 406 (232) (37) (321) 151 368 85
Income/(loss) from continuing operations  1,078 985 1,285 (801) (665) (985) 277 320 300
Income/(loss) from discontinued operations 0 0 0 (2) 150 (31) (2) 150 (31)
Net income/(loss)  1,078 985 1,285 (803) (515) (1,016) 275 470 269
Net income attributable to noncontrolling interests 8 16 6 0 0 0 8 16 6
Net income/(loss) attributable to shareholders  1,070 969 1,279 (803) (515) (1,016) 267 454 263
Balance sheet statistics (CHF million)  
Risk-weighted assets – Basel III 1 242,475 236,895 255,130 23,628 24,161 28,980 266,103 261,056 284,110
Total assets 820,992 838,098 862,101 47,986 52,971 58,073 868,978 891,069 920,174
Swiss leverage exposure 1,031,101 1,076,039 99,300 107,509 1,130,401 1,183,548
1
Represents risk-weighted assets on a fully phased-in "look-through" basis.



Results overview
Core Results net revenues of CHF 5,986 million increased 6% compared to 4Q12.
In our strategic businesses, net revenues were stable at CHF 6,064 million compared to 4Q12. An increase in Private Banking & Wealth Management reflected higher transaction- and performance based revenues and higher recurring commissions and fees, partially offset by lower other revenues and lower net interest income. A decrease in Investment Banking was driven by lower client trading activity in the fixed income business and lower advisory results, partially offset by increased revenues from our equity sales and trading and equity underwriting businesses.
In our non-strategic businesses, net revenue losses of CHF 78 million in 4Q13 improved from net revenue losses of CHF 456 million in 4Q12. Improved results in Investment Banking were driven by portfolio valuation gains, particularly in our legacy fixed income wind-down portfolio, reflecting various portfolio management measures, while improved results in Corporate Center were primarily due to lower fair value losses from movements in own credit spreads in 4Q13. An increase in Private Banking & Wealth Management reflected higher investment-related gains partially offset by lower revenues resulting from the sale of businesses.
> Refer to “Private Banking & Wealth Management”, “Investment Banking” and “Corporate Center” for further information.

Provision for credit losses of CHF 41 million in 4Q13 primarily reflected net provisions of CHF 32 million in Private Banking & Wealth Management and CHF 8 million in Investment Banking.
Total operating expenses of CHF 5,517 million were up 7% compared to 4Q12, primarily reflecting 11% higher general and administrative expenses and 6% higher compensation and benefits. In strategic businesses, total operating expenses of CHF 4,567 million increased 5% from 4Q12, mainly reflecting higher compensation and benefits, driven by higher discretionary performance-related compensation expense due to variable compensation accruals, reflecting 2013 full-year results, and higher fee-based revenues. In non-strategic businesses total operating expenses of CHF 950 million increased 14% from 4Q12, primarily reflecting higher general and administrative expenses, partially offset by a decrease in compensation and benefits. The increase in general and administrative expenses was primarily due to higher litigation provisions in 4Q13. We recorded litigation provisions of CHF 339 million relating to ongoing mortgage litigation and CHF 175 million in connection with the SEC-related aspect of the US tax matter, where we are working towards a resolution.

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Core Results reporting by region
  in % change in % change
4Q13 3Q13 4Q12 QoQ YoY 2013 2012 YoY
Net revenues (CHF million)  
Switzerland 1,735 1,839 1,783 (6) (3) 7,224 7,400 (2)
EMEA 1,234 1,303 1,340 (5) (8) 6,189 6,737 (8)
Americas 2,514 2,129 2,349 18 7 9,624 9,507 1
Asia Pacific 680 597 506 14 34 3,036 2,388 27
Corporate Center (177) (419) (351) (58) (50) (790) (2,781) (72)
Net revenues  5,986 5,449 5,627 10 6 25,283 23,251 9
Income/(loss) from continuing operations before taxes (CHF million)  
Switzerland 546 673 572 (19) (5) 2,475 2,544 (3)
EMEA (165) 38 (9) 650 872 (25)
Americas 324 468 725 (31) (55) 2,034 2,512 (19)
Asia Pacific 125 68 (79) 84 770 (151)
Corporate Center (402) (559) (824) (28) (51) (1,468) (3,889) (62)
Income from continuing operations before taxes  428 688 385 (38) 11 4,461 1,888 136
A significant portion of our business requires inter-regional coordination in order to facilitate the needs of our clients. The methodology for allocating our results by region is dependent on management judgment. For Wealth Management Clients and Corporate & Institutional Clients, results are allocated based on the management reporting structure of our relationship managers and the region where the transaction is recorded. For Asset Management, results are allocated based on the location of the investment advisors and sales teams. For Investment Banking, trading results are allocated based on where the risk is primarily managed and fee-based results are allocated where the client is domiciled.


Income tax expense of CHF 151 million recorded in 4Q13 included the impact of the geographical mix of results, an income tax benefit of CHF 367 million relating to tax deductions arising from participation valuations and the re-measurement of existing deferred tax assets on net operating losses due to changes in forecasted earnings, offset by a tax charge of CHF 278 million relating to a valuation allowance recognized on existing deferred tax assets in respect of one of the Group’s entities in the UK. Overall, net deferred tax assets decreased CHF 362 million to CHF 5,577 million as of the end of 4Q13 compared to 3Q13. Deferred tax assets on net operating losses decreased by CHF 238 million to CHF 1,369 million during 4Q13. The Core Results effective tax rate was 35.3% in 4Q13, compared to 53.5% in 3Q13.
> Refer to “Note 21 – Tax” in III – Condensed consolidated financial statements – unaudited for further information.

For the full year 2013, net income attributable to shareholders was CHF 3,069 million, up 128% compared to 2012. Net revenues were CHF 25,283 million, up 9% compared to 2012.
Strategic net revenues were stable at CHF 25,569 million compared to 2012 with stable net revenues for Private Banking & Wealth Management, reflecting higher transaction- and performance-based revenues and higher recurring commissions and fees offset by lower net interest income and other revenues. Strategic net revenues for Investment Banking were slightly lower, reflecting decreased revenues in fixed income sales and trading and advisory revenues, partially offset by increased revenues in equity sales and trading and debt and equity underwriting.
In our non-strategic businesses, net revenue losses of CHF 286 million in 2013 improved from net revenue losses of CHF 2,242 million in 2012. An improvement in Corporate Center mainly reflected fair value losses of CHF 315 million from movements in own credit spreads in 2013 compared to fair value losses from movements in own credit spreads of CHF 2,939 million in 2012. Improved results in Investment Banking were driven by portfolio valuation gains and lower funding costs, while a decrease in Private Banking & Wealth Management was due to lower recurring commissions and fees and lower transaction- and performance-based revenues, reflecting the impact of sales of non-strategic businesses during the course of the year.
Provision for credit losses decreased 9%, reflecting decreases in Private Banking & Wealth Management that were partly offset by increases in Investment Banking.
Compensation and benefits decreased 8%, due to lower discretionary performance-related compensation expense and lower salary expense, reflecting lower headcount. General and administrative expenses increased 7%, reflecting substantially higher litigation provisions in Investment Banking and Private Banking & Wealth Management.

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Overview of Core Results 
  Private Banking & Wealth Management Investment Banking Corporate Center Core Results 1 of which strategic results of which non-strategic results
in / end of period 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12 4Q13 3Q13 4Q12
Statements of operations (CHF million)  
Net revenues  3,438 3,316 3,314 2,725 2,552 2,664 (177) (419) (351) 5,986 5,449 5,627 6,064 5,692 6,083 (78) (243) (456)
Provision for credit losses  32 34 68 8 7 2 1 0 0 41 41 70 36 20 50 5 21 20
Compensation and benefits 1,314 1,285 1,293 1,355 1,129 1,172 132 115 169 2,801 2,529 2,634 2,612 2,376 2,328 189 153 306
General and administrative expenses 1,018 787 849 1,200 961 941 109 21 315 2,327 1,769 2,105 1,583 1,494 1,614 744 275 491
Commission expenses 204 192 193 202 226 251 (17) 4 (11) 389 422 433 372 412 400 17 10 33
Total other operating expenses 1,222 979 1,042 1,402 1,187 1,192 92 25 304 2,716 2,191 2,538 1,955 1,906 2,014 761 285 524
Total operating expenses  2,536 2,264 2,335 2,757 2,316 2,364 224 140 473 5,517 4,720 5,172 4,567 4,282 4,342 950 438 830
Income/(loss) from continuing operations before taxes  870 1,018 911 (40) 229 298 (402) (559) (824) 428 688 385 1,461 1,390 1,691 (1,033) (702) (1,306)
Income tax expense 151 368 85 383 405 406 (232) (37) (321)
Income/(loss) from continuing operations  277 320 300 1,078 985 1,285 (801) (665) (985)
Income from discontinued operations (2) 150 (31) 0 0 0 (2) 150 (31)
Net income  275 470 269 1,078 985 1,285 (803) (515) (1,016)
Net income attributable to noncontrolling interests 8 16 6 8 16 6 0 0 0
Net income attributable to shareholders  267 454 263 1,070 969 1,279 (803) (515) (1,016)
Statement of operations metrics (%)  
Return on Basel III capital 26.1 30.0 28.0 4.0 5.1 4.5 2 7.1 2 3.9 2 17.1 2 15.8 2 19.2 2
Cost/income ratio 73.8 68.3 70.5 101.2 90.8 88.7 92.2 86.6 91.9 75.3 75.2 71.4
Pre-tax income margin 25.3 30.7 27.5 (1.5) 9.0 11.2 7.2 12.6 6.8 24.1 24.4 27.8
Effective tax rate 35.3 53.5 22.1 26.2 29.1 24.0
Net income margin 4.5 8.3 4.7 17.6 17.0 21.0
Balance sheet statistics (CHF million)  
Risk-weighted assets – Basel III 3 94,395 92,434 96,009 156,402 152,638 171,511 15,306 15,984 16,590 266,103 261,056 284,110 242,475 236,895 255,130 23,628 24,161 28,980
Total assets 279,150 275,421 275,683 502,799 528,762 563,758 87,029 86,886 80,733 868,978 891,069 920,174 820,992 838,098 862,101 47,986 52,971 58,073
Swiss leverage exposure 324,494 323,092 722,500 781,225 83,407 79,231 1,130,401 1,183,548 1,031,101 1,076,039 99,300 107,509
Net loans 215,724 214,095 207,702 31,319 31,115 34,501 22 22 20 247,065 245,232 242,223
Goodwill 2,164 2,201 2,409 5,835 5,913 5,980 7,999 8,114 8,389
1
Core Results include the results of our integrated banking business, excluding revenues and expenses in respect of noncontrolling interests without SEI.
2
Calculated using income after tax denominated in CHF; assumes tax rate of 30% in 4Q13 and 3Q13, 25% in 4Q12 and capital allocated at 10% of average risk-weighted assets.
3
Represents risk-weighted assets on a fully phased-in "look-through" basis.


Cost savings and strategy implementation
We continued to adapt our client-focused, capital-efficient strategy to optimize our use of capital and improve our cost structure. We target cost savings of CHF 3.8 billion by the end of 2014 and more than CHF 4.5 billion by the end of 2015. These targets are measured against our annualized 6M11 expense run rate measured at constant foreign exchange rates and adjusted to exclude business realignment and other significant non-operating expenses and variable compensation expenses.
The majority of the expected future savings is expected to be realized from shared infrastructure and support services across the Group, mainly through the consolidation of fragmented and duplicate functions globally and the continued consolidation of IT applications and functions.
We have also targeted further savings within our two operating divisions. Within Private Banking & Wealth Management, we expect to deliver cost benefits from the creation of the integrated Private Banking & Wealth Management division, exiting a number of small non-strategic markets, repositioning select non-profitable onshore operations, rationalization of front office and support functions, including simplification of our operating platform, streamlining of the offshore affluent and Swiss client coverage model and from announced divestitures. Within Investment Banking, we expect to deliver cost benefits from the restructuring of our rates business, the initiatives already completed in 2012, from continuing to review and realize efficiencies across business lines and geographic regions and from continuing to refine our business mix and align resources with highest returning opportunities. We expect to incur approximately CHF 1.4 billion of business realignment costs associated with these measures during the course of 2014 to 2015.
We incurred CHF 131 million of business realignment costs associated with these measures in 4Q13.
> Refer to “Cost savings and strategy implementation” in II – Operating and financial review – Core Results – Information and developments in the Credit Suisse Annual Report 2012 for further information.

Compensation and benefits
Compensation and benefits for a given year reflect the strength and breadth of the business results and staffing levels and include fixed components, such as salaries, benefits and the amortization of share-based and other deferred compensation from prior-year awards, and a discretionary variable component.
The variable component reflects the performance-based variable compensation for the current year. The portion of the performance-based compensation for the current year deferred through share-based and other awards is expensed in future periods and is subject to vesting and other conditions.
> Refer to “Compensation and benefits” in II – Operating and financial review – Core Results – Information and developments in the Credit Suisse Annual Report 2012 for further information.

Variable compensation for 2013
Part of deferred compensation for 2013 was awarded in the form of Contingent Capital Awards (CCA). The CCA plan is a new deferred compensation plan for Executive Board members, managing directors and directors. These awards convey similar rights and risks to those of certain of the contingent capital instruments that have been issued by us in the market. As CCA qualify as additional tier 1 capital of the Group, their vesting and the form of distribution to employees upon settlement is subject to approval by FINMA. Prior to settlement, CCA are subject to being cancelled in full upon specified triggering events, including the Group’s Basel III common equity tier 1 (CET1) ratio falling below specified levels, or a determination by FINMA that cancellation of the CCA and other similar capital instruments is necessary, or that we require public sector capital support, to prevent us from becoming insolvent.

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Personnel
Headcount at the end of 4Q13 was 46,000, down 400 from 3Q13 and down 1,400 from 4Q12. The decrease in 4Q13 reflected headcount reductions in Investment Banking and Private Banking & Wealth Management resulting from our cost efficiency initiatives.

Number of employees by division
end of 4Q13 3Q13 4Q12
Number of employees by division (full-time equivalents)  
Private Banking & Wealth Management 26,000 26,100 27,300
Investment Banking 19,700 20,000 19,800
Corporate Center 300 300 300
Number of employees  46,000 46,400 47,400


Key performance indicators
Our key performance indicators (KPIs) for the Group and for our Private Banking & Wealth Management and Investment Banking divisions reflect our strategic plan, the regulatory environment and the market cycle. With the revised presentation of strategic and non-strategic results for the Group, our stated KPIs are measured on the basis of reported results rather than on the basis of underlying results as was the case in prior periods beginning in 1Q13.
We believe the execution of our strategic initiatives including the run-off of non-strategic operations, will enable us achieve our targets over a three to five year period across market cycles.
> Refer to “Key performance indicators” in Private Banking & Wealth Management and Investment Banking results for further information on divisional KPIs.

Collaboration revenues
Beginning 2Q13, collaboration revenues are calculated as the percentage of the Group’s net revenues represented by the aggregate collaboration revenues arising when more than one of the Group’s divisions participate in a transaction.
Additionally, within the Private Banking & Wealth Management division, collaboration revenues include revenues arising from cross-selling and client referral activities between the Wealth Management Clients and Corporate & Institutional Clients businesses on the one hand and the Asset Management and the securities trading and sales businesses on the other hand. Prior period measures of collaboration revenues were not materially impacted by this change and have not been restated. Collaboration revenues are measured by a dedicated governance structure and implemented through an internal revenue sharing structure. Only the net revenues generated by a transaction are considered. Position risk related to trading revenues, private equity and other investment-related gains, valuation adjustments and centrally managed treasury revenues are not included in collaboration revenues.

Key performance indicators
Our KPIs are targets to be achieved over a three to five year period across market cycles. As such, year to date results may be more meaningful than individual quarterly results. Our KPIs are assessed annually as part of our normal planning process and may be revised to reflect our strategic plan, the regulatory environment and market and industry trends.

in / end of Target 4Q13 2013 2012
Growth (%)  
Collaboration revenues 18 - 20% of net revenues 18.6 17.7 18.6
Efficiency and performance (%)  
Total shareholder return (Credit Suisse) 1 Superior return vs. peer group (1.3) 26.0 4.8
   Total shareholder return of peer group 1, 2 6.5 26.7 49.2
Return on equity attributable to shareholders (annualized) Above 15% 2.5 7.5 3.9
Core Results cost/income ratio Below 70% 92.2 81.7 91.1
Capital (%)  
Look-through Swiss Core Capital ratio Above 10% 11.0 11.0 9.0
1
Source: Bloomberg. Total shareholder return is calculated as equal to the appreciation or depreciation of a particular share, plus any dividends, over a given period, expressed as a percentage of the share's value at the beginning of the period.
2
The peer group for this comparison comprises Bank of America, Barclays, BNP Paribas, Citigroup, Deutsche Bank, HSBC, JPMorgan Chase, Société Générale and UBS. The total shareholder return of this peer group is calculated as a simple, unweighted average of the return reported by Bloomberg for each of the members of the peer group.

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Private Banking & Wealth Management

In 4Q13, we reported income before taxes of CHF 870 million and net revenues of CHF 3,438 million.
In our strategic businesses, we reported income before taxes of CHF 1,057 million and net revenues of CHF 3,269 million. Compared to 4Q12, income before taxes increased 3%, with higher transaction- and performance-based revenues, higher recurring commissions and fees, lower net interest income and slightly higher operating expenses.
In our non-strategic businesses, we reported a loss before taxes of CHF 187 million reflecting higher litigation provisions in 4Q13 in connection with the SEC-related aspect of the US tax matter, where we are working towards a resolution. In 3Q13, we reported income before taxes of CHF 210 million, which included gains from the sale of former Asset Management businesses.
For 2013, we reported income before taxes of CHF 3,686 million and net revenues of CHF 13,451 million. In our strategic businesses, we reported income before taxes of CHF 3,636 million and net revenues of CHF 12,443 million. In our non-strategic businesses, we reported income before taxes of CHF 50 million and net revenues of CHF 1,008 million.

Divisional results
  in / end of % change in / end of % change
4Q13 3Q13 4Q12 QoQ YoY 2013 2012 YoY
Statements of operations (CHF million)  
Net revenues  3,438 3,316 3,314 4 4 13,451 13,474 0
   of which strategic results  3,269 2,934 3,217 11 2 12,443 12,343 1
   of which non-strategic results  169 382 97 (56) 74 1,008 1,131 (11)
Provision for credit losses  32 34 68 (6) (53) 140 182 (23)
Compensation and benefits 1,314 1,285 1,293 2 2 5,331 5,561 (4)
General and administrative expenses 1,018 787 849 29 20 3,489 3,209 9
Commission expenses 204 192 193 6 6 805 747 8
Total other operating expenses 1,222 979 1,042 25 17 4,294 3,956 9
Total operating expenses  2,536 2,264 2,335 12 9 9,625 9,517 1
   of which strategic results  2,185 2,113 2,141 3 2 8,725 8,830 (1)
   of which non-strategic results  351 151 194 132 81 900 687 31
Income/(loss) before taxes  870 1,018 911 (15) (5) 3,686 3,775 (2)
   of which strategic results  1,057 808 1,029 31 3 3,636 3,374 8
   of which non-strategic results  (187) 210 (118) 58 50 401 (88)
Statement of operations metrics (%)  
Return on Basel III capital 1 26.1 30.0 28.0 27.4 29.0
Cost/income ratio 73.8 68.3 70.5 71.6 70.6
Pre-tax income margin 25.3 30.7 27.5 27.4 28.0
Utilized economic capital and return  
Average utilized economic capital (CHF million) 9,334 9,569 9,809 (2) (5) 9,554 9,965 (4)
Pre-tax return on average utilized economic capital (%) 2 37.8 43.1 37.7 39.2 38.5
Assets under management (CHF billion)  
Assets under management 1,282.4 1,268.2 1,250.8 1.1 2.5 1,282.4 1,250.8 2.5
Net new assets 4.4 8.1 6.8 (45.7) (35.3) 32.1 10.8 197.2
Number of employees and relationship managers  
Number of employees (full-time equivalents) 26,000 26,100 27,300 0 (5) 26,000 27,300 (5)