Global banking and capital markets sectorFILE/… · Global banking and capital markets sector Key themes from thirdquarter 2011 earnings calls 17 November 2011. Contents ... including

Global banking and capital markets sectorKey themes from third quarter 2011 earnings calls

17 November 2011

ContentsPage

Scope, limitations and methodology of the review 3

Key themes of the review 4

Key themes overview: external headwinds intensify over the eurozone debt crisis 5

Top key theme: macroeconomic and politicalTop key theme: macroeconomic and political concerns mount, prompting internal reviews of operations 15

Featured theme: capital issues - EBA recapitalization plan adds to complexity of capital requirements 17

Appendix 20

Global banking and capital markets sector – key themes from third quarter 2011 earnings calls | 1

Scope, limitations and methodology of the reviewThe purpose of this review is to determine the key themes discussed during the third quarter 2011 earnings reporting season among 36 selected banks operating within the banking and capital markets sector worldwide.

To determine the key themes, the review was limited to the examination of the transcripts and presentations of the third quarter 2011 earnings conference calls. (Transcripts were supplied by Capital IQ or FactSet.)

For most of the 36 banks reviewed, the period covered was third quarter 2011, which ended 30 September 2011. Exceptions to this include the following:

► Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD) – period covered was third quarter 2011, ended 31 July 2011.

► Nomura Holdings – period covered was second quarter 2012, ended 30 September 2011.

► Mizuho Financial Group – period covered was second quarter 2011, ended 30 September 2011.

► Westpac Banking Group – period covered was second half 2011, ended 30 September 2011.

► Macquarie Group – period covered was first half 2012 ended 30 September 2011► Macquarie Group – period covered was first half 2012, ended 30 September 2011.

► National Australia Bank (NAB) – period covered was second half 2011, ended 30 September 2011.

Banks were selected based on their size and the availability of earnings calls transcripts. Every effort was made to ensure a global sample of banks was included in the review.

► No Chinese banks were included in the analysis due to a lack of transcript availability.


Key themes of the review

Third quarter

Third quarter 2011 earnings season top 10 themes(arranged from most common to least common)

Second quarter

Second quarter 2011 earnings season top 10 themes(arranged from most common to least common)2011

Rank

(arranged from most common to least common)36 Banks

2011Rank

(arranged from most common to least common)32 banks

1 Concerns related to the macro-environment 1 Expense management

1 Capital issues 1 Impact of regulatory reform

1 E t 1 C it l i1 Expense management 1 Capital issues

1 Drivers of earnings performance 1 Drivers of earnings performance

5 Improvements in credit quality measures 5 Concerns related to the macro-environment

6 Funding strategy and liquidity management 6 Opportunities related to acquisitions, joint ventures and divestitures

O t iti l t d t i iti j i t t d7 Opportunities related to acquisitions, joint ventures and divestitures 7 Improvements in credit quality measures

7 Trends in lending 8 Globalization; presence outside home country

9 Impact of regulatory reform 9 Trends in lending

10 Globalization; presence outside home country 10 Funding strategy and liquidity managementp y g gy q y g

Note: ties are noted by continuation of rank number (e.g., four issues noted as # 1) to next most discussed theme (e.g., #5)


Key themes overview: external headwinds intensify over the eurozone debt crisiseurozone debt crisis

Macroeconomic and political concerns mount, creating a challenging operating environment In third quarter 2011 the external pressures related to political and

event happen and I think what you’re seeing — and this is reflected in our funding and with our counterparties’ funding — is an incredible bifurcation in the marketplace inenvironment. In third quarter 2011, the external pressures related to political and

economic uncertainty that began to materialize earlier in 2011 escalated and posed increasing challenges to the banking sector. Management at each of the banks reviewed for this analysis framed their comments in the context of the difficult environment, which was characterized as “tough,” “unpredictable,” “uneven,” “noisy,” “turbulent” and even “extremely terrible.” The title of Commerzbank’s third quarter 2011 earnings presentation – “Sound Performance of Core Bank Weighed Down by Sovereign Debt Crisis” – would have been applicable at many institutions The impact of

with our counterparties funding is an incredible bifurcation in the marketplace in Europe. Stronger institutions — international and even European — have not only access to liquidity but excess liquidity and institutions that are viewed to be weaker have virtually no liquidity.”

• Stefan Krause, CFO, Deutsche Bank: “Conditions in the global economy were more difficult than at any time since the collapse of Lehman in late 2008.”

Management provided details on transitions to new capital regimes As in previousSovereign Debt Crisis would have been applicable at many institutions. The impact of the challenging macro-environment filtered down through most of the top themes from the third quarter 2011 earnings season, including capital compliance, expense management, funding and liquidity, and, of course, earnings performance. M&A strategies and discussion about banks’ global reach reflected the difficult operating conditions, while comments on lending reflected the expectation that policy measures designed to address the crisis will mute credit availability in coming quarters. In addition, the escalating concerns around the eurozone debt crisis seemed to overshadow the

Management provided details on transitions to new capital regimes. As in previous quarters, strong capital levels were highlighted. In third quarter 2011, however, discussions around capital became more detailed as management provided guidance on how they plan to transition to new capital regimes. In the US, where most banks still operate under previous Basel guidelines, comments reflected an ability to comply with Basel III early, despite a lack of enthusiasm for the requirement. In Europe, several banks covered Basel III compliance in their earnings calls, but management more frequently discussed the glide path to Basel 2 5 European banks that reported thirdthe escalating concerns around the eurozone debt crisis seemed to overshadow the

discussions of regulatory reform that had dominated earnings calls in previous quarters. In third quarter 2011, the lack of a solution to the eurozone debt crisis impacted financial markets, resulted in significant volatility and led to concerns that the funding market could shut down. Skittish clients remained on the sidelines, while banks took steps to reduce both their exposures to sovereign debt and the size of their balance sheets. Management comments reflected these impacts and drew parallels to the financial crisis of 2008.

frequently discussed the glide path to Basel 2.5. European banks that reported third quarter 2011 results after 26 October 2011 commented on the eurozone crisis-driven recapitalization plan announced by the European Banking Authority (EBA) that requires banks to hold tier 1 capital of 9%.

• Chris Lucas, Group Finance Director, Barclays: “We’ve given you a view of Basel 2.5 because we think it’s appropriate given how quickly it becomes the requirement. We’re working hard on Basel III and we’ll update you as and when it’s appropriate but there of 2008.

• David Viniar, CFO, Goldman Sachs: “Whether it was volatile and unpredictable markets that made new equity issuances very difficult to execute, or our asset management clients having much less conviction on investment decisions, the broader environment served as a significant headwind to clients moving forward with their business objectives.”

• CIBC Senior Executive Vice President Richard Nesbitt commented on market

is nothing really to say.”

• Jamie Dimon, CEO, JPMorgan Chase: “The only question is when and how you use it and how quickly you want to get up to the higher Basel III numbers and do you want to get up there just by retaining capital and waiting for mitigation and things like that.”

CIBC Senior Executive Vice President Richard Nesbitt commented on market behavior: “I don’t mind volatility. It’s erratic markets that are difficult to manage.”

• BNP Paribas CFO Philippe Bordenave’s comments to analysts were almost entirely related to the external environment, with only brief highlights of third quarter 2011 performance.

• Morten Friis, Chief Risk Officer, RBC: “To some degree you’ve already seen a liquidity


Key themes overview: management remains focused oncost controlcost control

Early progress on expense reduction efforts reported. In third quarter 2011, bank managers maintained a strong focus on reducing costs and driving efficiency RBC CEO

• Ed Clark, CEO, Toronto Dominion (TD): “Our expense base already includes a healthy level of project spend which will continue into next year Our competitive edge hasmanagers maintained a strong focus on reducing costs and driving efficiency. RBC CEO

Gord Nixon noted, “In this type of market, the two critical factors for outperforming the competition are driving top line growth and operating as efficiently as possible.” This was echoed by UBS CEO Sergio Ermotti, who said, “Practical and strategic cost management will be even more important in the resource-constrained environment of the future.” Many banks reported initial progress on cost reduction targets and several revised targets upward. There was also widespread acknowledgment that expenses will remain under the microscope in the coming quarters

level of project spend which will continue into next year. Our competitive edge has always been our ability to invest in good times and bad and to not overreact to the headwinds we face.”

• Jamie Dimon, CEO, JPMorgan Chase: “We have to build a lot of additional systems to accommodate those hundreds of new rules, regulations, reporting …This is the new world. We're going to live with it, but it's hard to sit back when it costs money.”

• Banks that continued to spend on IT projects included Credit Agricole Wells Fargoremain under the microscope in the coming quarters.

• Expense reduction targets were increased at Morgan Stanley, Credit Suisse and Royal Bank of Scotland (RBS). Morgan Stanley CFO Ruth Porat said, “We previously expected slightly more than $1 billion in aggregate run rate savings during the next three years but now expect that figure to grow to $1.4 billion.” Credit Suisse CFO David Mathers noted, “We have increased our net expense reduction target going into 2012 by CHF200 million to CHF1.2 billion.” RBS CFO Bruce van Saun said that RBS

• Banks that continued to spend on IT projects included Credit Agricole, Wells Fargo, State Street, ING and National Australia Bank.

• A number of banks highlighted plans to invest in high-growth regions:• Alfredo Sáenz Abad, CEO, Banco Santander: “Over 70% of cost increases came

from emerging countries where we are investing in order to capture future growth.”• Angel Cano, COO, Grupo BBVA: “The growth in costs is fundamentally located in

those emerging economies where we have growth plans in terms of new branches, has increased its target from £2.5 billion to £3.0 billion. van Saun also acknowledged that further expense reductions may be identified. “I think we have to up the ante, given the revenue headwinds that we face, he said.”

• Corrado Passera, CEO, Intesa Sanpaolo: “The pressure on productivity is growing. The need for finding new sources of savings and productivity will grow…expect further and higher targets in terms of administrative cost reductions.”

putting in ATMs and trying to bring in new customers into the banking system.”• Brady Dougan, CEO, Credit Suisse: “We will target more resources towards the

faster-growing markets and in doing so, we aim for these markets to provide an overall contribution to group revenues of 25% by 2014, up significantly from the current 15%.”

• Head count reductions have either begun or are likely to accelerate at Bank of America, Credit Suisse, Deutsche Bank, HSBC, ING, Unicredit, Mizuho and Banco Itau, among others.

• Management at American Express and Commerzbank specifically highlighted reduced spending on consulting fees. Commerzbank CFO Eric Strutz said, “We are currently putting to the test all our external consultant services and services purchased.”

• Philip Coffey, CFO, Westpac: “We're firmly of the belief that right now is a time when you can't afford to have inefficient cost in the company and you should be looking to do everything that you can to reduce that.”

Banks continued to spend on initiatives related to technology and targeted growth areas. Management considers such investments to be necessary expenditures, as they will support regulatory compliance, business growth in strategic areas or overall efficiency


efficiency.

Key themes overview: progress on costs made at some banks

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Key themes overview: fair value gains, Greek write-downs and moderating reserve releases impact resultsmoderating reserve releases impact results

Third quarter 2011 results reflected the difficult operating environment. The clearest trend related to earnings and revenue performance that emerged during the

Commerzbank, Credit Agricole, Credit Suisse, HSBC, ING, RBS, Societe Generale and UBSclearest trend related to earnings and revenue performance that emerged during the

quarter was that retail-focused banks and divisions performed better than capital-markets-facing banks and divisions. In third quarter 2011, a wide range of extraordinary items masked the underlying performance of banks, making it difficult to draw further conclusions that were consistent across the sector.

• Retail banks delivered stable performance despite the challenging backdrop. • TD and Wells Fargo both reported record retail net income and US Bancorp reported

and UBS.• Interestingly, HSBC CEO Stuart Gulliver characterized the gains as “meaningless.”

• Other one-off items that clouded the underlying progress at certain banks in third quarter 2011 included the following:• Bank of America benefited from a one-off gain of $3.6 billion on the sale of its stake

in China Construction Bank. • UBS recorded a pretax loss of CHF1.85 billion related to the “unauthorized trading

all-time-high levels of both revenues and earnings. Deutsche Bank noted that each of its “classic banking businesses” increased pretax profit from third quarter 2010.

• Net interest income grew at a number of banks across different regions, including Westpac, NAB, US Bancorp, BNY Mellon, Banco Santander and Credit Agricole, among others.

• Banks with capital-markets-focused businesses saw revenues fall dramatically in third quarter 2011 Advisory revenues were down reflecting a lack of client confidence to

incident in the investment bank.”• Goldman Sachs recorded negative revenues of $1.5 billion on its investment in

Industrial and Commercial Bank of China (ICBC) and negative revenues of $1.9 billion on its other equity and debt securities investments as markets fell sharply.

• RBC’s C$92 million net loss was due to the sale of RBC Bank USA. Net income from continuing operations was C$1.6 billion.quarter 2011. Advisory revenues were down, reflecting a lack of client confidence to

execute on strategic plans, while market volatility kept debt and equity issuance low, therefore, impacting underwriting revenue. In addition, market volatility had a negative effect on trading revenues.• JPMorgan Chase reported its lowest quarterly investment banking fees since 2005,

while Citigroup characterized its Securities and Banking division as its “greatest performance challenge.”

• Due to the market environment Barclays Capital was the only division at Barclays

4,500 4,100

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FVA gains at selected bankslocal currency (millions)

Due to the market environment, Barclays Capital was the only division at Barclays that performed worse in third quarter 2011 than in third quarter 2010.

• Results at RBS’s Global Banking and Markets (GBM) division reflected “the subdued trading environment and our cautious risk appetite,” while its Commercial and Retail divisions reported stable results. This was echoed at Societe Generale, where Corporate and Investment Banking (CIB) were “influenced by the state of financial markets” despite a “steadily rising contribution” from retail banking.

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• One of the most confusing impacts that emerged during third quarter 2011 was fair value accounting (FVA) gains on banks’ own debt. Under accounting rules, banks’ own debt is carried at fair value on their balance sheet and gains or losses are reported as income. The accounting rule that allows this is not new, but the impact is most noticeable in periods of extreme volatility, when credit spreads widen. • FVA gains artificially inflated earnings at JPMorgan Chase, Citigroup, Bank of

America, Goldman Sachs, Morgan Stanley, Barclays, BNP Paribas,

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Key themes overview: credit quality improves, but at a more moderate pacemoderate pace

Credit quality improvements stabilizing. In third quarter 2011, credit quality continued to improve but at a more moderate pace Most banks reported a decrease in or

• Jamie Dimon, CEO, JPMorgan Chase: “I think it's been pointed out by several people already that we didn't take reserves down We’re fighting not to take them down Weto improve, but at a more moderate pace. Most banks reported a decrease in or

stabilization of impaired loans. Those that reported higher impairments were able to attribute the increase to a specific portfolio, type of loan formation or acquisition, and were comfortable that the higher credit costs did not constitute a reversal of credit performance. Management seemed broadly comfortable with provision levels, but plans to closely monitor the economic situation for signs of deterioration that could impact credit performance.

already that we didn t take reserves down. We re fighting not to take them down. We may not be able to not take them down, because obviously we operate every budget with accounting rules, but our predilection right now is with delinquencies kind of flattening out, there's some good signs and some bad signs or it's all over the place. We'd rather just leave them up until we have to take them down. So don't read anything into that other than we're just trying to be conservative here.”

• Dan Henry, CFO, American Express: “The third quarter reserve release was • Mark Chauvin, Chief Risk Officer, TD: “Overall, we remain comfortable with the

performance of the US credit portfolios and expect to see continuing improvement. Having said this, the current uncertainty in North America and European markets is concerning. While we’ve yet to see any impact in our portfolios, we continue to monitor this issue closely.”

• Wilfred Nagel, Chief Risk Officer, ING: “Now, at the same time, being realistic about what’s happening in the economy outside you can’t close your eyes to that So the

approximately the same as in the second quarter, but less than we saw in the first quarter of this year, as the improvement in metrics has started to moderate or stabilize. In the third quarter of 2010, we had $500 million of reserve releases. Going forward, we would expect reserve releases to diminish.”

what s happening in the economy outside, you can t close your eyes to that. So, the uncertainty around these numbers, of course, is not getting less.”

• Tim Sloan, CFO, Wells Fargo: “While we continued to see positive trends in credit performance, the rate of improvement moderated with some portfolios in the quarter, as expected at this point in the credit cycle.”

• Chris Lucas, Group Finance Director, Barclays: “In terms of impairment and asset quality we’re seeing what we predicted which is a slowdown in the speed ofquality, we re seeing what we predicted, which is a slowdown in the speed of improvement of impairment ... That trend of improvement is slowing down, but it’s not reversing yet.”

In addition, reserve releases began to decrease as expected, reflecting a normalization of reserve levels.

• Vikram Pandit, CEO, Citigroup: “We recorded a significantly lower net reserve release in the third quarter of 2011 at $1 4 billion versus $2 billion both last quarter and in thein the third quarter of 2011 at $1.4 billion versus $2 billion both last quarter and in the prior year.”


Key themes overview: funding profiles highlighted as concerns over a credit crunch growover a credit crunch grow

Funding status gains prominence as the eurozone debt crisis spurs fears of a liquidity crisis In previous quarters European banks routinely updated the status of

remain a key strength. We have seen this very clearly in the third quarter with the unsecured term funding market largely closed amid concerns about the level of termliquidity crisis. In previous quarters, European banks routinely updated the status of

their funding plans, while banks in other regions provided fewer details on a less frequent basis. In second quarter 2011, such disclosures began to address growing concerns about a potential liquidity crunch as external pressures mounted. In third quarter 2011, banks from all regions provided robust details on liquidity and funding as the situation in Europe deteriorated and concerns about contagion escalated.

• None of the banks that discussed funding in third quarter 2011 reported a shortfall for

unsecured term funding market largely closed amid concerns about the level of term liquidity… . We’ve raised over £24 billion of wholesale debt across a variety of products and geographies including £6 billion of term funding in third quarter 2011.”• Mark Joiner, Finance Director, NAB: “Despite periods of market difficulty, we

managed to execute above our plan and issue $32 billion.”

• There was general agreement that funding diversity was a key competitive advantage in the current environment.

covering 2011 liabilities, and a number of banks referenced their ability to prefund 2012 obligations. • Vikram Pandit, CEO, Citigroup: “Almost 25% of our balance sheet is cash or liquid

securities. We have enough liquidity that we could operate without issuing long-term debt for a couple of years, although we still plan to participate in the debt markets.”

• Philippe Bordenave, CFO, BNP Paribas: “Since July, we have raised €8 billion in addition to our 2011 funding program ... . The average cost of this medium- and

• Gord Nixon, CEO, RBC: “Our global funding platform is strong and having access to a multiple of global sources allows us to fund at more optimal spreads than our global peers. This is a real competitive advantage in today’s environment.”

• Stefan Krause, CFO, Deutsche Bank: “I always believe that the funding and liquidity situation is at least as important as the capital situation…[we have] rebalanced towards most stable funding sources, a significant reduction in utilization of short-term funding sources. We built up high liquidity reserves to buffer against extreme

long-term funding over the summer was 89 basis points, which represents a limited increase [from 1H11].”

• Eric Strutz, CFO, Commerzbank: “We’ve used the third quarter to start the pre-funding for 2012.”

• Tim Tookey, Group Finance Director, Lloyds Banking Group: “We issued £5.4 billion of wholesale term funding in Q3 and a further £3 billion in October. We’ve now finished this years’ funding plan although we will continue to be opportunistic and

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stress scenarios and we kept strong capital market access and an evenly balanced maturity profile.”

take further funding this year when markets are open. This will be pre-funding our 2012 requirements.”

• Didier Valet, CFO, Societe Generale: “In the third quarter, we did issue €4.1 billion of new medium to long-term debt with an average maturity of 5.6 years and at a price of 100 basis points above the mid swap. Due to our deleveraging program and our strict management of these resources, we set the 2012 program at €10 billion to €15 billion, so half of what we have issued in 2011 and part of what we raised within the thi d t f di f 2012 i ”third quarter are a pre-funding of our 2012 earnings.”

• A number of banks highlighted their ability to raise capital on the markets in the past three months, despite the stressed environment.• Ruth Porat, CFO, Morgan Stanley: “We raised $7.5 billion in the third quarter and

$30.5 billion of unsecured funding year to date, thereby prefunding much of our upcoming requirements.”

• Chris Lucas, Group Finance Director, Barclays: “Our liquidity and funding positions


Chris Lucas, Group Finance Director, Barclays: Our liquidity and funding positions

Key themes overview: divestments on the agenda asbanks deleverage?banks deleverage?

Few acquisitions take place as focus on capital inspires caution and prompts sales of non-core assets In third quarter 2011 management continued to emphasize

• Vikram Pandit, CEO, Citigroup: “We’d rather use our capital towards those businesses and those areas that create a long term earnings profile versussales of non-core assets. In third quarter 2011, management continued to emphasize

that they were only interested in acquisitions that, as TD CEO Ed Clark put it, “make strategic sense, fit within our risk profile and are financially attractive.”

• US Bancorp CEO Richard Davis acknowledged that his firm has made few recent purchases, but noted, “It’s not for lack of looking. And if I have my way, you’ll see continued branch and small bank deals … we’re going to do our best to keep filling that pipeline with those kind of small deals that come together in a nice way in the

businesses and those areas that create a long-term earnings profile versus having a mark-to-market gain on a shorter term investment. Although, if there are opportunities that come up, we’ll look at it, but I don’t think you should expect us to be a preferred bid for the large amount of assets they may sell.”

• Gerald Hassell, CEO, BNY Mellon: “If the turmoil in Europe springs out an asset that’s incredibly cheap and incredibly accretive, we might look at it. But the first priority is to really return the excess capital to shareholders.”

• Frédéric Oudéa CEO Societe Generale: “Determined actions on deleveragingend.”

• Credit Suisse CEO Brady Dougan said he might consider acquisitions to grow the strategically important Private Banking business. “It could include some acquisitions if there were acquisitions that made sense but there’s not a specific plan right now, he said.”

• Banco Santander and BBVA both referred to potential acquisitions of troubled Spanish

• Frédéric Oudéa, CEO, Societe Generale: Determined actions on deleveraging have yielded concrete results and significant results. €10 billion of legacy assets were disposed of between the first of July and the first of November.”

• Jay Hooley, CEO, State Street: “We continue to believe that the slow growth rate and concern about the financial institutions in Europe should result in consolidation in the financial sector, which we are prepared to take advantage of with our strong capital position.”

cajas, noting that they analyze opportunities as they come up, but have no specific plans in this regard. Grupo BBVA COO Angel Cano noted that consideration of such deals is made “on the basis of a strict control over our capital consumption and our exposure to risk and the possibility of having tighter liquidity.”

• The few acquisitions that were discussed in third quarter 2011 included CIBC’s purchase of American Century Investments, TD’s acquisition of MBNA’s Canadian credit card portfolio and Westpac’s three-year-old takeover of St George Bank Bankcredit card portfolio and Westpac s three-year-old takeover of St. George Bank. Bank disposals of non-core businesses generated more commentary.• RBC sold its US bank unit, RBC Bank USA, amid plans to “sharpen its focus” on

wealth management in the US. Bank of America sold its correspondent mortgage unit in a move that enables it to focus efforts on “a direct retail channel ... which enables us to serve our core customer base.” Barclays and HSBC continued to exit underperforming businesses in line with their respective strategic review criteria. INGmanagement discussed the sale of ING Direct USA and other assets that are part ofmanagement discussed the sale of ING Direct USA and other assets that are part of its restructuring plan. Lloyds reported that it had exceeded its own targets with the £11 billion reduction of non-core assets in third quarter 2011.

• European banks are deleveraging to shrink balance sheets and bolster capital levels without raising capital on the markets. Comments on deleveraging included views on the potential opportunities this could present to US banks.


Key themes overview: lending impacted by sovereign debt crisis

Loan growth evident in some regions and segments, but an across-the-board recovery has not yet materialized In third quarter 2011 there was a lack of

does not have any link to Germany and Poland.”• Tim Tookey Group Finance Director Lloyds Banking Group: “We’d love to berecovery has not yet materialized. In third quarter 2011, there was a lack of

consistency on lending trends. Some banks reported solid loan growth and optimism that this will continue, while increases at other banks were modest at best, and still others reported low demand and the expectation that lending will not pick up for several quarters.

• RBC, TD, American Express, JPMorgan Chase, US Bancorp and Wells Fargo reported loan growth. At Societe Generale, BNP Paribas and Credit Agricole, loan

• Tim Tookey, Group Finance Director, Lloyds Banking Group: We d love to be growing the core book and we’ve got the financial capacity, both in capital and cash terms, to grow it. But we are not seeing the level of demand that we would like to see. We are not going to lower our credit risk standards in order to grow that book and inadvertently put the wrong type of assets on, but we would like to see more demand. I think consumers and corporates are being understandably cautious given what’s going on in the outside world.”

growth in their home market underscored their commitment to support the French economy.

• At NAB, where business lending was flat, Finance Director Mark Joiner noted, “As we all know, credit growth is fairly muted at the moment. We do expect some uptick next year, but we've expected that for a while.”

• Westpac CFO Philip Coffey observed that while loans grew 2.6% in 2H11, “Growth

Loan growth over previous quarter, selected banks, percent change

was broadly in line with the system in Australia and tighter credit growth.”

• Management gave voice to concerns that lending will also feel the impact of the eurozone crisis. HSBC CEO Stuart Gulliver speculated that the effects of the crisis and the resultant EBA recapitalization plan could impact the availability of loans in Asia. “European bank lending into Asia has increased massively in the 2004 to 2010 period … if the eurozone crisis results in a number of European banks having to withdraw to their national sovereign borders which as we saw in 2008 is what banks

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withdraw to their national sovereign borders, which as we saw in 2008 is what banks do if they’re in need of support from their governments … there could be a vulnerability in Asia, he said.” • Angel Cano, COO, Grupo BBVA: “What we’ve seen this quarter is a general lack

of lending ... We think this is something that will be ongoing, certainly throughout 2012, as we’re seeing deleverage.”

• Philippe Bordenave, CFO, BNP Paribas: “We have always been very strict in terms of risk and I wouldn’t say there is a change in the lending standard what

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• Eric Strutz, CFO, Commerzbank: “We are currently assessing all options in order to reach the additional capital requirements set by EBA. Our management team has already agreed on immediate measures … .This plan consists of temporarily foregoing new business at Eurohypo, temporarily no new lending business that

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Key themes overview: regulatory reform discussions focused on specific jurisdictionsspecific jurisdictions

Regulatory reform discussions revolve around country-level rules. In previous editions of the quarterly key themes review regulatory reform was the predominant area

would cause it to miss its 2013 return on equity (ROE) target: “I think the Independent Commission on Banking recommendations were clear that they wantededitions of the quarterly key themes review, regulatory reform was the predominant area

of uncertainty facing the banking industry and, as such, generated the most discussion. In third quarter 2011, while concern about regulatory issues was displaced by the larger, immediate worries related to the macro-environment, management did touch briefly on the continued need for globally coordinated reform. Citigroup CEO Vikram Pandit urged regulators to get to “apples to apples” while Commerzbank CFO Eric Strutz noted that regulators should remember that they are not alone and should try to work together on setting rules that are “smart” as opposed to just “tough ” The areas of reform that

Independent Commission on Banking recommendations were clear that they wanted to see London as the premier financial center. They were clear that they wanted London to be home to large, successful international banks. They were clear that we had flexibility and they quoted a lot of the things that we had discussed with them about how to implement the ring fence … I think having the glide path through 2019 certainly helps with the execution and implementation as well.”

Eurozone crisis prompted management to highlight their global reach, or in some setting rules that are smart as opposed to just tough. The areas of reform that received the most attention from bank management in third quarter 2011 included several specific areas of country-level reform.

• In the US, conversation centered on the Durbin Amendment and the Volcker Rule, both of which are provisions of the Dodd-Frank Act. • On 1 October 2011, new debit interchange fees under the Durbin Amendment went

into effect, reducing “swipe fees” from $0.44 to $0.21 per transaction. TD and US $ $

cases, lack thereof. Given the current and anticipated stresses on topline growth in developed countries, management at a number of banks specifically highlighted the contribution of overseas markets to their third quarter 2011 results. Problems in the European market in particular led Societe Generale CEO Frédéric Oudéa to say, “Let me just highlight that I consider personally, especially in view of the potential difficult outlook for the eurozone economies, that it is definitely a key advantage to have strong presence in retail outside the eurozone.” In direct contrast, a handful of banks viewed

Bancorp expect to see an annual revenue impact of C$200 million to C$240 million and US$300 million, respectively. At JPMorgan Chase and Wells Fargo, the rule is expected to reduce annual revenues by $1 billion.

• On 11 October 2011, the Office of the Comptroller of the Currency the (the OCC), the Federal Reserve, the Federal Deposit Insurance Corporation the (the FDIC) and the Securities and Exchange Commission the (the SEC) released the Volcker Rule proposal. Among the banks that would be subject to the rule, namely Goldman S h M S l Ci i JPM Ch B k f A i d C di

their lack of international exposure as a differentiating factor. To illustrate, management at Wells Fargo and US Bancorp specifically pointed out that they were not globally focused. Wells Fargo CEO John Stumpf said, “When you look at the risk profile of the company — we’re not global. We don’t have a lot of the risk that others do.”• At BNY Mellon, non-US regions accounted for a record 39% of total third quarter

2011 revenues. Macquarie Group highlighted that 61% of its revenues now come from outside Australia, and State Street reported that 83% of its new business wins i hi d 2011 US dSachs, Morgan Stanley, Citigroup, JPMorgan Chase, Bank of America and Credit

Suisse, the consensus was that it is too early in the rulemaking process to determine how it will impact business models. JPMorgan Chase CEO Jamie Dimon made pointed comments about the proposed rule’s market-making provisions: “The US has the best, deepest, widest and most transparent capital markets in the world which give you, the investor, the ability to buy and sell large amounts at very cheap prices. That's a good thing … .We have to be in a position to offer market-making for our li t M t f b i i k t ki ”

in third quarter 2011 were non-US mandates.

clients. Most of our business is market-making.”

• UK bank management offered views on the recently released Independent Commission on Banking (ICB) report.• When asked about the possibility of relocating headquarters outside of London,

HSBC CEO Stuart Gulliver said, “Until we know exactly what the government intends to do, we can’t really get to a decision because we don’t have enough facts to make the decision with. What we’re also saying, however, is that the Board is acutely


the decision with. What we re also saying, however, is that the Board is acutely aware that its fiduciary duty is to its shareholders.”

• Barclays CEO Bob Diamond said he did not believe that the ICB recommendations


Top key theme: macroeconomic and political concerns mount, prompting internal reviews of operationsprompting internal reviews of operations

The challenges presented by the macro-environment dominated the quarter. Bankers expressed frustration at being powerless to influence the outcome of the crisis

environment for most of our Investment Bank’s businesses, particularly credit-related ones ” At Macquarie Group CEO Nicholas Moore said “Obviously the markets theBankers expressed frustration at being powerless to influence the outcome of the crisis,

as it is primarily dependent on the decisions and actions of policy makers. They also conveyed their belief that the operating environment will remain stressed in coming quarters.

• Ed Clark, CEO, TD: “Now what is hard to predict is the duration of the outlook. We are in the unusual position where political actions or inactions have the ability to change the environment and affect both the duration and severity of these challenges.”

ones. At Macquarie Group, CEO Nicholas Moore said, Obviously the markets the market-facing businesses have operated in over the last six months have been very challenging, and we see this reflected in their results going forward.”

The environment also prompted banks to review their business models and, in some cases, set a new strategic course.

• Federico Ghizzoni, CEO, UniCredit: “Analyzing the existing business model with the challenges that we have now-a-days in the market we came to the conclusion that

• Brady Dougan, CEO, Credit Suisse: “We’d all hoped that the headwinds to our business, including low levels of client activity, low interest rates, market volatility and political uncertainty around the world would subside. It’s now clear, however, that these secular trends may persist for an extended period.”

• Stefan Krause, CFO, Deutsche Bank: “As significant uncertainties persist for the world’s economy and financial markets, with a near-term outlook highly dependent on

challenges that we have now a days in the market … we came to the conclusion that the existing model needs to have a review ... . And for this reason we have decided to move to a different service model ... . I think that you must choose your core business and for us the core business is and will be commercial banking.”

• James Gorman, CEO, Morgan Stanley: “We’re constantly reassessing whether we’re experiencing something that is secular or cyclical and under what conditions we would act to shrink or change businesses, product lines, our overall balance sheet and our

decisive resolution of the sovereign debt crisis in Europe, we obviously continue to expect that we will have challenging times.”

• Richard Meddings, Group Finance Director, Standard Chartered: “The concern is whether it’s a series of chaotic distorts or some sort of chronic crisis here, what’s the impact then on global trade and volumes and confidence? How do regulators and the Reserve or Central Banks react to the turmoil of Europe in terms of potentially bringing in higher capital controls and so on? So you could face a world that gets very very

level of risk weighted assets. I want to be very clear, we will continue to make whatever decisions are necessary if we indeed determine we are experiencing a secular change.”

• Junko Nakagawa, CFO, Nomura: “After these times of turmoil are over we think a new world will come, but we think this will continue for two years or so and we have to re-calibrate our business to meet the market conditions.”

in higher capital controls and so on? So you could face a world that gets very, very lumpy indeed as people and as jurisdictions try to defend themselves.”

Political and economic concerns have resulted in significant levels of uncertainty that have weighed heavily on both banks’ activities and their share prices.

• Clients have largely fled to the sidelines, and activity levels remain muted. State Street CEO Jay Hooley said, “Cash continues to collect in bank deposits as investors stay on the sidelines ” Morgan Stanley CEO James Gorman observed “the biggest challengethe sidelines. Morgan Stanley CEO James Gorman observed, the biggest challenge we have faced of late is subdued client activity.” Similarly, Deutsche Bank CFO Stefan Krause noted, “The ongoing European sovereign debt crisis had a severe dampening effect on client activity in most products during the quarter.”

• Investment banking or market-sensitive divisions were especially vulnerable to the macro environment during the quarter. HSBC CEO Stuart Gulliver said, “Eurozone uncertainty hit revenues in Global Banking and Markets through the rates and credit


line.” UBS Interim CEO Sergio Ermotti noted, “It was a very difficult trading

Top key theme: robust disclosures of sovereign debt exposure reveal significant reductions in third quarter 2011reveal significant reductions in third quarter 2011

Banks from all regions disclosed eurozone exposure. Management at 29 banks detailed their exposure to the peripheral eurozone countries — Greece Ireland Italy

• HSBC’s interim management statement said, “At 30 September 2011, our exposure to the sovereign and agency debt of Greece Ireland Italy Portugal and Spain wasdetailed their exposure to the peripheral eurozone countries Greece, Ireland, Italy,

Portugal and Spain — and several also provided information on their exposure to non-peripheral countries such as France and Belgium. Banks noticeably reduced their exposure to the peripheral countries during third quarter 2011 as the crisis persisted with no credible resolution.

• Bruce Thompson, CFO, Bank of America: “As you think about where we are, our reported exposure for the quarter was roughly $14.6 billion … and that was down

the sovereign and agency debt of Greece, Ireland, Italy, Portugal and Spain was US$5.5bn, down from US$8.2bn at 30 June 2011.”

• Bruce van Saun, CFO, RBS: “It’s worth noting that year-to-date, our direct sovereign bond exposure to the periphery Eurozone countries has decreased by £3.2 billion, or 75%, to £800 million.”

Management at some banks tried to strike a balance between monitoring risk, holding appropriate levels of exposure and maintaining their commitment to eurozone-basedroughly $1.5 billion quarter over quarter.”

• Ruth Porat, CFO, Morgan Stanley: “We have been focused on carefully managing risk in both peripheral and core Europe for the last two years … To be clear, for the periphery, our net exposure is $2.1 billion and excluding the benefit of hedges is $5.7 billion.”

• Tom Woods, Chief Risk Officer, CIBC: “We’ve got no direct sovereign exposure to the

appropriate levels of exposure and maintaining their commitment to eurozone based clients.

• Jamie Dimon, CEO, JPMorgan Chase: “We've been doing business with some of these countries for 100 years. With a lot of these clients, you can't say you're going to be their bank one day and the second things get tough go away … . So we think we're earning some points; we're helping some companies. We’re helping a few of the banks and we hope the countries appreciate it.”

peripherals, number one. Number two, we’ve got about $40 million direct exposure to investment grade banks in three of the peripherals. We’ve got nothing in Greece or Portugal. So, $40 million in Italy, Spain and Ireland … . So, I think if you compare that disclosure to other global banks including the Canadians, we’re definitely at the low-end of that. And as it relates to non-peripheral European banks, our exposure is very manageable there.”

• Chris Lucas Group Finance Director Barclays: “Our sovereign exposure at the end of

• Vikram Pandit, CEO, Citigroup: “We continue to carefully manage these exposures while servicing our important clients in these countries.”

Further write-downs of Greek debt were reported. A number of European banks took additional haircuts on their holdings of Greek government debt following the European Commission meeting on 26 October 2011.

• Philippe Bordenave CFO BNP Paribas: “We have raised the total impairment of our• Chris Lucas, Group Finance Director, Barclays: Our sovereign exposure at the end of September was 31% lower than the half year at £8 billion, £5.9 billion of these assets were held as available for sale to hedge interest rate rising – the hedge interest rate risk relating to our local business is mainly in Spain, the remainder is part of our market making activities.”

• Philippe Bordenave, CFO, BNP Paribas: “We cut our global sovereign exposure by 23% in the 4 months to October, incurring losses of €362 million in the third quarter

• Philippe Bordenave, CFO, BNP Paribas: We have raised the total impairment of our Greek exposure to 60%, both on our banking books and on the insurance activities books, generating an impact on quarterly results of €2.3 billion. Our residual exposure to Greece is thus reduced to €1.6 billion now.”

• Eric Strutz, CFO, Commerzbank: “Given the further escalation of the European debt crisis and in the light of the result of the EU summit in October, we have decided to writedown our Greek Sovereign bonds exposure further. We are marking down our

and an additional €450 million in October … . Our residual exposure to Greece is thus reduced to €1.6 billion now.”

• Brady Dougan, CEO, Credit Suisse: “We also have a high-quality, clean balance sheet with minimal exposure to the peripheral European countries. Our total net sovereign exposure to these countries as of the end of the quarter was €900 million.”

• Stefan Krause, CFO, Deutsche Bank: “Our net sovereign exposure was €4.4 billion at

Greek sovereign bond portfolio by roughly €800 million in Q3 after €760 million in Q2.”

• Jan Hommen, CEO, ING: “We impaired Greek bonds for a pre-tax charge of €467 million. That included new bonds, and it included bonds that we already had impaired, that were re-impaired. And that was a result of the outcome of the EC meeting on October 26. We have now impaired, as of September 30, our Greek bond exposure to market value, which represents roughly a 60% write-down of our nominal position.


the 30th of September, down about 2/3 since September of 2010. The third quarter net debt exposures also generally came down, with the exception of Italy where we saw higher exposures resulting from our flow derivative and market-making activities as we continue to make markets in this area.”

• Bruce van Saun, CFO, RBS: “The further decline in the value of Greek sovereign bonds triggered an additional £142 million of write-downs on our Greek bond AFS portfolio. This portfolio has now been marked at £0.37.”

Featured theme: capital issuesEBA recapitalization plan adds to complexity of capital requirementsEBA recapitalization plan adds to complexity of capital requirements

Current strong capital levels are good but requirements continue to change. Banks have been aware of the Basel III capital requirements for several quarters now and many

ample flexibility to exercise other measures if required, but our current math shows that we will match the most likely number that we hear which will be the 9% ”been aware of the Basel III capital requirements for several quarters now, and many

have taken specific measures to ensure early compliance. In third quarter 2011, however, there was a renewed focus on capital as the eurozone crisis continued and the EBA set a recapitalization plan for banks. The intent of the plan was to restore confidence and require banks to shore up their tier 1 capital as the sovereign debt component of capital continues to lose value.

• As described by Banco Santander CEO Alfredo Sáenz Abad, the EBA plan is as

that we will match the most likely number that we hear, which will be the 9%.• Frédéric Oudéa, CEO, Societe Generale: “In view of higher levels of uncertainty

and recent decisions by European authorities concerning the need for banks to hold additional capital buffers for sovereign risks, Société Générale’s priority lies with capital enhancement. We want to be in line with this objective as quickly as possible. The board proposes not to distribute a dividend for 2011 to comply with that, incorporating the dividend provision for 2011 into its capital. The group Core Tier 1 ratio increases at 9 5% at the end of September 2011 and the EBA capitalfollows, “Minimum core capital requirement will be 9% by June 2012 within the

framework established by the EBA. This framework would introduce Basel 2.5 and the application of some criteria anticipating Basel III, such as the mark-to-market of sovereign debt, reduction of intangibles, and impacts on financial stakes and securitization.” Not surprisingly, the EBA plan, which has identified a capital shortfall for European banks of €106 billion, has been subject to criticism. Intesa Sanpaolo CEO Corrado Passera said, “All the crises in the past, but also the experiences in

Tier 1 ratio increases at 9.5% at the end of September 2011 and the EBA capital enhancement comes – and it’s an estimate – comes now to €2.1 billion, an amount which the group will cover for internal means over the next three quarters.”

• David Mathers, CFO, Credit Suisse: “Although the Swiss banks are not subject to the recently announced EBA stress test, we are already above the 9% requirement as laid out in the draft rules that have been published. And I note that these rules specifically include contingent capital, and hence, the buffer capital note issues that we issued in February would qualify in these calculations ”other industries, show very clearly that what makes an industry or a company weak in

the short-term is always the liquidity position rather than the capital position ... I am not saying that capital ratios are not important. What I strongly suggest is that capital ratios have to be looked at together with the other elements of sustainable profitability, that is liquidity, that is risk profile, that is operating performance. Concentrating too much, emphasizing too much on capital ratios can really create troubles to the real economy without preventing the economy from falling into another crisis.”

note issues that we issued in February would qualify in these calculations.

European banks that held their third quarter 2011 earnings call after the 26 October announcement of the EBA plan provided details on how they would comply. Glide paths to compliance included risk-weighted asset (RWA) reduction and organic capital generation. Several banks specifically highlighted their ability to meet the EBA requirement without having to raise capital. Other, more severe plans for compliance include Societe Generale’s plan to cancel its 2011 dividend and Commerzbank’s announcement that it would temporarily cease all new business that is not related toannouncement that it would temporarily cease all new business that is not related to Germany and Poland. • Banco Santander, BBVA, ING and Intesa Sanpaolo highlighted their ability to comply

with the EBA plan without having to raise additional capital. Deutsche Bank CFO Stefan Krause noted, “Even not utilizing the entire toolbox that we have, we still have


Featured theme: capital issues Guidance on Basel III capital compliance strengthens continuedGuidance on Basel III capital compliance strengthens continued

Outside of Europe, banks are confident in their ability to meet the Basel III capital requirements As noted banks have been preparing for the new capital regime under

Banks headquartered outside of North America are also focused on Basel III compliancerequirements. As noted, banks have been preparing for the new capital regime under

Basel III for several quarters now. While management support for higher capital levels and early compliance is not universal, most banks that discussed Basel III said they are comfortably positioned to meet it. JPMorgan Chase’s Jamie Dimon pushed back the hardest on the idea of early compliance and acknowledged that he had changed his tone on this issue, “I think the fact is we don't know what the rest of the world is going to do. It's a little confusing. And I think the regulators need to give us – not just JPMorgan, but the banking industry – a little more guidance Do they really mean you can leg into

compliance.

• Angel Cano, COO, Grupo BBVA: “Basically, I don’t think it makes very much sense talking about this ratio at this moment in time because, as you know, Basel III comes online in 2013 and is going to be phased in until 2019. So talking about a ratio in September 2011 with all the impacts of Basel III, something that’s going to come in in a long time in the future, I don’t think it really makes a lot of sense … . But if we took into account all the impacts of Basel III seriously, I think it would be over 7%, which is but the banking industry a little more guidance. Do they really mean you can leg into

this over seven years? Do they really mean they want you do it right away? We can probably do it very quickly if we wanted to. I'm not sure it's the right thing for the system.” Gerald Hassell at BNY Mellon concurred, and noted “At this point we don’t feel a need to accelerate to meet a Basel III ratio that really hasn’t even been determined what it is yet when we have such strong ratios under Basel I.”

• In North America, 12 out of 13 banks discussed Basel III. CIBC, RBC, JPMorgan

the minimum ratio established by Basel III for 2019.”

• Philippe Bordenave, CFO, BNP Paribas: “We have acted in response to Basel III in order to be sure, to be fully compliant as early as the 1st of January 2013, as we have said, meaning that, in order to be sure of the target, we had to reduce the volatility of our sovereign portfolio market valuation and the only way to do that is to reduce the size of the portfolio itself.”

Chase, Wells Fargo, State Street, US Bancorp and Morgan Stanley reported that they were already at the required capital levels under Basel III rules. Citigroup, Goldman Sachs, Bank of America and TD said they are confident that they will meet Basel III rules by the end of 2012.

• TD CEO Ed Clark said: “What’s going on in Europe and what’s going on in the United States…both are troubling things, and so we look at this and say why don’t we get to that 7% target as fast as we can ”

• Federico Ghizzoni, CEO, UniCredit: “We are already in the Basel III environment. We will be over 9% already 2012 and we will reach and will be above 10% at the end of the planning 2015.”

• Philip Coffey, CFO, Westpac: “Our end of year common equity ratio at 8.9% converts to 7.37% under our APRA Basel III metrics. And that compares to a minimum required at the beginning of 2013 of 4.5% or 7% after including the conservation buffer.”

that 7% target as fast as we can.

• Citigroup CEO Vikram Pandit pointed out, “The Basel III set of rules and calibrations are not without doubt. They’re not clear yet. But taking all of that into account, we’re still of the point of view we’re going hit our Basel III numbers by the end of next year.”

• Brian Moynihan, CEO, Bank of America: “Last quarter, we gave guidance that we had a target of reduction of risk-weighted assets on Basel III of $200 billion to $250 billion. As we’ve looked and got through the quarter we’ve now identified all of the assets that

• Takumi Shibata, COO, Nomura: “We are currently already compliant with Basel III even without assuming the future earnings that we will generate. So we are not in a situation where we have to reduce our risk-weighted assets.”

As we ve looked and got through the quarter, we ve now identified all of the assets that we need to move or mitigate to accomplish that. And during the quarter we’ve worked through more than half of those reductions during the third quarter, and as a result of that we continue to be very comfortable with our phased in – or fully phased in guidance of 6.75% to 7% at the end of 2012.”



Appendix


Summary of key banking sector themes: third quarter 2011 earnings seasonearnings season

Top initiatives and issues (arranged from most common to least common) AXP ITU STD BAC BK BCS BBVA BNP CIBC C CBK CA CS DB GS HSBC ING INT

Concerns related to the macro-environment 36

Capital issues 36Capital issues 36

Expense management 36

Drivers of earnings performance (focus on revenue trends) 36

I t i dit lit 30Improvements in credit quality measures 30

Funding strategy and liquidity management 29

Opportunities related to acquisitions, joint ventures and divestitures 27

Trends in lending 27

(continued on next page)


Impact of regulatory reform 26

Globalization; presence outside home country 21

LegendAXP – American Express ITU – Banco Itau STD – Banco Santander BAC – Bank of America BK – BNY Mellon BCS – Barclays BBVA – Grupo BBVA BNP – BNP ParibasCIBC – Canadian Imperial Bank of Commerce C – Citigroup CBK – Commerzbank CA – Credit AgricoleCS – Credit Suisse DB – Deutsche Bank GS – Goldman Sachs HSBC – HSBCING – ING Groep INT – Intesa Sanpaolo

( p g )


ING ING Groep INT Intesa Sanpaolo

Summary of key banking sector themes: third quarter 2011 earnings seasonearnings season

Top initiatives and issues (arranged from most common to least common) JPM LLD MAC MIZ MS NAB NOM RBC RBS SG STAN STT TD UBS UCG USB WFC WBC

Concerns related to the macro-environment 36

C it l i 36Capital issues 36

Expense management 36

Drivers of earnings performance (focus on revenue trends) 36

Improvements in credit quality measures 30

Funding strategy and liquidity management 29

Opportunities related to acquisitions, joint ventures and divestitures 27


Impact of regulatory reform 26

Globalization; presence outside home country 21

LegendJPM – JPMorgan Chase LLD – Lloyds Banking Group MAC – Macquarie Group MIZ – Mizuho Financial GroupMS – Morgan Stanley NAB – National Australia Bank NOM – Nomura RBC – Royal Bank of CanadaRBS – Royal Bank of Scotland SG – Societe Generale STAN – Standard Chartered STT – State StreetTD – Toronto Dominion UBS – UBS AG UCG – UniCredit Group USB – US Bancorp


WFC – Wells Fargo WBC – Westpac Banking Corporation

Select KPIsT t l

Market value ($m)

Assets ($m) ROA ROE

Total shareholder's

equity($m)

3Q11 revenues ($m) Tier 1 ratio

American Express 58,016.03 148,693.00 3.24 28.04 18,100.00 7,322.00 12.30 Banco Itau 75,679.03 451,282.85 2.06 23.91 37,855.13 6,517.00 15.50 Banco Santander 63,560.09 1,681,538.36 0.67 10.73 105,276.68 11,041.00 10.74 B k f A i 62 132 90 2 219 628 00 (0 08) (0 78) 230 252 00 25 046 00 11 48Bank of America 62,132.90 2,219,628.00 (0.08) (0.78) 230,252.00 25,046.00 11.48 Bank of New York Mellon 24,725.57 322,187.00 0.97 8.29 34,529.00 3,716.00 14.00 Barclays† 32,311.02 2,397,690.52 0.23 5.87 99,556.73 n/a 11.00 BBVA 38,072.18 785,904.66 0.79 12.44 53,611.24 5,005.00 12.60 BNP Paribas 48,850.82 2,796,484.94 0.45 10.97 125,845.37 9,443.00 11.90 CIBC* 27,900.24 379,584.38 0.78 17.23 17,665.41 2,996.00 14.60 Citigroup 81,922.30 1,935,992.00 0.59 6.66 179,342.00 17,782.00 13.50 Commerzbank 10,759.30 992,725.07 0.09 2.55 33,441.81 1,588.00 11.00 Credit Agricole 15,596.36 2,314,068.97 0.13 4.10 77,447.55 4,618.00 11.00 Credit Suisse 28,055.69 1,173,599.78 0.43 10.51 46,962.96 7,302.00 17.70 Deutsche Bank 34,606.46 3,069,292.01 0.22 10.25 71,415.32 9,214.00 13.80 Goldman Sachs 49,108.23 948,909.00 0.63 7.86 71,563.00 3,587.00 13.80 HSBC 135,803.25 2,715,704.00 0.59 9.77 166,065.00 16,057.00 12.10 ING Groep 27,364.70 1,724,327.30 0.51 13.29 64,917.64 19,645.00 12.22ING Groep 27,364.70 1,724,327.30 0.51 13.29 64,917.64 19,645.00 12.22 Intesa Sanpaolo 20,755.90 936,004.36 0.38 4.40 87,075.14 4,185.00 11.60 JP Morgan Chase 124,252.35 2,289,240.00 0.91 11.28 182,287.00 21,352.00 12.10 Lloyds 29,541.46 1,538,708.47 (0.71) (15.34) 72,433.74 4,269.00 11.90 Macquarie Bank 7,847.41 170,186.57 0.53 7.59 11,460.86 2,008.00 12.10 Mizuho 32,100.54 2,091,918.07 0.25 6.07 84,551.60 6,750.00 11.89 Morgan Stanley 30,703.52 794,939.00 0.72 8.69 70,094.00 9,865.00 15.10 National A stralia Bank 54 726 12 734 333 87 0 73 13 53 39 163 14 n/a 9 70National Australia Bank 54,726.12 734,333.87 0.73 13.53 39,163.14 n/a 9.70 Nomura 12,024.27 479,061.90 0.00 0.03 30,017.81 3,647.00 n/aRoyal Bank of Canada* 63,796.16 764,834.59 0.84 14.50 44,106.99 5,688.00 13.20 Royal Bank of Scotland 36,424.91 2,513,842.55 (0.01) (0.30) 123,330.47 10,767.00 13.80 Societe Generale 17,838.47 1,676,864.12 0.30 7.00 70,732.20 7,143.00 11.60 Standard Chartered Bank 50,773.54 567,706.00 0.92 13.51 41,561.00 n/a n/aState Street 20,169.99 208,795.00 0.85 8.72 19,651.00 2,427.00 18.00 Toronto Dominion* 63,699.46 695,992.46 0.86 12.38 46,824.75 5,206.00 12.90 UBS 43,274.53 1,599,607.52 0.40 10.57 62,216.69 7,088.00 18.40 UniCredit 18,348.51 1,333,970.13 0.25 3.51 98,907.35 4,391.00 12.80 US Bancorp 48,702.47 330,141.00 1.42 13.77 34,210.00 4,218.00 10.80 Wells Fargo 133,367.47 1,304,945.00 1.23 11.74 139,244.00 17,817.00 9.35 Westpac 64,526.83 652,957.28 1.10 16.82 42,679.14 4,311.00 9.70


Source: Capital IQ, accessed 15 November 2011.Market cap as of 15 November 2011Assets, ROA, ROE and shareholder’s equity obtained on an LTM (last 12 month) basis as of 30 September 2011.Tier 1 ratio as of 30 September 2011, except for the following: *CIBC, RBC and TD tier 1 Ratio as of 31 July 2011; Barclays reported core capital ratio.

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Global banking and capital markets sectorFILE/… · Global banking and capital markets sector Key themes from thirdquarter 2011 earnings calls 17 November 2011. Contents ... including