Global Banking & Capital Markets - EY · PDF fileGlobal Banking & Capital Markets 3 Scope, limitations and methodology of the review The purpose of this review is to examine the key

Global Banking & Capital Markets Key themes from 1Q15 earnings calls

May 2015

Global Banking & Capital Markets 2

Content Scope, limitations and methodology of the review 3

Top 10 key themes: 1Q15 earnings season 4

Top 10 themes: a quarter-over-quarter comparison 5

Key themes overview 6

1. Earnings performance — will strong first quarter performance be repeatable? 6 2. Macro challenges — a stronger US dollar has mixed impacts on banks worldwide 8 3. Expenses — what is driving efficiency gains? 9 4. Capital plans — RWA inflation is likely and it will impact CET1 ratios 11 5. Regulatory and compliance — contributions to resolution funds add to compliance burden 12 6. Lending trends — positive trends solidify, although growth rates remain low 13 7. Cross-border — benefits from global strategies emerge, while reshaping continues 14 8. Credit quality — banks play down concerns over oil and gas exposures 15 9. Acquisition and divestments — high-profile business exits help mitigate regulatory impacts 16 10. Innovation — banks continue to invest in digital capabilities 17

Appendix 18

Key themes addressed, by bank 18 Select KPIs 20


Scope, limitations and methodology of the review The purpose of this review is to examine the key themes discussed among 35 global institutions operating within the banking and capital markets sector during the 1Q15 earnings reporting season.

This review is limited to the examination of the transcripts and associated presentation materials of the earnings conference calls held from 25 February 2015 to 12 May 2015.

The period covered is 1Q15, which ended 31 March 2015. Exceptions include the following:

• Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada (RBC) and Toronto-Dominion Bank, for which the 1Q15 period ended 31 January 2015

• Nomura Holdings, Inc., for which the covered period was 4Q15

• Macquarie Group Limited, for which the covered period was 2H15

• Australia and New Zealand Banking Group Limited (ANZ) and National Australia Bank (NAB), for which the covered period was 1H15

Banks were selected based on their size and the availability of earnings conference call transcripts. Every effort was made to include a global sample of banks in the review. Exceptions include the following:

• Mitsubishi UFJ Financial Group, Inc., Mizuho Financial Group, Inc. and Sumitomo Mitsui Financial Group, Inc. were excluded from the analysis due to the lack of transcript availability.

• Bank of China Limited and Industrial and Commercial Bank of China Ltd, were excluded due to the timing of their 1Q15 results reporting.


Top 10 key themes: 1Q15 earnings season “We have reached most of our goals. But I think it’s too early to be happy with this. The first quarter is always the best quarter of the year. Furthermore, we have to absorb a significant amount of additional regulatory costs. … And, in addition to that, we have to work in an environment with unprecedented low interest rates. There is also the ongoing regulatory uncertainty about required capital levels, risk weights and leverage ratios.”

Ralph Hamers, CEO, ING Groep

The 1Q15 earnings season marked a strong start to the year for banks across Europe, Asia-Pacific and the Americas.

Most of the banks included in this analysis reported higher earnings, revenues and ROEs when compared to 1Q14. Management at a number of banks credited improved performance to meaningful strategic execution and strong underlying business trends.

• Gerald Hassell, CEO, BNY Mellon: “Simply put, we’re executing against our strategic priorities, and it’s showing up in our numbers.”

• Sergio Ermotti, Group CEO, UBS: “The results underline that our business model works, and our approach to thinking long term and acting early is paying off.”

However, a number of external factors drove positive performance during the quarter and significant questions about the sustainability of earnings cannot be ignored.

• How long will the supportive macro backdrop continue? The overarching theme of the quarter was that the influence of Central Banks’ decisions about interest rates and diverging monetary policies around the world contributed to favorable market conditions that helped drive banks’ sales and trading revenues significantly higher.

• When will interest rates normalize? The low interest rate environment continues to be a drag on stable sources of revenue, particularly for retail-oriented banks around the world.

• Have banks done enough to cut costs? Many banks reported positive operating leverage, but this was driven by potentially non-repeatable revenue growth, as opposed to meaningful expense reductions.

• Are conduct issues really resolved? Lower legal costs for a number of global banks provided a meaningful boost to earnings. However, this was a one-time benefit, and it is likely that legal-related impacts may recur.

• Do banks have sufficient capital to withstand evolving regulations? Looming global rules on risk-weighted assets may threaten banks’ capital ratios and revenue potential.

Reported ROE (%), 1Q15

–4.1

3,1 5,4 6,9 7,6 7,6 7,9 8,6 8,8 9,0 9,4 9,6 9,9 10,0 11,0 11,5 12,2 13,2 14,0 14,1 14,1 14,6 14,7 14,7 15,4 16,0

19,3 19,9

24,2

29,0

1Q15 1Q14

Source: Company reports; Crédit Agricole, Intesa Sanpaolo, Standard Chartered, UBS and UniCredit did not disclose ROE for 1Q15; Data for Lloyds is Return on Required Equity; ROE at RBS is for Core Bank. ROE for ANZ, MAC and NAB is for the half year.

Note: Please see Appendix for key to company symbols.


Top 10 themes: a quarter-over-quarter comparison 1Q15 4Q14

Rank* Earnings season top 10 themes (arranged from most common to least common) — 35 banks

Rank* Earnings season top 10 themes (arranged from most common to least common) — 32 banks

1 Quarterly earnings performance 1 Quarterly earnings performance

2 Macro challenges 2 Macro challenges

3 Expense trends 3 Expense trends

4 Capital strength and plans 4 Capital strength and plans

5 Regulation and compliance 5 Regulation and compliance

6 Lending trends 6 Cross-border and location strategies

7 Cross-border and location strategies 7 Acquisitions and divestments

8 Credit quality trends 8 Credit quality trends

9 Acquisitions and divestments 9 Lending trends

10 Innovation 10 Innovation

*Note: Please see Appendix for ranking of themes.


Key themes overview 1. Earnings performance — will strong first quarter performance be repeatable? “While the first quarter is typically the strongest of the year, our results this quarter are exceptionally good.”

Sergio Ermotti, Group CEO, UBS Most banks reported higher first quarter profits. In 1Q15, ROE increased at 21 banks when compared with 1Q14 levels, and for a number of banks, it was significantly higher. BBVA, BNP Paribas, Commerzbank, Goldman Sachs, ING, Lloyds, Morgan Stanley and Société Générale all reported ROE increases of three percentage points or more over 1Q14 levels. In addition, 16 banks* reported ROE of 11% or more, double the number that managed to break this threshold for full year 2014. Notably, only three — HSBC, ING and Lloyds — are headquartered in Europe.

Earnings showed similar improvement, with gains at 22 of the 31 banks** that disclose quarterly net income data. Only nine banks were less profitable than they were in the first quarter of 2014 and only Royal Bank of Scotland reported a net loss. Management at many banks highlighted strong results:

• Carlo Messina, CEO, Intesa Sanpaolo: “Net income is the highest since Q1 2009. … In three months, we have delivered almost the same net income as [we did for] all of 2014.”

• Nomura’s full year net income and revenues were both “at the highest level since the year ended March 2006.”

• Ruth Porat, CFO, Morgan Stanley: “It was the best quarter in a long time."

• Patrick Upfold, CFO, Macquarie Group: “You can see it’s a very strong result. Our [full year] net operating income was almost AU$9.3 billion. That’s the highest level of net operating income that we’ve had in our history.”

However, the sustainability of earnings performance remains unproven. For many of the 14 banks that either reversed net losses or reported earnings growth of 20% or more from 1Q14, strong results were driven by factors that are either unlikely to recur or may be unsustainable.

• Bank of America and Citigroup benefited from significantly reduced legal charges in the current quarter.

• Société Générale’s performance was helped by the absence of the significant impairment charge it took on its Russian operations in 1Q14.

• Earnings growth at ING and BBVA was supported by capital gains from sales of stakes in Voya and China Citic Bank, respectively.

• UBS reported a substantial gain on real estate, which, combined with improved trading results, contributed to higher earnings.

• Lower provisions and positive exchange rate movements drove earnings up at Banco Santander.

• And, at Goldman Sachs and Morgan Stanley, earnings growth of 40% and 55%, respectively, was driven primarily by higher trading revenues. Goldman’s CFO, Harvey Schwartz, called out the question of sustainability when he observed: “The environment was good everywhere. That doesn’t mean it can’t get better, and it doesn’t mean it can’t decline, but it was good everywhere this quarter.”

* ROE not disclosed at Crédit Agricole, Intesa Sanpaolo, Standard Chartered, UBS or UniCredit; ROE is for the half year at ANZ, Macquarie and NAB.

**Quarterly net income not disclosed at ANZ, Macquarie, NAB and Standard Chartered.

Percentage change in trading revenues from 1Q14

Source: Company reports; RBS does not report equities trading revenues

–41%

–11%

–9%

0%

5%

5%

5%

9%

10%

13%

14%

16%

31%

71%

–1%

–2%

5%

22%

31%

17%

31%

46%

15%

30%

31%

23%

15%

RBS

C

BAC

BARC

JPM

SG

HSBC

DB

GS

CS

NOM

MS

BNP

UBS

Equities FICC


Percentage change in net income and revenues from 1Q14*

Source: Company reports; * Banks not included for the following reasons: net loss in 1Q15 (Royal Bank of Scotland); net loss in 1Q14 (Bank of American and ING); ANZ, Macquarie, NAB and Standard Chartered do not disclose quarterly net income.

DB

BARC

UCG

CIBC

LLD

CS

CA WFC

TD

USB

HSBC

AXP

JPM

STT

RBC

BNP

C

BK

ITAU

NOM

SANT

GS

MS

CBK

UBS

INT

BBVA SG

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-150% -50% 50% 150% 250% 350% 450%

Rev

enue

Net income


2. Macro challenges — a stronger US dollar has mixed impacts on banks worldwide “There are a whole range of different currencies that impact us. The US dollar is obviously very, very

significant.”

Patrick Upfold, CFO, Macquarie Group Complex macro environment remains in place. The macro factors that framed the last months of 2014 — diverging Central Bank policies, falling oil prices and the strengthening US dollar — continued to have a strong influence on the operating environment in the first three months of 2015.

• A wide range of Central Bank actions — including the Bank of Canada’s unexpected rate cut, the Swiss National Bank’s move to de-peg the Swiss Franc from the euro, the launch of additional quantitative easing in Europe and ongoing speculation about when the US Federal Reserve will raise interest rates — provided a tailwind for banks’ capital markets businesses in 1Q15 as varied approaches to monetary policy worldwide supported a positive trading backdrop.

• The drop in oil prices remained a key concern during 1Q15, prompting banks to detail their credit exposure to the oil and gas industry. Many have conducted stress tests of their energy portfolios and offered assurances that they have not yet seen — and do not expect — material deterioration.

• Finally, banks with global operations detailed a wide range of positive and negative impacts on revenues, expenses and capital from currency translation, particularly with respect to the strengthening of the US dollar.

Mixed impact of currency translation

Benefits • Stefan Krause, CFO, Deutsche Bank: “Our Common Equity Tier 1 capital increased by €1.8b to

€47.8b, driven by the positive impact of the strengthening US dollar.”

• Lars Machenil, CFO, BNP Paribas: “Given the strong US dollar appreciation [during] the quarter, the pretax income [of US business unit BancWest] increased by 23% in euro terms.”

• José Antonio Álvarez, CEO, Banco Santander: “This quarter we’ve had a significantly positive, significant impact from exchange rates on the units’ result in euros. … The attributable profit was €1.7b, up 32% year on year and 18% quarter on quarter. The exchange rate contributed about 10 percentage points to year on year growth and 6 percentage points to quarter on quarter.”

• David McKay, CEO, Royal Bank of Canada: “This quarter, we benefited from translating our strong US earnings into Canadian dollars.”

• Brady Dougan, CEO, Credit Suisse: “The net margin in wealth management clients increased to 30 basis points with lower expenses and higher net interest income. Compared to the previous quarter, the net margin benefited from a decrease in our asset base, which was largely due to foreign exchange movements.”

Negative impacts • Jeffrey Campbell, CFO, American Express: “As the US dollar continued to strengthen, the magnitude

of the FX impact increased and depressed our growth by nearly four percentage points.”

• Philippe Heim, CFO, Société Générale: “We have seen a slight decline [in our leverage ratio] since last quarter, which can be explained very simply by the passive inflation of the balance sheet with the increase of the US dollar.”

• Iain Mackay, Group Finance Director, HSBC: “On a reported basis, loans and advances actually decreased by US$18b during 1Q 2015. This reflected adverse foreign exchange movements of US$35b; primarily sterling and the euro weakening against the US dollar.”

• Shigesuke Kashiwagi, CFO, Nomura: “Fourth quarter expenses were ¥329.6 billion, up 7% quarter on quarter due partly to yen depreciation.”

Appreciation of US dollar versus other currencies (rebased)

Source: Bank of England and EY analysis

90

95

100

105

110

115

120

125

1Q14 2Q14 3Q14 4Q14 1Q15

£ ¥ € C$ AU$


3. Expenses — what is driving efficiency gains? “We’re always looking for ways to be as efficient as we can and to make the most of every dollar we spend. At the same time, there are big demands in information security and compliance and risk management.”

John Shrewsberry, CFO, Wells Fargo Revenues grow faster than expenses. When compared to 1Q14, revenues grew faster than expenses at more than two-thirds of the banks included in this analysis. At first glance, this appears to indicate that banks are meeting an often-stated objective of “managing the trajectories of our expense growth against revenue growth to continue to target operating leverage,” as described by Jennifer Tory at Royal Bank of Canada. However, it is not entirely clear whether progress on this front is being driven by sustainable cost management or unsustainable revenue sources, particularly considering the following:

• Over the same time period, operating expenses increased at 25 of 32 banks.

• Of the seven banks that reduced expenses, Bank of America and Citigroup were the only ones to report double-digit declines (of 29% and 10%, respectively). But, at both, the primary driver of improved cost performance was lower legal charges (down 93% at Bank of America and 59% at Citigroup).

• Much of the revenue growth seen in 1Q15 can be attributed to positive exchange rate impacts and the beneficial trading backdrop, neither of which are reliable drivers of future revenues.

During the 1Q15 earnings season, management acknowledged that now is not the time to relax their focus on expenses. At the same time, they defended existing cost management strategies and called out compliance costs and foreign exchange headwinds as barriers to more meaningful expense reductions.

• Richard Davis, CEO, U.S. Bancorp: "I am not going to do a reduction in force; we’ve hung on here for eight years [of recession] and done quite well. … We always seek positive operating leverage, and our plan for 2015 is for the year to be slightly positive. I will say, however, that hinged on the original expectation that interest rates would start moving up at mid-year, and based on our stress test and the prevailing view of economists a couple of months ago, if that doesn’t happen in June then it’s going to put some stress on our ability to be positively operating leveraged. … In the meantime, we will deliver with the same people working as hard as they do to deliver a little bit more each time."

• Stefan Krause, CFO, Deutsche Bank: “It’s not like we are unhappy with what we achieved [on Strategy 2015+]. Regretfully, our reported cost base obviously didn’t show what the market was expecting it to show, mainly based on cost developments that were unforeseen in 2012. For example, the implementation of the fixed salary component in CRD4 is one of the larger drivers of the difference, and then additional implementation in terms of systems, IT deployed controls, etc. around our regulatory remediation and our implementation of new regulatory requirements. I think you saw that in the industry. I think we’re not singled out as a bank that had to face these additional costs."

• Tom Naratil, CFO, UBS: “We’ve got a very large outsourcing, nearshoring and offshoring initiative. As we increase our headcount in our business solution centers in Nashville, Tennessee, in Krakow, in Shanghai and in Pune, we’re reducing our overall cost of operating, but our headcount numbers may, in fact, be flat. And we’re not targeting headcount, we target costs; costs are the output that we’re looking for.”

• Tushar Morzaria, Group Finance Director, Barclays: “We’re one of the few banks that have been very specific around our cost objectives in terms of giving an absolute cost to measure, which we feel is the right thing to do, [because of] the clarity that provides. … But I do want to point out that if [the pound] continues to weaken, that’s going to put a lot of pressure on us.”

Efficiency ratios, 1Q15

43,2 44,3 44,9 47,0 47,7 47,9 49,3 51,7 54,3 54,7 55,0 55,7 58,8 59,5 62,0 63,5

69,2 69,7 70,0 70,6 71,0 73,3 76,8

83,6 95,0

1Q15 1Q14

Source: Company reports * Not disclosed at American Express, BNY Mellon, Credit Agricole, Goldman Sachs, Macquarie Group, Morgan Stanley, National Australia Bank, Nomura, Standard Chartered or State Street; ANZ data is for the half-year ended 31 March.


Percentage change in expenses and revenues from 1Q14

–29%

–10%

–7%

–4%

–1%

–0.4%

–0.1%

0,2%

1%

1%

1%

2%

2%

3%

3%

5%

5%

5%

5%

6%

6%

6%

6%

9%

9%

9%

11%

11%

14%

15%

20%

34%

–6%

–2%

–3%

–3%

6%

3%

0%

3%

–4%

16%

–3%

1%

4%

14%

5%

22%

3%

2%

14%

14%

12%

3%

10%

12%

21%

11%

13%

–5%

23%

12%

–14%

24%

BAC

C

BARC

AXP

BK

LLD

HSBC

UCG

STAN*

INT

CS*

TD*

JPM

ING

STT

UBS

WFC*

USB*

RBC

GS

BBVA

CA*

MS

SG

ITAU

NOM

SANT

CIBC*

CBK

BNP*

RBS*

DB*

Revenues Expenses

Source: Company reports; ANZ, MAC and NAB do not disclose quarterly expenses and revenues. *Expense growth exceeded revenue growth.


4. Capital plans — RWA inflation is likely and it will impact CET1 ratios “Our Common Equity Tier 1 ratio was 9.6%, down 30 basis points from the prior quarter, as strong internal capital generation was more than offset by higher risk-weighted assets, reflecting FX and business growth mainly in Capital Markets.”

Janice Fukakusa, CFO, Royal Bank of Canada Capital strength remains intact, but banks brace for RWA inflation. In 1Q15, 10 banks* reported that higher risk-weighted assets (RWAs) drove small declines in their Common Equity Tier 1 (CET1) ratios from 31 December 2014. RWA growth at these banks was driven primarily by higher volumes, the impact of currency translation or increased operational RWAs, and the banks easily maintained CET1 ratios in excess of regulatory requirements. However, concerns about the impact of RWA inflation on capital ratios have been mounting since December 2014, when the Basel Committee released consultations on Revisions to the Standardised Approach for credit risk RWA and the Fundamental Review of the Trading Book. During the 1Q15 earnings season, management at banks in Europe and Australia acknowledged that RWAs are likely to grow as a result of regulatory intervention.

• David Mathers, CFO, Credit Suisse: “Going forward, we continue to expect further increase in RWA due to anticipated regulatory and related methodology changes in both the investment bank and the private banking and wealth management divisions. And this will limit reductions in Group RWA even as we continue to wind down capital positions in our non-strategic units and further reduce risk elsewhere.”

• Tushar Morzaria, Group Finance Director, Barclays: “We do expect RWA inflation. I think that on the review of the trading book, which is a little bit of an unknown still, we may get clarity on the specifics towards the end of this year with implementation probably further out still. So it’s hard to be definitive on what to expect there, but we certainly wouldn’t be surprised that there is some RWA inflation.”

• Stefan Krause, CFO, Deutsche Bank: “In our strategic thinking, we [have planned for] some significant additional RWA increases to come from regulatory trends in terms of RWA harmonization and things like that.”

• Craig Drummond, Group Executive Finance & Strategy, National Australia Bank: “In relation to capital, we’ve seen the Basel Committee paper [on credit risk RWA] that talked about 25% to 30% mortgage risk weights. … We’ve also looked at what’s likely to come down the pike, in areas like op risk, and the fundamental review of the trading book and in a range of other areas. … We think, looking out for the next couple of years that there are still quite significant capital headwinds.”

In the US, banks did not provide material comments around potential RWA inflation. Instead, they talked about capital plans following the 11 March 2015 release of the results of the Federal Reserve’s 2015 Comprehensive Capital Analysis and Review (CCAR) exercise. Management appeared satisfied with the outcome of the CCAR, and dividend increases were announced at 8 of the 10 US banks covered in this report. At BNY Mellon, CEO Gerald Hassell said, “The results of the 2015 CCAR demonstrated that under the severely adverse scenario our projected minimum Tier 1 common ratio and our Common Equity Tier 1 (CET1) ratio were the most resilient of the 14 advanced approach bank holding companies. So, we are well-positioned for all stress scenarios and feel confident that we can continue to execute on our capital plans going forward.”

* CET1 ratios fell at BNY Mellon, Crédit Agricole, CIBC, Credit Suisse, Deutsche Bank, Intesa Sanpaolo, Banco Itaú, Morgan Stanley, Royal Bank of Canada and State Street.

Common Equity Tier 1 (CET1) ratios, 1Q15

9,1 9,5 9,5 9,6 9,6 9,7 10,0 10,1 10,1 10,3 10,3 10,5 10,6 10,6 10,8 10,8 11,0 11,1 11,2 11,5 11,6 11,6 11,6 11,8 12,1 12,4 13,0 13,2 13,4 13,7 13,8

1Q15 4Q14

Source: Company reports; Quarterly CET1 ratios not availble for ANZ, Macquarie, NAB or Standard Chartered


5. Regulatory and compliance — contributions to resolution funds add to compliance burden “The bank levy has gone up, [and] has actually been going up for a number of years, so it’s just what we’re

used to, unfortunately. And every time it goes up, we assess what business continues to be appropriate and profitable and sensible for us to be doing and adjust accordingly.”

Tushar Morzaria, Group Finance Director, Barclays Banks in Europe disclose contributions to resolution funds. In the post-crisis years, one of the ways regulators in Europe have approached the problem of how to resolve banks without using taxpayer funds has been to establish bank levies and resolution funds. One of the most prominent examples of this tactic is the UK bank levy, which has been in place since 2011. Originally set at 0.05% of total assets, Chancellor George Osborne recently announced that the levy will be increased for the ninth time, effective April 2015, to 0.21% of assets. During the 1Q15 earnings season, UK banks reacted to the latest hike in the levy.

• Stuart Gulliver, Group CEO, HSBC: “One of the factors that we will be looking at, in terms of where we headquarter the Company, is the size of the levy; the fact that it is applied on our global balance sheet; the fact that it’s been increased nine times and we [account for] a very big proportion of raising a fixed amount, for reasons that you well understand. So what I’m articulating is, clearly, [the bank levy is] one of the reasons why we started a process to review where the headquarters of the holding company should be.”

• Andy Halford, Group Finance Director, Standard Chartered: “The simple rules are that it’s your global balance sheet that attracts the bank levy if you are domiciled [in the UK]; it’s your UK balance sheet that attracts it if you’re not domiciled there. So a change of domicile doesn’t get one completely out of the bank levy, and therefore, implicit within your question is just how much of the UK balance sheet would continue in-country even if [one did] re-domicile.”

Banks headquartered in Eurozone countries are also required to contribute to country-level resolution funds, which will be replaced by the European Single Resolution Fund in 2015. In 1Q15, banks subject to European banking regulations disclosed the impacts of their contributions.

• Ralph Hamers, CEO, ING: “We [expect] a steep increase [in regulatory costs] this year because of the combination of bank taxes and deposit guarantee schemes (DGS) being introduced in some countries, but also the contribution to the Single Resolution Mechanism. So, we see different [amounts] coming at us. Clearly we hope that this is it because it’s already at a high level. This year it’s around €640 million to €650 million in total, we expect.”

• Lars Machenil, CFO, BNP Paribas: “In 1Q15, we booked the first contribution to the Single Resolution Fund. And this had a net impact of minus €245 million [this quarter]. It is net because it is the contribution to the Single Resolution Fund netted for the reduction of the French systemic tax. So we reminded you that the Single Resolution Fund is ramping up in its cost, whereas the French systemic tax is ramping down.”

• Stephan Engels, CFO, Commerzbank: "The €167 million that we have booked now is basically still an estimate because the final number will probably only be known somewhere in the third quarter this year. We do believe that we have made a very good and prudent estimate, but there are still a number of variables in there, which we will finally only learn once the EU has done their final calculation.”

In the US, comments around regulatory costs were related to ongoing investments in controls.

• Marianne Lake, CFO, JPMorgan Chase: “Expenses increased 3% year on year as we continued to invest in controls. … We’re reaching a peak in control cost in this business and you should expect expenses to stabilize from here.”

• John Gerspach, CFO, Citigroup: “Of the US$2.9 billion of expense saves that we’ve gotten through our efficiency efforts, approximately 50% of those savings are being consumed by additional investments that we’re making in regulatory and compliance activities.”

UK bank levy, 2014 contributions

BARC £462m

HSBC £750m

LLD £238m

RBS £250m

STAN £249m

Resolution fund contributions, 1Q15, €m

Source: Company reports

75 90 98 100 167 175

245

400

500

INT UCG ING BBVA CBK CA BNP SG DB


6. Lending trends — positive trends solidify, although growth rates remain low “In the loan book there is an accelerating pace of growth. One year ago we were not growing. As of December we were growing 5% and March we are growing 7%, so there is an accelerating pace of growth in the loan book.”

José Antonio Álvarez, CEO, Banco Santander European banks report an uptick in net lending in 1Q15. During the 2014 year-end earnings calls, management at banks worldwide appeared to be optimistic about the outlook for loan growth, with European banks pointing to “signals of recovery” and North American banks poised for a robust pick-up in consumer demand. While the latter did not materialize as expected, positive trends appeared to solidify in Europe, leading to generally higher loan balances at the end of 1Q15, when compared to 1Q14. Only seven banks — Bank of America, Barclays, Citigroup, Lloyds, HSBC, Royal Bank of Scotland and UniCredit — reported a decline in overall lending, primarily driven by run-off portfolios. Notably, this marks an improvement from 4Q14, when loan balances were down at 11 banks on a year-over-year basis.

• Brady Dougan, CEO, Credit Suisse: “In our wealth management clients business, we continued to expand our lending program to ultra-high net worth clients. Our volume of lending to this client segment increased by CHF6.3b since the start of 2014, resulting in higher client market share and increased net interest income despite muted growth in the first quarter of 2015.”

• John Gerspach, CFO, Citigroup: “Citigroup end-of-period loans declined 3% year over year to US$621 billion, as growth in Citicorp was more than offset by the continued wind-down of Citi Holdings.”

• Marianne Lake, CFO, JPMorgan Chase: “Our overall loan book grew for the third consecutive quarter with core loan growth of 15% year on year.”

• Bharat Masrani, CEO, Toronto-Dominion: “Our US franchise continues to deliver peer-leading loan growth, and will further benefit from our exposure to a robust US recovery.”

• Lars Machenil, CFO, BNP Paribas: “The Eurozone green shoots we talked about are starting to show up in a gradual recovery in credit demand as can be seen in the 1.6% increase in outstanding loans in our Domestic Markets.”

• Iain Mackay, Group Finance Director, HSBC: “On a constant currency basis, and excluding the effect of red-inked balances, lending increased by US$16 billion since the start of the year, particularly in global banking and markets, commercial banking in Europe and North America and retail banking and wealth management in Hong Kong.”

• Carlo Messina, CEO, Intesa Sanpaolo: “Loan growth is [gaining] momentum, but starting from mid-February. So, in mid-February, [we had] the start of the growth in our loan portfolio. And especially in March, we had a significant increase in volumes coming from export-related companies and also partially from internal demand-related companies. Of the €8 billion of medium-term loans that we granted in the first quarter, €4 billion has been granted in March.”

Percentage change in end-of-period loan balances from 1Q14

–15%

–7% –6% –5% –4% –2% 0%

2% 3% 3% 4% 4% 4% 5% 6% 7% 8% 8% 8% 10% 10% 11% 12% 13% 14% 15% 15% 19%

22% 24%

Source: Company reports; * Comparable loan data from 1Q14 not available for BK, CBK, GS, STAN and STT.


7. Cross-border — benefits from global strategies emerge, while reshaping continues “We remain global, but we must also reduce our footprint and focus on countries that are most essential to our clients and offer the greatest growth potential.”

Anshu Jain, Co-CEO, Deutsche Bank Banks highlight pay-offs from global investment decisions. Over the past few years, banks worldwide have adopted a variety of global footprint strategies, ranging from repositioning, selective investment and, in a few cases, maintaining a broad international presence. While global reshaping remains an ongoing and dynamic process, during the 1Q15 earnings season, management offered proof that the strategic choices made thus far have been sound and are yielding benefits.

Global footprint strategies

Diversified global presence

• Harvey Schwartz, CFO, Goldman Sachs: “We’ve talked for a long time about how [in order] to really be a significant player in [equities], you need to have scale, and you need to be in all the business lines, whether it is prime brokerage, derivatives, [you need to have] the ability to commit capital. You need to have strong electronic capabilities, and you need to be geographically diverse. And this was a quarter where we really saw a strong contribution across the entire business. And I highlight derivatives in Europe because it was a driver, and we hadn’t seen it recently.”

• Ruth Porat, CFO, Morgan Stanley: "In sales and trading, we continue to benefit from the breadth of our strong, global franchise with renewed client interest in European and Asian markets."

• Nicholas Moore, CEO, Macquarie Group: “We have about 14,000 people around the world. Australia is the largest in terms of people. … About 36% of the income is coming out of the Americas.”

Selective investments • Sergio Ermotti, Group CEO, UBS: “UBS is the world’s largest and most geographically diverse

wealth manager. As we said in the past, you can’t realistically build or buy the world’s leading high and ultra-high net worth management franchise. We are also the only large bank with global wealth management at the center of its strategy.

• Brady Dougan, CEO, Credit Suisse: “I’d like to look at our progress on rebalancing resources to growth markets, and particularly to Asia-Pacific. The Asia-Pacific region continues to be a strong driver of growth in both private banking and wealth management and investment banking, contributing 9% and 22%, respectively, to the overall revenues of the two divisions.”

• Mike Smith, CEO, ANZ: “The result reflects a range of strong performances in our core franchises in Australia, in New Zealand and in Asia. These are good outcomes, which highlight how our Super Regional strategy is continuing to deliver.”

Repositioning • David McKay, CEO, Royal Bank of Canada: “Caribbean Banking was profitable this quarter

following two years of restructuring, during which we repositioned the business and took out significant costs.”

• Mike Corbat, CEO, Citigroup: “We made some material changes to management leadership in Mexico, both from an operations and from a control perspective, and feel like we’ve got the right people in place. We did fairly broad sweeping reviews of our control processes in Mexico and we are extremely bullish on the economic prospects of Mexico and Banamex’s position in terms of helping to fuel that growth for the country. We see a lot of opportunity in Mexico.”

Exits • Ross McEwan, Group Chief Executive, Royal Bank of Scotland: “Our destination is a UK-focused

bank capable of delivering attractive, sustainable returns from a lower risk profile. While there will be quarters when one-offs take their toll, every time I talk to you I expect to show you we are another one step closer to that destination.”

• Craig Drummond, Group Executive Finance & Strategy, National Australia Bank: “We are building a business focused on the core Australia and New Zealand markets. The significant effort by the team to exit low-yielding assets will allow the organisation to be more focused on where it has real competitive advantage, and certainly earn better returns. A lot of work remains to be done, but we’re on our way. Encouragingly, we’re beginning to see some of the fruits of that increased focus on the Australian and New Zealand operations.”


8. Credit quality — banks play down concerns over oil and gas exposures “We have a [commercial] cost of risk this quarter of 55 basis points. … This is the best performance for the Group [since 2008].”

Philippe Heim, CEO, Société Générale Credit performance remains solid across regions. Banks in North America, Europe and Australia all highlighted continued strong asset quality performance, supported by non-core asset run-downs, benign economic trends and stricter underwriting standards. Improvements are evident in reduced cost of risk, declining non-performing loan (NPL) inflows and lower levels of NPLs as a percentage of total loans. Management continued to express their belief that it is unlikely that there will be any deterioration across most portfolios. Despite this, analysts expressed concerns about the performance of oil and gas loan portfolios amid the recent decline in oil prices. Management responses indicated that they are closely monitoring their exposure to the sector.

• Mark Chauvin, Chief Risk Officer, Toronto-Dominion: "With respect to the oil and gas sector, a series of stress tests were completed during the quarter to determine the potential impact of sustained low oil prices on the Canadian and wholesale business segments. The tests indicated that sustained low oil prices are not expected to have a significant impact on the bank for the following reasons. First, lending within the oil and gas industry is governed by disciplined underwriting standards and based on strong collateral positions. Second, unsecured consumer credit exposure to the regions most impacted is less than 2% of the bank’s total Canadian consumer credit exposure. Third, the bank’s higher concentration in Ontario, and lastly, the positive impact of low oil prices on our Ontario and US businesses."

• John Gerspach, CFO, Citigroup: “Our energy-related exposures, on a funded basis, are steady. Total exposure is down slightly. We mentioned last quarter that about 85% of our exposure to energy companies was investment grade. We’ve had some minor downgrades in that, so maybe it’s down to 82%, but it’s still very strong.”

• Andy Halford, Group Finance Director, Standard Chartered: “[At the full year earnings call on 4 March 2015], we talked about the oil element, which I know people have been worried about. I think we gave pretty good facts as to just how generally the exposure is not directly to the commodity itself, it’s to the business. And actually, at that stage, 98% of the exposure was actually either to government-owned entities or to companies whose cost of production was below the world price, which continues to be the case today.”

• Wilfred Nagel, Chief Risk Officer, ING: “We’ve always been open for business in the oil and gas sphere. [We provided] a breakdown of the portfolio in terms of how sensitive these exposures are to the oil price movements, and as you can see, not a lot of the book is directly linked into performance to the oil prices. And, indeed, we are doing business also in that sphere and you may notice, for example, compared to last quarter, that in reserve-based lending there have been a few new deals and that is simply because at the current oil prices and the buffers below them, that does look like a solid business despite all the nervousness around this.”

• Iain Mackay, Group Finance Director, HSBC: “Areas where we continue to monitor very, very closely are the oil and gas sector, Europe in the round, but specifically Greece, notwithstanding the fact that our exposure in terms of balance sheet footings is actually very small within Greece. And we continue to monitor at an enhanced level what’s going on in the Asian markets. … We were sitting at very low levels, in the round, of loan impairment charges in 2014. We’ve got a good start to 2015. … I think, logically, based on coming out of 2014, you’d have seen something a little bit higher, but you just continue to be amazed about how well overall credit is holding up.”

Basis point change in NPL ratio* from 1Q14, selected banks

–360 –290

–100 –80

–67 –60

–50 –30 –26 –23 –22 –21 –20 –14

–9 –5 –4

2 4

RBSLLD

BBVACBKNABBAC

ITAUBNP

USBJPMANZ

CCA

WFCCIBC

TDRBCING

UCG

Source: Company reports; Metrics include NPL ratio, net impaired loan ratio, non-accrual loans/total loans


9. Acquisition and divestments — high-profile business exits help mitigate regulatory impacts “We exited our institutional cash equities business and have completed the sale of our consumer finance and savings bank businesses in Korea. We expect to complete the sale of our consumer finance businesses in Hong Kong and China soon, and we’ll continue to review other non-core and underperforming businesses.”

Andy Halford, Group Finance Director, Standard Chartered No change in stance on inorganic growth strategies. In the first three months of 2015, banks worldwide continued their efforts to strengthen core businesses through bolt-on strategic acquisitions and exits of non-core units and assets. Those banks with high levels of excess capital expressed an ongoing willingness to consider what CIBC CEO Victor Dodig described as “inorganic investments that will generate consistent sustainable earnings for our shareholders.” Others highlighted further progress in running down non-core positions, such as Citigroup’s sale of OneMain, “the largest business remaining in [non-core division] Citi Holdings.” While strategies in this area remained intact, three notable business exits generated significant discussion during the 1Q15 earnings season.

Notable business exits

General Electric’s sale of GE Capital assets

• On 10 April 2015, General Electric announced plans to sell approximately US$165 billion of GE Capital’s assets, in a move that marks its exit from banking and eliminates the regulatory burden of being designated as a non-bank systemically important financial insitution.

• John Shrewsberry, CFO, Wells Fargo: "We’re excited about our announcement last week regarding the purchase of US$9 billion of commercial real estate mortgage loans from GE Capital. This is a portfolio of performing loans, primarily in the US, the United Kingdom and Canada, which are active lending markets for us."

• Richard Davis, CEO, U.S. Bancorp: "Leasing would be of interest to us as we look at our big equipment financing business. And there are other portfolios that we would be interested in defending. That could be credit card portfolios, could be high-quality auto portfolios. But it’s got to be something that we do already.”

Deutsche Bank deconsolidation of Postbank

• On 24 April 2015, Deutsche Bank announced that it would deconsolidate Postbank.

• Co-CEO Anshu Jain provided significant details on the logic behind and timeline for the transaction: “Our team felt that we needed to target a leverage ratio which would put us consistently with our top global peers. Whether or not that gets adopted by Europe as the new gold standard, we don’t know. The determination we came to is for us to compete in our core franchise, which is global banking. … So Postbank’s a very good bank, but the natural ownership rationale between Deutsche and Postbank could no longer withstand the changed regulatory circumstances.”

National Australia Bank’s demerger of UK business

• On 7 May 2015, NAB disclosed its plans to exit its UK business through a demerger transaction.

• Group Finance & Strategy Executive Craig Drummond stated: “Last October, we flagged our intention to exit the UK and we said we would consider public market options. After significant work over the past six months, we’ve arrived at our preferred public market option of demerging 70% to 80% of Clydesdale Bank’s holding company (Listco) and IPO-ing the balance of 20% to 30% to institutional investors. We are still open to a trade sale, but this path offers no certainty, certainly no certainty over timing or final outcomes. The benefit of a demerger over a full IPO [is that it] accelerates full exit. It delivers greater certainty and allows NAB shareholders the option to retain exposure to the potential upside of Listco. We are targeting the end of calendar year 2015 for the execution of this transaction.”


10. Innovation — banks continue to invest in digital capabilities “We’ve created a state-of-the-art digital private banking platform, which we successfully launched in Singapore during the first quarter. With this platform we aim to upgrade our service offering and make it even more accessible to clients.”

Brady Dougan, CEO, Credit Suisse Investments in innovation continue in spite of concerns about cost levels. Digital investments remained a high priority for banks across all regions, despite their ongoing focus on expense management. In 1Q15, management described a range of digital initiatives and highlighted how they would improve the customer experience. Notably, while digital banking programs are also intended to drive revenue growth and improve efficiency, metrics disclosed thus far focus on numbers of customers, as opposed to the long-term revenue or profitability benefits of investments in innovation.

• Ralph Hamers, CEO, ING: “Over the last couple of quarters I’ve mentioned to you examples of how we use technology and innovation to improve the customer experience [on the retail banking side]. I’d like to talk about an innovation that we have tested with our commercial banking customers. So we have made progress on the development of a commercial banking platform, a digital platform, called InsideBusiness. We have run a pilot over the last six months. And this InsideBusiness will provide clients with a single point of access to all of their commercial banking products and services, such as payments and cash management, trade finance, lending. It provides real-time information. It gives customized reporting. It can be accessed 24/7 and from any mobile device. It gives multi-country, multi-product and multi-device information. I think that’s another prime example of how we are pioneering technologies that keep us at the forefront of modern banking.”

• Andrew Thorburn, CEO, NAB: “The personal bank origination platform is a major step in advancing our digital and technology capability to deliver a better experience, both for our staff and for our customers. Just a reminder, this is a significant step for us. It encompasses origination of all consumer banking products through all channels. … Since last we spoke, we’ve made real progress, and remember, the benefits here are significant for us. For customers, faster approval time. A single application process for multiple products and where documents can be uploaded and submitted and tracked online. So our rollout will commence as planned in this half and will be completed in 2016.”

• Marcelo Kopel, Investor Relations Officer, Itaú: “Clients are becoming more digital. So, by becoming more digital, they ask us for less of a physical presence, which is more labor intensive and requires larger IT investments. Having the ability to foresee that, five years ago, we launched that big BRL11 billion program of IT investments and this is materializing now. So, over the course of the years, the physical presence will be less important than the digital and this should also help us be more efficient.”

• Bharat Masrani, CEO, Toronto-Dominion: “We’re making great strides in advancing our digital and mobile capabilities, including modernizing our technology infrastructure to drive agility and improve efficiency. Equally important, these efforts will better serve our customers’ needs across all of TD’s distribution networks.”

• Ross McEwan, Group Chief Executive, Royal Bank of Scotland: “Improvements to our customer offerings have also continued; one example being the introduction of our touch ID on our mobile app with 22 million logins since its launch in February. We’ve also introduced real-time registration, which allows new customers to have access to mobile banking within one day of an account being opened. This gives our customers the functionality that mobile offers: get cash, pay your contacts, and more, without having to wait until your debit card arrives in the post.”

Digital banking metrics

• Bank of America: 17 million active mobile customers, which account for approximately 13% of all deposit transactions

• ANZ: Digital accounts for almost 75% of all transactions in Australia and more than 65% of transactions in New Zealand

• BBVA: 12.9 million active digital customers, up 20% from 2011 and 6.4 million mobile customers, up 125% from 2011; targeting 15 million active digital customers and 8 million active mobile customers by year-end 2015

• JPMorgan Chase: Active mobile customer base up 22% from 1Q14

• Wells Fargo: 14.9 million active mobile customers, up 19% from 1Q14


Appendix Key themes addressed, by bank 1Q15 earnings season

Key theme # AN

Z

AX

P

ITA

U

SAN

T

BA

C

BK

BA

RC

BN

P

CIB

C

C

CB

K

CA

CS

DB

GS

BB

VA

HSB

C

Quarterly earnings performance

35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Macro challenges 35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Expense trends 35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Capital strength and plans

35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Regulation and compliance

33 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Lending trends 32 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Cross-border and location strategies

31 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Credit quality trends

28 √ √ √ √ √ √ √ √ √ √ √ √ √ √

Acquisitions and divestments

26 √ √ √ √ √ √ √ √ √ √ √ √

Innovation 26 √ √ √ √ √ √ √ √ √ √ √ √

Legend

ANZ — Australia and New Zealand Banking Corp.

AXP — American Express ITAU — Banco Itaú SANT — Banco Santander

BAC — Bank of America BK — BNY Mellon BARC — Barclays BNP — BNP Paribas

CIBC — Canadian Imperial Bank of Commerce

C — Citigroup CBK — Commerzbank CA — Crédit Agricole

CS — Credit Suisse DB — Deutsche Bank GS — Goldman Sachs BBVA — Grupo BBVA

HSBC — HSBC Holdings


Key themes addressed, by bank (cont’d) 1Q15 earnings season

Key theme # ING

INT

JPM

LLD

MA

C

MS

NA

B

NO

M

RB

C

RB

S

SG

STA

N

STT

TD

UB

S

UC

G

USB

WFC

Quarterly earnings performance

35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Macro challenges 35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Expense trends 35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Capital strength and plans

35 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Regulation and compliance

33 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Lending trends 32 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Cross-border and location strategies

31 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Credit quality trends

28 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Acquisitions and divestments

26 √ √ √ √ √ √ √ √ √ √ √ √ √ √

Innovation 26 √ √ √ √ √ √ √ √ √ √ √ √ √ √

Legend

ING — ING Groep INT — Intesa Sanpaolo JPM — JPMorgan Chase LLD — Lloyds Banking Group

MAC — Macquarie Group MS — Morgan Stanley NAB — National Australia Bank

NOM — Nomura Holdings

RBC — Royal Bank of Canada RBS — Royal Bank of Scotland

SG — Société Générale STAN — Standard Chartered

STT — State Street TD — Toronto-Dominion UBS — UBS Group UCG — UniCredit Group

USB — U.S. Bancorp WFC — Wells Fargo


Select KPIs

Operational metrics (% Y-o-Y growth)

KPIs Share price

Text legend: Better than average Worse than average

Ass

et

Com

p co

st

Non

-com

p co

st

Rev

enue

s/

empl

oyee

(U

S$00

0)

Cost

/em

ploy

ee

(US$

000)

Cost

-inco

me

ratio

Ope

ratin

g m

argi

n

Net

inte

rest

m

argi

n

Cost

of

equi

ty

Thre

e-m

onth

ch

ange

One

-yea

r ch

ange

AXP 2.1% –15.3% –2.2% NA NA 70.9% 29.1% 6.0% 8.7% –16.0% –14.3%

BBVA 12.0% 5.7% 11.8% 54.2 25.6 47.1% 52.9% 2.3% 10.7% 5.2% –18.7%

STD 17.2% 12.2% –21.1% 66.2 32.4 48.9% 51.1% 2.7% 10.5% –0.2% –0.3%

BAC –0.3% –1.4% –33.2% 96.5 70.6 73.1% 26.9% 2.1% 9.4% –14.0% –11.2%

BK 8.4% –1.7% 0.1% 76.3 53.6 70.3% 29.7% 1.0% 14.5% –0.5% 13.6%

BARC 4.0% –24.8% 20.8% NA NA 60.6% 39.4% NA 8.4% –0.2% 2.2%

BNP 27.1% NA NA 58.9 41.5 70.6% 29.4% NA 11.6% 14.4% –1.6%

CIBC 11.0% 13.0% 8.3% 64.9 40.4 62.2% 37.8% 2.2% 5.5% –8.5% –3.7%

C –3.3% –8.2% –11.8% 83.8 47.4 56.6% 43.4% 3.0% 10.0% –5.0% 7.8%

CBK 5.4% 0.8% 9.1% 60.5 38.6 63.7% 36.3% 1.1% 9.0% 14.6% –7.1%

CA 5.1% NA NA NA NA 72.3% 27.7% NA 10.6% 25.5% 14.8%

CS 3.0% –0.6% 2.8% 141.7 106.8 75.4% 24.6% 1.1% 10.6% 7.2% –10.5%

DB 19.5% 2.5% 15.7% 117.0 79.9 68.3% 31.7% 1.0% 9.6% 28.1% 2.8%

GS –5.5% 11.2% –0.7% NA NA 62.9% 37.1% NA 9.1% –3.3% 13.3%

HSBC –3.2% NA NA 63.3 34.0 53.7% 46.3% NA 9.4% –5.6% –5.8%

ING 9.0% 1.3% 5.6% NA NA 51.7% 48.3% NA NA NA NA

INT 9.2% NA NA 60.0 26.6 44.3% 55.7% NA 10.4% 29.0% 24.1%

ITAU 14.1% 19.1% 1.1% 75.1 46.5 61.9% 38.1% 7.1% 25.5% –15.4% –4.5%

JPM 4.1% 2.3% 0.0% 99.8 61.2 61.3% 38.7% 2.0% 12.9% –3.1% –0.1%

LLD 0.8% NA NA NA NA 70.1% 29.9% 1.1% 7.6% 2.8% 2.8%

MS –0.3% 5.1% 9.0% 176.6 125.7 71.2% 28.8% NA 8.5% –7.8% 15.3%

NOM –4.0% 8.7% 9.9% NA NA 75.8% 24.2% NA 17.2% 3.9% 5.1%

RBC 20.1% 5.8% 26.2% 106.2 67.6 63.7% 36.3% 1.7% 5.8% –5.5% 4.6%

RBS 7.9% –7.9% 63.8% 48.8 49.9 102% –2.2% NA 10.3% –12.6% 7.3%

SG 12.9% NA NA 48.4 33.9 69.9% 30.1% NA 11.0% 27.2% –5.1%

STT 8.9% –6.1% 19.2% 85.4 68.6 80.3% 19.7% 1.0% 11.2% –6.2% 5.8%

TD 17.4% 7.4% 4.6% 74.8 47.8 63.9% 36.1% 2.2% 6.0% 2.7% 6.9%

USB 10.5% 6.6% 2.5% NA NA 54.9% 45.1% 3.1% 13.0% –2.6% 1.5%

UBS 6.7% 5.2% 3.4% 154.8 107.2 69.2% 30.8% 0.7% 10.5% 14.0% –1.8%

UCG 7.2% –2.4% 0.6% 50.6 30.1 59.5% 40.5% NA 9.5% 16.5% –6.5%

WFC 12.4% 6.6% 1.4% 80.0 47.0 58.8% 41.2% 2.9% 11.2% –0.5% 9.2%

Source: SNL Financial. Notes: 1Q15 numbers for Canadian banks are from November–January 2015; calendar year and not fiscal year numbers are considered for Nomura; operating margin=(net revenue-operating exp.)/net revenue; all numbers are non-annualized (except net interest margin.)

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In today’s globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banks and securities firms. Global Banking & Capital Markets brings together a worldwide team of professionals to help you succeed — a team with deep technical experience in providing assurance, tax, transaction and advisory services. We work to anticipate market trends, identify the implications and develop points of view on relevant sector issues. Ultimately it enables us to help you meet your goals and compete more effectively.

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