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    Hsbc holdings plc car 892011 Hsbc holdings plc car 892011 Document Transcript

    • powered byF IN L ISTICS SOLUTI ONS HSBC HOLDINGS PLC cbv client Assessment RepoRt sales learning
    • Table of ContentsPurpose and Analysis Criteria 3Opportunity Dashboard 4Profiles 5 HSBC HOLDINGS PLC 5 CITIGROUP INC. 6 BANK OF CHINA LIMITED 7 UBS AG 8 HANG SENG BANK LIMITED 9Historical Peer Comparison Chart 1 10Historical Peer Comparison Chart 2 11Power Of One - What If Analysis 12Gap Analysis 13 Annual Trend Gap Analysis 13 Latest Twelve Months (LTM) Trend Gap Analysis 14 Annual Peer Gap Analysis 15 Latest Twelve Months (LTM) Peer Gap Analysis 16 Annual Industry Gap Analysis 17 Latest Twelve Months (LTM) Industry Gap Analysis 18Financial Statements 19 Annual Financials - HSBC HOLDINGS PLC 19 Annual Financials - Peer Comparison 20 Latest Twelve Months (LTM) Financials - HSBC HOLDINGS PLC 21 Latest Twelve Months (LTM) Financials - Peer Comparison 22Appendix Key Client Questions & Solutions 23 Definitions & Calculations 33 Data Sourcing 41
    • Purpose s Better understand your clients current financial performance when compared to: their own historical performance, their peers, and their industry s Improve understanding of how your client is performing in key financial metrics such as Growth, Profitability, Asset Quality and Capital Adequacy s Gain insights into the potential challenges your client may be facing s Use the insights to identify your solution capabilities that best fit your clients challenges s Formulate an account strategy focusing on clients potential areas of opportunity and mapping to your solutions s Use content in business strategy conversation when engaging client executivesNote: The goal is not to use as a financial analysis review tool with your client but to use as a foundation for a businessstrategy discussion and explore areas of opportunityAnalysis Criteria Target Company: HSBC HOLDINGS PLC Annual Data as of Dec-10 Latest Twelve Month Data (LTM) as of Jun-11 Peer 1: CITIGROUP INC. Annual Data as of Dec-10 Latest Twelve Month Data (LTM) as of Mar-11 Peer 2: BANK OF CHINA LIMITED Annual Data as of Dec-10 Latest Twelve Month Data (LTM) as of Mar-11 Peer 3: UBS AG Annual Data as of Dec-10 Latest Twelve Month Data (LTM) as of Jun-11 Peer 4: HANG SENG BANK LIMITED Annual Data as of Dec-10 Latest Twelve Month Data (LTM) as of Jun-11 Industry Benchmark: National commercial banks (SIC: 6021) $10 billion or more - Asia-Pacific Note: Industry Benchmark data is calculated by aggregating data for publicly traded companies in the National commercial banks (SIC: 6021) $10 billion or more - Asia-Pacific industry to derive 1st Quartile, Median and 4th Quartile statistics. Page 3 of 41
    • Opportunity Dashboard — HSBC HOLDINGS PLCThe Opportunity Dashboard provides an easy to understand view of HSBC HOLDINGS PLCs key financial metricsand their relative performance versus their historical TREND (latest 5 periods), selected PEERS and relevantINDUSTRY. The 1st Year Cash Flow figures represents the benefits that could be recognized assuming HSBCHOLDINGS PLC current year results could improve to the benchmark in three categories: TREND assumes HSBCHOLDINGS PLCs current year metrics can improve to their best performing year/quarterly period (benchmarkperiod) when compared to the latest five periods. PEER compares HSBC HOLDINGS PLCs current years results tothe best performing peer (benchmark peer) and INDUSTRY quantifies the benefits of improving to the benchmark(1st quartile) for HSBC HOLDINGS PLCs relevant industry (National commercial banks (SIC: 6021) $10 billion ormore - Asia-Pacific).Annual Dashboard (Dec-10) (Dec- 1st Year Cash Flow Gaps Opportunity* (Millions - USD) Trend Peer Industry Trend Peer IndustryTotal Income Growth 4,479.5 4,608.2 6,214.0 Net Interest Income Growth 1,217.9 2,027.2 2,722.7 Non-Interest Income Growth 3,484.7 3,355.3 3,473.5% Provision for Loan Loss 1,525.4 13,375.7 9,221.9Efficiency Ratio (Cost to Income) 10,743.0 15,439.7 16,827.8 % Salaries and Related 2,383.0 11,119.5 3,675.5 % Premises and Equipment 578.0 1,146.7 3,207.4 % Other Non-Interest Expense 11,258.6 10,641.5 14,081.7Pre-Tax Profit Margin 7,684.1 25,203.1 20,773.1Tot. Income / Premises and Equip. - 3,110.6 - Best Performer Mid-Range Performer Lowest PerformerLatest 12 Months (LTM) Dashboard (Jun-11) (Jun- 1st Year Cash Flow Gaps Opportunity* (Millions - USD) Trend Peer Industry Trend Peer IndustryTotal Income Growth 0.0 2,551.1 4,550.2 Net Interest Income Growth - 1,661.2 2,332.4 Non-Interest Income Growth 324.9 530.5 2,202.5% Provision for Loan Loss - 11,237.1 7,091.1Efficiency Ratio (Cost to Income) - 9,663.1 3,765.4 % Salaries and Related 1,104.8 - N/A % Premises and Equipment N/A N/A N/A % Other Non-Interest Expense N/A N/A 11,698.4Pre-Tax Profit Margin 639.1 27,640.3 13,713.4Tot. Income / Premises and Equip. 960.8 3,744.1 - Best Performer Mid-Range Performer Lowest Performer* 1st Year Cash Flow represents potential benefits that could be recognized given the impact of improving HSBCHOLDINGS PLC current years performance to the TREND, PEER and INDUSTRY benchmarks. Page 4 of 41
    • Profile: HSBC HOLDINGS PLCAddress: 1 Queens Road Central Symbol: 0005 Currency: US Dollars Holding Comp.: HSBC HOLDINGS PLCHSBC Holdings PLC. The Groups principal activity is providing banking and related financial services. The Groupoperates through its customer groups: Personal Financial Services, provides current and savings accounts,mortgages and secured and unsecured personal loans, credit cards, and local payment services; CommercialBanking, provides financing, payments and cash management, treasury and capital markets, commercial cards,investment banking, wealth management services, insurance and trade services; Global Banking and Markets;Private Banking, provides investment services, global wealth solutions, advisory and banking services and Othersincludes property, valuation of freehold and leasehold land and buildings and legal proceedings. The Groupoperates through an international network of over 10,000 offices in 86 countries and territories in Europe, theAsia-Pacific, Middle East, Africa, North America and Latin America.Total Assets: 2,447,317 Web Site: http://www.hsbc.comReturn on Ave. 0.5% Industry: National commercial banks (SIC:Assets (ROAA): 6021)Market Cap (Mil): 166,625 Employees: 295,061BUSINESS SEGMENTS DATA YEAR: Dec-10 Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description SIC (Mil) Growth Total Margin Margin (Mil) AssetsPersonal Financial 6021 43,054 -8.1% 53.0% 5.8% -4.4% 527,620 0.5%Global Banking &Markets 6282 19,959 24.6% 45.0% 1,758,056 0.5%Commercial Banking 6029 15,061 10.3% 18.6% 34.5% 31.2% 296,753 1.8%Private Banking 6099 3,091 -0.4% 3.8% 34.6% 35.6% 116,829 0.9%GEOGRAPHIC SEGMENTS Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description (Mil) Growth Total Margin Margin (Mil) AssetsEurope 27,437 -5.5% 34.3% 15.6% 13.8% 1,249,343 0.3%North America 17,179 4.1% 21.5% 2.5% -46.8% 492,414 0.1%Hong Kong 14,954 8.2% 18.7% 37.8% 36.3% 429,502 1.3%Latin America 11,515 6.4% 14.4% 15.6% 10.4% 139,917 1.3%Rest of Asia/Pacific 9,588 14.5% 12.0% 38.0% 50.0% 278,021 1.3%Middle East 2,408 -6.9% 3.0% 29.3% 17.5% 52,749 1.3%Intra-group -3,123 13.6% -3.9% -187,619KEY OFFICERSName TitleStephen K. Green Group ChairmanD. J. Flint Executive Director & Chief Financial OfficerR. G. Barber Group SecretaryKEY ACQUISITIONSYear2005-METRIS COMPANIES INC, ATLANTIC ADVISORS LLC, INVIC CORP, FINANCOMER GROUP AND 70.I% OFDAR ES SALAAM INVESTMENT BANK OF IRAQ IN 2005 Page 5 of 41
    • Profile: CITIGROUP INC.Address: 399 PARK AVENUE Symbol: C Currency: US Dollars NEW YORK, NY 10043 Holding Comp.: CITIGROUP INC.Citigroup Inc. (Citigroup) is a global diversified financial services holding company. Citigroup businesses provideconsumers, corporations, governments and institutions with a range of financial products and services. As ofDecember 31, 2010, the Company had approximately 200 million customer accounts and did business in morethan 160 countries and jurisdictions. Citigroup operates two primary business segments: Citicorp, consisting ofits Regional Consumer Banking (RCB) businesses and Institutional Clients Group (ICG), and Citi Holdings,consisting of its Brokerage and Asset Management (BAM), Local Consumer Lending (LCL), and Special Asset Pool(SAP). On February 1, 2011, Citigroup acquired Maltby Acquisitions Limited (Maltby).Total Assets: 1,913,902 Web Site: http://www.citigroup.comReturn on Ave. 0.6% Industry: Commercial Banks (SIC: 6020)Assets (ROAA):Market Cap (Mil): 97,575 Employees: 289,753BUSINESS SEGMENTS DATA YEAR: Dec-10 Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description SIC (Mil) Growth Total Margin Margin (Mil) AssetsInstitutional Client 6211 33,118 -11.5% 39.0% 41.7% 14.1% 953,000 1.4%Consumer Banking 6311 32,442 42.5% 38.2% 19.0% -1.7% 330,000 1.9%Citi Holdings 6021 19,287 -37.0% 22.7% -34.1% -23.6% 359,000 -1.8%GEOGRAPHIC SEGMENTS Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description (Mil) Growth Total Margin Margin (Mil) AssetsUnited States 48,706 24.1% 55.6%Asia Pacific 14,437 3.7% 16.5%Latin America 12,749 5.0% 14.6%EMEA 11,709 -21.8% 13.4%KEY OFFICERSName TitleRichard D. Parsons ChairmanLewis B. Kaden Vice ChairmanEdward J. Kelly III Vice ChairmanVikram S. Pandit Chief Executive OfficerJohn P. Havens President & Chief Operating OfficerKEY ACQUISITIONSYear Page 6 of 41
    • Profile: BANK OF CHINA LIMITEDAddress: No 1 Fuxingmennei Avenue Symbol: 3988 Currency: US Dollars Beijing 100818 Holding Comp.: BANK OF CHINA LTDBank of China Limited is a China-based commercial bank. The Bank operates its businesses through commercialbanking, including corporate banking, such as corporate deposits, loans, international settlements and tradefinancing services, among others, personal banking services, such as personal savings, loans, private bankingservices and bank card services, as well as financial market services, such as asset management, funddistribution and custody services, as well as management of enterprise annuity fund, among others; investmentbanking services, including listed financing, financial consulting, securities distribution, research on investmentand asset management services; insurance business, including personal insurance, vehicle insurance and marineinsurance, among others, as well as investment business.Total Assets: 1,571,061 Web Site: http://www.boc.cnReturn on Ave. 1.1% Industry: Commercial banks (SIC: 6029)Assets (ROAA):Market Cap (Mil): 115,470 Employees: 279,301BUSINESS SEGMENTS DATA YEAR: Dec-10 Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description SIC (Mil) Growth Total Margin Margin (Mil) AssetsCorporate Banking 6021 23,192 57.3% 57.6% 57.9% 69.2% 708,815 1.9%Personal Banking 6021 12,212 66.7% 30.3% 40.7% 50.8% 226,387 2.2%Treasury Operations 6021 2,802 66.3% 7.0% 59.1% 127.2% 608,902 0.3%Insurance 6411 1,563 762.3% 3.9% 4.1% 11.3% 7,491 0.9%Investment Banking 6021 516 760.6% 1.3% 53.0% 536.2% 6,426 4.3%GEOGRAPHIC SEGMENTS Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description (Mil) Growth Total Margin Margin (Mil) AssetsChina 33,441 62.0% 80.1% 51.3% 63.0% 1,282,786 1.3%Hong Kong & Macau 7,255 173.3% 17.4% 51.3% 118.7% 268,020 1.4%Other Overseas 1,028 65.0% 2.5% 52.1% 98.3% 82,492 0.6%KEY OFFICERSName TitleDr. Gang Xiao ChairmanMuhua Chen Non Executive ChairmanLihui Li Vice ChairmanBingxun Zhang SecretaryKEY ACQUISITIONSYear Page 7 of 41
    • Profile: UBS AGAddress: Bahnhofstrasse 45 Symbol: UBSN Currency: US Dollars 8098 Zurich Holding Comp.: UBS AGUBS Ag. UBS AG is a client-focused financial services company that offers a combination of wealth management,asset management and investment banking services on a global and regional basis. UBS AG is the parentcompany of the UBS Group (Group). The operational structure of the Group comprises the Corporate Center andfour business divisions: Wealth Management & Swiss Bank, Wealth Management Americas, Global AssetManagement and the Investment Bank. As of December 31, 2009, the Company operated about 973 businessand banking locations worldwide. In February 2009, JPMorgan Chase & Co. completed the acquisitions of theCompanys global agricultural business. In September 2009, UBS AG completed the sale of its Brazilian financialservices business, UBS Pactual, including its asset management business, UBS Pactual Asset Management. InMay 2009, the Company completed the acquisition of the commodity index business of AIG Financial ProductsCorp., including AIGs rights to the DJAIG Commodity index.Total Assets: 1,345,552 Web Site: http://www.ubs.comReturn on Ave. 0.6% Industry: National commercial banks (SIC:Assets (ROAA): 6021)Market Cap (Mil): 42,723 Employees: 64,617BUSINESS SEGMENTS DATA YEAR: Dec-10 Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description SIC (Mil) Growth Total Margin Margin (Mil) AssetsInvestment Bank 6211 12,357 266.5% 38.8% 18.3% -104.0% 994,915 0.2%Wealth Management&s 6211 11,618 36.5% 36.7% 254,306 1.7%Wealth ManagementA 6211 5,726 18.0% -2.3% 51,519 -0.3%Global Asset Manage 6021 2,118 6.7% 25.1% 16,354 3.2%GEOGRAPHIC SEGMENTS Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description (Mil) Growth Total Margin Margin (Mil) AssetsSwitzerland 13,036 6.1% 39.6% 5,064United States 11,063 15.2% 33.6% 8,924Asia/Pacific 3,906 0.7% 11.9% 405United Kingdom 2,872 -169.8% 8.7% 611Rest of Europe 1,558 19.8% 4.7% 1,109Rest of the World 485 60.2% 1.5% 431KEY OFFICERSName TitleKaspar Villiger ChairmanOswald J. Gruebel Chief Executive OfficerDr. Ulrich Koerner Chief Operating OfficerJohn Cryan Chief Financial OfficerKEY ACQUISITIONSYear Page 8 of 41
    • Profile: HANG SENG BANK LIMITEDAddress: 83 Des Voeux Road Central Symbol: 11 Currency: US Dollars Holding Comp.: HANG SENG BANK LTDHang Seng Bank Limited (the Bank) operates in five customer groups. The Bank operates in personal financialservices, commercial banking, corporate banking, treasury and other. Personal financial Services providesbanking, including deposits, credit cards, mortgages and other retail lending, and wealth management services,including private banking, investment and insurance to personal customers. Its commercial banking managesmiddle market and smaller corporate relationships and specializes in trade-related financial services. Itscorporate banking handles relationships with corporate and institutional customers. Its treasury engages inbalance sheet management and trading. Treasury also manages the funding and liquidity positions of the Banksand other market risk positions arising from banking activities. Other represents management of shareholdersfunds and investments in premises, investment properties and equity shares.Total Assets: 117,943 Web Site: http://www.hangseng.comReturn on Ave. 1.7% Industry: National commercial banks (SIC:Assets (ROAA): 6021)Market Cap (Mil): 28,699 Employees: 9,642BUSINESS SEGMENTS DATA YEAR: Dec-10 Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description SIC (Mil) Growth Total Margin Margin (Mil) AssetsPersonal FinancialServices 6021 3,237 4.9% 74.3% 31.3% 30.2% 34,065 3.0%Commercial Banking 6021 582 24.7% 13.4% 82.8% 72.6% 23,155 2.1%Treasury 6021 326 -20.5% 7.5% 132.6% 106.5% 39,219 1.1%Corporate &Institutional Banking 6021 211 25.1% 4.8% 77.1% 69.7% 16,741 1.0%GEOGRAPHIC SEGMENTS Revenue Curr. Yr. Prev. Yr. Total Operating Revenues Revenue % of Profit Profit Assets Return onSegment Description (Mil) Growth Total Margin Margin (Mil) AssetsHong Kong 4,132 3.9% 93.3% 42.7% 41.7% 96,757 1.8%Other 160 23.6% 3.6% 210.8% 176.2% 12,411 2.7%Americas 135 18.3% 3.0% 95.1% 90.3% 8,775 1.5%KEY OFFICERSName TitleDr. Kuo Fung Chien CBE Non Executive ChairmanHau Chung Fung Chief Executive OfficerMay Yee Leung Ko Vice Chairman & Chief ExecutiveWing Lok Leung Chief Financial OfficerC. C. Li SecretaryKEY ACQUISITIONSYear Page 9 of 41
    • NET INTEREST INCOME GROWTH — HSBC HOLDINGS PLC Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- Jun-11 Jun- HSBC HOLDINGS PLC -5.1% -4.0% -3.0% -1.4% 0.2% Mar-10 Mar- Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- CITIGROUP INC. -3.3% -0.4% 3.2% 10.1% 2.2% Mar-10 Mar- Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- BANK OF CHINA LTD 4.5% 12.6% 17.7% 22.1% 21.9% Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- Jun-11 Jun- UBS AG -0.2% -4.6% -3.6% -2.9% 3.3% Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- Jun-11 Jun- HANG SENG BANK LTD -11.9% -5.2% 2.0% 7.4% 13.1% 4 Pds. 3 Pds. 2 Pds. 1 Pd. Current Ago Ago Ago Ago Pd. PEER AVERAGE -2.7% 0.6% 4.8% 9.2% 10.1% Change in Current Pd. NET INTEREST INCOME GROWTH from previous corresponding Latest Twelve Month Period (4 Pds. Ago) HSBC HOLDINGS PLC - Increased 526.2 basis points (bps) or 5.26% Average change for other 4 peers - Increased 1284.9 basis points (bps) or 12.85% 1st Year Cash Flow benefits of 100 basis point (bps) improvement in NET INTEREST INCOME GROWTH for HSBC HOLDINGS PLC - 76.55 (Millions - USD) Page 10 of 41
    • EFFICIENCY RATIO (COST TO INCOME) — HSBC HOLDINGS PLC Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- Jun-11 Jun- HSBC HOLDINGS PLC 64.1% 64.5% 65.0% 60.6% 56.3% Mar-10 Mar- Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- CITIGROUP INC. 60.1% 66.1% 66.3% 57.7% 62.0% Mar-10 Mar- Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- BANK OF CHINA LTD 47.9% 46.3% 45.1% 45.3% 45.2% Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- Jun-11 Jun- UBS AG 80.3% 78.4% 78.4% 77.2% 78.8% Jun-10 Jun- Sep-10 Sep- Dec-10 Dec- Mar-11 Mar- Jun-11 Jun- HANG SENG BANK LTD 59.4% 59.2% 59.0% 58.8% 58.6% 4 Pds. 3 Pds. 2 Pds. 1 Pd. Current Ago Ago Ago Ago Pd. PEER AVERAGE 61.9% 62.5% 62.2% 59.7% 61.1% Change in Current Pd. EFFICIENCY RATIO (COST TO INCOME) from previous corresponding Latest Twelve Month Period (4 Pds. Ago) HSBC HOLDINGS PLC - Decreased -772.4 basis points (bps) or -7.72% Average change for other 4 peers - Decreased -80.1 basis points (bps) or -0.80% 1st Year Cash Flow benefits of 100 basis point (bps) improvement in EFFICIENCY RATIO (COST TO INCOME) for HSBC HOLDINGS PLC - 864.65 (Millions - USD) Page 11 of 41
    • Power of One (What-If Analysis) — HSBC HOLDINGS PLC POWER OF ONE Latest Twelve Months Annual (LTM) Percentage 1st Yr Cash Flow 1st Yr Cash Flow Financial Metric Change (in Millions - USD) (in Millions - USD) Total Income 1% 165.09 165.24 Net Interest Income 1% 78.45 76.55 Non Interest Income 1% 86.63 88.69 Provision for Loan Loss -1% 135.39 115.79 Total Non-Interest Expense Non- -1% 536.63 487.09 Salaries & Related Expense -1% 198.22 205.51 Premises & Equip. Expense -1% 43.45 - Other Non-Interest Expense Non- -1% 294.96 281.58 Total Income to Premises 1% 110.79 123.81 Total Benefit 1,649.61 1,428.46 The Power of One table above quantifies the impacts of a 1% improvement in key financial metrics for HSBC HOLDINGS PLC. Below are descriptions of the relevant financial metrics in the Banking industry. TOTAL INCOME GROWTH Total Income (or Total Revenue) is comprised of Net Interest Income plus Non-Interest Income. NET INTEREST INCOME Net Interest Income is primarily comprised of interest income GROWTH earned from loans and securities minus interest expense paid on deposits and other borrowings. NON- INTEREST INCOME Non-Interest Income can include fees/commissions from asset GROWTH management and investment banking activities, fees from lending and deposit related services in addition to trading revenue (losses) and credit card income. TOTAL NON- INTEREST EXPENSE Total Non-Interest Expense is comprised of all Salaries & Related expenses, expenses for Premises (Occupancy) and Equipment in addition to all Other Non-Interest Expenses such as Advertising & Marketing, Non-Labor related IT expenses, and Consulting and Advisory Services. SALARIES & RELATED EXPENSE Salaries & Related Expense encompasses all labor related expenses. PREMISES & EQUIPMENT Premises & Equipment Expense (or Occupancy expense) is EXPENSE comprised of all expenses on premises and fixed assets. OTHER NON- INTEREST EXPENSE Other Non-Interest Expense can include items such as Advertising/Marketing expenses, non-labor related shared service expenses and consulting/advisory service expenses. TOTAL INCOME TO PREMISES & Premises & Equipment includes all owned buildings, branches, EQUIPMENT infrastructure and other any other fixed assets reported on the balance sheet. Page 12 of 41
    • Annual Trend Gap Analysis — HSBC HOLDINGS PLC The Trend Gap Analysis compares HSBC HOLDINGS PLCs financial metrics for the current year with those of the four previous years. The and arrows indicate the best and lowest performance for a given metric for the five year period. The Trend Gap Analysis further quantifies the 1st year cash flow benefits for HSBC HOLDINGS PLC , with the underlying assumption that HSBC HOLDINGS PLC can improve its current years financial performance to that of the benchmark year (indicated by the arrow). Value of Gaps(1) Gaps(1) Year Benchmark Years 1st Yr Cash Flow Growth 2010 2009 2008 2007 2006 (Millions - USD) Net Interest Income Growth -3.0% -5.0% 12.1% 9.9% 10.5% 1,217.91 Non-Interest Income Growth Non- -7.3% 12.7% -15.8% 30.0% 18.3% 3,484.66 Total Income Growth -5.3% 3.7% -3.7% 20.4% 14.4% 4,479.54 Profitability % Provision for Loan Loss 16.3% 28.3% 28.5% 19.6% 14.4% 1,525.42 Efficiency Ratio (Cost to Income) 64.5% 64.6% 51.6% 56.1% 57.5% 10,743.00 % Salaries and Related Expense 23.8% 21.0% 24.6% 24.4% 25.3% 2,383.04 % Premises and Equipment Expense 5.2% 4.7% 5.1% 4.5% 4.6% 578.02 % Other Non-Interest Expense Non- 35.5% 39.0% 21.9% 27.2% 27.6% 11,258.58 Pre-Tax Profit Margin Pre- 19.8% 6.0% 9.0% 25.9% 29.1% 7,684.15 Net Income Margin 15.8% 6.6% 6.8% 21.8% 21.6% 5,022.93 Tot. Income / Premises and Equip. 8.01 6.91 6.50 6.10 5.04 - Returns Return On Assets 0.55% 0.24% 0.24% 0.91% 0.94% Return On Equity 9.32% 5.04% 4.91% 15.31% 14.82% Yields Yield on Earning Assets 2.66% 2.77% 4.06% 4.77% 4.95% Cost of Funding Earning Assets 0.86% 0.95% 2.16% 2.81% 2.69% Net Interest Margin 1.80% 1.82% 1.90% 1.96% 2.26% Asset Quality Nonperforming Assets to Tot. Assets N/A N/A N/A N/A N/A Loss Allowance to Loans 1.69% 2.32% 2.15% 1.55% 1.27% Loss Allowance to Noncurrent Loans 71.00% 82.81% 122.10% 104.92% 98.50% Leverage & Capital Adequacy Equity / Assets 6.09% 5.67% 3.89% 5.76% 6.19% Leverage Ratio N/A N/A N/A N/A N/A Tier 1 Risk Based Capital Ratio 12.10% 10.80% 8.30% 9.30% 9.40% Total Risk Based Capital Ratio 15.20% 13.70% 11.40% 13.60% 13.50% is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Targets financial metric for Most Recent Fiscal year compared to Benchmark year. The Trend Gap Analysis provides a consistent year over year analysis of a companys financial performance. Since the analysis compares the target companys current year to the target companys historical results, the financials typically provide an accurate picture of trends since product/geo mix, cost structures and accounting methods dont vary much from period to period for the same company. Exceptions to this include significant acquisitions/mergers, divestitures and accounting or account classification changes. Example of how to interpret this Trend Gap Analysis Table: If HSBC HOLDINGS PLC could have improved % OTHER NON-INTEREST EXPENSE from their current year figure of 35.5% to their benchmark year (2008) of 21.9%, it would have resulted in a 1st year cash flow benefit of 11258.58 (Mil - USD). Page 13 of 41
    • Latest Twelve Months (LTM) Trend Gap Analysis — HSBC HOLDINGS PLC The Trend Gap Analysis compares HSBC HOLDINGS PLCs financial metrics for the current LTM period with those of the four previous LTM periods. The and arrows indicate the best and lowest performance for a given metric for the five LTM periods. The Trend Gap Analysis further quantifies the 1st year cash flow benefits for HSBC HOLDINGS PLC , with the underlying assumption that HSBC HOLDINGS PLC can improve its current periods financial performance to that of the benchmark period (indicated by the arrow). Value of Gaps (1) Current LTM Benchmark Periods 1st Yr Cash Flow Growth Jun-11 Jun- Mar-11 Mar- Dec-10 Dec- Sep-10 Sep- Jun-10 Jun- (Millions - USD) Net Interest Income Growth 0.2% -1.4% -3.0% -4.0% -5.1% - Non-Interest Income Growth Non- 4.0% -1.8% -7.3% -0.2% 7.8% 324.93 Total Income Growth 2.2% -1.6% -5.3% -2.1% 1.3% 0.00 Profitability % Provision for Loan Loss 13.4% 14.8% 16.3% 19.3% 22.2% - Efficiency Ratio (Cost to Income) 56.3% 60.6% 65.0% 64.5% 64.1% - % Salaries and Related Expense 23.8% 23.8% 23.8% 23.2% 22.5% 1,104.81 % Premises and Equipment Expense N/A N/A N/A N/A N/A N/A % Other Non-Interest Expense Non- N/A N/A N/A N/A N/A N/A Pre-Tax Profit Margin Pre- 19.1% 19.5% 19.8% 16.4% 13.1% 639.05 Net Income Margin 17.9% 16.9% 15.8% 13.3% 10.9% - Tot. Income / Premises and Equip. 7.45 7.31 8.01 8.08 6.35 960.83 Returns Return On Assets 0.61% 0.56% 0.54% 0.46% 0.38% Return On Equity 9.93% 9.19% 8.82% 7.51% 6.43% Yields Yield on Earning Assets 2.61% 2.56% 2.60% 2.59% 2.65% Cost of Funding Earning Assets 0.89% 0.85% 0.84% 0.83% 0.83% Net Interest Margin 1.72% 1.71% 1.76% 1.77% 1.81% Asset Quality Nonperforming Assets to Tot. Assets N/A N/A N/A N/A N/A Loss Allowance to Loans N/A N/A N/A N/A N/A Loss Allowance to Noncurrent Loans N/A N/A N/A N/A N/A Leverage & Capital Adequacy Equity / Assets 6.24% 6.24% 6.09% 6.09% 5.94% Leverage Ratio N/A N/A N/A N/A N/A Tier 1 Risk Based Capital Ratio 12.20% 12.20% 12.10% 12.10% 11.50% Total Risk Based Capital Ratio 14.90% 14.90% 15.20% 15.20% 14.40% is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Targets financial metric for Most Recent LTM period compared to Benchmark period. The Trend Gap Analysis provides a consistent year over year analysis of a companys financial performance. Since the analysis compares the target companys current year to the target companys historical results, the financials typically provide an accurate picture of trends since product/geo mix, cost structures and accounting methods dont vary much from period to period for the same company. Exceptions to this include significant acquisitions/mergers, divestitures and accounting or account classification changes. Example of how to interpret this Trend Gap Analysis Table: If HSBC HOLDINGS PLC could have improved % SALARIES & RELATED EXPENSE from their current LTM figure of 23.8% to their benchmark LTM (Jun-10) of 22.5%, it would have resulted in a 1st year cash flow benefit of 1104.81 (Mil - USD). Page 14 of 41
    • Annual Peer Gap Analysis — HSBC HOLDINGS PLC The Peer Gap Analysis compares HSBC HOLDINGS PLC s financial metrics for the current year with those of its peers (as selected by the user). The and arrows indicate the company within the peer group with the best and lowest performance for a given metric for the year. The Peer Gap Analysis further quantifies the 1st year cash flow benefits for HSBC HOLDINGS PLC , with the underlying assumption that HSBC HOLDINGS PLC can improve its current years financial performance to match that of its best performing, or benchmark, peer (indicated by the arrow). Value of Gaps(1) Gaps(1) Target Peer Companies 1st Yr Cash Flow Growth HSBC HO CITIGRO BANK OF UBS AG HANG SE (Millions - USD) Net Interest Income Growth -3.0% 10.1% 22.1% -3.6% 2.0% 2,027.25 Non-Interest Income Growth Non- -7.3% -7.9% 15.4% 28.6% 8.0% 3,355.30 Total Income Growth -5.3% 3.1% 19.9% 21.1% 5.5% 4,608.21 Profitability % Provision for Loan Loss 16.3% 29.6% 5.5% 0.2% 1.1% 13,375.66 Efficiency Ratio (Cost to Income) 64.5% 57.7% 46.0% 78.8% 59.0% 15,439.69 % Salaries and Related Expense 23.8% 28.8% 19.0% 50.2% 10.5% 11,119.45 % Premises and Equipment Expense 5.2% 3.9% 4.3% 5.4% 3.8% 1,146.70 % Other Non-Interest Expense Non- 35.5% 25.0% 22.7% 23.2% 44.6% 10,641.45 Pre-Tax Profit Margin Pre- 19.8% 15.5% 50.1% 22.1% 41.3% 25,203.09 Net Income Margin 15.8% 12.5% 37.1% 22.4% 42.0% 21,776.15 Tot. Income / Premises and Equip. 8.01 11.13 2.28 6.27 2.44 3,110.63 Returns Return On Assets 0.55% 0.56% 1.09% 0.57% 1.71% Return On Equity 9.32% 6.71% 17.15% 14.99% 23.26% Yields Yield on Earning Assets 2.66% 4.90% 2.72% 1.39% 1.18% Cost of Funding Earning Assets 0.86% 1.49% 1.04% 0.93% 0.16% Net Interest Margin 1.80% 3.41% 1.68% 0.46% 1.02% Asset Quality Nonperforming Assets to Tot. Assets N/A 1.69% N/A N/A N/A Loss Allowance to Loans 1.69% 5.99% 1.90% 0.38% 0.31% Loss Allowance to Noncurrent Loans 71.00% 132.98% 196.66% 62.94% N/A Capital Adequacy Equity / Assets 6.09% 8.54% 6.48% 3.97% 7.64% Leverage Ratio N/A 6.6% N/A N/A N/A Tier 1 Risk Based Capital Ratio 12.10% 12.90% 10.10% 17.80% 10.80% Total Risk Based Capital Ratio 15.20% 16.60% 12.60% 20.40% 13.60% CITIGRO-CITIGROUP INC. CITIGRO- BANK OF -BANK OF CHINA LTD OF- UBS AG-UBS AG AG- HANG SE-HANG SENG BANK LTD SE- is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Targets financial metric for Most Recent Fiscal year compared to Benchmark year. The Peer Gap Analysis provides a comparison between the target company and your selected peers. While no two companies are exactly the same due to differences in product/geo mix distribution channels, accounting methods, etc. the peer analysis is most likely of interest to your client or prospect and makes for an interesting conversation around business processes and strategies. Example of how to interpret this Peer Gap Analysis Table: If HSBC HOLDINGS PLC could have improved PRE-TAX PROFIT MARGIN from their current year figure of 19.8% to their benchmark peer (BANK OF CHINA L) of 50.1%, it would have resulted in a 1st year cash flow benefit of 25203.09 (Mil - USD). Page 15 of 41
    • Latest Twelve Months (LTM) Peer Gap Analysis — HSBC HOLDINGS PLC The Peer Gap Analysis compares HSBC HOLDINGS PLC s financial metrics for the current year with those of its peers (as selected by the user). The and arrows indicate the company within the peer group with the best and lowest performance for a given metric for the year. The Peer Gap Analysis further quantifies the 1st year cash flow benefits for HSBC HOLDINGS PLC , with the underlying assumption that HSBC HOLDINGS PLC can improve its current years financial performance to match that of its best performing, or benchmark, peer (indicated by the arrow). Value of Gaps(1) Gaps(1) Target Peer Companies 1st Yr Cash Flow Growth HSBC HO CITIGRO BANK OF UBS AG HANG SE (Millions - USD) Net Interest Income Growth 0.2% 2.2% 21.9% 3.3% 13.1% 1,661.19 Non-Interest Income Growth Non- 4.0% -12.1% 10.3% -16.8% 5.2% 530.51 Total Income Growth 2.2% -3.2% 18.0% -13.0% 1.2% 2,551.13 Profitability % Provision for Loan Loss 13.4% 24.5% 5.3% 0.4% 1.5% 11,237.05 Efficiency Ratio (Cost to Income) 56.3% 62.0% 45.2% 78.8% 58.6% 9,663.13 % Salaries and Related Expense 23.8% 30.7% N/A 55.5% N/A - % Premises and Equipment Expense N/A 4.0% N/A 5.6% 3.8% N/A % Other Non-Interest Expense Non- N/A 27.4% N/A 17.6% N/A N/A Pre-Tax Profit Margin Pre- 19.1% 15.1% 51.1% 20.2% 42.0% 27,640.30 Net Income Margin 17.9% 11.4% 37.6% 19.8% 44.0% 22,548.11 Tot. Income / Premises and Equip. 7.45 10.68 2.39 5.47 2.27 3,744.06 Returns Return On Assets 0.61% 0.46% 1.07% 0.43% 1.74% Return On Equity 9.93% 5.69% 17.42% 11.00% 23.22% Yields Yield on Earning Assets 2.61% 4.52% 3.91% 1.51% 2.18% Cost of Funding Earning Assets 0.89% 1.41% 1.52% 0.98% 0.35% Net Interest Margin 1.72% 3.11% 2.38% 0.53% 1.83% Asset Quality Nonperforming Assets to Tot. Assets N/A 1.32% N/A N/A N/A Loss Allowance to Loans N/A 5.49% N/A N/A N/A Loss Allowance to Noncurrent Loans N/A 145.68% N/A N/A N/A Capital Adequacy Equity / Assets 6.24% 8.78% 6.34% 4.20% 7.57% Leverage Ratio N/A 7.0% N/A N/A N/A Tier 1 Risk Based Capital Ratio 12.20% 13.30% 10.00% 18.10% 11.00% Total Risk Based Capital Ratio 14.90% 17.00% 12.40% 19.50% 13.80% CITIGRO-CITIGROUP INC. CITIGRO- BANK OF -BANK OF CHINA LTD OF- UBS AG-UBS AG AG- HANG SE-HANG SENG BANK LTD SE- is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Targets financial metric for Most Recent Fiscal year compared to Benchmark year. The Peer Gap Analysis provides a comparison between the target company and your selected peers. While no two companies are exactly the same due to differences in product/geo mix distribution channels, accounting methods, etc. the peer analysis is most likely of interest to your client or prospect and makes for an interesting conversation around business processes and strategies. Example of how to interpret this Peer Gap Analysis Table: If HSBC HOLDINGS PLC could have improved PRE-TAX PROFIT MARGIN from their current year figure of 19.1% to their benchmark peer (BANK OF CHINA L) of 51.1%, it would have resulted in a 1st year cash flow benefit of 27640.30 (Mil - USD). Page 16 of 41
    • Annual Industry Gap Analysis — HSBC HOLDINGS PLC The Industry Gap Analysis compares HSBC HOLDINGS PLC s financial metrics for the current year with those of its relevant industry group. The and arrows indicate the best and lowest performer when comparing HSBC HOLDINGS PLC s financial metrics to their industry financial metrics. The industry selected for comparison purposes is determined by HSBC HOLDINGS PLC s Standard Industrial Classification code (SIC). The Industry Gap Analysis further quantifies the 1st year cash flow benefits for HSBC HOLDINGS PLC , with the underlying assumption that HSBC HOLDINGS PLC can improve its current years financial performance to match that of the industry benchmark (1st Quartile and indicated by the arrow). Value of Gaps(1) Gaps(1) National commercial banks (SIC: 6021) $10 billion or Company more - Asia-Pacific Asia- 1st Yr Cash Flow Growth HSBC HO 1st Quartile Median 4th Quartile (Millions - USD) Net Interest Income Growth -3.0% 30.7% 14.2% 2.9% 2,722.69 Non-Interest Income Growth Non- -7.3% 29.9% 12.6% -6.5% 3,473.51 Total Income Growth -5.3% 30.4% 13.6% 2.3% 6,213.99 Profitability % Provision for Loan Loss 16.3% 5.2% 11.9% 17.2% 9,221.92 Efficiency Ratio (Cost to Income) 64.5% 44.3% 50.9% 61.3% 16,827.76 % Salaries and Related Expense 23.8% 19.4% 22.8% 27.4% 3,675.54 % Premises and Equipment Expense 5.2% 1.4% 2.5% 5.2% 3,207.37 % Other Non-Interest Expense Non- 35.5% 18.5% 23.8% 46.0% 14,081.73 Pre-Tax Profit Margin Pre- 19.8% 44.8% 33.8% 24.2% 20,773.07 Net Income Margin 15.8% 33.7% 25.0% 16.6% 14,914.50 Tot. Income / Premises and Equip. 8.01 6.34 3.25 2.41 - Returns Return On Assets 0.55% 1.25% 0.93% 0.54% Return On Equity 9.32% 16.59% 12.44% 7.53% Leverage & Capital Adequacy Equity / Assets 6.09% 8.95% 6.92% 5.25% is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Targets financial metric for Most Recent Fiscal year compared to Benchmark year. The Industry Gap Analysis provides a comparison between the target company and their relevant industry. This type of analysis is most likely of interest to your client or prospect as the figures measure their relative performance to the aggregated data for all other publicly traded companies within their relevant industry SIC (Standard Industrial Classification) code. Example of how to interpret this Industry Gap Analysis Table: If HSBC HOLDINGS PLC could have improved PRE-TAX PROFIT MARGIN from their current year figure of 19.8% to the industry benchmark (1st Quartile) of 44.8%, it would have resulted in a 1st year cash flow benefit of 20773.07 (Mil - USD). Page 17 of 41
    • Latest Twelve Months (LTM) Industry Gap Analysis — HSBC HOLDINGS PLC The Industry Gap Analysis compares HSBC HOLDINGS PLC s financial metrics for the current year with those of its relevant industry group. The and arrows indicate the best and lowest performer when comparing HSBC HOLDINGS PLC s financial metrics to their industry financial metrics. The industry selected for comparison purposes is determined by HSBC HOLDINGS PLC s Standard Industrial Classification code (SIC). The Industry Gap Analysis further quantifies the 1st year cash flow benefits for HSBC HOLDINGS PLC , with the underlying assumption that HSBC HOLDINGS PLC can improve its current years financial performance to match that of the industry benchmark (1st Quartile and indicated by the arrow). Value of Gaps(1) Gaps(1) National commercial banks (SIC: 6021) $10 billion or Company more - Asia-Pacific Asia- 1st Yr Cash Flow Growth HSBC HO 1st Quartile Median 4th Quartile (Millions - USD) Net Interest Income Growth 0.2% 30.7% 14.2% 2.9% 2,332.38 Non-Interest Income Growth Non- 4.0% 29.9% 12.6% -6.5% 2,202.48 Total Income Growth 2.2% 30.4% 13.6% 2.3% 4,550.17 Profitability % Provision for Loan Loss 13.4% 5.2% 11.9% 17.2% 7,091.09 Efficiency Ratio (Cost to Income) 56.3% 44.3% 50.9% 61.3% 10,416.41 % Salaries and Related Expense 23.8% 19.4% 22.8% 27.4% 3,765.44 % Premises and Equipment Expense N/A 1.4% 2.5% 5.2% N/A % Other Non-Interest Expense Non- N/A 18.5% 23.8% 46.0% N/A Pre-Tax Profit Margin Pre- 19.1% 44.8% 33.8% 24.2% 22,232.39 Net Income Margin 17.9% 33.7% 25.0% 16.6% 13,713.38 Tot. Income / Premises and Equip. 7.45 6.34 3.25 2.41 - Returns Return On Assets 0.61% 1.25% 0.93% 0.54% Return On Equity 9.93% 16.59% 12.44% 7.53% Leverage & Capital Adequacy Equity / Assets 6.24% 8.95% 6.92% 5.25% is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Targets financial metric for Most Recent Fiscal year compared to Benchmark year. The Industry Gap Analysis provides a comparison between the target company and their relevant industry. This type of analysis is most likely of interest to your client or prospect as the figures measure their relative performance to the aggregated data for all other publicly traded companies within their relevant industry SIC (Standard Industrial Classification) code. Example of how to interpret this Industry Gap Analysis Table: If HSBC HOLDINGS PLC could have improved PRE-TAX PROFIT MARGIN from their current year figure of 19.1% to the industry benchmark (1st Quartile) of 44.8%, it would have resulted in a 1st year cash flow benefit of 22232.40 (Mil - USD). Page 18 of 41
    • Annual Financials — HSBC HOLDINGS PLC (Millions - USD)Income Statement Dec-10 Dec-09 Dec-08 Dec-07 Dec-06Total Interest Income 58,416.6 62,039.2 91,659.3 93,001.8 76,172.2Total Interest Expense 18,890.9 21,303.2 48,783.9 54,751.7 41,367.6NET INTEREST INCOME 39,525.6 40,736.0 42,875.4 38,250.1 34,804.6Total Non-Interest Income 43,648.8 47,086.3 41,774.3 49,620.1 38,173.5TOTAL INCOME 83,174.4 87,822.3 84,649.7 87,870.2 72,978.1Provision for Loan Loss 13,538.6 24,868.7 24,153.7 17,236.1 10,540.5Salaries and Related Expenses 19,822.3 18,413.8 20,811.6 21,407.4 18,488.6Premises & Equipment Expense 4,345.0 4,087.0 4,309.1 3,979.6 3,386.9Other Non-Interest Expense 29,495.6 34,256.1 18,560.5 23,898.9 20,115.6TOTAL NON-INTEREST EXPENSE 53,662.9 56,756.8 43,681.1 49,286.0 41,991.2Other Income (Expense) 535.6 -914.3 -9,161.6 1,438.9 780.5INCOME BEFORE TAXES 16,508.6 5,282.4 7,653.2 22,787.1 21,227.0Income Taxes 4,842.6 383.9 2,811.6 3,769.9 5,211.8Minority Interest IS 1,031.3 857.5 770.7 1,326.5 1,081.3Net Income - Continuing Operations 10,634.6 4,041.1 4,070.8 17,690.6 14,933.8Extraordinary Items, Net 2,515.3 1,775.8 1,662.6 1,508.2 845.5NET INCOME 13,149.9 5,816.9 5,733.4 19,198.8 15,779.3Assets Dec-10 Dec-09 Dec-08 Dec-07 Dec-06Interest Bearing BalancesNon-Interest Bearing BalancesCash and Due from Banks 100,943.1 98,011.7 79,605.1 54,854.3 43,219.9Securities 1,083,415.3 1,075,770.7 1,247,105.3 961,458.6 657,744.1Federal Funds Sold and Securities PurchasedTrading Account SecuritiesTotal Loans and Leases, Net of Unearned Inc 1,186,545.1 1,098,658.4 1,107,109.5 1,242,088.4 1,067,753.7Loan Loss Allowance 20,080.0 25,474.9 23,835.1 19,266.6 13,588.7NET LOANS AND LEASES 1,166,465.1 1,073,183.5 1,083,274.4 1,222,821.9 1,054,165.1Premises and Equipment 10,386.5 12,707.5 13,013.6 14,394.0 14,486.4Intangible Assets 26,478.1 27,142.5 27,272.4 39,816.2 37,364.3Other Assets 59,629.2 62,823.4 62,390.5 63,167.9 51,995.8TOTAL ASSETS 2,447,317.3 2,349,639.3 2,512,661.4 2,356,512.9 1,858,975.5Liabilities & Equity Dec-10 Dec-09 Dec-08 Dec-07 Dec-06Interest Bearing DepositsNon-Interest Bearing DepositsTOTAL DEPOSITS 1,227,544.1 1,155,987.3 1,111,878.7 1,099,654.3 897,538.2Federal Funds Purchased and Repurchase AgreementsOther Borrowed Funds 321,349.6 327,357.2 363,369.1 419,515.7 379,485.7Subordinated Debt and DebenturesBankers Acceptances OutstandingOther Liabilities 749,381.5 733,117.8 939,620.9 701,492.8 466,933.3TOTAL LIABILITIES 2,298,275.2 2,216,462.3 2,414,868.7 2,220,662.8 1,743,957.3Preferred EquityCommon Equity 140,390.3 124,433.0 89,774.6 128,570.9 108,437.1TOTAL EQUITY 140,390.3 124,433.0 89,774.6 128,570.9 108,437.1TOTAL LIABILITIES AND EQUITY CAPITAL 2,447,317.3 2,349,639.3 2,512,661.4 2,356,512.9 1,858,975.5 Page 19 of 41
    • Annual Financials — Peer Comparison (Millions) HSBC HOLDINGS CITIGROUP BANK OF HANG SENG PLC INC. CHINA LTD UBS AG BANK LTDIncome Statement (USD) (USD) (USD) (USD) (USD)Total Interest Income 58,416.6 79,702.0 47,232.0 19,417.9 2,125.1Total Interest Expense 18,890.9 24,234.0 18,000.8 13,023.1 283.9NET INTEREST INCOME 39,525.6 55,468.0 29,231.2 6,394.8 1,841.2Total Non-Interest Income 43,648.8 29,562.0 13,130.7 28,262.5 2,728.3TOTAL INCOME 83,174.4 85,030.0 42,361.9 34,657.3 4,569.5Provision for Loan Loss 13,538.6 25,194.0 2,343.1 67.9 50.2Salaries and Related Expenses 19,822.3 24,464.0 8,042.1 17,409.4 478.1Premises & Equipment Expense 4,345.0 3,338.0 1,822.8 1,859.3 175.7Other Non-Interest Expense 29,495.6 21,260.0 9,602.7 8,027.7 2,040.2TOTAL NON-INTEREST EXPENSE 53,662.9 49,062.0 19,467.6 27,296.4 2,694.0Other Income (Expense) 535.6 2,410.0 693.1 377.6 63.5INCOME BEFORE TAXES 16,508.6 13,184.0 21,244.3 7,670.6 1,888.8Income Taxes 4,842.6 2,233.0 4,885.8 -392.0 312.3Minority Interest IS 1,031.3 281.0 793.8 311.8 -Net Income - Continuing Operations 10,634.6 10,670.0 15,564.7 7,750.9 1,576.5Extraordinary Items, Net 2,515.3 -68.0 154.9 1.0 342.3NET INCOME 13,149.9 10,602.0 15,719.6 7,751.9 1,918.8 HSBC HOLDINGS CITIGROUP BANK OF HANG SENGAssets PLC INC. CHINA LTD UBS AG BANK LTDInterest Bearing Balances 162,437.0Non-Interest Bearing Balances 27,972.0Cash and Due from Banks 100,943.1 190,409.0 244,356.2 28,446.7 5,712.6Securities 1,083,415.3 303,377.0 321,830.1 877,430.0 30,629.7Federal Funds Sold and Securities Purchased 246,717.0Trading Account Securities 317,272.0Total Loans and Leases, Net of Unearned Inc 1,186,545.1 678,662.0 972,707.5 292,583.3 75,253.9Loan Loss Allowance 20,080.0 40,655.0 18,495.4 1,118.4 236.2NET LOANS AND LEASES 1,166,465.1 638,007.0 954,212.2 291,464.9 75,017.7Premises and Equipment 10,386.5 7,637.0 18,602.5 5,528.4 1,873.0Intangible Assets 26,478.1 38,210.0 631.2 10,106.1 693.8Other Assets 59,629.2 172,273.0 31,428.8 132,576.1 4,016.2TOTAL ASSETS 2,447,317.3 1,913,902.0 1,571,061.1 1,345,552.3 117,943.2 HSBC HOLDINGS CITIGROUP BANK OF HANG SENGLiabilities & Equity PLC INC. CHINA LTD UBS AG BANK LTDInterest Bearing Deposits 711,307.0 579,567.5 107,632.9 80,729.7Non-Interest Bearing Deposits 133,661.0 540,191.7 7,604.2TOTAL DEPOSITS 1,227,544.1 844,968.0 1,126,566.5 341,913.1 88,333.9Federal Funds Purchased and Repurchase Agreements 189,558.0 83,898.6Other Borrowed Funds 321,349.6 415,625.0 270,536.6 364,202.8 3,528.9Subordinated Debt and Debentures 44,348.0Bankers Acceptances OutstandingOther Liabilities 749,381.5 255,935.0 72,167.1 502,174.5 17,074.7TOTAL LIABILITIES 2,298,275.2 1,750,434.0 1,469,270.1 1,292,189.1 108,937.5Preferred Equity 312.0Common Equity 140,390.3 163,156.0 96,975.8 48,174.3 9,005.7TOTAL EQUITY 140,390.3 163,468.0 96,975.8 48,174.3 9,005.7TOTAL LIABILITIES AND EQUITY CAPITAL 2,447,317.3 1,913,902.0 1,571,061.1 1,345,552.3 117,943.2 Page 20 of 41
    • Latest Twelve Months (LTM) Financials — HSBC HOLDINGS PLC (Millions - USD)Income Statement Jun-11 Mar-11 Dec-10 Sep-10 Jun-10Total Interest Income 60,844.6 59,630.4 58,416.2 58,355.5 58,294.8Total Interest Expense 20,786.2 19,838.4 18,890.5 18,599.7 18,308.8NET INTEREST INCOME 40,058.4 39,792.0 39,525.7 39,755.8 39,986.0Total Non-Interest Income 46,406.1 45,027.2 43,648.3 44,128.2 44,608.2TOTAL INCOME 86,464.5 84,819.3 83,174.0 83,884.1 84,594.2Provision for Loan Loss 11,578.5 12,558.8 13,539.0 16,164.6 18,790.2Salaries and Related Expenses 20,550.9 20,186.5 19,822.2 19,423.8 19,025.4Premises & Equipment ExpenseOther Non-Interest Expense 28,157.7 31,192.4 34,227.1 34,695.2 35,163.4TOTAL NON-INTEREST EXPENSE 48,708.6 51,378.9 54,049.3 54,119.0 54,188.8Other Income (Expense) -9,653.4 -4,364.6 924.1 180.2 -563.7INCOME BEFORE TAXES 16,524.0 16,516.9 16,509.9 13,780.7 11,051.5Income Taxes 2,702.7 3,773.2 4,843.8 3,899.3 2,954.9Minority Interest IS 1,094.0 1,062.6 1,031.3 994.1 957.0Net Income - Continuing Operations 12,727.3 11,681.1 10,634.8 8,887.2 7,139.6Extraordinary Items, Net 2,886.1 2,700.7 2,515.2 2,306.0 2,096.9NET INCOME 15,461.1 14,305.6 13,150.0 11,193.2 9,236.4Assets Jun-11 Mar-11 Dec-10 Sep-10 Jun-10Interest Bearing BalancesNon-Interest Bearing BalancesCash and Due from Banks 103,134.1 103,134.1 100,943.1 100,943.1 101,316.9Securities 1,193,352.6 1,193,352.6 1,083,415.3 1,083,415.3 1,111,789.3Federal Funds Sold and Securities PurchasedTrading Account SecuritiesTotal Loans and Leases, Net of Unearned IncLoan Loss Allowance 20,080.0 20,080.0NET LOANS AND LEASES 1,265,318.5 1,265,318.5 1,166,465.1 1,166,465.1 1,091,593.0Premises and Equipment 11,606.7 11,606.7 10,386.5 10,386.5 13,314.9Intangible Assets 32,063.2 32,063.2 26,478.1 26,478.1 27,909.1Other Assets 80,516.3 80,516.3 59,629.2 59,629.2 70,623.8TOTAL ASSETS 2,685,991.4 2,685,991.4 2,447,317.3 2,447,317.3 2,416,547.1Liabilities & Equity Jun-11 Mar-11 Dec-10 Sep-10 Jun-10Interest Bearing DepositsNon-Interest Bearing DepositsTOTAL DEPOSITS 1,320,434.9 1,320,434.9 1,227,544.1 1,227,544.1 1,149,384.8Federal Funds Purchased and Repurchase AgreementsOther Borrowed Funds 328,139.8 328,139.8 321,349.6 321,349.6 328,116.2Subordinated Debt and DebenturesBankers Acceptances OutstandingOther Liabilities 869,695.7 869,695.7 749,381.5 749,381.5 795,465.3TOTAL LIABILITIES 2,518,270.5 2,518,270.5 2,298,275.2 2,298,275.2 2,272,966.3Preferred EquityCommon Equity 160,425.9 160,425.9 140,390.3 140,390.3 136,187.5TOTAL EQUITY 160,425.9 160,425.9 140,390.3 140,390.3 136,187.5TOTAL LIABILITIES AND EQUITY CAPITAL 2,685,991.4 2,685,991.4 2,447,317.3 2,447,317.3 2,416,547.1 Page 21 of 41
    • Latest Twelve Months (LTM) Financials - Peer Comparison (Millions) HSBC HOLDINGS CITIGROUP BANK OF HANG SENG PLC INC. CHINA LTD UBS AG BANK LTDIncome Statement (USD) (USD) (USD) (USD) (USD)Total Interest Income 60,844.6 77,109.0 50,165.4 19,209.0 2,335.4Total Interest Expense 20,786.2 24,000.0 19,555.5 12,494.2 375.1NET INTEREST INCOME 40,058.4 53,109.0 30,609.9 6,714.8 1,960.3Total Non-Interest Income 46,406.1 27,367.0 14,054.1 23,244.5 2,724.4TOTAL INCOME 86,464.5 80,476.0 44,664.0 29,959.2 4,684.7Provision for Loan Loss 11,578.5 19,727.0 2,374.4 118.3 70.5Salaries and Related Expenses 20,550.9 24,678.0 16,627.4Premises & Equipment Expense 3,192.0 1,692.6 175.7Other Non-Interest Expense 28,157.7 22,016.0 20,169.3 5,273.2 2,567.3TOTAL NON-INTEREST EXPENSE 48,708.6 49,886.0 20,169.3 23,593.3 2,743.1Other Income (Expense) -9,653.4 1,252.0 693.1 -209.9 98.7INCOME BEFORE TAXES 16,524.0 12,115.0 22,813.4 6,037.7 1,969.9Income Taxes 2,702.7 2,382.0 5,297.8 130.7 328.3Minority Interest IS 1,094.0 321.0 854.0 271.6 -Net Income - Continuing Operations 12,727.3 9,412.0 16,661.6 5,635.4 1,641.6Extraordinary Items, Net 2,886.1 -239.0 143.3 - 417.8NET INCOME 15,461.1 9,173.0 16,804.9 5,943.1 2,059.4 HSBC HOLDINGS CITIGROUP BANK OF HANG SENGAssets PLC INC. CHINA LTD UBS AG BANK LTDInterest Bearing Balances 163,619.0Non-Interest Bearing Balances 27,842.0Cash and Due from Banks 103,134.1 191,461.0 396,320.9 13,966.6 6,625.7Securities 1,193,352.6 309,964.0 307,356.0 816,752.2 32,384.3Federal Funds Sold and Securities Purchased 261,120.0Trading Account Securities 323,110.0Total Loans and Leases, Net of Unearned Inc 665,807.0Loan Loss Allowance 36,568.0 218.8NET LOANS AND LEASES 1,265,318.5 629,239.0 932,584.6 294,204.9 79,513.5Premises and Equipment 11,606.7 7,536.0 18,726.9 5,475.9 2,066.5Intangible Assets 32,063.2 38,474.0 - 9,113.2 767.4Other Assets 80,516.3 186,911.0 34,757.2 124,449.6 3,827.5TOTAL ASSETS 2,685,991.4 1,947,815.0 1,689,745.5 1,263,962.5 125,184.8 HSBC HOLDINGS CITIGROUP BANK OF HANG SENGLiabilities & Equity PLC INC. CHINA LTD UBS AG BANK LTDInterest Bearing Deposits 722,173.0Non-Interest Bearing Deposits 143,703.0TOTAL DEPOSITS 1,320,434.9 865,876.0 1,197,110.5 332,378.1 94,783.0Federal Funds Purchased and Repurchase Agreements 187,825.0 108,257.4Other Borrowed Funds 328,139.8 410,275.0 257,059.5 362,790.0 4,530.4Subordinated Debt and Debentures 44,888.0Bankers Acceptances OutstandingOther Liabilities 869,695.7 267,914.0 128,456.9 407,403.2 16,394.5TOTAL LIABILITIES 2,518,270.5 1,776,778.0 1,582,626.9 1,210,828.8 115,708.0Preferred Equity 312.0Common Equity 160,425.9 170,725.0 102,119.0 48,630.1 9,476.9TOTAL EQUITY 160,425.9 171,037.0 102,119.0 48,630.1 9,476.9TOTAL LIABILITIES AND EQUITY CAPITAL 2,685,991.4 1,947,815.0 1,689,745.5 1,263,962.5 125,184.8 Page 22 of 41
    • Key Client Questions & Solutions Total Income Growth (Includes Net and Non Interest Income)- Questions 1. How effective is Sales and Distribution in managing activities like i) sales planning, ii) sales plan execution, and iii) sales plan management? Better sales and distribution often improves income growth-related key performance indicators (KPIs) like i) number of leads generated, ii) salespersons? and customers? feedback, iii) percentage of sales leads converted, iv) percentage of sales growth by channel, new customers, and new products, and v) percentage of sales forecast achieved. Which of these KPIs or others are you focused on improving by better sales and distribution? 2. How effective is Marketing in managing activities like i) market research, ii) creation of market plan, and iii) market plan management? Better marketing often improves income growth-related key performance indicators like i) customer satisfaction with product attributes, ii) percentage of market share gained, iii) price point or market share point advantage, iv) product differentiation, and v) brand recognition and customer awareness. Which of these KPIs or others are you focused on improving by better marketing? 3. How effective is Customer Service and Support in managing activities like i) customer interface, ii) customer information management, and iii) service delivery management? Better customer service and support often improves income growth-related key performance indicators (KPIs) like i) customer satisfaction, ii) lifetime value of customer, iii) customer retention (churn), iv) cross-selling and up-selling effectiveness (products per account or household), and v) number of accounts (new and total). Which of these KPIs or others are you focused on improving by better customer service and support? 4. How effective is Product Development in managing activities like i) concept development, ii) product manufacture, and iii) product launch? Better product development often improves income growth-related key performance indicators (KPIs) like i) new customer segments and needs identified, ii) product cost competitiveness, iii) percentage of market share gained, iv) customer satisfaction, and v) product revenue versus forecast. Which of these KPIs or others are you focused on improving by better product development? 5. How effective is Financial Management in managing activities like i) risk management, ii) asset and liability management, iii) loan portfolio mix, iv) credit standards, and v) loan and deposit pricing? Better financial management often improves income growth-related key performance indicators (KPIs) like i) return on assets (equity), ii) net interest margin, iii) provision for loan losses, iv) customer satisfaction, and v) customer retention (churn). Which of these KPIs or others are you focused on improving by better financial management? Page 23 of 41
    • Total Income Growth (Includes Net and Non Interest Income)- Potential Solutions1. Sales and Distribution ? 1. Multi-channel and 2. Customer Insight: Customers have different needs anddemand consistent, personalized service at every touch point - From the office; At the branch; Self service; andthrough the contact center. Multi-channel solutions provide a complete and modular range of products andservices with the goal of common business functions, processes, and data reused across all channels. WithCustomer Insight solutions, you can gather customer intelligence from all touch points throughout your bank.Share it to provide consistent, informed service across channels. Analyze it to identify those segments bestsuited to your institution. Apply it to personalize products to your customers needs, strengthening loyalty.2. Marketing ? 1. Customer Insight, and 2. Multi-channel: Please see description of Customer Insight andMulti-channel in Sales and Distribution above.3. Customer Service and Support- 1. Multi-channel, and 2. Payments: Please see description of Multi-channel in Sales and Distribution above. Payment solutions include streamlining payments, from the front end tothe back office. Also, integrating seamlessly with external clearing agencies, digitizing check processing,increasing credit card volumes, and improving accuracy, and accelerating service.4. Product Development ? 1. Customer Insight, and 2. Core Systems: Please see description of CustomerInsight in Sales and Distribution above. Core Systems helps develop and launch new products quickly. Integrateand streamline core processes with a flexible infrastructure as well as supporting changing regulatoryrequirements. These solutions are designed to help transform existing core banking operations.5. Financial Management ? 1. Risk Management and Compliance, and 2. Core Systems: Risk Managementhelps manage risks, from operational to market and credit risk, across your enterprise and product lines. Improveresilience to go beyond meeting regulatory compliance mandates. Also helps prevent money laundering, fraud andidentity theft. Please see description of Core Systems in Product Development above. Page 24 of 41
    • Salaries and Related Expense - Questions1. How effective is Mid- and Back-Office Processing in managing activities like i) operations, ii) accountmanagement, iii) and operational risk management? Better mid- and back-office processing often improvessalaries and related expense-related key performance indicators (KPIs) like i) mid- and back-office expense(excluding non-personnel) as percentage of total income, ii) pre-tax profit margin, iii) time and cost to accessmid- and back-office data and information, and iv) percentage of mid- and back-office processing activities andtasks outsourced. Which of these KPIs or others are you focused on improving by better mid- and back-officeprocessing?2. How effective is Customer Service and Support in managing activities like i) customer interface, ii)customer information management, and iii) service delivery management? Better customer service and supportoften improves salaries and related expense-related key performance indicators (KPIs) like i) customer serviceand support employee expense as percentage of total income, ii) customer service and support employeesatisfaction, iii) number of customer service and support employees, iv) average time from customer inquiry andcomplaint to resolution, and v) percentage of customer service and support activities and tasks outsourced.Which of these KPIs or others are you focused on improving by better customer service and support?3. How effective is Sales and Distribution in managing activities like i) sales planning, ii) sales plan execution,and iii) sales plan management? Better sales and distribution often improves salaries and related expense-relatedkey performance indicators (KPIs) like i) sales and distribution employee expense as percentage of total income,ii) average customer acquisition cost, iii) number of sales and distribution employees, iv) average time from saleslead to close, and v) percentage of sales and distribution activities and tasks outsourced. Which of these KPIsor others are you focused on improving by better sales and distribution?4. How effective is Marketing in managing activities like i) market research, ii) creation of market plan, and iii)market plan management? Better marketing often improves salaries and related expense-related key performanceindicators like i) marketing employee expense as percentage of total income, ii) marketing employee satisfaction,iii) marketing employee turnover rate, iv) number of marketing employees, and v) time and cost to accessmarketing data and information. Which of these KPIs or others are you focused on improving by bettermarketing?5. How effective is Product Development in managing activities like i) concept development, ii) productmanufacture, and iii) product launch? Better product development often improves salaries and related expense-related key performance indicators (KPIs) like i) product development employee expense as percentage of totalincome, ii) product development employee satisfaction, iii) product development employee turnover rate, iv)number of product development employees, and v) time and cost to access product development data andinformation. Which of these KPIs or others are you focused on improving by better product development?6. How effective is Information Technology in managing activities like i) formulating IT strategy, ii) managingIT operations, iii) developing and executing technology infrastructure, information management and developmentprojects, iv) performing systems administration, and v) providing user support and training? Better managementof IT often improves salaries and related expense-related key performance indicators like i) total cost ofownership, ii) number of IT employees, iii) realized ROI on IT projects, iv) IT development costs as percentage oftotal IT cost, and v) percentage of IT projects implemented on time. Which of these KPIs or others are youfocused on improving by better IT?7. How effective is Human Resources in managing activities like i) creating employee resource plans, ii)recruiting, training and facilitating employee separation, iii) performing data and salary administration, iv)performing payroll functions, v) providing health and safety and vi) complying with regulations? Bettermanagement of human resources often improves salaries and related expense-related key performance indicatorslike i) overall number of employees, ii) employee turnover rate, iii) number of HR employees, iv) time and cost toaccess HR data and information, v) regulatory compliance costs and fines. Which of these KPIs or others are youfocused on improving by better human resources? Page 25 of 41
    • Salaries and Related Expense - Potential Solutions1. Mid- and Back-Office Processing ? 1. Core Systems and 2. Risk Management and Compliance: CoreSystems helps develop and launch new products quickly. Integrate and streamline core processes with a flexibleinfrastructure as well as supporting changing regulatory requirements. These solutions are designed to helptransform existing core banking operations. Risk Management helps manage risks, from operational to market andcredit risk, across your enterprise and product lines. Improve resilience to go beyond meeting regulatorycompliance mandates. Helps prevent money laundering, fraud and identity theft.2. Customer Service and Support ? Multi-channel: Customers have different needs and demand consistent,personalized service at every touch point - From the office; At the branch; Self service; and through thecontact center. Multi-channel solutions provide a complete and modular range of products and services with thegoal of common business functions, processes, and data reused across all channels.3. Sales and Distribution ? 1. Multi-channel and 2. Customer Insight: Please see description of Multi-channel in customer service and support above. With Customer Insight solutions, you can gather customerintelligence from all touch points throughout your bank. Share it to provide consistent, informed service acrosschannels. Analyze it to identify those segments best suited to your institution. Apply it to personalize productsto your customers needs, strengthening loyalty.4. Marketing ? 1. Customer Insight, and 2. Multi-channel: Please see description of Multi-channel incustomer service and support. Also, see description of Customer Insight in Sales and Distribution above.5. Product Development ? 1. Customer Insight, and 2. Core Systems: Please see description of CustomerInsight in Sales and Distribution above. Also, see description of Core Systems in Mid- and Back Office Processingabove.6. Information Technology ? 1. Consulting and Implementation Services, 2. Hardware and SoftwareTechnology and 3. Outsourcing: Consulting and implementation services typically are based on professionalsproviding expert advice and implementation. Typically infrastructure hardware and software is designed tosupport end-to-end solutions built on operating systems platforms. It should be based on a design approach thathelps you simplify development, deployment, and management by anticipating needs and opportunities. It shouldbe intrinsically designed to work together and interact seamlessly with other data and applications across your ITenvironment so that you can reduce the costs of ongoing operations, deliver high reliability and security in yourIT infrastructure, and drive valuable new capabilities for the future growth of your business. Outsourcingtypically takes over entire or parts of IT operations including system and application implementations, operationsand maintenance.7. Human Resources - Human Resource Applications of Enterprise Resource Planning: ERP humanresources applications typically provide capability to perform functions such as payroll, benefits administration,recruiting, hiring, retention, skills development, education, training, HR regulations, and change management. Itcan also include the outsourcing of HR functions. Page 26 of 41
    • Premise and Equipment Expense - Questions1. How effective is Mid- and Back-Office Processing in managing activities like i) operations, ii) accountmanagement, iii) and operational risk management? Better mid- and back-office processing often improvespremise and equipment expense-related key performance indicators (KPIs) like i) mid- and back-office expense(excluding personnel) as percentage of total income, ii) pre-tax profit margin, iii) time and cost to access mid-and back-office data and information, and iv) percentage of mid- and back-office processing activities and tasksoutsourced. Which of these KPIs or others are you focused on improving by better mid- and back-officeprocessing?2. How effective is Branch and Office Management in managing activities like i) branching strategy, ii)branching network optimization, iii) branch automation, iv) branch maintenance, and v) real estate management?Better branch and office management often improves premise and equipment expense-related key performanceindicators (KPIs) like i) premises and equipment expense as percentage of total income, ii) branch utilization, iii)number of ATMs, iv) number of branches, and v) percentage of branch activities and tasks automated. Which ofthese KPIs or others are you focused on improving by better branch and office management?3. How effective is Information Technology in managing activities like i) formulating IT strategy, ii) managingIT operations, iii) developing and executing technology infrastructure, information management and developmentprojects, iv) performing systems administration, and v) providing user support and training? Better managementof IT often improves premise and equipment expense-related key performance indicators like i) total cost ofownership, ii) CAPEX-OPEX Split of IT Spending, iii) HW & SW Maintenance as percentage of total IT costs, iv)percentage of IT projects implemented on time, and v) percentage of IT activities/tasks outsourced. Page 27 of 41
    • Premises and Equipment Expense - Potential Solutions1. Mid- and Back-Office Processing ? 1. Core Systems and 2. Risk Management and Compliance: CoreSystems helps develop and launch new products quickly. Integrate and streamline core processes with a flexibleinfrastructure as well as supporting changing regulatory requirements. These solutions are designed to helptransform existing core banking operations. Risk Management helps manage risks, from operational to market andcredit risk, across your enterprise and product lines. Improve resilience to go beyond meeting regulatorycompliance mandates. Also helps prevent money laundering, fraud and identity theft.2. Branch and Office Management ? 1. Multi-channel, 2. Payments and 3. Core Systems: Customers havedifferent needs and demand consistent, personalized service at every touch point - From the office; At thebranch; Self service; and through the contact center. Multi-channel solutions provide a complete and modularrange of products and services with the goal of common business functions, processes, and data reused acrossall channels. Payment processes includes streamlining payments, from the front end to the back office. Also,integrating seamlessly with external clearing agencies, digitizing check processing, increasing credit cardvolumes, and improving accuracy, and accelerating service. Please see description of Core Systems in Mid- andBack Office Processing above.3. Information Technology ? 1. Consulting and Implementation Services, 2. Hardware and SoftwareTechnology and 3. Outsourcing: Consulting and implementation services typically are based on professionalsproviding expert advice and implementation. Typically infrastructure hardware and software is designed tosupport end-to-end solutions built on operating systems platforms. It should be based on a design approach thathelps you simplify development, deployment, and management by anticipating needs and opportunities. It shouldbe intrinsically designed to work together and interact seamlessly with other data and applications across your ITenvironment so that you can reduce the costs of ongoing operations, deliver high reliability and security in yourIT infrastructure, and drive valuable new capabilities for the future growth of your business. Outsourcingtypically takes over entire or parts of IT operations including system and application implementations, operationsand maintenance. Page 28 of 41
    • Other Non-Interest Expense - Questions1. How effective is Vendor Selection and Procurement in managing activities like i) vendor selection andrationalization, ii) manage and monitor contracts, iii) evaluate vendor performance, iv) procure and replenishconsumables, and v) manage consumables inventory? Better vendor selection and procurement often helpsimprove other non-interest-related key performance indicators (KPIs) like i) other non-interest expense aspercentage of total income ii) non-interest expense per employee, iii) number of vendors, iv) vendor pricequality, and v) vendor on-time delivery of services and consumables. Which of these KPIs or others are youfocused on improving by better vendor selection and procurement? Page 29 of 41
    • Other Non-Interest Expense ? Potential Solutions1. Supply Chain Management: Procurement - For many companies, one area for better expense managementis procurement. However, to achieve substantial savings, you need to focus on how you buy and who you buyfrom, not just what you buy. Procurement solutions can help streamline and integrate your procurementprocesses to reduce costs and increase efficiency across the supply chain including helping i) determining yoursourcing strategy, ii) helping with when and what you order and from which suppliers, iii) helping you withbalancing priorities and managing price, quality, service, and v) implementing electronic transactions for allstages of the procurement process. If you need to develop a sourcing strategy, and implement the processesand tools to support that strategy, turn to these procurement solutions. Page 30 of 41
    • Fixed Asset Utilization - Premises and Equipment - Questions1. How effective is Mid- and Back-Office Processing in managing activities like i) operations, ii) accountmanagement, iii) and operational risk management? Better mid- and back-office processing often premises andequipment utilization-related key performance indicators (KPIs) like i) total income to premises and equipment, ii)return on mid- and back-office equipment investment, ) time and cost to access mid- and back-office data andinformation, and iv) percentage of mid- and back-office processing activities and tasks outsourced. Which ofthese KPIs or others are you focused on improving by better mid- and back-office processing?2. How effective is Branch and Office Management in managing activities like i) branching strategy, ii)branching network optimization, iii) branch automation, iv) branch maintenance, and v) real estate management?Better branch and office management often improves premises and equipment utilization-related key performanceindicators (KPIs) like i) total income to premises and equipment, ii) return on fixed assets, iii) branch utilization,iv) number of branches and ATMs, and v) percentage of branch activities and tasks automated. Which of theseKPIs or others are you focused on improving by better branch and office management?3. How effective is Information Technology in managing activities like i) formulating IT strategy, ii) managingIT operations, iii) developing and executing technology infrastructure, information management and developmentprojects, iv) performing systems administration, and v) providing user support and training? Better managementof IT often improves premises and equipment utilization-related key performance indicators like. Bettermanagement of IT often improves fixed asset-related key performance indicators like i) IT infrastructureutilization, ii) capital expenditure-operating expense mix of total IT spend, iii) total cost of ownership, iv)percentage of IT projects implemented on time, and v) realized ROI on IT projects. Which of these KPIs orothers are you focused on improving by better IT. Which of these KPIs or others are you focused on improvingby better IT? Page 31 of 41
    • Fixed Asset Utilization - Premises and Equipment ? Potential Solutions1. Mid- and Back-Office Processing ? 1. Core Systems and 2. Risk Management and Compliance: CoreSystems helps develop and launch new products quickly. Integrate and streamline core processes with a flexibleinfrastructure as well as supporting changing regulatory requirements. These solutions are designed to helptransform existing core banking operations. Risk Management helps manage risks, from operational to market andcredit risk, across your enterprise and product lines. Improve resilience to go beyond meeting regulatorycompliance mandates. Also helps prevent money laundering, fraud and identity theft.2. Branch and Office Management ? 1. Multi-channel, 2. Payments and 3. Core Systems: Multi-channel -customers have different needs and demand consistent, personalized service at every touch point. From theoffice. At the branch. Self service. Or through the contact center. Multi-channel solutions provide a completeand modular range of products and services with the goal of common business functions, processes, and datareused across all channels. Payment processes includes streamlining payments, from the front end to the backoffice. Also, integrating seamlessly with external clearing agencies, digitizing check processing, increasing creditcard volumes, and improving accuracy, and accelerating service. Please see description of Core Systems in Mid-and Back Office Processing above.3. Information Technology ? 1. Consulting and Implementation Services, 2. Hardware and SoftwareTechnology and 3. Outsourcing: Consulting and implementation services typically are based on professionalsproviding expert advice and implementation. Typically infrastructure hardware and software is designed tosupport end-to-end solutions built on operating systems platforms. It should be based on a design approach thathelps you simplify development, deployment, and management by anticipating needs and opportunities. It shouldbe intrinsically designed to work together and interact seamlessly with other data and applications across your ITenvironment so that you can reduce the costs of ongoing operations, deliver high reliability and security in yourIT infrastructure, and drive valuable new capabilities for the future growth of your business. Outsourcingtypically takes over entire or parts of IT operations including system and application implementations, operationsand maintenance. Page 32 of 41
    • Definitions & Calculations Total Income Growth What is Total Income Growth? s What is Total Income? s What is Total Income Growth? s Why analyze Total Income Growth? s Using your financial analysis as a roadmap. s What drives Total Income Growth? s Why do client executives care about Total Income Growth? s What is the goal? s Summary How is Total Income Growth calculated? Total Income is the summation of Net Interest Income and Non-Interest Income. Total Income Growth measures the year-over-year percentage change in Total Income. See below for the Annual Total Income Growth gap calculation for your analysis: Total Income Growth Gap - How it is calculated... Type of Gap Analysis Trend Peer Industry a. Companys Current Year Total Income (Net Interest Inc.+Tot. Non-Interest Inc.) 83,174.45 83,174.45 83,174.45 b. Previous Years Total Income 87,822.27 87,822.27 87,822.27 c. Benchmark Total Income Growth 20.4% 21.1% 30.4% d. Total Income at Benchmark Growth [b. x (1 + c.)] 105,743.50 106,391.80 114,482.10 e. Change in Net Interest Income [d. - a.] 22,569.07 23,217.35 31,307.67 f. Companys Earning Before Taxes as a Percentage of Total Income 19.8% 19.8% 19.8% g. First-Year Before-Tax Cash Flow Benefit [e. x f.] 4,479.54 4,608.21 6,213.99 Page 33 of 41
    • Net Interest Income GrowthWhat is Net Interest Income Growth? s What is Net Interest Income? s What is Net Interest Income Growth? s Why analyze Net Interest Income Growth? s Using your financial analysis as a roadmap. s What drives Net Interest Income Growth? s Why do client executives care about Net Interest Income Growth? s What is the goal? s SummaryHow is Net Interest Income Growth calculated?Net Interest Income growth simply measures the year-over-year percentage change in Net Interest Income.It is calculated as follows: (Net Interest Income this period - Net Interest Income last period) / Net InterestIncome last period. Net Interest Income is calculated as Total Interest Income minus Total Interest Expense.Total interest income is the interest from earning assets like loans (consumer, credit cards, commercial,industrial real estate, etc.), and securities (Federal Funds, government backed securities, mortgage backedsecurities, etc.). Interest expense is the amount paid on interest bearing liabilities like interest-bearingchecking accounts, savings accounts, certificates of deposits, Federal Funds and repurchase agreements.See below for the Annual Net Interest Income Growth gap calculation for your analysis:Net Interest Income Growth Gap - How it is Calculated...Type of Gap Analysis Trend Peer Industry a. Companys Current Year Net Interest Income 39,525.65 39,525.65 39,525.65 b. Previous Years Net Interest Income 40,735.99 40,735.99 40,735.99 c. Benchmark Net Interest Income Growth 12.1% 22.1% 30.7% d. Net Interest Income at Benchmark Growth [b. x (1 + c.)] 45,661.80 49,739.45 53,243.25 e. Change in Net Interest Income [d. - a.] 6,136.15 10,213.80 13,717.61 f. Companys Earning Before Taxes as a Percentage of Total Income 19.8% 19.8% 19.8% g. First-Year Before-Tax Cash Flow Benefit [e. x f.] 1,217.91 2,027.25 2,722.69 Page 34 of 41
    • Non-Interest Income GrowthWhat is Non-Interest Income Growth? s What is Non-Interest Income? s What is Non-Interest Income Growth? s Why analyze Non-Interest Income Growth? s Using your financial analysis as a roadmap. s What drives Non-Interest Income Growth? s Why do client executives care about Non-Interest Income Growth? s What is the goal? s SummaryHow is Non-Interest Income Growth calculated?Non Interest Income growth simply measures the year-over-year percentage change in Non Interest Income.It is calculated as follows: (Non Interest Income this period - Non Interest Income last period) / Non InterestIncome last period. Non Interest Income is the income from service charges, credit card fees, investmentand brokerage services, mortgage and investment banking, trading account profits, clearing services, andother income producing activities that do not generate interest income.See below for the Annual Non-Interest Income Growth gap calculation for your analysis:Non-Interest Income Growth Gap - How it is Calculated...Type of Gap Analysis Trend Peer Industry a. Companys Current Year Non-Interest Income 43,648.80 43,648.80 43,648.80 b. Previous Years Non-Interest Income 47,086.28 47,086.28 47,086.28 c. Benchmark Non-Interest Income Growth 30.0% 28.6% 29.9% d. Non-Interest Income at Benchmark Growth [b. x (1 + c.)] 61,205.41 60,553.68 61,149.21 e. Change in Non-Interest Income [d. - a.] 17,556.61 16,904.88 17,500.42 f. Companys Earning Before Taxes as a Percentage of Total Income 19.8% 19.8% 19.8% g. First-Year Before-Tax Cash Flow Benefit [e. x f.] 3,484.66 3,355.30 3,473.51 Page 35 of 41
    • Cost to Income (Efficiency) RatioWhat is Cost to Income (Efficiency) Ratio? s What is Total Non-Interest Expense? s What is Cost to Income (Efficiency) Ratio? s Why analyze Cost to Income Ratio? s Using your financial analysis as a roadmap. s What drives the Cost to Income Ratio? s Why do client executives care about Cost to Income Ratio? s What is the goal? s SummaryHow is Cost to Income (Efficiency) Ratio calculated?Cost to Income (Efficiency) Ratio measures of how well a financial institution manages its Total Non-Interestexpenses and is a key driver of overall financial performance. Total Non-Interest Expenses includes itemssuch as: Salaries & Related, Premises & Equipment and all Other Non-Interest Expenses. Efficiency Ratio iscalculated as: Total Non-interest Expense / Total Income. Total Income is Net Interest Income plus TotalNon- Interest Income.See below for the Annual Cost to Income (Efficiency Ratio) gap calculation for your analysis:Efficiency Ratio Gap - How it is Calculated...Type of Gap Analysis Trend Peer Industry a. Targets Total Income 83,174.45 83,174.45 83,174.45 b. Targets Efficiency Ratio 64.5% 64.5% 64.5% c. Benchmark Efficiency Ratio 51.6% 46.0% 44.3% d. Difference in Efficiency Ratio 12.9% 18.6% 20.2% e. First-Year Cash Flow Benefit [a. x. d.] 10,743.00 15,439.69 16,827.76 Page 36 of 41
    • Salaries & Related as a Percentage of Total IncomeWhat is Salaries & Related as a percentage of Total Income? s What is Salaries & Related Expense? s What is Salaries & Related as a percentage of Total Income? s Why analyze Salaries & Related Expense? s Using your financial analysis as a roadmap. s What drives Salaries & Related Expense? s Why do client executives care about Salaries & Related Expense? s What is the goal? s SummaryHow is Salaries & Related as a percentage of Total Income calculated?Salaries and related expense includes, salaries and wages for full, part-time and contract employees; andbenefit expenses like medical, insurance and retirement. It is calculated as follows: Salaries & Related Exp. /Total Income. Total Income is Net Interest Income plus Total Non-Interest Income.See below for the Annual Salaries & Related Expenses as percentage of Total Income gap calculation for youranalysis:% Salaries & Related Expense Gap - How it is Calculated...Type of Gap Analysis Trend Peer Industry a. Targets Total Income 83,174.45 83,174.45 83,174.45 b. Target % Salaries and Related Expenses 23.8% 23.8% 23.8% c. Benchmark % Salaries and Related Expenses 21.0% 10.5% 19.4% d. Difference in % Salaries and Related Expenses 2.9% 13.4% 4.4% e. First-Year Cash Flow Benefit [a. x. d.] 2,383.04 11,119.45 3,675.54 Page 37 of 41
    • Premises & Equipment Expenses as a Percentage of Total IncomeWhat is Premises & Equipment as a percentage of Total Income? s What is Premises & Equipment Expense? s What is Premises & Equipment as a percentage of Total Income? s Why analyze Premises & Equipment Expense? s Using your financial analysis as a roadmap. s What drives Premises & Equipment Expense? s Why do client executives care about Premises & Equipment Expense? s What is the goal? s SummaryHow is Premises & Equipment as a percentage of Total Income calculated?Premises & Equipment expense includes rent, utilities, maintenance on buildings, depreciation, equipmentexpense on hardware, office furniture expense and so forth. It is calculated as follows: Premises & EquipmentExp. / Total Income. Total Income is Net Interest Income plus Total Non-Interest Income.See below for the Annual Premises & Equipment Expenses as percentage of Total Income gap calculation foryour analysis:% Premises and Equipment Expense Gap - How it is Calculated...Type of Gap Analysis Trend Peer Industry a. Targets Total Income 83,174.45 83,174.45 83,174.45 b. Target % Premises and Equipment Expense 5.2% 5.2% 5.2% c. Benchmark % Premises and Equipment Expense 4.5% 3.8% 1.4% d. Difference in % Premises and Equipment Expense 0.7% 1.4% 3.9% e. First-Year Cash Flow Benefit [a. x. d.] 578.02 1,146.70 3,207.37 Page 38 of 41
    • Other Non-Interest Expenses as a Percentage of Total IncomeWhat is Other Non-Interest Expenses as a percentage of Total Income? s What is Other Non-Interest Expense? s What is Other Non-Interest Expenses as a percentage of Total Income? s Why analyze Other Non-Interest Expense? s Using your financial analysis as a roadmap. s What drives Other Non-Interest Expense? s Why do client executives care about Other Non-Interest Expense? s What is the goal? s SummaryHow is Other Non-Interest Expense as a percentage of Total Income calculated?Other non-interest expense includes, for example, marketing and advertising, professional fees,telecommunications, brokerage, exchange and clearance fees, and other general and administrative expensesexcluding personnel related expenses. It is calculated as follows: Other Non- Interest Exp. / Total Income.Total Income is Net Interest Income plus Total Non-Interest Income.See below for the Annual Other Non-Interest Expenses as percentage of Total Income gap calculation foryour analysis:Other Non-Interest Expense Gap - How it is Calculated...Type of Gap Analysis Trend Peer Industry a. Targets Total Income 83,174.45 83,174.45 83,174.45 b. Target % Other Non-Interest Expense 35.5% 35.5% 35.5% c. Benchmark % Other Non-Interest Expense 21.9% 22.7% 18.5% d. Difference in % Other Non-Interest Expense 13.5% 12.8% 16.9% e. First-Year Cash Flow Benefit [a. x. d.] 11,258.58 10,641.45 14,081.73 Page 39 of 41
    • Total Income to Premises and EquipmentWhat is Total Income to Premises & Equipment? s What is Premises & Equipment? s What Total Income to Premises & Equipment? s Why analyze Total Income to Premises & Equipment? s Using your financial analysis as a roadmap. s What drives Total Income to Premises & Equipment? s Why do client executives care about Total Income to Premises & Equipment? s What is the goal? s SummaryHow is Total Income to Premises & Equipment calculated?Improved management of premises and equipment can have a material impact on financial performance.Premises and equipment is comprised of assets like branches, corporate offices, ATMs, computer hardware,furniture and so forth. In addition, this value is stated net of accumulated depreciation. Total Income toPremises & Equipment is calculated as follows: Total Income / Premises & Equipment.See below for the Annual Total Income to Premises & Equipment gap calculation for your analysis:Total Income to Premises and Equipment Gap - How it is calculated...Type of Gap Analysis Trend Peer Industry a. Companys Net Premises and Equipment 10,386.47 10,386.47 10,386.47 b. Companys Fixed Asset Utilization -- Total Income / Net Premises and Equipment 8.01 8.01 8.01 c. Benchmark Fixed Asset Utilization 8.01 11.13 8.01 d. Percent Reduction in Fixed Assets [(c. - b.) / c.] - 28.1% - e. Reduction in Fixed Assets [a. x d.] - 2,916.13 - f. Companys Fixed Asset Depreciation Rate 6.7% 6.7% 6.7% g. Reduction in Annual Capital Expenditures for Replacement of - 194.51 - Operating Assets [e. x f.] h. First-Year Before-Tax Cash Flow Benefit -- Reduction in Fixed - 3,110.63 - Assets and Capital Expenditures [e. + g.] Page 40 of 41
    • Data Sourcing GOODS AND SERVICES COMPANIES (30,000 Companies) Data for global publicly traded goods and services companies is sourced by Thomson Reuters FINANCIAL MARKETS COMPANIES (22,000 Institutions) Data Sources s Thomson Reuters s FDIC (Federal Deposit Insurance Corporation) s Federal Reserve s Office of the Superintendent of Financial Institutions (OFSI) s NCUA (National Credit Union Association) INSURANCE COMPANIES (Over 600 Companies Globally) Data Sources s Thomson Reuters s Office of the Superintendent of Financial Institutions (OFSI) HEALTH CARE PROVIDERS (Over 6,000 Companies - US ONLY) Data for US Hospitals is sourced by CMS (Centers for Medicare & Medicaid Services) Page 41 of 41