Hsbc holdings plc car 892011

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Hsbc holdings plc car 892011

  1. 1. powered by SOLUTIONS FINLISTICS cbv Client Assessment Report Sales Learning HSBC HOLDINGS PLCHSBC HOLDINGS PLCHSBC HOLDINGS PLCHSBC HOLDINGS PLC
  2. 2. Table of ContentsTable of Contents Purpose and Analysis Criteria 3 Opportunity Dashboard 4 Profiles 5 HSBC HOLDINGS PLC 5 CITIGROUP INC. 6 BANK OF CHINA LIMITED 7 UBS AG 8 HANG SENG BANK LIMITED 9 Historical Peer Comparison Chart 1 10 Historical Peer Comparison Chart 2 11 Power Of One - What If Analysis 12 Gap 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 18 Financial 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 22 Appendix Key Client Questions & Solutions 23 Definitions & Calculations 33 Data Sourcing 41
  3. 3. s Better understand your client's 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 client's challenges s Formulate an account strategy focusing on client's potential areas of opportunity and mapping to your solutions s Use content in business strategy conversation when engaging client executives Note: The goal is not to use as a financial analysis review tool with your client but to use as a foundation for a business strategy discussion and explore areas of opportunity Purpose Analysis 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
  4. 4. Opportunity Dashboard — HSBC HOLDINGS PLC The Opportunity Dashboard provides an easy to understand view of HSBC HOLDINGS PLC's key financial metrics and their relative performance versus their historical TREND (latest 5 periods), selected PEERS and relevant INDUSTRY. The 1st Year Cash Flow figures represents the benefits that could be recognized assuming HSBC HOLDINGS PLC current year results could improve to the benchmark in three categories: TREND assumes HSBC HOLDINGS PLC's current year metrics can improve to their best performing year/quarterly period (benchmark period) when compared to the latest five periods. PEER compares HSBC HOLDINGS PLC's current years results to the best performing peer (benchmark peer) and INDUSTRY quantifies the benefits of improving to the benchmark (1st quartile) for HSBC HOLDINGS PLC's relevant industry (National commercial banks (SIC: 6021) $10 billion or more - Asia-Pacific). Annual Dashboard (DecAnnual Dashboard (Dec--10)10) Gaps 1st Year Cash Flow Opportunity* (Millions - USD) Trend Peer Industry Trend Peer Industry Total 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 9,221.9 Efficiency 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 14,081.7 Pre-Tax Profit Margin 7,684.1 25,203.1 20,773.1 Tot. Income / Premises and Equip. - 3,110.6 - Best Performer Mid-Range Performer Lowest Performer Latest 12 Months (LTM) Dashboard (JunLatest 12 Months (LTM) Dashboard (Jun--11)11) Gaps 1st Year Cash Flow Opportunity* (Millions - USD) Trend Peer Industry Trend Peer Industry Total 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 7,091.1 Efficiency 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 11,698.4 Pre-Tax Profit Margin 639.1 27,640.3 13,713.4 Tot. 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 HSBC HOLDINGS PLC current year's performance to the TREND, PEER and INDUSTRY benchmarks. Page 4 of 41
  5. 5. Profile: HSBC HOLDINGS PLC Address:Address: 1 Queen's Road Central Symbol:Symbol: 0005 Currency:Currency: US Dollars Holding Comp.:Holding Comp.: HSBC HOLDINGS PLC HSBC Holdings PLC. The Group's principal activity is providing banking and related financial services. The Group operates 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; Commercial Banking, 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 Others includes property, valuation of freehold and leasehold land and buildings and legal proceedings. The Group operates through an international network of over 10,000 offices in 86 countries and territories in Europe, the Asia-Pacific, Middle East, Africa, North America and Latin America. Total Assets:Total Assets: 2,447,317 Web Site:Web Site: http://www.hsbc.com Return on Ave.Return on Ave. Assets (ROAA):Assets (ROAA): 0.5% Industry:Industry: National commercial banks (SIC: 6021) Market Cap (Mil):Market Cap (Mil): 166,625 Employees:Employees: 295,061 BUSINESS SEGMENTSBUSINESS SEGMENTS DATA YEAR:DATA YEAR: Dec-10 Segment DescriptionSegment Description SICSIC RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Personal 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 SEGMENTSGEOGRAPHIC SEGMENTS Segment DescriptionSegment Description RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Europe 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% -187,619 KEY OFFICERSKEY OFFICERS NameName TitleTitle Stephen K. Green Group Chairman D. J. Flint Executive Director & Chief Financial Officer R. G. Barber Group Secretary KEY ACQUISITIONSKEY ACQUISITIONS YearYear 2005-METRIS COMPANIES INC, ATLANTIC ADVISORS LLC, INVIC CORP, FINANCOMER GROUP AND 70.I% OF DAR ES SALAAM INVESTMENT BANK OF IRAQ IN 2005 Page 5 of 41
  6. 6. Profile: CITIGROUP INC. Address:Address: 399 PARK AVENUE NEW YORK, NY 10043 Symbol:Symbol: C Currency:Currency: US Dollars Holding Comp.:Holding Comp.: CITIGROUP INC. Citigroup Inc. (Citigroup) is a global diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services. As of December 31, 2010, the Company had approximately 200 million customer accounts and did business in more than 160 countries and jurisdictions. Citigroup operates two primary business segments: Citicorp, consisting of its 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:Total Assets: 1,913,902 Web Site:Web Site: http://www.citigroup.com Return on Ave.Return on Ave. Assets (ROAA):Assets (ROAA): 0.6% Industry:Industry: Commercial Banks (SIC: 6020) Market Cap (Mil):Market Cap (Mil): 97,575 Employees:Employees: 289,753 BUSINESS SEGMENTSBUSINESS SEGMENTS DATA YEAR:DATA YEAR: Dec-10 Segment DescriptionSegment Description SICSIC RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Institutional 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 SEGMENTSGEOGRAPHIC SEGMENTS Segment DescriptionSegment Description RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets United 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 OFFICERSKEY OFFICERS NameName TitleTitle Richard D. Parsons Chairman Lewis B. Kaden Vice Chairman Edward J. Kelly III Vice Chairman Vikram S. Pandit Chief Executive Officer John P. Havens President & Chief Operating Officer KEY ACQUISITIONSKEY ACQUISITIONS YearYear Page 6 of 41
  7. 7. Profile: BANK OF CHINA LIMITED Address:Address: No 1 Fuxingmennei Avenue Beijing 100818 Symbol:Symbol: 3988 Currency:Currency: US Dollars Holding Comp.:Holding Comp.: BANK OF CHINA LTD Bank of China Limited is a China-based commercial bank. The Bank operates its businesses through commercial banking, including corporate banking, such as corporate deposits, loans, international settlements and trade financing services, among others, personal banking services, such as personal savings, loans, private banking services and bank card services, as well as financial market services, such as asset management, fund distribution and custody services, as well as management of enterprise annuity fund, among others; investment banking services, including listed financing, financial consulting, securities distribution, research on investment and asset management services; insurance business, including personal insurance, vehicle insurance and marine insurance, among others, as well as investment business. Total Assets:Total Assets: 1,571,061 Web Site:Web Site: http://www.boc.cn Return on Ave.Return on Ave. Assets (ROAA):Assets (ROAA): 1.1% Industry:Industry: Commercial banks (SIC: 6029) Market Cap (Mil):Market Cap (Mil): 115,470 Employees:Employees: 279,301 BUSINESS SEGMENTSBUSINESS SEGMENTS DATA YEAR:DATA YEAR: Dec-10 Segment DescriptionSegment Description SICSIC RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Corporate 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 SEGMENTSGEOGRAPHIC SEGMENTS Segment DescriptionSegment Description RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets China 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 OFFICERSKEY OFFICERS NameName TitleTitle Dr. Gang Xiao Chairman Muhua Chen Non Executive Chairman Lihui Li Vice Chairman Bingxun Zhang Secretary KEY ACQUISITIONSKEY ACQUISITIONS YearYear Page 7 of 41
  8. 8. Profile: UBS AG Address:Address: Bahnhofstrasse 45 8098 Zurich Symbol:Symbol: UBSN Currency:Currency: US Dollars Holding Comp.:Holding Comp.: UBS AG UBS 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 parent company of the UBS Group (Group). The operational structure of the Group comprises the Corporate Center and four business divisions: Wealth Management & Swiss Bank, Wealth Management Americas, Global Asset Management and the Investment Bank. As of December 31, 2009, the Company operated about 973 business and banking locations worldwide. In February 2009, JPMorgan Chase & Co. completed the acquisitions of the Company's global agricultural business. In September 2009, UBS AG completed the sale of its Brazilian financial services business, UBS Pactual, including its asset management business, UBS Pactual Asset Management. In May 2009, the Company completed the acquisition of the commodity index business of AIG Financial Products Corp., including AIG's rights to the DJAIG Commodity index. Total Assets:Total Assets: 1,345,552 Web Site:Web Site: http://www.ubs.com Return on Ave.Return on Ave. Assets (ROAA):Assets (ROAA): 0.6% Industry:Industry: National commercial banks (SIC: 6021) Market Cap (Mil):Market Cap (Mil): 42,723 Employees:Employees: 64,617 BUSINESS SEGMENTSBUSINESS SEGMENTS DATA YEAR:DATA YEAR: Dec-10 Segment DescriptionSegment Description SICSIC RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Investment 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 Management A 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 SEGMENTSGEOGRAPHIC SEGMENTS Segment DescriptionSegment Description RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Switzerland 13,036 6.1% 39.6% 5,064 United States 11,063 15.2% 33.6% 8,924 Asia/Pacific 3,906 0.7% 11.9% 405 United Kingdom 2,872 -169.8% 8.7% 611 Rest of Europe 1,558 19.8% 4.7% 1,109 Rest of the World 485 60.2% 1.5% 431 KEY OFFICERSKEY OFFICERS NameName TitleTitle Kaspar Villiger Chairman Oswald J. Gruebel Chief Executive Officer Dr. Ulrich Koerner Chief Operating Officer John Cryan Chief Financial Officer KEY ACQUISITIONSKEY ACQUISITIONS YearYear Page 8 of 41
  9. 9. Profile: HANG SENG BANK LIMITED Address:Address: 83 Des Voeux Road Central Symbol:Symbol: 11 Currency:Currency: US Dollars Holding Comp.:Holding Comp.: HANG SENG BANK LTD Hang Seng Bank Limited (the Bank) operates in five customer groups. The Bank operates in personal financial services, commercial banking, corporate banking, treasury and other. Personal financial Services provides banking, 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 manages middle market and smaller corporate relationships and specializes in trade-related financial services. Its corporate banking handles relationships with corporate and institutional customers. Its treasury engages in balance sheet management and trading. Treasury also manages the funding and liquidity positions of the Bank's and other market risk positions arising from banking activities. Other represents management of shareholders' funds and investments in premises, investment properties and equity shares. Total Assets:Total Assets: 117,943 Web Site:Web Site: http://www.hangseng.com Return on Ave.Return on Ave. Assets (ROAA):Assets (ROAA): 1.7% Industry:Industry: National commercial banks (SIC: 6021) Market Cap (Mil):Market Cap (Mil): 28,699 Employees:Employees: 9,642 BUSINESS SEGMENTSBUSINESS SEGMENTS DATA YEAR:DATA YEAR: Dec-10 Segment DescriptionSegment Description SICSIC RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Personal Financial Services 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 SEGMENTSGEOGRAPHIC SEGMENTS Segment DescriptionSegment Description RevenuesRevenues (Mil)(Mil) RevenueRevenue GrowthGrowth RevenueRevenue % of% of TotalTotal Curr. Yr.Curr. Yr. ProfitProfit MarginMargin Prev. Yr.Prev. Yr. ProfitProfit MarginMargin TotalTotal AssetsAssets (Mil)(Mil) OperatingOperating Return onReturn on AssetsAssets Hong 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 OFFICERSKEY OFFICERS NameName TitleTitle Dr. Kuo Fung Ch'ien CBE Non Executive Chairman Hau Chung Fung Chief Executive Officer May Yee Leung Ko Vice Chairman & Chief Executive Wing Lok Leung Chief Financial Officer C. C. Li Secretary KEY ACQUISITIONSKEY ACQUISITIONS YearYear Page 9 of 41
  10. 10. NET INTEREST INCOME GROWTH — HSBC HOLDINGS PLC JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 JunJun--1111 HSBC HOLDINGS PLCHSBC HOLDINGS PLC -5.1% -4.0% -3.0% -1.4% 0.2% MarMar--1010 JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 CITIGROUP INC.CITIGROUP INC. -3.3% -0.4% 3.2% 10.1% 2.2% MarMar--1010 JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 BANK OF CHINA LTDBANK OF CHINA LTD 4.5% 12.6% 17.7% 22.1% 21.9% JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 JunJun--1111 UBS AGUBS AG -0.2% -4.6% -3.6% -2.9% 3.3% JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 JunJun--1111 HANG SENG BANK LTDHANG SENG BANK LTD -11.9% -5.2% 2.0% 7.4% 13.1% 4 Pds.4 Pds. AgoAgo 3 Pds.3 Pds. AgoAgo 2 Pds.2 Pds. AgoAgo 1 Pd.1 Pd. AgoAgo CurrentCurrent Pd.Pd. PEER AVERAGEPEER 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
  11. 11. EFFICIENCY RATIO (COST TO INCOME) — HSBC HOLDINGS PLC JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 JunJun--1111 HSBC HOLDINGS PLCHSBC HOLDINGS PLC 64.1% 64.5% 65.0% 60.6% 56.3% MarMar--1010 JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 CITIGROUP INC.CITIGROUP INC. 60.1% 66.1% 66.3% 57.7% 62.0% MarMar--1010 JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 BANK OF CHINA LTDBANK OF CHINA LTD 47.9% 46.3% 45.1% 45.3% 45.2% JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 JunJun--1111 UBS AGUBS AG 80.3% 78.4% 78.4% 77.2% 78.8% JunJun--1010 SepSep--1010 DecDec--1010 MarMar--1111 JunJun--1111 HANG SENG BANK LTDHANG SENG BANK LTD 59.4% 59.2% 59.0% 58.8% 58.6% 4 Pds.4 Pds. AgoAgo 3 Pds.3 Pds. AgoAgo 2 Pds.2 Pds. AgoAgo 1 Pd.1 Pd. AgoAgo CurrentCurrent Pd.Pd. PEER AVERAGEPEER 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
  12. 12. Power of One (What-If Analysis) — HSBC HOLDINGS PLC POWER OF ONEPOWER OF ONE Financial MetricFinancial Metric PercentagePercentage ChangeChange AnnualAnnual 1st Yr Cash Flow1st Yr Cash Flow (in Millions(in Millions -- USD)USD) Latest Twelve MonthsLatest Twelve Months (LTM)(LTM) 1st Yr Cash Flow1st Yr Cash Flow (in Millions(in Millions -- USD)USD) Total IncomeTotal Income 1% 165.09 165.24 Net Interest IncomeNet Interest Income 1% 78.45 76.55 Non Interest IncomeNon Interest Income 1% 86.63 88.69 Provision for Loan LossProvision for Loan Loss -1% 135.39 115.79 Total NonTotal Non--Interest ExpenseInterest Expense -1% 536.63 487.09 Salaries & Related ExpenseSalaries & Related Expense -1% 198.22 205.51 Premises & Equip. ExpensePremises & Equip. Expense -1% 43.45 - Other NonOther Non--Interest ExpenseInterest Expense -1% 294.96 281.58 Total Income to PremisesTotal 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 GROWTH Net Interest Income is primarily comprised of interest income earned from loans and securities minus interest expense paid on deposits and other borrowings. NON-INTEREST INCOME GROWTH Non-Interest Income can include fees/commissions from asset 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 EXPENSE Premises & Equipment Expense (or Occupancy expense) is 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 & EQUIPMENT Premises & Equipment includes all owned buildings, branches, infrastructure and other any other fixed assets reported on the balance sheet. Page 12 of 41
  13. 13. Annual Trend Gap Analysis — HSBC HOLDINGS PLC The Trend Gap Analysis compares HSBC HOLDINGS PLC's 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 year's financial performance to that of the benchmark year (indicated by the arrow). Value of GapsValue of Gaps(1)(1) YearYear Benchmark YearsBenchmark Years Growth 20102010 20092009 20082008 20072007 20062006 1st Yr Cash Flow1st Yr Cash Flow (Millions(Millions -- USD)USD) Net Interest Income GrowthNet Interest Income Growth -3.0% -5.0% 12.1% 9.9% 10.5% 1,217.91 NonNon--Interest Income GrowthInterest Income Growth -7.3% 12.7% -15.8% 30.0% 18.3% 3,484.66 Total Income GrowthTotal Income Growth -5.3% 3.7% -3.7% 20.4% 14.4% 4,479.54 Profitability % Provision for Loan Loss% Provision for Loan Loss 16.3% 28.3% 28.5% 19.6% 14.4% 1,525.42 Efficiency Ratio (Cost to Income)Efficiency Ratio (Cost to Income) 64.5% 64.6% 51.6% 56.1% 57.5% 10,743.00 % Salaries and Related Expense% Salaries and Related Expense 23.8% 21.0% 24.6% 24.4% 25.3% 2,383.04 % Premises and Equipment Expense% Premises and Equipment Expense 5.2% 4.7% 5.1% 4.5% 4.6% 578.02 % Other Non% Other Non--Interest ExpenseInterest Expense 35.5% 39.0% 21.9% 27.2% 27.6% 11,258.58 PrePre--Tax Profit MarginTax Profit Margin 19.8% 6.0% 9.0% 25.9% 29.1% 7,684.15 Net Income MarginNet Income Margin 15.8% 6.6% 6.8% 21.8% 21.6% 5,022.93 Tot. Income / Premises and Equip.Tot. Income / Premises and Equip. 8.01 6.91 6.50 6.10 5.04 - Returns Return On AssetsReturn On Assets 0.55% 0.24% 0.24% 0.91% 0.94% Return On EquityReturn On Equity 9.32% 5.04% 4.91% 15.31% 14.82% Yields Yield on Earning AssetsYield on Earning Assets 2.66% 2.77% 4.06% 4.77% 4.95% Cost of Funding Earning AssetsCost of Funding Earning Assets 0.86% 0.95% 2.16% 2.81% 2.69% Net Interest MarginNet Interest Margin 1.80% 1.82% 1.90% 1.96% 2.26% Asset Quality Nonperforming Assets to Tot. AssetsNonperforming Assets to Tot. Assets N/A N/A N/A N/A N/A Loss Allowance to LoansLoss Allowance to Loans 1.69% 2.32% 2.15% 1.55% 1.27% Loss Allowance to Noncurrent LoansLoss Allowance to Noncurrent Loans 71.00% 82.81% 122.10% 104.92% 98.50% Leverage & Capital Adequacy Equity / AssetsEquity / Assets 6.09% 5.67% 3.89% 5.76% 6.19% Leverage RatioLeverage Ratio N/A N/A N/A N/A N/A Tier 1 Risk Based Capital RatioTier 1 Risk Based Capital Ratio 12.10% 10.80% 8.30% 9.30% 9.40% Total Risk Based Capital RatioTotal 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 Target's financial metric for Most Recent Fiscal year compared to Benchmark year. The Trend Gap Analysis provides a consistent year over year analysis of a company's financial performance. Since the analysis compares the target company's current year to the target company's historical results, the financials typically provide an accurate picture of trends since product/geo mix, cost structures and accounting methods don't 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
  14. 14. Latest Twelve Months (LTM) Trend Gap Analysis — HSBC HOLDINGS PLC The Trend Gap Analysis compares HSBC HOLDINGS PLC's 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 period's financial performance to that of the benchmark period (indicated by the arrow). Value of GapsValue of Gaps (1)(1) Current LTMCurrent LTM Benchmark PeriodsBenchmark Periods Growth JunJun--1111 MarMar--1111 DecDec--1010 SepSep--1010 JunJun--1010 1st Yr Cash Flow1st Yr Cash Flow (Millions(Millions -- USD)USD) Net Interest Income GrowthNet Interest Income Growth 0.2% -1.4% -3.0% -4.0% -5.1% - NonNon--Interest Income GrowthInterest Income Growth 4.0% -1.8% -7.3% -0.2% 7.8% 324.93 Total Income GrowthTotal Income Growth 2.2% -1.6% -5.3% -2.1% 1.3% 0.00 Profitability % Provision for Loan Loss% Provision for Loan Loss 13.4% 14.8% 16.3% 19.3% 22.2% - Efficiency Ratio (Cost to Income)Efficiency Ratio (Cost to Income) 56.3% 60.6% 65.0% 64.5% 64.1% - % Salaries and Related Expense% Salaries and Related Expense 23.8% 23.8% 23.8% 23.2% 22.5% 1,104.81 % Premises and Equipment Expense% Premises and Equipment Expense N/A N/A N/A N/A N/A N/A % Other Non% Other Non--Interest ExpenseInterest Expense N/A N/A N/A N/A N/A N/A PrePre--Tax Profit MarginTax Profit Margin 19.1% 19.5% 19.8% 16.4% 13.1% 639.05 Net Income MarginNet Income Margin 17.9% 16.9% 15.8% 13.3% 10.9% - Tot. Income / Premises and Equip.Tot. Income / Premises and Equip. 7.45 7.31 8.01 8.08 6.35 960.83 Returns Return On AssetsReturn On Assets 0.61% 0.56% 0.54% 0.46% 0.38% Return On EquityReturn On Equity 9.93% 9.19% 8.82% 7.51% 6.43% Yields Yield on Earning AssetsYield on Earning Assets 2.61% 2.56% 2.60% 2.59% 2.65% Cost of Funding Earning AssetsCost of Funding Earning Assets 0.89% 0.85% 0.84% 0.83% 0.83% Net Interest MarginNet Interest Margin 1.72% 1.71% 1.76% 1.77% 1.81% Asset Quality Nonperforming Assets to Tot. AssetsNonperforming Assets to Tot. Assets N/A N/A N/A N/A N/A Loss Allowance to LoansLoss Allowance to Loans N/A N/A N/A N/A N/A Loss Allowance to Noncurrent LoansLoss Allowance to Noncurrent Loans N/A N/A N/A N/A N/A Leverage & Capital Adequacy Equity / AssetsEquity / Assets 6.24% 6.24% 6.09% 6.09% 5.94% Leverage RatioLeverage Ratio N/A N/A N/A N/A N/A Tier 1 Risk Based Capital RatioTier 1 Risk Based Capital Ratio 12.20% 12.20% 12.10% 12.10% 11.50% Total Risk Based Capital RatioTotal 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 Target's financial metric for Most Recent LTM period compared to Benchmark period. The Trend Gap Analysis provides a consistent year over year analysis of a company's financial performance. Since the analysis compares the target company's current year to the target company's historical results, the financials typically provide an accurate picture of trends since product/geo mix, cost structures and accounting methods don't 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
  15. 15. 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 year's financial performance to match that of its best performing, or benchmark, peer (indicated by the arrow). Value of GapsValue of Gaps(1)(1) TargetTarget Peer CompaniesPeer Companies Growth HSBC HOHSBC HO CITIGROCITIGRO BANK OFBANK OF UBS AGUBS AG HANG SEHANG SE 1st Yr Cash Flow1st Yr Cash Flow (Millions(Millions -- USD)USD) Net Interest Income GrowthNet Interest Income Growth -3.0% 10.1% 22.1% -3.6% 2.0% 2,027.25 NonNon--Interest Income GrowthInterest Income Growth -7.3% -7.9% 15.4% 28.6% 8.0% 3,355.30 Total Income GrowthTotal Income Growth -5.3% 3.1% 19.9% 21.1% 5.5% 4,608.21 Profitability % Provision for Loan Loss% Provision for Loan Loss 16.3% 29.6% 5.5% 0.2% 1.1% 13,375.66 Efficiency Ratio (Cost to Income)Efficiency Ratio (Cost to Income) 64.5% 57.7% 46.0% 78.8% 59.0% 15,439.69 % Salaries and Related Expense% Salaries and Related Expense 23.8% 28.8% 19.0% 50.2% 10.5% 11,119.45 % Premises and Equipment Expense% Premises and Equipment Expense 5.2% 3.9% 4.3% 5.4% 3.8% 1,146.70 % Other Non% Other Non--Interest ExpenseInterest Expense 35.5% 25.0% 22.7% 23.2% 44.6% 10,641.45 PrePre--Tax Profit MarginTax Profit Margin 19.8% 15.5% 50.1% 22.1% 41.3% 25,203.09 Net Income MarginNet Income Margin 15.8% 12.5% 37.1% 22.4% 42.0% 21,776.15 Tot. Income / Premises and Equip.Tot. Income / Premises and Equip. 8.01 11.13 2.28 6.27 2.44 3,110.63 Returns Return On AssetsReturn On Assets 0.55% 0.56% 1.09% 0.57% 1.71% Return On EquityReturn On Equity 9.32% 6.71% 17.15% 14.99% 23.26% Yields Yield on Earning AssetsYield on Earning Assets 2.66% 4.90% 2.72% 1.39% 1.18% Cost of Funding Earning AssetsCost of Funding Earning Assets 0.86% 1.49% 1.04% 0.93% 0.16% Net Interest MarginNet Interest Margin 1.80% 3.41% 1.68% 0.46% 1.02% Asset Quality Nonperforming Assets to Tot. AssetsNonperforming Assets to Tot. Assets N/A 1.69% N/A N/A N/A Loss Allowance to LoansLoss Allowance to Loans 1.69% 5.99% 1.90% 0.38% 0.31% Loss Allowance to Noncurrent LoansLoss Allowance to Noncurrent Loans 71.00% 132.98% 196.66% 62.94% N/A Capital Adequacy Equity / AssetsEquity / Assets 6.09% 8.54% 6.48% 3.97% 7.64% Leverage RatioLeverage Ratio N/A 6.6% N/A N/A N/A Tier 1 Risk Based Capital RatioTier 1 Risk Based Capital Ratio 12.10% 12.90% 10.10% 17.80% 10.80% Total Risk Based Capital RatioTotal Risk Based Capital Ratio 15.20% 16.60% 12.60% 20.40% 13.60% CITIGROCITIGRO--CITIGROUP INC.CITIGROUP INC. BANK OFBANK OF--BANK OF CHINA LTDBANK OF CHINA LTD UBS AGUBS AG--UBS AGUBS AG HANG SEHANG SE--HANG SENG BANK LTDHANG SENG BANK LTD is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Target's 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
  16. 16. 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 year's financial performance to match that of its best performing, or benchmark, peer (indicated by the arrow). Value of GapsValue of Gaps(1)(1) TargetTarget Peer CompaniesPeer Companies Growth HSBC HOHSBC HO CITIGROCITIGRO BANK OFBANK OF UBS AGUBS AG HANG SEHANG SE 1st Yr Cash Flow1st Yr Cash Flow (Millions(Millions -- USD)USD) Net Interest Income GrowthNet Interest Income Growth 0.2% 2.2% 21.9% 3.3% 13.1% 1,661.19 NonNon--Interest Income GrowthInterest Income Growth 4.0% -12.1% 10.3% -16.8% 5.2% 530.51 Total Income GrowthTotal Income Growth 2.2% -3.2% 18.0% -13.0% 1.2% 2,551.13 Profitability % Provision for Loan Loss% Provision for Loan Loss 13.4% 24.5% 5.3% 0.4% 1.5% 11,237.05 Efficiency Ratio (Cost to Income)Efficiency Ratio (Cost to Income) 56.3% 62.0% 45.2% 78.8% 58.6% 9,663.13 % Salaries and Related Expense% Salaries and Related Expense 23.8% 30.7% N/A 55.5% N/A - % Premises and Equipment Expense% Premises and Equipment Expense N/A 4.0% N/A 5.6% 3.8% N/A % Other Non% Other Non--Interest ExpenseInterest Expense N/A 27.4% N/A 17.6% N/A N/A PrePre--Tax Profit MarginTax Profit Margin 19.1% 15.1% 51.1% 20.2% 42.0% 27,640.30 Net Income MarginNet Income Margin 17.9% 11.4% 37.6% 19.8% 44.0% 22,548.11 Tot. Income / Premises and Equip.Tot. Income / Premises and Equip. 7.45 10.68 2.39 5.47 2.27 3,744.06 Returns Return On AssetsReturn On Assets 0.61% 0.46% 1.07% 0.43% 1.74% Return On EquityReturn On Equity 9.93% 5.69% 17.42% 11.00% 23.22% Yields Yield on Earning AssetsYield on Earning Assets 2.61% 4.52% 3.91% 1.51% 2.18% Cost of Funding Earning AssetsCost of Funding Earning Assets 0.89% 1.41% 1.52% 0.98% 0.35% Net Interest MarginNet Interest Margin 1.72% 3.11% 2.38% 0.53% 1.83% Asset Quality Nonperforming Assets to Tot. AssetsNonperforming Assets to Tot. Assets N/A 1.32% N/A N/A N/A Loss Allowance to LoansLoss Allowance to Loans N/A 5.49% N/A N/A N/A Loss Allowance to Noncurrent LoansLoss Allowance to Noncurrent Loans N/A 145.68% N/A N/A N/A Capital Adequacy Equity / AssetsEquity / Assets 6.24% 8.78% 6.34% 4.20% 7.57% Leverage RatioLeverage Ratio N/A 7.0% N/A N/A N/A Tier 1 Risk Based Capital RatioTier 1 Risk Based Capital Ratio 12.20% 13.30% 10.00% 18.10% 11.00% Total Risk Based Capital RatioTotal Risk Based Capital Ratio 14.90% 17.00% 12.40% 19.50% 13.80% CITIGROCITIGRO--CITIGROUP INC.CITIGROUP INC. BANK OFBANK OF--BANK OF CHINA LTDBANK OF CHINA LTD UBS AGUBS AG--UBS AGUBS AG HANG SEHANG SE--HANG SENG BANK LTDHANG SENG BANK LTD is Best Performance is Lowest Performance * Company had acquisition during year 1 Value of Gap calculated using Target's 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
  17. 17. 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 year's financial performance to match that of the industry benchmark (1st Quartile and indicated by the arrow). Value of GapsValue of Gaps(1)(1) CompanyCompany National commercial banks (SIC: 6021) $10 billion orNational commercial banks (SIC: 6021) $10 billion or moremore -- AsiaAsia--PacificPacific Growth HSBC HOHSBC HO 1st Quartile1st Quartile MedianMedian 4th Quartile4th Quartile 1st Yr Cash Flow1st Yr Cash Flow (Millions(Millions -- USD)USD) Net Interest Income GrowthNet Interest Income Growth -3.0% 30.7% 14.2% 2.9% 2,722.69 NonNon--Interest Income GrowthInterest Income Growth -7.3% 29.9% 12.6% -6.5% 3,473.51 Total Income GrowthTotal Income Growth -5.3% 30.4% 13.6% 2.3% 6,213.99 Profitability % Provision for Loan Loss% Provision for Loan Loss 16.3% 5.2% 11.9% 17.2% 9,221.92 Efficiency Ratio (Cost to Income)Efficiency Ratio (Cost to Income) 64.5% 44.3% 50.9% 61.3% 16,827.76 % Salaries and Related Expense% Salaries and Related Expense 23.8% 19.4% 22.8% 27.4% 3,675.54 % Premises and Equipment Expense% Premises and Equipment Expense 5.2% 1.4% 2.5% 5.2% 3,207.37 % Other Non% Other Non--Interest ExpenseInterest Expense 35.5% 18.5% 23.8% 46.0% 14,081.73 PrePre--Tax Profit MarginTax Profit Margin 19.8% 44.8% 33.8% 24.2% 20,773.07 Net Income MarginNet Income Margin 15.8% 33.7% 25.0% 16.6% 14,914.50 Tot. Income / Premises and Equip.Tot. Income / Premises and Equip. 8.01 6.34 3.25 2.41 - Returns Return On AssetsReturn On Assets 0.55% 1.25% 0.93% 0.54% Return On EquityReturn On Equity 9.32% 16.59% 12.44% 7.53% Leverage & Capital Adequacy Equity / AssetsEquity / 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 Target's 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
  18. 18. 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 year's financial performance to match that of the industry benchmark (1st Quartile and indicated by the arrow). Value of GapsValue of Gaps(1)(1) CompanyCompany National commercial banks (SIC: 6021) $10 billion orNational commercial banks (SIC: 6021) $10 billion or moremore -- AsiaAsia--PacificPacific Growth HSBC HOHSBC HO 1st Quartile1st Quartile MedianMedian 4th Quartile4th Quartile 1st Yr Cash Flow1st Yr Cash Flow (Millions(Millions -- USD)USD) Net Interest Income GrowthNet Interest Income Growth 0.2% 30.7% 14.2% 2.9% 2,332.38 NonNon--Interest Income GrowthInterest Income Growth 4.0% 29.9% 12.6% -6.5% 2,202.48 Total Income GrowthTotal Income Growth 2.2% 30.4% 13.6% 2.3% 4,550.17 Profitability % Provision for Loan Loss% Provision for Loan Loss 13.4% 5.2% 11.9% 17.2% 7,091.09 Efficiency Ratio (Cost to Income)Efficiency Ratio (Cost to Income) 56.3% 44.3% 50.9% 61.3% 10,416.41 % Salaries and Related Expense% Salaries and Related Expense 23.8% 19.4% 22.8% 27.4% 3,765.44 % Premises and Equipment Expense% Premises and Equipment Expense N/A 1.4% 2.5% 5.2% N/A % Other Non% Other Non--Interest ExpenseInterest Expense N/A 18.5% 23.8% 46.0% N/A PrePre--Tax Profit MarginTax Profit Margin 19.1% 44.8% 33.8% 24.2% 22,232.39 Net Income MarginNet Income Margin 17.9% 33.7% 25.0% 16.6% 13,713.38 Tot. Income / Premises and Equip.Tot. Income / Premises and Equip. 7.45 6.34 3.25 2.41 - Returns Return On AssetsReturn On Assets 0.61% 1.25% 0.93% 0.54% Return On EquityReturn On Equity 9.93% 16.59% 12.44% 7.53% Leverage & Capital Adequacy Equity / AssetsEquity / 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 Target's 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
  19. 19. Annual Financials — HSBC HOLDINGS PLC (Millions - USD) Income Statement Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Total Interest Income 58,416.6 62,039.2 91,659.3 93,001.8 76,172.2 Total Interest Expense 18,890.9 21,303.2 48,783.9 54,751.7 41,367.6 NET INTEREST INCOME 39,525.6 40,736.0 42,875.4 38,250.1 34,804.6 Total Non-Interest Income 43,648.8 47,086.3 41,774.3 49,620.1 38,173.5 TOTAL INCOME 83,174.4 87,822.3 84,649.7 87,870.2 72,978.1 Provision for Loan Loss 13,538.6 24,868.7 24,153.7 17,236.1 10,540.5 Salaries and Related Expenses 19,822.3 18,413.8 20,811.6 21,407.4 18,488.6 Premises & Equipment Expense 4,345.0 4,087.0 4,309.1 3,979.6 3,386.9 Other Non-Interest Expense 29,495.6 34,256.1 18,560.5 23,898.9 20,115.6 TOTAL NON-INTEREST EXPENSE 53,662.9 56,756.8 43,681.1 49,286.0 41,991.2 Other Income (Expense) 535.6 -914.3 -9,161.6 1,438.9 780.5 INCOME BEFORE TAXES 16,508.6 5,282.4 7,653.2 22,787.1 21,227.0 Income Taxes 4,842.6 383.9 2,811.6 3,769.9 5,211.8 Minority Interest IS 1,031.3 857.5 770.7 1,326.5 1,081.3 Net Income - Continuing Operations 10,634.6 4,041.1 4,070.8 17,690.6 14,933.8 Extraordinary Items, Net 2,515.3 1,775.8 1,662.6 1,508.2 845.5 NET INCOME 13,149.9 5,816.9 5,733.4 19,198.8 15,779.3 Assets Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Interest Bearing Balances Non-Interest Bearing Balances Cash and Due from Banks 100,943.1 98,011.7 79,605.1 54,854.3 43,219.9 Securities 1,083,415.3 1,075,770.7 1,247,105.3 961,458.6 657,744.1 Federal Funds Sold and Securities Purchased Trading Account Securities Total Loans and Leases, Net of Unearned Inc 1,186,545.1 1,098,658.4 1,107,109.5 1,242,088.4 1,067,753.7 Loan Loss Allowance 20,080.0 25,474.9 23,835.1 19,266.6 13,588.7 NET LOANS AND LEASES 1,166,465.1 1,073,183.5 1,083,274.4 1,222,821.9 1,054,165.1 Premises and Equipment 10,386.5 12,707.5 13,013.6 14,394.0 14,486.4 Intangible Assets 26,478.1 27,142.5 27,272.4 39,816.2 37,364.3 Other Assets 59,629.2 62,823.4 62,390.5 63,167.9 51,995.8 TOTAL ASSETS 2,447,317.3 2,349,639.3 2,512,661.4 2,356,512.9 1,858,975.5 Liabilities & Equity Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Interest Bearing Deposits Non-Interest Bearing Deposits TOTAL DEPOSITS 1,227,544.1 1,155,987.3 1,111,878.7 1,099,654.3 897,538.2 Federal Funds Purchased and Repurchase Agreements Other Borrowed Funds 321,349.6 327,357.2 363,369.1 419,515.7 379,485.7 Subordinated Debt and Debentures Bankers Acceptances Outstanding Other Liabilities 749,381.5 733,117.8 939,620.9 701,492.8 466,933.3 TOTAL LIABILITIES 2,298,275.2 2,216,462.3 2,414,868.7 2,220,662.8 1,743,957.3 Preferred Equity Common Equity 140,390.3 124,433.0 89,774.6 128,570.9 108,437.1 TOTAL EQUITY 140,390.3 124,433.0 89,774.6 128,570.9 108,437.1 TOTAL 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
  20. 20. Annual Financials — Peer Comparison (Millions) Income Statement HSBC HOLDINGS PLC (USD) CITIGROUP INC. (USD) BANK OF CHINA LTD (USD) UBS AG (USD) HANG SENG BANK LTD (USD) Total Interest Income 58,416.6 79,702.0 47,232.0 19,417.9 2,125.1 Total Interest Expense 18,890.9 24,234.0 18,000.8 13,023.1 283.9 NET INTEREST INCOME 39,525.6 55,468.0 29,231.2 6,394.8 1,841.2 Total Non-Interest Income 43,648.8 29,562.0 13,130.7 28,262.5 2,728.3 TOTAL INCOME 83,174.4 85,030.0 42,361.9 34,657.3 4,569.5 Provision for Loan Loss 13,538.6 25,194.0 2,343.1 67.9 50.2 Salaries and Related Expenses 19,822.3 24,464.0 8,042.1 17,409.4 478.1 Premises & Equipment Expense 4,345.0 3,338.0 1,822.8 1,859.3 175.7 Other Non-Interest Expense 29,495.6 21,260.0 9,602.7 8,027.7 2,040.2 TOTAL NON-INTEREST EXPENSE 53,662.9 49,062.0 19,467.6 27,296.4 2,694.0 Other Income (Expense) 535.6 2,410.0 693.1 377.6 63.5 INCOME BEFORE TAXES 16,508.6 13,184.0 21,244.3 7,670.6 1,888.8 Income Taxes 4,842.6 2,233.0 4,885.8 -392.0 312.3 Minority 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 1,576.5 Extraordinary Items, Net 2,515.3 -68.0 154.9 1.0 342.3 NET INCOME 13,149.9 10,602.0 15,719.6 7,751.9 1,918.8 Assets HSBC HOLDINGS PLC CITIGROUP INC. BANK OF CHINA LTD UBS AG HANG SENG BANK LTD Interest Bearing Balances 162,437.0 Non-Interest Bearing Balances 27,972.0 Cash and Due from Banks 100,943.1 190,409.0 244,356.2 28,446.7 5,712.6 Securities 1,083,415.3 303,377.0 321,830.1 877,430.0 30,629.7 Federal Funds Sold and Securities Purchased 246,717.0 Trading Account Securities 317,272.0 Total Loans and Leases, Net of Unearned Inc 1,186,545.1 678,662.0 972,707.5 292,583.3 75,253.9 Loan Loss Allowance 20,080.0 40,655.0 18,495.4 1,118.4 236.2 NET LOANS AND LEASES 1,166,465.1 638,007.0 954,212.2 291,464.9 75,017.7 Premises and Equipment 10,386.5 7,637.0 18,602.5 5,528.4 1,873.0 Intangible Assets 26,478.1 38,210.0 631.2 10,106.1 693.8 Other Assets 59,629.2 172,273.0 31,428.8 132,576.1 4,016.2 TOTAL ASSETS 2,447,317.3 1,913,902.0 1,571,061.1 1,345,552.3 117,943.2 Liabilities & Equity HSBC HOLDINGS PLC CITIGROUP INC. BANK OF CHINA LTD UBS AG HANG SENG BANK LTD Interest Bearing Deposits 711,307.0 579,567.5 107,632.9 80,729.7 Non-Interest Bearing Deposits 133,661.0 540,191.7 7,604.2 TOTAL DEPOSITS 1,227,544.1 844,968.0 1,126,566.5 341,913.1 88,333.9 Federal Funds Purchased and Repurchase Agreements 189,558.0 83,898.6 Other Borrowed Funds 321,349.6 415,625.0 270,536.6 364,202.8 3,528.9 Subordinated Debt and Debentures 44,348.0 Bankers Acceptances Outstanding Other Liabilities 749,381.5 255,935.0 72,167.1 502,174.5 17,074.7 TOTAL LIABILITIES 2,298,275.2 1,750,434.0 1,469,270.1 1,292,189.1 108,937.5 Preferred Equity 312.0 Common Equity 140,390.3 163,156.0 96,975.8 48,174.3 9,005.7 TOTAL EQUITY 140,390.3 163,468.0 96,975.8 48,174.3 9,005.7 TOTAL 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
  21. 21. Latest Twelve Months (LTM) Financials — HSBC HOLDINGS PLC (Millions - USD) Income Statement Jun-11 Mar-11 Dec-10 Sep-10 Jun-10 Total Interest Income 60,844.6 59,630.4 58,416.2 58,355.5 58,294.8 Total Interest Expense 20,786.2 19,838.4 18,890.5 18,599.7 18,308.8 NET INTEREST INCOME 40,058.4 39,792.0 39,525.7 39,755.8 39,986.0 Total Non-Interest Income 46,406.1 45,027.2 43,648.3 44,128.2 44,608.2 TOTAL INCOME 86,464.5 84,819.3 83,174.0 83,884.1 84,594.2 Provision for Loan Loss 11,578.5 12,558.8 13,539.0 16,164.6 18,790.2 Salaries and Related Expenses 20,550.9 20,186.5 19,822.2 19,423.8 19,025.4 Premises & Equipment Expense Other Non-Interest Expense 28,157.7 31,192.4 34,227.1 34,695.2 35,163.4 TOTAL NON-INTEREST EXPENSE 48,708.6 51,378.9 54,049.3 54,119.0 54,188.8 Other Income (Expense) -9,653.4 -4,364.6 924.1 180.2 -563.7 INCOME BEFORE TAXES 16,524.0 16,516.9 16,509.9 13,780.7 11,051.5 Income Taxes 2,702.7 3,773.2 4,843.8 3,899.3 2,954.9 Minority Interest IS 1,094.0 1,062.6 1,031.3 994.1 957.0 Net Income - Continuing Operations 12,727.3 11,681.1 10,634.8 8,887.2 7,139.6 Extraordinary Items, Net 2,886.1 2,700.7 2,515.2 2,306.0 2,096.9 NET INCOME 15,461.1 14,305.6 13,150.0 11,193.2 9,236.4 Assets Jun-11 Mar-11 Dec-10 Sep-10 Jun-10 Interest Bearing Balances Non-Interest Bearing Balances Cash and Due from Banks 103,134.1 103,134.1 100,943.1 100,943.1 101,316.9 Securities 1,193,352.6 1,193,352.6 1,083,415.3 1,083,415.3 1,111,789.3 Federal Funds Sold and Securities Purchased Trading Account Securities Total Loans and Leases, Net of Unearned Inc Loan Loss Allowance 20,080.0 20,080.0 NET LOANS AND LEASES 1,265,318.5 1,265,318.5 1,166,465.1 1,166,465.1 1,091,593.0 Premises and Equipment 11,606.7 11,606.7 10,386.5 10,386.5 13,314.9 Intangible Assets 32,063.2 32,063.2 26,478.1 26,478.1 27,909.1 Other Assets 80,516.3 80,516.3 59,629.2 59,629.2 70,623.8 TOTAL ASSETS 2,685,991.4 2,685,991.4 2,447,317.3 2,447,317.3 2,416,547.1 Liabilities & Equity Jun-11 Mar-11 Dec-10 Sep-10 Jun-10 Interest Bearing Deposits Non-Interest Bearing Deposits TOTAL DEPOSITS 1,320,434.9 1,320,434.9 1,227,544.1 1,227,544.1 1,149,384.8 Federal Funds Purchased and Repurchase Agreements Other Borrowed Funds 328,139.8 328,139.8 321,349.6 321,349.6 328,116.2 Subordinated Debt and Debentures Bankers Acceptances Outstanding Other Liabilities 869,695.7 869,695.7 749,381.5 749,381.5 795,465.3 TOTAL LIABILITIES 2,518,270.5 2,518,270.5 2,298,275.2 2,298,275.2 2,272,966.3 Preferred Equity Common Equity 160,425.9 160,425.9 140,390.3 140,390.3 136,187.5 TOTAL EQUITY 160,425.9 160,425.9 140,390.3 140,390.3 136,187.5 TOTAL 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
  22. 22. Latest Twelve Months (LTM) Financials - Peer Comparison (Millions) Income Statement HSBC HOLDINGS PLC (USD) CITIGROUP INC. (USD) BANK OF CHINA LTD (USD) UBS AG (USD) HANG SENG BANK LTD (USD) Total Interest Income 60,844.6 77,109.0 50,165.4 19,209.0 2,335.4 Total Interest Expense 20,786.2 24,000.0 19,555.5 12,494.2 375.1 NET INTEREST INCOME 40,058.4 53,109.0 30,609.9 6,714.8 1,960.3 Total Non-Interest Income 46,406.1 27,367.0 14,054.1 23,244.5 2,724.4 TOTAL INCOME 86,464.5 80,476.0 44,664.0 29,959.2 4,684.7 Provision for Loan Loss 11,578.5 19,727.0 2,374.4 118.3 70.5 Salaries and Related Expenses 20,550.9 24,678.0 16,627.4 Premises & Equipment Expense 3,192.0 1,692.6 175.7 Other Non-Interest Expense 28,157.7 22,016.0 20,169.3 5,273.2 2,567.3 TOTAL NON-INTEREST EXPENSE 48,708.6 49,886.0 20,169.3 23,593.3 2,743.1 Other Income (Expense) -9,653.4 1,252.0 693.1 -209.9 98.7 INCOME BEFORE TAXES 16,524.0 12,115.0 22,813.4 6,037.7 1,969.9 Income Taxes 2,702.7 2,382.0 5,297.8 130.7 328.3 Minority 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 1,641.6 Extraordinary Items, Net 2,886.1 -239.0 143.3 - 417.8 NET INCOME 15,461.1 9,173.0 16,804.9 5,943.1 2,059.4 Assets HSBC HOLDINGS PLC CITIGROUP INC. BANK OF CHINA LTD UBS AG HANG SENG BANK LTD Interest Bearing Balances 163,619.0 Non-Interest Bearing Balances 27,842.0 Cash and Due from Banks 103,134.1 191,461.0 396,320.9 13,966.6 6,625.7 Securities 1,193,352.6 309,964.0 307,356.0 816,752.2 32,384.3 Federal Funds Sold and Securities Purchased 261,120.0 Trading Account Securities 323,110.0 Total Loans and Leases, Net of Unearned Inc 665,807.0 Loan Loss Allowance 36,568.0 218.8 NET LOANS AND LEASES 1,265,318.5 629,239.0 932,584.6 294,204.9 79,513.5 Premises and Equipment 11,606.7 7,536.0 18,726.9 5,475.9 2,066.5 Intangible Assets 32,063.2 38,474.0 - 9,113.2 767.4 Other Assets 80,516.3 186,911.0 34,757.2 124,449.6 3,827.5 TOTAL ASSETS 2,685,991.4 1,947,815.0 1,689,745.5 1,263,962.5 125,184.8 Liabilities & Equity HSBC HOLDINGS PLC CITIGROUP INC. BANK OF CHINA LTD UBS AG HANG SENG BANK LTD Interest Bearing Deposits 722,173.0 Non-Interest Bearing Deposits 143,703.0 TOTAL DEPOSITS 1,320,434.9 865,876.0 1,197,110.5 332,378.1 94,783.0 Federal Funds Purchased and Repurchase Agreements 187,825.0 108,257.4 Other Borrowed Funds 328,139.8 410,275.0 257,059.5 362,790.0 4,530.4 Subordinated Debt and Debentures 44,888.0 Bankers Acceptances Outstanding Other Liabilities 869,695.7 267,914.0 128,456.9 407,403.2 16,394.5 TOTAL LIABILITIES 2,518,270.5 1,776,778.0 1,582,626.9 1,210,828.8 115,708.0 Preferred Equity 312.0 Common Equity 160,425.9 170,725.0 102,119.0 48,630.1 9,476.9 TOTAL EQUITY 160,425.9 171,037.0 102,119.0 48,630.1 9,476.9 TOTAL 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
  23. 23. 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 (KPI's) 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 KPI's 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 KPI's 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 (KPI's) 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 KPI's 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 (KPI's) 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 KPI's 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 (KPI's) 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 KPI's or others are you focused on improving by better financial management? Page 23 of 41
  24. 24. Total Income Growth (Includes Net and Non Interest Income)- Potential Solutions 1. Sales and Distribution ? 1. Multi-channel and 2. Customer Insight: Customers have different needs and demand consistent, personalized service at every touch point - From the office; At the branch; Self service; and through the contact center. Multi-channel solutions provide a complete and modular range of products and services with the goal of common business functions, processes, and data reused across all channels. With Customer 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 best suited 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 and Multi-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 to the 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 Customer Insight in Sales and Distribution above. Core Systems helps develop and launch new products quickly. Integrate and streamline core processes with a flexible infrastructure as well as supporting changing regulatory requirements. These solutions are designed to help transform existing core banking operations. 5. Financial Management ? 1. Risk Management and Compliance, and 2. Core Systems: Risk Management helps manage risks, from operational to market and credit risk, across your enterprise and product lines. Improve resilience to go beyond meeting regulatory compliance mandates. Also helps prevent money laundering, fraud and identity theft. Please see description of Core Systems in Product Development above. Page 24 of 41
  25. 25. Salaries and Related Expense - Questions 1. How effective is Mid- and Back-Office Processing in managing activities like i) operations, ii) account management, iii) and operational risk management? Better mid- and back-office processing often improves salaries and related expense-related key performance indicators (KPI's) 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 access mid- and back-office data and information, and iv) percentage of mid- and back-office processing activities and tasks outsourced. Which of these KPI's or others are you focused on improving by better mid- and back-office processing? 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 support often improves salaries and related expense-related key performance indicators (KPI's) like i) customer service and support employee expense as percentage of total income, ii) customer service and support employee satisfaction, iii) number of customer service and support employees, iv) average time from customer inquiry and complaint to resolution, and v) percentage of customer service and support activities and tasks outsourced. Which of these KPI's 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-related key performance indicators (KPI's) 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 sales lead to close, and v) percentage of sales and distribution activities and tasks outsourced. Which of these KPI's or 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 performance indicators 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 access marketing data and information. Which of these KPI's or others are you focused on improving by better marketing? 5. How effective is Product Development in managing activities like i) concept development, ii) product manufacture, and iii) product launch? Better product development often improves salaries and related expense- related key performance indicators (KPI's) like i) product development employee expense as percentage of total income, 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 and information. Which of these KPI's 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) managing IT operations, iii) developing and executing technology infrastructure, information management and development projects, iv) performing systems administration, and v) providing user support and training? Better management of IT often improves salaries and related expense-related key performance indicators like i) total cost of ownership, ii) number of IT employees, iii) realized ROI on IT projects, iv) IT development costs as percentage of total IT cost, and v) percentage of IT projects implemented on time. Which of these KPI's or others are you focused 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? Better management of human resources often improves salaries and related expense-related key performance indicators like i) overall number of employees, ii) employee turnover rate, iii) number of HR employees, iv) time and cost to access HR data and information, v) regulatory compliance costs and fines. Which of these KPI's or others are you focused on improving by better human resources? Page 25 of 41
  26. 26. Salaries and Related Expense - Potential Solutions 1. Mid- and Back-Office Processing ? 1. Core Systems and 2. Risk Management and Compliance: Core Systems helps develop and launch new products quickly. Integrate and streamline core processes with a flexible infrastructure as well as supporting changing regulatory requirements. These solutions are designed to help transform existing core banking operations. Risk Management helps manage risks, from operational to market and credit risk, across your enterprise and product lines. Improve resilience to go beyond meeting regulatory compliance 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 the contact center. Multi-channel solutions provide a complete and modular range of products and services with the goal 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 customer intelligence from all touch points throughout your bank. Share it to provide consistent, informed service across channels. Analyze it to identify those segments best suited to your institution. Apply it to personalize products to your customers' needs, strengthening loyalty. 4. Marketing ? 1. Customer Insight, and 2. Multi-channel: Please see description of Multi-channel in customer 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 Customer Insight in Sales and Distribution above. Also, see description of Core Systems in Mid- and Back Office Processing above. 6. Information Technology ? 1. Consulting and Implementation Services, 2. Hardware and Software Technology and 3. Outsourcing: Consulting and implementation services typically are based on professionals providing expert advice and implementation. Typically infrastructure hardware and software is designed to support end-to-end solutions built on operating systems platforms. It should be based on a design approach that helps you simplify development, deployment, and management by anticipating needs and opportunities. It should be intrinsically designed to work together and interact seamlessly with other data and applications across your IT environment so that you can reduce the costs of ongoing operations, deliver high reliability and security in your IT infrastructure, and drive valuable new capabilities for the future growth of your business. Outsourcing typically takes over entire or parts of IT operations including system and application implementations, operations and maintenance. 7. Human Resources - Human Resource Applications of Enterprise Resource Planning: ERP human resources applications typically provide capability to perform functions such as payroll, benefits administration, recruiting, hiring, retention, skills development, education, training, HR regulations, and change management. It can also include the outsourcing of HR functions. Page 26 of 41
  27. 27. Premise and Equipment Expense - Questions 1. How effective is Mid- and Back-Office Processing in managing activities like i) operations, ii) account management, iii) and operational risk management? Better mid- and back-office processing often improves premise and equipment expense-related key performance indicators (KPI's) 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 tasks outsourced. Which of these KPI's 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 premise and equipment expense-related key performance indicators (KPI's) 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 of these KPI's 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) managing IT operations, iii) developing and executing technology infrastructure, information management and development projects, iv) performing systems administration, and v) providing user support and training? Better management of IT often improves premise and equipment expense-related key performance indicators like i) total cost of ownership, 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
  28. 28. Premises and Equipment Expense - Potential Solutions 1. Mid- and Back-Office Processing ? 1. Core Systems and 2. Risk Management and Compliance: Core Systems helps develop and launch new products quickly. Integrate and streamline core processes with a flexible infrastructure as well as supporting changing regulatory requirements. These solutions are designed to help transform existing core banking operations. Risk Management helps manage risks, from operational to market and credit risk, across your enterprise and product lines. Improve resilience to go beyond meeting regulatory compliance 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 have different needs and demand consistent, personalized service at every touch point - From the office; At the branch; Self service; and through the contact center. Multi-channel solutions provide a complete and modular range of products and services with the goal of common business functions, processes, and data reused across all 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 card 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 Software Technology and 3. Outsourcing: Consulting and implementation services typically are based on professionals providing expert advice and implementation. Typically infrastructure hardware and software is designed to support end-to-end solutions built on operating systems platforms. It should be based on a design approach that helps you simplify development, deployment, and management by anticipating needs and opportunities. It should be intrinsically designed to work together and interact seamlessly with other data and applications across your IT environment so that you can reduce the costs of ongoing operations, deliver high reliability and security in your IT infrastructure, and drive valuable new capabilities for the future growth of your business. Outsourcing typically takes over entire or parts of IT operations including system and application implementations, operations and maintenance. Page 28 of 41
  29. 29. Other Non-Interest Expense - Questions 1. How effective is Vendor Selection and Procurement in managing activities like i) vendor selection and rationalization, ii) manage and monitor contracts, iii) evaluate vendor performance, iv) procure and replenish consumables, and v) manage consumables inventory? Better vendor selection and procurement often helps improve other non-interest-related key performance indicators (KPI's) like i) other non-interest expense as percentage of total income ii) non-interest expense per employee, iii) number of vendors, iv) vendor price quality, and v) vendor on-time delivery of services and consumables. Which of these KPI's or others are you focused on improving by better vendor selection and procurement? Page 29 of 41
  30. 30. Other Non-Interest Expense ? Potential Solutions 1. Supply Chain Management: Procurement - For many companies, one area for better expense management is procurement. However, to achieve substantial savings, you need to focus on how you buy and who you buy from, not just what you buy. Procurement solutions can help streamline and integrate your procurement processes to reduce costs and increase efficiency across the supply chain including helping i) determining your sourcing strategy, ii) helping with when and what you order and from which suppliers, iii) helping you with balancing priorities and managing price, quality, service, and v) implementing electronic transactions for all stages of the procurement process. If you need to develop a sourcing strategy, and implement the processes and tools to support that strategy, turn to these procurement solutions. Page 30 of 41
  31. 31. Fixed Asset Utilization - Premises and Equipment - Questions 1. How effective is Mid- and Back-Office Processing in managing activities like i) operations, ii) account management, iii) and operational risk management? Better mid- and back-office processing often premises and equipment utilization-related key performance indicators (KPI's) 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 and information, and iv) percentage of mid- and back-office processing activities and tasks outsourced. Which of these KPI's 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 performance indicators (KPI's) 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 these KPI's 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) managing IT operations, iii) developing and executing technology infrastructure, information management and development projects, iv) performing systems administration, and v) providing user support and training? Better management of IT often improves premises and equipment utilization-related key performance indicators like. Better management of IT often improves fixed asset-related key performance indicators like i) IT infrastructure utilization, 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 KPI's or others are you focused on improving by better IT. Which of these KPI's or others are you focused on improving by better IT? Page 31 of 41
  32. 32. Fixed Asset Utilization - Premises and Equipment ? Potential Solutions 1. Mid- and Back-Office Processing ? 1. Core Systems and 2. Risk Management and Compliance: Core Systems helps develop and launch new products quickly. Integrate and streamline core processes with a flexible infrastructure as well as supporting changing regulatory requirements. These solutions are designed to help transform existing core banking operations. Risk Management helps manage risks, from operational to market and credit risk, across your enterprise and product lines. Improve resilience to go beyond meeting regulatory compliance 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 the office. At the branch. Self service. Or through the contact center. Multi-channel solutions provide a complete and modular range of products and services with the goal of common business functions, processes, and data reused across all 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 card 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 Software Technology and 3. Outsourcing: Consulting and implementation services typically are based on professionals providing expert advice and implementation. Typically infrastructure hardware and software is designed to support end-to-end solutions built on operating systems platforms. It should be based on a design approach that helps you simplify development, deployment, and management by anticipating needs and opportunities. It should be intrinsically designed to work together and interact seamlessly with other data and applications across your IT environment so that you can reduce the costs of ongoing operations, deliver high reliability and security in your IT infrastructure, and drive valuable new capabilities for the future growth of your business. Outsourcing typically takes over entire or parts of IT operations including system and application implementations, operations and maintenance. Page 32 of 41
  33. 33. Definitions & Calculations 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 Total Income Growth 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. Company's Current Year Total Income (Net Interest Inc.+Tot. Non-Interest Inc.) 83,174.45 83,174.45 83,174.45 b. Previous Year's 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. Company's 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
  34. 34. What 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 Summary Net Interest Income Growth How 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 Interest Income 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 backed securities, etc.). Interest expense is the amount paid on interest bearing liabilities like interest-bearing checking 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. Company's Current Year Net Interest Income 39,525.65 39,525.65 39,525.65 b. Previous Year's 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. Company's 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
  35. 35. What 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 Summary Non-Interest Income Growth How 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 Interest Income last period. Non Interest Income is the income from service charges, credit card fees, investment and brokerage services, mortgage and investment banking, trading account profits, clearing services, and other 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. Company's Current Year Non-Interest Income 43,648.80 43,648.80 43,648.80 b. Previous Year's 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. Company's 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
  36. 36. What 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 Summary Cost to Income (Efficiency) Ratio How is Cost to Income (Efficiency) Ratio calculated? Cost to Income (Efficiency) Ratio measures of how well a financial institution manages its Total Non-Interest expenses and is a key driver of overall financial performance. Total Non-Interest Expenses includes items such as: Salaries & Related, Premises & Equipment and all Other Non-Interest Expenses. Efficiency Ratio is calculated as: Total Non-interest Expense / Total Income. Total Income is Net Interest Income plus Total Non- 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. Target's Total Income 83,174.45 83,174.45 83,174.45 b. Target's 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
  37. 37. What 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 Summary Salaries & Related as a Percentage of Total Income How 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; and benefit 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 your analysis: % Salaries & Related Expense Gap - How it is Calculated... Type of Gap Analysis Trend Peer Industry a. Target's 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
  38. 38. What 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 Summary Premises & Equipment Expenses as a Percentage of Total Income How is Premises & Equipment as a percentage of Total Income calculated? Premises & Equipment expense includes rent, utilities, maintenance on buildings, depreciation, equipment expense on hardware, office furniture expense and so forth. It is calculated as follows: Premises & Equipment Exp. / 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 for your analysis: % Premises and Equipment Expense Gap - How it is Calculated... Type of Gap Analysis Trend Peer Industry a. Target's 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
  39. 39. What 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 Summary Other Non-Interest Expenses as a Percentage of Total Income How 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 expenses excluding 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 for your analysis: Other Non-Interest Expense Gap - How it is Calculated... Type of Gap Analysis Trend Peer Industry a. Target's 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
  40. 40. What 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 Summary Total Income to Premises and Equipment How 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 to Premises & 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. Company's Net Premises and Equipment 10,386.47 10,386.47 10,386.47 b. Company's 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. Company's Fixed Asset Depreciation Rate 6.7% 6.7% 6.7% g. Reduction in Annual Capital Expenditures for Replacement of Operating Assets [e. x f.] - 194.51 - h. First-Year Before-Tax Cash Flow Benefit -- Reduction in Fixed Assets and Capital Expenditures [e. + g.] - 3,110.63 - Page 40 of 41
  41. 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

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