Analysis of the drivers of stock returns of the S&P500 financial sector from 2000 to Q2. 2017 and their performances.

1. S&P500 FINANCIAL SECTOR
ALPHA DRIVERS AND PERFORMANCE ANALYSIS
2000-2017
NUMERAXIAL ANALYTICS
WWW.NUMERAXIAL.COM
@2017 NUMERAXIAL LLC

2. OVERVIEW
• OVER THE PAST 17 YEARS, WE HAVE HAD TWO RECESSIONS AND TWO BULL MARKETS. THE
DRIVERS AND PERFORMANCES OF STOCK RETURNS OF THE INDUSTRIES IN THE FINANCIAL
SECTOR OF THE S&PS500 HAVE BEEN INCONSISTANT SHOWING THE COMPLEXITY OF THE
SECTOR. DURING THE PERIOD OF 2000 TO Q2 2017, THE BEST PERFORMENT INDUSTRY HAS
BEEN THE CONSULTING SERVICES. DISPITE AN OVERALL GOOD PERFORMANCE OVER THE PAST
8 YEARS, THE BANKING INDUSTRY HAS THE WORST OVERALL PERFORMANCE DURING THE PAST
17 YEARS REFLECTING THE BIG DIVE FROM THE HOUSING CRISIS.
• THE FINANCIAL SECTOR HAD A TOTAL RETURN OF 125.51% OVER THE PAST 8 YEAR AND
AVERAGE DIVIDEND YIELD OF 0.48%, A P/E RATIO OF 22.16 AND A P/B RATIO OF 5.53. WITH
AN AVERAGE EARNINGS GROWTH RATE OF -14.45%.
@2017 NUMERAXIAL LLC

3. BANKING
2000-2002 2003-2007 2008-2009 2010-2017 2000-2017
Revenue $3,66 B $4,56 B $5,25 B $5,86 B $5,05 B
ROE 16.53% 16.00% -0.88% 8.80% 11.16%
P/B ratio 2.86 2.22 1.07 1.24 1.80
P/E ratio 19.72 14.59 20.92 16.68 17.06
Long-term debt to
equity ratio 0.05 0.18 0.28 0.43 0.28
Dividend Yield 0.74% 0.76% 0.80% 0.46% 0.64%
Return -12.97% 25.50% -63.69% 106.02% -18.15%
Earning Growth Rate 4.94% -2.13% -105.08% -18.42% -12.00%
Beta 0.31
@2017 NUMERAXIAL LLC

4. BANKING
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
12/1/99
4/1/00
8/1/00
12/1/00
4/1/01
8/1/01
12/1/01
4/1/02
8/1/02
12/1/02
4/1/03
8/1/03
12/1/03
4/1/04
8/1/04
12/1/04
4/1/05
8/1/05
12/1/05
4/1/06
8/1/06
12/1/06
4/1/07
8/1/07
12/1/07
4/1/08
8/1/08
12/1/08
4/1/09
8/1/09
12/1/09
4/1/10
8/1/10
12/1/10
4/1/11
8/1/11
12/1/11
4/1/12
8/1/12
12/1/12
4/1/13
8/1/13
12/1/13
4/1/14
8/1/14
12/1/14
4/1/15
8/1/15
12/1/15
4/1/16
8/1/16
12/1/16
4/1/17
Aggregated Banking Industry Level
2000-2017
@2017 NUMERAXIAL LLC

5. CONGLOMERATE INDUSTRY
2000-2002 2004-2007 2008-2009 2010-2017 2000-2017
Revenue $4,74 B $8,43 B $10,41 B $17,18 B $11,76 B
ROE 5.28% 10.57% -1.06% 7.01% 6.88%
P/B ratio 1.30 1.46 1.35 1.03 1.24
P/E ratio 42.47 23.55 23.60 44.25 35.31
Long-term debt to
equity ratio 0.19 0.25 0.33 0.37 0.30
Dividend Yield 1.76% 0.43% 0.09% 0.21% 0.54%
Return 20.11% 71.77% -28.52% 145.27% 320.62%
Earning Growth Rate -62.41% 886.42% -200.78% -49.67% 243.99%
Beta -0.59
@2017 NUMERAXIAL LLC

6. CONGLOMERATE
$-
$10,000.00
$20,000.00
$30,000.00
$40,000.00
$50,000.00
$60,000.00
$70,000.00
$80,000.00
$90,000.00
12/1/99
4/1/00
8/1/00
12/1/00
4/1/01
8/1/01
12/1/01
4/1/02
8/1/02
12/1/02
4/1/03
8/1/03
12/1/03
4/1/04
8/1/04
12/1/04
4/1/05
8/1/05
12/1/05
4/1/06
8/1/06
12/1/06
4/1/07
8/1/07
12/1/07
4/1/08
8/1/08
12/1/08
4/1/09
8/1/09
12/1/09
4/1/10
8/1/10
12/1/10
4/1/11
8/1/11
12/1/11
4/1/12
8/1/12
12/1/12
4/1/13
8/1/13
12/1/13
4/1/14
8/1/14
12/1/14
4/1/15
8/1/15
12/1/15
4/1/16
8/1/16
12/1/16
4/1/17
AGGREGATED CONGLOMERATE LEVEL
2000-2017
@2017 NUMERAXIAL LLC

7. CONSULTANT INDUSTRY
2000-2002 2003-2007 2008-2009 2010-2017 2000-2017
Revenue $1,20 B $1,38 B $1,31 B $1,69 B $1,49 B
ROE 16.15% 22.38% 30.23% 26.56% 24.48%
P/B ratio 4.19 4.39 4.40 12.16 7.87
P/E ratio 29.27 20.72 16.98 24.63 23.15
Long-term debt to
equity ratio 0.31 0.16 0.37 1.17 0.66
Dividend Yield 0.80% 0.62% 0.56% 0.49% 0.56%
Return -27.04% 146.60% -28.41% 184.88% 294.98%
Earning Growth Rate 23.02% 20.16% -170.22% -5.33% -15.79%
Beta 0.42
@2017 NUMERAXIAL LLC

8. CONSULTING
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
12/1/00
4/1/01
8/1/01
12/1/01
4/1/02
8/1/02
12/1/02
4/1/03
8/1/03
12/1/03
4/1/04
8/1/04
12/1/04
4/1/05
8/1/05
12/1/05
4/1/06
8/1/06
12/1/06
4/1/07
8/1/07
12/1/07
4/1/08
8/1/08
12/1/08
4/1/09
8/1/09
12/1/09
4/1/10
8/1/10
12/1/10
4/1/11
8/1/11
12/1/11
4/1/12
8/1/12
12/1/12
4/1/13
8/1/13
12/1/13
4/1/14
8/1/14
12/1/14
4/1/15
8/1/15
12/1/15
4/1/16
8/1/16
12/1/16
4/1/17
Aggregated Consulting Industry Level
2000-2017
@2017 NUMERAXIAL LLC

9. FINANCIAL SERVICES INDUSTRY
2000-2002 2003-2007 2008-2009 2010-2017 2000-2017
Revenue $1,76 B $2,16 B $2,96 B $3,54 B $2,77 B
ROE 16.28% 15.03% 6.89% 9.84% 12.14%
P/B ratio 3.20 3.84 1.70 1.49 2.53
P/E ratio 20.29 22.35 19.73 25.34 23.01
Long-term debt to
equity ratio 0.07 0.77 0.17 1.60 0.93
Dividend Yield 0.52% 0.49% 0.59% 0.61% 0.56%
Return -16.66% 121.45% -48.08% 105.85% 96.72%
Earning Growth Rate 13.12% -12.90% -2.83% 0.58% -3.18%
Beta 0.68
@2017 NUMERAXIAL LLC

10. FINANCIAL SERVICES
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
12/1/99
4/1/00
8/1/00
12/1/00
4/1/01
8/1/01
12/1/01
4/1/02
8/1/02
12/1/02
4/1/03
8/1/03
12/1/03
4/1/04
8/1/04
12/1/04
4/1/05
8/1/05
12/1/05
4/1/06
8/1/06
12/1/06
4/1/07
8/1/07
12/1/07
4/1/08
8/1/08
12/1/08
4/1/09
8/1/09
12/1/09
4/1/10
8/1/10
12/1/10
4/1/11
8/1/11
12/1/11
4/1/12
8/1/12
12/1/12
4/1/13
8/1/13
12/1/13
4/1/14
8/1/14
12/1/14
4/1/15
8/1/15
12/1/15
4/1/16
8/1/16
12/1/16
4/1/17
Aggregated Financial Services Industry Level
2000-2017
@2017 NUMERAXIAL LLC

11. INSURANCE INDUSTRY
2000-2002 2003-2007 2008-2009 2010-2017 2000-2017
Revenue $2,41 B $4,80 B $4,47 B $5,64 B $4,72 B
ROE 93.15% 161.08% 116.53% 180.57% 152.93%
P/B ratio 19.57 14.54 12.89 13.49 14.62
P/E ratio 34.62 1.06 0.94 1.46 7.33
Long-term debt to
equity ratio 0.21 0.19 0.18 0.18 0.19
Dividend Yield 0.51% 0.48% 0.63% 0.66% 0.58%
Return -16.72% 27.10% -76.22% 129.33% -44.39%
Earning Growth Rate 260.75% -68.31% 3.93% -24.57% 15.54%
Beta 0.51
@2017 NUMERAXIAL LLC

12. INSURANCE
$-
$50.00
$100.00
$150.00
$200.00
$250.00
12/1/99
4/1/00
8/1/00
12/1/00
4/1/01
8/1/01
12/1/01
4/1/02
8/1/02
12/1/02
4/1/03
8/1/03
12/1/03
4/1/04
8/1/04
12/1/04
4/1/05
8/1/05
12/1/05
4/1/06
8/1/06
12/1/06
4/1/07
8/1/07
12/1/07
4/1/08
8/1/08
12/1/08
4/1/09
8/1/09
12/1/09
4/1/10
8/1/10
12/1/10
4/1/11
8/1/11
12/1/11
4/1/12
8/1/12
12/1/12
4/1/13
8/1/13
12/1/13
4/1/14
8/1/14
12/1/14
4/1/15
8/1/15
12/1/15
4/1/16
8/1/16
12/1/16
4/1/17
Aggregated Insurance Industry Level
2000-2017
@2017 NUMERAXIAL LLC

13. INVESTMENT INDUSTRY
2000-2002 2003-2007 2008-2009 2010-2017 2000-2017
Revenue $1,86 B $2,38 B $2,27 B $2,78 B $2,46 B
ROE 12.00% 15.62% 5.88% 10.05% 11.79%
P/B ratio 3.43 13.40 2.06 3.75 6.54
P/E ratio 31.24 24.14 24.68 20.57 23.86
Long-term debt to
equity ratio 0.74 1.29 1.20 1.01 1.08
Dividend Yield 0.18% 0.38% 0.35% 0.44% 0.37%
Return -60.38% 180.08% -35.59% 81.69% 42.91%
Earning Growth Rate 28.36% 28.60% 215.07% 10.73% 40.29%
Beta 0.85
@2017 NUMERAXIAL LLC

14. INVESTMENT INDUSTRY
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
12/1/99
4/1/00
8/1/00
12/1/00
4/1/01
8/1/01
12/1/01
4/1/02
8/1/02
12/1/02
4/1/03
8/1/03
12/1/03
4/1/04
8/1/04
12/1/04
4/1/05
8/1/05
12/1/05
4/1/06
8/1/06
12/1/06
4/1/07
8/1/07
12/1/07
4/1/08
8/1/08
12/1/08
4/1/09
8/1/09
12/1/09
4/1/10
8/1/10
12/1/10
4/1/11
8/1/11
12/1/11
4/1/12
8/1/12
12/1/12
4/1/13
8/1/13
12/1/13
4/1/14
8/1/14
12/1/14
4/1/15
8/1/15
12/1/15
4/1/16
8/1/16
12/1/16
4/1/17
Aggregated Investment Industry Level
2000-2017
@2017 NUMERAXIAL LLC

15. • RELATIVE CONSTRIBUTION OF ECONOMIC FACTORS THAT DRIVE THE
RETURN OF STOCKS IN THE FINANCIAL SECTOR
@2017 NUMERAXIAL LLC
2000-17 00-02 03-07 08-09 10-17
CPI 14 4.47% 26 6.25% 12 5.74% 27 6.70% 7 2.72%
Durable Good 18 5.75% 26 6.25% 9 4.31% 31 7.69% 30 11.67%
ISM 3 0.96% 16 3.85% 9 4.31% 29 7.20% 3 1.17%
Personal Consumption 15 4.79% 25 6.01% 11 5.26% 23 5.71% 45 17.51%
PPI 24 7.67% 26 6.25% 6 2.87% 47 11.66% 20 7.78%
Retail 5 1.60% 34 8.17% 14 6.70% 27 6.70% 4 1.56%
Balance 9 2.88% 20 4.81% 22 10.53% 19 4.71% 10 3.89%
Consumer Sentiment 20 6.39% 13 3.13% 8 3.83% 15 3.72% 9 3.50%
Nonfarm Payroll 15 4.79% 38 9.13% 4 1.91% 13 3.23% 11 4.28%
Consumer Confidence 41 13.10% 2 0.48% 7 3.35% 31 7.69% 28 10.89%
House Permit 18 5.75% 22 5.29% 14 6.70% 23 5.71% 2 0.78%
Industrial Pro index 21 6.71% 35 8.41% 15 7.18% 10 2.48% 8 3.11%
Capacity Util 23 7.35% 32 7.69% 21 10.05% 11 2.73% 8 3.11%
New Home Sale 31 9.90% 31 7.45% 11 5.26% 11 2.73% 17 6.61%
Inflation 15 4.79% 16 3.85% 12 5.74% 12 2.98% 10 3.89%
Interest Rate 13 4.15% 19 4.57% 8 3.83% 30 7.44% 34 13.23%
Unemployment 11 3.51% 15 3.61% 9 4.31% 20 4.96% 5 1.95%
Oil 17 5.43% 20 4.81% 17 8.13% 24 5.96% 6 2.33%
Total 313 416 209 403 257

16. @2017 NUMERAXIAL LLC
0
10
20
30
40
50
60
70
Financial InfoTech Consumer
Discretionary
Consumer
Staples
Energy Health Industrial Materials Real Estate Telecom Utilities
FINANCIAL SECTOR PCA
PC1 PC2 PC3
Principal Economics Indicators
driving returns in the financial sector
➢PC1: 43.95%
Inflation, Nonfarm Payroll, Durable Goods
➢PC2: 7.11%
New Home Sales, Interest Rate, Balance of Trade
➢PC3: 4.74%
Unemployment, PPI, ISM

17. FINANCIAL SECTOR RATIO
2000-2002 2003-2007 2008-2009 2010-2017 2000-2017
Revenue $2,61 B $3,95 B $4,45 B $6,11 B $4,71 B
ROE 26.57% 40.11% 26.27% 40.47% 36.56%
P/B ratio 5.76 6.64 3.91 5.53 5.77
P/E ratio 29.60 17.73 17.81 22.16 21.62
Long-term debt to
equity ratio 0.26 0.47 0.42 0.79 0.57
Dividend Yield 0.75% 0.53% 0.50% 0.48% 0.54%
Return -18.94% 95.42% -46.75% 125.51% 115.45%
Earning Growth Rate 44.63% 141.97% -43.32% -14.45% 44.81%
Beta 0.33
@2017 NUMERAXIAL LLC

18. FINANCIAL SECTOR
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
12/1/99
4/1/00
8/1/00
12/1/00
4/1/01
8/1/01
12/1/01
4/1/02
8/1/02
12/1/02
4/1/03
8/1/03
12/1/03
4/1/04
8/1/04
12/1/04
4/1/05
8/1/05
12/1/05
4/1/06
8/1/06
12/1/06
4/1/07
8/1/07
12/1/07
4/1/08
8/1/08
12/1/08
4/1/09
8/1/09
12/1/09
4/1/10
8/1/10
12/1/10
4/1/11
8/1/11
12/1/11
4/1/12
8/1/12
12/1/12
4/1/13
8/1/13
12/1/13
4/1/14
8/1/14
12/1/14
4/1/15
8/1/15
12/1/15
4/1/16
8/1/16
12/1/16
4/1/17
AGGREGATED S&P 500 FINANCIAL SECTOR LEVEL
2000-2017
@2017 NUMERAXIAL LLC

19. $-
$50.00
$100.00
$150.00
$200.00
$250.00
12/1/99
3/1/00
6/1/00
9/1/00
12/1/00
3/1/01
6/1/01
9/1/01
12/1/01
3/1/02
6/1/02
9/1/02
12/1/02
3/1/03
6/1/03
9/1/03
12/1/03
3/1/04
6/1/04
9/1/04
12/1/04
3/1/05
6/1/05
9/1/05
12/1/05
3/1/06
6/1/06
9/1/06
12/1/06
3/1/07
6/1/07
9/1/07
12/1/07
3/1/08
6/1/08
9/1/08
12/1/08
3/1/09
6/1/09
9/1/09
12/1/09
3/1/10
6/1/10
9/1/10
12/1/10
3/1/11
6/1/11
9/1/11
12/1/11
3/1/12
6/1/12
9/1/12
12/1/12
3/1/13
6/1/13
9/1/13
12/1/13
3/1/14
6/1/14
9/1/14
12/1/14
3/1/15
6/1/15
9/1/15
12/1/15
3/1/16
6/1/16
9/1/16
12/1/16
3/1/17
6/1/17
Financial Industries Growth Level
2000-2017
Bank Price Consultant Price Financial Services Price Insurrance Price Investment Price
@2017 NUMERAXIAL LLC

20. FOR QUESTION REGARDING THIS ANALYSIS
CONTACT US THROUGH THE LINKS BELOW
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