September 17, 2012

GS SUSTAIN - Financials
Equity Research

Looking through the gloom

Storm clouds recede; look beyond the gloom
Although the financial services sector faces continued uncertainties, we believe there is increasing value in a longer-term view of industry trends and the companies best placed to thrive. Downside risks at least for the strongest institutions are becoming more limited given the industrys continued capital rebuilding. Consequently, it is timely to refocus on those companies best positioned to adapt to the structural trends that should shape the industry in the coming years: geographical realignment, intensifying regulation, unwinding capital imbalances and the sharp decline in societys trust in the industry.

Future leaders look different from past ones

The structural shifts we highlight should benefit high return, well capitalised institutions exposed to growing, disciplined markets in stable product areas that are least likely to be affected by toughening regulation; strong customer relationships and funding models are also key. We expect the resulting leaders will typically be smaller and more focused on traditional services than many of the last decades winners.
THE GS SUSTAIN FOCUS LIST
The GS SUSTAIN Focus List is aimed at long-term, longonly performance with a low turnover of ideas. It incorporates 69 identified leaders that we believe are well positioned to sustain industry leadership and superior return on capital.

GS SUSTAIN RESEARCH TEAM

EUROPE
Andrew Howard | andrew.howard@gs.com | Goldman Sachs International Nick Hartley | nick.hartley@gs.com | Goldman Sachs International Nimit Agarwal | nimit.agarwal@gs.com | Goldman Sachs International

AMERICAS
Derek R. Bingham | derek.bingham@gs.com | Goldman, Sachs & Co

ASIA PACIFIC

11 global leaders on GS SUSTAIN Focus List

We apply the GS SUSTAIN framework, integrating (1) returns on capital, (2) industry positioning and (3) management quality (ESG), to 212 banks and insurers globally. Eleven companies stand out as particularly well positioned to sustain industryleading returns on capital over the long term: HSBC, Standard Chartered, BBVA, Julius Baer, Commonwealth Bank, Hang Seng Bank, Itau Unibanco, Firstrand, Prudential plc, RSA and AMP.

Richard Manley | richard.manley@gs.com | Goldman Sachs (Asia) L.L.C. Hamish Tadgell | Hamish.tadgell@gs.com | Goldman Sachs (Asia) L.L.C. Lan Wu | lan.wu@gs.com | Goldman Sachs (Asia) L.L.C. Jien Goh| jien.goh@gs.com | Goldman Sachs (Asia) L.L.C.

Growth exposure alone may be insufficient

Returns on capital and equity market performance have correlated with market growth over the past decade. Going forward, greater selectivity will be needed as emerging and developed market returns converge. GS SUSTAIN applies consistent measures globally to identify leaders.

Andrew Howard +44(20)7552-5987 andrew.howard@gs.com Goldman Sachs International Richard Manley +852-2978-1870 richard.manley@gs.com Goldman Sachs (Asia) L.L.C. Derek R. Bingham (415) 249-7435 derek.bingham@gs.com Goldman, Sachs & Co. Nick Hartley +44(20)7774-8337 nick.hartley@gs.com Goldman Sachs International

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.
Global Investment Research

The Goldman Sachs Group, Inc.

September 17, 2012

GS SUSTAIN - Financials

Table of Contents
Executive summary: Looking through the gloom No industry has seen more structural change in recent years Growth exposure alone may no longer be enough for future outperformance Key trends in global financial markets intact, but business models challenged GS SUSTAIN identifies structural industry leaders Sustained high returns drive earnings growth and equity market performance Industry positioning quantifies the strength of companies business models Management quality (ESG) analysis quantifies engagement with 21st century business risk 4 6 10 13 35 41 43 46

Emerging Market Banks Developed Market Banks Insurance

Disclosure Appendix

57 67 85
112

GlobalGSSUSTAINteamandFinancialsanalystscoveringcompaniesincludedinthisreport GSSUSTAIN AndrewHoward RichardManley DerekBingham NickHartley HamishTadgell JienGoh LanWu NimitAgarwal NasraHussein SamirSiddhanti NiteshKhirwal ShauryaVisen TianWeng ShibinLiang GauravTandon Americas RichardRamsden CarlosMacedo MichaelNannizzi ChristopherGiovanni AlexanderBlostein WesleyOkada EMEA JernejOhamen MonicaKalia ColinSimpson PawelDziedzic FrederikThomasen DmitryTrembovolsky WaleedMohsin VinitMalhotra JeanFrancoisNeuez HeinerLuz Asia&Australia NingMa TabassumInamdar RyanFisher TakanoriMiyoshi KatsunoriTanaka BenKoo VincentChang StanLee RahulJain MelissaKuang EuniceLee GurpreetSinghSahi MancySun IrisZhao

Estimates in this report are as of September 10, 2012.

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

GS SUSTAIN brings together analysis of structural industry trends and their impacts with objective analysis of performance to identify leaders
createopportunities&challenges acrossglobalfinancials underpinningGSSUSTAIN analysis ofthedriversofsustained competitiveadvantage &longtermoutperformance Industrypositioning Continued(butslowing) growthinwealthandsavings inemergingeconomies Emergingmarketswillcontribute2/3of incrementalglobalgrowthto2020E,but growataslowerpacethanthepast decade(10%vs.17%p.a.).Loandemand growthoutpacingsavings inemerging markets Paceoffinancialservices growthinendmarkets

Longterm,structuraltrends

Industrystructureand discipline Returnoncapital GSSUSTAIN analysis identifies11sustainable industryleaders

Increasedfinancialmarket depthanddisintermediation asemergingeconomies mature

Growingproportionofemergingmarket growthwillaccrueoutsidetraditional bankingservicesasdemandforinsurance andwealthmanagementproductsrises

Exposuretobusiness areas wellplacedtogrowandleast threatenedbyhighercapital standards Accesstostablefunding sources Indebtednessandpolitical riskofcountriestowhich exposed

Sustainedhighreturnson capital(ROA/ROE) drivelong termgrowthand outperformance Wellpositioned,well managedbusinesses will sustainhighreturnson capitalforlongerthanpeers

Decliningglobalcapital imbalances,increased scarcityofwholesalefunding

Assetgrowthwillbemorecloselytiedto companiesabilitiestoattractdeposits

Elevateddebtlevelsand increasedneedfor governmentsupporthave tightenedcreditlinkbetween sovereignandfinancialsector

Aneconomywideviewofleveragehas becomemoreimportantinassessing financialsectorrisks

BBVA CommonwealthBank Firstrand HangSeng Bank HSBC Itau Unibanco JuliusBaer StandardChartered

Wellcapitalisedinstitutions withlimitedexposureto higherriskactivities Morestringentregulationofcapital standards,risktakingandinternal controls;larger,universalandsystemically importantinstitutionswillfacethemost stringentstandards

AMPLtd PrudentialPlc RoyalSunAlliance

Focusonminimizing likelihoodoffuturefinancial crisesandimpactsonpublic sectorandeconomy

Boardoversightofcorporate controlsandcapital allocation

Greaterscepticismof financialservicesector

Institutionsbestabletoadapt to increasedsocialmistrustofthefinancial system,particularlyindeveloped economieswillbenefitfromstronger brandsandloyalty

Engagementwith,and managementof,changing socialpressures

Managementquality(ESG)
Source: Goldman Sachs Research

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

Executive summary: Looking through the gloom

Since the global financial crisis began, the financial sector has been at the epicenter of economic and political uncertainty. In an environment of major capital and liquidity stresses, the equity market has understandably focused more on companies survival prospects than longer-term business strengths. Although weaker institutions will struggle in an environment of continued deleveraging, sluggish economic growth and increased regulation, stronger institutions with the earnings power, capital strength and competitive position to expand profitably have a platform to deliver sound returns and growth in the coming years. As a result, despite the near-term uncertainties, we believe current conditions offer a compelling backdrop to assess the longer-term outlook for the global industry and companies best positioned to thrive.
Over longer investment horizons, returns on capital have correlated closely to both earnings growth and total shareholder returns; companies that have achieved above-median returns on capital over the past decade have outperformed those with below-median returns by c.8% annually on average. By focusing on long-term structural trends in the industry, identifying the characteristics of businesses most likely to thrive and applying objective measures to compare companies strengths, the GS SUSTAIN framework seeks to identify future returns leaders across the global industry. We have applied the framework to 212 global financial institutions and identify 11 leaders well placed to deliver long-term outperformance.

Economic realignment continues to drive industry growth; composition of demand is changing

Global economic realignment should drive continued strong financial services growth in emerging markets, but the composition of this growth is changing. Credit demand is beginning to rise, reducing the surplus of capital that has accumulated in many growth economies, which in turn coincides with both falling margins and rising credit costs in those markets. The structure of financial services demand is also changing as emerging market populations become wealthier; basic banking services increasingly will be replaced by alternative savings and credit products such as consumer credit services, asset management and insurance facilitated by disintermediation of the financial systems in those countries. As a result, a growing proportion of the industrys growth in those markets will accrue outside the banking sector. In developed markets, where many institutions grew in the decade before 2008 by leveraging the funding that stemmed from emerging market capital surpluses, financials have had to adjust to greater capital scarcity.

but exposure to growth alone may not be sufficient

While geographical exposure will likely remain a key driver of growth across the global industry, exposure to growth markets alone may be insufficient to support strong returns on capital. As they start to mature, the differences between individual growth markets will become increasingly important the structures of financial service industries, the indebtedness of financial systems, and government ownership will prove key determinants of the returns generated in different countries.

Tougher regulation returns likely to revert to historical trends but winners & losers may change
Toughening regulation raising capital requirements and limiting the allowed scale and scope of activities for major institutions will also prompt change in the structure of the industry and the activities of different groups within it. Notwithstanding concerns that
Goldman Sachs Global Investment Research 4

September 17, 2012

GS SUSTAIN - Financials

regulation will undermine the industrys return potential, we note that over the past three decades, the industrys aggregate return on equity has consistently reverted to around 10.5% (the industry ROE has been within 2.5% of this average three-quarters of the time since 1980 and has not remained outside that range for more than three years). We expect the same reversion towards cost of equity in the future the transition will likely present challenges to some business models and institutions, but opportunities for others. Regulators have also demonstrated a determination to impose tough penalties for control failures and rule-breaking, as evidenced by a string of recent costly fines for major players, including relating to money laundering, LIBOR and mis-selling. By focusing on those companies already well placed to thrive in such an industry environment, we believe investors can most successfully navigate the changes facing the financial sector.

GS SUSTAIN provides an objective framework to identify future leaders

The GS SUSTAIN framework is designed to identify the companies in the strongest position to maintain industry-leading returns on capital (ROA/ROE) over the long term. Doing so requires analysis of the major structural trends facing the industry and the characteristics of companies able to sustain a competitive advantage and superior returns against this backdrop of change (summarised in Exhibit 1). We have examined 151 banks and 61 insurance companies with a combined market capitalisation of US$5.5 tn under the GS SUSTAIN framework; this assessment integrates objective, quantitative analysis of companies (1) returns on capital (ROA/ROE), (2) industry positioning (strategic strengths) and (3) management quality (management of the environmental, social and governance issues facing the industry). Through this analysis, we identify 11 global leaders. The same logic and analysis can be applied to institutions in individual regions, highlighting those companies in the strongest positions relative to local peers. Exhibit 45 on page 36 highlights leaders in each region. Exhibit 1: GS SUSTAIN analysis highlights 11 global leaders
GS SUSTAIN leaders ranking relative to respective peers in key dimensions of GS SUSTAIN framework (full details of analysis from page 52)
Institution HSBC StandardChartered BBVA JuliusBaer CommonwealthBank HangSengBank ItauUnibanco Firstrand PrudentialPlc RSA AMP Returnoncapital ROA(Banks)/ROE(Insurers) 0.7% 0.8% 0.8% 1.0% 1.0% 1.5% 1.8% 1.7% 18% 11% 14% Percentileranking 58% 65% 59% 73% 74% 92% 65% 96% 93% 61% 83% Industrypositioning Percentileranking 66% 68% 76% 61% 82% 77% 79% 70% 82% 75% 87% Managementquality(ESG) Percentileranking 96% 92% 84% 60% 96% 88% 88% 75% 98% 90% 87%

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

No industry has seen more structural change in recent years

The industry has undergone significant structural shifts since we first assessed global financial sectors within GS SUSTAIN in 2008. The implosion of businesses that had historically proven highly successful (Lehman Brothers and Bear Stearns outperformed the US financials sector by over 100% and 60% respectively between 2000 and 2008) marked the beginning of a reversal in many of the trends that had underpinned success over the previous decade. A decade of deregulation, rising leverage and diversification prior to 2008 starting around the time Citicorp and Travelers merged in 1998 (and the subsequent Gramm-Leach-Bliley Act that allowed the combination of commercial and investment banking) has begun to reverse and has further to go in the coming years. The Basel III regulatory standards for the banking industry, agreed in 2010-11, may raise required capital levels by an estimated 50% across the industry; subsequent agreements outlined further increases for large, systemically important institutions. Increased capital requirements, along with the drying up of wholesale funding, will place greater value on deposit-led rather than lending-led growth. Social and political views towards the industry have turned significantly more sceptical in recent years, primarily across developed markets, as a string of high-profile scandals and control failures has hit many major institutions, prompting a fall in trust that will likely take many years to re-establish. On the other hand, whereas many legacy business models will be challenged, key major market trends remain intact. Economic realignment continues to drive faster growth in financial services across emerging economies than in developed markets, the structure and discipline of markets remains a key determinant of profitability, and more stable, traditional banking areas (e.g. retail banking) continue to offer greater returns stability and visibility. The analysis we apply has evolved to reflect the changes the industry is undergoing. In particular, this year we have incorporated country risk (national indebtedness, regulatory risk) and funding strength (reliance on wholesale funding for banks) into the measures of industry positioning we use. Changes in the industry and consequently in the analysis we apply have resulted in changes to the GS SUSTAIN Focus List. In 2012, we removed all three Chinese financial institutions that had been included ICBC, China Merchants Bank and China Life as well as Banco Bradesco in Brazil. Those changes reflected a combination of (1) deteriorating forecast profitability relative to emerging market peers, and (2) declines in industry positioning scores, reflecting the incorporation of country risk measures into the framework. Nevertheless, several leaders have been constant members of the GS SUSTAIN Focus List since 2008 HSBC, BBVA, Standard Chartered, AMP and Prudential Plc have remained high return, well positioned and well managed leaders as the framework has evolved and the industrys profitability has deteriorated. Those leaders are well capitalised (and capital generating) businesses with relatively strong positions in a range of growth markets within effective governance structures and environmental and social risk management. While swings in sentiment towards their domestic markets have buffeted market performance in recent years, the fundamentals of their businesses remain intact. Four of those five leaders have outperformed the global financials benchmark since 2008 (BBVA being the underperformer). In common with many large institutions, both HSBC and Standard Chartered have faced regulatory scrutiny for control failures during 2012, reflecting issues that began over a decade ago in both cases. The management quality (ESG) analysis we apply supports our view that both companies have taken steps to address the causes of those issues.

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

Exhibit 2: Ups and downs in global financials industry, framework and GS SUSTAIN leaders since 2008
2008
105

2009

2010

2011

2012

FinancialsTSRreltomarket

100 95 90 85 80 75 70 Jan/08 Mar/08 May/08 Jul/08 Sep/08 Nov/08 Jan/09 Mar/09 May/09 Jul/09 Sep/09 Nov/09 Jan/10 Mar/10 May/10 Jul/10 Sep/10 Nov/10 Jan/11 Mar/11 May/11 Jul/11 Sep/11 Nov/11 Jan/12 Mar/12 May/12 Jul/12 Sep/12 Nov/12

BearStearns,LehmanBros,AIGfailures

VolckerruleintroducedaspartofDoddFrankAct US&Europeanbankstresstestsmandate recapitilizationofUS&Europeanfinancialsystems

BaselIIIagreed,raisingcapitalrequirements,tobe phasedinfrom2013 Europeanfinancialstabilityfacilityestablished ShortsalerestrictionsforfinancialstocksinEurope andJapan

FinancialStabilityBoardoutlinesincreasedcapital requirementsforsystemicallyimportantfinancial institutions

JPMannouncesCIOOfficelosses,UBSanounces Delta1losses

TARPbailoutprogramannouncedinUS

ECBannounces3yearliquidityscheme,essentially Barclaysfinedc$460mformanipulationofLIBOR.20 eliminatingliquidityrisks otherinstitutionsinvestigated

Industry positioning analysis

Paceofbankingassetgrowthinendmarkets Disciplineinendmarkets(consolidation&stateownership) Attractivenessofbusinessmix(levelandstabilityofreturnsinbusinessareas) Capitalstructurestrength(leverage) Country riskmeasuresincorporatedas sovereign/corporatecreditworthinesshas becomemoreblurred NAB Countryrisk(indebtedness) Fundingstability(wholesalefundingreliance)

MorganStanley HDFC Banks BancoBradesco ICBC

TwoChinesebanks&BancoBradesco (Brazil)removedfromGSSUSTAINfocus listin2012reflectingfallsinreturns relativetoEMpeers ChinaMerchantsBank

Focuslist leaders

BBVA HSBC StandardChartered HangSengBank ItauUnibanco CommonwealthBank JuliusBaer Firstrand Reservesufficiency Operatingefficiency

Industry positioning analysis Insurance

Paceofinsurancepremiumgrowthinendmarkets Proximitytoendcustomerofdistributionchannels Attractivenessofbusinessmix(levelandstabilityofreturnsinbusinessareas) Regulatoryandpoliticalstabilityinendmarkets Leverage Consolidationinendmarkets AXA ING ChinaLiferemovedfrom GSSUSTAIN focuslistreflectingincreasedweightof countryriskinanalysisanddeclinein industrypositioning

Focuslist leaders

Allianz ChinaLife AMP Prudential RoyalSunAlliance

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

While less emphasis has understandably been placed on longer-term industrial strengths and business model sustainability amid significant structural changes and concerns over companies near-term viability, we believe a longer-term perspective is becoming increasingly valuable. Downside risks have not been eliminated, but the industrys recapitalisation and governments support of the financial systems of developed economies appear to have reduced the risks for now, at least for stronger, better capitalised companies. In 2008-09, returns cratered and leverage peaked across the industry, but both have now returned close to historical trend levels (Exhibit 3). This persistent tendency of industry returns on capital to revert to long-run levels aggregate ROE has been within 2.5% of the industrys 10.5% average three-quarters of the time during the last three decades and has never remained outside that band for longer than three years provides comfort that in the face of current uncertainties, the industry will adapt over time to similar profitability as in recent decades as capital exits low-return areas and pricing adjusts. The industry may have a different composition, but aggregate returns are likely to prove relatively robust. Exhibit 3: Industry profitability and leverage have returned close to historical average levels
Global financials aggregate returns on assets, return on equity (%) and leverage (total assets/equity) (x)

18% 16% 14% 12%

20 18 16 14 12

Returnonequity

10% 8%

10 6% 8 4% 2% 0% 1981 2% 4% 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2 0 ROE 6 Assets/equity 4

Source: Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Leverage(assets/equity)

AverageROE (10.5%)+/ 2.5%

September 17, 2012

GS SUSTAIN - Financials

GS SUSTAIN is ultimately designed to deliver long-term outperformance. We first incorporated global financials into the GS SUSTAIN framework in September 2007, a period that spans the demise of Lehman Brothers and Bear Stearns, as well as recent financial crises in Europe. Over that period, the financials leaders identified through our analysis outperformed the global MSCI ACWI Financials benchmark by 47% (as of September 17, 2012; Exhibit 4). While a significant proportion of this outperformance was achieved during the year following the collapse of Lehman Brothers, examining the underlying components of equity market returns highlights the durability of the strategy (Exhibit 5). Sustained high returns on capital over time have translated into superior earnings growth and revisions to the equity markets growth forecasts, which is ultimately the key to long-term equity market outperformance. The financials leaders included in the GS SUSTAIN Focus List have delivered consistently positive earnings momentum (relative to the trajectory of their global peers) over the past five years. Despite this stronger earnings momentum which we expect the current leaders to maintain financials leaders valuation multiples have remained broadly in line with those of global peers and look to us relatively undemanding. Exhibit 4: GS SUSTAIN financials leaders have outperformed their global benchmark
Cumulative outperformance of GS SUSTAIN Financials leaders vs. MSCI ACWI

Exhibit 5: principally reflecting their stronger earnings growth

Cumulative revisions to earnings forecasts and to forward earnings multiples, both relative to 212 banks and insurance companies analysed in GS SUSTAIN

60%

100% Stronger earningsexpectation momentumforGSSUSTAIN leadersthanpeers

50%
Cumulativechangeinearnings&multiples

80%

40%
Cumulativeoutperformance

60%

30%

40% Limited benefitfrommultiple expansionforGSSUSTAINleaders relativetopeers

20%

20%

10%

0% Sep/07 20%

Apr/08

Nov/08

Jun/09

Jan/10

Aug/10 Mar/11

Oct/11 May/12

0% Sep/07 Apr/08 10%

Nov/08 Jun/09

Jan/10

Aug/10 Mar/11

Oct/11 May/12
40%

MultiplepremiumofFinancialsLeadersvsGlobal Financials(P/E1yrforward) CumulativeexcessearningsrevisionsofFinancials LeadersvsGlobalFinancials

CumulativeoutperformanceofFinancialsvs. MSCIACWIFinancials
60%

20%
Note: Results presented should not and cannot be viewed as an indicator of future performance. Performance is calculated on an equally weighted basis relative to the MSCI All Country World index (market-cap-weighted total return series in US$). Full details of the performance of stocks in the GS SUSTAIN universe can be provided upon request. Source: Datastream, Goldman Sachs Research estimates

Source: Datastream, Goldman Sachs Research estimates

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

Growth exposure alone may no longer be enough for future outperformance

For most of the past five years, the equity market has mainly focused on the uncertainty over how financial institutions would cope with rapidly receding credit availability, where the burden of deleveraging would fall across the private and public sector, the effects of tougher regulation and whether or in what form major institutions would survive. The result of this focus on downside risk has been significant underperformance by the industry in aggregate. With those worries most acute in developed economies, emerging market financials have significantly outperformed over the past decade, reversing the fallout of the Asian crisis in the late 1990s (Exhibit 7). Over the same period, emerging market financials share of the global sector benchmark (MSCI ACWI Financials) has quintupled from 5% to 25% of the total a function of both their outperformance and the public listing of new institutions. Over the past year, however, emerging market financials have retreated relative to their developed market peers, and we believe generating future outperformance will require more discrimination than screening by country of domicile. Exhibit 6: Global financials have provided a rollercoaster ride but no outperformance over 30 years
Global Financials cumulative outperformance relative to MSCI ACWI (quarterly)
120%

Exhibit 7: Emerging market financials have significantly outperformed developed market financials over the last decade
Emerging and developed market financials relative to global sector
40%

Emgingvs.GlobalFinancials Devd.vs.GlobalFinancials

100%

Cumulativeoutperformancevs.MSCIACWIsince1980

20% Globalfinancialsvs.globalequities
80%

0% 1995 1997 1999 2001 2003 Major underperformance byemergingmarket financialsasAsian crisisunfolds 2005 2007 2009 2011

60%

40%

20%

20%

40%

0% 1981 20% 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

60%

Emerging market financialsbenefitfrom rebalancingofglobal economy,risingfrom5% ofglobalsectorto25% overlastdecade

40%
Source: Datastream, Goldman Sachs Research.

80%

Source: Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

10

September 17, 2012

GS SUSTAIN - Financials

Over most of the past decade, exposure to emerging growth markets has been sufficient to drive strong returns and outperformance. Looking ahead, however, it will be increasingly important to discriminate between markets based on structural characteristics and between companies business models. Returns pressures in emerging markets are reflected in the convergence in developed and emerging market returns in recent years. This trend is most evident in the banks sector, given the limited representation of emerging market domiciled companies in the global insurance sector. Having generated materially stronger returns for the last decade, emerging market banks are moving closer to their developed market counterparts. This trend is already evident (Exhibit 8). Having begun to diverge around a decade ago (prior to which returns were higher in developed markets), returns on assets across both regions have begun to converge in recent years. Exhibit 8: Developed and emerging market banks returns have begun to converge
Average ROA of developed and emerging market listed banks

1.4% Developedmarketbanksindex Emergingmarketbanksindex EmergingminusDeveloped

1.2%

1.0%

0.8%
ROA

0.6%

0.4%

0.2%

0.0% 2001 0.2%

Source: Datastream, Goldman Sachs Research.

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Goldman Sachs Global Investment Research

11

September 17, 2012

GS SUSTAIN - Financials

Given the declining importance of growth exposure in isolation as a driver of returns on capital, and the rising importance of nongrowth aspects of business models, we believe the best positioned institutions will be those combining strong growth exposure with other dimensions of the analysis we apply. Exhibits 9 and 10 compare the attractiveness of the banking and insurance sectors (for companies listed in major markets) on both growth and non-growth dimensions. Institutions in many of the fastest-growing countries are relatively poorly positioned on other dimensions of industry positioning. The industry positioning analysis applied to financial industries combines measures of growth exposure with industry structure and business model comparisons, reflecting the key trends detailed in the next section. The financials leaders included in the global GS SUSTAIN Focus List typically combine strengths on both dimensions; many of these leaders are domiciled in the more attractive markets highlighted in the exhibits below. Exhibit 9: Industry positioning percentiles for growth vs. non-growth metrics, country averages (banks)
Growth vs. non-growth industry positioning measures, average by listing country

Exhibit 10: Industry positioning percentiles for growth vs. non-growth metrics, country averages (insurance)
Growth vs. non-growth industry positioning measures, average by listing country

100% Spain
Averagepercentilerankonnongrowthindustrypositioning measuresvs.globalbanks

90% Sweden 80% 70% Italy 60% 50% 40% 30% 20% 10% 0% 0% Korea SaudiArabia Japan France UnitedStates Switzerland Qatar UAE Germany Brazil

AveragepercentilerankonnongrowthIndustryPositioning metrics

Moreattractive combinationofgrowth exposuresandnongrowth industrymeasures(market structure,countryriskand businessmodel)

70% 65% 60% 55% Switzerland 50% 45% Japan

UnitedKingdom Australia Thailand China

Moreattractive combinationofgrowth Australia exposuresandnon growthindustry measures(market structure,countryrisk andbusinessmodel) UnitedKingdom UnitedStates

SouthAfrica HongKong Taiwan

Russia India Indonesia Malaysia

SouthKorea 40% 35% 30% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% AveragepercentilerankongrowthmetricwithinIndustryPositioning analysis France Germany China

Singapore

Turkey 20% 40% 60% 80% 100% Averagepercentilerankongrowthmeasuresvs.globalbanks

Source: Company data, Goldman Sachs Research.

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

12

September 17, 2012

GS SUSTAIN - Financials

Key trends in global financial markets intact, but business models challenged
The crises of the past five years have caused a series of acute dislocations across financial sectors. The market appears to have focused on these as discrete events, but we view the crises as symptomatic of an ongoing reversal in underlying industry drivers, which we expect to persist through the next five to ten years. Rather than estimating the direction of sovereign borrowing costs, pinpointing the detail of regulatory change or identifying the next institution to face liquidity or regulatory concerns, we believe there is value in focusing on the trends underlying these events, and their longer-term implications. The GS SUSTAIN analysis we apply has accordingly evolved to reflect the industrys shifting competitive drivers (Exhibit 11).
Recent years have marked a reversal from less to more regulation, from growing to narrowing global capital imbalances, and from abundance to scarcity of capital. The credit crisis of 2008 and more recent concerns over Europes financial and sovereign indebtedness and liquidity are symptoms of the stresses of excessive leverage that have accumulated in many developed markets. While those shifts will have a significant impact on business models across the global industry, other long-term trends in demand in particular the rising importance of emerging economies continue unabated. As they grow wealthier, emerging market populations are likely to borrow more and save less of their income, reducing the capital surplus that has built over the last decade, much of which funded the growth in developed market credit over the last decade. While their contribution to global growth is rising, as emerging financial markets mature, margins are declining, leading to a convergence in developed and emerging market returns on capital. As a result, it will prove increasingly important to identify institutions able to sustain strong returns, through the structure of their markets, business models or cost efficiencies, rather than through growth exposure alone. In contrast, in mature economies, reduced access to wholesale funding and deleveraging are prompting a return to more traditional business models. Central bank liquidity windows notwithstanding, deposit funding is becoming increasingly valuable, raising the relative value of traditional deposit-taking banking. Customer relationships have become more critical as competition for funding has intensified strong capital bases and access to secure funding are key sources of competitive advantage. Similarly, in the insurance sector, companies ability to maintain strong customer relationships in the face of disintermediation through aggregator channels has made these relationships more important to sustainable business models. Across the world, we expect regulators and governments to play an increasingly active role in the industry. Recent years have underscored the importance of the financial system to national and global economies, and the failure of the regulatory controls previously in place to avert the crises that occurred. The precise path of regulatory change is unclear, but focusing on regulators ultimate goals to reduce the likelihood of future financial crises and to limit their impact if they do occur provides a clear outline of the likely direction of change: greater capital requirements and limitations on major institutions risk-taking. Critically, the industry faces an unprecedented level of social mistrust; blame for the causes of recent crises and the subsequent economic slowdown has been laid at the sectors door. In an environment in which less than a quarter of developed nations populations have trust in financial service companies (according to a survey by Edelman), the ability to restore faith in the industry and individual institutions will be a critical source of advantage, albeit one that is hard to measure. Linked to this deterioration in trust in the industry, regulators are becoming increasingly stringent in the penalties they apply to institutions found guilty of rule-breaking and internal risk management and control failures.

Goldman Sachs Global Investment Research

13

September 17, 2012

GS SUSTAIN - Financials

The structural trends on which our analysis focus inform the drivers of competitive advantage that we expect to separate well- from poorly-positioned companies across the industry. In turn, these inform the analysis we apply within GS SUSTAIN to identify future leaders across the global industry. Exhibit 11 outlines the key trends on which our analysis focuses across the global financials industry, the implications of those trends for future profitability and the resulting industry positioning and management quality analysis we apply to identify the companies best placed to sustain industry-leading returns on capital. Exhibit 11: Key trends and implications
Structural trends, implications for return on capital drivers and resulting industry positioning and management quality (ESG) analysis
GlobalFinancialsfaceschangingstructural industrytrends Emergingeconomiescontinuetodrive growth butconvergingprofitabilitiesacross developedandemergingmarketfinancials Reversalofcapitalimbalances,lower capitalavailabilityindevelopedmarkets Increasedsophisticationofemerging economyfinancialservicesanddeepening offinancialmarkets Blurringofsovereign/financialsector boundaries Increasedregulation;highercapital requirements,reducedrisktaking Underasocialspotlight;increased mistrust,socialpressures Higherpenaltiesforcontrolfailuresand rulebreaking
Source: Goldman Sachs Research.

whichwillimpactfuturereturnoncapitaldrivers Webelieveeconomicgrowthanddeepeningfinancialmarketsinemergingeconomieswill underpinfinancialservicesgrowth23xfasterthanindevelopedmarkets Fallingnetinterestmarginsinemergingeconomies,relativetodeveloped,underpina convergenceindevelopedandemergingmarketreturns Risingborrowinginemergingeconomiesisreducingthecapitalsurplusthathasfundedthe creditexpansioninmanydevelopedeconomies,reversingwhichwillrequireaprolonged deleveragingprocess Aswealthlevelsrise,borrowingisrisingrelativetodepositsanddemandforwealth managementandinsuranceproductsisincreasing Governments'interventionstosupportfinancialsectorsinmanyregionshavecreateda linkagebetweensovereignandfinancialcredit Regulatorsareincreasinglyfocusedonminimisingtherisksposedbythefinancialsector viaincreasedcapitalrequirementsandcurtailingorincreasingcostsofhigherriskactivities Companiesabletorestoreconsumers'trustwillbeatasignificantadvantageasdeveloped economies'populationshavelostconfidenceintheindustry Penaltiesforrulebreakingorcontrolfailureswillriseasregulatorsareprovidedamandate todeterillegalactivity

andunderpintheindustrypositioningandmanagementquality (ESG)analysisweapply Paceoffinancialservicesgrowthinendmarkets

Industrystructureanddiscipline Accesstosecurefunding Industry positioning Exposuretobusinessareaswellplacedtogrowand leastthreatenedbyhighercapitalstandards Indebtednessandpoliticalriskofcountriesto whichexposed Wellcapitalisedinstitutionswithlimitedexposure tohigherriskactivities Engagementwith,andmanagementof,changing socialpressures Management quality(ESG) Boardoversightofcorporatecontrolsandcapital allocation

Goldman Sachs Global Investment Research

14

September 17, 2012

GS SUSTAIN - Financials

Emerging economies continue to drive growth

Over the last decade, the global industry has diverged along geographic lines. As their economic power has risen, emerging markets demand for financial services has become a larger share of the global total, mirrored by a rise in their importance in the global sectors market value. Since 2000, over 90% of the growth in market capitalisation of global financials has come from emerging markets, contrasting with the dominance of developed G7 markets to growth in the prior decade (Exhibit 13). The migration of industry assets and market capitalisation towards emerging economies will likely continue. As wealth rises in those economies, the penetration of financial services typically continues to grow, compounding the effects of rising economic output (Exhibit 14). Developed economies, in contrast, face the prospect of subdued economic growth and already-mature demand for traditional financial services. Exhibit 12: Geographical shift in financial services has mirrored economic realignment
Regional share of GDP and share of banking assets of top 20 banks by assets, 19902011

Exhibit 13: almost all of the industrys growth in the last decade has come from emerging economies
Contribution to global financials market capitalisation growth by region, 1990 to 2012 (current)

100% 90% Other 80% 70% China

20 18 16 14

ROW EmergingAsia G7

LatAm CEEMA Series1

Shareofglobaltotal

60% 50% 40% 30%

US Western Europe Japan

US$tr

12 10 8 6

90%ofthe growthin globalsectormarket valueinthelast decadehasbeen outsideG7markets, contrastingwiththe priordecade

20%
4

10% 0% 1990 2000 2011 1990 2000 2011

2 0 1990 199000 2000 200012 2012

ShareinglobalGDP

Shareinbankingassets

Source: The Economist, Datastream, Goldman Sachs Research.

Source: Datastream, Goldman Sachs Research estimates

Goldman Sachs Global Investment Research

15

September 17, 2012

GS SUSTAIN - Financials

Exhibit 14: Continued financial penetration as emerging economies grow wealthier

Banking assets/GDP vs. GDP/capita (2000-10 series for major countries)

350% Japan 300% Japan themostextreme anomolyreflectinghighlevelsof debtaccumulationinthat country

250% Spain UK 200%

Bankingassets/GDP

US

HK

Generally positiverelationship betweenwealthlevelsand bankingassetpenetration Italy Sweden Germany France Australia

150%

China

Korea 100% India 50% Indonesia Russia Brazil Chile Turkey Poland

0% 0 10,000 20,000 30,000 40,000 GDP/capita(current US$atmarket exchangerates) 50,000 60,000

Source: World Bank, IMF, Goldman Sachs Research.

Goldman Sachs Global Investment Research

16

September 17, 2012

GS SUSTAIN - Financials

While rising wealth will support financial services growth in emerging economies, the banking sectors of many developed markets have reached a scale from which further growth will be limited. The headwinds are greatest in countries where credit and financial service industries are large relative to national economies, of which there are an increasing number. Since 2000, the number of countries among the worlds 30 largest banking markets where bank credit outstanding is higher than 150% of GDP has quadrupled (Exhibit 15). We expect that many developed market governments will seek to mitigate the risks posed by financial institutions by encouraging or mandating a reduction in the scale of their financial sectors and reducing the concentration of that risk by fragmenting currently consolidated industries or systemically important (large) institutions. These concerns are likely to present a headwind to further growth for large financial institutions in many developed markets, even in Europe where the industry is currently more fragmented than in the US. Exhibit 15: Banking credit has reached a significant proportion of GDP in many developed countries
Domestic banking credit as % of GDP

350% 300% 250% 200%

Bankcredit/GDP

2000 150% 100% 50% 0%

Germany Israel RussianFederati Switzerland SouthAfrica HongKong UnitedKingdom UnitedStates SouthKorea Singapore Indonesia
17

2011

Portugal

Sweden

Canada

Austria

Colombia

Ireland

Denmark

Malaysia

Australia

Belgium

Japan

Spain

Norway

Turkey

France

China

India

Thailand

Source: World Bank, IMF, Goldman Sachs Research

Goldman Sachs Global Investment Research

Poland

Brazil

Italy

Chile

September 17, 2012

GS SUSTAIN - Financials

As a result, emerging economies will likely continue to drive industry growth. Exhibit 16 outlines the historical growth in banking assets and implied future growth derived by combining our economists GDP forecasts with the relationship between wealth levels and banking asset penetration in each country demonstrated in Exhibit 14. This analysis implies that approximately two-thirds of the total growth in banking assets will come from emerging economies over the next five years, almost twice as large a contribution as that of the past decade. While their contribution to the global total is rising, the pace of growth in emerging economies has been slowing and is likely to continue to do so in the coming years as they begin to mature from 17% pa since 2000 to 10% pa over the next decade, based on the projections outlined below. Exhibit 16: Emerging economies are driving banking asset growth
Banking assets by region, projections based on forecast GDP/capita and observed relationship between banking penetration and wealth

Exhibit 17: The majority of growth in the next decade will come from emerging economies
Contribution of developed and emerging economies to banking asset growth

160

ROW LatAm NAmerica Japan

China CEEMEA WEurope

160 140 120 100

US$tr

140

120

Developed G7markets contributed2/3oftotal bankingassetgrowthin2000 10butimpliedcontributionis under40%in201020 ROW

100
US$tr

China LatAm CEEMEA NAmerica WEurope Japan

80

80 60 40 20 0

60

40

20

0 2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2000

200010

201020

2020

Source: World Bank, Goldman Sachs ECS Research, Goldman Sachs Research estimates

Source: World Bank, Goldman Sachs ECS Research, Goldman Sachs Research estimates

Goldman Sachs Global Investment Research

18

September 17, 2012

GS SUSTAIN - Financials

but the returns of emerging market financials are converging towards developed market peers
While emerging markets continue to drive growth, profitability in many of those markets is coming under pressure. Exhibit 18 plots average historical and forecast ROAs of developed and emerging market-listed banks. Emerging market banks continue to generate higher returns than developed peers, but the extent of this advantage is shrinking. Exhibit 19 dissects differences in the components of banks average returns on assets in emerging and developed markets; the stronger returns of emerging market-listed banks today mainly reflect stronger net interest margins (higher lending rates more than offset higher deposit rates). At the same time, emerging market institutions are typically less efficient and bear higher credit costs, though insufficient to offset their stronger margins. However, examining trends in these income and cost components (Exhibit 20) highlights the declining margins emerging market banks face, and resulting downward pressures on their excess ROA relative to developed market peers. Exhibit 18: Emerging and developed market ROAs are converging
Average ROA of developed and emerging market banks

Exhibit 19: Net interest margins explain most of the ROA difference
Decomposition of differences between average developed and emerging market banking sector ROAs (avg 2004-11 ROA)

2.5%

Developedmarkets Emergingmarkets Spread:EMDMavg(RHS)

1.5%

3.5% 16bp 187bp 3.0% 2.5% 2.0% 1.5% 23bp 1.0% 39bp 53bp 72bp 39bp

1.4%

2.0% 1.3% 1.5%

AvgROA

1.2%

175bp

1.0%

1.1%

1.0% 0.5% 0.9%

0.5% 0.0%

Noninterest income

Netinterest income

Operating expenses

Provision charge

Taxand other

Fees

0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E

0.8%

Source: Quantum database, Goldman Sachs Research estimates.

Source: Quantum database, Goldman Sachs Research.

Goldman Sachs Global Investment Research

ROA DMbanks
19

ROA EMbanks

September 17, 2012

GS SUSTAIN - Financials

Exhibit 20: Trends in ROA drivers in developed and emerging markets highlight NIM convergence
Average income statement components as % of assets across developed and emerging market banks

Income Netinterestmarginas%ofassets 3.0% 2.8% 2.6% Netinterest marginconvergence isthemaindriverofROA convergence 4.1% 4.0% 3.9% 1.8% 1.6% 1.4%

Costs Provisionsas%ofassets 1.0% 0.9% 0.8% 0.7% 0.6% 0.5% 0.8% 0.6% 0.4% 0.2% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E Tax&otheras%ofassets 2.5% 0.4% 0.3% 2.0% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.1% 0.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E Developedmarkets Emergingmarkets 0.0% 0.2% 0.1% Developedmarkets Emergingmarkets 0.4% 0.3% 0.2% 0.1% 0.0%

Emergingnmarketavg

2.4% 2.2% 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E Noninterestincome&feeincomeas%ofassets 2.0% 1.8% 1.6% Developedmarkets Emergingmarkets

3.8% 3.7% 3.6% 3.5% 3.4% 3.3% 3.2% 3.1%

1.2% 1.0%

Emergingnmarketavg

Developedmarketavg

1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E Developedmarkets Emergingmarkets 0.5% 1.0% 1.5%

Developedmarketavg

0.3% 0.2%

Source: Quantum database, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

Emergingnmarketavg
20

Emergingnmarketavg

Developedmarketavg

Developedmarketavg

September 17, 2012

GS SUSTAIN - Financials

The prospect of convergence in returns is evident across the insurance sector, as well as in banks. While the listed emerging market insurance industry is a much smaller proportion of the global total than the more established banking sector, similar relationships between market maturity and returns generated by domestic companies are evident. As wealth levels and financial services penetration rise in todays emerging economies, we expect returns to move closer to those achieved in developed economies. Exhibit 21: As financial systems mature, banks become less profitable
Banking penetration (banking assets/GDP) vs. average ROA by country (2011)

Exhibit 22: and so do insurance companies

Insurance penetration (premia/GDP) vs. average ROE by country (2011)

3.0%
AggregateROEofinsurancecompanieslistedineach country

30%

AggregateROAofbankslistedineachcountry

2.5%

Indonesia Colombia Turkey Russia Chile Brazil Thailand Malaysia SouthAfrica China India SKorea HongKong Canada Singapore Australia Poland Israel Norway UnitedStates Sweden Switzerland Spain Austria Portugal France Ireland Germany Denmark UK Italy 100% 150% 200% 250% 300% Bankcredit/GDP

25%

Thailand Peru Israel Mexico

2.0%

20%

1.5%

15%

1.0%

10%

China Brazil Spain Singapore Norway

0.5%

5%

Belgium Germany Korea SouthAfrica Canada Denmark UnitedKingdom Finland Switzerland Japan UnitedStates France HongKong Austria India Italy Netherlands 14% 16%

Japan 350%

0.0% 0% 0.5% 50%

0% 0% 2% 4% 6% 8% 10% 12% Insurancepenetration(premiumsin%ofGDP)

Source: Datastream, Goldman Sachs Research.

Source: Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

21

September 17, 2012

GS SUSTAIN - Financials

Capital imbalances are reversing; more domestic EM credit, less surplus capital in DMs
The global economy is passing from a period of excess capital, and growing global imbalances, to one of greater capital constraints and falling imbalances. Rising wealth levels in emerging markets, and the tendency for savings growth to precede rising borrowing as these economies develop, have contributed to the imbalance between savings and debt in emerging markets and consequent global capital imbalances that have built in recent decades. Exhibits 23 and 24 plot the trends in global savings and credit growth over recent decades. While emerging markets share of both has risen rapidly since the 1990s, growth in the supply of capital (savings) has outstripped demand (credit), resulting in a surplus of capital in those markets. Exhibit 23: Emerging economies represent a growing share of capital accumulation
Share of gross annual savings across major economies

Exhibit 24: and of credit use, although materially less significant globally
Annual credit use (increase in credit outstanding) (US$) by region, 5-year moving average

100% 90% 80% 70% Russia 60% 50% 40% 30% 20% 10% 0% 1970 India China Brazil Japan US WEurope

100% 90% 80% 70% Russia 60% 50% 40% 30% 20% 10% 0% 1975 India China Brazil Japan US WEurope

1975

1980

1985

1990

1995

2000

2005

2010

1980

1985

1990

1995

2000

2005

2010

Source: World Bank

Source: World Bank

Goldman Sachs Global Investment Research

22

September 17, 2012

GS SUSTAIN - Financials

The divergence between savings growth and credit growth in emerging economies reflects the higher levels of income at which consumers start to borrow rather than save. More capital has accumulated in emerging economies than those markets have absorbed in investment domestically. As a result, emerging economies became exporters of capital during the last decade, helping fund the credit expansion that supported economic growth in developed economies. As emerging economies grow wealthier, we expect their savings and borrowing rates to move further into line, resulting in greater credit and reducing the surplus of capital that has built up. Exhibit 25: Wealthier countries have more borrowers
Annual average penetration of savings accounting and loans by income band (US$/capita) of countries, indexed to penetration levels in wealthiest countries

Exhibit 26: Borrowing tends to rise with higher wealth, whereas savings fall
Annual average savings/GDP (2000-11) and rise in credit/GDP (2000-11), by country

120%
Penetrationas%ofwealthiestcountries(100%)

100

Depositaccountsperadult Loanaccountsperadult
Growthincredit/GDP,averagesavings/GDP(%)

100%

80

Credit Savings Linear(Credit) Linear(Savings)

80%

60

60%

40

40%

20

20%

0 0 20 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

0%
<500 5001,000 4,30012,000 1,0002,100 2,1004,300 12,00030,000 >30,000

Incomeband
Source: World Bank, Goldman Sachs Research.

40

GDP/capita(US$)

Source: World Bank, Goldman Sachs Research.

Goldman Sachs Global Investment Research

23

September 17, 2012

GS SUSTAIN - Financials

Surplus capital in emerging economies has helped underpin the relatively high returns companies in those markets have achieved. For instance, in the banking industry, high savings rates have typically allowed banks to provide relatively low deposit rates compared with the prevailing relatively high interest rates in many of those countries. As a result, in countries where savings rates are high relative to credit demand (principally emerging economies), net interest margins (lending minus deposit rates) tend to be materially higher than where borrowing exceeds savings (principally in developed economies; Exhibit 27). However, as the excess of savings over demand for credit in emerging economies falls, net interest margins in those countries are coming under pressure (Exhibit 28). We believe the trend towards greater balance in savings and credit demand will drive continued convergence in net interest margins.

Exhibit 27: Net interest margins tend to be higher in countries with savings surpluses
Excess of gross savings over credit growth (as % GDP) vs. net interest margins, 2011

Exhibit 28: Convergence in savings is bringing NIM convergence

Excess of gross savings over credit growth (as % GDP) vs. net interest margins, average of BRICs vs. G7 countries

5.0% 4.5% Brazil 4.0%

Netinterestmargin(200611 avg)

40%

Russia
35% 30%
(Savingcreditgrowth)/GDP

BRICExcesssaving BRICNIM

G7Excesssaving G7NIM

4.5% 4.0% 3.5% 3.0% 2.5%

Netinterestmargin

3.5% 3.0% 2.5% 2.0% 1.5% UnitedKingdom 1.0% France 0.5% 0.0% 0% 10% 20% 30% (Savingscreditgrowth)/GDP200611avg 40% Japan Germany UnitedStates India

China

25% 20% 2.0% 15% 1.5% 10% 5% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1.0% 0.5% 0.0%

50%

Source: World Bank, Datastream, Goldman Sachs Research.

Source: World Bank, Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

24

September 17, 2012

GS SUSTAIN - Financials

Compounding the challenges presented by realignment of global flows, demographic trends present headwinds to overall growth in the global capital stock. Savings tend to vary with age people typically accumulate debt until around age 30, save more than they borrow between 30 and 55, and then deplete their savings thereafter. As a result, the aging of the worlds population presents a growing impediment to the accumulation of the capital that future investment will demand. Exhibit 29 plots the long-term relationship between the proportion of the worlds population at peak savings age (30-55 years) and 10-year US treasuries (as a proxy of the risk-adjusted cost of capital). As the worlds saving population grew relative to borrowers over the last three decades, a period during which capital has been relatively abundant, the cost of capital has fallen. However, as the worlds population enters a period of sustained shrinkage in its savings age population, without a shift in lifecycle savings patterns (of which there has so far been no evidence), capital is likely to become scarcer at an aggregate level, and more costly as a result. Exhibit 29: Demographic trends imply capital will become more constrained
Global saving age (30-55) population as % of total population vs. benchmark borrowing rate (10-year US treasury yield, 5 year average)

12 10yrUStreasuryyield
Riskfreeborrowingrate(10yrUStreasuries)

20%

10

22%
3055yroldsas%totalpopulation
25

Savingagepopulation(3055)as%total population 24%

8 26% 6 28% 4 30% 2

32%

0 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

34%

Source: UN Population Division, Datastream, US Census Bureau, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

Emerging market financial services consumers are becoming more sophisticated

Rising wealth levels in the emerging economies that have driven growth over the last decade will likely underpin increasing sophistication in demand and a shift from traditional banking to more sophisticated financial services. Economies typically pass through an evolution from traditional banking services at lower levels of wealth (initially basic deposits to borrowing and more sophisticated banking services as economies become more mature) through to insurance and wealth management products at higher levels of income. As a result, as demand for financial services continues to grow, a rising proportion of this growth will accrue outside the banking industry that currently dominates emerging market financial services. Currently, emerging market listed insurers represent less than 15% of the global industrys market capitalization, whereas emerging market banks contribute close to half of the total value of that sector. Exhibit 30: As wealth increases, populations move first into banking products, then into insurance
Avg penetration of financial services by average national wealth levels, indexed to wealthiest countries

Exhibit 31: and as GDP/capita rises further, increasingly sophisticated products are introduced
Avg penetration of financial products by average national wealth levels, indexed to wealthiest countries

140%
Penetrationas%ofwealthiestcountries(100%)
Bankdeposits

120%
Domesticcreditprovided bybanks LifeInsurancePremiumVol.

Branchesperadult Depositaccoutnsperadult Loanaccountsperadult

Penetrationas%ofwealthiestcountry(100%)

120% 100% 80% 60% 40% 20% 0%

1,0002,000

100%

NonLifeInsurancePremiumVol.

80%

POSterminalsperadult Stockstradedannually(%GDP)

60%

40%

20%

0%

<500

5001,000

4,30012,000

1,0002,100

2,1004,300

30,00050,000

5,00012,000

12,0000,000

Incomeband
Source: IMF, World Bank, Swiss Re Sigma, Goldman Sachs Research.

Source: IMF, World Bank, Swiss Re Sigma, Goldman Sachs Research.

Goldman Sachs Global Investment Research

12,00030,000

2,0005,000

>50,000

>30,000
26

September 17, 2012

GS SUSTAIN - Financials

Whereas growth in emerging economies has principally benefited the banking industry to date, going forward we expect the financial sectors of those markets to become more diverse. Rising wealth levels, deepening financial markets and greater consumer sophistication will likely underpin the growth of non-banking sectors in todays emerging economies, moving closer to the financial industry structures of wealthier countries. Exhibit 32 plots the structures of financial service industries, based on the market value of each sector of major economies spanning a range of incomes. With the exception of Russia in which banking continues to dominate the transition from banking to nonbanking sectors is evident. This transition will also present opportunities for international companies exposed to this growth. Whereas the banking sector of most countries is typically dominated by locally domiciled companies, insurance and other financial sectors are more international, providing opportunities to established multinationals. Exhibit 32: Non-banking activities are typically a larger share of financial services income in more developed economies
2011 aggregate net income of listed companies in financial services subsectors, by country, ranked by GDP/capita (US$)

100% 90% 80% 70% REITS(all) 60% 50% 40% 30% 20% 10% 0%
Turkey Russia Korea India China Brazil Japan WEurope US

Reinsurance FullLineInsurance

AssetManagers LifeInsurance ConsumerFinance P&CInsurance Banks

GDPper capita (2011)

1,389

5,414

10,522

12,789

12,993

22,778

39,745

45,920

48,387

Source: Datastream, Goldman Sachs Research estimates, IMF WEO.

Goldman Sachs Global Investment Research

27

September 17, 2012

GS SUSTAIN - Financials

Increased regulation: Higher capital requirements, reduced risk-taking

The financial crisis of recent years has prompted a response from regulators seeking to reduce the risks of similar contagion from the financial sector to the broader economy and to limit the impact of failures where they do occur. The industry is seeing a reversal in the trend of several decades in which regulation provided institutions greater flexibility to determine the capital buffers they needed, to combine retail and wholesale banking activities and to diversify, with lower capital requirements as a result. The shift from lighter to heavier touch regulation has become evident in recent years, reflected in a sharp increase in the number of regulations affecting the industry; Exhibit 33 plots the number of new regulations or amendments proposed by US Federal regulators in recent years, which have accelerated since 2008/09, with others currently under consideration. Exhibit 33: Rapid growth in industry regulation
The number of proposed changes to US Federal Banking & Financial Services regulation recorded annually (2012 is annualised YTD figure)

900 800

Numberofregulatorychangesrecordedannually

700 600 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012

Source: Regulations.gov.

Goldman Sachs Global Investment Research

28

September 17, 2012

GS SUSTAIN - Financials

Forecasting the details of regulatory change is highly challenging, but focusing on regulators ultimate goals is a relatively easier exercise. We believe these are mainly: (1) to reduce the risks that financial institution business models pose to the broader economy; and (2) to ensure that institutions maintain effective control over their employees activities. As a result, regulation lies in two broad areas: (1) business model regulation; and (2) control oversight. While a lot of attention has focused on the detrimental impact of proposed regulatory changes on the industrys returns, regulation is unlikely to result in sustained lower returns for the industry in aggregate investors will withhold capital over time if returns are insufficient. We expect financial sector returns on equity to revert over time towards historical trend levels pricing and competition should adjust to allow the industry to generate a return commensurate with its costs of capital. However, the relative winners from this transition will likely differ from those that benefited from the industry environment of the past decade. Exhibit 34: Regulation is likely to focus on mitigating business model risk and on oversight of internal controls

Rapiddeclineintrustindevelopedfinancialsystemsempowersregulatorstoassumegreatercontroloffinancialinstitutions Businessmodelregulation Regulatorychangetoreducethelikelihoodoffuturefinancialmarket crisesandpublicsectorbailouts Capitalrequirements Thelevelofstablecapital financialinstitutionsare requiredtoholdisincreasing, andrisingfurthestforlarger, systemicallyimportant institutions Businessactivities Increasedcapitalrequirements forlarger,universaland systemicallyimportant institutions Controloversight

Increaseddeterrentstoundertakingillegalactivities

Consciousrulebreaking Persistentorsystemicrule breakingislikelytoresultin increasinglypunitivepenalties andsuspensions

Controlfailures Institutionswillfaceincreased penaltiesfortheactionsof Individualmanagers undertakingfraudulentand illegalactivities

Greatercapitalrequirementsraisetheimportanceofstrong operationalperformance;leveragewillnolongerprovideasourceof returnsenhancement. Larger,globalanduniversalinstitutionsatagrowingdisadvantage giventheirgreatercapitalrequirements

Source: Goldman Sachs Research.

Increasedfinesandlitigationexpensesacrosstheindustrywillraise thevalueofethicalandlegalcontrols Internalcontrols,culture,incentivesandriskmanagement infrastructureincreasinglyimportantsourcesofdifferentiation

Goldman Sachs Global Investment Research

29

September 17, 2012

GS SUSTAIN - Financials

Although the extent of regulatory change is unclear and in some countries may go further than those currently tabled developed market institutions in particular have already responded to the need for greater capital through a combination of balance sheet rationalisation and capital raising. Exhibit 35 plots the response of the US banking industry to the global financial crisis in recent years; capital ratios in that region are at two-decade highs. The industrys reliance on wholesale funding growth in which underpinned the liquidity constraints the industry has faced in recent years has similarly reversed in recent years (while emerging market banks in contrast have become more reliant on wholesale funds). In addition to rebuilding balance sheets, the reorganisation of universal banks business models away from risk-taking activities has similarly begun, at least in the US. Although the details of its implementation remain unclear, the US Volker Rule, which will prohibit banks from taking proprietary risk positions, has been enacted into US law and major institutions have begun to reorganise their businesses in response. Exhibit 35: As a result, capital ratios are now at historical highs
US banking system capital adequacy

Exhibit 36: and developed market banks are reducing their reliance on wholesale funding
Wholesale funding (defined as all non-deposit funding) as % of total assets

45%

13%

Tier1Common Tier1 TCE/TA

~13.3%
40%

EMBanks DMBanks

11%

~11.2%
35%

USBanksCapitalRatios

9%
30%

~7.4% 7%
25%

5%
20%

3%

1Q92

1Q94

1Q96

1Q98

1Q00

1Q02

1Q04

1Q06

1Q08

1Q10

1Q12

15% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: Company data, Goldman Sachs Research estimates.

Source: Quantum database, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

30

September 17, 2012

GS SUSTAIN - Financials

Regulatory pressure is likely to prove toughest for large, diversified companies. Historically, those universal banks have benefited from lower capital requirements under regulation that allowed them to hold capital commensurate with their own risk estimates (which benefited from scale, diversification and more sophisticated risk management), but they are likely to face higher capital requirements than smaller, less systemically important institutions in the future. This shift is evident in the US in particular. Exhibit 37 plots the ratio of shareholder equity to total assets for banks with asset bases larger/smaller than that countrys average asset size. Since the financial crisis, an increase in the capitalisation of large banks, towards the level of smaller peers, is evident. By contrast, in Europe, larger institutions have yet to make headway in raising capitalisation, relative to smaller peers in the region.

Exhibit 37: Large US banks have already reduced leverage, relative to smaller peers
Average equity/assets of US listed banks with above-/below-median assets

Exhibit 38: European banks show a similar trend but slower pace of change
Average equity/assets of European listed banks with above-/below-median assets

16%

12%

14% 10% 12% 8%

Equity/totalassets

Equity/totalassets

10%

8%

6%

6% Largerthanmedianassets Smallerthanregional medianassets

4% 4% Largerthanmedianassets 2% Smallerthanregional medianassets

2%

0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Quantum database, Goldman Sachs Research estimates.

Source: Quantum database, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

31

September 17, 2012

GS SUSTAIN - Financials

The boundaries of sovereign and financial sector creditworthiness are blurring

In the most stressed economies, governments have facilitated the rebuilding of balance sheets and injection of liquidity through capital injections and by opening their balance sheets to provide funding to the financial system. Through their need to support the financial system, these governments have in effect transferred the debt burden from the private sector to their own balance sheets, blurring the distinction between the creditworthiness of the public and private financial sectors. This contagion is most evident in Europe; Exhibit 39 demonstrates the shift in Europes debt burden in the years following the 2008 crisis (as well as the limited progress made to date to reduce the level of that debt in aggregate). The result of assuming this increased debt burden has been a widespread deterioration in the creditworthiness of developed economy sovereigns in recent years (Exhibit 40). In the most indebted economies, the credit of governments and financial service companies has become so closely connected that further regulation seems likely to protect public sector creditworthiness and the capital that governments have extended. Exhibit 39: Post the financial crisis, the debt burden has moved to the public sector, but remains unsustainably high
European Union net borrowing/saving by sector

Exhibit 40: increasingly calling into question the creditworthiness of sovereigns

Historical overview of S&P debt ratings of selected OECD countries (current ratings as of September 2012)
1975 1980
AAA

8.0 6.0 4.0 2.0

%ofGDP

1985
AAA

1990
AAA AA+

1995
AAA AA+ AA+ AAA AAA BBB A AA AA AAA AA AA AA+ AAA AAA AAA

2000
AAA AA+ AA+ AAA AAA A A+ AA+ AA AAA AA AA+ AA+ AAA AAA AAA

2005
AAA AA+ AAA AAA AAA a AA AAA AA AA AA AAA AAA AAA AAA AAA

2010
AAA AA+ AAA AAA AAA BB+ BBB A A+ AA A AA AAA AAA AAA AAA

2011
AAA AA AAA AAA AAA CC BBB BBB+ A AA BBB AA AAA AAA AAA AA+

current
AA+ AA AAA AA+ AAA CCC BBB BBB+ BBB+ AA BB BBB+ AAA AAA AAA AA+

Hugetransfer ofdebtfrom privatetopublicsector following2008global financialcrisis Netsaving

Austria Belgium Canada France Germany Greece

AAA

AAA AAA AAA

AAA AAA AAA

AAA AAA AAA

AAA AAA AAA BBB A AA AA+

0.0 2.0 4.0 Netborrowing 6.0 8.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Corporate Government Households

Iceland ireland Italy Japan Portugal Spain Sweden Switzerland UnitedKingdom UnitedStates
AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA

AAA A AA AAA AAA AAA AAA

Source: Eurostat, Goldman Sachs Research.

Source: IMF, Goldman Sachs Research.

Goldman Sachs Global Investment Research

32

September 17, 2012

GS SUSTAIN - Financials

Trust in financial services has sunk to historical lows in developed economies

The least easily quantified, but in our view among the most important, changes the industry has seen in recent years has been its thrust into the spotlight of public, media and political criticism, particularly in developed economies where the 2007/08 financial crisis has had the greatest impact. The impact of financial system failures on the real economy was immediately evident, pushing the industry much further into public visibility and resulting in a significantly higher level of scrutiny. This shift in perceptions has shone an unfamiliar light onto the industrys inner workings, providing regulators with a platform of public support to introduce tougher regulation. It has also prompted more active ownership by institutional shareholders (for instance over pay levels) and led to greater media attention. Exhibit 41: Press coverage of ESG challenges relevant to the financial industry has increased significantly over the last decade
Number of articles with below-stated keywords from Factiva news search

90,000 80,000 70,000 60,000 Numberofarticles 50,000 40,000 30,000 20,000 10,000 0 2000
Source: Factiva.

Bank&Bonus Invest&Climatechange Bank&Scandal Trading&Fraud Responsible&Investing

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Ytd

Goldman Sachs Global Investment Research

33

September 17, 2012

GS SUSTAIN - Financials

The increased attention the industry has faced, and its perceived responsibility for the crisis, has impacted the publics trust in financial services. Exhibit 42 plots the collapse in trust in the financial services sector in developed economies over recent years, as measured through the media agency Edelmans trust barometer, an annual survey of social views towards different industries. Since 2007, trust in financial service companies among US respondents has dropped from over two-thirds of the population to around one-third, with trust among European societies at similarly low levels. Interestingly, emerging market societies demonstrate a very different trend: trust in the industry has risen in both India and China in recent years (although recently dipping in China). Globally, companies in financial sectors have become among the least trusted of any industry (Exhibit 43). Trust is central to business models across financial services. The rapid reversal in public perceptions of the industry provides both a challenge and an opportunity. The industry as a whole faces a significant challenge in restoring public faith in the financial system those companies that can differentiate themselves in doing so have an opportunity to generate a significant competitive advantage, if they are able to effectively adapt their organizations and marketing messages to more closely resonate with the changing demands of their customers. Exhibit 42: Trust in developed market financials has collapsed
% answering I trust Financial Services companies to do what is right

Exhibit 43: ..leaving financials the least trusted of any industry

% answering I trust companies in the following industries to do what is right

95% India 85% China

Technology Automotive FoodandBeverages Cons.PackagedGoods

%ofsurveyedpopulationagreeing

75%

65%

Japan

Telecommunications BrewingandSpirits

55% SouthKorea 45% USA

Pharmaceuticals Energy Media Banks

35%

25%

UK/France/ Germany
0% 20% 40%

FinancialServices 60% 80% 100%

15% 2007 2008 2009 2010 2011 2012

Source: Edelman, Goldman Sachs Research

Source: Edelman, Goldman Sachs Research

Goldman Sachs Global Investment Research

34

September 17, 2012

GS SUSTAIN - Financials

GS SUSTAIN identifies structural industry leaders

The GS SUSTAIN framework is designed to identify the companies in each global sector that are in the strongest position to maintain competitive advantage, industry-leading cash returns and ultimately deliver equity market outperformance. Integrating measures of financial performance with the underlying drivers of this performance provides greater visibility into future profitability than financial forecasts alone. In every sector, we apply objective measures to three separate aspects of corporate performance:

Returns on capital: We rank companies using our analysts forecasts for average return on assets (banks) or return on equity
(insurance) over the coming three years (2012-14E).

Industry positioning: Overall industry positioning rankings provide a measure of the strength of companies business models
and strategic position.

Management quality (ESG): Through analysis of the key environmental and social trends facing each sector, we identify c.20 indicators of ESG performance based on c.70 data points in each sector, on which we base our assessment of management quality.

Companies in each sector are ranked on each of those three dimensions of corporate performance. Overall leaders must stand out relative to global peers on all three dimensions (at a minimum, achieving above-median scores on each). Exhibit 44: The GS SUSTAIN framework combines analysis of the key drivers of corporate performance

Returnon Capital
CashReturns Sustainedsuperiorcash returnstranslatestolong termcashflowand earningsgrowth

Industry Positioning
Exposuretogrowthmarkets Exposuretogrowth regions,productsorassets Competitiveposition Marketstructure Costleadership Pricingpower Technology Scale

GSSUSTAIN

GovernanceStructure Boardoversight, balanceofpower, incentives

StakeholderEngagement Customers,employees, investors,community, government,regulators, suppliers

EnvironmentalPerformance Supplychain,resource efficiency,product development

Management Quality(ESG)
Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

35

September 17, 2012

GS SUSTAIN - Financials

11 leaders stand out globally GS SUSTAIN framework also highlights regional leaders
11 institutions stand out as global leaders across each of the three dimensions of the GS SUSTAIN framework. The same analysis can also be applied to highlight relatively better placed companies in each region. Exhibit 45 shows regional leaders based on a combination of the three pillars of the GS SUSTAIN framework returns on capital, industry positioning and management quality (ESG). The companies shown are those that achieve above-median scores on each of those three dimensions of the framework. Overall global leaders included in the GS SUSTAIN framework are highlighted in blue. Exhibit 45: Best placed institutions across three dimensions of GS SUSTAIN framework in major regions
(Global GS SUSTAIN leaders highlighted)
Banks %ilevs.globalpeers Company ROA US LatAm WellsFargo J.P.Morgan ItaUnibanco BancoSantanderChile ICBC ChinaMinsheng ChinaMerchantsBank ShizuokaBank ResonaHoldings 93% 66% 65% 64% 39% 38% 36% 41% 34% 79% 47% 45% 92% 78% 74% 65% 59% 58% 55% 49% na IndPos 27% 26% 79% 76% 58% 30% 68% 42% 46% 56% 82% 36% 77% 97% 82% 68% 76% 66% 72% 58% 61% ESG 99% 95% 88% 64% 47% 37% 58% 51% 53% 56% 57% 42% 88% 99% 96% 92% 84% 96% 81% 86% 60% ROA 89% 51% 78% 51% 93% 87% 80% 88% 75% 93% 70% 67% 65% 100% 52% 97% 94% 90% 87% 77% na IndPos 67% 56% 56% 33% 80% 53% 93% 63% 88% 65% 88% 58% 100% 100% 75% 81% 90% 77% 84% 71% 74% ESG 100% 89% 100% 56% 87% 67% 100% 75% 88% 85% 93% 59% 100% 75% 25% 90% 77% 97% 68% 81% 56% PingAn 90% 48% 20% 67% 33% 67% Aflac Marsh&McLennan %ilevs.localpeers Company ROA 98% 95% IndPos 65% 47% ESG 52% 57% ROA 100% 88% IndPos 63% 44% ESG 50% 56% Insurance %ilevs.globalpeers %ilevs.localpeers

China

Japan

TokioMarineHoldings AIAGroup SamsungFire&Marine

5% 56% 54%

27% 55% 53%

43% 28% 40%

80% 100% 83%

60% 83% 67%

100% 50% 83%

Kasikornbank PublicBankBerhad OtherAsia CIMBGroupHoldings HangSengBank Australia ANZBankingGroup CommonwealthBank StandardChartered BBVA HSBC Swedbank DnBASA JuliusBaerGroup

IAG AMP PrudentialPlc Legal&General RSA AvivaPlc

80% 83% 93% 88% 61% 63%

100% 87% 82% 80% 75% 65%

90% 87% 98% 98% 90% 97%

100% 67% 95% 91% 55% 59%

100% 33% 86% 82% 77% 64%

100% 67% 95% 95% 77% 91%

WEurope

Note: Firstrand is also included in the GS SUSTAIN Focus List, outside any of the regions shown above.
Source: Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

36

September 17, 2012

GS SUSTAIN - Financials

GS SUSTAINs focus on long-term drivers highlights some leaders facing negative sentiment
The longer-term perspective offered by GS SUSTAIN looks through nearer-term noise and news flow to the underlying fundamentals of companies business models. As a result, the analysis can highlight stocks facing media scrutiny and negative sentiment. We highlight below some of the leaders identified that have faced recent pressures.

BBVA has underperformed the European banking sector by over 20% since 2008, pulled down in particular by its Spanish listing
and concerns over that countrys heavily indebted financial system. However, close to half the groups assets lie outside Spain and over half of its income is generated internationally. In particular, BBVAs subsidiary in Mexico is the leader in that market, in terms of assets. While we recognise the challenges facing the Spanish financial system, BBVA (along with Banco Santander) has moved to shore up its balance sheet; its leverage (assets/equity) is among the lowest quartile of the European companies examined in this report and its capital base comfortably higher than the levels we expect regulators will require. Through the GS SUSTAIN lens applied to the sector, BBVA stands out as particularly well positioned to maintain its current strong returns on assets through the relatively rapid pace of growth its relatively diversified exposure provides, the consolidation and limited state ownership in the markets in which it operates and the stability of its business model, which remains more biased to traditional retail and commercial lending than wholesale banking.

HSBC and Standard Chartered have both faced significant media attention in 2012 for failures of internal controls in prior years.
HSBC was found to have handled laundered money in the US and Standard Chartered was fined $340 mn by the New York banking regulator for failure to maintain adequate records and controls in dealings with countries subject to US sanctions (in particular Iran). In both cases, the organisations have taken steps to improve internal controls and incentives. HSBC was one of the first major banks to invoke claw-back mechanisms on bonuses paid in prior years. While control failures and regulatory fines have been a feature of the industry in recent years (and we expect this to continue) there are few large banks that have not faced negative media attention on some front organisations responses to those difficulties are more important, in our view. Both HSBC and Standard Chartered have made changes to incentive structures for senior and line managers in recent years, as well as strengthening their risk management reporting structures. Those changes are reflected in the top decile scores we calculate for the effectiveness of both companies engagement with, and management of, environmental, social and governance issues. We have detailed the analysis applied to two GS SUSTAIN leaders HSBC and BBVA in Exhibits 46 and 47. These show the calculation of objective measures comparing the pace of growth, risk profile and structures of the markets in which the banks operate, along with the other measures used to compare industry positioning, forecast ROA and management quality (ESG) in the sector. The exposures are shown at an aggregate regional level, rather than the country level analysis applied in the final calculations, which are detailed from page 52.

Goldman Sachs Global Investment Research

37

September 17, 2012

GS SUSTAIN - Financials

Exhibit 46: Objective analysis of its exposures and business model, combined with forecast ROA and management quality (ESG) highlights HSBCs strengths
HSBCisgloballydiversified,withemergingAsiarevenuesalmostas largeasthoseofitsdomesticEuropeanmarket Combiningthatgeographicalexposurewithprojectedassetgrowth,indebtednessandmeasuresofmarketstructureineachcountry yieldsobjectivemeasuresoftheattactivenessofitsendmarkets

MEA Other

MEA NAmerica

MEA NAmerica EmgAsia DevdAsia LatAm EU15 CIS CEE 0% 5% 10% 15% 0 1 2 3

MEA NAmerica EmgAsia DevdAsia LatAm EU15 CIS CEE 0% 20% 40% 60% 80% 100% %ofbankingsystemassetsownedbyState controlledbanks

NAmerica

EU15

EmgAsia DevdAsia LatAm EU15 CIS

EmgAsia LatAm DevdAsia

CEE

Bankingassets10yCAGR

Bankingsectorcredit/GDP

Thegroup'sbusinessissimilarlydiverisifiedacrossbusinessareas withnonedominant

Combiningbusinesslineexposure withrankingofattractivenessyieldsa comparablescore

Bringingthecalculatedindustrypositioningmeasurestogetherwithforecastreturnson assetsandmanagementquality(ESG)scoresprovidescomparisonacrosstheglobal industryandhighlightsHSBC'sstrengthacrossallthreedimensions Percentilevs. peers 61% 75% 55% 37% 37% 83% 70% %ofmaximum(2010/11) 84% 96%

Other

Retail banking

Mostattractive

WealthMgmt

Measure ROA

Definition 201214E Wtdavg10ybankingassetgrowth Wtdavgcountrydebt/GDP Wtdavgconsolidation Wtdavgstateownership Rankedbusinessmixscore Loans/deposits(2012E) Wholesalefunding%

Value 0.7% 4% 166% 73% 14% 2.9 77% 20%

Retailbanking

Countrygrowth Countryrisk Marketstructure

Wealth Mgmt

Wholesale/ comm'cial banking

Wholesale/ commercial banking Investment Banking

Businessmix Funding OverallIndPosition

Investment Banking
Source: Goldman Sachs Research estimates

Leastattractive

ESG

Goldman Sachs Global Investment Research

38

September 17, 2012

GS SUSTAIN - Financials

Exhibit 47: Objective analysis of the groups business model similarly highlights BBVAs strengths
BBVAgenerates40%ofitsrevenues(andahigherproportionof earnings)outsideEurope MEA Other Other NAmerica NAmerica Combiningthatgeographicalexposurewithprojectedassetgrowth,indebtednessandmeasuresofmarketstructureineachcountryyieldsobjective measuresoftheattactivenessofitsendmarkets MEA NAmerica EU15 EmgAsia DevdAsia LatAm EU15 EU15 LatAm EmgAsia LatAm DevdAsia CEE 0% 5% 10% 15% CIS MEA NAmerica EmgAsia DevdAsia LatAm EU15 CIS CEE 0 1 2 3 MEA NAmerica EmgAsia DevdAsia LatAm EU15 CIS CEE 0% 20% 40% 60% 80% 100% %ofbankingsystemassetsownedbyState controlledbanks

Bankingassets10yCAGR

Bankingsectorcredit/GDP

Thegroup'sbusinessisrelativelydiverisifiedacrossbusinessareas

Combiningbusinesslineexposurewith rankingofattractivenessyieldsacomparable score

Bringingtheindustrypositioningmeasurestogetherwithforecastreturnsonassetsand managementquality(ESG)scoresprovidescomparisonacrosstheglobalindustryand highlightsthegroup'sstrengthacrossallthreedimensions Measure ROA Definition 201214E Wtdavg10ybankingassetgrowth Wtdavgcountrydebt/GDP Wtdavgconsolidation Wtdavgstateownership Rankedbusinessmixscore Loans/deposits(2012E) Wholesalefunding% Value 0.8% 4% 190% 86% 10% 3.8 134% 47% Percentile vs.peers 62% 72% 40% 87% 97% 23% 82% %ofmaximum(2010/11) 74% 84%

Other

Retail banking

Mostattractive

WealthMgmt

Retailbanking

Countrygrowth Countryrisk Marketstructure

Wealth Wealth Mgmt Mgmt

Wholesale/ comm'cial banking

Wholesale/ commercialbanking

Businessmix Funding OverallIndPosition

Investment Investment Banking Banking

Source: Goldman Sachs Research estimates

Leastattractive

InvestmentBanking

ESG

Goldman Sachs Global Investment Research

39

September 17, 2012

GS SUSTAIN - Financials

Regional exposure is more important to financial sectors than other industries

Analysis of country exposure is more important in financial sectors than in most others. With the exception of insurance in which companies are relatively internationally diversified financial companies are the least reliant on international revenues of any major sector (Exhibit 48). Similarly, financials shareholder returns are more closely correlated with their national benchmarks than with global sector indices; companies in every other sector (except Travel & Leisure) show a stronger correlation with their global sector peers than with their domestic markets (Exhibit 49). As a result, country attractiveness is a key element of the analysis we apply to the financials sector. We have separated the 151 global banks analysed in this report into emerging and developed market banks (those domiciled in markets in which banking assets are growing faster than the global average are categorised as emerging). Similarly, a large proportion of the measures we apply to assess industry positioning reflect the attractiveness of the countries to which companies are exposed, in order to capture the importance of differentiating market exposures across the industry. Exhibit 48: Financials are among the most domestically focused sectors
Average % of sales generated outside home market, 2011

Exhibit 49: Financials performance more heavily influenced by country factors than other sectors
Strength of correlation (R-squared) between average stock performance and (1) country benchmark and (2) global sector index

80% 70% 60% 50% 40% 30% 20% 10% 0%

Media Pers&HousehldGoods Telecommunications BasicResources Chemicals Technology Food&Beverage Autos Oil&Gas Retail Ind.Goods&Services Insurance Construct.&Material Healthcare Utilities Banks Travel&Leisure Otherfinancials RealEstate

45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Avgcorrelationwithcountryindex Avgcorrelationwithglobalindustry

Media

FixedTelecom.

NonlifeInsurance

CapGoods

MobileTelecom

StaplesRetail

Food&bev.

Transport

Software

Oil&Gas

Mining

DiscrRetail

Pharma&Bio

Tobacco

Hardware

Utilities

LifeInsurance

HcareEquip

Strengthof correlationwith globalindustry highest, relativetocountryindex

Source: Datastream, Goldman Sachs Research.

Strengthof correlationwith countryindexstrongest, relativetoglobalindustry

Source: Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Travel&Leisure

40

Banks

September 17, 2012

GS SUSTAIN - Financials

Sustained high returns drive earnings growth and equity market performance
GS SUSTAIN is designed to identify the companies in each industry that are best placed to sustain industry-leading returns on capital. This strategy aims to generate outperformance stemming from the superior growth that companies able to sustain industryleading returns on capital can achieve (through a combination of strong earnings generation and reinvesting surplus earnings at high rates of return). Across the financials sector, given the lack of meaningful cash flow statements, as well as accounting differences across regions and varying asset base structures for different companies, we have focused on more conventional return measures than the CROCI measures we use in industrial sectors. Across the banking sector, we compare companies returns on assets (ROA) as a measure of profitability, whereas in insurance, we compare returns on equity (ROE) given the different asset base structures of companies in the industry. In line with their different returns profiles and competitive drivers, we assess emerging and developed market banks separately. In both cases, we find that companies with higher returns have delivered materially stronger earnings growth over the past decade. Exhibit 50: High-return financials have grown more quickly than profitable peers
Annual average EPS growth (US$ terms) 2002-12E of companies in each quartile of sector-relative returns on capital
Developedmarketbanks:annualaverageEPSgrowthbyROAquartile Emergingmarketbanks:annualaverageEPSgrowthbyROAquartile (basedon200212avgROA) (basedon200212avgROA)
10% 8% 6% 18% 4% 2% 0% 14% 2% 4% 4thquartile 3rd 2nd 1stquartile 13% 12% 4thquartile 3rd 2nd 1stquartile 17% 10% 16% 8% 15% 6% 4% 2% 0% 4thquartile 3rd 2nd 1stquartile 21% 20% 19%

Globalinsurance:annualaverageEPSgrowthbyROEquartile(based on200212avgROE)
20% 18% 16% 14% 12%

Source: Quantum database, Goldman Sachs Research.

Goldman Sachs Global Investment Research

41

September 17, 2012

GS SUSTAIN - Financials

Commensurate with the stronger growth they have delivered, we find that higher-return companies across both banks and insurance have outperformed their sector peers over the last decade. Exhibit 51 shows the annual average total returns of companies with above-/below-median returns on capital relative to their sectors. In each of the three groups analysed, companies with above-median returns outperformed those with below-median returns by an average of 7%-8% and did so in over 70% of years.

Exhibit 51: High return financials have outperformed less profitable peers
Annual average total shareholder return (US$ terms) relative to sector for companies with above/below median returns on capital in each of (1) developed banks, (2) emerging banks and (3) global insurance
Developed market banks: annual equity market performance of above vs. below median ROA
20% > Median ROA < Median ROA

Emerging market banks: annual equity market performance of above vs. below median ROA
20% > Median ROA < Median ROA

Global insurance: annual equity market performance of above vs. below median ROA
30% > Median ROE < Median ROE

Average annual total shareholder return

Average annual total shareholder return

Average annual total shareholder return Avg

15% 10% 5% 0% -5% -10% -15% -20%

15% 10% 5% 0% -5% -10% -15% -20%

20%

10%

0%

-10%

-20%

-30%

2010

2011

2010

2001

2002

2003

2004

2005

2006

2007

2008

2009

2001

2002

2003

2004

2005

2006

2007

2008

2001

2002

2003

2004

2005

2006

2007

2008

Source: Quantum database, Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

2009

2009

2010

2011

2011

Avg

Avg

42

September 17, 2012

GS SUSTAIN - Financials

Industry positioning quantifies the strength of companies business models

We assess three aspects of industry positioning in the analysis we apply to each sector: (1) exposure to demand growth, (2) market structure and (3) company-specific competitive positioning. The declining benefit of exposure to growth in isolation, reflected in the converging returns of emerging and developed market institutions, means other aspects of the structures of financial service markets are increasingly important differentiators. Across industries, particularly where products and services are relatively homogeneous, we find that the degree of consolidation and market discipline is closely correlated to the returns generated by the industry in aggregate. Given the risks of intensifying regulation and the blurring of creditworthiness of sovereigns and financial institutions, we have also incorporated measures of regulatory and financial risks at a national level. Within attractive national markets, we assess the relative strength of companies business models through the attractiveness of their product line exposures, access to secure funding (banks) and proximity to their customers (insurance). Exhibit 52: GS SUSTAIN industry positioning analysis combines measures of exposure to growth, market structure and companies competitive positions
Advantagedindustrypositioningreliesonacombinationofaccesstogrowthmarkets,attractivemarketstructureandstrongbusinesmodels

Exposuretogrowth Weightedaveragetrendbankingassetgrowth inendmarkets

Marketstructure Weightedaverageconsolidation(shareoftop5 commercialbanks)inendmarkets WeightedaverageStateownership(%of commericalbankingassetscontrolledbyState) inendmarkets Weightedaveragenationalcreditrisk (debt/GDP)inendmarkets

Competitiveposition Attractiveness(rankingbasedonleveland stabilityofreturns)inbusinesslinestowhich exposed

Banks

Relianceonwholesale(vs.deposit)funding

Weightedaveragetrendinsurancepremium growthinendmarkets Insurance

Weightedaverageconsolidation(shareoftop3 life/nonlifeinsurers)inendmarkets

Attractiveness(rankingbasedonleveland stabilityofreturns)inbusinesslinestowhich exposed Strengthofdistributionplatform(basedon distribuitionchannelmixandrankingofchannel proximitytoconsumer)

Weightedaveragecountryandregulatoryrisk (AMBestandWorldBankmeasures)

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

43

September 17, 2012

GS SUSTAIN - Financials

The industry positioning measures we apply are designed to reflect companies business models and exposures, rather than the output of their financial performance. They are also typically positively correlated to returns on capital, other than those designed to reflect the risks of different countries; these are typically negatively correlated to returns on capital, but are designed to assess the risk of companies returns declining in the future. Exhibit 53: Banks industry positioning measures are typically positively correlated with returns on capital, except country risk measures
Key industry positioning measures
3.0% 3.0% Indonesia Russia 2.0% Poland CzechRep. UAE 1.5% SouthAfrica HK Australia Hungary Brazil Singapore Korea Mexico China Malaysia Turkey India Indonesia Russia 2.0% Turkey 1.5% India Brazil UAE Mexico Poland CzechRep. Hungary 3.0% EM Indonesia Russia Poland TurkeyCzechRep. UAE India Hungary Brazil China SouthAfrica Mexico Malaysia HK Australia Singapore Korea US Spain Norway Belgium Switzerland Austria Sweden UK France Italy Denmark Germany Greece 0% 100% 200% 300% Banksectorcredit/GDP

weightedaverageROA201214Eavg.

weightedaverageROA201214Eavg.

weightedaverageROA201214Eavg.

2.5%

2.5%

2.5%

2.0%

1.5%

1.0%

1.0%

Belgium Spain US Norway Austria 0.5% Switzerland SwedenItaly UK Japan France Germany 0.0% Greece 0% 2% 4%

0.5%

6% 8% 10% Bankingassets10yCAGR

12%

14%

0.0% 0 3.0% 20

Malaysia China SouthAfrica Australia HK Singapore Spain US Belgium Norway Switzerland Austria UK Italy France Sweden Japan Denmark Germany Greece 40 60 80 WorldBankcountryriskmeasure 100 120

1.0%

0.5%

Japan 400%

0.0%

3.0%

3.0%

weightedaverageROA201214Eavg.

Russia 2.0% India 1.5% 1.0% 0.5% 0.0%

Indonesia Poland

Indonesia Poland

weightedaverageROA201214Eavg.

2.5%

weightedaverageROA201214Eavg.

2.5% 2.0%

Russia

2.5%

Indonesia Poland

Russia

Turkey CzechRep. India UAE Hungary 1.5% Brazil SouthAfrica Mexico China Malaysia HK 1.0% Singapore Australia Sweden US Spain Austria Norway Belgium 0.5% Korea UK Denmark Japan Italy Switzerland Germany France Greece 0.0% 0% 20% 40% 60% 80% 0% 20% 40% 60% 80% 100% 120% Consolidation Assetsoffivelargestbanksasashareofassetsofall Stateownership %ofbankingsystemassetsownedbyState banks controlledbanks CzechRep. UAE Hungary Mexico Brazil China SouthAfrica Malaysia HK Australia Singapore Spain Korea US Belgium Norway UK Sweden Austria Italy JapanSwitzerland Denmark France Germany Greece

Turkey

2.0%

CzechRep.

Brazil Mexico Malaysia SouthAfrica HK Australia 1.0% Singapore Spain US Korea Belgium Norway Austria Sweden 0.5% UK Switzerland Italy Germany France Denmark 0.0% 0 Greece

1.5%

Turkey India UAE Hungary

China

Japan 25

5 10 15 20 Foreignexchangereserves monthsofimports

Source: World Bank, IMF, Quantum database, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

44

September 17, 2012

GS SUSTAIN - Financials

The industry positioning analysis we apply is designed to improve visibility into the level and sustainability of future returns on capital, which is ultimately the goal of the GS SUSTAIN analysis to identify companies able to sustain industry-leading returns on capital over the long term. We find that financial companies with stronger industry positioning typically generate higher returns on capital than peers and, more importantly, sustain high returns for longer than weaker peers (Exhibit 55). Sustainability of returns on capital is a measure of the returns that companies generate on new investment more durable high returns imply that companies are able to reinvest capital into expanding their business at higher rates of return than companies for which returns on capital deteriorate rapidly.

Exhibit 54: Better positioned companies tend to be more profitable

Avg. 2012-14E ROE/ROA for Banks/Insurers by industry positioning quartile

Exhibit 55: and to sustain high returns for longer than weaker peers
Number of years sustained above-median returns , by industry positioning quartile

6%
Avgyearsofsustainedabovemedianreturnspriorto2011

7.0

5%
Avgreturnsoncapital(201214E)

6.5

4%

6.0

3%

5.5

2%

5.0

4.5

1%

4.0

0% 4thquartile 3rd 2nd 1stquartile

4thquartile

3rd

2nd

1stquartile

Source: Quantum database, Goldman Sachs Research estimates.

Source: Quantum database, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

45

September 17, 2012

GS SUSTAIN - Financials

Management quality (ESG) analysis quantifies engagement with 21st century business risk
The management quality analysis in our GS SUSTAIN framework is designed to assess the effectiveness of companies engagement with, and management of, the environmental, social and governance (ESG) issues facing each industry. In our view, changes in the social pressures financials companies face have, and will continue to, fundamentally alter the basis on which they compete. Environmental, social and governance analysis encompasses three areas of performance with distinct drivers: Corporate governance reflects the growing need for an effective mechanism to ensure that owners and managers incentives are aligned and that effective capital allocation and strategic control mechanisms are in place. Social factors encompass companies adaptation to the diverse and changing stakeholder groups with which they interact and on which they rely ultimately, companies success rests on the strength of their relationships with customers, employees, governments and other stakeholders. Environmental performance reflects companies exposures to resource scarcity and physical environmental change and their ability to mitigate the negative effects of those changes on their businesses and take advantage of resulting demand for products and services.

Exhibit 56: Management quality (ESG) analysis is based on the key issues in each industry and the information available to assess corporate performance
Keystakeholderswithineach industry Keyissuesfacingindustry Analyticalchallenges Informationanalyzed

Governance 1.Basedonthebusinessmodels ofcompaniesineachindustry andthemajorchallengesthey face,weidentifythekey stakeholdersandenvironmental pressuresineachindustry 2.AcrossthedimensionsofESG issueshighlighed,weidentify thekeyissues(challengesand opportunities)companies shouldaddress 3.Weassesstheinformation reportedbycompaniesineach industrytoassessthepractical constraintstoobjectively analyzingmanagementofthe issuesidentified

Social

Environmental

4.Combiningtheissues identifiedwiththeinformation providedbycompanieswe identifydatapointsand indicatorsthatallowan assessmentofcompanies' managementoftheESGissues mostimportanttotheir industries

Source: Goldman Sachs Research

Goldman Sachs Global Investment Research

46

September 17, 2012

GS SUSTAIN - Financials

Exhibits 57 and 58 outline the issues we have identified, the challenges we face in analysing those issues based on objective, quantitative information, and the data points on which our analysis focuses as a result. In most cases, constraints on data availability significantly hinder our ability to assess the specific issues we have identified, but in aggregate, we believe the analysis provides an objective and valuable measure of the effectiveness of companies responses to the challenges they face. Exhibit 57: Issues and analysis applied across Financials: Governance and Environmental
Category Issues IstheBoardsufficientlyindependentto ensurebalancedquestioningofrisk,capital andstrategicdecisions? Analyticalchallenges LimitedinsightintoBoarddiscussionsonly reallypossibletomeasureorganisational structureandpolicies Compensationmethodologyisfrequently impreciselydefinedinpublicreports;actual compensationlevelscanvarysignificantly fromperformanceonstatedgoals Arethereimpedimentstoshareholders votingonkeyissues? Assessingmotivationsofmajorshareholders challengingbutpossibletoassessownership andcontrolstructuretoidentifypotential risks DetailsofseniorityofESGmanagers frequentlyunclear,compensationstructures oftenimpreciselydefined Metricsanalyzed Percentageofindependent,nonexecutive directorsandwhollyindependent compensationandnominationcommittees Auditcommitteeindependenceandratioof nonaudittoauditfeespaidtotheassigned auditor

Boardoversightoffinancial risks

HowengagedistheBoardinmonitoringand IstheBoardprovidedsufficientinformation questioningriskexposures? toassessriskpositions?

SeparationofCEOandChairmanrolesand appointmentofindependentLeadDirector

Managementincentives Governance Representationof shareholderinterests ImportanceofESGfactorsto managementresponsibility/ incentives

Isseniormanagementincentivisedtodeliver Iscompensationdeterminedinatransparent longtermperformancethatisalignedwith andobjectiveway? shareholderinterests? Istheownershipandvotingstructure sufficientlybalancedtoensureordinary shareholdersarerepresentedinstrategic decisions? Isseniormanagementresponsibleforand incentivizedbyenvironmentalandsocial performance? Isthereastandardisedapproachto measuringenvironmentalrisksand incorporatingthemintolendingandadvisory decisions? Isthereanemployeeengagementprogram onenvironmentalorsocialissuesof importancetoitsworkforce? Managementofenergyconsumption, Istravelactivelymonitored&reducedwhere relationshiptobuildingdesign? possible? Hasthecompanydevelopedconsumer productswithenvironmentalorsocialcriteria e.g.climatechange/SRIfundsor"green" consumerfinanceproducts? Doestheownership/votingstructurealign economicinterest(equityholding)with influence(votingrights)?

CEOcompensation(includingsalary,bonus, Fairvalueofsharebasedcompensation stockgrantsandoptions)asapercentageof expenseaspercentageofequity netincome Blockownershipgreaterthan5%,staggered Board,poisonpill,unequalvotingrightsand otherprovisions Compensationlinkandresponsibilityof Board,seniorexecutivestoenvironmental andsocialperformance

Keyelementsofcompensation(equity market/growth/returnbased)

Environmentalriskanalysisin lendingdecisions Employeeengagementon environmentalstrategy Environmental Environmentalimpactof offices&travel Environmental/socially responsibleinvestment products

Veryfewinstitutionsprovidesufficientdetail onriskmanagementapproachtoassess details Specificinitiativesmaybementioned consistentgroupwidedisclosureislimited Limitedconsistentdisclosure Increasinglydisclosed,thoughgenerally difficulttoassessthecontributionofthose productstothebusinessorimportance attachedtotheminternally

Specializedenvironmentaltraining, environmentalchecksonprojectfinanceand responsiblelending,EquatorPrinciples

Productandbusinessinnovationrelatedto environmentalandsocialissues

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

47

September 17, 2012

GS SUSTAIN - Financials

Exhibit 58: Issues and analysis applied across Financials: Stakeholders

Category Issues Analyticalchallenges Metricsanalyzed

Transparency Investors Capitalrisks

Areinvestorsprovidedwithsufficient informationtoassessfinancialandnon financialperformance? Doesthecompanymanageriskinitsassets sufficiently,andmaintainsufficientcapital,to mitigateshareholderrisks? Iscompensationcompetitivewithotherfirms Iscompensationinlinewiththeproductivity oftheworkforce? intheindustry? Arefirmwideincentivestructuresaligned withlongertermshareholderinterests? Areemployeesprovidedwithsufficient trainingtoidentifyrisksandunderstand importanceofescalatingconcernsisthis treatedasaculturalgoaloracompliance requirement? Howdoesstaffturnovercomparewith competitorcompaniesintheindustry? Howmanylevelsofmanagementexist betweenlinebusinessesandsenior management? Havemechanismsbeencreatedtoallow concernstobequicklyescalatedoutsideof businessunits? Doesthecompanyrecruitfromdiverse backgrounds,increasingthepotential recruitmentpool? Howeasilyisinformation/concernsrelayed upwardthroughtheorganisation? Aretheremechanismsinplacetoclawback compensationwhereproblemsarefound subsequently?

Challengingtoassess"qualityofreporting" adherencetoGRIorotherstandardshelpful butinsufficient AssessingHOWcompaniesmeasurerisk rarelypossiblecanonlymeasureRESULTSof riskmanagementinfinancialstatements Challengesincomparisonacrossregionsand differenttypesofinstitution Detailsofcompensationstructuresrarely sufficienttoallowmeaningfulcomparison Companiestypicallystatetheyprovide trainingbutuncleartheimportancebanks attachtogoingbeyondcompliance requirements Verylimitedinformationprovidedon employeeturnover Organisationalstructurevdifficultto compareacrossbusinesses

Numberofyearsofreportingon environmentalandsocial("ES")issuesand externalassuranceofdata

Returnonpreprovisionoperatingprofit,ratio oftangibleequitytotangibleassets

Compensation

Totalpayrollcostsdividedbyaveragenumber Netincomeperemployee ofemployees Performancebasedexecutivecompensation linkedtoEPSorTSRtargets

Incentivestructure

Training

Institutionalizedtrainingprogramme,amount ofresourcesusedfortraining,hoursorspend

Employees

Employeeretention

Levelsofmanagement/ease ofescalationofconcerns

Reportingonlinesofresponsibilityforrisk management,reportingonriskmeasurement methodology,reportingonwhistleblowing andescalationprocess Genderdiversityoftotalworkforce,senior executives,andBoarddirectors

Workforcediversity

Istheworkforcesufficientlydiverseto provideadiversityofopinion?

Onlygenderdiversityiswidelyreported wouldbepreferabletoassessotheraspects ofdiversityanddiversityofincomingrecruits Organisationalcultureimpossibletomeasure

Employeeengagement

Doesthefirmhaveastrongcorporateculture Isthereastrongcultureofemployee andindividualresponsibility? engagement?

Consumerbrand Stakeholders

Isthecompany'sbrandandreputationstrong relativetocompetitors,providingan Doconsumershaveagreaterleveloftrustin advantageindepositgrowthandfunding thatorganisationthanincompetitors? costs?

Companyspecificbrand/reputational measuresexistbuttypicallydonotprovide adequatecomparabilityacrosscompanies givennormalsizebiastonewscoverageand limitedcomparabilityacrossregions Manyinstitutionshavecustomersurveysin placecanonlycomparewhetherbanks activelyengagecannotcomparetheresults acrossorganisations Increasinglydisclosed,thoughgenerally difficulttoassessthecontributionofthose productstothebusinessorimportance attachedtotheminternally Cannotmeasureobjectivelydifficultto assessdegreeofengagementandstance manyinstitutionsprefernottodiscusstheir discussionswithregulators Individualfinesaretypicallydisclosedbut aggregatefinesincurredareusuallynot separatelydisclosed Customersurveysleadingtocompany actions,increaseinM&Adealscompleted, microfinance,publicpolicydialogue

Customers

Customersatisfaction

Isthereamechanismformonitoringand respondingtocustomerdissatisfaction?

Products

Doesthecompanyinnovateinproduct developmenttomeetdemandsfor environmental/responsibleinvestment productsandconsumerfinance?

Productandbusinessinnovationrelatedto environmentalandsocialissues

Engagementinpolicy discussions Regulators Fines&penalties

Isthefirmactivelycontributingtopolicy discussions,directlyorthroughtrade organisations? Hasthecompanyexperiencedhigherthan averagefines?

Whatpolicystancehasthecompanyadopted constructiveengagementorobstructive? Doesthecompanyfacesignificantlitigation (andpotentialfuturefines)?

Investmentinlocal communities Fundingforsocialventures Communities Provisionoffinancialservices tounderbanked

Doesthecompanyactivelyandvisiblyinvest inlocalcommunityinitiativesarethese throughnationallevelorlocalprograms? Isfundingavailableforsocialinitiatives? Isthereanactiveefforttoprovidefinancial servicestoconsumerexcludedfrom traditionalfinancialservices? Doesthecompanyinvestinmicrofinance initiativesorotherinnovativemethodsto providefinancingtosmallerscalegrassroots businessesandborrowers? Someinstitutionsdiscussspecificinitiatives butlimiteddisclosureofgroupwideefforts

Communityinvestmentasapercentageof equity

Microfinanceinvestments

Suppliers

Reputationalrisksofusing controversialsuppliers

Doesthecompanyhavesupplierstandards relatingtoenvironmental&social performance?

Doesthecompanymonitor/auditthe environmental/socialperformanceofits suppliers?

Canassesswhethercompaniesactivelyseek tomanagesupplierissues,butinsufficient detailtoassesseffectivenessofthatprocess

Guidelinesforsuppliersonenvironmental andsocialissues,reportingonquantification ofenvironmentallyassessedandminority ownedsuppliers

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

48

September 17, 2012

GS SUSTAIN - Financials

While disclosure levels are rising quickly, allowing us to incorporate additional information, many aspects of performance remain too infrequently disclosed to allow meaningful analysis. Exhibit 59: Developed market banks increasingly recognise the need to address environmental, social and governance issues that are particularly pertinent to the banking industry
Proportion of banks disclosing ESG factors particularly relevant to their industry

Compensation practices 100%

Customer& regulatorrelations

Risk management

Climatechange opportunities 2010/11 2008/09 2006/07 2009/10 2007/08

Climatechange risks

Developedmarketbanks

80% 60% 40% 20%

Investment/financialservices re.otherclimatechgprojects Investment/financialservices re.renewableenergy Climatechangerelated products

Financefordisadvantaged countries/microfinance Customersatisfactionsurvey leadingtofutureactions

PayoutformulaforEPS/TSR targets Executivecomp.linkedto EPS/TSRtargets

Statementofrisk measurementmethodology Linesofresponsibilityforrisk management

100%

Emergingmarketbanks

80% 60% 40% 20% 0%

2010/11 2008/09 2006/07

2009/10 2007/08

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Environ.checksonproject finance/responsiblelending Specializedenvironmental training

49

0%

Publicpolicydialogue

Whistleblowerpolicy

Carbonfinance

SRIfunds

Equatorprinciples

September 17, 2012

GS SUSTAIN - Financials

Differences in disclosure levels between developed and emerging markets explain a large proportion of the differences in ESG scores that we calculate across global financials. Our ESG framework typically assigns the lowest score where information is not disclosed for individual indicators. As a result, the lowest scores are typically achieved by companies with the lowest levels of disclosure. Exhibit 60 ranks the average ESG scores of companies listed in each country from highest to lowest across the global financials sector, highlighting the regional disparities. The risks of investing in emerging markets are frequently greater than those of developed markets, yet investors are provided with less information by companies listed in those markets than in developed economies. As a result, in many cases, we have found emerging market exposure through globally diversified, developed market businesses more attractive. Exhibit 60: Within the financial industry, performance varies by country on environmental, social and governance factors, with Anglo-Saxon outperformance on corporate governance
Average country performance (banks and insurance) on environmental, social and governance measures, as a percentage of maximum

90% 80% 70% 60%

Performance as a % of max

Governance

Social

Environment

50% 40% 30% 20% 10%

Netherlands UnitedKingdom UnitedStates CzechRepublic Indonesia

0%
Australia

Norway

Norway

Germany

Kuwait

Austria

Mexico

UnitedArabEmirates

Turkey

Russia

Qatar

China

Finland

Brazil

SaudiArabia

SouthAfrica

Japan

HongKong

Hungary

Spain

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Taiwan

Peru
50

September 17, 2012

GS SUSTAIN - Financials

While disclosure constraints reduce our ability to measure every aspect of companies performance, we nonetheless find a positive link between the management quality (ESG) scores we calculate and both the level and sustainability of returns on capital. Exhibit 61 shows the average return on capital (ROA for Banks, ROE for Insurance) for companies in each quartile of management quality, highlighting a modest positive relationship between ESG scores and returns on capital across the industry. More importantly for our analysis, Exhibit 62 shows the average number of consecutive years for which companies in each quartile of management quality (ESG) had sustained above-median returns on capital, prior to 2011. Companies with above-median ESG scores sustained better-than-median returns on capital for c.20% longer than companies with below-median ESG scores. Exhibit 61: Better managed companies tend to be slightly more profitable
Avg. 2012-14E ROE/ROA for Banks/Insurance companies by mgmt quality (ESG) quartile

Exhibit 62: and more importantly tend to sustain high returns for longer than weaker peers
Number of years sustained above-median returns, by mgmt quality (ESG) quartile

6%
Avgyearsofsustainedabovemedianreturnspriorto2011

6.0 5.8 5.6 5.4 5.2 5.0 4.8 4.6 4.4 4.2 4.0

5%
Avgreturnsoncapital(201214E)

4%

3%

2%

1%

0% 4thquartile 3rd 2nd 1stquartile

4thquartile

3rd

2nd

1stquartile

Source: Company data, Quantum database, Goldman Sachs Research estimates.

Source: Company data, Quantum database, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

51

September 17, 2012

GS SUSTAIN - Financials

GS SUSTAIN framework extended to 151 banks and 61 insurance companies; 11 winners

The GS SUSTAIN framework is designed to identify the companies in each global industry that we believe are best positioned to sustain a competitive advantage and superior returns on capital over the long term (three to five years and beyond) relative to sector peers. The framework integrates our analysis of companies: (1) management quality with respect to environmental, social and governance (ESG) issues, (2) industry positioning and (3) return on capital, using objective, quantifiable and transparent measures of performance on each dimension. Overall leaders stand out across all three of these dimensions. Exhibit 63: The GS SUSTAIN framework

Management quality

Industry positioning

GS SUSTAIN WINNERS

Returns on capital
Source: Goldman Sachs Research

Goldman Sachs Global Investment Research

52

September 17, 2012

GS SUSTAIN - Financials

With this report, we extend the universe of large, mature financials companies to which we have applied the GS SUSTAIN framework to 212 financial institutions assessed in three distinct groups: Emerging Market Banks, Developed Market Banks and Global Insurance. Emerging and developed market banks are defined based on the trend pace of banking asset growth in each companys domestic market those based in countries in which banking assets are growing more slowly than the global average are treated as developed market and vice versa. The details of the analysis applied are laid out in the following pages, highlighting 11 leaders that stand out as well placed to sustain industry-leading cash returns relative to peers, shown in Exhibit 64. Exhibit 64: 11 global leaders stand out across emerging & developed banks and global insurance

Institution HSBC StandardChartered BBVA JuliusBaer CommonwealthBank HangSengBank ItauUnibanco Firstrand PrudentialPlc RSA AMP

Returnoncapital ROA(Banks)/ROE(Insurers) 0.7% 0.8% 0.8% 1.0% 1.0% 1.5% 1.8% 1.7% 18% 11% 14% Percentileranking 58% 65% 59% 73% 74% 92% 65% 96% 93% 61% 83%

Industrypositioning Percentileranking 66% 68% 76% 61% 82% 77% 79% 70% 82% 75% 87%

Managementquality(ESG) Percentileranking 96% 92% 84% 60% 96% 88% 88% 75% 98% 90% 87%

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

53

September 17, 2012

GS SUSTAIN - Financials

GS SUSTAIN analysis of global financial sectors

This section summarises the key elements of the analysis that we have applied to each mature industry examined within the GS SUSTAIN framework. The structure of this presentation is consistent across all global industries analysed within GS SUSTAIN. As shown in Exhibit 65, for each of the three industry groups we detail:

1. Industry roadmaps describing structural industry trends and measures used to identify long-term industry winners in three
categories; return on capital (ROE/ROA), industry positioning, and management of environmental, social and governance (ESG).

2. Winners circles summarising the overall categorisation of companies analysed in each sector as Venn diagrams. Companies are
shown in categories in which they demonstrate leadership relative to global peers. The companies listed in the intersection of the three circles stand out on all three dimensions and are included in the GS SUSTAIN Focus List.

3. Winners tables showing details of the analysis applied in each of the three dimensions of the GS SUSTAIN framework, with
companies percentile-ranked relative to peers on each aspect of performance. Global leaders are shaded grey.

4. Average return on capital of companies in each quartile of profitability and the cumulative total shareholder return of companies
in each quartile over the last decade.

5. Return on capital (ROE/ROA for insurance/banks) plotted against asset multiples (P/Book), demonstrating the extent of the
relationship between returns on capital and asset multiples. Across the industries we have examined, we consistently find that returns-based measures of performance provide a stronger relationship to valuation than other, growth-based measures.

7. Return on capital progression over time for each company in the sector colour coding highlights the quartile of sector-relative
cash returns to which each company belongs.

8. A comparison of each companys industry positioning percentile and its return on capital percentile. The former is intended to
provide greater visibility into the sustainability of future returns, and, as a result, we typically find a positive relationship between the two measures.

9. Comparison of prior and current year industry positioning rankings, highlighting material improvements or deteriorations over
the last year. In addition to changes in companies like-for-like performances, movements reflect changes in the methodology used to assess industry positioning and changes to the universe of companies against which individual companies are compared.

10. Summary of the measures applied to assess industry positioning, explaining the measures, rationale and calculations, reflecting the trends and measures outlined in the industry roadmaps for each sector. Subsequent pages also provide further detail on the underlying assumptions used in those calculations. 11. The environmental, social and governance indicators used to assess management quality. We believe effective management of
ESG issues is a key element of sustained competitive advantage. Indicators are based on our assessment of the key issues facing each industry and the extent of data reporting to allow comparison on those dimensions.

12. Management quality (ESG) rankings by category. Each company is scored on a 1 (low) to 5 (high) scale relative to global peers. Thos scores are aggregated to provide an overall ESG score and ranking relative to peers. 13. Comparison of prior and current year management quality (ESG) rankings, highlighting material improvements or deteriorations over the last year.

Goldman Sachs Global Investment Research

54

September 17, 2012

GS SUSTAIN - Financials

Exhibit 65: The analysis in each sector is summarised in 13 pages

1. Industry roadmap: describes structural industry trends and measures used to identify the companies best positioned to sustain competitive advantage 2. Winners circle: leaders on each dimension of analysis are shown in each circle. Companies in middle excel on all three dimensions and are included in the GS SUSTAIN Focus List
Management quality ConocoPhillips BP Nexen Cairn Energy Industry positioning Canadian Natural Res. Shell Suncor Devon Santos PTT Public Galp XTO Energy Questar BG Petrobras Novatek Exxon Mobil OMV Chevron
ESG Environmental, social and governance issues Access to assets / exposure to asset depletion CROCI Cash return on cash invested 10yr reserve growth through access to new legacy assets (Top 280)
Us a p dc r p tre m ro u e s
Kazmunaigaz CNOOC PTTEP Sasol Murphy Rosneft Petrobras Hess BG Exxon Mobil Lukoil ONGC OMV Chevron PTT Public Gazprom Neft PetroChina BP ConocoPhillips Sinopec Reliance Industr. Marathon StatoilHydro ENI Shell Gazprom TOTAL Suncor Surgutneftegaz Galp Repsol Cairn Energy Novatek Southwestern Energy Ultra Petroleum Occidental

3. Winners table: detailed summary of companies performance on each of 1) environmental, social and governance performance, 2) industry positioning and 3) returns on capital
Management qualit y Company ESG ( 2008) Access to assets/ assets depletion Indust ry positioning Overal l Industr y Per centile Return on capital Asset t urn Cash margin CROCI Sales/GCI DACF/Sales T280 total reserves as a % of current r eserves 94% 39% 88% 101% 147% 24% 137% 76% 341% 85% 28% 17% 8% 115% 88% 4% 38% 108% 113% 52% 132% 138% 173% 115% 146% 29% 121% 331% 7% >400% 105% 56% 88% 353% 260% 33% 216% 56% 189% 38% 218% 244% 150% 32% 68% 250% 287% 72% 24% 93% 131% 227% 5yr cash flow growth associated with new legacy assets (T 280) 100% 8% 43% (4%) 40% 24% 58% 22% 81% 30% 33% 13% 0% 21% n/a 1% 22% 26% 21% 9% 21% 18% 27% 20% 47% 35% 23% 56% 18% 128% 25% 509% 498% 63% 105% 3% 37% 16% 437% 26% 132% 73% 22% (5%) 13% 25% 56% 16% 31% 41% 64% 42%

4. Average returns on capital of companies in each quartile of CROCI and cumulative shareholder returns of companies in each quartile over time

Rise of emerging market competition

Increased regulation

Resource constraints

Human capital shortages

Scor e as a % Change from of maximum previous report

Percentile

Percentile

Percentile

Medium term decline rate (2009-12 change)

Per centile

Percent ile

2010-11E

% change vs. 2007-09

Percentile

2010-11E

Percentil e

2010-11E

Percentil e

30%
41% 46% 44% 63% 38% 40% 74% 70% 77% 78% 44% 41% 57% 70% 38% 28% 43% 83% 70% 44% 56% 65% 74% 74% 82% 48% 70% 63% 30% 35% 59% 74% 64% 34% 34% 50% 55% 62% 43% 38% 57% 78% 35% 49% 48% 32% 53% 70% 42% 67% 33% 70%
New 6% New New 2% 2% (2%) 9% (4%) 0% (3%) 13% 5% 0% 2% New 4% (2%) (1%) 9% 0% 2% (3%) 2% (1%) 17% (3%) (10%) New New (7%) 13% New New New (6%) 5% (6%) New New (11%) 4% New 6% 8% New 4% (1%) 1% 24% New 10%

1200%

Themes

ENI TOTAL Repsol EnCana

18% 18% 16% 17% 17% 15% 16% 15% 15% 15% 13% 14% 14% 13% 14% 13% 14% 12% 13% 12% 12% 12% 10% 11% 8% 62% 30% 22% 22% 21% 17% 16% 19% 16% 17% 16% 13% 15% 15% 12% 14% 11% 11% 10% 9% 6%

(3%) 0% (6%) (1%) 1% (1%) 3% (1%) 1% (4%) (2%) 2% 0% (0%) 2% (1%) 2% (1%) 1% (0%) 0% (1%) (2%) 2% 1% 55% 6% (1%) (6%) 2% (7%) (4%) 5% (2%) (2%) 1% (6%) 0% (2%) (4%) 1% (4%) 1% (3%) (4%) (3%)

Chesapeake Energy Kazmunaigaz Ultra Petroleum Southwestern Energy PTTEP Tullow INPEX EOG Resources
In g te te ra d

Cu mu lat iv e out perf orm anc e of v s CRO CI qua rt ile

Increasing competition for assets from emerging market champions, particularly in emerging market resource basins

Host governments increasingly vocal in seeking higher rents from mineral extraction. Social and environmental standards in project development are rising

Increasing political risk and project complexity is raising the industry cost base and widening the cost gap between leaders and laggards in commodity markets

Marathon
Access to engineers and geologists is a key constraint to growth across the sector

StatoilHydro Reliance Industr.

Murphy

Drivers of corporate performance

Management quality

Industry positioning

Return on capital

GS SUSTAIN

Woodside Hess

Talisman

23% 39% 33% 62% 19% 21% 86% 72% 92% 96% 33% 23% 54% 76% 15% 0% 29% 100% 72% 33% 52% 68% 86% 86% 98% 41% 76% 62% 1% 11% 58% 84% 66% 7% 7% 47% 50% 60% 29% 15% 54% 94% 11% 45% 41% 3% 49% 76% 27% 70% 5% 76%

48% 24% 40% 50% 74% 8% 68% 36% 98% 38% 12% 6% 4% 58% 40% 0% 22% 54% 56% 26% 66% 70% 78% 60% 72% 14% 62% 96% 2% 100% 52% 28% 44% 100% 92% 18% 82% 30% 80% 20% 84% 88% 76% 16% 32% 90% 94% 34% 10% 46% 64% 86%

88% 10% 70% 2% 64% 42% 78% 38% 86% 54% 58% 16% 4% 30% n/a 6% 34% 50% 28% 12% 32% 24% 52% 26% 72% 60% 40% 74% 22% 92% 46% 100% 98% 80% 90% 8% 62% 18% 96% 48% 94% 84% 36% 0% 14% 44% 76% 20% 56% 66% 82% 68%

( 1%) 5% 10% n/a 13% 6% 5% 3% 7% 0% 3% 3% ( 1%) ( 0%) 10% ( 2%) 4% ( 1%) ( 0%) 4% 21% 3% 1% ( 1%) 2% 4% ( 1%) 9% ( 1%) 52% ( 2%) 69% 15% 31% 20% 6% ( 1%) ( 0%) 20% 8% 7% 2% 9% 5% 3% 14% 3% ( 5%) 1% 1% 12% 2%

10% 58% 78% 84% 64% 62% 44% 68% 26% 48% 40% 14% 24% 78% 2% 52% 8% 20% 54% 94% 42% 30% 6% 36% 56% 12% 76% 16% 98% 4% 100% 88% 96% 92% 66% 18% 22% 90% 72% 70% 38% 74% 60% 50% 86% 46% 0% 32% 28% 82% 34%

54% 15% 66% 13% 80% 37% 72% 41% 92% 45% 41% 7% 1% 33% 60% 0% 31% 35% 29% 19% 70% 49% 56% 15% 62% 47% 37% 88% 3% 100% 27% 84% 86% 98% 96% 19% 58% 9% 94% 50% 90% 74% 64% 11% 23% 78% 76% 5% 25% 52% 82% 66%

45% 23% 20% 19% 20% 20%

6% (2%) (4%) 2% (1%) 4%

98% 94% 86% 80% 84% 82% 76% 74% 62% 72% 68% 54% 64% 50% 47% 49% 33% 41% 43% 27% 39% 31% 35% 23% 29% 21% 15% 17% 5% 9% 1% 100% 96% 90% 92% 88% 70% 56% 78% 58% 66% 60% 25% 52% 45% 19% 37% 11% 13% 7% 3% 0%

1.2x 0.5x 0.4x 0.8x 1.7x 0.7x 0.7x 1.3x 0.4x 1.6x 1.1x 0.5x 1.2x 1.2x 1.9x 1.0x 0.6x 1.2x 1.4x 1.5x 0.8x 1.4x 0.8x 0.8x 1.4x 0.4x 0.9x 0.9x 0.3x 1.4x 0.8x 0.7x 0.7x 0.3x 0.3x 0.5x 0.6x 0.3x 0.3x 0.2x 0.3x 0.2x 0.2x 0.2x 0.2x 0.1x 0.2x 0.2x 0.2x 0.2x 0.1x 0.1x

76% 45% 39% 64% 98% 54% 56% 84% 37% 96% 74% 43% 82% 78% 100% 72% 49% 80% 92% 94% 66% 88% 58% 60% 90% 35% 70% 68% 31% 86% 62% 52% 50% 25% 27% 41% 47% 23% 33% 17% 29% 19% 9% 21% 15% 3% 13% 7% 11% 5% 1% 0%

37% 41% 44% 23% 11% 25% 22% 13% 39% 11% 15% 29% 13% 12% 7% 15% 20% 11% 9% 8% 16% 9% 18% 16% 9% 29% 12% 12% 28% 7% 10% 80% 42% 75% 68% 45% 26% 60% 57% 67% 53% 67% 67% 59% 63% 79% 64% 60% 55% 64% 69% 52%

54% 58% 62% 43% 13% 45% 41% 25% 56% 15% 31% 52% 27% 19% 1% 29% 39% 17% 9% 3% 35% 7% 37% 33% 5% 50% 21% 23% 49% 0% 11% 100% 60% 96% 92% 64% 47% 76% 72% 90% 68% 88% 86% 74% 80% 98% 84% 78% 70% 82% 94% 66%

25%

1000%

20%

800%

CROCI

15%

600%

10%

400%

5%

200%

Oil producers

10yr cash flow growth associated with new legacy assets (Top 280)

CNOOC
Medium term decline rate (200912E change)

ONGC Occidental Gazprom Neft

Rosneft Apache

INPEX Talisman Tullow EOG Resources W oodside Nexen XTO Energy Apache Noble Questar Canadian Natural Res. EnCana

0% 2000 2001 2002 2003 2004 Q1 Q2 2005 Q3 2006 Q4 2007 2008 2009

0%

Lukoil

2001

2002

2003

2004 Q1

2005 Q2 Q3

2006 Q4

2007

2008

2009

Return on capital

Anadarko Devon Chesapeake Energy Santos

5. Return on capital (CROCI, or ROE for financials) vs. asset multiples (EV/GCI, or P/B for financials)
80.0%

6. Returns on capital decomposition: decomposition of cash returns into its constituent drivers (sales/GCI vs. DACF/sales)
Questar 75th percentile CROCI Southwestern Energy Chesapeake XTO Energy Devon 60.0% Nexen Ultra Petroleum EOG Resources Canadian Natural Res. Noble EnCana Talisman Tullow Apache Anadarko 50th percentile CROCI Cairn Energy 25th percentile CROCI

7. Returns on capital progression over time

CROCI Company 2000 Mechel Nucor CSN Angang Steel Severstal Evraz Wuhan Iron & Steel Novolipetsk Steel Usiminas Steel Authority of India Magnitogorsk Vallourec Baoshan Gerdau Tata Steel ArcelorMittal POSCO Acerinox SSAB China Steel Corp. Voestalpine Salzgitter US Steel Outokumpu ThyssenKrupp JFE Nippon Steel Sumitomo Metal
17% 20% 13%

8. CROCI percentile vs. industry positioning percentile

CROCI, 2007-09
24% 18% 23% 17% 13% 28% 17% 17% 20% 23% 26% 11% 15% 31% 15% 12% 3% 8% 8% 11% 10% 5% 3% 5% 6% 6% 6%

2001
11% 17% 11%

2002
11% 36% 13%

2003
9% 26% 24%

2004
25% 21% 27%

2005
23% 24% 20% 21% 30%

2006
23% 28% 14% 45% 18% 33% 18% 18% 25% 19% 26% 37% 15% 12% 31% 17% 9% 14% 17% 10% 10% 14% 13% 15% 10% 6% 8% 9%

2007
25% 24% 16% 25% 18% 36% 22% 19% 26% 19% 25% 35% 11% 19% 20% 16% 13% 9% 10% 12% 13% 15% 11% 8% 11% 6% 6% 6%

2008
39% 26% 46% 13% 20% 38% 18% 25% 33% 27% 20% 29% 12% 22% 63% 22% 16% 2% 13% 7% 11% 14% 12% 5% 9% 6% 5% 6%

2009
9% 5% 7% 12% 0% 9% 10% 6% 2% 23% 8% 13% 10% 5% 9% 7% 8% 0% 2% 4% 9% 2% -6% -5% -5% 6% 6% 7%

2010E
26% 17% 17% 17% 15% 15% 16% 13% 14% 15% 11% 9% 11% 10% 7% 10% 10% 7% 7% 6% 7% 7% 4% 4% 4% 4% 3% 3%

2011E
28% 27% 19% 17% 17% 15% 14% 17% 16% 13% 14% 14% 11% 12% 13% 10% 10% 11% 9% 8% 7% 7% 9% 7% 6% 6% 5% 5%

10 0% 90% 80%

Lamar Focus Media BSkyB Antena3 Grupo Televisa Scripps Networks Interactive, Inc. Viacom TF1 M6

18% -1% -31%

15% 25% 1%

14% 21% 8% 9% 8% 23% 16%

25% 26% 32% 21% 16% 18% 30% 22% 19% 14% 15% 16% 7% 10% 14% 8% 7% 5% 4% 5%

23% 20% 37% 34% 20% 29% 19% 25% 27% 23% 18% 6% 17% 16% 11% 14% 10% 4% 9% 8% 7% 7%

D C / a s 2 1 -1 Ea g A FS le , 0 0 1 v .

70%
CROCI percentile, 2011-12E

Time Warner Publicis Discovery Communications, Inc. Walt Disney Wolters Kluwer ITV News Corp. Reed Elsevier SES SA Vivendi JCDecaux Eutelsat Communications CBS WPP Thomson Reuters Pearson Telecinco Dentsu Lagardere

Occidental PTTEP Woodside 40.0% BG Kazmunaigaz Novatek CNOOC

18%

11% 20%

15% 9% 18%

13% 6% 24%

60% 50% 40% 30% 20% 10% 0% 0% 10% 20%

Gazprom ONGC Surgutneftegaz Santos INPEX Rosneft Sasol Petrobras PetroChina StatoilHydro ENI Suncor Reliance Industr. Repsol

9% 18% 11% 7% 9% 10% 7% 4% 2%

5% 8% 7% 7% 8% 6% 1% 7% 7% 5% 5%

10% 12% 7% 9% 6% 5% 8% 6% 6% 2% 0%

14% 7% 8% 13% 7% 7% 2% 4% 6% 4% 3%

20.0%

Lukoil Gazprom Neft TOTAL Chevron OMV BP Hess

Marathon Shell ConocoPhillips Galp

0.0% 0.0 0.3 0.6 0.9 1.2 1.5

Sales / GCI, 2010-11E avg.

Mediaset 30% 40% 50% 60% 70% Industry positioning percentile, 2011-12E

80%

90%

100%

9. Changes in Industry Positioning

10. Industry positioning summary: key drivers, rationale and calculation of their measurement

11. Environmental, social and governance measures (ESG indicators): objective, quantifiable indicators to assess management quality
Criteria
I ndependent Board leadership

12. Management quality rankings by ESG category: scores of companies based on publically disclosed data

13. Changes in management quality

In depen dent Boa rd d irectors & comm it tees

Minorit y sha reho lde rs' rights

Le adersh ip for susta inab ility initiative s

Share-b ased compe nsatio n

Reporting for sustainability

Energy co nsu mption / GCI

Wa ste generation / GCI

Comm unity in ve stm ent

Social - Employees

In depend ent boa rd lea dership

Employee training

Health a nd safety mana gemen t

Ge nder diversit y

R&D investm ent

Separat ion of CEO and Chairman roles and appointment of independent Lead Director Percentage of independent, non-executive directors and wholly independent compensation and nomination committees Audit committee independence and ratio of non-audit to audit f ees paid to the assigned auditor CEO compensation (including salary, bonus, st ock grants and options) as a percentage of net income Fair value of share-based compensation expense as percent age of equity Block ownership greater than 5%, staggered Board, poison pill, unequal voting right s and other provisions Number of years of reporting on environmental and social ("ES ") issues and external assurance of dat a Compensation link and responsibility of B oard, senior executives to environmental and social performance Total payroll costs divided by average number of employees Cash flow per employee Gender diversity of total workforce, senior executives, and Board directors Institutionalized training programme, amount of resources used for t raining, hours or spend Healt h & saf ety behaviour based, health & safet y risk assessment , and pandemics policy Total employee and contractor fat alities and rate per 50,000 employees Lost time injuries of employees and contractors per million hours worked Research and development expenditure relative to cash flow Community investment as a percentage of cash flow Procedures for stakeholder dialogue, Whistleblower mechanisms, UN declaration of human rights, bribery prohibition Energy consumpt ion as a ratio of gross cash invested Greenhouse gas emissions as a ratio of gross cash invested Wat er consumption as a ratio of gross cash invested Waste generation as a ratio of gross cash invested INT/UP INT/UP INT/UP Gas flaring relative to production Gas reserves as a % of total reserves, and low carbon invest ments Absolute oil spills (kbls) and Oil spills rate ( kbls / mn boe production)

Maintain balance of power S hareholder representat ion I ndependence of audit process 24% Management incentives Transparency S trength of individual shareholders Transparency 8% I ntegration of ES issues into st rat egy E mployee incentives Labour efficiency Qualit y of workplace E mployee incentives Qualit y of workplace Qualit y of workplace Qualit y of workplace P roduct innovation B rand, impact on communities License to operat e Energy ef ficiency Impact of operations Wat er efficiency Impact of operations Impact of operations Impact of operations Impact of operations 28%
Up stream Integrated

Com pany

Co rporate govern ance

I ndependent Board directors & committees I ndependent auditors CEO compensation S hare-based compensation Minority shareholders' rights
Leadership

10yr reserve growth through access to new legacy assets

As productio n growth becomes more scarce across across the industry, it is becomin g increasingly - Equity interest in Top 280 reserves as % of valuable to those companies access to attractive new current reserves legacy assets

Report ing and assurance of ES G performance Leadership responsibility for ES G performance E mployee compensat ion

Stakeholders

Risin g project complexity and political risk are raising the capital costs of new projects; those companie s Access to Assets / exposure 10yr cash flow growth associa ted - Equity interest in cash flow associated with Top exposed to the least capital intensive / most cash with new le gacy assets to asset depletion 280 projects as % of current cash flow generative projects will see the greatest benefit from rising prices Companies with shallo w declines in production from - Growth / (declin e) in hydrocarbon productio n legacy assets will face least need for capital intensive (2009-2012E) growth

E mployee product ivity

Em ployees

Gender diversit y E mployee training Health and safety management Fat alities Health & safety performance - LTI Research and development Communit y invest ment B usiness ethics and corruption E nergy consumption GHG emissions

28%

BP Shell BG Exxo n Mobil Petrobras Stato ilHydro ENI Ch evron TOTAL Co nocoPhillip s He ss Marathon Sasol Suncor Re psol OMV Re liance Ind ustr. Gazpro m CNOOC PTTEP Sinopec Lukoil PetroCh ina Kazmuna iga z ONGC Ro sn eft Murphy PTT Pu blic Surgutne ftegaz Gazpro m Ne ft Ne xen Ca irn Energy EnCana Santo s De von No vat ek Talisman W oodside INPEX Ca nadian Natura l Res. Occiden tal Apache No ble Anad arko Tullow EOG Resources XTO Energy South western Energy Ultra Petroleum Ch esapeake Ene rgy Questar Avera ge Maximum

106 103 97 97 93 93 92 88 88 87 87 81 79 78 74 72 70 60 57 55 55 54 54 51 51 50 48 48 37 35 97 92 88 88 84 80 78 70 69 66 62 61 60 54 54 47 44 43 43 41 40 68.6 125

85% 82% 78% 78% 74% 74% 74% 70% 70% 70% 70% 65% 63% 62% 59% 58% 56% 48% 46% 44% 44% 43% 43% 41% 41% 40% 38% 38% 30% 28% 78% 74% 70% 70% 67% 64% 62% 56% 55% 53% 50% 49% 48% 43% 43% 38% 35% 34% 34% 33% 32% 55%

5 5 5 3 4 4 4 3 4 3 1 4 4 4 1 4 3 4 1 4 4 4 4 4 1 4 4 4 4 4 4 5 4 4 3 4 4 4 4 4 3 4 3 3 4 1 1 3 1 1 1 3.4 5

4 4 4 5 5 4 3 5 3 5 4 5 4 5 2 2 2 1 1 2 1 1 1 2 1 1 5 3 1 1 5 2 5 5 5 2 5 2 1 4 5 5 5 5 1 5 4 5 5 5 4 3.4 5

4 5 3 4 5 2 5 5 5 5 4 5 5 5 5 2 3 1 5 5 5 1 2 1 2 1 2 1 1 1 5 3 3 3 4 1 3 2 2 5 5 5 3 5 3 5 4 5 5 5 5 3.5 5

5 4 4 5 5 5 5 4 5 4 3 2 4 3 1 4 5 4 5 5 5 1 1 4 5 1 3 5 1 1 4 2 5 3 3 1 4 3 1 4 2 4 3 3 2 4 2 2 2 2 3 3. 3 5

5 5 5 5 1 1 3 3 5 3 3 5 3 3 1 1 1 1 1 1 1 1 1 1 1 1 5 1 1 1 3 3 3 3 5 5 3 3 1 3 5 3 5 3 1 3 3 1 1 1 1 2.5 5

4 5 4 5 1 1 2 5 1 4 3 5 4 1 2 1 3 1 1 1 4 4 4 5 1 1 4 1 5 1 4 5 5 5 3 5 4 2 1 5 5 3 5 4 3 5 4 5 5 4 1 3.3 5

27 28 25 27 21 17 22 25 23 24 18 26 24 21 12 14 17 12 14 18 20 12 13 17 11 9 23 15 13 9 25 20 25 23 23 18 23 16 10 25 25 24 24 23 14 23 18 21 19 18 15 19.4 30

5 5 5 5 5 5 5 4 5 5 5 4 5 5 5 5 3 1 2 1 2 5 4 3 1 3 1 1 1 1 5 5 5 5 3 3 5 4 2 4 4 1 1 1 3 1 1 1 1 1 1 3 .2 5

5 3 5 4 3 3 4 4 2 4 4 5 4 3 2 3 2 2 1 1 2 1 3 1 2 1 2 1 1 1 4 5 3 4 1 1 3 4 3 3 4 2 2 2 2 1 1 1 1 1 1 2.5 5

10 8 10 9 8 8 9 8 7 9 9 9 9 8 7 8 5 3 3 2 4 6 7 4 3 4 3 2 2 2 9 10 8 9 4 4 8 8 5 7 8 3 3 3 5 2 2 2 2 2 2 5.7 10

5 4 5 5 5 5 4 3 4 1 3 1 1 5 4 3 2 2 2 3 2 1 2 2 2 2 1 2 1 2 4 5 5 5 5 3 1 1 1 1 1 1 1 1 5 1 1 1 1 1 1 2. 5 5

3 3 5 4 3 4 3 4 3 4 4 3 2 4 3 2 3 2 5 4 1 2 1 2 3 2 3 4 1 2 5 2 5 4 5 3 5 5 5 5 4 5 5 5 5 5 5 4 5 4 4 3 .6 5

4 5 1 4 1 5 2 2 3 2 3 1 2 3 2 1 1 3 1 1 1 1 1 4 1 2 1 2 1 1 2 1 5 2 2 1 1 4 1 1 1 2 1 2 2 1 1 1 2 2 2 1.9 5

3 5 3 3 5 3 5 3 3 3 5 3 5 3 3 5 5 5 3 3 3 3 3 3 5 3 1 3 5 1 3 5 3 5 5 5 3 3 3 3 3 1 1 1 1 1 1 1 1 1 1 3.1 5

5 5 5 5 5 5 5 5 5 5 5 5 5 4 5 5 5 5 4 1 3 3 3 4 3 3 1 5 1 1 5 4 4 3 4 4 5 4 5 4 3 3 3 3 1 1 1 1 1 1 1 3.6 5

3 2 3 3 2 4 2 3 3 4 5 5 4 3 2 2 4 1 5 1 1 3 3 3 1 3 1 1 1 1 3 5 1 5 5 3 3 5 5 1 1 1 1 1 1 1 1 1 1 1 1 2.5 5

5 4 5 5 4 2 3 5 2 4 2 4 1 4 2 3 1 1 4 3 1 1 4 1 1 1 1 1 1 1 5 5 3 2 3 3 2 3 1 1 2 1 1 1 4 1 1 1 1 1 1 2. 4 5

28 28 27 29 25 28 24 25 23 23 27 22 20 26 21 21 21 19 24 16 12 14 17 19 16 16 9 18 11 9 27 27 26 26 29 22 20 25 21 16 15 14 13 14 19 11 11 10 12 11 11 19 .6 35

4 5 2 3 4 4 3 4 5 3 1 1 4 4 4 3 4 2 3 1 5 3 5 1 3 1 1 1 2 2 3 2 1 1 2 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 2.2 5

4 4 2 3 5 3 4 4 5 3 4 3 1 3 4 4 5 1 1 1 2 5 1 2 1 5 1 1 1 1 3 5 3 4 3 5 2 2 1 2 1 1 1 1 2 1 1 1 1 1 1 2.5 5

5 5 5 5 4 5 5 5 5 5 4 4 5 3 5 4 3 4 1 1 2 3 2 1 4 2 4 2 1 1 5 4 4 4 3 3 5 2 4 2 3 2 2 3 1 2 1 1 1 1 1 3. 1 5

13 14 9 11 13 12 12 13 15 11 9 8 10 10 13 11 12 7 5 3 9 11 8 4 8 8 6 4 4 4 11 11 8 9 8 9 8 5 7 5 5 4 4 5 4 4 3 3 3 3 3 7 .8 15

3 3 4 2 3 4 3 2 3 2 4 2 5 1 3 2 2 1 1 1 1 1 1 1 5 1 1 1 1 1 4 4 4 3 1 5 3 2 4 5 1 5 5 1 1 1 1 1 1 1 1 2.3 5

4 3 4 2 2 4 3 3 4 3 3 3 2 4 4 3 2 2 1 2 1 2 1 1 1 1 1 3 1 2 4 5 4 5 5 3 2 2 5 3 3 4 4 1 5 1 4 1 1 1 3 2.7 5

3 3 1 3 3 5 3 1 4 2 4 1 2 1 3 2 2 4 1 5 2 2 1 1 1 2 1 1 1 1 5 3 1 4 5 4 5 4 5 1 1 1 1 1 1 1 1 1 1 1 1 2. 2 5

5 4 4 1 5 1 3 1 1 2 4 1 2 1 4 3 4 5 1 2 1 3 1 1 1 2 1 1 1 4 1 5 3 1 1 4 2 5 5 1 1 1 1 1 2 1 1 1 1 1 1 2.2 5

4 4 3 4 5 5 3 3 3 5 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 1 1 1 1 5 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1.7 5

5 5 5 5 3 5 5 3 3 3 1 5 3 3 3 5 3 5 1 1 3 1 3 1 3 3 1 1 1 1 3 1 5 5 3 5 3 1 1 1 1 3 3 3 1 1 1 1 1 1 1 2.6 5

4 3 5 4 5 4 5 4 2 3 5 3 1 2 3 2 1 1 5 4 1 1 1 1 1 3 1 1 1 1 4 5 3 2 4 1 3 1 5 1 1 1 1 1 1 1 1 1 1 1 1 2.3 5

28 25 26 21 26 28 25 17 20 20 24 16 16 13 21 18 15 19 11 16 10 11 9 7 13 13 7 9 7 11 25 24 21 21 20 27 19 16 26 13 9 16 16 9 12 7 10 7 7 7 9 16. 1 35

Social

12%

Environment

Medium term decline rate

Water consumption Waste generation Gas flaring versus production Producers Gas reserves and low carbon invest ments Oil spills, absolute and versus production

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

Environm ent

Overa ll ESG

Description

Purpose

Weighting

Ga s f laring versus produ ction

Governance

Fa talities

L TI

Rationale

Calculation

Bu siness eth ics and corrup tion

Overa ll ESG (as % of m aximu m)

CEO co mpensat ion

Social - Lead ership

Measure

Oil sp ills, a bsolu te and versu s prod uction

Emp loyee pro ductivity

Ga s reserve s a nd low carbon investme nts

GHG emission s / GCI

Social - St ake holders

I ndepen dent a uditors

Oil & gas producers specific

Wa ter co nsu mption / GCI

Employee comp ensation

55

September 17, 2012

GS SUSTAIN - Financials

This page is intentionally blank

Goldman Sachs Global Investment Research

56

September 17, 2012

GS SUSTAIN - Financials

Emerging Market Banks

Goldman Sachs Global Investment Research

57

September 17, 2012

GS SUSTAIN - Financials

Industry roadmap: Key trends and drivers of performance

Exhibit 66 summarises the key structural shifts we have identified for the global banks industry, and the measures that we use to identify those companies we believe are best placed to sustain industry leadership against this backdrop of change. Exhibit 66: Industry roadmap Emerging market banks
Debt/capital imbalances across developed & emerging economies Costs of capital becoming increasingly divergent between developed and developing banks and across funding models

Emerging market consumption growth

Increased regulation

Consolidation

Themes

Emerging markets offer sustainable growth due to rising wealth and financial intermediation

Developed markets need to rebuild depleted wealth

Governments have increased their ownership in financial institutions

Regulators may become more proactive and could influence future returns

Industry consolidation is likely to continue opportunistically

Drivers of corporate performance

Management quality

Industry positioning

Return on capital

Balance sheet strength

GS SUSTAIN

ESG Environmental, social and governance issues

Regional growth

Regional market structure

Regulatory exposure

ROA Return on assets

Capital, leverage and funding mix

Banks

High potential growth markets -Trend in banking asset growth in end markets

Attractive market structure - State ownership and market concentration of end markets

Attractive business mix - Exposure to low volatility, low capital intensity businesses

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

58

September 17, 2012

GS SUSTAIN - Financials

We identify Itau Unibanco as an industry leader on each of: (1) return on capital (ROA), (2) industry positioning and (3) management quality (as measured by environmental, social and governance (ESG) performance above the sector median). Exhibit 67: Winners circle Emerging market banks
Management of ESG issues Industry positioning

Shinhan Financial Group Banco do Brasil Kasikornbank Santander Brasil China Merchants Public Bank Bhd

Bank of China

ICBC

Hong Leong Bank

Korea Exchange Bank

Banco Bradesco Santander Chile

Bank Pekao

Chongqing Rural Comm. Bank

Sberbank PKO BP Malayan Banking Berhad HDF Corp Itau Unibanco Yapi Kredi SAMBA Banrisul

Agri. Bank of China

RHB Capital

KB Financial

Komercni Banka Banco de Chile Akbank Bancolombia Arab National Bank Saudi British Bank Grupo Financiero Banorte ICICI Bank Siam Commercial Bank OTP Bank Axis Bank Credicorp Al-Rajhi Bank

Turkiye Halk Bankasi HDFC Bank

Management of ESG issues ESG (based on 2010 data) above sector median Industry positioning: leaders on a combination of: Country risk Attractive market structure Favourable business mix Sound funding & capital base Returns ROA (2012-14E) above sector median Balance sheet strength Capital, leverage and funding above bottom sector quintile

Qatar National Bank Qatar Islamic Bank

Bank of Ayudhya

Riyad Bank

Turkiye Isbankasi

Banque Saudi Fransi

Turkiye Garanti Bankasi

Commercial Bank of Qatar

Bangkok Bank

Returns

Note: CIMB, China Construction Bank, Turkiye Vakiflar Bankasi, China Minsheng Banking, JSC VTB, China CITIC Bank, Krung Thai Bank, Bank of Ningbo, Bank Of Nanjing, Industrial Bank, Bank of Communications, Shanghai Pudong, Bank of Beijing, Ping An Bank, Hua Xia Bank, Industrial Bank of Korea, Hana Financial, Woori Finance scored below median on all three metrics.
Source: Company data, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

59

September 17, 2012

GS SUSTAIN - Financials

Exhibit 68: Winners table Emerging market banks

Return on capital ROA
change vs 2009-11 in ppts -0.1% 0.0% 0.0% -0.5% 0.0% 0.6% 0.1% 0.2% 0.1% -0.5% 0.4% 0.3% 0.3% 0.4% 0.6% -0.3% -0.7% 0.0% -0.7% 0.2% 0.1% -0.3% -0.1% 0.0% -0.3% -0.5% 0.2% -0.1% 0.4% 0.1% 0.1% 0.4% 0.5% 0.4% -0.7% 0.1% 0.1% -0.3% 0.0% -0.4% 0.0% 0.2% 0.1% 0.3% 0.8% 0.1% 0.1% 0.1% 0.3% 0.0% -0.1% -0.2% -0.1% -0.1% -0.1% 0.0% -0.1% -0.2% -0.1% -0.1% 0.5% 0.2% 0.0% 0.1% -0.5% 0.2% 0.2%

Industry positioning Country risk

Weighted avg country indebtedness (Debt/GDP 2012E) 92% 92% 101% 103% 71% 42% 92% 99% 52% 46% 92% 92% 64% 138% 138% 98% 56% 64% 49% 64% 103% 52% 90% 101% 90% 50% 71% 98% 138% 71% 69% 111% 138% 54% 56% 137% 107% 98% 147% 49% 146% 146% 146% 146% 47% 146% 146% 131% 138% 146% 146% 111% 146% 155% 146% 146% 131% 98% 146% 146% 103% 146% 105% 106% 109% 104% 106%

Management quality Funding

Wholesale funding % ((liabilities deposits) / liabilities) 4% 32% 21% 37% nm 15% 13% 5% 31% 16% 9% 11% 10% 21% 9% 28% 30% 8% 31% 10% 4% 31% 3% 28% 27% 27% 9% 28% 12% 14% 22% 33% 30% 3% 26% 13% 15% 29% 11% 20% 13% 20% 14% 9% 39% 20% 23% 14% 28% 25% 35% 18% 40% 18% 23% 25% 16% 21% 31% 22% 19% 23% 27% 16% 20% 30% 25% 3% 5% 22% 8% 8%

Company
2012-14E Al-Rajhi Bank Commercial Bank of Qatar Qatar National Bank Qatar Islamic Bank Housing Development Finance Corpora Sberbank SAMBA Banque Saudi Fransi Credicorp Turkiye Halk Bankasi A.S. Saudi British Bank Arab National Bank PKO BP Siam Commercial Bank (Foreign) Kasikornbank (Foreign) Banrisul Turkiye Garanti Bankasi Bank Pekao Akbank Komercni Banka Riyad bank Bancolombia Banco de Chile Ita Unibanco Holding (ADR) Banco Santander Chile Yapi Kredi HDFC Bank Banco Santander Brasil (ADR) Bangkok Bank (Foreign) Axis Bank OTP Bank Plc ICICI Bank Bank of Ayudhya (Foreign) Grupo Financiero Banorte Turkiye Isbankasi Public Bank Berhad CIMB Group Holdings Banco Bradesco (ADR) China Construction Bank (H) Turkiye Vakiflar Bankasi Industrial and Commercial Bank of Chi China Minsheng Banking (H) China Merchants Bank (H) Agricultural Bank of China (H) JSC VTB Bank Chongqing Rural Commercial Bank China CITIC Bank (H) Hong Leong Bank Krung Thai Bank (Foreign) Bank of Ningbo Bank Of Nanjing Malayan Banking Berhad Industrial Bank Bank of China (H) Bank of Communications(H) Shanghai Pudong Development Bank RHB Capital Banco do Brasil Bank of Beijing Ping An Bank Co. KB Financial Group Hua Xia Bank Shinhan Financial Group Industrial Bank of Korea Korea Exchange Bank Hana Financial Group Woori Finance Holdings Bank Central Asia Bank Rakyat Indonesia Bank Danamon Bank Mandiri Bank Negara Indonesia 3.7% 2.9% 2.7% 2.6% 2.6% 2.6% 2.5% 2.4% 2.3% 2.3% 2.2% 2.2% 2.2% 2.1% 2.0% 2.0% 2.0% 1.9% 1.9% 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% 1.7% 1.7% 1.7% 1.6% 1.6% 1.6% 1.6% 1.5% 1.5% 1.5% 1.5% 1.4% 1.4% 1.4% 1.4% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% 1.2% 1.2% 1.2% 1.2% 1.1% 1.1% 1.1% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.7% 0.6% 2009-11 3.8% 2.9% 2.8% 3.1% 2.6% 2.0% 2.4% 2.2% 2.3% 2.8% 1.8% 1.9% 1.9% 1.7% 1.4% 2.3% 2.7% 1.9% 2.6% 1.6% 1.7% 2.1% 1.9% 1.8% 2.0% 2.3% 1.5% 1.7% 1.3% 1.5% 1.4% 1.1% 1.1% 1.1% 2.2% 1.4% 1.3% 1.7% 1.4% 1.8% 1.3% 1.2% 1.2% 1.0% 0.5% 1.2% 1.1% 1.1% 0.9% 1.1% 1.3% 1.2% 1.2% 1.1% 1.1% 1.0% 1.1% 1.2% 1.1% 1.0% 0.4% 0.6% 0.8% 0.7% 1.2% 0.5% 0.4% 2.8% 3.1% 2.2% 2.2% 1.7%

Market structure

Business mix

Overall Industry Positioning

Percentile 94% 15% 45% 5% 0% 42% 95% 88% 8% 56% 91% 80% 52% 38% 68% 29% 21% 76% 26% 89% 92% 3% 53% 12% 12% 20% 85% 11% 70% 79% 23% 6% 9% 71% 36% 74% 64% 17% 98% 44% 97% 73% 82% 100% 2% 83% 59% 86% 24% 62% 47% 50% 33% 77% 55% 58% 65% 39% 48% 61% 41% 67% 32% 27% 35% 18% 30% Percentile 89% 6% 5% 2% 32% 88% 61% 48% 82% 71% 52% 68% 97% 67% 56% 86% 29% 95% 44% 100% 33% 26% 92% 79% 76% 55% 85% 77% 33% 20% 94% 0% 45% 98% 38% 82% 36% 65% 21% 47% 58% 30% 68% 64% 12% 74% 3% 91% 15% 8% 14% 42% 23% 53% 27% 48% 73% 80% 15% 9% 59% 41% 18% 39% 62% 11% 23%

ESG
Score as a % Change vs last of maximum report (2010/11) 36% 44% 45% 35% 55% 44% 43% 40% 35% 39% 45% 43% 42% 41% 54% 36% 48% 57% 60% 48% 39% 62% 45% 76% 62% 49% 41% 63% 36% 50% 51% 53% 42% 46% 44% 55% 49% 62% 51% 41% 51% 48% 57% 39% 46% 43% 44% 40% 44% 44% 43% 52% 44% 50% 47% 48% 48% 60% 44% 40% 45% 41% 66% 41% 40% 31% 47% 40% 36% 40% 49% 51% New New New New 3% 9% New New -1% -2% New New -4% New New New 4% 4% 7% -7% New 8% 2% 1% New 3% 1% New New 6% -6% 8% New 13% -2% New New -2% 0% 1% -2% -1% -4% 5% 9% New -7% New New 3% New New -3% -3% -7% -6% New 0% -8% 5% -7% 1% 9% 0% -4% New 0% 1% -4% New -2% New

Percentile 100% 98% 97% 95% 94% 92% 91% 89% 88% 86% 85% 83% 82% 80% 79% 77% 76% 74% 73% 71% 70% 68% 67% 65% 64% 62% 61% 59% 58% 56% 55% 53% 52% 50% 48% 47% 45% 44% 42% 41% 39% 38% 36% 35% 33% 32% 30% 29% 27% 26% 24% 23% 21% 20% 18% 17% 15% 14% 12% 11% 9% 8% 6% 5% 3% 2% 0%

Total assets / total equity 7 5 8 6 9 9 7 7 9 10 8 7 8 10 10 9 8 7 7 9 6 9 13 12 12 9 11 8 9 12 7 8 9 11 8 16 11 14 15 9 16 16 17 18 9 13 15 15 15 15 13 13 21 16 17 18 13 17 19 19 13 23 11 15 11 13 15

Percentile 96% 100% 83% 99% 73% 74% 93% 91% 64% 58% 79% 86% 80% 56% 55% 67% 82% 94% 89% 65% 97% 71% 39% 46% 44% 68% 53% 77% 70% 43% 88% 85% 62% 52% 76% 17% 49% 30% 23% 61% 15% 14% 11% 6% 59% 36% 21% 20% 26% 27% 33% 38% 2% 18% 9% 8% 35% 12% 5% 3% 41% 0% 50% 29% 47% 32% 24%

Percentile 68% 70% 53% 52% 77% 100% 68% 56% 91% 99% 68% 68% 83% 30% 30% 62% 86% 82% 94% 80% 50% 91% 73% 55% 73% 93% 77% 62% 30% 77% 79% 36% 30% 88% 85% 32% 41% 62% 2% 96% 15% 15% 20% 15% 97% 15% 18% 35% 30% 15% 15% 38% 23% 0% 18% 23% 33% 62% 15% 15% 49% 15% 46% 44% 39% 47% 44%

Weighted avg. consolidation 45% 44% 50% 48% 34% 52% 45% 46% 65% 40% 45% 45% 90% 72% 72% 100% 44% 89% 41% 94% 46% 65% 52% 98% 52% 41% 34% 100% 72% 34% 88% 43% 72% 78% 44% 53% 59% 100% 81% 41% 81% 81% 80% 81% 52% 81% 80% 51% 72% 81% 81% 62% 80% 83% 80% 80% 51% 100% 81% 81% 56% 81% 56% 56% 56% 56% 56% 70% 70% 70% 70% 70%

Weighted avg. state ownership 63% 63% 55% 60% 73% 54% 63% 62% 25% 30% 63% 63% 20% 28% 28% 45% 28% 20% 29% 3% 61% 25% 13% 43% 13% 29% 73% 45% 28% 73% 7% 62% 28% 14% 28% 16% 23% 45% 65% 29% 66% 66% 66% 66% 51% 66% 65% 17% 28% 66% 66% 18% 66% 54% 65% 66% 17% 45% 66% 66% 14% 66% 15% 15% 16% 16% 15% 39% 39% 39% 39% 38%

Percentile 6% 6% 24% 20% 0% 27% 6% 15% 68% 14% 6% 6% 97% 59% 59% 86% 26% 95% 23% 100% 15% 68% 76% 86% 76% 21% 0% 86% 59% 0% 98% 5% 59% 94% 30% 58% 59% 86% 53% 18% 36% 36% 32% 36% 29% 36% 36% 55% 59% 36% 36% 73% 33% 73% 36% 33% 56% 86% 36% 36% 76% 36% 85% 82% 71% 76% 82%

Ranked business mix score (Rank 1-4) 3.6 3.2 2.9 2.9 3.6 3.5 3.2 3.2 3.4 3.3 3.2 3.3 3.7 3.4 3.2 3.4 3.2 3.3 3.2 3.5 3.1 2.9 3.4 3.4 3.3 3.3 3.4 3.3 3.1 3.0 3.7 3.1 3.5 3.6 3.2 3.4 3.0 3.2 3.0 3.2 3.3 3.3 3.4 3.3 3.1 3.6 3.0 3.6 3.3 3.1 3.3 3.2 3.4 3.3 3.3 3.4 3.3 3.3 3.3 3.2 3.2 3.3 2.6 3.2 3.3 2.8 3.0 3.1 3.8 3.8 3.4 3.0

Percentile 94% 38% 5% 6% 97% 88% 33% 32% 71% 53% 29% 64% 98% 82% 39% 73% 35% 56% 41% 89% 20% 3% 82% 79% 67% 62% 80% 70% 18% 8% 100% 15% 86% 95% 27% 74% 14% 42% 11% 30% 52% 44% 85% 55% 17% 91% 12% 92% 47% 21% 50% 23% 76% 45% 58% 77% 68% 48% 61% 24% 36% 65% 0% 26% 59% 2% 9%

Loans/ deposits (2012E) 85% 107% 91% 119% 442% 107% 67% 87% 121% 87% 82% 85% 107% 102% 97% 95% 101% 96% 92% 82% 84% 140% 121% 149% 201% 109% 86% 176% 91% 83% 135% 109% 122% 102% 92% 89% 87% 122% 64% 99% 62% 73% 73% 57% 144% 58% 72% 71% 102% 68% 61% 91% 74% 72% 77% 70% 86% 101% 64% 72% 107% 69% 99% 222% 108% 107% 105%

Percentile (2010/11) 3% 26% 32% 2% 57% 26% 21% 10% 2% 7% 32% 21% 18% 14% 56% 3% 37% 58% 61% 37% 7% 64% 32% 88% 64% 42% 14% 69% 3% 45% 47% 53% 18% 34% 26% 57% 42% 64% 47% 14% 47% 37% 58% 7% 34% 21% 26% 10% 26% 26% 21% 51% 26% 45% 36% 37% 37% 61% 26% 10% 32% 14% 74% 14% 10% 1% 36% 10% 3% 10% 42% 47%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

60

September 17, 2012

GS SUSTAIN - Financials

Exhibit 69: Emerging market banks P/B vs. ROA (2012-14E avg.)

2.5

Siam Commercial

2.0

Hong Leong Malayan Banking

CIMB Group

Kasikornbank Grupo Financiero Banorte

Credicorp Qatar National Axis Bank Bancolombia B. of Ayudhya Bank Pekao ICICI Bank Turkiye Halk Komercni Banka Banco Bradesco 1.5 PKO BP Qatar Islamic Ita Unibanco Saudi British OCBC Bangkok Bank UOB Turkiye Garanti Arab National Akbank Bank of Ningbo SAMBA Banrisul RHB Cap Saudi Fransi China Merchants Turkiye Isbankasi DBS CCB Yapi Kredi Comm Bank of Qatar ICBC Riyad 1.0 B. of Nanjing Sberbank Ag. Bank of China Banco Santander Brasil B. do Brasil China Minsheng B. of Beijing Industrial Turkiye Vakiflar Hua Xia B. of Comm Shenzhen Dev. JSC VTB B. of China Krung Thai Shanghai Pudong OTP CITIC Shinhan Fin Chongqing Ind. Bank of Korea 0.5 KB Fin Hana

PB, 2012-14E avg

Woori Fin

Korea Exch

0.0 0.5%

1.0%

1.5% 2.0% ROA, 2012-14E avg.

2.5%

3.0%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

61

September 17, 2012

GS SUSTAIN - Financials

Exhibit 70: Return on assets (ROA) progression over time Emerging market banks
Company Al-Rajhi Bank Qatar Islamic Bank Commercial Bank of Qatar Qatar National Bank Sberbank SAMBA Housing Development Finance Corporation Credicorp Banrisul Arab National Bank Banque Saudi Fransi Saudi British Bank PKO BP Turkiye Halk Bankasi A.S. Turkiye Garanti Bankasi Bank Pekao Akbank Siam Commercial Bank (Foreign) Riyad bank Bancolombia Kasikornbank (Foreign) Yapi Kredi Banco de Chile Komercni Banka Ita Unibanco Holding (ADR) Banco Santander Chile Banco Santander Brasil (ADR) JSC VTB Bank Bangkok Bank (Foreign) HDFC Bank OTP Bank Plc China Construction Bank (H) Bank of Ayudhya (Foreign) Turkiye Isbankasi ICICI Bank Industrial and Commercial Bank of China (H) Public Bank Berhad Axis Bank Banco Bradesco (ADR) China Merchants Bank (H) Grupo Financiero Banorte China CITIC Bank (H) Turkiye Vakiflar Bankasi China Minsheng Banking (H) CIMB Group Holdings Agricultural Bank of China (H) Chongqing Rural Commercial Bank Hong Leong Bank Bank of Ningbo Malayan Banking Berhad Shinhan Financial Group Krung Thai Bank (Foreign) Banco do Brasil Bank of China (H) Bank Of Nanjing Industrial Bank Bank of Communications(H) United Overseas Bank Shanghai Pudong Development Bank Bank of Beijing RHB Capital KB Financial Group Industrial Bank of Korea DBS Group Holdings Ping An Bank Co. Oversea-Chinese Banking Corp. Hua Xia Bank Korea Exchange Bank Hana Financial Group Woori Finance Holdings Bank Central Asia Bank Rakyat Indonesia Bank Danamon Bank Mandiri Bank Negara Indonesia ROA 2001 2002 2003 2004 2005 2006 7.3% 2007 5.6% 5.3% 3.9% 2.8% 2.5% 3.5% 2.6% 2.3% 5.0% 2.9% 3.0% 3.0% 2.8% 3.0% 3.9% 2.2% 3.2% 1.3% 2.8% 2.4% 1.6% 1.4% 1.9% 1.8% 2.8% 1.9% 2.0% 2.1% 1.3% 1.4% 2.7% 1.2% -0.6% 2.2% 1.0% 1.0% 1.3% 1.1% 2.5% 1.4% 2.6% 1.0% 2.6% 0.8% 1.6% 0.9% 1.4% 1.3% 1.1% 0.5% 1.7% 1.0% 1.4% 1.2% 1.1% 1.2% 0.7% 1.1% 0.7% 1.3% 1.0% 1.0% 0.9% 1.2% 0.4% 1.3% 1.1% 0.9% 2.3% 2.7% 2.5% 1.5% 0.5% 2008 4.5% 6.0% 4.1% 2.8% 1.7% 2.7% 3.2% 1.8% 1.7% 2.3% 2.5% 2.5% 2.6% 2.2% 2.2% 2.5% 2.2% 1.6% 1.9% 2.3% 1.3% 1.8% 1.8% 1.9% 1.5% 2.2% 0.8% 0.2% 1.3% 1.4% 2.7% 1.3% 0.7% 1.7% 1.1% 1.2% 1.3% 1.2% 1.4% 1.4% 1.5% 1.1% 1.6% 0.8% 1.0% 0.8% 1.4% 1.0% 1.5% 1.3% 0.7% 1.0% 1.5% 1.0% 1.7% 1.2% 1.2% 1.0% 1.1% 1.4% 1.0% 0.8% 0.6% 0.8% 0.1% 0.9% 0.5% 0.8% 0.3% 0.8% 2.5% 2.6% 1.6% 1.6% 0.6% 2009 4.0% 3.9% 2.9% 2.6% 0.3% 2.5% 2.5% 2.2% 2.0% 2.0% 2.0% 1.6% 1.6% 2.9% 3.0% 1.8% 3.0% 1.6% 1.7% 2.0% 1.1% 2.1% 1.5% 1.6% 1.7% 2.1% 1.5% -1.7% 1.2% 1.4% 1.6% 1.3% 0.9% 2.3% 1.0% 1.2% 1.2% 1.4% 1.7% 1.0% 1.0% 0.9% 2.1% 1.0% 1.2% 0.8% 1.0% 1.2% 1.1% 0.8% 0.4% 0.8% 1.0% 1.0% 1.3% 1.1% 1.0% 1.0% 0.9% 1.2% 1.1% 0.2% 0.5% 0.8% 0.9% 1.0% 0.5% 0.9% 0.2% 0.4% 2.6% 2.6% 1.5% 1.9% 1.2% 2010 3.8% 2.7% 2.9% 2.9% 2.3% 2.4% 2.6% 2.3% 2.4% 1.7% 2.3% 1.5% 2.0% 3.0% 2.7% 1.9% 2.7% 1.7% 1.6% 2.2% 1.4% 2.8% 2.1% 1.9% 2.0% 2.2% 2.0% 1.5% 1.2% 1.5% 1.2% 1.3% 1.1% 2.4% 1.1% 1.3% 1.4% 1.5% 1.8% 1.2% 1.2% 1.1% 1.7% 1.1% 1.4% 1.0% 1.3% 1.2% 1.1% 1.2% 0.8% 0.9% 1.3% 1.1% 1.2% 1.2% 1.1% 1.3% 1.0% 1.1% 1.2% 0.0% 0.8% 0.6% 1.0% 1.0% 0.6% 1.1% 0.6% 0.4% 2.8% 3.2% 2.7% 2.2% 1.7% 2011 3.6% 2.8% 2.9% 2.8% 3.2% 2.3% 2.8% 2.4% 2.6% 1.9% 2.2% 2.2% 2.1% 2.5% 2.3% 2.0% 1.9% 1.9% 1.8% 2.0% 1.6% 1.9% 2.1% 1.3% 1.8% 1.9% 1.7% 1.6% 1.3% 1.6% 1.5% 1.5% 1.3% 1.8% 1.3% 1.4% 1.5% 1.6% 1.5% 1.4% 1.2% 1.3% 1.5% 1.4% 1.3% 1.1% 1.3% 1.0% 1.2% 1.8% 1.0% 0.9% 1.3% 1.1% 1.3% 1.2% 1.2% 1.0% 1.1% 1.1% 1.1% 0.9% 0.8% 1.0% 1.0% 0.9% 0.8% 1.7% 0.7% 3.1% 3.5% 2.6% 2.4% 2.1% 2012E 3.7% 2.6% 2.9% 2.7% 2.9% 2.4% 2.7% 2.2% 2.0% 2.0% 2.2% 2.2% 2.0% 2.4% 1.9% 1.8% 1.8% 2.0% 1.7% 1.6% 1.9% 1.7% 1.9% 1.8% 1.6% 1.8% 1.5% 1.1% 1.5% 1.7% 1.3% 1.4% 1.4% 1.6% 1.5% 1.4% 1.5% 1.6% 1.3% 1.3% 1.3% 1.2% 1.4% 1.3% 1.4% 1.2% 1.3% 1.1% 1.2% 1.1% 0.8% 1.2% 0.9% 1.1% 1.2% 1.1% 1.0% 1.1% 1.0% 1.0% 1.0% 0.8% 0.7% 0.9% 0.9% 0.9% 0.8% 0.8% 0.9% 2013E 3.7% 2.6% 2.9% 2.7% 2.4% 2.5% 2.5% 2.3% 1.9% 2.1% 2.4% 2.1% 2.2% 2.3% 1.9% 1.9% 1.9% 2.1% 1.8% 1.9% 2.0% 1.8% 1.8% 1.8% 1.8% 1.7% 1.7% 1.3% 1.6% 1.7% 1.5% 1.4% 1.6% 1.4% 1.6% 1.3% 1.5% 1.6% 1.4% 1.3% 1.6% 1.2% 1.3% 1.3% 1.4% 1.3% 1.3% 1.2% 1.1% 1.1% 0.8% 1.2% 1.0% 1.0% 1.1% 1.1% 1.0% 1.1% 1.0% 1.0% 1.0% 0.8% 0.8% 0.9% 0.9% 0.9% 0.8% 0.7% 0.6% 0.6% 2014E 3.8% 2.6% 2.9% 2.7% 2.4% 2.6% 2.5% 2.4% 2.0% 2.3% 2.6% 2.2% 2.3% 2.4% 2.0% 2.0% 1.9% 2.1% 2.0% 2.0% 2.1% 1.8% 1.7% 1.9% 2.1% 1.7% 1.9% 1.5% 1.7% 1.8% 1.9% 1.4% 1.6% 1.5% 1.6% 1.3% 1.5% 1.6% 1.5% 1.3% 1.8% 1.2% 1.3% 1.3% 1.4% 1.4% 1.2% 1.2% 1.1% 1.1% 0.7% 1.2% 1.0% 1.0% 1.1% 1.0% 1.0% 1.1% 0.9% 0.9% 0.9% 0.8% 0.8% 1.0% 0.8% 0.9% 0.8% 0.7% 0.6% 0.6% ROA, 2009ROA, 11 2012-14E 3.8% 3.7% 3.1% 2.6% 2.9% 2.9% 2.8% 2.7% 2.0% 2.6% 2.4% 2.5% 2.6% 2.6% 2.3% 2.3% 2.3% 2.0% 1.9% 2.2% 2.2% 2.4% 1.8% 2.2% 1.9% 2.2% 2.8% 2.3% 2.7% 2.0% 1.9% 1.9% 2.6% 1.9% 1.7% 2.1% 1.7% 1.8% 2.1% 1.8% 1.4% 2.0% 2.3% 1.7% 1.9% 1.8% 1.6% 1.8% 1.8% 1.8% 2.0% 1.8% 1.7% 1.7% 0.5% 1.3% 1.3% 1.6% 1.5% 1.7% 1.4% 1.6% 1.4% 1.4% 1.1% 1.5% 2.2% 1.5% 1.1% 1.6% 1.3% 1.3% 1.4% 1.5% 1.5% 1.6% 1.7% 1.4% 1.2% 1.3% 1.1% 1.5% 1.1% 1.2% 1.8% 1.4% 1.2% 1.3% 1.3% 1.4% 1.0% 1.3% 1.2% 1.3% 1.1% 1.2% 1.1% 1.2% 1.2% 1.1% 0.8% 0.8% 0.9% 1.2% 1.2% 1.0% 1.1% 1.0% 1.3% 1.1% 1.2% 1.1% 1.1% 1.0% 1.1% 1.1% 1.0% 1.0% 1.1% 1.0% 1.1% 1.0% 0.4% 0.8% 0.7% 0.8% 0.8% 0.9% 1.0% 0.9% 1.0% 0.9% 0.6% 0.8% 1.2% 0.8% 0.5% 0.7% 0.4% 0.6% 2.8% 3.1% 2.2% 2.2% 1.7%

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile

3.0% 2.7% 2.8% 2.7% 2.6% 2.8% 1.5% 2.7% 1.8% 4.9%

0.1%

-1.8% 2.9% 0.9% 1.2%

1.4% 3.7% 1.5% 1.5% 2.2% 1.9%

2.0% 3.8% 1.9% 1.6% 2.6% 1.7% 3.1% 1.3% 1.4% 1.3% 0.9% 1.4% 0.6% 1.6% 1.3% 1.7% 0.6% 1.3%

2.0% 2.1% 2.3% 2.5% 3.4% 1.8% 3.3% 1.7% -7.4% 1.7% 1.8% 3.3% 1.9% 2.3% 1.8% 1.4% 1.4% 3.4% 1.1% 1.0% 1.9% 1.4% 0.7% 1.4% 1.1% 2.9% 0.6% 2.5% 0.6% 1.9% 0.5% 0.7% 1.0% 1.2% 1.3% 1.1% 1.1% 1.3% 0.6% 0.8% 0.6% 0.7% 1.2% 0.5% 0.8% 0.4% 1.3% 0.9% 0.5% 0.1% 1.0% 0.4% 3.1% 1.0% 1.1% 2.4% 3.3% 3.2% 0.2% 1.0%

0.1%

2.4%

1.8% 0.0%

0.5% 1.5% -0.6%

0.5% 1.5% 0.5%

0.9% 1.4% 0.7% 0.6% 1.1%

1.5% 1.0% 2.0% 0.6% 1.4%

1.3% 1.1% 1.5% 0.6% 1.3%

1.6% 1.1% 1.4% 0.5% 1.1%

0.5% 1.1% 0.6% -0.4%

0.7% 1.2% 1.1% 0.8%

0.8% 1.3% 1.3% 0.3% 0.8% 1.4% 1.6% 0.5% 1.1% 0.4% -0.5% 0.3% 0.7% 1.1% -0.4% 0.7% 0.0% 1.9% 3.1% 0.6%

0.7% 0.8% 1.4% 0.7% 1.0% 1.2% 0.5% 0.2% 1.2% 0.6% 0.2% 0.5% 1.2% 0.2% 1.1% 0.4% 0.8% 1.6% 1.0% 2.3% 3.6% 4.3% 2.1% 2.3%

2.8% 4.5% 2.6% 1.9% 2.4% 3.4% 4.1% 4.2% 2.2% 2.8% 2.5% 2.7% 2.9% 1.1% 3.3% 2.5% 1.5% 1.2% 1.6% 1.7% 3.0% 2.0% 1.7% 2.5% 1.4% 1.4% 3.0% 0.9% 0.3% 1.6% 1.2% 0.7% 1.3% 1.1% 2.7% 0.8% 2.8% 0.6% 2.2% 0.6% 1.1% 0.9% 1.3% 1.3% 1.0% 1.2% 1.3% 0.9% 1.1% 0.7% 0.8% 1.6% 0.5% 0.8% 0.5% 1.3% 1.1% 1.2% 0.6% 1.4% 0.4% 1.5% 1.0% 1.1% 2.6% 3.1% 1.8% 0.9% 1.2%

1.0% 0.5% 0.8% 0.7% 1.1% 0.5% 0.5% 3.1%

1.0% 0.3% 0.8% 0.9% 0.7% 0.8% 0.2% 0.7% 1.0% 2.3% 1.9%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

62

September 17, 2012

GS SUSTAIN - Financials

Exhibit 71: Emerging market banks ROA percentile vs. industry positioning percentile
Al-Rajhi Commercial Bank of Qatar Qatar National Qatar Islamic HDF Corp

100% 90% 80% 70%

ROA percentile, 2012-14E

Banque Saudi Fransi

SAMBA Saudi British Bank Turkiye Halk

Sberbank Credicorp PKO BP Bank Pekao

Turkiye Garanti Akbank Bancolombia Riyad bank

Arab National Siam Commercial Kasikornbank Banrisul

Yapi Kredi Bangkok Bank Axis Bank ICICI Bank of Ayudhya Grupo Financiero Banorte Turkiye Isbankasi 50% Banco Bradesco Public Bank Berhad CIMB CCB Turkiye Vakiflar China Minsheng 40% ICBC China Merchants Bank JSC VTB Bank Agri. Bank of China Chongqing Rural China CITIC Hong Leong Krung Thai Bank 30% Malayan Banking Bank Of Nanjing Bank of Ningbo United Overseas Bank Industrial Bank Bank of China Bank of Communications 20% Shanghai Pudong Dev Bank RHB Capital Banco do Brasil Oversea-Chinese Banking Bank of Beijing DBS 10% Ping An Bank KB Fin Hua Xia Bank Shinhan Fin Hana Fin Industrial Bank of Korea Korea Exchange Bank Woori Finance 0%

60%

Komercni Banka Ita Unibanco Banco de Chile Santander Chile HDFC OTP Bank Santander Brasil

0%

10%

20%

30%

40% 50% 60% Industry positioning percentile

70%

80%

90%

100%

Source: Company Data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

63

September 17, 2012

GS SUSTAIN - Financials

Exhibit 72: Changes in industry positioning Emerging market banks Change in industry positioning scores since previously published performance, by company, as percentile ranking relative to peers

100%
Bank Pekao

Komercni Banka PKO BP Grupo Financiero Banorte Banco de Chile OTP Bank United Overseas Bank Ita Unibanco Banco do Brasil

90%
Sberbank HDFC Credicorp

80%

Current Industry positioning percentile

70%

China Merchants Bank Turkiye Halk Agri. Bank of China Korea Exchange Bank KB Fin ICBC Yapi Kredi Shanghai Pudong Turkiye Vakiflar Hua Xia Akbank Industrial Bank of Korea Oversea-Chinese Banking Bank of China DBS Banco Bradesco

60%

50%

40%

30% 20% Woori Finance

Shinhan Fin Bank of Beijing

HDF Corp Turkiye Isbankasi Turkiye Garanti China Minsheng Banking Industrial Bank Axis Bank Bancolombia CCB Bank of Communications

10%

JSC VTB Bank Bank of Ningbo China CITIC

Ping An Bank ICICI

0% 0% 10%

20%

30% 40% 50% 60% 70% Previous reported Industry positioning percentile

80%

90%

100%

Source: Company data, Goldman Sachs Research, Gao Hua Securities.

Goldman Sachs Global Investment Research

64

September 17, 2012

GS SUSTAIN - Financials

Reflecting our assessment of the main structural drivers for the industry, which we identify in conjunction with our sector analysts, we assess companies performance on key elements of strategic positioning. This analysis enables us to differentiate between companies that are well and poorly competitively positioned over the long term. Exhibit 73: Industry positioning: Objective, quantifiable measures of strategic positioning Emerging market banks
Measure Indebtednessofeconomiesto whichexposed Degreeofconsolidationinend markets Marketstructure Stateownershipofbankingassets Statecontrolledlendersmayhaveincentivestolendatratesat ProportionofcommercialbankingassetscontrolledbyState inendmarkets whichprivateinstitutionscannotgeneratesufficientreturns (2011) Exposuretohighreturn,low volatilitybusinessareas Proportionofloansbackedby deposits Funding Relianceonwholesalefunding Morevolatile,higherriskactivitiesarelikelytofacethemost stringentregulation Weightedaverageexposuretoattractive(ranked15on combinationoflevelandstandarddeviationofglobalsegment ROE)businesslines Totalloans/totalassets(2012E) Rationale Blurringofsovereignandprivatesectorbalancesheetshas heightenedfinancialsectorrisksinheavilyindebtedcountries Calculation

Countryrisk

Weightedaveragecountryindebtedness(debt/GDP)(2012E)

Consolidatedmarkettypicallyprovidesgreaterpriceandreturn Weightedaverageshareoffivelargestcommercialbanks acrossendcountryexposures(2011) discipline

Businessmix

Accesstostable,depositbackedfunding(andabilitytoattract additionaldeposits)willbekeytofundinggrowthascapital requirementsriseandwholesalefundingshrinks

(Liabilitiesdeposits)/Liabilities(mostrecentreported)

Capitalposition

Strengthofcapitalbase

Bettercapitalisedinstitutionsembodylessearningsleverageto creditcycleandreduceriskofshareholderdilutionthrough Totalassets/totalequity capitalraising

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

65

September 17, 2012

GS SUSTAIN - Financials

Exhibit 74: Changes in management quality Emerging market banks Change in ESG scores since previously published performance, by company, as % of maximum score possible for each company

70%
Ita Unibanco Holding (ADR): 75%, 76% Shinhan Financial

65%
Bancolombia Banco Bradesco Banco do Brasil China Merchants Bank

60%

Akbank Bank Pekao

2010/11 Overall ESG %

55%
ICICI Bank Axis Bank

HDF Corp OCBC DBS Group

ICBC OTP Bank Plc CCB Bank of China Bank Mandiri Yapi Kredi Komercni Banka China Minsheng Turkiye Garanti Shanghai Pudong Dev. Grupo Financiero Banorte Woori Finance Bank of Communications JSC VTB Banco de Chile 45% Industrial Bank KB Financial Group Bank of Ningbo Sberbank Bank of Beijing Turkiye Isbankasi China CITIC UOB Hua Xia PKO BP Ind. Bank of Korea Turkiye Vakiflar HDFC Bank

50%

40%

Agri. Bank of China

BBCA Turkiye Halk

Korea Exchange

35%

Credicorp

Bank Rakyat Indonesia

30% 30%

35%

40%

45% 50% 55% Previous reported overall ESG %

60%

65%

70%

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

66

September 17, 2012

GS SUSTAIN - Financials

Developed Market Banks

Goldman Sachs Global Investment Research

67

September 17, 2012

GS SUSTAIN - Financials

Industry roadmap: Key trends and drivers of performance

Exhibit 75 summarises the key structural shifts we have identified for the global banks industry, and the measures that we use to identify those companies we believe are best placed to sustain industry leadership against this backdrop of change. Exhibit 75: Industry roadmap Developed market banks
Debt/capital imbalances across developed & emerging economies Costs of capital becoming increasingly divergent between developed and developing banks and across funding models

Emerging market consumption growth

Increased regulation

Consolidation

Themes

Emerging markets offer sustainable growth due to rising wealth and financial intermediation

Developed markets need to rebuild depleted wealth

Governments have increased their ownership in financial institutions

Regulators may become more proactive and could influence future returns

Industry consolidation is likely to continue opportunistically

Drivers of corporate performance

Management quality

Industry positioning

Return on capital

Balance sheet strength

GS SUSTAIN

ESG Environmental, social and governance issues

Regional growth

Regional market structure

Regulatory exposure

ROA Return on assets

Capital, leverage and funding mix

Banks

High potential growth markets -Trend in banking asset growth in end markets

Attractive market structure - State ownership and market concentration of end markets

Attractive business mix - Exposure to low volatility, low capital intensity businesses

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

68

September 17, 2012

GS SUSTAIN - Financials

We identify Firstrand, BBVA, Hang Seng Bank, Commonwealth Bank, Standard Chartered, HSBC and Julius Baer Group as industry leaders on each of: (1) return on capital (ROA), (2) industry positioning and (3) management quality (as measured by environmental, social and governance (ESG) performance above the sector median). Exhibit 76: Winners circle Developed market banks
Management of ESG issues
Natixis Barclays Societe Generale Shizuoka Bank Credit Suisse UBI Banca RBS Commerzbank Danske Bank Resona Holdings Credit Agricole Macquarie BNP Paribas DBS OCBC Citi DnB Standard ANZ KBC N. Bank of Aus Deutsche Bank SEB Banesto Nedbank Sabadell Erste Banco Popular First Financial Holdings

Industry positioning

Raiffeisen N. Bank of Greece Unicredit Svenska Handelsbanken Swedbank Westpac Firstrand BBVA

Morgan Stanley Lloyds Banking Group Intesa Sanpaolo UBS

ABSA Group J.P. Morgan Chase State Street

Hang Seng Bank Commonwealth Bank Standard Chartered HSBC

United Overseas Bank Emirates NBD Chinatrust First Gulf Mega Financial

Mitsubishi UFJ

Northern Trust

National Bank of Kuwait

Bank of America Nordea

Bank of New York Mellon U.S. Bancorp Wells Fargo

Julius Baer Group

Abu Dhabi Commercial Bank Bank of East Asia National Bank of Abu Dhabi BOC Hong Kong

PNC Financial Services

Kuwait Finance House

Management of ESG issues ESG (based on 2010 data) above sector median Industry positioning: leaders on a combination of: Country growth Country risk Attractive market structure Favourable business mix Sound funding & capital base Returns ROA (2012-14E) above sector median Balance sheet strength Capital, leverage and funding above bottom sector quintile Note: Bank of Yokohama, Chiba Bank, Sumitomo Mitsui Financial Group, Mizuho Financial Group, Sumitomo Mitsui Trust Holdings scored below median on all three metrics.
Source: Company data, Goldman Sachs Research estimates.
Aozora Bank

Returns

Goldman Sachs Global Investment Research

69

September 17, 2012

GS SUSTAIN - Financials

Exhibit 77: Winners table Developed market banks

Return on capital ROA
change vs 2009-11 in ppts 0.3% 0.2% 0.1% 0.4% 0.4% 0.5% -0.3% 0.4% 0.7% 0.0% 0.3% 0.2% -0.1% 0.0% 0.0% 0.4% 0.2% 0.1% 0.4% 0.1% -0.1% 0.0% 0.2% -0.1% 0.1% 0.2% 0.0% 1.7% 0.1% 0.2% 0.0% 0.2% -0.3% 0.5% 0.2% 0.5% -0.2% -0.1% 0.0% 0.1% 0.0% -0.1% 0.2% 0.1% 0.2% 0.0% 0.0% 0.3% 0.1% 0.1% 0.1% 0.1% 0.1% 0.2% 0.8% 0.1% 0.1% 0.3% 0.3% 0.1% 0.3% 0.1% 0.2% 0.2% 0.2% 0.1% 0.1% 0.2% 0.0% 0.3% 0.2% -0.2% 0.0% -0.2% -0.6%

Industry positioning Country risk

Weighted avg country indebtedness (Debt/GDP 2012E) 92% 96% 98% 181% 231% 229% 197% 114% 91% 181% 181% 182% 188% 231% 100% 93% 145% 145% 141% 140% 141% 209% 118% 106% 209% 209% 136% 326% 155% 140% 190% 166% 201% 134% 103% 179% 202% 179% 136% 146% 49% 188% 105% 133% 326% 150% 193% 216% 191% 326% 142% 158% 146% 208% 216% 326% 326% 289% 304% 190% 301% 132% 190% 164% 326% 144% 155% 155% 169% 218% 118% 227% 154% 227% 230%

Management quality Funding

Wholesale funding % ((liabilities deposits) / liabilities) 21% 39% 32% 38% 28% 24% 12% 17% 27% 35% 10% 30% 19% 21% 16% 26% 18% 37% 16% 25% 27% nm 18% 19% nm 40% 33% 36% 26% 32% 47% 20% nm 65% 40% 8% 44% 9% 58% 67% 50% nm 38% 55% 16% 68% 69% 53% 75% 17% 14% 69% 46% nm 44% 9% 8% 36% 37% 58% 49% 25% 71% 66% 34% 40% 32% 59% nm 37% 39% 37% 61% 48% 51%

Company
2012-14E First Gulf Bank National Bank of Kuwait National Bank of Abu Dhabi Firstrand Ltd U.S. Bancorp Wells Fargo & Company Hang Seng Bank Kuwait Finance House Abu Dhabi Commercial Bank ABSA Group Limited Nedbank Group Ltd Standard Bank Group BOC Hong Kong (Holdings) PNC Financial Services United Overseas Bank Emirates NBD ANZ Banking Group Limited Westpac Banking Corp. Chinatrust Financial Holdings Commonwealth Bank of Australia Julius Baer Group State Street Corp. DBS Group Holdings Oversea-Chinese Banking Corp. Northern Trust Corp. J.P. Morgan Chase & Co. Standard Chartered Aozora Bank National Australia Bank Mega Financial Holdings BBVA HSBC Bank of New York Mellon Corp. Swedbank KBC Group NV Citigroup Inc. Banco Santander Bank of East Asia DNB Svenska Handelsbanken Raiffeisen Bank International Macquarie Group Limited Erste Bank SEB Shizuoka Bank Nordea Credit Suisse Bank of America Corporation UBS Resona Holdings First Financial Holdings BNP Paribas Intesa Sanpaolo Morgan Stanley & Co. Lloyds Banking Group Plc Bank of Yokohama Chiba Bank Mitsubishi UFJ Financial Group Sumitomo Mitsui Financial Group Barclays plc Mizuho Financial Group UniCredit Danske Bank Natixis Sumitomo Mitsui Trust Holdings Societe Generale UBI Banca Commerzbank AG Deutsche Bank Royal Bank of Scotland National Bank of Greece Banco Sabadell Credit Agricole SA Banesto Banco Popular Espanol 2.5% 2.4% 1.7% 1.7% 1.6% 1.5% 1.5% 1.2% 1.2% 1.2% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.6% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.0% -0.1% 2009-11 2.2% 2.3% 1.6% 1.2% 1.2% 1.0% 1.7% 0.9% 0.5% 1.2% 0.9% 0.9% 1.2% 1.1% 1.1% 0.7% 0.9% 1.0% 0.6% 0.9% 1.0% 1.0% 0.8% 1.0% 0.8% 0.7% 0.8% -0.9% 0.7% 0.6% 0.7% 0.5% 1.1% 0.2% 0.5% 0.2% 0.8% 0.7% 0.6% 0.5% 0.5% 0.6% 0.3% 0.4% 0.3% 0.5% 0.4% 0.1% 0.3% 0.3% 0.3% 0.3% 0.3% 0.2% -0.4% 0.2% 0.3% 0.1% 0.1% 0.2% 0.0% 0.2% 0.1% 0.1% 0.0% 0.2% 0.2% 0.0% 0.2% -0.1% -0.1% 0.3% 0.1% 0.3% 0.5%

Market structure

Business mix

Overall Industry Positioning

Percentile 66% 27% 49% 41% 43% 53% 95% 77% 45% 39% 76% 69% 91% 55% 84% 51% 72% 23% 99% 47% 85% 58% 80% 78% 58% 68% 70% 54% 57% 65% 22% 82% 100% 4% 38% 96% 24% 97% 7% 1% 20% 58% 36% 11% 81% 3% 42% 14% 34% 89% 86% 8% 15% 58% 18% 92% 93% 74% 73% 19% 46% 35% 0% 5% 64% 28% 32% 12% 88% 50% 31% 26% 30% 16% 9% Percentile 80% 54% 69% 70% 4% 27% 77% 86% 62% 43% 81% 73% 84% 15% 99% 59% 97% 65% 89% 82% 61% 16% 100% 92% 12% 26% 68% 22% 74% 93% 76% 66% 39% 72% 85% 51% 55% 96% 58% 62% 91% 24% 95% 35% 42% 31% 7% 0% 1% 46% 78% 5% 34% 8% 23% 50% 45% 38% 32% 18% 9% 49% 41% 3% 20% 28% 19% 11% 36% 14% 88% 57% 30% 53% 47% Score as a % of maximum (2010/11) 43% 42% 51% 67% 67% 87% 76% 49% 41% 61% 75% 73% 48% 74% 43% 39% 88% 89% 31% 84% 59% 74% 53% 53% 76% 83% 77% 50% 84% 36% 74% 84% 77% 73% 63% 78% 64% 43% 75% 52% 62% 69% 63% 64% 52% 64% 76% 76% 84% 53% 30% 73% 73% 76% 73% 40% 42% 66% 48% 75% 51% 70% 58% 60% 48% 63% 68% 62% 80% 70% 68% 62% 68% 62% 62%

ESG

Percentile 100% 99% 97% 96% 95% 93% 92% 91% 89% 88% 86% 85% 84% 82% 81% 80% 78% 77% 76% 74% 73% 72% 70% 69% 68% 66% 65% 64% 62% 61% 59% 58% 57% 55% 54% 53% 51% 50% 49% 47% 46% 45% 43% 42% 41% 39% 38% 36% 35% 34% 32% 31% 30% 28% 27% 26% 24% 23% 22% 20% 19% 18% 16% 15% 14% 12% 11% 9% 8% 7% 5% 4% 3% 1% 0%

Total assets / total equity 7 6 11 13 10 9 13 9 10 13 13 13 13 8 10 9 15 15 13 13 13 10 10 10 13 12 13 9 18 13 15 13 8 18 26 11 15 12 17 25 13 13 13 21 13 25 13 10 13 24 17 13 13 13 21 16 17 19 19 24 24 13 28 13 63 13 13 25 38 13 13 17 13 21 16

Percentile 99% 100% 80% 68% 88% 91% 70% 93% 83% 68% 68% 68% 37% 97% 84% 92% 31% 33% 72% 41% 68% 85% 89% 81% 39% 76% 68% 95% 22% 74% 35% 68% 96% 20% 4% 78% 34% 77% 23% 8% 68% 38% 68% 14% 69% 7% 68% 87% 68% 11% 24% 68% 68% 73% 15% 30% 27% 19% 18% 12% 10% 68% 3% 68% 0% 68% 68% 6% 1% 68% 68% 26% 68% 16% 28%

Percentile 97% 95% 93% 47% 14% 16% 33% 87% 99% 46% 45% 43% 41% 14% 92% 96% 66% 68% 72% 74% 73% 27% 84% 88% 24% 27% 78% 7% 57% 76% 38% 53% 31% 80% 91% 49% 30% 50% 77% 64% 100% 42% 89% 81% 7% 62% 34% 22% 35% 7% 70% 56% 65% 28% 23% 7% 7% 11% 8% 37% 10% 83% 39% 54% 7% 69% 58% 60% 51% 20% 85% 19% 61% 18% 15%

Weighted avg. consolidation 45% 46% 48% 80% 37% 38% 90% 56% 44% 80% 80% 81% 93% 37% 86% 45% 66% 62% 71% 62% 74% 45% 94% 85% 48% 45% 71% 65% 64% 72% 86% 73% 48% 95% 97% 56% 87% 88% 91% 97% 69% 63% 68% 90% 65% 90% 56% 42% 66% 65% 70% 56% 47% 46% 83% 65% 65% 65% 65% 74% 65% 60% 85% 57% 65% 56% 46% 74% 71% 75% 88% 98% 64% 99% 99%

Weighted avg. state ownership 63% 62% 58% 12% 36% 36% 8% 45% 63% 12% 12% 12% 14% 36% 13% 62% 4% 0% 28% 2% 23% 33% 8% 11% 31% 33% 29% 4% 5% 27% 10% 30% 32% 6% 4% 29% 20% 26% 15% 7% 13% 16% 4% 14% 4% 6% 30% 34% 26% 4% 28% 8% 10% 33% 31% 4% 4% 11% 8% 31% 9% 18% 3% 17% 4% 8% 10% 29% 18% 32% 18% 1% 12% 1% 2%

Percentile 1% 9% 11% 62% 3% 7% 88% 16% 0% 61% 62% 69% 85% 3% 68% 5% 78% 66% 39% 65% 49% 12% 91% 81% 19% 12% 31% 70% 55% 42% 86% 35% 18% 95% 96% 22% 58% 57% 80% 93% 50% 27% 81% 81% 70% 89% 20% 8% 30% 70% 34% 45% 28% 15% 42% 70% 70% 53% 53% 35% 51% 23% 92% 24% 70% 45% 26% 41% 47% 31% 59% 97% 38% 100% 99%

Ranked business mix score (Rank 1-4) 3.4 3.1 3.0 3.0 2.9 3.4 2.7 3.3 3.0 2.2 3.1 2.7 2.6 3.3 3.2 2.9 3.5 3.4 3.0 3.6 2.0 2.4 3.1 2.9 2.4 2.7 2.3 3.0 3.6 3.4 3.8 2.9 2.4 3.5 3.3 2.4 3.8 3.3 3.2 3.8 3.4 1.9 3.7 2.4 3.3 2.9 1.7 2.4 1.8 3.5 2.9 2.7 3.5 1.4 3.3 3.5 3.4 3.3 3.2 2.6 3.0 3.3 3.1 2.7 2.9 2.9 3.3 2.9 1.7 2.6 3.7 3.8 3.0 3.6 3.8

Percentile 76% 55% 49% 47% 35% 77% 24% 69% 46% 8% 53% 27% 19% 62% 59% 39% 86% 80% 42% 88% 7% 18% 54% 32% 15% 28% 9% 50% 91% 74% 97% 36% 12% 81% 68% 16% 96% 70% 58% 99% 78% 5% 93% 14% 72% 38% 1% 11% 4% 82% 31% 23% 85% 0% 61% 84% 73% 66% 57% 20% 45% 65% 51% 26% 41% 30% 64% 34% 3% 22% 92% 95% 43% 89% 99%

Loans/ deposits (2012E) 103% 125% 109% 110% 123% 118% 69% 92% 118% 123% 103% 88% 61% 117% 84% 115% 108% 158% 59% 121% 48% 100% 84% 87% 100% 67% 79% 95% 106% 89% 134% 77% 35% 216% 108% 74% 124% 69% 185% 247% 128% 100% 116% 151% 85% 183% 75% 132% 78% 73% 80% 128% 144% 100% 143% 78% 77% 65% 72% 124% 78% 154% 225% 178% 90% 122% 134% 126% 74% 95% 119% 141% 100% 134% 160%

Change vs last report New New -3% -1% 2% 10% 3% New New 2% -1% -4% 4% 13% -9% -3% 7% 8% New 12% -7% -2% -1% 0% 3% 5% -2% New 11% 0% -3% 2% 3% 13% 2% 1% -3% 0% 2% 1% 11% 5% 6% 3% New -1% 4% 7% 10% 4% New 1% 9% 11% 8% New New 5% 5% 3% -1% 2% -5% 9% 14% 1% 10% 9% 10% 4% 11% 0% 0% -2% -5%

Percentile (2010/11) 21% 18% 47% 75% 75% 99% 88% 42% 14% 63% 86% 81% 37% 84% 21% 7% 99% 100% 1% 96% 60% 84% 53% 53% 88% 95% 92% 45% 96% 3% 84% 96% 92% 81% 69% 94% 72% 21% 86% 51% 64% 79% 69% 72% 51% 72% 88% 88% 96% 53% 0% 81% 81% 88% 81% 10% 18% 74% 37% 86% 47% 79% 60% 61% 37% 69% 77% 64% 95% 79% 77% 64% 77% 64% 64%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

70

September 17, 2012

GS SUSTAIN - Financials

Exhibit 78: Developed market banks P/B vs. ROA (2012-14E avg.)

2.0

1.8

BOC Hong Kong US Bancorp

1.6

Westpac

Standard Bank

-0.5%

Nedbank Grp ANZ Julius Baer ABSA Grp Northern Trust 1.4 Kuwait Fin NAB Svenska Handelsbanken Standard Chartered 1.2 Swedbank Mega Fin N. Bank of Abu Dhabi Chinatrust Wells Fargo Bank of East Asia First Fin 1.0 Nordea State Street Resona SEB HSBC PNC Fin. Svcs Macquarie Abu Dhabi Comm. 0.8 Shizuoka DnB Santander BNY Mellon Sumitomo Mitsui Fin Mizuho Aozora UBS JP Morgan Chiba B. of Yokohama Danske 0.6 Raiffeisen BBVA Sumitomo Mitsui Trust Credit Suisse Mitsubishi UFJ BNP Paribas Erste KBC Lloyds Morgan Stanley Emirates NBD Citigroup 0.4 Deutsche Barclays Sabadell Intesa Sanpaolo Banco Popular Espanol RBS Natixis BofA Banesto Soc Gen Commerzbank UniCredit 0.2 UBI Banca

PB, 2012-14E avg

0.0%

0.5% 1.0% ROA, 2012-14E avg.

1.5%

2.0%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

71

September 17, 2012

GS SUSTAIN - Financials

Exhibit 79: Return on assets (ROA) progression over time Developed market banks
Company First Gulf Bank National Bank of Kuwait Firstrand Ltd National Bank of Abu Dhabi Hang Seng Bank U.S. Bancorp ABSA Group Limited Emirates NBD Wells Fargo & Company Abu Dhabi Commercial Bank Standard Bank Group PNC Financial Services Julius Baer Group Nedbank Group Ltd Kuwait Finance House Commonwealth Bank of Australia ANZ Banking Group Limited State Street Corp. BBVA Westpac Banking Corp. Chinatrust Financial Holdings Bank of New York Mellon Corp. National Australia Bank KBC Group NV Standard Chartered Northern Trust Corp. Banco Santander Aozora Bank J.P. Morgan Chase & Co. HSBC BOC Hong Kong (Holdings) DnB ASA Mega Financial Holdings Citigroup Inc. Swedbank Macquarie Group Limited Erste Bank Morgan Stanley & Co. Banco Popular Espanol Svenska Handelsbanken Bank of East Asia Raiffeisen Bank International SEB Lloyds Banking Group Plc Intesa Sanpaolo BNP Paribas UBS Nordea Banco Sabadell Credit Suisse Shizuoka Bank Bank of America Corporation Resona Holdings Sumitomo Mitsui Trust Holdings First Financial Holdings Chiba Bank Societe Generale Banesto Bank of Yokohama Mitsubishi UFJ Financial Group Danske Bank UniCredit UBI Banca Sumitomo Mitsui Financial Group Barclays plc Natixis Royal Bank of Scotland Deutsche Bank Commerzbank AG Credit Agricole SA Mizuho Financial Group National Bank of Greece ROA 2001 2002 2003 2.0% 1.9% 1.9% 2.1% 1.8% 1.3% 1.6% 0.1% 2004 2.4% 2.3% 2.1% 2.2% 2.5% 1.8% 2.4% 1.2% 1.7% 0.7% 2005 5.4% 3.7% 2.2% 2.3% 2.8% 1.7% 4.0% 1.4% 1.6% 0.9% 2006 3.0% 3.6% 2.3% 2.0% 2.3% 2.1% 1.8% 3.0% 1.2% 1.6% 1.2% 2.9% 1.1% -0.7% 2.1% 0.9% 1.1% 2.2% 1.1% 0.9% 1.6% 0.7% 1.3% 0.6% 0.7% 1.3% 0.8% 0.8% 0.5% 0.5% 0.7% 0.4% 1.6% 1.0% 0.7% 0.7% 0.5% 0.6% 0.6% 0.6% 1.2% 0.6% 0.7% 0.4% 0.5% 0.8% 0.4% 0.3% 0.4% 0.4% 1.3% 2007 2.5% 2.8% 1.5% 2.1% 2.6% 2.2% 1.7% 1.7% 1.6% 2.4% 1.2% 1.6% 1.4% 3.6% 1.1% 1.1% 1.3% 1.3% 1.0% 0.7% 1.7% 0.8% 0.9% 1.0% 1.3% 1.0% 1.3% 1.1% 0.8% 1.5% 0.9% 0.8% 0.2% 0.8% 1.2% 0.6% 0.3% 1.2% 0.6% 1.2% 0.6% 0.8% 0.8% 0.4% -0.3% 0.8% 0.9% 0.7% 0.4% 1.0% 1.7% 0.6% 0.8% 0.5% 0.7% 0.7% 0.6% 0.5% 0.5% 0.7% 0.7% 0.4% 0.4% 0.2% 0.6% 0.0% 0.2% 0.2% 0.4% 1.9% 2008 2.2% 2.2% 1.2% 1.9% 1.9% 1.2% 1.4% 1.4% 0.5% 1.4% 1.0% 0.6% 1.1% 1.6% 1.0% 0.7% 1.5% 1.0% 0.9% 0.8% 1.7% 0.6% 0.6% 0.8% 0.8% 0.9% 0.1% 0.3% 0.6% 0.3% 0.6% 0.0% -1.4% 0.6% 1.2% 0.4% 0.2% 0.7% 0.6% 0.0% 1.2% 0.4% -0.6% 0.6% 0.1% -0.9% 0.6% 0.4% -0.7% 0.4% 0.1% 0.8% 0.4% 0.4% 0.5% 0.2% 0.7% 0.6% 0.3% 0.0% 0.6% 0.4% 0.4% 0.0% -0.5% -0.7% -0.2% 0.1% 0.0% 0.2% 1.7% 2009 2.2% 2.1% 0.8% 1.6% 1.7% 0.7% 1.2% 1.2% 0.9% 0.1% 0.8% 1.0% 1.1% 0.8% 1.1% 0.8% 0.7% 0.9% 0.8% 0.9% 0.1% 1.1% 0.6% 0.5% 0.8% 0.9% 0.9% -3.6% 0.4% 0.4% 1.2% 0.5% 0.6% -0.5% -0.6% 0.6% 0.4% -0.2% 0.6% 0.5% 0.6% 0.2% 0.1% -1.1% 0.4% 0.3% 0.0% 0.5% 0.5% 0.7% 0.1% -0.1% 0.3% -0.2% 0.1% 0.1% 0.0% 0.5% 0.1% -0.1% 0.1% 0.2% 0.2% -0.3% 0.1% -0.3% -0.3% 0.2% -0.4% 0.1% -0.4% 0.9% 2010 2.1% 2.3% 1.5% 1.7% 1.7% 1.2% 1.1% 0.7% 0.9% 0.4% 0.9% 1.1% 1.1% 0.8% 0.9% 1.0% 1.0% 1.1% 0.8% 1.0% 0.7% 1.2% 0.7% 0.5% 0.9% 0.8% 0.8% 0.1% 0.8% 0.6% 1.1% 0.7% 0.6% 0.6% 0.4% 0.7% 0.4% 0.5% 0.4% 0.5% 0.8% 0.9% 0.4% -0.2% 0.4% 0.4% 0.6% 0.5% 0.3% 0.5% 0.4% 0.4% 0.3% 0.3% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.1% 0.3% 0.1% 0.2% 0.2% 0.3% 0.0% 0.3% 0.1% 0.2% 0.2% 0.4% 2011 2.3% 2.3% 1.5% 1.5% 1.8% 1.6% 1.3% 0.2% 1.2% 1.0% 1.0% 1.1% 0.9% 1.0% 0.6% 1.0% 1.0% 1.0% 0.5% 1.0% 0.9% 0.9% 0.8% 0.4% 0.9% 0.6% 0.8% 0.7% 0.8% 0.6% 1.2% 0.7% 0.7% 0.6% 0.7% 0.6% 0.2% 0.3% 0.4% 0.5% 0.7% 0.5% 0.5% 0.0% 0.2% 0.3% 0.3% 0.4% 0.1% 0.2% 0.4% 0.1% 0.4% 0.1% 0.4% 0.4% 0.2% 0.0% 0.4% 0.3% 0.1% 0.1% 0.1% 0.4% 0.2% 0.3% 0.0% 0.2% 0.3% 0.0% 0.3% -1.5% 2012E 2.4% 2.3% 1.6% 1.6% 1.6% 1.6% 1.1% 0.9% 1.4% 1.1% 1.0% 1.1% 0.9% 1.1% 1.0% 1.0% 1.0% 0.9% 0.3% 1.0% 0.9% 0.7% 0.7% 0.6% 0.8% 0.7% 0.4% 0.9% 0.8% 0.7% 1.1% 0.5% 0.8% 0.6% 0.7% 0.5% 0.3% 0.2% -0.5% 0.5% 0.8% 0.5% 0.5% 0.2% 0.3% 0.4% 0.4% 0.4% -0.4% 0.4% 0.4% 0.3% 0.6% 0.1% 0.4% 0.4% 0.2% -0.7% 0.4% 0.5% 0.1% 0.2% 0.2% 0.4% 0.3% 0.2% 0.1% 0.2% 0.2% 0.1% 0.3% -0.2% 2013E 2.5% 2.4% 1.7% 1.7% 1.4% 1.5% 1.2% 1.1% 1.5% 1.2% 1.1% 1.1% 1.0% 1.1% 1.3% 1.0% 1.1% 0.9% 1.0% 1.0% 1.0% 0.8% 0.8% 0.7% 0.8% 0.9% 0.7% 0.7% 0.8% 0.7% 1.1% 0.6% 0.8% 0.7% 0.7% 0.5% 0.5% 0.5% -0.4% 0.6% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.5% 0.5% 0.3% 0.5% 0.6% 0.4% 0.4% 0.3% 0.4% 0.4% 0.3% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2% 0.3% 0.3% 2014E 2.5% 2.5% 1.7% 1.8% 1.4% 1.6% 1.2% 1.3% 1.5% 1.4% 1.2% 1.1% 1.0% 1.2% 1.4% 1.0% 1.1% 1.0% 1.0% 1.0% 1.1% 0.7% 0.8% 0.7% 0.8% 1.0% 0.8% 0.8% 0.8% 0.8% 1.1% 0.7% 0.8% 0.7% 0.8% 0.6% 0.7% 0.6% 0.6% 0.6% 0.5% 0.6% 0.5% 0.6% 0.5% 0.4% 0.5% 0.5% 0.5% 0.5% 0.4% 0.6% 0.4% 0.3% 0.4% 0.4% 0.3% 0.4% 0.4% 0.3% 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.2% 0.3% 0.2% 0.3% 0.4% ROA, ROA, 200911 2012-14E 2.2% 2.5% 2.3% 2.4% 1.2% 1.7% 1.6% 1.7% 1.7% 1.5% 1.2% 1.6% 1.2% 1.2% 0.7% 1.1% 1.0% 1.5% 0.5% 1.2% 0.9% 1.1% 1.1% 1.1% 1.0% 1.0% 0.9% 1.1% 0.9% 1.2% 0.9% 1.0% 0.9% 1.1% 1.0% 1.0% 0.7% 0.8% 1.0% 1.0% 0.6% 1.0% 1.1% 0.7% 0.7% 0.8% 0.5% 0.7% 0.8% 0.8% 0.8% 0.9% 0.8% 0.7% -0.9% 0.8% 0.7% 0.8% 0.5% 0.7% 1.2% 1.1% 0.6% 0.6% 0.6% 0.8% 0.2% 0.7% 0.2% 0.7% 0.6% 0.5% 0.3% 0.5% 0.2% 0.4% 0.5% -0.1% 0.5% 0.6% 0.7% 0.6% 0.5% 0.5% 0.4% 0.5% -0.4% 0.4% 0.3% 0.4% 0.3% 0.4% 0.3% 0.4% 0.5% 0.5% 0.3% 0.1% 0.4% 0.5% 0.3% 0.5% 0.1% 0.4% 0.3% 0.4% 0.0% 0.3% 0.3% 0.4% 0.3% 0.4% 0.2% 0.3% 0.3% 0.0% 0.2% 0.4% 0.1% 0.4% 0.1% 0.3% 0.2% 0.3% 0.2% 0.2% 0.1% 0.3% 0.2% 0.3% 0.1% 0.3% -0.1% 0.2% 0.2% 0.2% 0.0% 0.2% 0.1% 0.1% 0.0% 0.3% -0.1% 0.2%

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile

2.0% 0.9% 1.3% 1.1% 0.5% 2.0%

2.0% 1.9% 1.8% 1.3% 1.7% 0.9%

0.9%

1.3%

0.9% 0.7% 1.4% 0.9% 1.1% 0.8%

0.9% 1.1% 1.2% 1.1% 1.2% 0.6% 0.5% 1.1% 1.5% 1.1% -0.2%

1.0% 1.0% 1.7% 1.1% 1.2% 1.8% 0.7% 1.1% 1.7% 1.0% 1.6% 0.5% 0.6% 1.2% 0.8% 1.0% 0.5% 0.6% 0.5% 0.4% 1.5% 0.9% 0.7% 0.9% 0.4% 0.6% 0.5% -0.1% 1.0% -0.2% 0.4% 0.8% 0.3% 0.2% 0.4% 0.4% 1.5%

1.7% 0.7% 1.4%

1.1% 0.8% 1.2%

1.0% 0.3%

1.0% 0.9% -0.5%

1.1% 1.1% 1.1% -0.1%

0.8% 0.9% 1.0% 0.3% 0.5% 0.5%

0.6% 0.7% 0.7% 0.1% 0.4% 0.5% -0.9%

0.7% 1.0% 0.9% 0.4% 0.5% 0.5% 0.2% 0.2% 1.5% -3.9% -1.2% -1.7% 0.1% 0.5% 0.2% -0.4%

0.7% 1.1% 0.9% 0.7% 0.5% 0.5% 0.5% 0.3% 1.6% -4.0% 0.5% 0.7% 0.3% 0.6% 0.4% 0.1% 0.0% 0.5% 0.3% 0.6% 1.0% 0.3% 0.1% 0.4% 0.3% 1.1%

1.0%

1.4%

0.4%

0.4%

0.9% 0.8% 0.9% 0.1% 0.0% 1.1% 0.7% 1.0% 0.1% 0.0% 0.9%

0.9% 0.3% -0.4% 0.7% 1.0% 0.2% -0.2% 0.3% -1.7% 1.0%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

72

September 17, 2012

GS SUSTAIN - Financials

Exhibit 80: Developed market banks ROA percentile vs. industry positioning percentile

100%
U.S. Bancorp

National Bank of Kuwait Wells Fargo ABSA

First Gulf

90% 80% 70%

ROA percentile, 2012-14E
PNC Fin State Street Northern Trust

National Bank of Abu Dhabi Firstrand Hang Seng Abu Dhabi Comm Bank Kuwait Finance Standard Bank Nedbank Emirates NBD BOC Hong Kong Westpac Chinatrust ANZ Julius Baer Commonwealth Bank Standard Chartered National Australia Bank

J.P. Morgan Chase Aozora Bank BNY Mellon

60% 50%
Macquarie

40% 30% 20% 10%

BofA UBS

Credit Suisse BNP Paribas Lloyds

Nordea

SEB

BBVA Mega Fin HSBC Swedbank KBC Banco Santander Bank of East Asia DnB ASA Svenska Handelsbanken Raiffeisen Bank Intl Erste Bank Shizuoka Bank Citigroup Resona Bank of Yokohama Chiba Bank First Fin

Intesa Sanpaolo

Morgan Stanley Sumitomo Mitsui Mitsubishi Mizuho Fin Barclays Natixis

Commerzbank

0% 0% 10%

UniCredit Danske Bank Sumitomo Mitsui Trust Societe Generale UBI Banca Deutsche Bank Banco Sabadell RBS Credit Agricole Banesto Banco Popular Esp

National Bank of Greece

20%

30%

40% 50% 60% Industry positioning percentile

70%

80%

90%

100%

Source: Company data, Goldman Sachs Research, Gao Hua Securities.

Goldman Sachs Global Investment Research

73

September 17, 2012

GS SUSTAIN - Financials

Exhibit 81: Changes in industry positioning Developed market banks Change in industry positioning scores since previously published performance, by company, as percentile ranking relative to peers

100%
Mega Fin Erste Bank

ANZ Bank of East Asia National Bank of Greece Nedbank Commonwealth Bank Hang Seng BBVA National Australia Bank Raiffeisen Bank Standard Bank HSBC DnB Emirates NBD Firstrand Swedbank Westpac Julius Baer Banco Santander Citigroup ABSA KBC

90%

BOC Hong Kong

80%
Standard Chartered

Current Industry positioning percentile

70%

National Bank of Abu Dhabi

60%
Banco Sabadell Banesto

Svenska Handelsbanken UniCredit Resona Danske Bank

50%

Banco Popular Esp

40%

Deutsche Bank

Mitsubishi UFJ Morgan Stanley

BNY Mellon SEB Intesa Sanpaolo Nordea Credit Agricole Sumitomo Mitsui Societe Generale Macquarie

30%
Lloyds Wells Fargo RBS State Street Barclays

J.P. Morgan Chase Sumitomo Mitsui Trust

20%

UBI Banca Commerzbank

PNC Fin

10%

Mizuho Fin

0% 0% 10%

Northern Trust BNP Paribas Credit Suisse U.S. Bancorp Natixis BofA

UBS

20%

30% 40% 50% 60% 70% Previous reported Industry positioning percentile

80%

90%

100%

Source: Company data, Goldman Sachs Research, Gao Hua Securities.

Goldman Sachs Global Investment Research

74

September 17, 2012

GS SUSTAIN - Financials

Reflecting our assessment of the main structural drivers for the industry, which we identify in conjunction with our sector analysts, we assess companies performance on key elements of strategic positioning. This analysis enables us to differentiate between companies that are well and poorly competitively positioned over the long term. Exhibit 82: Industry positioning: Objective, quantifiable measures of strategic positioning Developed market banks
Measure Rateofbankingassetgrowthin endmarkets Indebtednessofeconomiesto whichexposed Degreeofconsolidationinend markets Marketstructure Stateownershipofbankingassets Statecontrolledlendersmayhaveincentivestolendatratesat Proportionofcommercialbankingassetscontrolledbystate inendmarkets whichprivateinstitutionscannotgeneratesufficientreturns (2011) Exposuretohighreturn,low volatilitybusinessareas Proportionofloansbackedby deposits Funding Relianceonwholesalefunding Morevolatile,higherriskactivitiesarelikelytofacethemost stringentregulation Weightedaverageexposuretoattractive(ranked15on combinationoflevelandstandarddeviationofglobalsegment ROE)businesslines Totalloans/totalassets(2012E) Rationale Calculation

Countrygrowth

Amongmaturebankingmarkets,exposuretomarketsinwhich Weightedaveragetrendrateofbankingassetgrowthacross demandisgrowingprovidesanoutletforgrowthandtypically endcountryexposures(201120ECAGR) lessintensecompetition Blurringofsovereignandprivatesectorbalancesheetshas heightenedfinancialsectorrisksinheavilyindebtedcountries Weightedaveragecountryindebtedness(debt/GDP)(2012E)

Countryrisk

Consolidatedmarkettypicallyprovidesgreaterpriceandreturn Weightedaverageshareoffivelargestcommercialbanks discipline acrossendcountryexposures(2011)

Businessmix

Accesstostable,depositbackedfunding(andabilitytoattract additionaldeposits)willbekeytofundinggrowthascapital requirementsriseandwholesalefundingshrinks

(Liabilitiesdeposits)/Liabilities(mostrecentreported)

Capitalposition

Strengthofcapitalbase

Bettercapitalisedinstitutionsembodylessearningsleverageto creditcycleandreduceriskofshareholderdilutionthrough Totalassets/totalequity capitalraising

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

75

Countriesrankedinorderofmarketgrowth potential Russia India China Indonesia Mexico Malaysia Turkey Singapore Brazil Korea HongKong UnitedKingdom Australia UnitedStates Germany Japan Russia India China Indonesia Mexico Malaysia Turkey Singapore Brazil Korea HongKong UnitedKingdom Australia UnitedStates Germany Japan RaiffeisenBankInternational MegaFinancialHoldings ### ### ChinatrustFinancialHoldings FirstFinancialHoldings ### BankofEastAsia StandardChartered BOCHongKong(Holdings) StandardBankGroup NedbankGroupLtd ABSAGroupLimited FirstrandLtd ### AbuDhabiCommercialBank KuwaitFinanceHouse NationalBankofAbuDhabi FirstGulfBank EmiratesNBD NationalBankofKuwait HangSengBank HSBC CitigroupInc. BBVA Barclaysplc ANZBank NationalBankofGreece ErsteBank BankofNewYorkMellonCorp. CreditSuisse ### MorganStanley&Co. StateStreetCorp. J.P.MorganChase&Co. ### ### JuliusBaerGroup ### ### GrupoSantander BankofAmericaCorporation MacquarieGroupLimited NorthernTrustCorp. ### ### ### ### CommonwealthBankofAustralia ### ### UniCredit DnBASA RoyalBankofScotland NationalAustraliaBankLimited WellsFargo&Company WestpacBankingCorporation LloydsBankingGroupPlc PNCFinancialServices U.S.Bancorp KBCGroupNV Swedbank Banesto BancoPopularEspanol BancoSabadell DeutscheBank CreditAgricoleSA UBS ### ### SocieteGenerale ### ### SEB ### Natixis CommerzbankAG ### ### MitsubishiUFJFinancialGroup BNPParibas SvenskaHandelsbanken MizuhoFinancialGroup ### ### SumitomoMitsuiFinancialGroup IntesaSanpaolo ### Nordea AozoraBank ### ResonaHoldings SumitomoMitsuiTrustHoldings ChibaBank ### BankofYokohama ShizuokaBank UBIBanca ### DanskeBank HDFCCorp AxisBank HDFCBank ### JSCVTBBank AgriculturalBankofChina(H) ICBC ShenzhenDevelopmentBank BankofNingbo ChinaMinshengBanking(H) ChongqingRuralCommercialBank HuaXiaBank BankOfNanjing BankofBeijing ChinaEverbrightBank BankofCommunications(H) ChinaCITICBank(H) ChinaMerchantsBank(H) ShanghaiPudongDevelopmentBank IndustrialBank ChinaConstructionBank(H) BankRakyatIndonesia BankDanamon BankCentralAsia BankMandiri BankNegaraIndonesia ### ### BankofChina(H) ### GrupoFinancieroBanorte HongLeongBank RHBCapital ### CIMBGroupHoldings ### ICICIBank ### ### PublicBankBerhad Credicorp Bancolombia MalayanBankingBerhad BankPekao PKOBP TurkiyeHalkBankasiA.S. TurkiyeVakiflarBankasi Akbank YapiKredi ### OTPBankPlc BankofAyudhya(Foreign) BangkokBank(Foreign) Kasikornbank(Foreign) KrungThaiBank(Foreign) SiamCommercialBank(Foreign) OverseaChineseBankingCorp. UnitedOverseasBank TurkiyeGarantiBankasi TurkiyeIsbankasi BancodeChile BancoSantanderChile DBSGroupHoldings ### HanaFinancialGroup BancodoBrasil BancoBradesco(ADR) BancoSantanderBrasil(ADR) Banrisul KBFinancialGroup IndustrialBankofKorea WooriFinanceHoldings ### KoreaExchangeBank ### ItaUnibancoHolding(ADR) ShinhanFinancialGroup KomercniBanka QatarNationalBank CommercialBankofQatar SaudiBritishBank ArabNationalBank SAMBA AlRajhiBank BanqueSaudiFransi QatarIslamicBank ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### <1% ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### Sberbank ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ###

September 17, 2012

Goldman Sachs Global Investment Research

Countriesrankedinorderofmarketgrowth potential ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ###

Source: Company data, Goldman Sachs Research.

Riyadbank

Exhibit 83: Geographical exposures of global banks

Revenue exposures of banks included in this report to main economic regions (most recent reported)

GS SUSTAIN - Financials

76

September 17, 2012

GS SUSTAIN - Financials

Exhibit 84: Ranking of country attractiveness used in global banks analysis

Trend projected banking asset growth (based on economic growth and banking asset penetration), regulatory risk (World Bank) and sector indebtedness by country

BankingassetsCAGR
Paraguay Russia Egypt India China Ukraine Kazakhstan Indonesia Argentina Panama Mexico Malaysia Bulgaria Romania Poland Turkey Uruguay Hungary Chile Lithuania Singapore Brazil Serbia Croatia B&H Albania Slovenia Slovakia CzechRepublic Korea SouthAfrica SaudiArabia Kuwait Qatar UnitedArabEmirates HongKong Estonia Latvia NewZealand Portugal UnitedKingdom Australia UnitedStates Spain Greece Cyprus Ireland Austria Norway Sweden Netherlands France Germany Japan Malta Italy Belgium Finland Switzerland Denmark
Argentina Kazakhstan Ukraine Russia India Indonesia Paraguay China HongKong Egypt Brazil Mexico Panama Turkey UnitedArabEmirates Qatar Kuwait SaudiArabia SouthAfrica Uruguay Malaysia Bulgaria Cyprus Greece Romania Portugal Italy Malta Poland Lithuania Latvia Japan Slovakia Slovenia Albania B&H Croatia Serbia Hungary Spain CzechRepublic Belgium France UnitedStates Chile Estonia Norway Austria Germany Switzerland Ireland Australia Sweden UnitedKingdom NewZealand Netherlands Singapore Finland Denmark

Regulatoryrisk(WorldBankGovernance indicators)

Bankingsectorcredit/GDP(Countryindebtedness)
Paraguay Argentina Uruguay Indonesia Russia Turkey Mexico Panama Romania Poland Lithuania CzechRepublic Egypt Bulgaria India Kazakhstan Ukraine Hungary Singapore Latvia Chile UnitedArabEmirates Qatar Kuwait SaudiArabia Estonia Brazil Finland Korea Belgium Germany Malaysia Norway France Austria Sweden Australia Cyprus Greece China Italy Malta NewZealand SouthAfrica Switzerland HongKong Portugal Netherlands Denmark UnitedKingdom Ireland UnitedStates Spain Japan

5%

0%

5%

10%

15%

20

40

60

80

100

0%

50%

100%

150%

200%

250%

300%

350%

Source: World Bank, IMF, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

77

September 17, 2012

GS SUSTAIN - Financials

Exhibit 85: Ranking of country attractiveness used in global banks analysis (cont.)
Industry consolidation (share of top 5 commercial banks), State ownership (% of assets controlled by government) and national liquidity (foreign exchange reserves/GDP)
Marketconsolidation shareof5largest commercialbanks
Belgium Norway Sweden Greece Cyprus Spain Brazil Singapore Hungary Bulgaria Finland HongKong CzechRepublic Portugal Poland Switzerland UnitedKingdom Estonia Lithuania SouthAfrica China Panama Mexico Denmark NewZealand Germany Ireland Netherlands Indonesia Japan Romania Austria Australia Serbia Croatia B&H Albania Slovenia Slovakia Korea Egypt France Chile Russia Malaysia Uruguay Paraguay Latvia Malta Italy SaudiArabia Kuwait Qatar UnitedArabEmirates Argentina Turkey Ukraine Kazakhstan UnitedStates India Paraguay Lithuania Singapore Estonia Australia Denmark Spain HongKong Bulgaria France Finland NewZealand Slovakia Slovenia Albania B&H Croatia Serbia Belgium CzechRepublic Romania Japan Hungary Austria Sweden Netherlands Latvia Ireland Kazakhstan Ukraine Italy Malta SouthAfrica Norway Mexico Panama Chile Korea Malaysia Cyprus Greece Poland Portugal Switzerland Turkey Argentina UnitedKingdom UnitedStates Indonesia Germany Brazil Russia Uruguay UnitedArabEmirates Qatar Kuwait SaudiArabia China Egypt India

Stateownership proportionofbankingassets controlledbyState

China Japan Russia Brazil Switzerland SaudiArabia Kuwait Qatar UnitedArabEmirates Romania Uruguay India Argentina Egypt Bulgaria Korea Indonesia Latvia Malaysia Singapore Denmark HongKong Ukraine Kazakhstan Turkey Poland SouthAfrica Norway Paraguay Hungary Panama Mexico NewZealand Chile CzechRepublic Lithuania Malta Italy Sweden France Portugal UnitedStates Estonia Germany Australia Austria UnitedKingdom Finland Netherlands Greece Cyprus Spain Belgium Serbia Croatia B&H Albania Slovenia Slovakia Ireland

Foreignexchangereserves(monthsofimports)

0%

20%

40%

60%

80%

100%

120%

0%

20%

40%

60%

80%

0.0

5.0

10.0

15.0

20.0

25.0

Source: World Bank, IMF, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

78

September 17, 2012

GS SUSTAIN - Financials

Exhibit 86: Environmental, social and governance measures to assess management quality Banks
Criteria
Independent Board leadership

Banks specific

Description
Separation of CEO and Chairman roles and appointment of independent Lead Director Percentage of independent, non-executive directors and wholly independent compensation and nomination committees Audit committee independence and ratio of non-audit to audit fees paid to the assigned auditor CEO compensation (including salary, bonus, stock grants and options) as a percentage of net income Fair value of share-based compensation expense as percentage of equity Block ownership greater than 5%, staggered Board, poison pill, unequal voting rights and other provisions Number of years of reporting on environmental and social ("ES") issues and external assurance of data Compensation link and responsibility of Board, senior executives to environmental and social performance Total payroll costs divided by average number of employees Net income per employee Gender diversity of total workforce, senior executives, and Board directors Institutionalized training programme, amount of resources used for training, hours or spend

Purpose
Maintain balance of power Shareholder representation Independence of audit process

Weighting

Corporate governance

Independent Board directors & committees Independent auditors CEO compensation Share-based compensation Minority shareholders' rights
Leadership

30% Management incentives Transparency Strength of individual shareholders Transparency 10% Leadership responsibility for ESG performance Employee compensation
Employees

Reporting and assurance of ESG performance

Integration of ES issues into strategy Employee incentives Labour efficiency Quality of workplace Quality of workplace Employee incentives Brand, impact on communities Supply chain management Client and shareholder relationships Reputation Profitability vs. leverage Product innovation 10% Risk exposure 25% 25%

Employee productivity Gender diversity Employee training Compensation practices Community investment B

Social

Performance-based executive compensation linked to EPS or TSR targets Community investment as a percentage of equity Guidelines for suppliers on environmental and social issues, reporting on quantification of environmentally assessed and minority-owned suppliers

Stakeholders

Supply chain management Customer and regulator relations Risk management Pricing of risk B B B B B

Customer surveys leading to company actions, increase in M&A deals completed, microfinance, public policy dialogue Reporting on lines of responsibility for risk management, reporting on risk measurement methodology, reporting on whistleblowing and escalation process Return on pre-provision operating profit, ratio of tangible equity to tangible assets Product and business innovation related to environmental and social issues Specialized environmental training, environmental checks on project finance and responsible lending, Equator Principles

Environment

Opportunities Risks

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

79

September 17, 2012

GS SUSTAIN - Financials

Exhibit 87: Management quality rankings based on ESG performance by category Banks
Independent Board directors & committees Minority shareholders' rights Leadership for sustainability initiatives Share-based compensation Supply chain management Reporting for sustainability Employee compensation Climate change risks (B) 5 5 5 5 5 5 5 5 5 1 5 3 5 5 5 3 5 5 5 5 5 5 1 5 5 5 5 5 5 5 3 3 5 3 5 3 1 5 5 3 5 5 3 5 3 5 5 1 3 5 2.7 5 Compensation Practices (BK) Customer and regulator relations (B) Community investment Employee productivity Risk management (B) Social - Stakeholders Independent auditors

Overall ESG (as % of maximum)

CEO compensation

Social - Employees

Social - Leadership

Independent board leadership

Employee training

Pricing of risk (B)

Climate change opportunities (B)

Gender diversity

Company

Westpac Banking Corp. ANZ Banking Group Limited Wells Fargo & Company Commonwealth Bank of Australia National Australia Bank HSBC J.P. Morgan Chase & Co. UBS Deutsche Bank Bank of New York Mellon Corp. Standard Chartered Citigroup Inc. Ita Unibanco Holding (ADR) Hang Seng Bank Nedbank Group Ltd Northern Trust Corp. Morgan Stanley & Co. Credit Suisse Bank of America Corporation DnB ASA Barclays plc PNC Financial Services State Street Corp. BBVA Standard Bank Group Swedbank Lloyds Banking Group Plc Intesa Sanpaolo BNP Paribas UniCredit Royal Bank of Scotland Macquarie Group Limited U.S. Bancorp UBI Banca Credit Agricole SA National Bank of Greece Shinhan Financial Group Firstrand Ltd Mitsubishi UFJ Financial Group Banco Santander Banco Santander Brasil (ADR) SEB Nordea KBC Group NV Erste Bank Societe Generale Bancolombia Banco Santander Chile Banco Bradesco (ADR) Banco Popular Espanol

89 88 87 84 84 84 83 83 80 77 77 77 76 76 76 76 76 76 76 75 75 74 74 74 73 73 73 73 73 70 70 69 68 68 68 68 67 67 66 65 64 64 64 63 63 63 62 62 62 62 55.4 100

89% 88% 87% 84% 84% 84% 83% 83% 80% 77% 77% 77% 76% 76% 76% 76% 76% 76% 76% 75% 75% 74% 74% 74% 73% 73% 73% 73% 73% 70% 70% 69% 68% 68% 68% 68% 67% 67% 66% 65% 64% 64% 64% 63% 63% 63% 62% 62% 62% 62% 55%

4 4 3 4 4 5 3 5 4 3 5 5 4 4 5 3 5 4 4 4 5 3 3 1 4 4 5 4 4 4 5 4 3 4 4 4 4 4 4 5 4 4 4 4 4 1 4 4 4 1 3.7 5

5 5 5 5 5 4 5 5 1 5 3 5 1 3 1 5 5 3 5 4 5 5 5 2 2 2 4 3 3 2 4 5 5 5 1 3 3 1 1 2 1 2 2 1 4 2 2 1 1 1 2.2 5

5 5 4 3 5 4 4 4 4 4 3 4 5 3 3 3 5 4 4 3 3 5 4 3 4 5 3 4 2 2 3 4 3 3 2 5 5 2 2 4 1 2 2 2 2 2 5 3 2 4 2.3 5

5 4 5 5 5 4 5 4 5 2 4 3 1 5 4 2 4 4 3 4 5 4 2 5 4 5 4 4 3 1 2 2 4 2 3 1 1 4 3 1 1 5 4 4 4 3 1 1 1 4 2.6 5

5 5 5 5 3 3 3 3 3 5 3 3 1 5 5 3 3 3 3 1 3 5 3 5 3 3 3 3 3 3 3 3 5 3 5 5 5 3 3 1 1 5 3 3 5 3 1 5 1 1 2.4 5

4 4 4 4 4 5 5 5 4 4 3 5 2 1 3 5 4 3 5 2 3 5 4 4 3 4 2 3 3 3 1 4 5 1 1 4 3 1 5 4 1 2 2 1 2 1 1 1 5 2 2.6 5

28 27 26 26 26 25 25 26 21 23 21 25 14 21 21 21 26 21 24 18 24 27 21 20 20 23 21 21 18 15 18 22 25 18 16 22 21 15 18 17 9 20 17 15 21 12 14 15 14 13 15.7 30

5 5 4 5 5 5 4 5 5 2 4 4 5 4 4 5 2 5 5 4 5 2 5 5 5 5 5 5 5 5 5 2 2 5 4 3 5 4 4 5 2 2 3 4 4 5 2 4 5 5 2.8 5

3 5 4 3 2 3 4 4 4 2 4 5 4 1 3 4 3 3 4 3 1 2 2 2 2 2 3 2 2 4 3 1 3 3 2 4 2 3 2 2 1 4 2 1 1 3 1 2 3 2 1.8 5

8 10 8 8 7 8 8 9 9 4 8 9 9 5 7 9 5 8 9 7 6 4 7 7 7 7 8 7 7 9 8 3 5 8 6 7 7 7 6 7 3 6 5 5 5 8 3 6 8 7 4.6 10

5 5 5 5 5 5 3 3 5 5 5 3 3 5 3 5 5 5 5 1 5 5 5 5 5 3 5 1 5 3 5 5 3 3 3 5 3 3 1 1 3 1 3 5 5 3 3 5 1 1 2.1 5

4 4 5 5 5 4 5 5 5 5 4 4 4 3 3 4 5 5 5 5 5 4 5 3 3 4 4 4 5 4 5 5 1 5 5 3 5 3 5 4 4 4 4 3 3 4 2 3 2 4 3.2 5

5 4 2 5 4 3 4 4 4 3 3 2 4 5 2 3 3 4 2 5 2 3 3 3 2 3 1 2 3 1 1 3 1 1 3 1 5 2 3 4 4 3 4 2 1 2 2 4 3 3 3.0 5

5 5 5 3 5 5 3 5 5 5 5 5 5 5 5 5 3 5 1 5 3 3 5 5 5 5 5 5 5 5 3 3 3 5 5 5 3 5 3 5 5 3 5 5 5 5 5 5 5 5 4.0 5

4 5 5 3 3 5 5 2 2 4 4 2 2 5 5 4 4 1 5 5 2 3 2 1 4 5 2 4 4 4 4 3 3 1 4 2 1 4 1 2 5 5 5 2 3 5 2 4 2 1 2.4 5

23 23 22 21 22 22 20 19 21 22 21 16 18 23 18 21 20 20 18 21 17 18 20 17 19 20 17 16 22 17 18 19 11 15 20 16 17 17 13 16 21 16 21 17 17 19 14 21 13 14 14.7 25

5 3 5 3 4 4 4 3 4 4 3 4 5 3 4 5 5 2 5 4 5 3 4 5 4 1 5 4 1 5 5 5 4 5 4 5 1 4 4 5 5 1 2 1 1 1 4 2 5 5 2.5 5

1 1 5 3 1 1 3 1 1 3 1 3 5 5 3 3 1 1 3 1 1 5 3 3 3 1 1 1 1 1 1 3 5 1 1 3 3 3 1 3 5 1 1 1 1 1 5 5 3 3 3.0 5

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 3 5 5 5 5 5 3 5 5 5 5 5 5 5 5 5 3 3 5 5 5 3 3 5 3 5 3 3 5 3 2 3 3.8 5

4 4 2 3 4 4 5 5 4 5 4 4 5 4 4 3 2 4 2 5 4 3 5 4 4 4 4 4 4 4 4 2 2 4 4 2 2 3 4 3 4 3 3 5 4 4 5 5 4 4 2.4 5

5 5 5 5 5 5 3 5 5 5 5 5 5 3 5 3 3 5 2 5 3 1 5 5 5 3 3 5 5 5 5 2 2 5 5 3 5 5 5 3 5 3 5 5 5 5 3 3 5 5 3.1 5

20 18 22 19 19 19 20 19 19 22 18 21 25 20 21 19 16 17 15 20 18 17 22 22 19 14 18 19 16 20 20 17 18 20 17 16 16 20 19 17 22 13 14 17 14 14 22 18 19 20 14.8 25

5 5 4 5 5 5 5 5 5 5 4 3 5 2 4 3 4 5 5 4 5 3 3 3 3 4 4 5 5 4 3 5 4 4 4 4 5 3 5 5 4 4 4 4 3 5 4 1 5 3 2.8 5

Average Maximum Partial data disclosure Non disclosure

5.5 10

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Environment 10 10 9 10 10 10 10 10 10 6 9 6 10 7 9 6 9 10 10 9 10 8 4 8 8 9 9 10 10 9 6 8 9 7 9 7 6 8 10 8 9 9 7 9 6 10 9 2 8 8

Overall ESG

Governance

80

September 17, 2012

GS SUSTAIN - Financials

Exhibit 88: Management quality rankings based on ESG performance by category Banks (continued)
Independent Board directors & committees Minority shareholders' rights Leadership for sustainability initiatives Share-based compensation Supply chain management Reporting for sustainability Employee compensation Climate change risks (B) 1 5 5 3 3 5 5 5 1 1 3 3 1 1 1 3 1 1 5 1 5 5 1 3 5 1 5 1 5 3 3 3 5 1 1 5 1 3 1 1 3 3 3 1 1 1 3 1 1 2.7 5 Compensation Practices (BK) Customer and regulator relations (B) Community investment Employee productivity Risk management (B) Independent auditors Social - Stakeholders

CEO compensation

Overall ESG (as % of maximum)

Social - Leadership

Social - Employees

Independent board leadership

Employee training

Pricing of risk (B)

Climate change opportunities (B)

Gender diversity

Company

Raiffeisen Bank International Banco Sabadell Banesto Commerzbank AG ABSA Group Limited Akbank Banco do Brasil Natixis Julius Baer Group Danske Bank Bank Pekao China Merchants Bank (H) Housing Development Finance Corporation Public Bank Berhad Kasikornbank (Foreign) ICICI Bank DBS Group Holdings Oversea-Chinese Banking Corp. Resona Holdings Malayan Banking Berhad Svenska Handelsbanken Shizuoka Bank OTP Bank Plc China Construction Bank (H) Industrial and Commercial Bank of China (H) National Bank of Abu Dhabi Mizuho Financial Group Axis Bank Bank of China (H) Aozora Bank Bank Mandiri Yapi Kredi Komercni Banka CIMB Group Holdings Kuwait Finance House Turkiye Garanti Bankasi China Minsheng Banking (H) Shanghai Pudong Development Bank RHB Capital BOC Hong Kong (Holdings) Sumitomo Mitsui Trust Holdings Sumitomo Mitsui Financial Group Bank of Communications(H) Woori Finance Holdings Banco de Chile JSC VTB Bank Grupo Financiero Banorte Qatar National Bank Saudi British Bank

62 62 62 62 61 60 60 60 59 58 57 57 55 55 54 54 53 53 53 52 52 52 51 51 51 51 51 50 50 50 49 49 49 49 49 48 48 48 48 48 48 48 47 47 46 46 46 45 45 55.4 100

62% 62% 62% 62% 61% 60% 60% 60% 59% 58% 57% 57% 55% 55% 54% 54% 53% 53% 53% 52% 52% 52% 51% 51% 51% 51% 51% 50% 50% 50% 49% 49% 49% 49% 49% 48% 48% 48% 48% 48% 48% 48% 47% 47% 46% 46% 46% 45% 45% 55%

4 1 4 4 4 4 4 4 5 4 4 4 4 4 4 4 4 4 4 5 4 4 1 4 4 4 1 4 4 4 4 4 1 5 4 4 4 4 4 4 4 4 4 1 4 4 4 4 4 3.7 5

5 2 2 1 2 1 1 1 5 4 2 1 3 4 2 2 2 2 2 2 3 1 1 1 1 2 2 2 1 4 1 1 1 2 1 1 1 1 1 1 1 1 1 3 1 1 2 2 4 2.2 5

3 3 2 2 3 1 1 2 3 3 2 2 3 5 2 1 3 4 2 2 1 2 1 2 2 1 2 1 1 5 1 1 2 4 1 1 2 1 3 2 2 2 2 5 2 1 1 1 1 2.3 5

1 5 2 4 2 1 1 5 2 4 4 3 5 4 4 4 4 4 1 5 5 1 1 3 3 1 1 4 3 1 1 1 4 4 1 1 4 1 5 4 1 1 3 1 1 1 1 1 1 2.6 5

5 1 1 5 5 1 1 3 5 3 3 1 3 3 1 1 5 5 1 5 1 3 3 1 1 5 3 3 1 1 3 1 1 1 1 1 1 1 1 1 3 1 1 3 3 1 1 1 1 2.4 5

1 3 4 2 1 1 1 1 4 2 1 3 3 2 4 3 2 2 2 3 4 5 3 1 1 1 4 5 1 1 1 1 1 4 4 2 4 2 1 1 4 4 2 1 2 1 3 4 2 2.6 5

19 15 15 18 17 9 9 16 24 20 16 14 21 22 17 15 20 21 12 22 18 16 10 12 12 14 13 19 11 16 11 9 10 20 12 10 16 10 15 13 15 13 13 14 13 9 12 13 13 15.7 30

5 5 5 3 2 2 5 2 2 4 2 2 1 2 4 2 1 1 2 1 1 4 5 5 3 2 4 1 2 2 2 2 2 2 2 2 2 4 4 2 1 4 1 1 1 2 3 4 1 2.8 5

3 2 2 2 1 3 2 2 2 2 1 1 1 1 3 4 1 1 3 1 1 1 1 1 1 1 2 1 1 1 1 2 1 1 1 3 1 1 1 1 2 1 3 1 2 1 2 2 1 1.8 5

8 7 7 5 3 5 7 4 4 6 3 3 2 3 7 6 2 2 5 2 2 5 6 6 4 3 6 2 3 3 3 4 3 3 3 5 3 5 5 3 3 5 4 2 3 3 5 6 2 4.6 10

5 1 3 5 3 1 1 1 3 1 1 3 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 2.1 5

2 4 5 5 3 3 4 5 5 5 2 3 3 2 1 2 4 3 1 2 5 1 2 3 2 4 4 1 2 4 2 3 3 2 5 1 3 3 2 3 5 3 2 4 3 2 2 1 4 3.2 5

1 2 3 1 2 5 3 4 5 1 2 4 5 3 2 1 4 4 4 2 5 4 1 5 3 5 2 1 3 3 2 4 4 2 5 5 4 5 2 5 5 3 4 2 3 2 2 1 5 3.0 5

5 5 5 3 5 5 5 5 5 3 5 5 5 5 5 3 5 5 3 3 1 3 5 5 5 5 1 5 5 3 5 5 5 3 3 5 3 5 5 3 1 3 3 5 5 3 5 5 5 4.0 5

2 1 4 2 3 4 2 2 2 4 5 3 2 4 2 2 2 2 4 2 4 1 2 2 2 1 1 1 5 1 2 4 2 2 1 2 1 2 2 2 1 1 2 1 1 2 2 1 1 2.4 5

15 13 20 16 16 18 15 17 20 14 15 18 16 15 11 9 16 15 13 10 16 10 11 16 15 16 9 9 16 12 12 17 15 10 15 14 12 16 12 14 13 11 14 13 13 10 12 9 16 14.7 25

3 4 1 1 4 2 4 1 1 4 2 2 3 1 1 3 2 3 2 1 1 1 4 2 2 1 3 5 2 3 3 3 1 1 5 1 4 2 1 2 1 1 3 1 4 5 1 1 1 2.5 5

3 1 1 1 5 5 3 1 1 1 5 1 5 3 5 5 3 1 1 5 1 3 5 3 3 5 1 5 1 3 5 5 5 5 5 5 1 1 3 3 1 1 1 1 5 5 3 5 5 3.0 5

5 5 3 5 5 5 5 3 3 3 3 5 3 5 5 5 5 5 5 3 2 5 3 3 3 3 5 5 3 5 5 2 2 5 3 2 3 3 3 5 3 5 3 5 3 3 3 5 3 3.8 5

2 4 4 4 4 3 4 5 1 2 4 3 1 1 2 2 1 1 2 4 1 2 2 2 1 4 2 1 2 1 1 1 4 2 1 1 2 2 1 3 1 1 2 1 1 3 2 1 1 2.4 5

3 5 3 5 3 5 3 3 2 3 5 5 2 3 3 3 2 3 5 2 3 2 5 2 3 3 2 2 3 2 5 2 1 1 2 3 2 2 3 1 3 3 2 5 2 5 2 2 2 3.1 5

16 19 12 16 21 20 19 13 8 13 19 16 14 13 16 18 13 13 15 15 8 13 19 12 12 16 13 18 11 14 19 13 13 14 16 12 12 10 11 14 9 11 11 13 15 21 11 14 12 14.8 25

3 3 3 4 1 3 5 5 2 4 1 3 1 1 2 3 1 1 3 2 3 3 4 2 3 1 5 1 4 2 1 3 3 1 2 2 4 4 4 3 5 5 2 4 1 2 3 2 1 2.8 5

Average Maximum Partial data disclosure Non disclosure

5.5 10

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Environment 4 8 8 7 4 8 10 10 3 5 4 6 2 2 3 6 2 2 8 3 8 8 5 5 8 2 10 2 9 5 4 6 8 2 3 7 5 7 5 4 8 8 5 5 2 3 6 3 2

Overall ESG

Governance

81

September 17, 2012

GS SUSTAIN - Financials

Exhibit 89: Management quality rankings based on ESG performance by category Banks (continued)
Independent Board directors & committees Minority shareholders' rights Leadership for sustainability initiatives Share-based compensation Supply chain management Reporting for sustainability Employee compensation Climate change risks (B) 3 1 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 1 1 1 1 1 2.7 5 Compensation Practices (BK) Customer and regulator relations (B) Community investment Employee productivity Risk management (B) Social - Stakeholders Independent auditors

Overall ESG (as % of maximum)

CEO compensation

Social - Employees

Social - Leadership

Independent board leadership

Employee training

Pricing of risk (B)

Climate change opportunities (B)

Gender diversity

Company

Industrial Bank KB Financial Group Commercial Bank of Qatar Sberbank Turkiye Isbankasi China CITIC Bank (H) Bank of Ningbo Krung Thai Bank (Foreign) Bank of Beijing SAMBA Arab National Bank Chongqing Rural Commercial Bank Bank Of Nanjing United Overseas Bank First Gulf Bank Bank of East Asia PKO BP Bank of Ayudhya (Foreign) Hua Xia Bank National Bank of Kuwait Chiba Bank Siam Commercial Bank (Foreign) HDFC Bank Turkiye Vakiflar Bankasi Industrial Bank of Korea Abu Dhabi Commercial Bank Bank Central Asia Banque Saudi Fransi Bank Danamon Hong Leong Bank Shenzhen Development Bank Korea Exchange Bank Bank of Yokohama Turkiye Halk Bankasi A.S. Riyad bank Agricultural Bank of China (H) Emirates NBD Al-Rajhi Bank Bank Rakyat Indonesia Banrisul Bangkok Bank (Foreign) Mega Financial Holdings Qatar Islamic Bank Credicorp Hana Financial Group Chinatrust Financial Holdings First Financial Holdings

45 45 44 44 44 44 44 44 44 43 43 43 43 43 43 43 42 42 42 42 42 41 41 41 41 41 40 40 40 40 40 40 40 39 39 39 39 36 36 36 36 36 35 35 31 31 30 55.4 100

45% 45% 44% 44% 44% 44% 44% 44% 44% 43% 43% 43% 43% 43% 43% 43% 42% 42% 42% 42% 42% 41% 41% 41% 41% 41% 40% 40% 40% 40% 40% 40% 40% 39% 39% 39% 39% 36% 36% 36% 36% 36% 35% 35% 31% 31% 30% 55%

4 1 4 4 4 4 4 5 4 4 4 4 4 4 4 1 4 4 4 4 1 1 4 4 1 4 4 4 4 4 5 1 1 4 4 4 4 4 1 4 1 4 4 1 1 4 4 3.7 5

1 5 2 1 1 1 1 1 1 1 4 1 1 2 1 2 1 1 1 1 1 2 2 1 2 1 2 1 2 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 2 2 1 2.2 5

1 1 1 1 1 2 1 2 1 1 1 1 1 4 1 3 2 4 1 1 2 5 1 1 1 2 1 1 1 2 1 1 2 1 1 1 1 1 1 1 3 2 1 2 1 1 1 2.3 5

3 1 1 3 1 3 4 3 1 2 1 3 4 1 1 2 4 1 4 1 1 1 5 1 1 1 1 1 1 4 4 1 1 1 1 3 1 1 1 1 1 1 1 1 1 1 1 2.6 5

1 3 1 1 1 1 1 1 1 1 1 1 1 5 1 5 3 1 1 1 3 1 3 1 1 1 1 1 1 1 1 5 3 1 1 1 3 1 1 1 1 1 1 1 3 1 1 2.4 5

2 3 4 1 1 4 1 1 2 5 1 3 2 3 4 3 1 2 2 5 4 4 2 1 1 1 2 1 1 1 2 1 5 1 1 1 1 1 1 1 2 3 5 3 4 1 1 2.6 5

12 14 13 11 9 15 12 13 10 14 12 13 13 19 12 16 15 13 13 13 12 14 17 9 7 10 11 9 10 13 14 10 13 9 10 11 11 9 6 9 9 12 13 9 12 10 9 15.7 30

2 1 1 2 1 2 2 4 3 1 1 2 2 1 1 2 1 2 2 2 1 4 1 1 1 2 1 1 1 4 3 1 2 1 1 2 1 1 1 1 4 1 1 1 1 1 1 2.8 5

1 2 1 1 3 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 3 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1.8 5

3 3 2 3 4 3 3 6 4 2 2 3 3 2 2 3 2 3 3 3 4 6 2 2 2 3 2 2 2 5 4 2 3 2 2 3 2 2 2 2 5 2 2 2 2 2 2 4.6 10

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2.1 5

2 3 5 2 3 1 3 1 3 5 4 2 3 1 5 3 2 2 3 1 1 1 2 3 5 4 2 4 2 1 3 5 1 2 3 2 4 3 2 3 1 3 1 2 1 1 1 3.2 5

5 1 5 1 4 5 4 2 5 5 5 2 5 1 5 3 2 1 4 1 4 1 1 4 5 3 3 5 1 1 4 5 4 4 5 2 4 5 2 3 1 3 1 2 1 1 2 3.0 5

3 5 5 5 3 3 3 3 3 1 3 3 3 3 3 3 3 5 3 3 3 3 3 5 5 3 5 3 5 3 1 3 3 5 3 3 3 3 5 3 3 1 3 3 3 3 5 4.0 5

1 1 1 5 4 1 5 2 3 1 1 1 1 2 1 1 1 3 2 2 1 3 1 2 1 1 2 1 2 3 2 1 2 1 1 1 1 1 1 2 2 2 1 1 1 2 1 2.4 5

12 11 17 14 15 11 16 9 15 13 14 9 13 8 15 11 9 12 13 8 12 9 8 15 17 12 13 14 11 9 11 15 11 13 13 9 13 13 11 12 8 10 7 9 7 8 10 14.7 25

3 1 1 2 1 2 3 1 2 2 3 4 1 1 1 3 2 1 3 5 1 1 1 1 1 1 2 1 1 3 2 1 1 2 1 2 1 1 1 1 1 1 1 1 1 1 1 2.5 5

1 1 5 5 5 1 1 3 1 5 5 3 3 3 5 3 5 5 1 5 1 5 5 5 3 5 5 5 5 3 1 5 1 5 5 1 5 5 5 5 5 3 5 5 1 3 1 3.0 5

3 3 2 2 3 3 3 5 5 3 3 2 3 5 3 3 3 3 3 3 3 1 3 3 3 5 3 3 5 2 2 3 5 3 3 3 3 2 5 2 3 3 3 3 3 2 2 3.8 5

1 1 1 1 1 3 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 2 1 1 1 1 2 1 1 1 1 1 1 2 2 1 1 2 1 2 2 2.4 5

3 5 1 3 1 2 2 3 2 1 1 2 3 2 2 1 2 2 1 2 3 1 2 2 5 2 1 2 3 2 3 1 2 2 2 3 1 1 3 1 1 2 1 2 2 1 1 3.1 5

11 11 10 13 11 11 10 14 11 12 13 12 11 12 12 11 13 12 9 16 9 10 12 12 13 14 12 13 15 11 9 11 11 13 12 10 11 10 15 11 12 10 11 13 8 9 7 14.8 25

4 5 1 2 4 3 2 1 3 1 1 3 2 1 1 1 2 1 3 1 4 1 1 2 1 1 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 1 1 1 1 1 2.8 5

Average Maximum Partial data disclosure Non disclosure

5.5 10

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Environment 7 6 2 3 5 4 3 2 4 2 2 6 3 2 2 2 3 2 4 2 5 2 2 3 2 2 2 2 2 2 2 2 2 2 2 6 2 2 2 2 2 2 2 2 2 2 2

Overall ESG

Governance

82

September 17, 2012

GS SUSTAIN - Financials

Exhibit 90: Changes in management quality Developed market banks Change in ESG scores since previously published performance, by company, as % of maximum score possible for each company

90%

80%

70%
2010/11 Overall ESG %

60%

Westpac Wells Fargo ANZ NAB CBA HSBC UBS JP Morgan Deutsche Citigroup BNY Mellon Northern Trust Corp. Morgan Stanley Credit Suisse Standard Chartered BofA Nedbank Grp Hang PNC Fin. Svcs Lloyds Barclays DnB Seng BBVA Swedban State Street Intesa Sanpaolo BNP Paribas Standard Bank RBS UniCredit UBI Banca Macquarie N. Bank of Greece US Bancorp Credit Agricole Mitsubishi UFJ Nordea SEB Soc Gen Santander Commerzbank Erste Banesto KBC Banco Popular Espanol Banco Sabadell Raiffeisen ABSA Grp Natixis Julius Baer Danske Resona Holdings Svenska Handelsbanken

50%

N. Bank of Abu Dhabi Sumitomo Mitsui Fin. Mizuho Fin. BOC Hong Kong Bank of East Asia Emirates NBD Mega Financial

Sumitomo Mitsui Trust

40%

30% 30%

40%

50%

60% 70% Previous reported overall ESG %

80%

90%

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

83

September 17, 2012

GS SUSTAIN - Financials

This page is intentionally blank

Goldman Sachs Global Investment Research

84

September 17, 2012

GS SUSTAIN - Financials

Insurance

Goldman Sachs Global Investment Research

85

September 17, 2012

GS SUSTAIN - Financials

Industry roadmap: Key trends and drivers of performance

Exhibit 91 summarises the key structural shifts we have identified for the global insurance industry, and the measures that we use to identify those companies we believe are best placed to sustain industry leadership against this backdrop of change. Exhibit 91: Industry roadmap Insurance
Debt/capital imbalances across developed & emerging economies

Emerging market consumption growth

Increased regulation

Themes
Emerging markets offer sustainable growth due to rising wealth and financial intermediation Developed markets need to rebuild depleted wealth Increasing focus on regulation of risk-taking in financial services Gradual moves towards harmonized regulatory standards Increased costs of capital and risk pricing, especially in developed economies

Drivers of corporate performance

Management quality

Industry positioning

Return on capital

Balance sheet strength

GS SUSTAIN

ESG Environmental, social and governance issues

Exposure to growth markets

Pricing power in distribution

Attractiveness of business lines

ROE Return on equity

Leverage, cash flow generation

Insurance

High potential growth markets - Exposure to growth markets (premiums CAGR to 2015E)

Attractive distribution mix - Exposure to channels with high pricing power

Business mix low volatility and low capital intensity

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

86

September 17, 2012

GS SUSTAIN - Financials

We identify AMP, Prudential and RSA Insurance as industry leaders on each of (1) return on capital (ROE), (2) industry positioning and (3) management quality (as measured by environmental, social and governance (ESG) performance above the sector median). Exhibit 92: Winners circle Insurance
Management of ESG issues
Lincoln National Assicurazioni Generali Allianz Swiss Re Munich Re CNP AXA Prudential Old Mutual Hartford Marsh & McLennan Ping An Prudential Financial China Pacific Ins. Management of ESG issues ESG (based on 2010 data) above sector median Industry positioning: leaders on a combination of: Country growth Country risk Pricing power Favourable business mix Sound capital base Returns ROE (2012-14E) above sector median Balance sheet strength Leverage and cash flow generation above bottom sector quintile Note: Chubb, Tokio Marine Holdings, SCOR, Principal Financial Group, XL Group, MS&AD Holdings, American International Group, NKSJ Holdings, The Dai-ichi Life Insurance Company, T&D Holdings, Sony Financial Holdings, Cathay Financial Holding Company scored below median on all three metrics.
Source: Company data, Goldman Sachs Research estimates.

Industry positioning
QBE Suncorp Aviva Allstate Unum AFLAC Legal & General Zurich Ins. Standard Life Travelers Admiral Gjensidige Forsikring Insurance Aus

Korea Life Ins. W. R. Berkley Samsung Life Ins. Vienna Insurance Ageas Progressive Assurant Aon

Aegon Swiss Life

AMP

MetLife Ace

RSA Insurance

Samsung Fire & Marine Ins. Sampo AIA

Hannover

China Life Ins.

Mapfre

Ping An Ins.

Return on Returns capital

Goldman Sachs Global Investment Research

87

September 17, 2012

GS SUSTAIN - Financials

Exhibit 93: Winners table Insurance

Return on capital ROE Company
2012-14E change vs 2009-11 in ppts -9% 1% 17% 2% 2% 0% -2% 3% 0% -9% 1% 8% 0% 4% 2% 3% 4% 1% -5% -2% 0% 3% 1% 4% -5% 0% 0% 2% -1% 6% 1% 1% -3% 2% 2% 9% 3% 1% -6% -1% 5% -2% 3% -2% 0% 3% 2% 3% 2% 0% 2% 4% -2% 0% 12% 1% -4% -1% 0% Percentile Weighted average premium growth (2010-20 CAGR) 2% 1% 2% 2% 3% 9% 2% 0% 3% 2% 2% 2% 9% 1% 1% 9% 1% 2% 2% 3% 2% 2% 2% 3% 2% 6% 5% 2% 1% 2% 1% 2% 2% 2% 2% 2% 2% 2% 1% 2% 2% 3% 5% 2% 1% 2% 2% 2% 4% 2% 2% 4% 5% 0% 1% 1% 1% 1% 1% 3% Percentile Country risk (AM Best) (rank 1-4) 1.0 1.8 1.0 0.9 1.8 3.0 1.0 1.0 1.9 1.2 1.2 1.2 3.0 0.5 1.1 3.0 1.3 1.4 1.0 2.2 1.0 1.5 1.2 1.3 1.4 2.8 2.0 0.9 1.3 1.2 1.3 1.0 0.7 1.6 1.0 1.0 0.9 1.3 2.0 1.0 1.0 1.8 2.0 1.0 1.3 0.9 1.1 2.0 2.7 1.2 1.0 2.3 2.0 1.0 2.0 1.9 2.0 2.0 2.0 2.5 3.0 World Bank Regulatory Quality score 97 83 90 61 73 45 96 94 71 94 81 94 45 47 95 45 79 80 90 60 90 87 85 95 81 49 79 81 79 84 73 74 66 81 91 90 85 86 81 87 90 77 79 81 84 72 95 79 48 92 62 67 79 92 80 75 81 76 80 74 45 Percentile Distribution channel mix (1-6 reflecting proximity to customer) 4.0 4.0 2.0 2.0 3.0 3.1 2.3 3.7 2.0 2.6 2.1 3.1 3.1 2.2 3.5 3.2 2.5 2.3 2.8 3.1 3.4 2.5 2.6 2.3 1.0 3.0 2.6 2.9 2.3 2.4 2.7 1.0 2.5 2.6 2.0 2.0 2.5 1.6 4.0 2.5 2.9 2.2 2.4 2.1 2.7 1.0 3.2 2.7 2.8 2.4 2.2 2.1 2.5 2.7 3.7 3.2 3.7 3.2 3.2 2.8 2.7 Weighted avg. top 3 market share in largest market 30% 47% 36% 23% 45% 56% 38% 61% 27% 45% 45% 76% 56% 18% 66% 56% 41% 35% 35% 33% 35% 43% 39% 43% 20% 55% 50% 32% 37% 36% 34% 20% 26% 42% 35% 35% 33% 20% 50% 34% 35% 30% 50% 33% 45% 20% 80% 49% 56% 38% 25% 22% 50% 54% 50% 45% 50% 47% 50% 49% 67% Percentile Business line volatility adjusted profitability (rank 1-7) 4.0 3.7 3.0 7.0 4.0 2.5 3.5 3.8 7.0 3.5 3.9 4.0 2.0 2.3 2.7 2.5 3.2 4.2 4.0 3.3 2.0 3.4 4.0 5.0 3.6 2.6 2.7 3.6 2.3 2.2 3.5 3.8 4.0 3.3 4.0 2.0 3.4 3.3 2.1 4.0 3.9 3.5 6.6 4.0 2.5 3.6 3.2 3.4 2.6 3.0 3.1 3.5 3.0 2.6 2.0 3.6 2.0 3.8 3.8 3.3 4.0 Percentile

Industry positioning Regional growth Country risk Pricing power Business mix Overall Industry Positioning

Management quality ESG

Percentile

Score as a % Change vs of maximum last report (2010/11) 59% 59% 64% 60% 82% 47% 82% 66% 57% 77% 60% 78% 51% 74% 54% 39% 78% 71% 52% 53% 44% 79% 78% 77% 52% 52% 54% 49% 65% 71% 73% 53% 57% 73% 66% 63% 52% 74% 38% 66% 67% 58% 46% 42% 61% 63% 59% 57% 28% 78% 51% 52% 33% 62% 39% 55% 43% 51% 45% 37% 36% 1% -7% 3% New 4% -6% 6% New New 6% 2% 2% -3% -1% -1% 0% 8% -2% -3% -8% New 0% -2% 6% -3% -2% 7% New 3% 12% -1% -3% 1% 2% -3% New New 2% -2% -2% -8% New New New 2% New New -1% New 1% New New New 5% 2% New 7% New New 1% -1%

Percentile (2010/11) 52% 52% 67% 57% 98% 20% 98% 70% 45% 87% 57% 90% 23% 83% 40% 8% 90% 77% 28% 37% 15% 97% 90% 87% 28% 28% 40% 22% 68% 77% 80% 37% 45% 80% 70% 63% 28% 83% 7% 70% 75% 50% 18% 12% 60% 63% 52% 45% 0% 90% 23% 28% 2% 62% 8% 43% 13% 23% 17% 5% 3%

Admiral Group Plc Aflac Incorporated The Hartford Financial Services Marsh & McLennan Companies Prudential Plc Ping An Insurance Group Legal & General Group Gjensidige Forsikring ASA Aon Plc. AMP QBE Insurance Group Insurance Australia Group China Life Insurance Company Old Mutual plc Sampo China Pacific Insurance (H) AXA Zurich Insurance Group The Progressive Corporation Mapfre S.A. Torchmark Corp. Aviva plc RSA Insurance Group Standard Life Plc Hannover Ruckversicherung AIA Group Samsung Fire & Marine Insurance Assurant Inc. Prudential Financial, Inc. MetLife Inc. Allianz SE SCOR Chubb Corp. Assicurazioni Generali Unum Group Lincoln National Corp. Principal Financial Group, Inc. Munich Re (reg) Sony Financial Holdings The Travelers Companies, Inc. The Allstate Corp. ACE Limited Korea Life Insurance W. R. Berkley Corp. CNP Assurances Swiss Re Suncorp Group Limited Ageas SA/NV Cathay Financial Holding Company Aegon N.V. American International Group, Inc. XL Group Plc Samsung Life Insurance Swiss Life Holding T&D Holdings Tokio Marine Holdings The Dai-ichi Life Insurance Company MS&AD Holdings NKSJ Holdings Vienna Insurance Group PICC Property and Casualty Company

45% 21% 19% 19% 18% 16% 15% 15% 14% 14% 14% 14% 14% 14% 13% 13% 13% 13% 13% 12% 12% 12% 11% 11% 11% 11% 11% 11% 11% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 9% 9% 8% 8% 8% 8% 7% 7% 7% 6% 6% 6% 6% 5% 5% 5% 4% 0% -1%

100% 98% 97% 95% 93% 90% 88% 86% 85% 83% 81% 80% 78% 76% 75% 73% 71% 69% 68% 66% 64% 63% 61% 59% 58% 56% 54% 53% 51% 49% 47% 46% 44% 42% 41% 39% 37% 36% 34% 32% 31% 29% 27% 25% 24% 22% 20% 19% 17% 15% 14% 12% 10% 8% 7% 5% 3% 2% 0%

47% 17% 45% 33% 83% 95% 63% 0% 82% 68% 70% 72% 95% 12% 3% 95% 18% 42% 50% 77% 50% 60% 35% 75% 67% 93% 88% 37% 23% 62% 22% 28% 27% 25% 57% 50% 40% 32% 8% 43% 50% 80% 88% 58% 20% 30% 65% 73% 87% 48% 38% 85% 88% 2% 5% 15% 10% 13% 5% 78%

100% 45% 72% 53% 17% 0% 97% 85% 15% 77% 57% 73% 0% 52% 85% 0% 38% 40% 88% 10% 88% 57% 65% 70% 47% 7% 18% 78% 42% 68% 37% 50% 60% 43% 95% 88% 80% 63% 27% 82% 88% 28% 18% 67% 55% 62% 82% 32% 8% 75% 48% 12% 18% 98% 33% 25% 28% 23% 33% 13%

58% 83% 23% 7% 70% 83% 30% 97% 10% 57% 33% 92% 88% 8% 98% 90% 42% 27% 48% 52% 63% 45% 47% 38% 0% 80% 65% 43% 32% 35% 38% 0% 22% 53% 17% 15% 25% 5% 93% 27% 50% 20% 53% 17% 60% 0% 100% 67% 75% 37% 13% 12% 60% 72% 87% 73% 93% 77% 77% 68%

80% 65% 32% 98% 77% 15% 50% 68% 98% 52% 75% 80% 0% 12% 25% 18% 35% 93% 80% 43% 0% 48% 80% 95% 63% 20% 27% 62% 13% 10% 57% 72% 80% 42% 80% 0% 45% 38% 8% 80% 73% 53% 97% 78% 17% 60% 37% 47% 22% 28% 33% 55% 30% 23% 0% 58% 0% 70% 67% 40%

98% 65% 25% 47% 82% 48% 80% 85% 63% 87% 78% 100% 38% 0% 68% 62% 7% 58% 93% 33% 60% 65% 75% 95% 30% 55% 53% 72% 2% 28% 18% 13% 40% 22% 83% 20% 43% 12% 10% 77% 92% 35% 88% 72% 15% 15% 97% 70% 45% 40% 8% 22% 52% 50% 3% 27% 5% 37% 32% 55%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

88

September 17, 2012

GS SUSTAIN - Financials

Exhibit 94 shows the average returns on equity (ROE) of global insurance companies examined within the GS SUSTAIN framework, grouped by their quartile of ROE relative to sector peers. Exhibit 95 shows the cumulative average total shareholder returns generated by companies in each quartile of return on equity since 2000. In common with most sectors to which we have applied the GS SUSTAIN framework, we find that companies with leading returns have consistently outperformed lower-return peers. Exhibit 94: Average returns on capital (ROE) by quartile, 20012014E Exhibit 95: Cumulative outperformance of the highest returns companies over time

40%

250% 200% 150% 100% 50% 0% -50% -100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
89

20%
ROE avg

10%

0%

-10%

-20%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Cumulative TSR by ROE quartile

30%

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Source: Datastream, Goldman Sachs Research estimates, Gao Hua securities, Quantum database.

Source: Datastream, Goldman Sachs Research, Gao Hua securities, Quantum database.

Goldman Sachs Global Investment Research

September 17, 2012

GS SUSTAIN - Financials

Exhibit 96: Return on Equity (ROE) vs. total shareholders equity, 2012-14E avg. Insurance

25%

AIG: 98,724, 6% Allianz: 67,292, 10% Admiral: 863, 45% Aflac Hartford Marsh & McLennan Prudential

20%

ROE, 2012-14E avg.

Gjensidige Forsikring Legal & General 15%

Ping An Insurance

QBE Old Mutual Insurance Aus. AMP Aon China Life Insurance China Pacific Ins. Progressive Zurich Insurance AXA Sampo Torchmark Mapfre Aviva AIA Standard Life Hannover Ruckversicherung Prudential Financial Assurant RSA Samsung Fire & Marine Assicurazioni Generali 10% Unum Chubb ACE Principal Lincoln Sony Financial Munich Re Allstate Travelers Korea Life Ins. W. R. Berkley CNP Assurances Swiss Re Ageas Cathay Financial Suncorp Aegon Samsung Life Ins. XL Swiss Life Tokio Marine 5% Dai-ichi MS&AD NKSJ

MetLife

0% 0 10,000 20,000 30,000 40,000 Total shareholders' equity 2012-14E avg. 50,000 60,000

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

90

September 17, 2012

GS SUSTAIN - Financials

Exhibit 97: Net income/sales vs. sales/total shareholders equity, 2012-14E avg. Insurance

75th percentile CROCI 25%

Dai-ichi: 5.8x,1% MS&AD: 4.2x, 0% Sony Financial: 3.0x, 3% T&D: 2.9x, 2% NKSJ: 2.7x, 0%

50th percentile CROCI

25th percentile CROCI

20%

Net Income/Sales, 2012-14E avg.

15%
Torchmark AIA Principal Financial Lincoln National MetLife Unum QBE Prudential Financial Insurance Australia Samsung Fire & Marine Ins. Gjensidige Forsikring Aflac

10%

Cathay Financial

5%
Samsung Life Insurance

Korea Life Insurance

Tokio Marine

0% 0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 Sales / Total Shareholders' Equity, 2012-14E avg. 2.1 2.3 2.5

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

91

September 17, 2012

GS SUSTAIN - Financials

Exhibit 98: Return on equity (ROE) progression over time Insurance

Company The Hartford Financial Services Admiral Group Plc Aflac Incorporated Prudential Plc Marsh & McLennan Companies PICC Property and Casualty Company Old Mutual plc Ping An Insurance Group The Progressive Corporation China Life Insurance Company Legal & General Group AMP Insurance Australia Group China Pacific Insurance (H) Aon Plc. QBE Insurance Group Gjensidige Forsikring ASA Zurich Insurance Group Sampo Torchmark Corp. AXA RSA Insurance Group Aviva plc Mapfre S.A. Prudential Financial, Inc. Hannover Ruckversicherung Standard Life Plc Samsung Fire & Marine Insurance AIA Group SCOR Allianz SE Principal Financial Group, Inc. Assurant Inc. Assicurazioni Generali Munich Re (reg) Unum Group Vienna Insurance Group MetLife Inc. Chubb Corp. The Travelers Companies, Inc. ACE Limited Sony Financial Holdings Lincoln National Corp. Korea Life Insurance The Allstate Corp. CNP Assurances W. R. Berkley Corp. Suncorp Group Limited Swiss Re Cathay Financial Holding Company Aegon N.V. Ageas SA/NV Tokio Marine Holdings Samsung Life Insurance Swiss Life Holding XL Group Plc American International Group, Inc. The Dai-ichi Life Insurance Company T&D Holdings MS&AD Holdings NKSJ Holdings ROE 2001 2002 9% 21% 27% 3% 17% 18% 2003 -1% 18% 28% 9% 18% 25% 9% 2004 15% 26% 29% 1% 11% 32% 11% 2005 15% 25% 15% 5% 13% 23% 12% 2006 15% 21% 17% 10% 17% 24% 14% 39% 21% 153% 14% 23% 2% 29% 13% 2% 10% 13% 13% 4% 13% 12% 13% 4% 14% 24% 14% 11% 26% 22% 14% 13% 27% 19% 15% 13% 2007 15% 21% 33% 13% 20% 24% 20% 48% 13% 67% 14% 22% 12% 25% 46% 16% 15% 11% 17% 16% 22% 9% 14% 12% 17% 12% 16% 20% 15% 8% 14% 19% 17% 15% 4% 10% 7% 21% 11% 20% 9% 13% 20% 3% 6% 18% 2% 6% 4% 2008 -30% 17% 43% 13% 1% 2% -2% 11% -29% 20% 3% 5% 28% 20% 1% 16% 15% 20% 3% 15% -9% 18% -5% -4% 13% 12% 5% 10% -7% 6% 10% 8% 7% 9% 11% 9% 13% 11% 8% 9% -6% 10% -13% 7% 9% 6% 2% -27% 4% 8% -10% -37% 8% 5% 2009 -6% 52% 18% 13% 14% 8% 7% 16% 18% 16% 20% 30% 5% 10% 19% 17% 10% 14% 8% 12% 9% 12% 13% 15% 14% 20% 4% 14% 12% 10% 11% 7% 9% 8% 11% 10% 9% -13% 14% 13% 13% 15% -11% 2% 5% 9% 9% 4% 2% 5% 2% 14% 1% 2% 4% 2% -11% 15% -30% -1% -6% 2010 8% 55% 23% 18% 18% 20% 9% 16% 18% 17% 17% 26% 4% 11% 11% 13% 13% 9% 12% 14% 6% 9% 11% 14% 10% 17% 11% 10% 14% 10% 11% 7% 6% 10% 11% 10% 9% 7% 14% 13% 14% 18% 6% 7% 5% 9% 12% 6% 3% 2% 12% 3% 6% 7% 7% 6% 7% 6% 4% 4% 4% 2011 3% 56% 18% 16% 17% 23% 13% 15% 17% 9% 14% 13% 9% 11% 14% 8% 12% 12% 12% 12% 12% 11% 1% 14% 12% 12% 8% 10% 7% 7% 6% 7% 11% 6% 3% 4% 10% 17% 11% 6% 6% 14% 7% 8% 4% 7% 10% 5% 9% 5% 5% -4% 4% 13% 7% -4% 16% 3% 4% 0% -1% 2012E 5% 52% 21% 17% 18% 13% 16% 13% 13% 15% 13% 12% 12% 13% 15% 15% 13% 13% 12% 12% 10% 9% 13% 9% 12% 10% 10% 11% 10% 10% 9.0% 13% 10% 10% 10% 10% 11% 10% 9% 9% 10% 8% 10% 8% 9% 5% 9% 6% 6% 8% 0% 5% 6% 6% 8% 2% 4% -11% -9% 2013E 15% 46% 21% 18% 19% 14% 16% 12% 13% 14% 14% 14% 14% 15% 13% 14% 13% 13% 12% 13% 12% 12% 13% 12% 11% 12% 11% 11% 11% 11% 9.9% 10% 10% 10% 10% 11% 10% 9% 9% 10% 10% 8% 9% 8% 8% 7% 8% 7% 6% 7% 6% 6% 5% 6% 5% 3% 5% 5% 2% 2014E 37% 37% 20% 18% 19% 15% 15% 13% 16% 15% 15% 16% 14% 15% 14% 15% 12% 13% 12% 14% 12% 13% 12% 11% 11% 12% 11% 12% 10% 10% 10.1% 10% 10% 9% 9% 11% 10% 9% 9% 9% 10% 9% 9% 8% 8% 8% 8% 7% 6% 6% 8% 6% 5% 6% 5% 5% 5% 5% 5% ROE, 2009ROE, 11 2012-14E 2% 54% 19% 16% 16% 17% 10% 16% 18% 14% 17% 23% 6% 10% 15% 13% 12% 12% 11% 13% 9% 11% 8% 14% 12% 16% 7% 11% 11% 9% 9% 7% 9% 8% 8% 8% 9% 4% 13% 10% 11% 16% 1% 6% 5% 8% 10% 5% 5% 4% 6% 4% 4% 7% 6% 1% 4% 8% -7% 1% -1% 19% 45% 21% 18% 19% 14% 16% 13% 14% 15% 14% 14% 13% 14% 14% 15% 13% 13% 12% 13% 11% 12% 12% 11% 11% 11% 11% 11% 10% 10% 10% 11% 10% 10% 10% 10% 10% 10% 9% 10% 10% 8% 9% 8% 8% 7% 8% 7% 6% 7% 5% 6% 5% 6% 6% 4% 5% 0% -1% 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile

20%

17% 56% 13%

8% 1% -3%

11% 4% 12%

13% 6% 12%

10% 9% 11%

11% 16% 2% 10%

15% 15% 16% 8% 16% 14% 15% 15% 16% 13% 3% 20% 18% 17% 16% 4% 11% 12% 23% 11% 21% 21% 6% 19%

-10% 5%

-37% -7% 2%

-41% 9% 12% 6% -2% -14% 15% 9% 17% 10% 13% 20%

1% 11% 4%

2% 6% 13% 3% 0% -3% 7% 13%

7% 8% 13% 11% 15% 9% -13% 17% 15% 11% 13% 15% 10% 20%

7% 11% 13% 14% 14% 11% 7% 19% 15% 9% 10% 3% 14% 19% 9% 11% 21%

-2% 9%

16%

12% 11%

15% 9%

17% 18%

11% 16%

-2%

-41%

5%

9%

7% 11% -15% 9% 6%

8% 12% 15% 6% 3%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

92

September 17, 2012

GS SUSTAIN - Financials

Exhibit 99: Insurance ROE percentile vs. industry positioning percentile

Admiral Prudential Legal & General Gjensidige Forsikring AMP QBE China Pacific Insurance Zurich Insurance Mapfre Torchmark Aviva AIA Samsung Fire & Marine MetLife Unum The Travelers Co. The Allstate Korea Life Ins. Suncorp RSA Insurance Standard Life Assurant Sampo The Progressive Insurance Australia

100% 90% 80%

Old Mutual

Hartford Marsh & McLennan

Aflac Ping An Insurance

China Life Insurance

Aon

70%
ROE percentile, 2012-14E

AXA

60% 50% 40% 30% 20%

AIG

Hannover Ruckversicherung Prudential Financial Allianz SCOR Munich Re Sony Financial ACE CNP Assurances Swiss Re

Chubb Assicurazioni Generali Lincoln National Principal Financial

W. R. Berkley Cathay Financial Aegon Samsung Life Insurance Swiss Life Ageas

10% 0%

T&D Dai-ichi

XL Tokio Marine NKSJ

MS&AD

0%

10%

20%

30%

40% 50% 60% Industry positioning percentile

70%

80%

90%

100%

Source: Company data, Goldman Sachs Research estimates, Gao Hua Securities.

Goldman Sachs Global Investment Research

93

September 17, 2012

GS SUSTAIN - Financials

Exhibit 100: Changes in industry positioning Change in industry positioning scores since previously published performance, by company, as percentile ranking relative to peers

100%
The Progressive Standard Life

Insurance Australia Admiral

90%
AMP Unum

The Allstate Legal & General Prudential QBE The Travelers Co. RSA Insurance Ageas Aviva Aflac Zurich Insurance Samsung Fire & Marine Insurance Sampo

80%

Current Industry positioning percentile

70%

60%

China Pacific Insurance Vienna Insurance AIA Ping An Insurance

50%

Swiss Life

40%

Aegon Hannover Ruckversicherung MetLife Hartford

Chubb

China Life Insurance

30%

Mapfre Assicurazioni Generali Allianz

20%
SCOR Munich Re Dai-ichi Prudential Financial Old Mutual

10%

Sony Financial AXA T&D

CNP Assurances

0%

0%

10%

20%

30% 40% 50% 60% 70% Previous reported Industry positioning percentile

80%

90%

100%

Source: Company data, Goldman Sachs Research, Gao Hua Securities.

Goldman Sachs Global Investment Research

94

September 17, 2012

GS SUSTAIN - Financials

Reflecting our assessment of the main structural drivers for the industry, which we identify in conjunction with our sector analysts, we assess companies performance on key elements of strategic positioning. This analysis enables us to differentiate between companies that are well and poorly competitively positioned over the long term. Exhibit 101: Industry positioning: Objective, quantifiable measures of strategic positioning Insurance
Measure Rateofinsurancepremium growthinendmarkets Insurancespecificregulatoryand politicalrisk Countryrisk Qualityofregulatoryinstitutions Rationale Calculation

Countrygrowth

Marketsinwhichinsurancepremiaaregrowingquicklyprovide Weightedaveragetrendrateofgrowthininsurancepremia greatergrowthoptionsandtypicallystrongerpricing (life/nonlife)acrossendcountries(201120ECAGR) WeighedaverageAMBestcountryriskrankingsacrossend countries WeighedaverageWorldBankRegulatoryQualityrankings acrossendcountries Weightedaverageexposuretomore/lessdirectdistribution channels(sixdistributionchannelsrankedbycustomer proximity) Weightedaverageshareofthreelargestinsurers(life/nonlife separately)acrossendmarkets Weightedaverageexposuretoattractive(ranked15on combinationoflevelandstandarddeviationofglobalsegment ROE)businesslines

Clarityandstabilityofregulatoryregimecriticaltofuture returnsvisibilityandsustainability

Proximitytocustomer Pricingpower Levelofconsolidation&market discipline

Directrelationshipwithconsumerprovidesstrongerpricing powerandmorestablerelationships Moreconsolidatedmarketstendtosupportmoreattractive pricing Exposuretohigherreturn,lessvolatileinsuranceproducts improvesvisibilityintofuturereturnsprofile

Businessmix

Businesslinevolatility

Capitalposition

Strengthofcapitalbase

Bettercapitalisedinstitutionsembodylessearningsleverageto incomeandcreditcyclesandreduceriskofshareholder Totalassets/totalequity dilutionthroughcapitalraising

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

95

Countriesrankedinorderofmarketgrowth potential China India Russia MEast CEE OtherAEJ Brazil Korea UK Australia US Spain France Japan Italy Germany PingAnInsuranceGroup PICCPropertyandCasualtyCompany ChinaPacificInsurance(H) ChinaLifeInsuranceCompany AIAGroup PowszechnyZakladUbezpieczen SamsungFire&MarineInsurance SamsungLifeInsurance KoreaLifeInsurance CathayFinancialHoldingCompany XLGroupPlc ### ### PrudentialPlc AonCorp. ACELimited ### ### ViennaInsuranceGroup ### ### MapfreS.A. ### StandardLifePlc ### AgeasSA/NV InsuranceAustraliaGroupLimited QBEInsuranceGroupLimited AMPLimited HannoverRuckversicherung SuncorpGroupLimited ### Legal&GeneralGroup MetLifeInc. ### Avivaplc W.R.BerkleyCorp. UnumGroup TheAllstateCorp. LincolnNationalCorp. TheProgressiveCorporation TorchmarkCorp. AegonN.V. AdmiralGroupPlc TheHartfordFinancialServices TheTravelersCompanies,Inc. ### ### ### ZurichFinancialServices PrincipalFinancialGroup,Inc. ### AmericanInternationalGroup,Inc. AssurantInc. ### ### RSAInsuranceGroup Marsh&McLennanCompanies ### MunichRe(reg) SwissRe SCOR ChubbCorp. ### ### ### ### ### ### AssicurazioniGenerali PrudentialFinancial,Inc. AllianzSE CNPAssurances AXA AflacIncorporated TokioMarineHoldings MS&ADHoldings ### ### OldMutualplc ### ### ### TheDaiichiLifeInsuranceCompany SonyFinancialHoldings NKSJHoldings T&DHoldings ### Sampo ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### ### Over50% ### 1050% ### 210% ### ### ### ### ### ### ### ###

September 17, 2012

Goldman Sachs Global Investment Research

### ### ### ### ### ### ### ###

Source: Company data, Goldman Sachs Research.

Exhibit 102: Geographical exposures of global insurers

Revenue exposures of banks included in this report to main economic regions (most recent reported)

GS SUSTAIN - Financials

96

###

###

SwissLifeHolding

September 17, 2012

GS SUSTAIN - Financials

Exhibit 103: Ranking of country attractiveness used in global insurance analysis

Regulatory risk (AM Best), regulatory stability (World Bank) and trend projected insurance premium growth (based on economic growth and insurance penetration)
Countryrisk(AMBestranking)
Austria Denmark Finland France Germany Netherlands Norway Sweden Switzerland UK US Canada Australia Belgium Greece Iceland Ireland Italy Portugal Spain NewZealand Japan Korea Poland Brazil China Russia India 0.0 1.0 2.0 3.0 4.0

Regulatorystability(WorldBankGovernance Indicators)
Denmark Finland Netherlands NewZealand UK Sweden Canada Australia Ireland Switzerland Germany Austria Norway US France Belgium Spain Japan Poland Korea Iceland Italy Portugal Greece Brazil China India Russia 5.0 0 20 40 60 80 100

Trendinsurancepremiumgrowth(201120ECAGR)
China India Russia Poland Brazil Korea NewZealand UK Australia Portugal US Canada Spain Ireland Greece Sweden Austria Netherlands France Japan Italy Germany Belgium Finland Switzerland Norway Iceland Denmark 120 2% 0% 2% 4% 6% 8% 10%

Source: Swiss Re, AM Best, World Bank, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

97

September 17, 2012

GS SUSTAIN - Financials

Exhibit 104: Ranking of country attractiveness used in global insurance analysis (cont.)
Share of three largest players in domestic Life and Non-life insurance markets
Consolidation(Life) shareoftop3
Finland China Norway Russia India Portugal Ireland Switzerland Poland Belgium Korea Japan Brazil Iceland Denmark Greece Australia France Netherlands Italy NewZealand UK Austria Canada US Germany Sweden Spain 0% 20% 40% 60% 80%

Consolidation(Nonlife) shareoftop3
China NewZealand Australia Russia Finland India Sweden Norway Poland Iceland Denmark Korea Japan Brazil Belgium Italy Switzerland Austria France Ireland Canada US Germany Portugal Greece UK Netherlands Spain 100% 0% 20% 40% 60% 80% 100%

Source: Swiss Re, AM Best, World Bank, Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

98

September 17, 2012

GS SUSTAIN - Financials

Exhibit 105: Environmental, social and governance measures to assess management quality Insurance
Criteria
Independent Board leadership

Insurance specific

Description
Separation of CEO and Chairman roles and appointment of independent Lead Director Percentage of independent, non-executive directors and wholly independent compensation and nomination committees Audit committee independence and ratio of non-audit to audit fees paid to the assigned auditor CEO compensation (including salary, bonus, stock grants and options) as a percentage of net income Fair value of share-based compensation expense as percentage of equity Block ownership greater than 5%, staggered Board, poison pill, unequal voting rights and other provisions Number of years of reporting on environmental and social ("ES") issues and external assurance of data Compensation link and responsibility of Board, senior executives to environmental and social performance

Purpose
Maintain balance of power Shareholder representation Independence of audit process

Weighting

Corporate governance

Independent Board directors & committees Independent auditors CEO compensation Share-based compensation Minority shareholders' rights
Leadership

31% Management incentives Transparency Strength of individual shareholders Transparency 11% Leadership responsibility for ESG performance Compensation practices
Employees

Reporting and assurance of ESG performance

Integration of ES issues into strategy Employee incentives Employee incentives Labour efficiency 26% Quality of workplace Quality of workplace Brand, impact on communities Client and shareholder relationships 21% Reputation Supply chain management Product innovation 11% Risk exposure

Performance-based executive compensation linked to EPS or TSR targets Total payroll costs divided by average number of employees Net income per employee

Employee compensation Employee productivity Employee training Gender diversity Community investment I

Social

Institutionalized training programme, amount of resources used for training, hours or spend Gender diversity of total workforce, senior executives, and Board directors Community investment as a percentage of equity

Stakeholders

Customer and regulator relations Risk management Supply chain management

I I

Customer surveys leading to company actions, microinsurance and low income health insurance programs, public policy dialogue Reporting on lines of responsibility for risk management, reporting on risk measurement methodology, reporting on whistleblowing and escalation process Guidelines for suppliers on environmental and social issues, reporting on quantification of environmentally assessed and minority-owned suppliers

Environment

Opportunities Risks

I I

Product and business innovation related to environmental and social issues, signatories of UNPRI Response to climate change and social issues including policy, research and disclosure

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

99

September 17, 2012

GS SUSTAIN - Financials

Exhibit 106: Management quality rankings based on ESG performance by category Insurance
Independent Board directors & committees Minority shareholders' rights Leadership for sustainability initiatives Share-based compensation Compensation Practices (I) Supply chain management Reporting for sustainability Employee compensation Customer and regulator relations Climate change risks (I) 5 5 3 5 5 5 3 5 5 5 5 5 5 2 5 3 3 2 2 2 3 3 2 2 3 3 2 2 2 1 2.8 5 Community investment Employee productivity

Social - Stakeholders

Independent auditors

Risk management (I)

CEO compensation

Overall ESG (as % of maximum)

Social - Employees

Social - Leadership

Independent board leadership

Employee training

Gender diversity

Climate change opportunities (I)

Company

Prudential Plc Legal & General Group Aviva plc Insurance Australia Group AXA RSA Insurance Group Aegon N.V. AMP Standard Life Plc Old Mutual plc Munich Re (reg) Assicurazioni Generali Allianz SE MetLife Inc. Zurich Insurance Group The Allstate Corp. Gjensidige Forsikring ASA Unum Group The Travelers Companies, Inc. Prudential Financial, Inc. The Hartford Financial Services Lincoln National Corp. Swiss Re Swiss Life Holding CNP Assurances Marsh & McLennan Companies QBE Insurance Group Admiral Group Plc Aflac Incorporated Suncorp Group Limited

78 78 75 74 74 74 74 73 73 70 70 69 69 67 67 64 63 63 63 62 61 60 60 59 58 57 57 56 56 56 55.4 95

82% 82% 79% 78% 78% 78% 78% 77% 77% 74% 74% 73% 73% 71% 71% 67% 66% 66% 66% 65% 64% 63% 63% 62% 61% 60% 60% 59% 59% 59% 58%

5 5 5 4 3 5 4 4 5 5 4 4 4 3 4 1 4 5 3 3 1 4 4 4 4 4 4 5 3 4 3.5 5

4 4 3 5 3 4 5 5 3 3 2 2 2 5 5 5 2 5 5 5 5 5 5 5 1 5 3 4 4 5 3.3 5

3 3 5 4 4 3 5 4 4 3 4 5 2 4 4 5 5 5 5 5 5 5 5 3 2 5 5 3 5 4 3.5 5

5 4 5 2 4 4 3 4 5 5 3 4 4 5 4 4 4 4 4 4 5 2 2 4 3 2 5 4 4 5 3.0 5

5 5 1 3 3 3 3 5 3 5 3 5 3 5 3 3 3 5 5 5 5 5 3 3 3 5 5 3 3 3 3.2 5

4 4 4 4 3 1 3 4 4 3 4 3 4 3 4 5 1 4 5 5 5 4 3 3 1 5 4 3 4 1 3.1 5

26 25 23 22 20 20 23 26 24 24 20 23 19 25 24 23 19 28 27 27 26 25 22 22 14 26 26 22 23 22 19.7 30

4 4 5 5 5 5 5 1 5 2 4 4 4 4 1 4 2 2 2 2 2 1 5 2 4 2 1 4 1 2 2.5 5

2 4 3 3 3 4 3 2 2 4 5 2 4 3 1 2 2 1 2 2 3 2 3 1 1 2 1 1 3 1 1.9 5

6 8 8 8 8 9 8 3 7 6 9 6 8 7 2 6 4 3 4 4 5 3 8 3 5 4 2 5 4 3 4.3 10

5 5 5 5 5 5 5 5 5 5 5 1 5 5 5 5 1 3 5 5 5 5 1 5 3 5 5 5 3 5 3.6 5

3 4 3 3 5 3 5 5 4 3 4 3 4 3 4 1 4 3 1 1 1 1 5 5 5 1 1 3 5 4 2.8 5

4 5 3 1 2 2 4 5 3 2 3 2 2 3 3 2 5 4 4 3 3 4 4 3 5 2 4 4 5 2 3.0 5

3 5 5 3 5 3 5 3 3 1 5 5 5 3 3 3 5 3 3 1 3 3 5 5 5 1 1 3 3 3 3.1 5

5 1 3 5 2 4 2 5 3 1 2 1 1 3 1 5 5 3 3 3 2 2 1 1 2 3 4 2 4 3 2.3 5

20 20 19 17 19 17 21 23 18 12 19 12 17 17 16 16 20 16 16 13 14 15 16 19 20 12 15 17 20 17 14.8 25

3 3 4 5 4 4 3 3 5 5 1 4 1 5 3 5 1 4 4 4 1 5 1 3 2 1 1 2 1 4 2.3 5

5 2 5 3 5 5 2 2 3 5 5 5 5 2 5 2 5 2 2 1 3 2 1 2 5 2 2 3 1 2 2.6 5

5 5 5 5 3 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 3 3 5 3 3 5 4.3 5

4 5 5 5 5 5 4 1 3 4 1 5 4 1 4 1 4 2 1 1 1 1 4 1 3 3 1 1 1 1 2.1 5

17 15 19 18 17 19 14 11 16 19 12 19 15 13 17 13 15 13 12 11 10 13 11 11 13 9 9 9 6 12 11.3 20

4 5 3 4 5 4 5 5 3 4 5 4 5 3 3 3 2 1 2 5 3 1 1 2 3 3 3 1 1 1 2.4 5

Average Maximum Partial data disclosure Non disclosure

5.3 10

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Environment 9 10 6 9 10 9 8 10 8 9 10 9 10 5 8 6 5 3 4 7 6 4 3 4 6 6 5 3 3 2

Overall ESG

Governance

100

September 17, 2012

GS SUSTAIN - Financials

Exhibit 107: Management quality rankings based on ESG performance by category Insurance (continued)
Independent Board directors & committees Minority shareholders' rights Leadership for sustainability initiatives Share-based compensation Compensation Practices (I) Supply chain management Reporting for sustainability Employee compensation Customer and regulator relations Climate change risks (I) 5 2 1 1 5 2 2 3 5 2 3 2 2 1 2 1 5 2 1 1 5 1 2 1 2 3 2 2 1 2 1 2.8 5 Community investment Employee productivity

Social - Stakeholders

Independent auditors

Risk management (I)

CEO compensation

Overall ESG (as % of maximum)

Social - Employees

Social - Leadership

Independent board leadership

Employee training

Gender diversity

Climate change opportunities (I)

Company

ACE Limited Aon Plc. Chubb Corp. Ageas SA/NV Tokio Marine Holdings Sampo Samsung Fire & Marine Insurance Mapfre S.A. SCOR The Progressive Corporation Hannover Ruckversicherung AIA Group Principal Financial Group, Inc. XL Group Plc China Life Insurance Company American International Group, Inc. MS&AD Holdings Assurant Inc. Ping An Insurance Group Korea Life Insurance NKSJ Holdings Torchmark Corp. The Dai-ichi Life Insurance Company W. R. Berkley Corp. China Pacific Insurance (H) T&D Holdings Sony Financial Holdings Vienna Insurance Group PICC Property and Casualty Company Samsung Life Insurance Cathay Financial Holding Company

55 54 54 54 52 51 51 50 50 49 49 49 49 49 48 48 48 47 45 44 43 42 41 40 37 37 36 35 34 31 27 55.4 95

58% 57% 57% 57% 55% 54% 54% 53% 53% 52% 52% 52% 52% 52% 51% 51% 51% 49% 47% 46% 45% 44% 43% 42% 39% 39% 38% 37% 36% 33% 28% 58%

3 4 5 4 4 4 4 1 1 4 4 4 3 4 4 4 1 4 1 5 4 3 4 1 4 1 1 4 4 4 1 3.5 5

5 3 5 3 1 2 2 1 2 5 1 1 4 5 1 5 1 5 1 4 1 5 1 5 1 1 1 3 1 2 2 3.3 5

4 5 5 3 2 2 1 2 4 5 1 2 5 4 5 5 2 5 2 1 2 5 2 5 1 2 2 4 2 1 1 3.5 5

5 2 4 5 1 4 1 1 2 4 1 4 1 2 3 4 1 2 3 1 1 2 1 2 3 1 1 1 3 1 1 3.0 5

3 3 5 5 3 3 1 3 3 3 3 3 3 3 3 5 1 3 3 1 3 3 1 3 1 1 1 1 3 1 1 3.2 5

3 5 5 4 4 3 3 1 4 3 1 2 3 3 1 1 3 4 3 5 4 3 4 3 2 4 1 1 1 1 2 3.1 5

23 22 29 24 15 18 12 9 16 24 11 16 19 21 17 24 9 23 13 17 15 21 13 19 12 10 7 14 14 10 8 19.7 30

2 1 1 1 3 1 2 5 1 2 4 2 1 1 2 1 4 1 5 1 1 1 4 1 2 2 1 1 1 1 1 2.5 5

1 1 1 1 2 1 3 2 1 1 1 1 2 1 1 2 2 1 1 2 1 1 3 1 1 2 1 1 1 1 1 1.9 5

3 2 2 2 5 2 5 7 2 3 5 3 3 2 3 3 6 2 6 3 2 2 7 2 3 4 2 2 2 2 2 4.3 10

5 5 5 5 1 5 1 5 5 1 5 5 5 5 1 5 1 5 1 1 1 1 1 3 1 1 1 1 1 1 1 3.6 5

5 5 2 4 4 5 4 3 1 1 5 2 1 1 2 1 5 1 2 3 2 1 1 1 2 1 2 2 2 1 2 2.8 5

5 1 5 2 3 5 4 2 5 2 5 5 3 5 3 4 1 1 2 4 1 5 1 4 1 1 4 1 1 1 1 3.0 5

1 3 1 5 3 3 3 5 3 1 3 3 3 3 5 1 3 1 5 3 3 1 3 1 3 3 3 3 3 3 3 3.1 5

1 2 2 2 1 3 1 2 1 3 1 1 3 2 3 2 1 3 2 1 1 1 2 2 2 2 1 2 2 2 2 2.3 5

17 16 15 18 12 21 13 17 15 8 19 16 15 16 14 13 11 11 12 12 8 9 8 11 9 8 11 9 9 8 9 14.8 25

1 1 1 1 2 1 5 1 1 1 1 2 1 1 3 1 3 1 2 5 2 1 1 1 3 1 2 1 1 1 1 2.3 5

1 2 1 1 3 2 5 5 3 2 3 3 1 1 3 1 2 1 3 2 3 1 2 1 1 2 2 1 2 3 2 2.6 5

3 5 3 5 5 3 5 3 5 5 5 5 3 5 3 2 5 5 3 2 3 5 5 3 5 5 5 3 3 3 2 4.3 5

1 1 1 1 2 1 1 3 2 1 1 1 2 1 2 1 3 1 3 1 2 1 1 1 1 1 2 2 1 1 1 2.1 5

6 9 6 8 12 7 16 12 11 9 10 11 7 8 11 5 13 8 11 10 10 8 9 6 10 9 11 7 7 8 6 11.3 20

1 3 1 1 3 1 3 2 1 3 1 1 3 1 1 2 4 1 2 1 3 1 2 1 1 3 3 1 1 1 1 2.4 5

Average Maximum Partial data disclosure Non disclosure

5.3 10

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

Environment 6 5 2 2 8 3 5 5 6 5 4 3 5 2 3 3 9 3 3 2 8 2 4 2 3 6 5 3 2 3 2

Overall ESG

Governance

101

September 17, 2012

GS SUSTAIN - Financials

Exhibit 108: Changes in management quality Change in ESG scores since previously published performance, by company, as % of maximum score possible for each company

90%

Legal & General

Prudential

80%

70%
2010/11 Overall ESG %

Aviva AXA Ins. Australia RSA Insurance Standard Life AMP Aegon Munich Re Old Mutual Assicurazioni Generali Allianz Zurich Ins. MetLife Prudential Financial Travelers Unum The Allstate

60%
Samsung Fire & Marine Ins.

Swiss Life Hartford CNP Assurances QBE Admiral Aflac Chubb Ageas Sampo SCOR Mapfre Progressive Hannover Ruckversicherung Ping An Ins.

50%
Dai-ichi

AIA China Life Ins.

40%

T&D Vienna Ins.

China Pacific Ins. Sony Financial

PICC Property & Casualty

30% 30%

40%

50%

60% 70% Previous reported overall ESG %

80%

90%

Source: Company data, Goldman Sachs Research.

Goldman Sachs Global Investment Research

102

September 17, 2012

GS SUSTAIN - Financials

Goldman Sachs global ESG scoring methodology

Our analysis of companies management of environmental, social & governance (ESG) performance is based on c.70 publically disclosed data points, verified with companies where possible, and used to calculate scores 1-5 on each of 20-25 indicators applicable to each sector. The scoring methodology is designed to be as objective, transparent and quantitative as possible. Exhibits 109-114 detail the calculations used to determine scores 1 (low) to 5 (high) for each company on each indicator (indicators shown apply to all sectors only those specific for each financial sector are applied to companies analysed in this report). Exhibit 109: Goldman Sachs Global ESG scoring methodology: Corporate governance
Scoring schema defining requirements for scores 1-5
Indicator Independent Board leader Independent Board directors and committees Score 5 Separate CEO/Chair -AND- Existence of a lead Director >= 75% independent directors with independent nomination -AND- compensation committees Audit committee comprising independent Board directors and < 10% non-audit to audit fees 3rd quintile CEO compensation as a % of DACF Share based compensation as % of DACF in the 2nd tercile No block shareholdings > 5% -AND- no defences against minority shareholders, staggered Boards, poison pills, unequal voting rights and restrictions on voting rights Score 4 Separate CEO/Chair, no Lead Director 50 - 75% independent directors with independent nomination -AND- compensation committees Audit committee comprising independent Board directors and < 25% non-audit to audit fees Score 3 Existence of a lead director, no separate CEO/Chair Score 2 Score 1 No separate CEO/Chair, no Lead Director <50% independent directors, non-independent nomination and compensation committees No disclosure of audit fees and non-audit fees

Independent auditors

CEO compensation as % of DACF Share-based compensation as % DACF

>= 50% independent directors -OR>50% independent directors with independent independent nomination -OR- compensation nomination -OR- compensation committee committee Audit committee comprising independent Non-independent audit committee and Board directors and > 25% non-audit to audit disclosure of audit fees and non-audit fees fees 1st quintile CEO compensation as a % of 2nd or 4th quintile CEO compensation as a % 5th quintile CEO compensation as a % of DACF (or negative number due to negative of DACF DACF cash flow) Share based compensation as % of DACF in the 1st or 3rd tercile No block shareholdings > 5% and one defence against minority shareholders -ORblock shareholdings < 25% and no defence against minority shareholders

No disclosure No disclosure of share-based compensation

Protection of minority shareholders

25% >=No block shareholdings > 5% and one 25% < Block shareholdings < 50% -AND- less defence against minority shareholders -ORBlock shareholdings >= 50% -OR- three or than three defences against minority block shareholdings < 25% and two defences more defences against minority shareholders shareholders against minority shareholders

Source: Goldman Sachs Research.

Exhibit 110: Goldman Sachs Global ESG scoring methodology: Social leadership
Scoring schema defining requirements for scores 1-5
Indicator Reporting on sustainability Score 5 Score 4 Score 3 Score 2 Score 1

>= 5 years environmental and social reporting - >= 5 years environmental and social reporting - < 5 years environmental and social reporting - < 5 years environmental and social reporting No environmental and social reporting AND- external assurance of ES data AND- no external assurance of ES data AND- external assurance of ES data AND- no external assurance of ES data Both Board -AND- Senior Executive responsible for ES performance -ANDcompensation link at board and at senior executive levels

Leadership on sustainability

Three of four satisfied

Two of four satisfied

One of four satisfied

None of the four satisfied

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

103

September 17, 2012

GS SUSTAIN - Financials

Exhibit 111: Goldman Sachs Global ESG scoring methodology: Employees

Scoring schema defining requirements for scores 1-5
Indicator Employee compensation Employee productivity Employee gender diversity Score 5 Reported payroll expense per employee (year average) > 1st quartile DACF per employee (year average) > 1st quartile >median Board directors, >median Senior executives and >median overall workforce females (Reporting on training expenditure - OR reporting on training hours), and training policy Fatalities = 0 4th quartile Lost Time Injury rate (LTI) Fatalities below median -AND- Fatality rate below median 3rd quartile Lost Time Injury rate (LTI) Score 4 2nd quartile < reported payroll expense per employee (year average) <= 1st quartile 2nd quartile < DACF per employee (year average) <= 1st quartile Two above median, all reported Score 3 3rd quartile <reported payroll expense per employee (year average) <= 2nd quartile 3rd quartile < DACF per employee (year average) <= 2nd quartile Two above median (Reporting on training expenditure - OR reporting on training hours), or training policy Fatalities below median -OR- Fatality rate below median 2nd quartile Lost Time Injury rate (LTI) One of three satisfied Fatalities above median 1st quartile Lost Time Injury rate (LTI) Score 2 4th quartile < reported payroll expense per employee (year average) <= 3rd quartile 4th quartile < DACF per employee (year average) <= 3rd quartile One above median Score 1 Reported payroll expense per employee (year average) <= 4th quartile DACF per employee (year average) <= 4th quartile No disclosure -OR- none above median

Employee training Fatalities Health & safety performance - LTI Health & safety management

None of the three satisfied No disclosure of fatalities No disclosure of LTI None of the three satisfied

Health & safety behaviour based, health & Two of three satisfied safety risk assessment, and pandemics policy Performance-based executive compensation linked to EPS or TSR targets and pay-out formula for EPS or TSR targets Flexible work arrangement, Sponsorship of continuing education for employees, on-site medical facilities, H&S policy, H&S training Flexible working arrangements, family care, sponsorship of continuing education, and onsite facilities policies Four of five satisfied

Compensation practices (B)/(I)

Performance-based executive compensation linked to EPS or TSR targets

No disclosure

Employee development (M)

Three of five satisfied

Two of five satisfied

One/none of five satisfied

Employee development (SS)

Three of four satisfied

Two of four satisfied

One of four satisfied

None of the four satisfied

Sector specific indicators: B: Banks, I: Insurance, M: Media, SS: Software & Services

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

104

September 17, 2012

GS SUSTAIN - Financials

Exhibit 112: Goldman Sachs Global ESG scoring methodology: Stakeholders

Scoring schema defining requirements for scores 1-5
Indicator Supply chain management Score 5 Score 4 Score 3 Two of the four satisfied Score 2 One of the four satisfied Score 1 None

Supplier guidelines, suppliers: assess for environment, suppliers: assess for human Three of the four satisfied rights, and % of suppliers assessed disclosed Procedures for stakeholder dialogue, Whistleblower mechanisms, UN declaration of human rights, bribery prohibition 1st quartile R&D as a % sales 1st quartile Community investments as a % sales Customer surveys leading to actions, microfinance, public policy dialogue Reporting on lines of responsibility for risk management, reporting on risk measurement methodology, reporting on whistle-blowing and escalation process Both return on assets and tangible equity / tangible assets above median Policies for: i) self-regulation, ii) consumer privacy, iii) consumer data protection, and iv) senior executive responsibility Policy for editorial independence, senior executive responsibility of editorial independence, no political donations, policy on bribery Three of the four satisfied 2nd quartile R&D as a % sales 2nd quartile Community investments as a % sales

Business ethics and corruption R&D / DACF Community investment / Sales Customer and regulator relations (B)/(I)

Two of the four satisfied 3rd quartile R&D as a % sales 3rd quartile Community investments as a % sales Two of three

One of the four satisfied 4th quartile R&D as a % sales 4th quartile Community investments as a % sales One of three

None No disclosure No disclosure None

Risk management (B)/(I)

Two of three Either return on assets or tangible equity / tangible assets above median Three of the four satisfied Two of the four satisfied

One of three

None Both return on assets and tangible equity / tangible assets below median

Pricing of risk (B) Responsible marketing (M)

One of the four satisfied

None

Independence of content (M)

Three of the four satisfied

Two of the four satisfied

One of the four satisfied

None

Marketing self-regulation (CS)

Policy statement on self-regulation, Guidelines for marketing to youth, Policy on product Three of the four satisfied labelling and Community health initiatives Three of the four satisfied

Two of the four satisfied

One of the four satisfied

None

Policy statement on health, Advisory panel on health, Stakeholder consultation and Targets to reduce product health risks Political donations % of cash flow <= median Lobbying and political donations as % of cash AND- lobbying costs % of cash flow <= flow (H) median Health and wellness strategy (CS) Product donations to least developed countries as % of cash flow > median, Patient assistance programs, one of the following: Sale at no profit to least developed countries OR- Sale at discount to emerging markets Litigation costs as % of sales < median Access, security, and privacy policy / guidelines, governance structure, and implementation Churn rate <= 80% of the observed churn rates

Two of the four satisfied

One of the four satisfied

None No disclosure of lobbying and political donations

Both numbers are reported (political donations Both numbers are reported (political donations Only one number is reported (political and lobbying costs) and one of the two is and lobbying costs) and both are above donations and lobbying costs) below median median Product donations to least developed countries as % of cash flow < median, Patient assistance programs, one of the following: Sale at no profit to least developed countries OR- Sale at discount to emerging markets Product donations to least developed countries as % of cash flow > median, and one of the two: 1. Patient assistance programs, 2. one of the following: Sale at no profit to least developed countries -OR- Sale at discount to emerging markets Litigation costs as % of sales > median Policy -OR- Governance structure -ANDImplementation Churn rate <= 60% of the observed churn rates Policy -AND- Governance structure -ORImplementation Churn rate <= 40% of the observed churn rates Policy -OR- Governance structure Churn rate <= 20% of the observed churn rates

Access to healthcare and product donations (H)

One of the three is satisfied: 1. Product donations to least developed countries as % of cash flow is disclosed, 2. Patient No disclosure assistance programs, 3. one of the following: Sale at no profit to least developed countries OR- Sale at discount to emerging markets No disclosure None of the four satisfied Churn rate > 20% of the observed churn rates

Litigation Cost as % of cash flow (H) Access, security, and privacy measures (SS) Customer retention (T)

Customer engagement (T)

Actioned customer satisfaction survey, customer satisfaction survey with quantitative Three of the four satisfied reporting, customer fraud protection, support for vulnerable customers. Reporting on procedure to address customer complaints, customer loyalty scheme, customer confidentiality policy Political donations % of cash flow <= median AND- lobbying costs % of cash flow <= median Two of three

Two of the four satisfied

One of the four satisfied

None

Customer management Customer management ( R) Lobbying & political donations as % of cash flow (A&D)

One of three

None No disclosure of lobbying and political donations

Both numbers are reported (political donations Both numbers are reported (political donations Only one number is reported (political and lobbying costs) and one of the two is and lobbying costs) and both are above donations and lobbying costs) below median median One of three

Human rights and security (MM)

Support human rights and security principles, employees trained on human rights and Two of three suppliers assessed on human rights issues.

None

Corruption risk management (MM)

Member of EITI or disclose tax and royalty payments, no political donations

Member of EITI or disclose tax and royalty payments, make political donations

Member of EITI or disclose tax and royalty No disclosure on EITI membership and tax payments, no disclosure on political donations No disclosure on EITI membership or tax and and royalty payments and on political - OR royalty payments, make political donations donations Not member of EITI nor disclosure of tax payments, but no political donations

Sector specific indicators: B: Banks, CS: Consumer Staples H: Healthcare, I: Insurance, M: Media, R: Retail, SS: Software & Services, T: Telecoms Subsector specific indicators: A&D: Aerospace & Defense, MM: Metals & Mining

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

105

September 17, 2012

GS SUSTAIN - Financials

Exhibit 113: Goldman Sachs Global ESG scoring methodology: Environmental

Scoring schema defining requirements for scores 1-5
Indicator Environmental policy & targets Energy consumption / GCI GHG emissions / GCI Water consumption / GCI Waste generation / GCI Score 5 Climate change targets, policy to increase use of power from renewable sources, recycling program 4th quartile Total energy consumption relative to GCI 4th quartile Total GHGs emissions relative to GCI 4th quartile Total water consumption relative to GCI 4th quartile Total waste production relative to GCI Carbon finance, SRI funds, climate change related products, investment or financial services related to renewable energy or other climate change related projects Research on impacts of climate change & environmental and social catastrophe modelling, Environmental policy, Integration of climate change & environmental/social risks into risk assessment Water conservation programme, Water conservation targets, Energy efficiency projects and Renewable energy projects "Sustainable packaging policy", "Source packaging materials from sustainable sources", "Packaging reduction targets" and "Report on progress" Renewable energy policy, alternative commute, green buildings, and climate change related products Climate change target, external verification of emissions, renewable energy use policy, and alternative commute Alternative transport/fleet management, renewable energy use policy, infrastructure related energy efficiency initiatives, environmental training of employees SOx relative to GCI < median (0.85 tonnes / mn $US GCI) and NOx relative to GCI < below median (0.45 tonnes / mn $US GCI) Score 4 Two of three 3rd quartile Total energy consumption relative to GCI 3rd quartile Total GHGs emissions relative to GCI 3rd quartile Total water consumption relative to GCI 3rd quartile Total waste production relative to GCI Three of the four satisfied Score 3 One of three 2nd quartile Total energy consumption relative to GCI 2nd quartile Total GHGs emissions relative to GCI 2nd quartile Total water consumption relative to GCI 2nd quartile Total waste production relative to GCI Two of the four satisfied 1st quartile Total energy consumption relative to GCI 1st quartile Total GHGs emissions relative to GCI 1st quartile Total water consumption relative to GCI 1st quartile Total waste production relative to GCI One of the four satisfied Score 2 Score 1 None No disclosure of Total energy consumption No disclosure of Total GHGs emissions No disclosure of Total water consumption No disclosure of Total waste production

Climate change opportunities (B)/(I)

None

Climate change risks (B)/(I)

Two of the four satisfied

One of the four satisfied

None

Resources (CS)

Three of the four satisfied

Two of the four satisfied

One of the four satisfied

None

Packaging (CS)

Three of the four satisfied

Two of the four satisfied

One of the four satisfied

None

Climate change initiatives (SS)

Three of the four satisfied

Two of the four satisfied

One of the four satisfied

None

Climate change initiatives (M)

Three of the four satisfied

Two of the four satisfied

One of the four satisfied

None

Climate change policies (T)

Three of the four satisfied

Two of the four satisfied

One of the four satisfied

None

Other emissions versus asset base (U)

Both reported but only one below median

Both reported and both above or equal to median

One reported

None reported

Sector specific indicators: B: Banks, CS: Consumer Staples H: Healthcare, I: Insurance, M: Media, R: Retail, SS: Software & Services, TH: Tech Hardware, T: Telecoms, U: Utilities, PG: Power Generation Subsector specific indicators: AU: Autos, A&D: Aerospace & Defense, INT/E&P: Integrated and E&P, MM: Metals & Mining

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

106

September 17, 2012

GS SUSTAIN - Financials

Exhibit 114: Goldman Sachs Global ESG scoring methodology: Environmental (cont.)
Scoring schema defining requirements for scores 1-5
Indicator Zero carbon capacity Power Utilities (PG) Restriction of hazardous substances RoHS (TH) Product recycling at end-of-lifecycle (TH ) Product safety ( R) Score 5 Score 4 Score 3 Score 2 Score 1 5th quintile Zero carbon capacity as a % of total power generation No reported plans to phase out PVC and BFR No disclosure of % products recycled at endof-lifecycle, 3R product design No disclosure 1st quintile Zero carbon capacity as a % of 2nd quintile Zero carbon capacity as a % of total power generation total power generation Plans to phase out PVC and BFR by end of 2009 >0% product recycling at end-of-lifecycle and 3R product design Initiatives to phase out use of specific ingredients on environmental/safety grounds AND- product safety testing At least four of "Sustainable packaging initiative", "quantifiable packaging reduction Three of five satisfied AND- targets", "quantifiable reporting on plastic bag elimination -AND- targets" Below median on lowest emission model AND- below median on average fleet emission Development of hybrid technology, availability of hybrid technology, development of cell Three of four satisfied fuel/electric technology, availability of cell fuel/electric technology Environmental impact assessment (EIA) conducted at all projects -AND- biodiversity strategy Hectares disturbed per mn US$ GCI below median -AND- land rehabilitation rate above median Slag recycling >= 99.5% Hectares disturbed per mn US$ GCI below median -OR- land rehabilitation rate above median Slag recycling >= 95% 3rd quintile Zero carbon capacity as a % of 4th quintile Zero carbon capacity as a % of total power generation total power generation Plans to phase out PVC and BFR in 2010 or thereafter 3R product design, % products recycled at end-of-lifecycle not disclosed Initiatives to phase out use of specific ingredients on environmental/safety grounds OR- product safety testing Two of five satisfied One of five satisfied

Sustainable packaging use ( R)

No disclosure

Fleet Emission (AU)

Only one below median

None below median

Technology development (AU)

Two of four satisfied Environmental impact assessment (EIA) conducted at all projects -OR- biodiversity strategy Hectares disturbed per mn US$ GCI above median -AND- land rehabilitation rate below median Slag recycling >= 80%

One of four satisfied

No disclosure

Environmental impact management (MM)

No disclosure

Land disturbance and rehabilitation (MM) Reuse of slag (S) Chemical hazards ( C) Gas flaring versus production Producers (INT/E&P) Gas reserves and low carbon investments (INT/E&P) Oil spills, absolute and versus production (INT/E&P)

Disclosure of one figure Slag recycling >= 2%

No disclosure No disclosure of recycling of slag or < 2%

VOC emissions < 0.15 AND COD emissions < VOC emissions < 0.15 OR COD emissions < 0.15 AND follows Responsible Care policy 0.15 AND follows Responsible Care policy 3rd tercile gas flaring relative to production (Gas reserves >= 40% of total reserves and strategic renewables investment) -OR- (gas reserves > 65 % of total reserves and no strategic renewables investment) Average 1st quartile absolute oil spills (kbls) and Oil spills rate ( kbls / mn boe production) Average 2nd quartile absolute oil spills (kbls) and Oil spills rate ( kbls / mn boe production) 2nd tercile gas flaring relative to production

Three of the three ,VOC OR COD are Two of the three ,VOC OR COD are disclosed Everything else disclosed OR follows Responsible Care policy OR follows Responsible Care policy 1st tercile gas flaring relative to production (Gas reserves >= 40% of total reserves and no strategic renewables investment) or (strategic renewables investment) Average 3rd quartile absolute oil spills (kbls) and Oil spills rate ( kbls / mn boe production) Average 4th quartile absolute oil spills (kbls) and Oil spills rate ( kbls / mn boe production) No disclosure No gas reserves, no strategic investment in renewables

No disclosure

Sector specific indicators: B: Banks, CS: Consumer Staples H: Healthcare, I: Insurance, M: Media, R: Retail, SS: Software & Services, TH: Tech Hardware, T: Telecoms, U: Utilities, PG: Power Generation Subsector specific indicators: AU: Autos, A&D: Aerospace & Defense, INT/E&P: Integrated and E&P, MM: Metals & Mining

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

107

September 17, 2012

GS SUSTAIN - Financials

GS SUSTAIN Focus List and performance

We have applied the GS SUSTAIN framework to c.1,400 companies across 27 global industries, applying objective measures to identify those leaders in the strongest position to sustain industry-leading returns on capital, which in turn translates into superior growth and equity market outperformance. The GS SUSTAIN Focus List, bringing together leaders identified since the products launch in June 2007, has outperformed global equity benchmarks (Exhibit 116) as well as global industry peers (Exhibit 117). Exhibit 115: GS SUSTAIN Focus List: 69 global industry leaders
GS SUSTAIN Focus List as of September 17, 2012
Industry Sector Oilproducers Americas Occidental OXYUS EMEA BGGroup Novatek Halliburton HALUS Saipem Technip Monsanto Potash MONUS POTUS Novozymes Syngenta Antofagasta BHPBilliton Gerdau GGBUS Centrica Fortum CNALN FUM1VFH BG/LN NVTKLI SPMIM TECFP NZYMBDC SYNNVX ANTOLN BLTLN BHPBilliton BLTLN TMT Software&internet TechHardware AsiaPacific Industry Sector Americas Apple EMC Qualcomm Amazon Priceline Accenture Mastercard Altera AAPLUS EMCUS QCOMUS AMZNUS PCLNUS ACNUS MAUS ALTRUS ASML ASMLNA Tencent 700HK ARM EMEA ARMLN AsiaPacific

OilServices

Resources

Chemicals

ITServices Semiconductors Media

Mining Steel Utilities

Publicis Millicom MTN

PUBFP MICSS MTNSJ ChinaMobile 941HK

Telecom

Caterpillar Cummins Capitalgoods Industrials Autos Construction Aero&defense FluorCorp Boeing Rockwell Automation

CATUS CMIUS ROKUS

ABB AtlasCopco KONE

ABBNVX ATCOASS KNEBVFH Healthcare Pharma Allergan BiogenIdec AGNUS BIIBUS NovoNordisk Roche Shire MedTech Healthcareservices AgilentTechnologies Cerner AUS CERNUS NOVOBDC ROGVX SHPLN Cochlear COHAU

NokianRenkaat FLRUS BAUS RollsRoyce

NRE1VFH

BajajAuto

BJAUTIN

RR/LN ItauUnibanco ITUBUS BBVA Firstrand Banks Belle International 1880HK Financials HSBC JuliusBaer StandardChartered Insurance Prudentialplc RSA BBVASM FSRSJ HSBALN BAERVX STANLN PRULN RSALN StandardChartered AMP STANLN AMPAU Commonwealth Bank HangSeng HSBC CBAAU 11HK HSBALN

Hospitality TJX Retail&apparel Consumer Staplesretail Consumerproducts Cocacola Hershey KOUS HSYUS TJXUS

InterContinental Hotels Inditex Richemont JeronimoMartins Diageo

IHGLN ITXSM CFRVX JMTPL DGELN

Source: Goldman Sachs Research.

Goldman Sachs Global Investment Research

108

September 17, 2012

GS SUSTAIN - Financials

Exhibit 116: The GS SUSTAIN Focus List has outperformed MSCI ACWI by 43% since launch in June 2007 (performance as of Sept 14, 2012)

40% 30% 20% 10%

Absoluteperformance

0% (10%) (20%) (30%) (40%) (50%) (60%) Jul07 GSSUSTAINFocusList MSCIAllCountryWorldIndex Jan08 Aug08 Feb09 Sep09 Mar10 Oct10 May11 Nov11 Jun12

Note: Results presented should not and cannot be viewed as an indicator of future performance. Performance is calculated on an equally weighted basis relative to the MSCI All Country World index (market-cap-weighted total return series in US$). Full details of the performance of stocks in the GS SUSTAIN universe can be provided upon request. Source: MSCI, Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

109

September 17, 2012

GS SUSTAIN - Financials

Exhibit 117: GS SUSTAIN Focus List stocks have outperformed their MSCI ACWI global benchmarks in most sectors
EnergyinGSSUSTAIN
versusMSCIACWIEnergy
+70%
+50%

BasicMaterialsinGSSUSTAIN
versusMSCIACWIMaterials
+60%

IndustrialsinGSSUSTAIN
versusMSCIACWIIndustrials
+10% +0% -10%

TelecomServiceinGSSUSTAIN
versusMSCIACWITelecom

+50%

+30%

+40%

+30%
+10%

+20% -20% +0%

-10%

+10%

-30% -40% -50%

-10%
-30%

-20%

-30%
-50%

-40% -60%

-50%

-60%

-70% -80% Oct 07

-70% Jun/07

Mar/08

Dec/08

Sep/09

Jun/10

Mar/11

Dec/11

-70% Jun 07

Apr 08

Feb 09

Dec 09

Oct 10

Aug 11

Jun 12

-80% Jan 08

Nov 08

Sep 09

Jul 10

May 11

Mar 12

Aug 08

Jun 09

Apr 10

Feb 11

Dec 11

Basic Materials in GS SUSTAIN

MSCI ACWI Materials

Basic Materials in GS SUSTAIN

MSCI ACWI Materials

Industrials in GS SUSTAIN

MSCI ACWI Industrials

Financials in GS SUSTAIN

MSCI ACWI Financials

Consumer Staples in GS SUSTAIN

versus MSCI ACWI Consumer Staples
+90% +70%

HealthcareinGSSUSTAIN
versusMSCIACWIHealthCare
+20% +10%

FinancialsinGSSUSTAIN
versusMSCIACWIFinancials
+50%

ConsumerDiscretionaryinGSSUSTAIN
versusMSCIACWIConsumerDiscretionary

+70%

+50%

+30% +0%

+50%

+30%

-10% -20% -30%

+10%

+30% +10% +10% -10% -10% -30% -40% -30% -30% -50% -60% -70% -70% Jun 07 May 08 Mar 09 Feb 10 Dec 10 Nov 11 -70% Jun 07 Apr 08 Feb 09 Dec 09 Oct 10 Aug 11 Jun 12 -80% Oct 07 -70% Jun 07 -50%

-10%

-50%

-50%

Aug 08

Jun 09

Apr 10

Feb 11

Dec 11

Apr 08

Feb 09

Dec 09

Oct 10

Aug 11

Jun 12

Consumer Staples in GS SUSTAIN

MSCI ACWI Consumer Staples

Healthcare in GS SUSTAIN

MSCI ACWI Healthcare

Financials in GS SUSTAIN

MSCI ACWI Financials

Consumer Discretionary in GS SUSTAIN

MSCI ACWI Consumer Discretionary

TechnologyinGSSUSTAIN
versusMSCIACWIInformationTechnology
+20% +10% -0% -10% -20% -30% -40% -50% -60% -70% Mar 08 +10% +0% -10% -20% -30% -40% -50% -60% -70% -80% Dec 08

UtilitiesinGSSUSTAIN
versusMSCIACWIUtilities

Jan 09

Nov 09

Sep 10

Jul 11

May 12

Oct 09

Aug 10

Jun 11

Apr 12

Information Technology in GS SUSTAIN

MSCI ACWI Information Technology

Financials in GS SUSTAIN

MSCI ACWI Financials

Note: Results presented should not and cannot be viewed as an indicator of future performance. Performance is calculated on an equally weighted basis relative to the relevant index (market-cap-weighted total return series in US$). Full details of the performance of stocks in the GS SUSTAIN universe can be provided upon request. Source: MSCI, Datastream, Goldman Sachs Research.

Goldman Sachs Global Investment Research

110

September 17, 2012

GS SUSTAIN - Financials

Financial advisory disclosures

Goldman Sachs is acting as a financial adviser to Barclays plc. Goldman Sachs is acting as financial advisor to Insurance Australia Group Limited in an announced strategic transaction. Goldman Sachs is acting as financial advisor to Itau Unibanco Holding S.A. in an announced matter. Goldman Sachs is acting as financial advisor to Julius Baer Group Ltd. in an announced strategic transaction. Goldman Sachs is acting as financial advisor to Osk Holdings Berhad in an announced strategic transaction. Goldman Sachs is acting as financial advisor to Denizbank A.S. in an announced strategic transaction. Goldman Sachs is acting as financial advisor to The Hartford Financial Services Group, Inc. in an announced strategic transaction.

Special disclosure
Goldman Sachs Australia Pty Ltd ("Goldman Sachs"), in conjunction with its affiliates, is acting as a joint lead manager to the proposed issue of perpetual, exchangeable, resaleable, listed securities (_PERLS VI") by Commonwealth Bank of Australia (CBA.AX). Goldman Sachs and/ or its affiliates may receive fees for acting in this capacity.

Goldman Sachs Global Investment Research

111

September 17, 2012

GS SUSTAIN - Financials

Disclosure Appendix

Reg AC
We, Andrew Howard, Richard Manley, Derek R. Bingham and Nick Hartley, hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Investment Profile
The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage universe. The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:
Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI, ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month

volatility adjusted for dividends.

Quantum
Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets.

GS SUSTAIN
GS SUSTAIN is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The GS SUSTAIN focus list includes leaders our analysis shows to be well positioned to deliver long term outperformance through sustained competitive advantage and superior returns on capital relative to their global industry peers. Leaders are identified based on quantifiable analysis of three aspects of corporate performance: cash return on cash invested, industry positioning and management quality (the effectiveness of companies' management of the environmental, social and governance issues facing their industry).

Disclosures
Distribution of ratings/investment banking relationships
Goldman Sachs Investment Research global coverage universe

Goldman Sachs Global Investment Research

112

September 17, 2012

Rating Distribution Investment Banking Relationships

GS SUSTAIN - Financials

Buy

Hold

Sell

Buy

Hold

Sell

Global 31% 55% 14% 48% 41% 35% As of July 1, 2012, Goldman Sachs Global Investment Research had investment ratings on 3,480 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage groups and views and related definitions' below.

Regulatory disclosures Disclosures required by United States laws and regulations

See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/co-managed public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. Goldman Sachs usually makes a market in fixed income securities of issuers discussed in this report and usually deals as a principal in these securities. The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts, professionals reporting to analysts and members of their households from owning securities of any company in the analyst's area of coverage. Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes investment banking revenues. Analyst as officer or director: Goldman Sachs policy prohibits its analysts, persons reporting to analysts or members of their households from serving as an officer, director, advisory board member or employee of any company in the analyst's area of coverage. Non-U.S. Analysts: Non-U.S. analysts may not be associated persons of Goldman, Sachs & Co. and therefore may not be subject to NASD Rule 2711/NYSE Rules 472 restrictions on communications with subject company, public appearances and trading securities held by the analysts.
Distribution of ratings: See the distribution of ratings disclosure above. Price chart: See the price chart, with changes of ratings and price targets in prior periods, above, or, if electronic format or if with respect to multiple companies which are the subject of this report, on the Goldman Sachs website at http://www.gs.com/research/hedge.html.

Additional disclosures required under the laws and regulations of jurisdictions other than the United States
The following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States laws and regulations. Australia: Goldman Sachs Australia Pty Ltd and its affiliates are not authorised deposit-taking institutions (as that term is defined in the Banking Act 1959 (Cth)) in Australia and do not provide banking services, nor carry on a banking business, in Australia. This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act, unless otherwise agreed by Goldman Sachs. Brazil: Disclosure information in relation to CVM Instruction 483 is available at http://www.gs.com/worldwide/brazil/area/gir/index.html. Where applicable, the Brazil-registered analyst primarily responsible for the content of this research report, as defined in Article 16 of CVM Instruction 483, is the first author named at the beginning of this report, unless indicated otherwise at the end of the text. Canada: Goldman, Sachs & Co. has approved of, and agreed to take responsibility for, this research in Canada if and to the extent it relates to equity securities of Canadian issuers. Analysts may conduct site visits but are prohibited from accepting payment or reimbursement by the company of travel expenses for such visits. Hong Kong: Further information on the securities of covered companies referred to in this research may be obtained on request from Goldman Sachs (Asia) L.L.C. India: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (India) Securities Private Limited; Japan: See below. Korea: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (Asia) L.L.C., Seoul Branch. New Zealand: Goldman Sachs New Zealand Limited and its affiliates are neither "registered banks" nor "deposit takers" (as defined in the Reserve Bank of New Zealand Act 1989) in New Zealand. This research, and any access to it, is intended for "wholesale clients" (as defined in the Financial Advisers Act 2008) unless otherwise agreed by Goldman Sachs. Russia: Research reports distributed in the Russian Federation are not advertising as defined in the Russian legislation, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian legislation on appraisal activity. Singapore: Further information on the covered companies referred to in this research may be obtained from Goldman Sachs (Singapore) Pte. (Company Number: 198602165W). Taiwan: This material is for reference only and must not be reprinted without permission. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual investor. United Kingdom: Persons who would be categorized as retail clients in the United Kingdom, as such term is defined in the rules of the Financial Services Authority, should read this research in conjunction with prior Goldman Sachs research on the covered companies referred to herein and should refer to the risk warnings that have been sent to them by Goldman Sachs International. A copy of these risks warnings, and a glossary of certain financial terms used in this report, are available from Goldman Sachs International on request.
European Union: Disclosure information in relation to Article 4 (1) (d) and Article 6 (2) of the European Commission Directive 2003/126/EC is available at http://www.gs.com/disclosures/europeanpolicy.html which states the European Policy for Managing Conflicts of Interest in Connection with Investment Research. Japan: Goldman Sachs Japan Co., Ltd. is a Financial Instrument Dealer under the Financial Instrument and Exchange Law, registered with the Kanto Financial Bureau (Registration No. 69), and is a

member of Japan Securities Dealers Association (JSDA) and Financial Futures Association of Japan (FFAJ). Sales and purchase of equities are subject to commission pre-determined with clients plus consumption tax. See company-specific disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese Securities Finance Company.

Ratings, coverage groups and views and related definitions

Buy (B), Neutral (N), Sell (S) -Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an Investment List is determined by a

stock's return potential relative to its coverage group as described below. Any stock not assigned as a Buy or a Sell on an Investment List is deemed Neutral. Each regional Investment Review Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular

Goldman Sachs Global Investment Research

113

September 17, 2012

GS SUSTAIN - Financials

coverage group may vary as determined by the regional Investment Review Committee. Regional Conviction Buy and Sell lists represent investment recommendations focused on either the size of the potential return or the likelihood of the realization of the return.
Return potential represents the price differential between the current share price and the price target expected during the time horizon associated with the price target. Price targets are required for all covered stocks. The return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership. Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html. The analyst assigns one of the following coverage views which represents the analyst's investment outlook on the coverage group relative to the group's historical fundamentals and/or valuation. Attractive (A). The investment outlook over the following 12 months is favorable relative to the coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12 months is neutral relative to the coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage group's historical fundamentals and/or valuation. Not Rated (NR). The investment rating and target price have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. Rating Suspended (RS). Goldman Sachs Research has suspended the investment rating and price target for this stock, because

there is not a sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded.

Global product; distributing entities

The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs on a global basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs Australia Pty Ltd (ABN 21 006 797 897); in Brazil by Goldman Sachs do Brasil Corretora de Ttulos e Valores Mobilirios S.A.; in Canada by Goldman, Sachs & Co. regarding Canadian equities and by Goldman, Sachs & Co. (all other research); in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by Goldman Sachs New Zealand Limited; in Russia by OOO Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198602165W); and in the United States of America by Goldman, Sachs & Co. Goldman Sachs International has approved this research in connection with its distribution in the United Kingdom and European Union.
European Union: Goldman Sachs International, authorized and regulated by the Financial Services Authority, has approved this research in connection with its distribution in the European Union and United Kingdom; Goldman Sachs AG, regulated by the Bundesanstalt fr Finanzdienstleistungsaufsicht, may also distribute research in Germany.

General disclosures
This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large majority of reports are published at irregular intervals as appropriate in the analyst's judgment. Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have investment banking and other business relationships with a substantial percentage of the companies covered by our Global Investment Research Division. Goldman, Sachs & Co., the United States broker dealer, is a member of SIPC (http://www.sipc.org). Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. The analysts named in this report may have from time to time discussed with our clients, including Goldman Sachs salespersons and traders, or may discuss in this report, trading strategies that reference catalysts or events that may have a near-term impact on the market price of the equity securities discussed in this report, which impact may be directionally counter to the analysts' published price target expectations for such stocks. Any such trading strategies are distinct from and do not affect the analysts' fundamental equity rating for such stocks, which rating reflects a stock's return potential relative to its coverage group as described herein. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Investors should review current options disclosure documents which are available from Goldman Sachs sales representatives or at http://www.theocc.com/about/publications/character-risks.jsp. Transaction costs may be significant in option strategies calling for multiple purchase and sales of options such as spreads. Supporting documentation will be supplied upon request.

Goldman Sachs Global Investment Research

114

September 17, 2012

GS SUSTAIN - Financials

In producing research reports, members of the Global Investment Research Division of Goldman Sachs Australia may attend site visits and other meetings hosted by the issuers the subject of its research reports. In some instances the costs of such site visits or meetings may be met in part or in whole by the issuers concerned if Goldman Sachs Australia considers it is appropriate and reasonable in the specific circumstances relating to the site visit or meeting. All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client websites. Not all research content is redistributed to our clients or available to third-party aggregators, nor is Goldman Sachs responsible for the redistribution of our research by third party aggregators. For all research available on a particular stock, please contact your sales representative or go to http://360.gs.com. Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, 200 West Street, New York, NY 10282. 2012 Goldman Sachs. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Goldman Sachs Group, Inc.

Goldman Sachs Global Investment Research

115