TRUST A THOMSON REUTERS FINANCIAL & RISK PROPRIETARY BENCHMARK OF TRUST IN THE GLOBAL FINANCIAL MARKETPLACE, Q3 2014

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1 TRUST A THOMSON REUTERS FINANCIAL & RISK PROPRIETARY BENCHMARK OF TRUST IN THE GLOBAL FINANCIAL MARKETPLACE, Q3 214

2 Our TRust Index recorded positive sentiment across the financial industry as a whole for the second consecutive quarter. The results were led by a steep rise for Asian financial institutions, due to positive economic news including cross-border investment in China, and supported by positive U.S. sentiment resulting from stronger earnings reported by U.S. banks. This deeply contrasted with European institutions, which continued to fall due to negative news primarily relating to benchmark probes. Given the disparity between analysts optimistic expectations and investors pessimistic outlooks for the sector, we will see how these conflicting messages impact the index next quarter. David Craig President of Financial & Risk, Thomson Reuters TRUST Q3 214 TRUST SENTIMENT IN TOP FINANCIAL INSTITUTIONS IN ASIA RISES IN Q3 THOMSON REUTERS TRUST INDEX; NEGATIVE NEWS SENDS EUROPEAN INSTITUTIONS LOWER Created at the beginning of 213 from an array of Thomson Reuters data, news and analytical capabilities, the Thomson Reuters TRust Index provides metrics for tracking the state of trust and confidence in the Top 5 Global Financial Institutions. This quarter s findings follow. TRACKING TRUST THROUGH NEWS SENTIMENT Thomson Reuters proprietary news sentiment analysis aggregates and scores business and financial news sources to track trust sentiment for our benchmark group of the top 5 global financial institutions. In Q3 214, aggregate trust sentiment in the world s largest financial institutions was stable from Q2 at.5 percent. The data reveals significant divergence at the regional level, however: The 13 institutions in Asia posted a considerable rise, with trust sentiment increasing to 6 percent from 1 percent in the prior quarter The 19 Americas institutions posted a trust score of 4 percent, down slightly from 5 percent in Q2 The 18 Europe/UK financial institutions saw a further decline, to -8 percent from -5 percent in Q2 Trust in the Top 5 Global Financials Expressed Through News Sentiment 8% 4% -4% -8% -12% Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Global (5) Americas (19) Asia (13) Europe (18) Regions based on domicile institutions in the Top 5 Global Financials SOURCE: TRNA Sentiment Indicators Our analysis shows that while earnings recovery headlines have accounted for some of the increased confidence in news sentiment in the sector throughout 214, this quarter s data was most strongly driven by negative headlines in Europe and the UK, among them Lloyds Cuts 5 Jobs; Dark Pool Probe Puts Pressure on Barclays and ongoing news coverage stemming from FX and Libor investigations.

3 A THOMSON REUTERS FINANCIAL & RISK PROPRIETARY BENCHMARK OF TRUST IN THE GLOBAL FINANCIAL MARKETPLACE, Q3 214 THE CONFIDENCE OF THE MARKETPLACE INVESTORS AND ANALYSTS Commenting on earnings data, senior Research Analyst Sridharan Raman says, at 1.4 percent, the financial sector growth rates have picked up after reporting a disappointing -6.6 percent in Q2. Excluding the huge fine for Bank of America, the expected growth rate for financials jumps to over 18 percent. As banks look ahead with majority of litigation and fines behind them, growth rates can be expected to remain in double digits for the following two quarters, a sign of strength. Q3/214 Earnings Growth Estimates for Financials Less Bullish S&P 5: Earnings Growth Estimates, Q % 2 16% 12% 8% 4% CONSUMER DISCRETIONARY COUNTERPARTIES: CREDIT SPREADS AS AN INDICATOR OF TRUST Credit Default Spreads (CDS) provide another (implied) metric for trust. In our Datastream analysis, spreads illustrate the level of confidence institutions have in each other as reliable counterparties within the larger landscape of market conditions, macroeconomic environment, government and central bank policies and other external factors. Credit Default Spreads (CDS) continue to be tight, as they have been throughout 214. The average spread for the Top 5 Global Financial Institutions rose in Q3 to about 9 basis points from 86 bp in Q2, but remains far below 211 s high of nearly 35. The Americas institutions ended Q3 with the widest spreads at 96.1 bp (v 81.5 bp in Q2), and Europe the narrowest at 83.9 bp The Asia institutions posted tightening rates over the quarter, to 93.1 bp from 97.6 bp Credit Default Spread (CDS) Trends for the Top Global Financials Weighted CDS (213 Revenue) % -8% MATERIALS HEALTHCARE FINANCIALS INDUSTRIALS TELECOM TECHNOLOGY S&P 5 ENERGY CONSUMER STAPLES UTILITIES SOURCE: Thomson Reuters I/B/E/S 2 15 Our StarMine data below shows analysts now forecast forward 5-year EPS CAGR for the Top 5 Global Financials at 9.2 percent, above the 8.2 percent they forecast for the S&P 5 as a whole. According to Raman, at a -2 percent market implied growth rate, the gap between the analysts expected growth rate and market assessment has now grown to 11.2 percent, as investors continue to discount these institutions. The markets continue to discount this group relative to analyst expectations, which forecast growth in the coming quarters and improved capitalization at the banks. Analyst Expectations/Q3 ANALYST FORECASTS OF FORWARD 5-YEAR EPS CAGR S&P Q2: 8.6 TOP 5 GLOBAL FINANCIALS THOMSON REUTERS GLOBAL INDEX 9.2 Q2: Q2: 8. (BBB- and higher: investment grade) MARKET PRICES IMPLIED FORWARD 5-YEAR EPS CAGR 6.2 Q2: Q2: Q2:.6 PRICE CHANGE % (PAST 9 DAYS) -1.4 Q2: 2..8 Q2: Q2: 2.2 CREDIT SMARTRATIOS IMPLIED RATING BBB Q2: BBB- BBB+ Q2: BBB SOURCE: StarMine Professional Analyst Recommendation Changes/Q3 Percentage of companies that describe, claim to have, or mention processes in place AMERICAS ASIA EUROPE # of Upgrades # of Downgrades Q2 Results The third quarter saw more upgrades than downgrades (56:49) for the top 5 global financial institutions as a group, driven primarily by Europe (38:27). This confidence by analysts may signal that the markets are overly pessimistic about prospects in the region. 1 5 TRACKING CONTROVERSY AND GOVERNANCE AS FACTORS IN REBUILDING TRUST Our ASSET4 environmental, social and governance (ESG) analyst André Chanavat says Q3 data shows, the number of controversy events has been fairly stable since the last quarter both for the Top 5 and the financial sector as a whole although more than half of the Top 5 report some business ethics event. Percentage of Financials that Have Had Controversies JUN 13 SEP 13 DEC 13 MAR 14 JUN 14 SEP 14 Global BUSINESS ETHICS Top 5 Americas (15 companies) ANTI- COMPETITION MARKETING RESPONSIBILITY Financial Sector PRODUCT QUALITY Asia (1 companies) PRIVACY WAGES/WORKING CONDITIONS SOURCE: ASSET4 Europe (17 companies) Percentage of Companies with Processes in Place MAINTAIN RESPONSIBLE MARKETING PRACTICES SOURCE: Thomson Reuters Datastream IMPROVE FAIR COMPETITION AVOID BRIBERY AND CORRUPTION PRACTICES Top 5 Financial Sector SOURCE: ASSET4 The ASSET4 data further shows that adoption of processes and governance to improve fair competition (52 percent) and avoid bribery and corruption (88 percent) continue to be priorities for the Top 5 Global Financial Institutions.

4 A THOMSON REUTERS FINANCIAL & RISK PROPRIETARY BENCHMARK OF TRUST IN THE GLOBAL FINANCIAL MARKETPLACE, Q3 214 REGULATION AS A BAROMETER OF TRUST Data drawn from our Governance, Risk & Compliance data and Thomson Reuters Accelus TM reveals that the pace of regulatory activity worldwide has continued unabated globally this quarter, and particularly in the Americas. In the third quarter the average daily number of regulatory alerts was 14, down slightly from 143 in Q2 and above 1 for the fifth consecutive quarter. Total 214 alerts now count more than 27, to date in 214, surpassing 213 s full-year total. Total Regulatory Alerts Year-On-Year Global 212, Q3 Q4 213, Q1 Q2 Q3 Q4 214, Q1 Americas Asia Total Regulatory Alerts By Year Europe/UK 26,898 18,761 Q2 Q3 Average Daily Alerts 14 *NOTE: Tracked activity includes document changes, announcements and enforcements by regulators. Q3 Average Daily Alerts = Total alerts to September 3, 214 / 261 working days SOURCE: Thomson Reuters Accelus METHODOLOGY Except where otherwise indicated, the data is for the Top 5 Global Financial Institutions based on market capitalization and for the period through Q Regions are based on the domicile of institutions within the Top 5 Global Financial Institutions. Trust sentiment scoring may range between -1 and 1, with neutral sentiment at zero, and is derived/ calculated from the daily average trust sentiment score for the Top 5 Global Financial Institutions to produce the 12-day moving average reported here. THOMSON REUTERS DATA SOURCES ASSET4 provides objective and transparent environmental, social and governance (ESG) information and analysis tools to enable professional investors to benchmark, compare and integrate extra-financial information into their investment processes. Coverage 4,7+ listed companies including the S&P 5, BOVESPA, FTSE 1, STOXX Europe 6, ASX 3, TSX, MSCI World Index and MSCI emerging markets companies. Database depth 65+ data points and 25+ key performance indicators give you the most in-depth coverage in the industry. Datastream provides vast reserves of historical financial content, enabling research on the correlations and relationships between global economic indicators, and asset classes. Access up to 5 years of history, millions of global instruments and indicators and coverage for 175 countries in 6 global markets. Real-time market data seamlessly integrates streaming real-time market data, economic news, First Call research reports and more in a single integrated application. Datastream simplifies the graphical exploration of trends and relationships between series and allows sophisticated analysis across a broad range of financial instruments. StarMine Quantitative Models are stock selection factors grounded in sound economic intuition and developed using best-of-breed modeling techniques. The models are robust across regions, sectors and market environments. Thomson Reuters Accelus suite provides market-leading solutions for global regulatory intelligence, financial crime, anti-bribery and corruption, enhanced due diligence, compliance management, internal audit, e-learning, risk management and board of director or disclosure services. The Thomson Reuters Governance, Risk & Compliance (GRC) business delivers a comprehensive suite of solutions designed to empower audit, risk and compliance professionals; business leaders; and the boards they serve to reliably achieve business objectives, address uncertainty and act with integrity. Thomson Reuters News Analytics (TRNA) is a powerful tool that allows users to analyze millions of public and premium sources of Internet content, tag and filter that content to focus on the most relevant sources and turn the mass of data into actionable analytics that can be used to support trading, investment and risk management decisions. Thomson Reuters I/B/E/S provides detailed and consensus estimates featuring up to 26 forecast measures, including GAAP and pro-forma EPS, revenue/sales, net income, pretax profit and operating profit, and price targets and recommendations for more than 6, companies in 67 countries worldwide. Thomson Reuters Business Classification (TRBC) is our global, comprehensive, industry classification schema. TRBC helps you identify, analyze and monitor companies and industries across global markets and is the ideal tool for benchmarking, peer comparison and navigation. TRBC Indices track 124 industries, 52 industry groups, 25 business sectors and 1 economic sectors on a global and/or regional basis. We invite your questions, feedback and suggestions at TRustIndex@thomsonreuters.com.

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