METHODOLOGY

Brand Finance employs a discounted cash flow technique to discount estimated future royalties at an appropriate rate to arrive at a net present value of a bank’s trademark and associated intellectual property – its brand value.

The steps in this process are to:

1 - Obtain brand-specific financial and revenue data. The revenue was then segmented into the following revenue streams: retail banking, commercial banking, wholesale/investment banking, insurance, asset management and credit cards.

2 - Model the market to identify market demand and the position of individual banks in the context of all other market competitors.

Three forecast periods were used:

• Estimated financial results for 2012 using Institutional Brokers Estimate System (IBES) consensus forecast.
• A five-year forecast period (2013 to 2017) based on three sources: IBES, historic growth and gross domestic product (GDP) growth.
• Perpetuity growth based on a combination of growth expectations (GDP and IBES).
  

3 - Establish the royalty rate for each bank by:

• Calculating brand strength on a scale of zero to 100 according to a number of attributes, including asset strength, emotional connection, market share and profitability.
• Determining the royalty rate for each revenue stream mentioned in step one.
• Calculating the future royalty income stream.
  

4 - Calculate the discount rate specific to each bank, taking account of its size, geographical presence, reputation, gearing and brand rating (see below).

5 - Discount future royalty stream (explicit forecast and perpetuity periods) to a net present value – the brand value.

Brand ratings definitions:

AAA Extremely strong

AA Very strong

A Strong

BBB-B Average

CCC-C Weak

DDD-D Failing

Valuation date: All brand values in the report are for the year ending December 31, 2012