2011 Brandfinance Banking 500: Summary Brand Valuation Report

In association with
2011 BrandFinance® Banking 500

Summary brand valuation report
Prepared for:
Brand Finance plc, January 2011

Table Of Contents
2011 BrandFinance® Banking 500 – Summary Brand Valuation Report
1. Introduction to 2011 BrandFinance® Banking 500 4. Brand Valuation Analysis
2. Global results 5. About Brand Finance

• Executive Summary
• Top 10 most valuable global banking brands
• Top 10 most valuable banking brands in [relevant
geographic region]
Appendix I
Valuation Methods
• Top 10 most valuable banking brands in [country x]
• Most valuable banking brand by business segment
• IVSC – Recognised Valuation Approaches
• IVSC – Recognised Valuation Methods
3. [Name of bank] results
• International Brand Valuation Standard (ISO – 10668)
• Valuation Results
• Summary of ‘Royalty Relief’ Method
• Valuation Schedule & Assumptions
• Overview of the BrandFinance® Methodology
• Brand valuation by region
• Comparison of other brand valuation approaches
• Brand valuation by business segment
• Brand valuation reconciliation
• Change in ßrandßeta® Index
• Competitor review
• Competitor review – historical brand values Appendix II
• Portfolio value 2011 BrandFinance® Global Intangibles Financial Tracker (GIFT)
• Market cap composition
Appendix III
Additional Materials
Contents 2
sectionone
sectionone
Introduction and valuation methodology
The BrandFinance® Banking 500
Brand Finance is the world’s leading independent brand valuation
consultancy.
The BrandFinance® Banking 500, now in its fifth year, directly

compares the values of the world’s leading banking brands. It is
the only direct comparison of brand value within the banking
industry.
The BrandFinance® Banking 500 provides an opinion on the point-

in-time value of the world’s leading banking brands. This report
illustrates how our methodology, findings and value-based
marketing techniques can be used for decision-making and to
determine the impact of brand equity on business performance.
Brand Finance has teamed up with The Banker, the monthly

international financial affairs magazine, for the fifth year running
to publish the results.
Introduction 4
The Brand Valuation Migration Path
Published studies Bespoke studies
Summary Brand Detailed Brand Strategic Brand Scenario Based Brand Valuation
Valuation Report Valuation Report Valuation Valuation Scorecard
Free $3,500 Price variable Price variable Price variable
• Based on public • Disclosure of detailed • ISO 10668 compliant • Multiple scenario • Periodic reporting
information valuation assumptions valuation modelling
• Balanced scorecard
• Point in time valuation • Comparative • Brand equity analysis • Marketing budget
of brand marketing
performance analysis analysis
and finance KPI’s
• Relief From Royalty • Visual identity audit
valuation method • Commentary on brand • Trade off research
rating • Trademark and brand • Intranet based
• High level results IP audit • ‘What if?’ analysis
• Brand rating certificate • Econometric and
• Summary ISO 10668 • Detailed segmentation • Brand extension statistical analysis
requirements • Full ISO 10668 by geography , product analysis
standard text and consumer type
• Decision support • Brand management
• Strategy support
recommendations
Introduction 5
ISO 10668 – Brand Valuation Standard
NOTE
Brand Finance plc is certified to produce
ISO compliant brand valuations. However,
ISO compliant brand valuations require
internal information on IP ownership and
behavioural analysis to be fully complete.
While Brand Finance plc published
valuations use compliant valuation
methods they cannot be fully compliant
on the other dimensions without the
benefit of internal analysis.
Introduction 6
sectionone
sectiontwo
Global Results
Excluded from sample report
Additional sections included in the full report :
Executive summary
Top 10 most valuable banking brands
Top 10 most valuable banking brands in relevant geographic region
Top 10 most valuable banking brands in relevant country
Most valuable banking brand by service line
Global results 8
sectionone
sectionthree
[name of bank] results
XXXX Valuation Results
Brand Value $XXXX
Market Capitalisation Value $XXXXX
Parent Company: XXXX Brand Value/Market Capitalisation XX%
Domicile: xxxxx Brand Rating XX
Market Capitalisation Brand Value
300,000
Market Cap $ millions
14,000
Brand Value $ millions

250,000 12,000 XXXXX
XXXXX
200,000 XXXXX 10,000 XXXXX XXXXX
150,000 8,000
XXXXX
100,000 6,000
4,000
50,000
2,000
0
0
2009 2010 2011
2009 2010 2011
Brand Strength Index

100
Brand Strength Index
80 XX
XX XX
60
40
20
0
2009 2010 2011 Valuation results 10
Valuation Schedule & Assumptions
Brand Value $XXXX
TOTAL BRAND VALUE

XXXX
VALUE IN EXPLICIT VALUE IN CORPORATE

PERIOD PERPETUITY VALUE
XXXX XXXX XXXXX
DISCOUNT RATE XXXX XXXX REVENUE FORECAST CAGR
TAX RATE XXXX XXXX ROYALTY RATE
PERPETUITY RATE XXXX XXXX BRAND SPLIT
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
BRAND SPLIT %
REVENUE
growth %
ROYALTY RATE
BRAND
CONTRIBUTION
TAX
DISCOUNT FACTOR
NPV
Valuation results 11
Regional brand value segmentation
Brand Value $XXXX
Brand value $ millions
- 2,000 4,000 6,000 8,000 10,000 12,000
Europe XXX
South America XXX
XXX Europe
North America X% X%
X% South America
Rest of the World XXX
/ Other North America
X%
XXX Rest of the World / Other

Pacific
Brand X Pacific
X%
Product brand value segmentation
Brand Value $XXXX

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Wholesale - Banking / XXX

Investment - Banking
XXX
Retail - Banking
Wholesale - Banking /
X%
Asset Management - XXX Investment - Banking
X%
Banking Retail - Banking
XXX Asset Management -

Other - Banking
Banking
Brand X X%
Other - Banking
X%
Value reconciliation (2010 to 2011)
Brand Value $XXXX
Last
Last Historical Brand Royalty Perpetuity Discount Corporate Brand Effective
Valuation Comparison with Last Year Forecasted Tax Rate % Change
Revenue Split Rate Rate Rate Value Value Change
Revenue
2010 Brand Finance Valuation X X X X X X X X X X X
Change in Revenue X X X X X X X X X X X
Change in Brand Split X X X X X X X X X X X
Change in Royalty Rate X X X X X X X X X X X
Change in Perpetuity Rate X X X X X X X X X X X
Change in Discount
X X X X X X X X X X X
Rate
Change in Tax Rate X X X X X X X X X X X
Change in Corporate Value X X X X X X X X X X X
2011 Brand Finance Valuation X X X X X X X X X X X
Change in ßrandßeta® Index
Brand Value $XXXX
Financial Measures Security/ Risk Measures Brand Equity Measures Brand Rating
Net Revenue Visual Identity Function
Tier 1 Capital
Forecasted Growth % Assets Rank Emotion
Capital Asset
Ratio
AAA+
Real Profit
Net Income Conduct
Growth
Performance on
Average Capital
Margin % Loyalty
Return on Assets
Credit Rating
Competitor review
Brand Value $XXXX
400,000 Enterprise Value Brand Value
Market Cap
350,000 XXX
300,000
250,000
XXX XXX
200,000 XXX
XXX XXX
150,000
100,000 XXX
50,000
XXX XXX XXX XXX XXX XXX XXX
0
Your Brand Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6
Brand Value X X X X X X X
Market Cap X X X X X X X
Global Rank X X X X X X X
BV/MC X% X% X% X% X% X% X%
Competitor review – historical brand values
Brand Value $XXXX
35,000
30,000
25,000
Your Brand
20,000
Comp 1
Comp 2
15,000 Comp 3
Comp 4
10,000 Comp 5
Comp 6
5,000
0
2007 2008 2009 2010 2011
Year
Portfolio value
Brand Value $XXXX
100% X%
100,000 XXX
X%
XXX 80%
80,000
XXX 60% X% Brand 4

60,000
XXX XXX Brand 3
40,000 40% Brand 2
XXX
XXX XXX X% Brand 1
20,000 20%
0 0%
Brand 1 Brand 2 Brand 3 Brand 4 Total Brand Value Contribution
portfolio
Composition of market cap
Brand Value $XXXX
120,000
100,000 Undisclosed Value

XXX
XXX
80,000
XXX Disclosed Intangibles
(less GW)
$ millions
60,000
Disclosed Goodwill
XXX
XXX
40,000
XXX
Tangible NAV
XXX
20,000
XXX XXX
-
MC Analyst Mcap Asset Break Down Intangible Asset Brand Value
Value
sectionone
sectionfour
Brand valuation analysis
Why conduct a more detailed brand valuation study
• How can brand valuation enhance shareholder value?

– Better understand the value of key customer segments (by
geography, product, channel and customer type)
– Understand the relationship between brand equity and key value drivers in
the business model
– Understand the strengths and weaknesses of the brand compared with key
competitors
– Provide a planning framework for long term strategic marketing investment
– Create a framework for marketing mix modelling
– Create the framework for better reporting and managing brand performance
(brand scorecard or dashboard)
– Create a body of information about brand performance for use in investor
and banking presentations
Brand valuation analysis 21

Brand Finance approach to marketing-oriented projects
• Brand Finance’s approach has been designed to allow clients to manage their brands more intelligently and deliver
improved business results
• Each step in the process is tailored to the client’s specific needs and the level of sophistication required, from ‘high
level’ to ‘highly granular’
Market
Research
Marketing Mix
Optimisation
Brand Equity
Measurement
Strategic Dynamic
Brand Brand Valuation
Discovery Valuation Model
Value Mapping
Brand
Scorecard
Business Data
Continuous feedback

Brand Discovery Brand Equity Strategic Brand Marketing Mix Brand Scorecard Dynamic
& Value Mapping Measurement Valuation Optimisation Valuation Model
• What is legal & • What are key drivers • What is the value of • What is the optimal • Can we connect • Which markets,
economic status of of brand equity? my brand and what marketing mix to marketing customers, brands
the brand? does it contribute to maximise short term investments, drivers, and channels will
• What is the relative
Questions
business value? sales? & health indicators to generate the highest

• What financial, importance of each
financial KPI’s and return and maximise
competitor & market driver to my • Which segments of • What is the return on
shareholder value? shareholder value?
data is available? customers (by my business are my promotional
segment)? generating most marketing spend? • How can we track • How much should
• What data gaps
value? performance over we invest and where
must be addressed? • How do I perform
time and capture to maximise that
versus my • How should I
• What are key value data systematically return?
competitors on key allocate my
drivers (and linkages for improved
drivers? resources? • What value is at risk
between drivers) decision-making and
if we fail to
within the business? • How strong is my • How does brand in-depth
adequately support
brand relative to its equity link to understanding of
the brand?
competitors? business results and value drivers?
branded business
value?
• Market research • Brand Equity Driver • Business and brand • Demand Driver • Brand Dashboard • Strategy selection
review analysis valuation framework analysis (high level snapshot
Services
• Portfolio
for management)
• Data gap analysis • Brand Equity • Brand Valued • Econometric management
analysis Added® modelling • Brand Scorecard (in
• Value map (via • Brand architecture
depth diagnostic tool
interviews or • Brandβeta® analysis • Brand Evaluation • Marketing ROI
for marketers) • Resource allocation
workshops) Matrix
• ‘Value at risk’
• Profit pool analysis
analysis

sectionone
sectionfive
About Brand Finance
Our Services
At Brand Finance, we are entirely focussed on quantifying and leveraging intangible asset
value. Our services compliment and support each other, resulting in robust valuation
methodologies, which are underpinned by an in-depth understanding of revenue drivers and
licensing practice.
Valuation Analytics Strategy Transactions

We perform valuations for Our analytical services help We give marketers the We help private equity
financial reporting, tax clients to better understand framework to make companies, venture
planning, M&A the drivers of business and effective economic capitalists and branded
activities, joint brand value. Understanding decisions. Our value-based businesses to identify and
ventures, IPOs and other how value is created, where marketing service enables assess the value
transactions. We work it is created and the companies to focus on the opportunities through
closely with auditors, tax relationship between brand best opportunities, allocate brand and market due
authorities and lawyers. value and business value is budgets to activities that diligence and brand
a vital input to strategic have the most licensing.
decision making. impact, measure the results
and articulate the return on
brand investment.
About Brand Finance 25

Selection of financial services clients

Selection of other global clients
27
Our international network
Finland
France Russia
U.K. (HQ)
Canada
Belgium Holland
Switzerland
Croatia
Portugal Dubai
USA
Hong Kong
Greece
India
Spain Turkey
Sri Lanka
East Africa
Singapore
Brazil
Australia
South Africa

Contact details Country Name of Contact Email address
Brand Finance plc is the leading independent
Australia Tim Heberden t.heberden@brandfinance.com
intangible asset valuation and brand strategy
firm, helping companies to manage their Belgium Valerie Herdlicka v.herdlicka@brandfinance.com
brands more intelligently for improved Brazil Gilson Nunes g.nunes@brandfinance.com
business results.
Canada Andrew Zimakas a.zimakas@brandfinance.com
For further enquiries relating to this report, Croatia Borut Zemljic b.zemljic@brandfinance.com
please contact:
Dubai Gautam Sen Gupta g.sen-gupta@brandfinance.com
East Africa Jawad Jaffer info@brandfinance.co.ke
David Haigh France Xander Bird x.bird@brandfinance.com
CEO
Holland Marc Cloosterman m.cloosterman@brandfinance.com
Hong Kong Rupert Purser r.purser@brandfinance.com
d.haigh@brandfinance.com
India Unni Krishnan u.krishnan@brandfinance.com
Portugal Pedro Tavares p.tavares@brandfinance.com
Russia Alexander Eremenko a.eremenko@brandfinance.com
Mike Rocha Singapore Bernard Lee b.lee@brandfinance.com
Managing Director
South Africa Oliver Schmitz o.schmitz@brandfinance.com
Spain Pedro Tavares p.tavares@brandfinance.com
m.rocha@brandfinance.com
Sri Lanka Ruchi Gunewardene r.gunewardene@brandfinance.com
Switzerland Mike Rocha m.rocha@brandfinance.com
For further information on Brand Finance’s services and Turkey Muhterem Ilguner m.ilguner@brandfinance.com
valuation experience, please contact your local United Kingdom James Park j.park@brandfinance.com
representative.
USA Bill Barker w.barker@brandfinance.com
Brand Finance 29
sectionone
appendixone
Valuation Methods
IVSC
As the established international standard setter for valuation, the IVSC develops
and maintains standards for the reporting and disclosure of valuations, especially
those that will be relied upon by investors and other third party stakeholders.
In 2006, the IVSC was commissioned to produce a ‘Guidance Note on the valuation of
intangible assets for IFRS financial reports’ by the following bodies:
• The Securities and Exchange Commission (SEC)

• American Institute of Certified Public Accountants (AICPA)
• International Accounting Standards Board (IASB)
Consultation responses received in 2009 and final guidelines have been published as of
February 2010
The purpose of this Guidance Note was to:
• Address valuation issues not covered by IFRS

• Codify existing best practice
• Address strengths and weaknesses of different valuation methods
• Improve consistency and reliability of results
Valuation methodology 31
IVSC – Recognised Valuation Methods
Valuation
Approaches
Market Cost Income

Approach Approach Approach
based on multiples or prices from reproduction/ replacement cost-adjusted present value of earnings
market transactions involving the for depreciation and obsolescence attributable to the asset or costs
sale of comparable assets avoided as a result of owning the
asset
Indirect or
Direct Methods
Residual Methods
Cashflow or earnings generated by the Residual earnings left after deducting from
intangible asset or expenses saved by the after-tax operating earnings the fair returns on
intangible are estimated directly by all other assets employed
reference to market benchmarks
Price Premium
Method
Margin or Earnings
Uplift Method
Relief-from-Royalty Recommended by IVSC Guidance Note 4 and 16

as the primary method for valuing Income Split
Method
brands, patents, secret formulae, technology
ISO
ISO (International Organization for Standardization) is the world's largest developer
and publisher of International Standards. It is a network of the national standards
institutes of 162 countries, one member per country, with a Central Secretariat in
Geneva that coordinates the system.
In 2006, Deutsches Institut für Normung (DIN) produced a German standard on brand
valuation. DIN proposed to ISO to expand this initiative globally and this project was
completed in 2010.
The purpose of the ISO Draft Standard 10668 is:
• To create a universal standard for all applications in all territories.
• To create an accepted, transparent methodology which is reproducible.
• To ensure that all important analysis should be included in a brand valuation

exercise, namely legal issues, behavioural issues, and financial analysis.
On 20th December 2010, Brand Finance was certified to produce brand valuations in
compliance with ISO by Austrian Standards plus
ISO 10668 – Required Brand Valuation steps
ISO Compliant
Brand Valution
Legal Behavioural Financial

Analysis Analysis Analysis
Trademark and IP Market trend analysis Valuation modelling

Review and Market Research and opinion
analysis
This requires a detailed This involves a detailed review This involves forecasting and
internal audit of all IP of all desk, tracking and analysis of financial data and
supporting the brand bespoke research cost of capital
NOT INCLUDED IN THE LIMITED ANALYSIS IN THE ROBUST ANALYSIS IN THE
INDICATIVE VALUATION INDICATIVE VALUATION INDICATIVE VALUATION
NOTE: The BrandFinance Global 500 brand valuations are based on publicly available data and are indicative only.
They follow IVSC guidance but will only comply with ISO 10668 Monetary Brand Valuation Standard when
accompanied by detailed Legal and Behavioral analysis
Introduction to Royalty Relief methodology
Discount Rate
3
1
2 4
5 X RR - tax X NPV = Brand
Value
Revenue Forecast
• The Royalty Relief approach is based on the assumption that if a company did not own any trademarks it would
need to license them from a third party trademark owner instead. Ownership therefore ‘relieves’ the company
from paying a license fee (the royalty) for the use of the third party trademarks
• The royalty relief method involves estimating likely future sales, applying an appropriate royalty rate to them and
then discounting estimated future, post-tax royalties, to arrive at a Net Present Value (NPV). This is held to
represent the brand value.
• Brand Finance uses the Royalty Relief methodology for three reasons:
– Firstly, it is the approach that is most recognised by technical authorities worldwide and favoured by
accounting, tax and legal users because it calculates brand values by reference to comparable, third-party
transactions.
– Secondly, it ties back to the commercial reality of brands - their ability to command a premium in an arm’s
length transaction.
– Finally, because it can be performed on the basis of publicly available financial information.
Introduction to Royalty Relief methodology
Discount Rate
3
1
2 4
5 X RR - tax X NPV = Brand
Value
Revenue Forecast
Five Steps - Royalty Relief Valuation

Determine future revenues attributable to the brand over a five year explicit
1. Determine forecast revenues forecast period. This is done by referencing historic trends, market growth
estimates, competitive forces , analyst projections and company forecasts.
Review comparable licensing agreements. Analyse margins and value drivers.

2. Establish Royalty Rate Range Establish average royalty rate range for relevant sector.
Determine the strength of the brand using the ßrandßeta® Index. Apply
3. Assess the Brand Strength ßrandßeta® Index to royalty rate range to determine royalty rate for the brand
Determine discount rate to calculate the net present value (‘NPV’) of future
4. Determine the Discount Rate brand earnings (accounting for the time value of money and the associated
risk).
5. Brand Valuation Calculation The NPV of post-tax royalties equals the brand value
Step 1 – Determine forecast revenue
• Obtained historic brand-specific revenues
• Each revenue stream was then classified into nine key product segments:
1. Retail Banking
2. Commercial Banking
3. Wholesale Yr Terminal
Yr Yr
4. Investment Banking Yr Yr
4 5 Value
2 3
5. Insurance 1
6. Credit Cards
7. Asset Management Time
Valuation Future Cash Flows
8. Mortgages Date Perpetuity
9. Wealth Management Over Planning Period
• Revenue forecasts for a five-year period (2011-2015) were created based on IBES forecasts and a perpetuity
growth rate determined by reference to GDP growth in geographic regions of operation.
• Revenues attributed to the different sectors are based on publicly available and reported data. In a number of
cases this simplifies the breakdown from the possible categories above.
• IBES (Institutional Brokers' Estimate System) is offered on a summary (consensus) level or detailed (analyst-by-
analyst) basis. With over 26 data items that are updated as often as five times a day, it is designed to help
portfolio managers and analysts identify, manipulate, and analyze exceptional information for over 25,000
equities worldwide.
• Brand Finance uses the IBES forecast for the company to determine the compound annual growth rate (CAGR) of
the future years.
Step 2 - ßrandßeta® Index determination
MEASURE KPI WEIGHT PROVIDED BY SCORE
NET REVENUE 8.3% BRAND FINANCE 2.5
FORECASTED GROWTH % 8.3% BRAND FINANCE 2.5

FINANCIAL MEASURES
50 NET INCOME 8.3% BLOOMBERG 2.5
ßrandßeta® MARGIN % 8.3% BLOOMBERG 2.5
INDEX
VISUAL IDENTITY 4.2% VI360 (see next slide) 2.5
TIER 1 CAPITAL 4.2% THE BANKER 2.5
ASSETS RANK 4.2% THE BANKER 2.5
CAPITAL ASSET RATIO 4.2% THE BANKER 2.5

SECURITY/RISK
MEASURES 50 REAL PROFIT GROWTH 4.2% THE BANKER 2.5
PERFORMANCE ON AVERAGE CAPITAL 4.2% THE BANKER 2.5
RETURN ON ASSETS 4.2% THE BANKER 2.5
CREDIT RATING 4.2% BLOOMBERG 2.5

50 FUNCTION 8.3% BRAND FINANCE 2.5
EMOTION 8.3% BRAND FINANCE 2.5

BRAND EQUITY
MEASURES 50 CONDUCT 8.3% BRAND FINANCE 2.5
LOYALTY 8.3% BRAND FINANCE 2.5
Illustrative
Visual Identity determination – VI360
VI360 is a specialist visual identity management company and is part of the Brand Finance group. We have a close and formal
working relationship driven by the recognition that there is a strong link between visual identity management and brand value.
VI360 works with national and international organisations to implement, monitor and control the visual elements of their brands
and manage the holistic view of their visual identities.
Using a robust formula and benchmarking against industry best practice, VI360 uses available data to assess the visual identity
and the management performance.
The basic components and architecture of VI elements and their application across the business
1. VI Basics entity which should all adhere to a basic VI structure. As applied to all visible brand carriers - vehicles,
signage, store, print, advertising, products, packaging, etc.
Evaluated on observations based on actual experiences. The purpose being to highlight known issues
2. VI Risk that may detrimentally affect the visual impression for stakeholders.
The use of visual identity in an international context. It is an evaluation of performance of all visual
3. VI Best Practice components relative to perceived best practice and in comparison with peers in the same business
sector.
The overall VI visual impression of all visual components. This is a subjective view based on
4. VI Impact experience and industry best practice. They are evaluated on aspects such as how well the visual
elements reflect the corporation, and how appropriate it is to the specific business / sector.
Visual representation of the three leading methodologies
Discount Rate
3
1
2 4
5 X RR - tax X NPV =
Brand
Value
Royalty Relief approach
Revenue Forecast
ROYALTY RELIEF: Determine sales forecast, multiply sales forecast by royalty rate, deduct tax. Net Present Value (NPV) of brand contribution = Brand Value
(Favoured by Brand Finance plc)
3 Deduct
Charge for Capital Discount Rate
2 4 Employed
1
5 X RoB = % 2
3
4 NPV =
Brand Earnings split method 1
1 5 Value
Forecast Earnings Role of Branding Brand Contribution (%)

EARNINGS SPLIT (Role of branding): Determine forecast earnings, deduct charge for capital employed to give intangible earnings (EVA), apply
role of brand to determine brand contribution. NPV of brand contribution = Brand Value
Corporate
$ Earnings
Intangible Brand
$ Earnings
$ Allocated
X % X B = Value
Earnings split method 2
Intangible
Earnings
Intangible Earnings ($M) Brand Contribution (%) Brand Multiple (x)
EARNINGS SPLIT : Determine current year earnings, deduct charge for capital employed to give intangible earnings (EVA), determine brand
contribution. Apply brand multiple = Brand Value Valuation methodology 40
Methodology summary
Royalty Relief method Earnings split method 1 Earnings split method 2
The dollar value of a brand is

Brand Value is the Net Present Value calculated as Net Present Value or The financial value of a brand is
Definition of Brand Value of the estimated future cash flows today’s value of the earnings the defined as the sum of all earnings that
attributable to the brand brand is expected to generate in the a brand is expected to generate
future
Valuation based on which key financial

Net Sales Intangible Earnings Intangible Earnings
metric?
Royalty Rate study based on third

Forecast of future Economic Value Based on drivers of demand analysis Based on % of committed consumers
party arms length comparables, brand
Added (Role of Brand Index) base
strength and margin analysis
DCF of five year explicit forecast and DCF of five year explicit forecast and Not explicitly taken into account; Uses
Time scale (modeling)
perpetuity perpetuity current Intangible Earnings
Discount rate calculated from first Discount rate determined by

principles using Capital Asset Pricing estimating brand risk using a Brand
How is risk accounted for? Model (CAPM) producing Weighted Strength Index (BSI) and applying the Multiple (short term growth indicator)
Average Cost of Capital (WACC) that answer to an “S curve” of possible
takes into account brand specific risk rates.
BV =  (Si * RR*(1-tax))/(1+r)i BV =  (EVAi * RBI)/(1+r)i BV = EVA * (%) * M

Where S = Sales Forecasts; RR = Where EVA = Intangible Earnings; RBI Where EVA = intangible Earnings; % =
BV Calculation
Royalty Rate; r = Discount Rate; i = = Role of brand Index; r = Discount Brand Contribution);
number of years Rate (S curve); i = number of years M = Brand Momentum
Pros & cons
Royalty Relief Earnings Split
Pros • This is an accepted methodology for valuing brands, that is • Also a generally accepted methodology for valuing brands
widely used and based in commercial reality. It is commonly used
• With sufficient market research, it can provide insight into impact of drivers of
in legal cases and tax disputes;
demand on the value of different intangible assets in the business
• It ties back to the commercial reality of brands - their ability to
command a premium in an arm’s length transaction.
• The methodology specifically recommended by the IVSC for use
in IFRS reporting;
• It relies on verifiable third party data (licensing agreements) and
therefore less judgment is involved;
• It recognises that brands can have a value even where the
underlying business is unprofitable.
• It can be performed on the basis of publicly available financial
information.
Cons • At times it is difficult to source comparable license agreements • Highly judgmental, particularly when done without specific, detailed market
for a particular sector. research into drivers of demand
• Unless the Royalty Range is analysed carefully, it could lead to a • Calculations based on profit can lead to volatile results which do not reflect the
conservative or even an aggressive brand valuation. underlying value of the brand; businesses that are loss-making will have zero or
negative brand value, which is inappropriate in many cases
• Approach to determining discount rate has been criticised as lacking
transparency and not being applicable to all situations
• Generic approach for brand strength may lack cohesion with particular sectors
• Calculations of EVA are notoriously complex and hard to audit. E.g. Stern
Stewart claim to make 167 adjustments between accounting profits and EVA
(EVA’s of many brands from time to time can be negative)
Further details of methodology excluded from sample report
sectionone
appendixtwo
2011 BrandFinance® Global Intangibles Financial Tracker
BrandFinance® Global Intangibles Financial Tracker 2011
(GIFT™ 2011)
Annual review of global intangible value: Banks and Diversified Financial Services
Global Banks % DFS Enterprise Value Breakdown by

Country
$USD billion
-20% 0% 20% 40% 60% 80% 100% 120%
- 500 1,000 1,500 2,000
United States
United States
China
China
Britain
Britain
Japan
Japan Tangible Net Assets
Brazil
Brazil Disclosed Intangible Canada

Assets (ex g/w)
Canada
Disclosed Goodwilll Australia
Australia France
Undisclosed Value
France Spain
Spain Switzerland
Tangible Net Assets

Switzerland
Disclosed Intangible Assets (ex g/w)
Disclosed Goodwilll
Undisclosed Value
BrandFinance® GIFT 2011 45
Excluded from sample report
Included in full report

Further analysis taken from GIFT 2011
BrandFinance® GIFT 2011 46

sectionone
appendixthree
In addition to the Detailed Brand Valuation

Summary, the company will receive:
• A signed certificate which states its brand

rating, brand value and rank within the
Banking 500 (pictured)
• A hardcopy of the ISO 10668 Brand

valuation Standard
Brand Rating Certificate 48

Disclaimer
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions produced in this
study are based only on publicly available information and certain assumptions that Brand Finance used where such data was
deficient or unclear. No independent verification or audit of such materials was undertaken. Brand Finance accepts no responsibility
and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate.
The conclusions expressed are the opinions of Brand Finance and are not intended to be warranties or guarantees that a particular
value or projection can be achieved in any transaction. The opinions expressed in the report are not to be construed as providing
investment advice. Brand Finance does not intend the report to be relied upon for technical reasons and excludes all liability to any
organisation.
Disclaimer 49
Brand Finance plc (London) is the world’s leading independent brand valuation
consultancy. We have a global footprint with offices in more than 20 countries. For
more information please refer to our website:
www.brandfinance.com
50

2011 Brandfinance Banking 500: Summary Brand Valuation Report

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2011 Brandfinance Banking 500: Summary Brand Valuation Report

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In association with

2011 BrandFinance® Banking 500

Brand Finance plc, January 2011

1. Introduction to 2011 BrandFinance® Banking 500 4. Brand Valuation Analysis

2. Global results 5. About Brand Finance

The BrandFinance® Banking 500, now in its fifth year, directly

The BrandFinance® Banking 500 provides an opinion on the point-

Brand Finance has teamed up with The Banker, the monthly

Market Capitalisation Brand Value

Brand Value $ millions

Brand Strength Index

TOTAL BRAND VALUE

VALUE IN EXPLICIT VALUE IN CORPORATE

DISCOUNT RATE XXXX XXXX REVENUE FORECAST CAGR

TAX RATE XXXX XXXX ROYALTY RATE

PERPETUITY RATE XXXX XXXX BRAND SPLIT

- 2,000 4,000 6,000 8,000 10,000 12,000

South America XXX

XXX Rest of the World / Other

Brand value $ millions

Wholesale - Banking / XXX

XXX Asset Management -

2010 Brand Finance Valuation X X X X X X X X X X X

Change in Brand Split X X X X X X X X X X X

Change in Royalty Rate X X X X X X X X X X X

Change in Perpetuity Rate X X X X X X X X X X X

Change in Tax Rate X X X X X X X X X X X

Change in Corporate Value X X X X X X X X X X X

2011 Brand Finance Valuation X X X X X X X X X X X

Net Revenue Visual Identity Function

Forecasted Growth % Assets Rank Emotion

XXX 60% X% Brand 4

100,000 Undisclosed Value

• How can brand valuation enhance shareholder value?

Brand valuation analysis 21

Brand valuation analysis 22

business value? sales? & health indicators to generate the highest

Brand valuation analysis 23

Valuation Analytics Strategy Transactions

About Brand Finance 25

About Brand Finance 26

About Brand Finance 28

• The Securities and Exchange Commission (SEC)

The purpose of this Guidance Note was to:

• Address valuation issues not covered by IFRS

Market Cost Income

Relief-from-Royalty Recommended by IVSC Guidance Note 4 and 16

The purpose of the ISO Draft Standard 10668 is:

• To create a universal standard for all applications in all territories.

• To create an accepted, transparent methodology which is reproducible.

• To ensure that all important analysis should be included in a brand valuation

Legal Behavioural Financial

Trademark and IP Market trend analysis Valuation modelling

Five Steps - Royalty Relief Valuation

Review comparable licensing agreements. Analyse margins and value drivers.

NET REVENUE 8.3% BRAND FINANCE 2.5

FORECASTED GROWTH % 8.3% BRAND FINANCE 2.5

TIER 1 CAPITAL 4.2% THE BANKER 2.5

ASSETS RANK 4.2% THE BANKER 2.5

CAPITAL ASSET RATIO 4.2% THE BANKER 2.5

PERFORMANCE ON AVERAGE CAPITAL 4.2% THE BANKER 2.5

RETURN ON ASSETS 4.2% THE BANKER 2.5

BV =  (Si * RR(1-tax))/(1+r)i BV =  (EVAi RBI)/(1+r)i BV = EVA * (%) * M