China Citic Bank - H Share

China Citic Bank - H Share Weak Result Even Before Large Provision Neutral 0998.HK, 998 HK Price: HK$4.02 Price Target: HK$5.00 CITIC Bank delivered a disappointing 3Q result, with net profit of Rmb7.9bn, -15% Y/Y and -27% Q/Q. NIMs continued to compress, falling 4bps Q/Q on top of a -36bps decline in 1H12, but the real miss here was provisions, which came in at 105bps for 3Q12. This follows a 2Q result where provisions were indisputably too low, at just 6bps despite NPLs rising +14% Q/Q (3Q: +2%). Overall, this provision top-up was likely overdue, and helps boost reserve/ loans from 1.67% to 1.83%, with NPL coverage rising to 306%. We also question the speed of balance sheet expansion at CITIC, with loans up +16% Y/Y & assets up +28%, reflecting growth in interbank/reverse repos. Growth in non-lending credit contributes volatility, but more importantly it consumes core capital, which stagnated in 3Q12 at 10.1%. With shares trading at just 0.7x book & 5x fwd earnings, the bar is set low for an upside surprise, but we struggle to find one. We think fwd ROEs compress well below 20%, remain N. NIMs declined 4bps Q/Q, and have now fallen for 4 consecutive quarters by -41bps in total. Volatility in quarterly results is partly driven by the large swings in interbank borrowing, which moved +274%/-35%/+22%/-14% in just the last 4 quarters alone, making it hard to forecast future NII. Fee growth decelerated sharply this quarter, coming in flat Q/Q, albeit still up +19% Y/Y vs. +36% in 2Q12. Part of that Y/Y growth is due to the bank s push into bank cards, where growth was +72% Y/Y in 1H12 results, as well as settlement & agency fees, which also grew +68% Y/Y in 1H. Asset quality showed modest signs of deterioration, with NPLs up +2% Q/Q. This makes the large provision top-up of 105bps a bit of a surprise in terms of timing, with most banks having done similar one-offs in late 2011. High credit costs contributed to an already weak pre-provision profit, which was flat Q/Q and +4% Y/Y. Cost control will be a key issue going forward in light of weaker rev growth. In 3Q, CITIC revs +10% Y/Y vs. costs +23%. Overall results were disappointing, with NIM compression, decelerating fees, and rising NPLs the key issues. The one-off provision raises reserves/loans to 1.83%, so in some sense it was expected, with the rest of the sector well above 2%. But given volatility in balance sheet & earnings, with lean capital & stretched liquidity (LDR 72%) we remain Neutral. China Citic Bank - H Share (Reuters: 0998.HK, Bloomberg: 998 HK) FY09A FY10A FY11A FY12E FY13E FY14E Operating Profit (Rmb mn) 21,884 33,944 48,797 57,369 58,644 61,409 Net Profit (Rmb mn) 14,320 21,509 30,819 33,929 31,496 32,167 Cash EPS (Rmb) 0.37 0.55 0.66 0.73 0.67 0.69 DPS (Rmb) 0.09 0.14 0.16 0.17 0.17 0.17 EPS growth (%) 8.0% 50.2% 19.5% 10.1% (7.2%) 2.1% ROE 12.9% 19.3% 20.9% 18.1% 14.8% 13.6% P/E (x) 8.8 5.9 4.9 4.5 4.8 4.7 BVPS (Rmb) 2.63 3.08 3.73 4.29 4.80 5.32 P/BV (x) 1.2 1.1 0.9 0.8 0.7 0.6 Dividend Yield 2.7% 4.2% 5.1% 5.1% 5.2% 5.3% Fully Diluted EPS (Rmb) 0.37 0.55 0.66 0.73 0.67 0.69 Source: Company data, Bloomberg, J.P. Morgan estimates. China Asia Financials AC Helen Ye (852) 2800-8513 helen.zj.ye@jpmorgan.com J.P. Morgan Securities (Asia Pacific) Limited Price Performance 5.0 4.6 HK$ 4.2 3.8 3.4 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 0998.HK share price (HK$) H-SHARE (rebased) YTD 1m 3m 12m Abs -8.0% 9.2% 5.8% -5.4% Rel -15.5% 1.2% -2.3% -7.8% Company Data 52-week Range (HK$) 5.15-3.50 Market Cap (Rmb mn) 151,661 Market Cap ($ mn) 24,268 Shares O/S (mn) 46,787 Fiscal Year End Dec Price (HK$) 4.02 Date Of Price 29 Oct 12 3M - Avg daily value (HK$ 186.82 mn) 3m Avg. Daily Value ($ mn) 19.4 3mth Avg daily volume (mn) 48.26 H-SHARE 1,3790.13 Exchange Rate 9.61 See page 5 for analyst certification and important disclosures, including non-us analyst disclosures. J.P. Morgan 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. www.morganmarkets.com

Company Description P&L sensitivity metrics PPOP EPS Founded in 1987, China Citic Bank is one of the older and better-known banks among medium-sized joint-stock banks. Traditionally strong in large corporate banking and foreigncurrency business, Citic has been also very successful in retail banking in recent years. Currently, Citic is the 7th largest bank in China by total assets. The bank was listed on both Shanghai Stock Exchange and Hong Kong Stock Exchange in April 2007. As of June 2011, Citic had over 725 branch outlets operating in 93 cities. Net interest margin assumption (2.89%) impact (%) impact (%) Impact of each 10bps increase 5% 6% Asset growth assumption (4%) Impact of each 5 percentage points increase 6% 8% Non-interest income growth assumption (18.1%) Impact of each 5 percentage points increase 1% 1% Credit cost assumption (0.66%) Impact of each 10bps increase - -3% Source: J.P. Morgan estimates. Price target and valuation analysis Our PT (Dec-12, DDM-derived) of HK$5 implies a forward P/BV of 0.84x and P/E of 6.11x (FY13E). Loan Mix (2011) Cost of equity assumptions Discounted bills 3% Corporate 78% Risk free rate: 4.5% Market risk premium: 7.0% Cost of equity 13.8% Terminal g : 1.5% Fair P/B 0.90x PV of Terminal Value 3.67 PV of Dividends to 12E 0.44 Dec-12 fair value (Rmb) 4.58 Equity/assets 7% Source: Company data. Normalised ROE 13% EPS: J.P.Morgan vs consensus JPM Consensus Risks to our price target FY12E 0.73 0.71 Upside risk would come from better pricing power on mix shift, which FY13E 0.67 0.74 FY14E 0.69 0.83 Source: Bloomberg and J.P. Morgan estimates. Table 1: Peer valuation comparison would lead to less NIM compression and a better outlook for earnings. We could also be too aggressive on credit costs if stimulus comes through, which would further boost loan & fee growth. A downside risk is if costs are higher than expected. Bank Bloomberg Price Rating Dec-12 Upside P/E P/BV Dividend Yield code (LC) PT FY12E FY13E FY12E FY13E FY12E FY13E ICBC-A 601398 CH 3.81 OW 4.75 25% 6.0 6.1 1.2 1.1 5.3% 5.2% BoComm-H 3328 HK 5.72 OW 6.75 18% 5.6 6.6 0.9 0.8 2.3% 1.9% CCB-H 939 HK 5.79 OW 6.75 17% 6.4 6.3 1.2 1.1 3.5% 3.8% ICBC-H 1398 HK 5.12 OW 5.80 13% 6.5 6.6 1.3 1.1 3.2% 3.1% CMB-H 3968 HK 14.92 UW 14.25-4% 6.8 7.0 1.3 1.2 2.1% 2.1% PAB 000001 CH 2.72 N 3.20 18% 5.8 6.1 0.9 0.9 5.8% 6.0% BOC-A 601988 CH 10.12 N 11.75 16% 5.7 5.9 1.1 1.0 3.8% 3.9% CMB-A 600036 CH 6.03 N 6.00 0% 5.9 6.2 1.1 1.0 4.7% 4.6% Minsheng-A 600016 CH 3.34 N 3.75 12% 5.9 6.0 1.2 1.0 3.2% 2.9% ABC-H 1288 HK 3.17 N 3.75 18% 5.4 5.7 0.9 0.8 4.0% 4.1% BOC-H 3988 HK 4.02 N 5.00 24% 4.6 4.9 0.7 0.7 3.2% 3.3% Citic-H 998 HK 7.35 N 7.25-1% 5.7 6.1 1.1 0.9 3.1% 3.0% Minsheng-H 1988 HK 3.64 N 5.40 48% 5.2 4.2 0.8 0.7 3.4% 3.7% CQRB 3618 HK 3.81 OW 4.75 25% 6.0 6.1 1.2 1.1 5.3% 5.2% Source: Bloomberg. J.P. Morgan estimates Mortgage 13% Consumer 6% 2

Table 2: Details of 3Q12 result for Citic In Rmb mn except % and per share data FY11 FY12E % y/y 3Q11 4Q11 1Q12 2Q12 3Q12 Q/Q Y/Y Net interest income 65,106 75,747 16% 17,160 18,140 18,310 18,619 18,789 0.9% 9.5% Non-interest revenue 11,986 14,260 19% 2,996 3,461 3,413 3,829 3,322-13.2% 10.9% Net fee income 8,837 11,135 26% 2,306 2,633 2,627 2,778 2,753-0.9% 19.4% Total operating income 77,092 90,007 17% 20,156 21,601 21,723 22,448 22,111-1.5% 9.7% Operating expenses (28,381) (32,638) 15% (6,101) (9,121) (7,883) (7,933) (7,484) -5.7% 22.7% Pre-provisions op. profits 48,711 57,369 18% 14,055 12,480 13,840 14,515 14,627 0.8% 4.1% Loan loss provisioning (5,734) (10,198) 78% (1,812) (2,003) (2,216) (231) (4,098) 1674.0% 126.2% Other provisions (1,473) (1,421) -4% - (1,460) (10) (67) - Pre-tax profits 41,590 45,749 10% 12,263 9,004 11,606 14,270 10,571-25.9% -13.8% Income tax (10,746) (11,821) 10% (3,316) (2,377) (2,933) (3,358) (2,612) -22.2% -21.2% Attributable profit 30,819 33,929 10% 9,202 6,596 8,563 10,810 7,853-27.4% -14.7% EPS (restated) (RmB) 0.69 0.73 6% 0.21 0.14 0.18 0.23 0.17-27.4% -21.7% BVPS 3.73 4.38 18% 3.62 3.73 3.92 4.02 4.17 3.7% 15.2% Balance sheet Total liquid assets 1,066,141 764,618-28% 639,446 1,066,141 887,773 1,048,871 966,185-7.9% 51.1% Net loans & int. receivables 1,410,779 1,617,380 15% 1,363,554 1,410,779 1,451,369 1,509,692 1,572,281 4.1% 15.3% Investments 251,176 277,835 11% 235,682 251,176 280,444 316,807 332,427 4.9% 41.0% Total assets 2,765,881 2,881,811 4% 2,270,843 2,765,881 2,657,376 2,916,365 2,911,945-0.2% 28.2% Interbank funding 550,028 385,020-30% 147,249 550,028 358,094 436,393 375,750-13.9% 155.2% Customer deposits 1,968,051 2,217,607 13% 1,869,559 1,968,051 2,041,981 2,188,820 2,237,168 2.2% 19.7% Total Liabilities 2,587,100 2,676,770 3% 2,097,481 2,587,100 2,469,580 2,723,885 2,712,276-0.4% 29.3% Equity 174,496 205,041 18% 169,270 174,496 183,299 187,892 194,923 3.7% 15.2% DuPont analaysis NIM 3.00% 2.89% 3.13% 3.12% 3.01% 2.76% 2.72% Non IR/total rev. 15.5% 15.8% 14.9% 16.0% 15.7% 17.1% 15.0% Total rev./avg. assets 3.18% 3.19% 3.57% 3.32% 3.14% 3.08% 3.03% Cost/income 36.8% 36.3% 30.3% 42.2% 36.3% 35.3% 33.8% Cost/avg. assets 1.17% 1.16% 1.08% 1.40% 1.14% 1.09% 1.03% Operating ROAA 2.0% 2.0% 2.5% 1.9% 2.0% 2.0% 2.0% Provisioning/loans -0.43% -0.66% -0.53% -0.58% -0.61% -0.06% -1.05% Loan/assets 55.4% 54.6% 60.7% 53.5% 52.6% 51.9% 53.8% Pre-tax ROAA 1.7% 1.6% 2.2% 1.4% 1.7% 2.0% 1.5% Tax rate 25.8% 25.8% 27.0% 26.4% 25.3% 23.5% 24.7% ROAA 1.27% 1.20% 1.63% 1.01% 1.29% 1.48% 1.08% RoRWA 1.81% 1.76% 2.39% 1.58% 2.03% 2.44% 1.69% Avg. equity/assets 6.1% 6.7% 6.7% 6.0% 6.5% 6.3% 6.6% ROAE 20.9% 17.9% 24.2% 16.8% 19.3% 23.6% 16.4% Impaired loan balance 8,541 12,617 8,306 8,541 8,271 9,393 9,610 2.3% 12.5% Impaired loan ratio 0.60% 0.77% 0.60% 0.60% 0.56% 0.61% 0.60% Impairment loans coverage 272% 252% 250% 272% 309% 273% 306% Provisioning/PPOP -11.8% -17.8% -13% -16% -16% -2% -28% Loan/deposit ratio 72.9% 74.4% 74.0% 72.9% 72.3% 70.1% 71.6% Loans/assets 51.8% 57.2% 61.0% 51.8% 55.6% 52.6% 55.0% Tier 1 (% ) 9.91% 10.28% 10.43% 9.91% 9.94% 10.05% 10.07% Total capital ratio (% ) 12.27% 12.72% 12.83% 12.27% 12.39% 13.44% 13.72% Source: Company data, JPMorgan estimates 3

China Citic Bank - H Share: Summary of Financials Income Statement Growth Rates Rmb in millions, year end Dec FY09 FY10 FY11 FY12E FY13E FY09 FY10 FY11 FY12E FY13E NIM (as % of avg. assets) 2.4% 2.5% 2.7% 2.7% 2.6% Loans 45.9% 18.6% 13.4% 15.0% 14.0% Earning assets/assets 92.6% 94.9% 89.4% 93.0% 93.4% Deposits 30.6% 29.0% 13.7% 12.7% 13.2% Margins (as % of Avg. Assets) 2.2% 2.4% 2.4% 2.5% 2.4% Assets 34.5% 17.3% 32.9% 4.2% 12.6% Equity (13.7%) 16.9% 45.2% 15.0% 11.8% Net Interest Income 35,984 48,135 65,106 75,747 78,569 RWA 48.2% 25.2% 22.9% 13.0% 15.0% Total Non-Interest Income 5,031 8,447 12,072 14,260 16,629 Net Interest Income (3.7%) 33.8% 35.3% 16.3% 3.7% Fee Income 4,220 5,696 8,837 11,135 13,139 Non-Interest Income 11.7% 67.9% 42.9% 18.1% 16.6% Dealing Income 412 1,656 2,428 2,157 2,328 of which Fee Grth 13.4% 35.0% 55.1% 26.0% 18.0% Revenues (2.0%) 38.0% 36.4% 16.6% 5.8% Total operating revenues 41,015 56,582 77,178 90,007 95,199 Costs 10.1% 18.3% 25.4% 15.0% 12.0% Pre-Provision Profits (10.6%) 55.1% 43.8% 17.6% 2.2% Operating costs (19,131) (22,638) (28,381) (32,638) (36,555) Loan Loss Provisions (57.3%) 73.3% 35.3% 77.9% 43.3% Pre-Prov. Profits 21,884 33,944 48,797 57,369 58,644 Pre-Tax 9.0% 48.9% 44.9% 10.0% (7.2%) Provisions (2,446) (4,238) (5,734) (10,198) (14,612) Attributable Income 8.0% 50.2% 43.3% 10.1% (7.2%) Other Inc 0 0 0 0 0 EPS 8.0% 50.2% 19.5% 10.1% (7.2%) Other Exp. - - - - - DPS 4.1% 55.8% 19.5% 1.8% 0.9% Exceptionals 0 0 0 0 0 Associate 0 0 0 0 0 Balance Sheet Gearing FY09 FY10 FY11 FY12E FY13E Pre-tax 19,265 28,695 41,590 45,749 42,469 Loan/deposit 78.3% 72.0% 71.7% 72.9% 73.1% Tax (4,705) (6,916) (10,746) (11,821) (10,973) Investment/assets 13.7% 12.3% 10.7% 12.6% 16.5% Minorities (240) (270) (25) 0 0 Loan/Assets 58.0% 60.4% 55.7% 54.6% 57.6% Attributable Income 14,320 21,509 30,819 33,929 31,496 Customer deposits/liab. 80.5% 88.5% 76.1% 82.8% 83.3% LT debt/liabilities 1.6% 1.8% 1.7% 1.3% 1.3% Per Share Data CNY FY09 FY10 FY11 FY12E FY13E Asset Quality/Capital FY09 FY10 FY11 FY12E FY13E EPS 0.37 0.55 0.66 0.73 0.67 Loan loss reserves/loans (1.4%) (1.4%) (1.6%) (1.9%) (2.3%) DPS 0.09 0.14 0.16 0.17 0.17 NPLs/loans 1.1% 0.8% 0.6% 0.7% 1.0% Payout 24.0% 24.9% 24.9% 23.0% 25.0% Loan loss reserves/npls 142.7% 178.6% 242.9% 260.0% 214.4% Book value 2.63 3.08 3.73 4.29 4.80 Growth in NPLs (1.3%) (16.0%) 0.1% 47.7% 80.3% Fully Diluted Shares 39,033 39,033 46,787 46,787 46,787 Tier 1 Ratio 9.4% 8.6% 10.1% 10.3% 10.0% PPOP per share 0.56 0.87 1.04 1.23 1.25 Total CAR 10.7% 11.3% 12.3% 12.7% 12.4% Key Balance sheet Rmb in millions FY09 FY10 FY11 FY12E FY13E Du-Pont Analysis FY09 FY10 FY11 FY12E FY13E Net Loans 1,050,479 1,246,026 1,410,779 1,617,380 1,835,957 NIM (as % of avg. assets) 2.4% 2.5% 2.7% 2.7% 2.6% LLR (15,170) (18,219) (23,258) (31,762) (44,065) Earning assets/assets 92.6% 94.9% 89.4% 93.0% 93.4% Gross Loans 1,065,649 1,264,245 1,434,037 1,649,143 1,880,023 Margins (as % of Avg. Assets) 2.2% 2.4% 2.4% 2.5% 2.4% NPLs 10,157 8,533 8,541 12,617 22,749 Non-Int. Rev./ Revenues 12.3% 14.9% 15.6% 15.8% 17.5% Investments 206,146 268,872 251,045 458,190 555,158 Non IR/Avg. Assets 0.3% 0.4% 0.5% 0.5% 0.5% Other earning assets 15,228 19,956 25,841 28,808 32,129 Revenue/Assets 2.7% 2.9% 3.2% 3.2% 3.1% Avg. IEA 1,433,377 1,829,344 2,167,788 2,624,853 2,862,124 Cost/Income 46.6% 40.0% 36.8% 36.3% 38.4% Goodwill 887 857 818 0 0 Cost/Assets 1.2% 1.2% 1.2% 1.2% 1.2% Assets 1,775,031 2,081,314 2,765,881 2,881,811 3,243,689 Pre-Provision ROA 1.4% 1.8% 2.0% 2.0% 1.9% LLP/Loans (0.3%) (0.4%) (0.4%) (0.7%) (0.8%) Deposits 1,341,927 1,730,816 1,968,051 2,217,607 2,511,189 Loan/Assets 58.0% 60.4% 55.7% 54.6% 57.6% Long-term bond funding 21,177 45,644 33,730 35,873 38,743 Other Prov, Income/ Assets 0.0% 0.0% 0.0% 0.0% 0.0% Other Borrowings 18,422 34,915 33,730 35,873 38,743 Operating ROA 1.3% 1.5% 1.8% 1.7% 1.4% Avg. IBL 1,312,864 1,710,024 2,002,796 2,319,625 2,508,064 Pre-Tax ROA 1.3% 1.5% 1.8% 1.7% 1.4% Avg. Assets 1,547,143 1,928,173 2,423,598 2,823,846 3,062,750 Tax rate 24.4% 24.1% 25.8% 25.8% 25.8% Common Equity 102,798 120,175 174,496 200,756 224,448 Minorities & Outside Distbn. 0.5% 0.2% 0.2% 0.2% 0.1% RWA 1,106,648 1,385,262 1,702,165 1,923,446 2,211,963 ROA 0.9% 1.1% 1.3% 1.2% 1.0% Avg. RWA 926,598 1,245,955 1,543,714 1,812,806 2,067,705 RORWA 1.5% 1.7% 2.0% 1.9% 1.5% Equity/Assets 7.2% 5.8% 6.1% 6.6% 6.9% ROE 12.9% 19.3% 20.9% 18.1% 14.8% Source: Company reports and J.P. Morgan estimates. 4

Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. Important Disclosures Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: China Citic Bank - H Share. Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: China Citic Bank - H Share. Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: China Citic Bank - H Share. Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from China Citic Bank - H Share. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailing research.disclosure.inquiries@jpmorgan.com with your request. China Citic Bank - H Share (0998.HK, 998 HK) Price Chart Price(HK$) 11 10 9 8 7 6 5 4 3 2 1 0 Apr 07 Jan 08 Oct 08 Jul 09 Apr 10 OW HK$7.5 OW HK$7.7 OW HK$8.8 OW HK$8 Jan 11 Oct 11 OW HK$8.2 OW HK$8.6 OW HK$8 OW HK$7.5OW HK$7.4 OW HK$7.5 OW HK$7.7N HK$5 Jul 12 Date Rating Share Price (HK$) 23-Nov-09 OW 6.73 8.60 10-Mar-10 OW 5.71 8.00 30-Apr-10 OW 5.07 7.70 09-Aug-10 OW 5.54 7.50 10-Nov-10 OW 6.14 8.80 27-Nov-10 OW 5.39 7.50 23-Mar-11 OW 5.18 7.40 02-Apr-11 OW 5.66 8.00 30-Aug-11 OW 3.96 7.50 12-Jan-12 OW 4.64 7.70 01-Apr-12 OW 4.67 8.20 31-Jul-12 N 3.92 5.00 Price Target (HK$) Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Nov 23, 2009. The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-australia) and U.K. small- and mid-cap equity research, each stock s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear 5

in the Important Disclosures section of this report, the certifying analyst s coverage universe can be found on J.P. Morgan s research website, www.morganmarkets.com. Coverage Universe: Klaczek, Josh A: Agricultural Bank of China - H (1288.HK), Bank of China - A (601988.SS), Bank of China - H (3988.HK), Bank of Communications Co (3328.HK), China Citic Bank - H Share (0998.HK), China Construction Bank (0939.HK), China Merchants Bank - H (3968.HK), China Merchants Bank Co., Ltd - A (600036.SS), China Minsheng Banking - A (600016.SS), China Minsheng Banking - H (1988.HK), HSBC Holdings plc (0005.HK), Industrial and Commercial Bank of China - A (601398.SS), Industrial and Commercial Bank of China - H (1398.HK), Standard Chartered Plc (HK) (2888.HK) J.P. Morgan Equity Research Ratings Distribution, as of September 28, 2012 Overweight (buy) Neutral (hold) Underweight (sell) J.P. Morgan Global Equity Research Coverage 44% 44% 12% IB clients* 52% 46% 34% JPMS Equity Research Coverage 42% 48% 10% IB clients* 69% 61% 53% *Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above. Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.morganmarkets.com, contact the primary analyst or your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues. Registration of non-us Analysts: Unless otherwise noted, the non-us analysts listed on the front of this report are employees of non-us affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account. Other Disclosures J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. 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