JANUARY 2010 GLOBAL BANKING

SPECIAL COMMENT Asian Banking System Industry Outlooks:

12 Systems Move to Stable from Negative
Table of Contents:
OVERVIEW 1
AUSTRALIA 2 Overview
CAMBODIA 2
CHINA 3 Moody’s has changed the industry outlooks of the following banking systems from negative
HONG KONG 3 to stable: Australia, China, Hong Kong, Indonesia, India, Korea, Malaysia, New Zealand,
INDIA 4 the Philippines, Singapore, Taiwan, and Thailand.
INDONESIA 4
JAPAN 5 The industry outlooks of the banking systems in Cambodia, Japan, Mongolia and Vietnam
KOREA 6
remain negative.
MALAYSIA 6
MONGOLIA 7
NEW ZEALAND 7
Outlooks for industries represent our view on the likely future direction of credit conditions
PHILIPPINES 8 in those industries. They do not represent our projections of rating upgrades versus
SINGAPORE 8 downgrades.
TAIWAN 9
THAILAND 9 Three factors underpin the generally better outlook across most of Asia’s banking systems.
VIETNAM 10
MOODY’S RELATED RESEARCH 10 » Improving local economic prospects and stabilizing global conditions
» Improving access to international debt and money markets
Analyst Contacts:
» Banks are still adequately resilient to cope with remaining macro and micro-economic
SINGAPORE 65.6398.8311 risks, having suffered only limited damage during the past 30 months of the financial
Deborah Schuler 65.6398.8336
crisis
Senior Vice President
Those banking systems which continue to carry negative industry outlooks, are also
Deborah.Schuler@moodys.com
John Tham 65.6398.8337
exhibiting some signs of stability, but remain more vulnerable to shocks. Typically these
Vice President-Senior Credit Officer systems were weaker going into the crisis, may have suffered more during the crisis and/or
John.Tham@moodys.com operate in economies experiencing slower recoveries.
HONG KONG 852.3551.3077
Underlying these generally improved outlooks is Moody’s opinion 1 that the most likely
Jerry Chien 852.2916.1106
scenario is that the global recovery will be a sluggish one characterized by growth returning
Team Managing Director
ChungCheng.Chien@moodys.com
to trend growth rates. Nevertheless, we expect that NPLs will remain above normal
throughout much of the region for at least the next 12-18 months. The road to recovery will
not be without bumps.

1
Sovereign Risk Analysis Group on January 11, 2010 published an update to our Global Risk Scenarios in a report entitled “Global Macro-risk Scenarios 2010-2011 – On
the “Hook” for Some Time Yet”.
 GLOBAL BANKING

AUSTRALIA

Analysts: Patrick Winsbury, Senior Vice President 612 9270 8183

Marina Ip, Assistant Vice President-Analyst 612 9270 8130
Daniel Yu, Analyst 612 9270 8198

Banking Industry Outlook - Stable

We have changed the Australian banking system outlook to stable as industry conditions are stabilising
on the back of an economic outlook that is far more favorable than predicted only six months ago.
Strong demand for commodities from China and an effective government stimulus programme have
been important drivers of this outcome. Australia avoided recession in 2009 and the consensus GDP
growth outlook for 2010 is in the order of 2.5% to 3.0%. Unemployment is still well contained - at
5.7% in November 2009 - and looks like it has peaked well below the 8.5% originally forecast by the
government in mid 2009.

Recent bank disclosures suggest that credit costs are flattening off. Corporate sector leverage is
generally low. The commercial real estate sector has successfully raised equity during the crisis and
supply/demand conditions remain generally acceptable. While consumer leverage remains high, it has
reduced over the crisis period. Housing conditions have remained strong as the supply shortage
worsens on continued net migration and limited housing starts. There has been a gain in house prices
over the crisis period.

Furthermore, the crisis has supported more sustainable competition by forcing the exit of marginal,
price led players. Risk-adjusted returns have improved sharply and have effectively offset the increased
funding costs of the crisis period, including retail deposits. Wholesale market conditions continue to
improve and investor demand for domestic RMBS is clearly starting to return.

CAMBODIA

Analysts: Christine Kuo, Vice President-Senior Analyst 65-6398-8324

Karolyn Seet, Assistant Vice President-Analyst 65-6398-8303

Banking Industry Outlook - Negative

The outlook for the Cambodian banking sector remains negative. The repercussions of the global
economic crisis have hampered the country’s garment exports to developed countries, in addition to
weakening tourism and construction. The significant impact on the country’s real economy has
dragged the banks’ asset quality and thus their earnings since 2Q2009. The system’s NPL ratio rose to
around 6% in 2009, from 3.7% in 2008.

Although in 2010 the economy is likely to return to growth from recession, the country’s high reliance
on external developments makes its recovery more vulnerable than that of most Asian countries.
Moreover, we expect the banking sector will be beleaguered by a high amount of NPLs for some time,
given the excessive credit growth in the several years before the crisis and before the property market
bubble burst.

2 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

CHINA

Analysts: Yvonne Zhang, Vice President-Senior Analyst 8610-6642-8968 (ext 123)

Leo Wah, Vice President-Senior Analyst 852-2916-1163

Banking Industry Outlook - Stable

The outlook for the Chinese banking system is stable. Our rating horizon is 12-18 months. We
factored into our outlook the fact that the economy is back to high growth, due to the government
stimulus policies in 2009. Inflation and inflated asset prices in certain markets pose risks to banks’ asset
quality. But during our rating horizon, we do not expect a crash in the real estate market that would
cause a significant deterioration in loan quality. In addition, regulators have been taking active steps to
manage excess liquidity to mitigate the risks of inflation and formation of an asset bubble.

We expect liquidity to remain readily available in the banking system, especially as most bank loans
will not come due in the next 18 months. However, banks may face challenges in dealing with a
potential rise in non-performing loans when a large proportion of loans begin to mature in 2011.
However, unless the global and Chinese economies are again suffering significantly slower growth at
the time, we believe that the banks will be well positioned to restructure or provision loans as necessary
against larger balance sheets and earnings.

HONG KONG

Analysts: Leo Wah, Vice President-Senior Analyst 852-2916-1163

Youngil Choi, Vice President-Senior Analyst 852-2916-1157

Banking Industry Outlook - Stable

We have changed the outlook for Hong Kong’s banking system to stable. There have recently been
more signs pointing to an encouraging operating environment for the banks in Hong Kong over the
next 12 to 18 months.

» The global economy continues to recover gradually.

» The Chinese Government is tightening its monetary policy, which improves chances that bank
credits will grow at a more sustainable, healthy rate. A solid Chinese economy is important to the
banks in Hong Kong given the growing integration between the economic systems in mainland
China and Hong Kong.
In addition, our recent conversations with the banks in Hong Kong have convinced us that there are
more developments which help alleviate most of our worries.

» With growing confidence in the operating environment, the banks are carefully increasing their
risk appetite in lending and their treasury operation. We believe this will allow the banks to enjoy
better profitability without taking too much additional risk, optimizing the risk and return profile.
» Banks are going to increase staff training, enhancing their own due diligence on investment
products, and, perhaps most importantly, ensuring a good match between customer needs and
investment product features. We believe this will both avoid the reputation and financial damage

3 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

of another Lehman minibond fiasco, and facilitate a recovery in wealth management income over
the medium to long term.
Downside risks remain, but due to strong financial profiles, crisis-test management teams, and a
stringent regulatory regime, there is not a long list of factors which may cause serious damage to the
banks. However, as an open economy which emphasizes highly cyclical industries, Hong Kong is
certainly exposed to global economic shocks, which may adversely affect the banks. Hong Kong is in
particular vulnerable to inflationary risk, given that its monetary policy cannot be used totally freely to
contain inflation with the Hong Kong dollar pegging against the US dollar.

INDIA

Analysts: Nondas Nicolaides, Vice President-Senior Analyst 357.25.586.586

John Tofarides, Analyst 971.4401.9543

Banking Industry Outlook - Stable

Moody’s changed the fundamental credit outlook for the Indian banking system to stable from
negative that was assigned in January 2009, reflecting the favorable trends in India’s economic
indicators over the last few months. India’s July-September 2009 (Q2 FY2010) data were stronger
than expectations, and higher than 5.8% in the previous two quarters, pointing to a 7.9% year-on-year
GDP growth and suggesting a sustainable recovery in economic activity. As a result the Indian
economy may grow at around 7% in the current fiscal year ending March 2010 (FY2010) backed by
buoyant industry growth and an upside in agriculture output.

This implies a more favorable outlook for credit growth and the banking system as a whole, which has
been facing significant asset quality challenges with higher loan delinquency rates over the last few
quarters. The Indian economy and its credit cycle seem to have bottomed out and as a result we expect
any credit cost pressures for the banks to ease going forward, although the volume of non-performing
and restructured loans is not expected to come down significantly over the short-term. We believe that
the management and the future performance of all those restructured loans in the banking system,
estimated at about 4.5% of total loans, will drive the credit risk profile as well as the evolution of the
Indian rated banks’ financial fundamentals over the short-to-medium term.

INDONESIA

Analysts: Beatrice Woo, Vice President-Senior Credit Officer 65-6398-8332

John Tham, Vice President-Senior Credit Officer 65-6398-8337

Banking Industry Outlook - Stable

We have changed the industry outlook to stable from negative. In hindsight, we were overly
pessimistic about the potential impact of the global crisis on Indonesia’s banking system. Although
the Indonesian banks did face increased pressure - particularly with regard to asset quality and tighter
liquidity, which culminated in intense competition for deposits in late 2008 – their creditworthiness
proved relatively resilient.

4 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

Over the next 12 months, earnings growth should accelerate as economic conditions improve. This
will be fuelled by stronger loan growth and a recovery in net interest margins as the cost of funds
normalizes.

The interest rate cycle is likely to be on a rising trend due to higher inflation. In Moody’s opinion,
however, the banks will manage, as the system has traditionally coped with high levels of interest rates.
Moreover, this situation will benefit banks that hold substantial amounts of floating-rate loans and
government bonds.

On balance, liquidity concerns will remain benign given the moderate system loan-to-deposit ratio of
74%, the banks’ substantial government bond holdings and the system’s reliance on Indonesian
rupiah-denominated deposits for funding.

As for asset quality, the non-performing loan ratio declined to 3.82% in November 2009 from the
recent peak of 4.14% in May 2009. Overall, asset quality and credit costs will be contained in the
more favorable operating environment.

Finally, capital levels have held up – as the banks were sheltered from risky global investments by
regulatory restrictions – which allow for future expansion. As of November 2009, the capital adequacy
ratio was 17.08%.

JAPAN

Analysts: Mutsuo Suzuki, Senior Vice President 81.3 5408 4051

Hanatate Maki, Vice President-Senior Credit Officer 81.3.5408.4029
Yamamoto Tetsuya, Vice President-Senior Analyst 81.3.5408.4053
Kaji Kyosuke, Assistant Vice President 81.3.5408.4031

Banking Industry Outlook - Negative

We maintain a negative outlook on Japan's banking system, despite continuing improvement of
fundamentals in 2009. The major reasons are that the operating environment for Japan's banks will
continue to be characterised by:

» the onset of deflation,

» very weak credit growth and employment figures,
» a still volatile equity market, and
» limited growth opportunities inside domestic markets.
We expect all of these factors will continue to pressure Japanese banks’ performances for the next year.

5 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

KOREA

Analysts: Beatrice Woo, Vice President-Senior Credit Officer 65-6398-8332

Youngil Choi, Vice President-Senior Analyst 852-2916-1157

Banking Industry Outlook - Stable

We have revised our outlook on the Korean banking system to stable from negative, as Korea’s
favorable economic growth prospects for the next few years should help banks recover their
profitability, as well as pre-provision and net earnings. The rise in market interest rates will enhance
the banks’ net interest margins, as their asset duration is shorter than their liability duration. And
favorable economic growth will help the banks gradually lower their credit costs.

Two risk mitigating factors could arise should the global economy decline significantly from our
central scenario (for a sluggish recovery): the domestic banks’ improved external debt position and the
government’s ability to provide additional economic stimulus. The domestic banks had cut their
external debt to U$102.4 billion as of September 2009 from U$126.5 billion at June 2008, and have
made progress in terming out their external debt maturities since mid-2009. We believe that the
government can provide additional economic stimulus if necessary, given its current deficit and debt
levels. However, an unexpected fall in China’s growth dynamic could hurt Korea’s macro economy,
given its dependence on exports for economic growth.

MALAYSIA

Analysts: John Tham, Vice President-Senior Credit Officer 65-6398-8337

Karolyn Seet, Assistant Vice President-Analyst 65-6398-8303

Banking Industry Outlook - Stable

We have revised the industry outlook for Malaysian banks from negative to stable. Their prospects --
over the next 12 to 18 months -- have improved from 2008-2009 due to better economic conditions.
Indeed, the government’s stimulus measures, low interest rates and the gradually stabilizing global
economy have helped, although fiscal consolidation and contentious domestic politics will need to be
addressed to enhance long-term economic fundamentals. Our sovereign team projects Malaysia’s real
GDP to grow 4.3% in 2010, after it shrank an estimated 2.5% in 2009, and which was a good result,
but still below the 2004-2008 average of 5.7%.

Barring further economic shocks, the liquid and well-capitalized banks are favorably positioned to
increase lending. Fee income from better capital market and wealth management opportunities and
manageable provisions should support overall profitability, considering the highly competitive nature
of the lending business. However, there are risks which could test the banks, such as the uneven and
fragile recovery of the advanced economies and disorderly exits from high-stimulus policies. On a
more optimistic note, healthy levels of loan loss reserves and capital offer reasonable protection for
Malaysian banks against further financial stress.

6 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

MONGOLIA

Analysts: Yvonne Zhang, Vice President-Senior Analyst 8610-6642-8968

(ext 123)
Youngil Choi, Vice President-Senior Analyst 852-2916-1157

Banking Industry Outlook - Negative

Our outlook for Mongolia’s banking system remains negative reflecting our expectation of continued
weakness in the real economy during our rating horizon of 12-18 months. Industrial production in
October 2009 dropped sharply from a year earlier, continuing its downward trend since mid-2009.
Deflation and high real interest rates on both loans and deposits are very high --- the real borrowing
cost to be over 20% --- suppressing loan demand. Although, the conclusion of Oyu Tolgoi agreement
on a major mining project will help with local economy and loan demand in 2010.

The banking system also remains weak as loan quality continues to deteriorate, especially for loans to
the private sector. Excluding the two failed banks, past due loans and non-performing loans were over
17% of total gross loans as of November 2009. Consequently, we expect banks’ profit margin to
remain under pressure in the coming year. In addition, liquidity remains tight as loan-to-deposit ratio
reached a high of 120% as of November 2009, though MNT deposits continue to increase in recent
months.

Recent irregularities at two failed banks also highlight the perils in the operating environment and the
weakness in banks' overall risk positioning, including poor corporate governance, deficiency in
controls and risk management, lack of transparency, and high risk concentrations to individual clients.
The Bank of Mongolia has implemented a range of banking sector reforms, including a key measure to
complete the audits of most banks by internationally reputable firms. However, the effectiveness of
these measures remains to be seen.

NEW ZEALAND

Analysts: Marina Ip, Assistant Vice President-Analyst 612-9270-8130

Patrick Winsbury, Senior Vice President 612-9270-8183

Banking Industry Outlook - Stable

The change in outlook to stable from negative for the New Zealand banking industry reflects the
country's steady recovery from its mild recession between Jan 2008-March 2009. Improved economic
factors such as two consecutive positive quarters of GDP growth and lower revised unemployment
forecasts should ease asset quality concerns. Real GDP is expected to grow by 3% in 2010.

The dramatic monetary policy action taken by the RBNZ during the crisis, cutting official interest
rates from their recent high of 8.25% (in June 2008) to its current 2.50%, was designed to stimulate
the economy. Encouragingly, the RBNZ recently announcing it may start to remove monetary
stimulus around mid-2010, earlier than the previous timeframe of end-2010, should economic
conditions continue to improve.

Whilst we feel non-performing loan (NPL) rates may have peaked, we will continue to closely monitor
these levels in coming months, as some exposures may become delinquent over time. Borrower

7 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

concentrations still exist, particularly in the property sector, where development has slowed and final
completion or settlement has been delayed due to factors such as a fall in market value. However, the
recovery in 2010 dairy prices will ease farm cash flow pressures, leading to a greater portion of
performing loans.

The major banks still have significant funding wholesale requirements, at around 40% of total funding.
With the New Zealand government guarantee for wholesale funding still in place, the New Zealand
banks have continued to utilize both the government guaranteed and non-government guaranteed
markets. The four majors are also well under way to meet new RBNZ liquidity policy requirements,
scheduled to be in place by April 2010.

PHILIPPINES

Analysts: John Tham, Vice President-Senior Credit Officer 65-6398-8337

Youngil Choi, Vice President-Senior Analyst 852-2916-1157

Banking Industry Outlook - Stable

Improved economic conditions underpin the change in the Philippine banks’ industry outlook from
negative to stable. We expect domestic consumption, helped by robust remittances, a better export
outlook, and election spending -- against a backdrop of stabilizing global conditions -- to benefit the
banking industry over the next 12 to 18 months. Some “political noise” could emerge in an election
year, but is not expected to cause excessive instability. Our sovereign team projects the country’s real
GDP to grow 3% in 2010, much better than an estimated 1% in 2009, but below the 2004 to 2008
average of 5.7%.

The better economic outlook will support earnings in two ways. Firstly, loan demand should increase.
Secondly, higher interest rates should benefit the banks’ margins as their loans typically re-price faster
than deposits. These factors should moderate the effects of competition and a potential hike in
typhoon-related provisions. The Philippines was hit by a number of typhoons toward the end of
3Q2009. Barring significant shocks, we expect the banks’ loan-loss reserves, capital and earnings
prospects to offer reasonable creditor protection over the next 12 to 18 months.

SINGAPORE

Analysts: Christine Kuo, Vice President-Senior Analyst 65-6398-8324

Beatrice Woo, Vice President-Senior Credit Officer 65-6398-8332

Banking Industry Outlook - Stable

The outlook for the Singaporean banking sector has been revised to stable from negative. The change
mainly reflects expectations of a more favorable operating environment in the coming 12 to 18
months along with the economic recovery. In 2009, Singapore’s GDP contracted by around 2%. For
2010, Moody’s forecasts 5% growth.

With economic growth, more sustainable loan demand and lower loan loss provisions should follow.
Moreover, rising interest rates could benefit Singaporean banks’ net interest margins. As a result, we
expect bank asset quality and earnings to gradually improve and return to more normalized levels.

8 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

TAIWAN

Analysts: Christine Kuo, Vice President-Senior Analyst 65-6398-8324

Sally Yim, Vice President-Senior Analyst 852-2916-1250

Banking Industry Outlook - Stable

The change in Taiwan’s banking system outlook to stable is driven mainly by the improving operating
environment, stabilizing asset quality, and improving profitability.

A gradual economic recovery will set the stage for better prospects for the banks, with Taiwan’s GDP
growth forecast at 4% for 2010. Exports have also rebounded in the past several months thanks to
strong orders from China. Therefore, Taiwan banks’ asset quality of the banks in Taiwan is stabilizing.
The NPL ratio for all the domestic banks peaked at 1.63% in March 2009, a marginal increase
compared to 1.53% in September 2008, and declined further, to 1.29% in November 2009.

Moody’s also expects pre-provision profits to rise. Net interest margin, which bottomed between 2Q
and 3Q of 2009, are recovering as time deposits were re-priced. Wealth management income, is also
improving, given the more favorable sentiment in the equity market and the return of consumer
confidence. However, we believe that profitability will improve only moderately as interest rates will
likely increase slowly in order to support economic growth.

Throughout the financial crisis, liquidity has been strong in Taiwan. Funding will not be an issue for
most of the banks, given the industry’s average loan-to-deposit ratio of around 75% and limited loan
growth. In addition, the domestic money market and bond market have been in good order, providing
banks with the avenues to raise capital.

Several risks remain in the banking system. First, net income of the Taiwanese banks could decline, as
they will likely need to set aside more loan loss provisions in order to meet the more stringent
accounting standard that will become effective in 2011. At this time, however, the actual impact to the
banks remains uncertain given that specific regulations are not yet available. Second, single borrower
and industry concentration remains one of the biggest credit weaknesses. We may see a sudden spike
in NPLs, but this will be due to isolated cases.

THAILAND

Analysts: Karolyn Seet, Assistant Vice President-Analyst 65-6398-8303

Beatrice Woo, Vice President-Senior Credit Officer 65-6398-8332

Banking Industry Outlook - Stable

We have changed our fundamental credit outlook for the Thai banking system to stable from negative,
reflecting the favorable overall credit conditions in the country. However, the sector's resilience and
ability to absorb the adverse effects of the global financial crisis could be fractured by the country’s
fragile political environment.

Nevertheless, Moody's believes that the banking sector will benefit from the Thai government's
continued commitment to supporting the economy with an expansionary budget and stimulus

9 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

program. We expect the economy to grow 3-5% in 2010 after a contraction of 3% in 2009. We also
expect credit growth of 5-10% in 2010, after a contraction of 2% in 2009.

The impact of the financial crisis has been limited, as the Thai banks do not depend significantly on
market funding. Moreover, asset quality has been stable since end-2008, with most banks reporting a
decline in NPL ratios, which are targeted to fall to 5% from 5.5% at end-2009. The rated banks'
profitability indicators also remain strong, despite pressure, and are in fact commensurate with those of
higher-rated banks in other markets.

Capitalization metrics do not indicate any imminent threats to the banking system's solvency, ensuring
some stability amid the more volatile operating environment.

VIETNAM

Analysts: Karolyn Seet, Assistant Vice President-Analyst 65-6398-8303

Christine Kuo, Vice President-Senior Analyst 65-6398-8324

Banking Industry Outlook - Negative

Moody’s maintains its negative outlook for Vietnamese banking due to the still unstable economic
conditions in the country. The current macroeconomic imbalances put downward pressure on the
Vietnamese exchange rate as the government tries to balance pro-growth with stabilization policies.
This coupled with re-emerging inflationary expectations create uncertainty and instability in the
operating environment that the Vietnamese banks operate in.

Moody’s notes that the government stimulus and limited global integration reduced the impact of the
global financial crisis on Vietnam. Its GDP grew 5.3% in 2009, contrary to the contractions recorded
by its regional neighbours, and the economy is expected to grow by 5.7% in 2010. Its banking sector
has also been resilient thus far. However, past rapid credit growth is likely to continue and pose
challenges for banks' risk management, asset quality, and capitalization, whilst liquidity is tightening
from satisfactory levels. In addition, the credit fundamentals of the Vietnamese banks remain
compromised by a weak legal system, poor governance, and limited transparency.

Moody’s Related Research

Special Comment:
» Asia-Pacific Regional Outlook, January 2010 (122061)
» Global Macro-risk Scenarios 2010-2011 – On the “Hook” for Some Time Yet, January 2010
(122431)
Banking System Outlook
» Japan, December 2009 (121780)
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of
this report and that more recent reports may be available. All research may not be available to all clients.

10 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE
 GLOBAL BANKING

Report Number: 122607

Author Senior Production Associates

Deborah Schuler Shubhra Bhatnagar

© 2010 Moody’s Investors Service, Inc. and/or its licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S (“MIS”) CURRENT OPINIONS OF THE RELATIVE FUTURE
CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE
RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY
ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK,
INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE
NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR
FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR
SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR
INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR
WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE,
HOLDING, OR SALE.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND
NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED,
TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN
WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S
PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY’S from sources believed by it to be accurate
and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained
herein is provided “AS IS” without warranty of any kind. Under no circumstances shall MOODY’S have any liability to any person or
entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or
other circumstance or contingency within or outside the control of MOODY’S or any of its directors, officers, employees or agents in
connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any
such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including
without limitation, lost profits), even if MOODY’S is advised in advance of the possibility of such damages, resulting from the use of
or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any,
constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not
statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must
make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR
IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE
OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER
WHATSOEVER.
MIS, a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt
securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS
have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500
to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and
rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between
entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is
posted annually at www.moodys.com under the heading “Shareholder Relations — Corporate Governance — Director and
Shareholder Affiliation Policy.”

11 JANUARY 2010 SPECIAL COMMENT: ASIAN BANKING SYSTEM INDUSTRY OUTLOOKS: 12 SYSTEMS MOVE TO STABLE FROM NEGATIVE