Bank of the Philippine Islands

BPI.PS BPI PM
EQUITY: BANKS

1Q19 results in line, reiterate Buy Global Markets Research

29 April 2019
Pre-provisioning profits sustain strong growth
Rating
Remains Buy
Target Price
Action: Reiterate Buy; trim TP to PHP100, implying 19.8% upside Reduced from 102.40 PHP 100.00
BPI reported 1Q19 earnings of PHP6.72bn, up 7.6% y-y, largely in line with our
Closing price
estimates. Pre-provisioning profits rose 23% y-y on the back of 50bp NIM 26 April 2019 PHP 83.45
improvement, 11.5% loan growth, and increases in fee-related revenue. Higher
provision for losses of PHP1.8bn (+129% y-y), however, dampened bottom-line Potential upside +19.8%
growth to single digits for the period. We think the provisioning jump in 4Q18
and 1Q19 already covers most of BPI’s exposure in Hanjin, and we expect Anchor themes
credit cost to settle at 41bp for FY19F vs 36bp in FY18. We thus slightly cut our We believe the current trends (a
DDM-based TP by 2% and 2019/20F EPS by 2% to incorporate the higher broadening domestic economy
provisioning. We maintain our Buy rating, with BPI still poised to deliver a strong driven by rising consumption and
19% 2018A-2021F EPS CAGR, in our view. The stock is also trading at an investments) favour BPI.
attractive forward P/B 1.3x vs its 2.2x historical average.
Nomura vs consensus
Healthy loan growth and NIM improvements continue
Our FY19/20F earnings and TP
NIMs widened 50bp to 3.39% in 1Q19 as BPI continues to reprice across its
are within the range of
loan products. Loan book grew 11.5%, with corporate, credit card, and consensus.
housing loans up 11.8%, 20.3% and 9.9%, respectively. We believe credit
demand and loan growth should remain healthy considering our outlook Research analysts
for accelerating GDP growth. Meanwhile, NPLs were stable at 1.85% while
total loss coverage including allowances for contingent exposure stood at Philippines Banks
95.7%.
Abigail Chiw, CFA - BDO-NS
Investments in IT and branches to enhance efficiencies +632 878 4590
BPI earmarked PHP6bn for capex spending this year, in line with its Lourdes Dumol - BDO-NS
digitalisation and financial inclusion strategy. 33% of the budget is allocated +632 688 1227
for IT, while the balance is for branch network expansion (i.e. +14 BPI
branches, +100 BanKo branches and branch-lite units). Over time, we expect
opex growth to normalise and ROEs to eventually improve towards 12% by
BDO Unibank, Inc. and BDO Nomura
2020F, as these investments translate into increasing revenue. Securities, Inc are the distributors of this
report in the Philippines. No part of this
material may be (i) copied, photocopied, or
Year-end 31 Dec FY18 FY19F FY20F FY21F duplicated in any form, by any means; or (ii)
redistributed without the prior written
Currency (PHP) Actual Old New Old New Old New consent of BDO Unibank, Inc. and BDO
PPOP (mn) 34,922 41,108 42,165 49,407 49,802 58,507 Nomura Securities. Inc. Nomura has
authorized BDO Unibank, Inc. and BDO
Reported net profit (mn) 23,078 28,368 27,600 34,561 33,806 40,221 Nomura Securities. Inc to re-distribute this
report in the Philippines.
Normalised net profit (mn) 23,078 28,368 27,600 34,561 33,806 40,221
FD normalised EPS 5.47 6.30 6.39 7.68 7.83 9.32 The "BDO-NS" (which stands for "BDO
Nomura Securities, Inc.") placed next to an
FD norm. EPS growth (%) -3.9 21.8 16.9 21.8 22.5 19.0 analyst’s name on the front page of a
FD normalised P/E (x) 15.3 N/A 13.0 N/A 10.7 N/A 9.0 research report indicates that the analyst is
employed by BDO Unibank Inc. ("BDO
Price/adj. book (x) 1.4 N/A 1.3 N/A 1.2 N/A 1.1 Unibank") who has been seconded to
Price/book (x) 1.4 N/A 1.3 N/A 1.2 N/A 1.1 BDO-NS, to provide research assistance
services to NSL under an agreement
Dividend yield (%) 2.1 N/A 2.2 N/A 2.2 N/A 2.2 between BDO Unibank, NSL and BDO-NS.
ROE (%) 10.8 11.1 10.7 12.4 12.0 12.9 BDO-NS is a Philippines securities dealer,
which is a joint venture between BDO
ROA (%) 1.2 1.3 1.3 1.4 1.4 1.5
Unibank and the Nomura Group.
Source: Company data, Nomura estimates

Key company data: See next page for company data and detailed price/index chart.

See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.
Nomura | Bank of the Philippine Islands 29 April 2019

Key data on Bank of the Philippine Islands

Relative performance chart Balance sheet (PHPmn)
As at 31 Dec FY17 FY18 FY19F FY20F FY21F
Cash and equivalents 35,132 43,536 43,571 51,405 57,092
Inter-bank lending 18,586 34,323 34,897 39,221 44,617
Deposits with central bank 255,948 225,907 212,319 181,171 192,301
Total securities 306,117 341,498 365,510 412,629 468,358
Other int earning assets 19,387 12,477 14,909 16,093 18,685
Gross loans 1,223,001 1,377,798 1,571,114 1,806,650 2,051,383
Less provisions -20,663 -22,902 -27,020 -30,874 -35,313
Net loans 1,202,338 1,354,896 1,544,095 1,775,776 2,016,070
Long-term investments 27,505 25,733 28,621 30,414 32,295
Fixed assets 15,056 16,251 18,128 21,787 28,051
Goodwill
Other intangible assets
Source: Thomson Reuters, Nomura research Other non IEAs 23,836 30,607 27,222 28,914 28,068
Total assets 1,903,905 2,085,228 2,289,270 2,557,410 2,885,537
Notes: Customer deposits 1,562,200 1,585,746 1,744,828 1,961,028 2,230,827
Bank deposits, CDs, 83,517 166,901 185,291 204,214 221,768
Other int bearing liabilities 1,218 3,988 3,988 3,988 3,988
Total int bearing liabilities 1,646,935 1,756,635 1,934,108 2,169,230 2,456,583
Performance Non-int bearing liabilities 73,419 77,055 83,514 90,154 98,069
(%) 1M 3M 12M Total liabilities 1,720,354 1,833,690 2,017,622 2,259,384 2,554,652
Absolute (PHP) -1.9 -8.4 -20.5 M cap (USDmn) 7,202.3 Minority interest 2,863 3,017 3,218 3,482 3,810
Absolute (USD) -1.5 -7.9 -20.5 Free float (%) 47.7 Common stock 69,107 119,142 119,142 119,142 119,142
Rel to MSCI Philippines -1.9 -6.9 -26.3 3-mth ADT (USDmn) 3.4 Preferred stock
Retained earnings 116,669 131,555 151,464 177,578 210,108
Profit and loss (PHPmn) Reserves for credit losses
Year-end 31 Dec FY17 FY18 FY19F FY20F FY21F Proposed dividends
Interest income 68,053 80,190 97,497 114,558 133,964 Other equity -5,088 -2,176 -2,176 -2,176 -2,176
Interest expense -17,810 -24,347 -30,445 -37,467 -44,589 Shareholders' equity 180,688 248,521 268,430 294,544 327,074
Net interest income 50,243 55,843 67,052 77,090 89,374 Total liabilities and equity 1,903,905 2,085,228 2,289,270 2,557,410 2,885,537
Net fees and commissions 9,753 9,447 10,014 10,615 11,252 Non-perf assets 16,255 25,391 29,066 33,423 37,951
Trading related profits 3,353 2,847 3,100 2,974 3,037
Other operating revenue 11,369 10,387 12,675 14,892 17,415 Balance sheet ratios (%)
Non-interest income 24,475 22,681 25,788 28,481 31,704 Loans to deposits 78.3 86.9 90.0 92.1 92.0
Operating income 74,718 78,524 92,840 105,571 121,078 Equity to assets 9.5 11.9 11.7 11.5 11.3
Depreciation Asset quality & capital
Amortisation NPAs/gross loans (%) 1.3 1.8 1.9 1.9 1.9
Operating expenses -28,334 -28,287 -33,982 -37,573 -42,191 Bad debt charge/gross 0.31 0.36 0.41 0.37 0.37
Employee share expense -13,897 -15,315 -16,693 -18,196 -20,379 Loss reserves/assets (%) 1.09 1.10 1.18 1.21 1.22
Pre-provision op profit 32,487 34,922 42,165 49,802 58,507 Loss reserves/NPAs (%) 127.1 90.2 93.0 92.4 93.0
Provisions for bad debt -3,795 -4,923 -6,394 -6,685 -7,590 Tier 1 capital ratio (%) 11.8 15.2 15.1 14.5 14.1
Other provision charges Total capital ratio (%) 12.7 16.1 16.0 15.4 15.0
Operating profit 28,692 29,999 35,770 43,117 50,917 Per share
Other non-op income Reported EPS (PHP) 5.69 5.47 6.39 7.83 9.32
Associates & JCEs Norm EPS (PHP) 5.69 5.47 6.39 7.83 9.32
Pre-tax profit 28,692 29,999 35,770 43,117 50,917 FD norm EPS (PHP) 5.69 5.47 6.39 7.83 9.32
Income tax -5,956 -6,670 -7,891 -8,970 -10,290 DPS (PHP) 1.80 1.76 1.80 1.80 1.80
Net profit after tax 22,736 23,329 27,879 34,147 40,627 PPOP PS (PHP) 8.25 8.28 9.77 11.54 13.56
Minority interests -320 -251 -279 -341 -406 BVPS (PHP) 45.89 57.58 62.19 68.24 75.78
Other items ABVPS (PHP) 45.89 57.58 62.19 68.24 75.78
Preferred dividends NTAPS (PHP) 45.89 57.58 62.19 68.24 75.78
Normalised NPAT 22,416 23,078 27,600 33,806 40,221
Extraordinary items Valuations and ratios
Reported NPAT 22,416 23,078 27,600 33,806 40,221 Reported P/E (x) 14.7 15.3 13.0 10.7 9.0
Dividends -7,089 -7,598 -7,769 -7,769 -7,769 Normalised P/E (x) 14.7 15.3 13.0 10.7 9.0
Transfer to reserves 15,327 15,480 19,831 26,037 32,452 FD normalised P/E (x) 14.7 15.3 13.0 10.7 9.0
Dividend yield (%) 2.2 2.1 2.2 2.2 2.2
Growth (%) Price/book (x) 1.8 1.4 1.3 1.2 1.1
Net interest income 13.3 11.1 20.1 15.0 15.9 Price/adjusted book (x) 1.8 1.4 1.3 1.2 1.1
Non-interest income -4.6 -7.3 13.7 10.4 11.3 Net interest margin (%) 2.93 2.96 3.24 3.35 3.46
Non-interest expenses 13.5 -0.2 20.1 10.6 12.3 Yield on assets (%) 3.97 4.25 4.71 4.98 5.19
Pre-provision earnings 2.8 7.5 20.7 18.1 17.5 Cost of int bearing liab (%) 1.13 1.43 1.65 1.83 1.93
Net profit 1.7 3.0 19.6 22.5 19.0 Net interest spread (%) 2.83 2.82 3.06 3.16 3.26
Normalised EPS 1.5 -3.9 16.9 22.5 19.0 Non-interest income (%) 32.8 28.9 27.8 27.0 26.2
Normalised FDEPS 1.5 -3.9 16.9 22.5 19.0 Cost to income (%) 56.5 55.5 54.6 52.8 51.7
Loan growth 15.5 12.7 14.0 15.0 13.5 Effective tax rate (%) 20.8 22.2 22.1 20.8 20.2
Interest earning assets 10.7 9.3 10.3 11.7 13.0 Dividend payout (%) 31.6 32.9 28.1 23.0 19.3
Interest bearing liabilities 10.2 6.7 10.1 12.2 13.2 ROE (%) 13.0 10.8 10.7 12.0 12.9
Asset growth 10.3 9.5 9.8 11.7 12.8 ROA (%) 1.24 1.16 1.26 1.39 1.48
Deposit growth 9.1 1.5 10.0 12.4 13.8 Operating ROE (%) 16.6 14.0 13.8 15.3 16.4
Source: Company data, Nomura estimates Operating ROA (%) 1.58 1.50 1.64 1.78 1.87
Source: Company data, Nomura estimates

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Nomura | Bank of the Philippine Islands 29 April 2019

1Q19 results in line

BPI reported 1Q19 earnings of PHP6.72bn, up 7.6% y-y, in line with our estimates. ROE
was 10.7%, lower by 2.9%, reflecting the dilution from the stock rights offering in May
2018. CAR and CET1 ratios stand at 16.57% and 15.68%, respectively, indicating
sufficient capital buffers to support growth.

Fig. 1: BPI – financial highlights

PHPmn 3Q17 3Q18 % chg 4Q17 4Q18 % chg 1Q18 1Q19 % chg
Income Statement
Net interest income 11,985 14,665 22.4% 12,539 14,966 19.4% 12,512 16,050 28.8%
Non-interest income 5,717 5,002 -12.5% 5,440 6,672 22.6% 5,938 6,730 12.4%
Operating revenues 17,702 19,666 11.1% 17,979 21,638 20.4% 18,450 22,780 23.5%
Operating expenses 9,608 10,864 13.1% 10,672 11,518 7.9% 9,747 12,070 23.8%
Pre-provision oper profits 8,094 8,802 8.7% 7,306 10,120 38.5% 8,703 10,710 23.1%
Impairment loss provisions 1,148 931 -18.9% 186 2,079 1017% 785 1,800 129%
Provision for income taxes 1,492 1,826 22.3% 1,684 1,878 11.5% 1,618 2,190 35.3%
Net income 5,453 6,045 10.9% 5,436 6,164 13.4% 6,300 6,720 6.7%
Attributable net income 5,356 5,984 11.7% 5,368 6,068 13.0% 6,247 6,720 7.6%
NIM 2.92% 3.24% 2.91% 3.23% 2.91% 3.39%
CIR 54.3% 55.2% 59.4% 53.2% 52.8% 53.0%
ROE 12.2% 11.1% 12.8% 11.2% 13.5% 10.7%
ROA 1.26% 1.27% 1.26% 1.22% 1.40% 1.30%
Balance Sheet
Assets 1,799,820 1,960,621 8.9% 1,903,905 2,085,228 9.5% 1,914,411 2,084,793 8.9%
Loans 1,122,235 1,267,522 12.9% 1,202,338 1,354,896 12.7% 1,209,940 1,348,500 11.5%
Deposits 1,504,895 1,542,472 2.5% 1,562,200 1,585,746 1.5% 1,587,183 1,608,300 1.3%
LDR 74.6% 82.2% 77.0% 85.4% 76.2% 83.9%
NPL Ratio 1.47% 0.00% 1.29% 1.85% 1.32% 1.85%
NPL Cover 125.6% 0.0% 129.2% 88.3% 130.1% 95.7%
CAR 13.4% 17.0% 12.7% 16.1% 13.6% 16.6%
CET1 12.5% 16.1% 11.8% 15.2% 12.7% 15.7%
Source: Company data, Nomura estimates

Net interest income jumped 28.8% y-y on the back of a 50bp expansion in NIMs, an
11.5% increase in loan books, and a 14.4% increase in its securities portfolio. About
84% of the securities portfolio is Hold-to-Collect, and thus less exposed to market
volatility. Meanwhile, non-interest income also grew 12.4% following increases in
transaction-based service charges, credit card and rental businesses, and income from
assets sold.
The 23.5% y-y increase in top line was accompanied by a similar 23.8% rise in opex due
to the bank's continued investments in technology and its microfinance branch network.
BPI also incurred higher premises costs in relation to the transfers to new sites from its
old headquarter offices. FY19 opex growth should trend lower to 15-16% however,
according to management. Overall, pre-provisioning profits still sustained strong growth
(+23% in 1Q19 from +38% in 4Q18).

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Nomura | Bank of the Philippine Islands 29 April 2019

Tweaking TP on higher provisioning

Higher provision for losses of PHP1.8bn (+129% y-y) in 1Q18 however, dampened
bottom-line growth to single digits for the period. We think the provisioning jump in 4Q18
and 1Q19 already covers most of its exposure in Hanjin, and we expect credit cost to
settle at 41bp for FY19F vs 36bp in FY18. We thus slightly cut our DDM-based TP by 2%
to PHP100 and 2019/20F EPS by 2%, on average, largely to incorporate the higher
provisioning. We also adjust for the wider-than-expected NIM improvement trends, the
impact of which is mostly offset by the higher opex costs moving forward, as guided by
management.

Fig. 2: BPI - revisions to our earnings estimates

Adjusted Estimates Previous Estimates % Changes

PHPmn FY19F FY20F FY19F FY20F FY19F FY20F
Income Statement
Net interest income 67,052 77,090 62,887 71,454 7% 8%
Non-interest income 25,788 28,481 26,099 29,221 -1% -3%
Operating revenues 92,840 105,571 88,986 100,675 4% 5%
Operating expenses 50,676 55,769 47,877 51,268 6% 9%
Pre-provision oper profits 42,165 49,802 41,108 49,407 3% 1%
Impairment loss provisions 6,394 6,685 4,952 6,004 29% 11%
Provision for income taxes 7,891 8,970 7,502 8,492 5% 6%
Net income 27,879 34,147 28,655 34,910 -3% -2%
Attributable net income 27,600 33,806 28,368 34,561 -3% -2%
NIM 3.41% 3.53% 3.17% 3.26%
CIR 54.6% 52.8% 57.3% 54.5%
ROE 10.6% 11.9% 11.0% 12.2%
ROA 1.26% 1.39% 1.31% 1.44%
Balance Sheet
Assets 2,289,270 2,557,410 2,273,472 2,524,131 1% 1%
Loans 1,544,095 1,775,776 1,547,182 1,791,505 0% -1%
Deposits 1,744,828 1,961,028 1,815,059 2,020,895 -4% -3%
LDR 90.0% 92.1% 86.6% 90.0%
NPL Ratio 1.85% 1.85% 1.50% 1.50%
NPL Cover 93.0% 92.4% 105.0% 102.7%
CAR 16.0% 15.4% 16.5% 16.0%
CET1 15.1% 14.5% 15.6% 15.2%
Source: Nomura estimates

Valuations still look attractive to us

We maintain our Buy rating, with BPI still poised to deliver a strong 19% 2018A-2021F
EPS CAGR, in our view. The stock is also trading at an attractive forward P/B 1.3x vs its
2.2x historical average. Philippine banks have underperformed YTD (-2% vs +5% for the
PCOMP) on tightening liquidity concerns. Potential cuts in RRR by the BSP however,
could be a welcome boost for banks with PH RRR of 18% among the highest in the
region.
Downside risks: 1) competitive pressure could restrain NIMs; and 2) higher-than-
expected problem loans provisioning.

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Nomura | Bank of the Philippine Islands 29 April 2019

Appendix A-1
Analyst Certification
I, Abigail Chiw, hereby certify (1) that the views expressed in this Research report accurately reflect my personal views about
any or all of the subject securities or issuers referred to in this Research report, (2) no part of my compensation was, is or will be
directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of my
compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc.,
Nomura International plc or any other Nomura Group company.

Issuer Specific Regulatory Disclosures

The terms "Nomura" and "Nomura Group" used herein refers to Nomura Holdings, Inc. and its affiliates and subsidiaries, including Nomura
Securities International, Inc. ('NSI') and Instinet, LLC('ILLC'), U. S. registered broker dealers and members of SIPC.

Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Sector rating Disclosures
Bank of the Philippine
Islands BPI PM PHP 83.45 26-Apr-2019 Buy N/A

Bank of the Philippine Islands (BPI PM) PHP 83.45 (26-Apr-2019) Buy (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
15-Nov-18 102.40 84.50
01-Aug-18 114.00 95.80
14-May-18 127.20 98.00
03-Apr-18 Buy 108.70
03-Apr-18 133.00 108.70
22-Jan-18 Neutral 123.40
22-Jan-18 136.70 123.40
13-Nov-17 Buy 99.00
13-Nov-17 117.20 99.00
11-Apr-17 Neutral 104.80
11-Apr-17 103.67 104.80

For explanation of ratings refer to the stock rating keys located after chart(s)

Valuation Methodology Our TP of PHP100 is derived using a 2-stage dividend discount methodology. We assume sustainable
profit growth at 9.6% with normalizing ROE of 12% and dividend payout ratio of 20%. The benchmark index for this stock is
MSCI Philippines.

Risks that may impede the achievement of the target price Downside risks are: 1) competitive pressures could restrain
NIMs; and 2) higher-than-expected problem loans and loss provisioning.

Important Disclosures
Online availability of research and conflict-of-interest disclosures
Nomura Group research is available on www.nomuranow.com/research, Bloomberg, Capital IQ, Factset, Reuters and ThomsonOne.
Important disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx or requested
from Nomura Securities International, Inc., or Instinet, LLC on 1-877-865-5752. If you have any difficulties with the website, please
email grpsupport@nomura.com for help.

The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a
portion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report are
not registered/qualified as research analysts under FINRA rules, may not be associated persons of NSI or ILLC, and may not be subject to

5
Nomura | Bank of the Philippine Islands 29 April 2019

FINRA Rule 2241 restrictions on communications with covered companies, public appearances, and trading securities held by a research
analyst account.

Nomura Global Financial Products Inc. (“NGFP”) Nomura Derivative Products Inc. (“NDPI”) and Nomura International plc. (“NIplc”) are
registered with the Commodities Futures Trading Commission and the National Futures Association (NFA) as swap dealers. NGFP, NDPI, and
NIplc are generally engaged in the trading of swaps and other derivative products, any of which may be the subject of this report.

Distribution of ratings (Nomura Group)

The distribution of all ratings published by Nomura Group Global Equity Research is as follows:
50% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 44% of companies with this
rating are investment banking clients of the Nomura Group*. 0% of companies (which are admitted to trading on a regulated market in the EEA)
with this rating were supplied material services** by the Nomura Group.
44% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 53% of companies with
this rating are investment banking clients of the Nomura Group*. 0% of companies (which are admitted to trading on a regulated market in the
EEA) with this rating were supplied material services by the Nomura Group
6% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 13% of companies with
this rating are investment banking clients of the Nomura Group*. 0% of companies (which are admitted to trading on a regulated market in the
EEA) with this rating were supplied material services by the Nomura Group.
As at 31 March 2019.
*The Nomura Group as defined in the Disclaimer section at the end of this report.
** As defined by the EU Market Abuse Regulation

Distribution of ratings (Instinet, LLC)

The distribution of all ratings published by Instinet, LLC Equity Research is as follows:
55% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; Instinet LLC has provided
investment banking services to 0% of companies with this rating within the previous 12 months.
41% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; Instinet LLC has provided
investment banking services to 0% of companies with this rating within the previous 12 months.
4% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; Instinet LLC has provided
investment banking services to 0% of companies with this rating within the previous 12 months.

Definition of Nomura Group's equity research rating system and sectors

The rating system is a relative system, indicating expected performance against a specific benchmark identified for each individual stock,
subject to limited management discretion. An analyst’s target price is an assessment of the current intrinsic fair value of the stock based on an
appropriate valuation methodology determined by the analyst. Valuation methodologies include, but are not limited to, discounted cash flow
analysis, expected return on equity and multiple analysis. Analysts may also indicate expected absolute upside/downside relative to the stated
target price, defined as (target price - current price)/current price.

STOCKS
A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral',
indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that
the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, target
price and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies
that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage. Investors should not expect continuing or
additional information from Nomura relating to such securities and/or companies. Benchmarks are as follows: United States/Europe/Asia ex-
Japan: please see valuation methodologies for explanations of relevant benchmarks for stocks, which can be accessed
at: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global Emerging Markets (ex-Asia): MSCI
Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology; Japan: Russell/Nomura Large Cap.

SECTORS
A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance,
indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that
the analyst expects the sector to underperform the Benchmark during the next 12 months. Sectors that are labelled as 'Not rated' or shown as
'N/A' are not assigned ratings. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging
Markets (ex-Asia): MSCI Emerging Markets ex-Asia. Japan/Asia ex-Japan: Sector ratings are not assigned.

Target Price
A Target Price, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part the analyst's
estimates for the company's earnings. The achievement of any target price may be impeded by general market and macroeconomic trends, and
by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.

Disclaimers
This publication contains material that has been prepared by the Nomura Group entity identified on page 1 and, if applicable, with the
contributions of one or more Nomura Group entities whose employees and their respective affiliations are specified on page 1 or identified
elsewhere in the publication. The term "Nomura Group" used herein refers to Nomura Holdings, Inc. and its affiliates and subsidiaries including:
Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura Financial Products Europe GmbH (‘NFPE’), Germany; Nomura International plc
('NIplc'), UK; Nomura Securities International, Inc. ('NSI'), New York, US; Instinet, LLC ('ILLC'); Nomura International (Hong Kong) Ltd. (‘NIHK’),
Hong Kong; Nomura Financial Investment (Korea) Co., Ltd. (‘NFIK’), Korea (Information on Nomura analysts registered with the Korea Financial
Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis.kofia.or.kr); Nomura Singapore Ltd. (‘NSL’), Singapore
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