Banks

www.fitchratings.com 16 December 2015

United Arab Emirates

Bank of Sharjah Full Rating Report

Key Rating Drivers IDR State-Support Driven: Bank of Sharjah’s (BOS) IDRs, Support Rating (SR) and Support Rating Floor (SRF) are driven by a high probability of support from the UAE and Sharjah authorities, if needed. This reflects the strong history of support in the UAE.

Viability Rating Drivers: The Viability Rating (VR) is constrained by the bank’s relatively small franchise and some asset quality concerns. It reflects BOS’s high concentration risk, some related-party lending concerns and modest profitability. It also takes into account BOS’s adequate capital ratios, adequate loan loss reserve coverage of existing problem exposures and a healthy liquidity position.

Moderate Asset Quality Improvement: The impaired loans ratio decreased to 5% at end-1H15 from 7.3% at end-2014 partly due to 1% of loans being written off, but also thanks to the recovery of some impaired exposures. Total problem loans (impaired, 90 days overdue, but not impaired and restructured loans) comprised a moderate 8.6% of gross loans at end-1H15 and were fully covered by reserves. The problem loans generation ratio (difference in impaired loans plus write-offs to average loans for a period, annualised) was -2.9% in 1H15.

High Concentration: The bank has high concentrations on both sides of its balance sheet, which increases BOS's sensitivity to event risk.

High Related-Party Financing: Net lending to related parties fell by AED0.7bn in 1H15, but was still a high 14% of the total book at end-1H15 (55% of Fitch Core Capital; FCC). High related-party lending is common for many banks in the region; however, in BOS’s case most of these loans are to board members, a legacy situation that the bank is gradually addressing within new Central Bank guidelines.

Adequate Capital Ratios: The FCC ratio of 20.5% at end-1H15 was only adequate considering the high loan-book concentration – the 20 largest exposures comprised 58% of total loans (2.2x FCC) at end-1H15. The total regulatory capital ratio stood at 21.3%. Fitch Ratings calculated that the bank was able to increase impairment reserves to 22% (from 9.2% at end-1H15) of gross loans without breaching the regulatory minimum of 12%.

Weak Profitability: BOS’s pre-impairment profitability is weak – equal to 3% of gross loans in 1H15 (annualised), providing only moderate loss absorption capacity.

Stable Funding, Healthy Liquidity: Customer deposits comprised 90% of BOS’s funding base at end-1H15. Deposits are moderately concentrated – the 20 largest accounted for 14% of the total balance at end-2014, but are sticky. BOS has a good cushion of liquid assets (cash and equivalents and net short-term interbank placements), which were equal to 26% of total assets at end-1H15 and were sufficient to repay 37% of customer deposits.

Rating Sensitivities IDRs on Stable Outlook: The bank’s IDRs, SR and SRF are unlikely to change unless Fitch changes its view on the creditworthiness of the UAE and Sharjah authorities and on their propensity to support the bank.

VR Sensitive to Asset Quality, Franchise: Upside potential to BOS’s VR is somewhat limited given the bank’s weak asset quality indicators and narrow franchise. The VR could be downgraded if asset quality deteriorates and affects the bank’s profitability or capital position.

Related Research 2016 Outlook: Gulf Cooperation Council Banks (December 2015) Analysts Redmond Ramsdale +971 4 424 1202 redmond.ramsdale@fitchratings.com Anton Lopatin +7 495 956 7096 anton.lopatin@fitchratings.com

Ratings Foreign Currency Long-Term IDR BBB+ Short-Term IDR F2 Viability Rating bb Support Rating 2 Support Rating Floor BBB+

Outlook Foreign-Currency Long-Term IDR Stable

Financial Data Bank of Sharjah 30 Jun

15 31 Dec

14

Total assets (USDm) 7,337.1 6,822.2 Total assets (AEDm) 26,945.6 25,054.4 Total equity (AEDm) 4,462.3 4,412.7 Operating profit (AEDm)

183.4 277.7

Published net income (AEDm)

175.6 285.9

Comprehensive income (AEDm)

148.6 227.5

Operating ROAA (%) 1.4 1.1 Operating ROAE (%) 8.4 6.4 Internal capital generation (%)

7.9 4.8

Fitch Core Capital/ weighted risks (%)

20.5 21.5

Tier 1 ratio (%) 19.8 20.7

Banks

Bank of Sharjah

December 2015 2

Support IDR Based on Sovereign Support Fitch believes that the UAE authorities are able to support the banking system given the sovereign’s superior financial flexibility, sustained by its sovereign wealth and ongoing revenues, mostly from its hydrocarbon production. The increasingly diversified non-oil sectors and the moderate size of the UAE banking system in relation to the country’s GDP also underpin the sovereign’s ability to support the banks.

Fitch’s opinion of support is also based on the willingness of the authorities to support the banking sector. This has been demonstrated by the UAE authorities’ long track record of sustaining domestic banks, most recently during the 2008/2009 crisis through capital injections for some and system-wide liquidity facilities to all banks.

Fitch does not consider BOS to be a domestic systemically important bank (D-SIB) in the UAE. This view is based on BOS’s narrower franchise than larger banks and smaller market share of approximately 1% of banking system loans. On the other hand, the bank is 16%-owned by the government of Sharjah and 25% of BOS’s shares are controlled by members of the Sharjah and Abu Dhabi ruling families, meaning there is still high propensity to support the bank. As a result, the SRF is two notches below the UAE’s D-SIB SRF.

Operating Environment Solid Operating Environment GDP growth in the UAE is continuing despite lower oil prices and is underpinned by growth of the non-oil sector, which in turn is supported by government spending and increased national economic activity. Fitch estimates that sovereign foreign assets rose to 181% of GDP at end-2014, while direct external debt was less than 1% of GDP. Net foreign assets are forecast to be at about the same level at end-2016 based on a conservative assumption for investment performance.

Real GDP growth is expected to be around 4% for the next two years in the UAE, underpinned mainly by the non-oil sector. This continues to be supported by government spending, although it is lower than before.

A ‘lower for longer’ oil price scenario, however could affect the economy over time, and result in lower loan growth, reduced profitability and deteriorating asset quality, which in turn may pressure solid capital and liquidity buffers. This is not currently our base case as the UAE is the most diversified of the Gulf Cooperation Council (GCC) economies.

Real Estate Market Recovery – Back to Pre-Crisis Levels, but More Sustainable The residential real estate market has improved since end-2012, with prices increasing significantly, despite regulatory measures to reduce speculative buying. However, as opposed to the pre-crisis period, real estate market growth is not credit-driven: cash buyers comprised about 70% of total sales in 2013-2014. Property price growth, particularly in Dubai, was driven by underlying fundamentals, such as strong non-oil GDP growth in logistics, tourism and retail and an increase in population and inflow of expatriates to these sectors. Fitch therefore believes prices are more sustainable than before the crisis, and a small price correction would be manageable.

GREs Restructuring Completed, but Bullet Repayments Leave Uncertainty Debt restructuring of troubled Dubai-based government-related entities (GREs) is largely complete, although many repayments are still in the form of bullet repayments with some maturities into the 2020s. This allows the GREs time to make asset sales in an improving market, and restructures are linked to a sustainable improvement in the local and international

Figure 1

Related Criteria Global Bank Rating Criteria (March 2015)

Public66%

Source: Bank

BOS's ShareholdersEnd-1H15

Sharjah asset management

16%

Al Saqr United group

12%

Ahmed Abdalla Al Noman

6%

Banks

Bank of Sharjah

December 2015 3

operating environment. Some Dubai GREs are now performing very well, particularly Nakheel (part of Dubai World), and have repaid some of their restructured debt before maturity.

A greater-than-expected decrease in real estate prices and unsuccessful repayment/refinancing of Dubai’s restructured debt could lead to re-emergence of asset quality problems in the UAE.

Company Profile Small Corporate Bank Domiciled in Sharjah BOS was established in 1973 as the first bank in Sharjah, with the government of Sharjah, Banque Paribas (now BNP Paribas) and the Hassawi Group as founding shareholders. BNP Paribas sold its stake in 2002. BOS is now listed on the Abu Dhabi Stock Exchange and is 16%-owned by the government of Sharjah through Sharjah Asset Management Company. Members of the ruling families of Sharjah and Abu Dhabi own a further 25%. The remaining shares are widely owned.

BOS is primarily a corporate bank, catering to UAE-based businesses. BOS is headquartered in Sharjah and had 13 branches at end-1Q15, of which seven were in the UAE.

The bank identifies only two business segments for reporting purposes – commercial and investment banking. The commercial segment is dominant in revenues and assets. As well as corporate banking services, the bank provides retail banking services to the employees of some of its commercial banking clients. However, the revenue it derives from such services and products is not material.

Weak Lebanese Subsidiary In 2008, BOS acquired a subsidiary in Lebanon (Emirates Lebanon Bank (ELB)), in which it holds 80%. ELB is the only material foreign subsidiary, accounting for around 20% and 10% of BOS’s consolidated assets and revenues, respectively.

ELB offers similar banking products to BOS, which mainly focus on the corporate segment. ELB’s performance compared to BOS’s standalone contribution to the group profitability is considered to be on the lower side although it is one of the market leaders in Lebanon. A significant share of BOS’s local business is Lebanese related and therefore ELB benefits BOS’s franchise in the UAE – ELB is an acquisition channel for Lebanese business within the UAE.

Management Potential Corporate Governance Concerns As in other UAE banks, most of BOS’s executive managers have sound experience in banking, with local, Middle East and North Africa (MENA), or international banking groups. Executive management is an important part of new loan and investment decision making.

The board of directors consists of eleven members, comprising members of the UAE ruling family as well as businessmen from the UAE and other MENA countries. It meets six times per year. BOS reports most of the directors as independent members; however, the independence of some could be impaired, as the bank reports significant financing to board members (AED1.8bn at end-1H15, 11% of total loans, 43% of FCC). Total related-party lending net of collateral deposits fell AED0.7bn to AED2.3bn (55% of FCC) at end-1H15. Fitch views this as a corporate governance weakness, although similar concerns exist for many UAE banks and BOS complies with current Central Bank regulation.

Strategy – Steady Development, Focus on Corporates The bank does not expect to accelerate its growth – growth rates should be in line with the market, or below. It will continue to focus on corporates and larger SME clients that demonstrate strong medium- or long-term growth prospects and are likely to be corporates of the future in line with the bank’s traditional customer base.

Figure 2

Figure 3

Segment Revenue1H15

Source: Bank

Commercial banking

97%

Investment banking

3%

Source: Bank

Segment AssetsEnd-1H15

Commercial banking

91%

Investment banking

9%

Banks

Bank of Sharjah

December 2015 4

Risk Appetite Growth Below Sector Average, Some Problem Loan Recovery BOS's growth was below the sector average in 2013 to 1H15 – the CAGR was 8%. Growth was mainly in core trade and service segments.

The impaired loans ratio improved to 5% at end-1H15 from 7.3% at end-2014, partly due to recoveries, but also thanks to AED155m of write-offs. The total problem loans ratio (impaired, 90 days overdue, but not impaired and restructured loans) improved to 8.6% from 11.8% at end-2014 and the Fitch calculated annualised problem loans generation ratio was -2.9% in 1H15 (-0.7% in 2014) demonstrating moderate asset quality improvement.

Figure 4

Loan Quality Evolution (AEDm) End-1H15 End-2014 End-2013 Gross loans total 17,024.3 15,715.5 14,356.4 Including Impaireda 844.4 1,139.80 1,059.2 Past due (more than 90 days) not impaired 209.8 278.7 479.1 Restructured 412.1 436.0 429.00 Total problem loans 1,466.3 1,854.5 1,967.3 Total problem loans ratio (%) 8.6 11.8 13.7 Write-offs during the period 154.6 10.7 5.8 Problem loans generated in the periodb -233.6 -102.1 n.a. Problem loans generation ratio (%) -2.9 -0.7 n.a. Impaired loans ratio (%) 5.0 7.3 7.4 a Loans reported as impaired under IFRS b Difference in problem loans for the period plus write-offs during the period, annualised Source: Bank

Reasonable Control Framework Senior management closely control and monitor the risk functions from head office. An executive committee determines policies, and establishes the control framework and systems to monitor and manage BOS’s exposure to credit, market, liquidity and other risks. An additional board committee is in place to provide risk oversight and ensure that adequate risk is in place.

Material Unquoted Equity Investments Market risk stems mainly from the securities book. Securities comprised 6% of total assets at end-1H15, equal to 0.4x FCC (58% of these were investments in unquoted securities (24% of FCC).

Most unquoted equity investments are to one telecoms company operating fixed-lines, mobile, internet and related services in Middle East and Africa, which was intended for an IPO in the middle of the 2000s; however, this was postponed and is still private. Although Fitch views the company valuation as reasonable – it is valued 20% below similar companies operating in the GCC and MENA regions, judging by average enterprise value (EV)//EBITDA and EV/sales multiples, these shares are illiquid and therefore a higher discount could be applicable should BOS need to sell them.

Banks

Bank of Sharjah

December 2015 5

Financial Profile Asset Quality Figure 6 BOS’s Asset Quality (%) End-1H15 End-2014 End-2013 End-2012 Growth of gross loans 8.3 9.5 7.0 4.6 Impaired loans/gross loans 5.0 7.3 7.4 3.0 Reserves for impaired loans/impaired loans 185.4 143.5 115.3 241.2 Impaired loans less reserves for impaired loans/ Fitch core capital

(17.1) (11.9) (4.0) (15.5)

Loan impairment charges/average gross loans 0.6 1.6 1.3 1.4 Source: Bank

BOS’s franchise is concentrated in Sharjah, and differs from larger UAE banks as it is not exposed to the major previously troubled GREs and is less exposed to the Dubai real estate market than peers. Reported loans to trading and services companies comprise more than half of gross loans, while construction companies represent less than 10% of total loans (around 30% of FCC).

Concentrated Loan Book; Reasonable Provisioning The loan book is highly concentrated – the 20 largest corporate loans represented 58% of gross loans at end-1H15 (2.2x FCC), although this applies to most banks in the UAE.

Fitch conducted a detailed review of the 20 largest borrowers at end-1H15 and views most of the largest borrowers as moderate risk. These comprise companies in real estate development, luxury services, those controlled by Sharjah’s ruling family and well-known conglomerates. Concentration could be higher than reported, as some of these companies may be interconnected. However, Fitch views a few exposures, which totalled about AED0.9bn (16% of FCC) at end-1H15, as higher risk.

Impaired and other problem loans were fully covered by impairment reserves at end-1H15.

Figure 5

Figure 7

Loan Book Concentration at End-1H15 Top 20 financing Corporate financing below top 20 Retail financing Total financing Gross loans (AEDm) 9,835.0 6,785.0 404.0 17,024.0 Impaired loans (AEDm) 639.4 179.0 26.0 844.4 Impaired loans ratio (%) 6.5 2.6 6.4 5.0 Past due (90+) but not impaired loans (AEDm) 209.8 - - 209.8 Past due (90+) but not impaired loans ratio (%) 2.1 - - 1.2 Restructured loans (AEDm) 412.1 - - 412.1 Restructured loans ratio (%) 4.2 - - 2.4 Total problem loansa (AEDm) 1,261.3 179.0 26. 1,466.3 Total problem loans ratioa (%) 12.8 2.6 6.4 8.6 Reserves for impaired loansb (LIR) 627.5 922.7 14.9 1,565.1 LIR/gross loans (%) 6.4 13.6 3.7 9.2 LIR/Impaired loans (%) 98.2 515.5 57.5 185.4 LIR/total problem loans (%) 49.8 515.5 57.5 106.8 a Impaired + 90 days overdue not impaired + restructured b Non-specific LIR is allocated based on share in total loans Source: Bank

Source: Bank

Securities Book StructureEnd-1H15

Unquoted equities

58%Debt

securities35%

Quoted equities

7%

Banks

Bank of Sharjah

December 2015 6

Earnings and Profitability Narrow Margins, ELB Undermines Earnings Figure 8 BOS’s Earnings (%) 1H15 2014 2013 2012 Net interest income/average earning assets 2.8 2.5 2.8 3.0 Non-interest expense/gross revenues 36.2 34.1 31.4 30.1 Loans and securities impairment charges/ pre-impairment operating profit

21.2 46.2 32.9 38.0

Operating profit/average total assetsa 1.4 1.1 1.5 1.4 Operating profit/risk-weighted assetsa 1.8 1.4 1.9 1.6 Net income/average equitya 8.0 6.6 8.5 6.8 a Annualised Source: Bank

BOS has a lower share of higher yield retail loans than peers, and due to high competition for good-quality corporate borrowers from other banks, its net interest margin (NIM) is weaker than that of peers (2.8% in 1H15 compared with an average of 4% for peer banks, see Annex 1). Fitch believes that tougher competition also limits lending growth.

Capitalisation and Leverage Good Capital Ratios Figure 9 BOS’s Capital Ratios (%) End-1H15 End-2014 End-2013 End-2012 Fitch core capital/weighted risk 20.5 21.5 21.7 20.6 Fitch eligible capital/weighted risks 20.5 21.5 21.7 20.6 Tangible common equity/tangible assets 15.8 16.8 16.6 17.4 Tier 1 regulatory capital ratio 19.8 20.7 20.6 21.5 Internal capital generation 7.9 4.8 4.0 2.0 Source: Bank

The bank targets a total capital ratio above 20%. It was 21.3% at end-1H15 and the Tier 1 ratio was 19.8%. Fitch views BOS’s capital ratios as sound, as problem loans are well-covered by impairment reserves and capital ratios are moderately above other UAE banks’ ratios. Internal capital generation is weak due to modest profitability and a dividend pay-out of around 50% of net income.

Good Loss Absorption Capacity The banks in the UAE have to maintain a total capital adequacy ratio above 12%. Fitch estimates that BOS was able to increase impairment reserves by 12.8% of gross loans at end-1H15 before the regulatory capital ratio falls below the required minimum (see Figure 10). Existing impairment reserves and the loss absorption buffer give total loan book coverage of 22%. This was enough to cover the largest corporate loan book.

Banks

Bank of Sharjah

December 2015 7

Figure 10 Loss Absorption Capacity End-1H15 End-2014 End-2013 Tier 1 capital 4,097.2 4,016.6 3,903.5 Tier 2 capital 296.0 311.8 326.6 Total capital 4,393.3 4,328.4 4,230.1 Risk-weighted assets 20,643.7 19,446.2 18,951.2 Tier 1 ratio (%) 19.8 20.7 20.6 Total capital ratio (%) 21.3 22.3 22.3 Gross loans 17,024.3 15,715.5 14,356.4 Reserves 1,565.1 1,635.4 1,221.7 Net loans 15,459.2 14,080.1 13,134.7 Additional reserves capacity 2,177.3 2,267.9 2,222.7 Current loan loss reserves/gross loans 9.2 10.4 8.5 Additional loss absorption capacity 12.8 14.4 15.5 Total maximum coverage ratio 22.0 24.8 24.0 Minimum total capital ratio (%) 12.0 12.0 12.0 Source: Bank, Fitch’s calculations

Funding and Liquidity Moderately Concentrated, Stable Deposits; Good Liquidity Cushion Figure 11 BOS’s Funding (%) End-1H15 End-2014 End-2013 End-2012 Loans/customer deposits 91.4 88.3 78.1 81.4 Interbank assets/interbank liabilities 516.6 686.2 4,225.3 836.4 Customer deposits/total funding (excluding derivatives)

89.6 94.0 95.7 94.6

Source: Bank

The bank is funded mainly with customer deposits, which were 90% of the funding base at end-1H15. These are moderately concentrated – the top-20 deposits accounted for 16% of total customer funding. BOS had long business relationships with the largest depositors and the accounts are sticky year to year. Most companies are from Sharjah – some are controlled by Lebanese businessmen or connected with the state or ruling family.

The liquid assets cushion (cash and equivalents and net short-term interbank placements) was AED6.9bn at end-1H15, equal to 26% of total assets. Fitch considers this reasonable as it was enough to repay 37% of customer deposits at the same date.

In June 2015, the bank issued a USD500m (AED1.8bn equivalent) bond, which matures in 2020 to diversify the funding base.

Banks

Bank of Sharjah

December 2015 8

Annex 1: Peer Comparison Figure 12 Peer Comparison

Bank of Sharjah

(BBB+/bb) Dubai Islamic Bank PJSC

(A/bb) Commercial Bank of Dubai

(A-/bb+) Abu Dhabi Islamic Bank

PJSC ((A+/bb) 1H15 2014 2013 1H15 2014 2013 1H15 2014 2013 1H15 2014 2013 Interest income/avg. earning assets 5.2 5.2 5.6 4.6 4.8 4.9 4.6 4.8 4.9 5.2 5.3 5.2 Interest expense/avg. interest-bearing liab. 2.3 2.8 2.9 0.8 0.8 1.2 0.8 0.8 1.2 0.6 0.7 0.8 Net interest margin 2.8 2.5 2.8 3.8 4.0 3.6 3.8 4.0 3.6 4.5 4.5 4.4 Cost/income ratio 36.2 34.1 31.4 35.6 43.5 44.4 35.6 43.5 44.4 46.4 45.3 47.8 Pre-impairment operating profit/average total assets 1.8 2.1 2.3 3.1 2.6 2.1 3.1 2.6 2.1 2.4 2.4 2.2 Loan impairment/pre-imp operating profit 21.2 46.2 32.9 13.2 18.0 33.2 13.2 18.0 33.2 28.5 27.2 21.1 ROAE 8.0 6.6 8.5 26.5 21.4 14.3 26.5 21.4 14.3 23.5 23.2 20.5 ROAA 1.4 1.2 1.5 2.7 2.1 1.4 2.7 2.1 1.4 1.7 1.7 1.8 Loans/assets 57.4 56.2 52.6 60.6 59.7 49.5 78.8 75.0 74.5 67.2 67.7 63.1 Loan growth 8.3 9.5 7.0 18.9 30.5 3.0 15.4 6.3 12.0 2.1 16.4 19.9 Loan impairment charge/average loans 0.6 1.6 1.3 n.a. 0.8 1.4 0.8 0.8 1.3 1.0 0.9 1.0 Impaired loans/gross loans 5.0 7.3 7.4 n.a. 6.8 9.3 n.a. 9.2 10.1 3.5 3.8 6.5 LIR/gross loans 9.2 10.4 8.5 5.5 6.5 7.5 6.5 8.6 8.6 3.6 3.6 5.2 LIR/Impaired loans 185.4 143.5 115.3 n.a. 96.3 80.9 n.a. 93.7 84.9 101.8 95.6 79.8 Gross loans/customer deposits 91.4 88.3 78.1 86.2 85.7 76.7 114.0 109.5 107.0 86.8 89.4 86.2 Customer funding/total liabilities 89.6 94.0 95.7 92.5 93.2 93.6 85.1 86.3 87.3 91.3 89.4 87.5 Wholesale & bank funding/total liabilities 10.4 6.0 4.3 7.5 6.8 6.4 14.9 13.7 12.7 8.7 10.6 12.5 Fitch core capital/risk-weighted risks 20.5 21.5 21.7 12.5 14.0 16.5 16.9 18.4 19.6 8.0 8.2 9.6 Total regulatory capital ratio 21.3 22.3 22.3 17.1 14.9 18.2 17.9 18.1 19.0 14.0 14.4 16.9 Equity/assets 16.6 17.6 17.4 9.6 11.3 11.2 15.2 16.7 16.2 7.0 7.2 7.2 Total assets (AEDbn) 26.9 25.1 25.0 146.7 123.9 113.3 51.6 46.9 44.5 115.1 111.9 103.2 Total equity (AEDbn) 4.5 4.4 4.4 14.0 14.0 12.7 7.8 7.8 7.2 8.1 8.0 7.4 Source: IFRS statements of the banks

Banks

Bank of Sharjah

December 2015 9

Banks

Bank of Sharjah

December 2015 10

Banks

Bank of Sharjah

December 2015 11

Banks

Bank of Sharjah

December 2015 12

Banks

Bank of Sharjah

December 2015 13

The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK HTTPS://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2015 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third-party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.

The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.

For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.