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rr Sh Banks Takeaways With our conference coming a week following a historic US presidential election that helped boost bank stocks by 12%, bank management teams were generally optimistic with regards to the economic outlook heading into 2017. Greater fiscal stimulus that is expected to spur economic growth coupled with potential regulatory relief has helped improve the overall sentiment in the sector. When asked what the biggest impact of the GOP sweep would likely be to bank earnings, 35% noted tax cuts and infrastructure spurring growth as the biggest impact. Chart 3: What do you think is the biggest impact of the GOP sweep to bank earnings? 40% 35% 35% 30% 25% 20% 15% 10% 5% 0% Interest rates rising Tax cuts and Lower regulatory No real impact/too faster across the curve infrastructure spending burden, driving higher early to tell due to stronger dollar — spurring growth, ROEs as excess therefore better loan capital —_is returned demand back to shareholders or reinvested for growth Source: BofA Merrill Lynch Global Research An area that has attracted particular attention among bank investors is around the current landscape of multifamily lending. We polled the audience around their outlook for multifamily lending in 2017 and found that 49% of those polled said there was some concern, but only in certain regions and at certain rental price points. Meanwhile, 29% noted softening fundamentals that should lead to slower financing activity and worsening credit metrics (see Chart 4). Chart 4: How do you view fundamentals for multifamily lending in 2017? 60% 50% 40% 30% 20% 10% 0% Softening Softening Softening | Someconcern, but No concern fundamentals fundamentals fundamentals only in certain should leadto § shouldleadto = shouldlead to _—rregions and at slower financing worsening credit slower financing certain rental price activity next year metrics activity and points worsening credit metrics Source: BofA Merrill Lynch Global Research Bankof America 2 2016 Future of Financials Conference | 17 November 2016 3 Merrill Lynch HOUSE_OVERSIGHT_014317