Published on February 27, 2014
Results Presentation 4Q13 Your Banking Partner
Disclaimer This presentation may contain references and statements representing future expectations, plans of growth and future strategies of BI&P. These references and statements are based on the Bank’s assumptions and analysis and reflect the management’s beliefs, according to their experience, to the economic environment, and to predictable market conditions. As there may be various factors out of the Bank’s control, there may be significant differences between the real results and the expectations and declarations herewith eventually anticipated. Those risks and uncertainties include, but are not limited to, our ability to perceive the dimension of the Brazilian and global economic aspect, banking development, financial market conditions, and competitive, government and technological aspects that may influence both the operations of BI&P as the market and its products. Therefore, we recommend the reading of the documents and financial statements available at the CVM website (www.cvm.gov.br) and at our Investor Relations page in the internet (www.bip.b.br/ir) and the making of your own appraisal. 2
2013- We have reached the end of the bank's reconstruction cycle In 4Q13 we concluded the second phase of the strategic restructuring program we launched in April 2011 Joint Ventures to generate assets JVs have already generated assets worth more than R$400 million for the Bank Acquisition of IB Team Additional ALL Additional allowance for loan losses amounting to R$111 million, for loans granted prior to April 2011 to prevent contamination of the Bank’s future results Capital Increase Capital increase of R$90 million, subscribed by Warburg Pincus, controlling shareholders and the market Acquisition of Banco Intercap Acquisition of Banco Intercap, with Mr. Afonso Antonio Hennel (Grupo Semp Toshiba) and Mr. Roberto de Resende Barbosa (NovAmerica/Cosan) joining the board of directors and the controlling group Launch of Guide Investimentos 3 Acquisition of Voga (investment bank boutique), fully integrated in May 2013, with the distribution team strengthened | 51 ongoing mandates during the 4Q13 Restructuring of the brokerage house Indusval Corretora, expanding the distribution base with an open business design, to institutional and high income individuals.
Highlights Loans rated between AA and B totaled 87.1% of the expanded credit portfolio (81.4% in December 2012). 99% of the loans granted in the quarter were rated between AA and B. Emerging Companies and Corporate segments accounted for 47.0% and 52.2%, respectively, of the expanded credit portfolio. Managerial Expense with Allowance for Loan Losses (ALL) (annualized) in 4Q13 was 0.95% of the expanded credit portfolio (0.75% in 3Q13), in line with the conservative lending policy adopted by the Bank and lower than Management’s expectations. Funding totaled R$3.9 billion and Free Cash totaled R$758.0 million at the end of 4Q13, keeping step with credit portfolio growth. Income from Services Rendered and Tariffs totaled R$9.9 million in the quarter, slightly lower than in the previous quarter but 42.8% higher than in 4Q12. Result in the quarter was a loss of R$10.0 million, mainly due to the following: (i) the more conservative approach to lending, (ii) the negative impact, with no cash effect, of the discontinuance of the designation of hedge accounting of operations to protect cash flows, which continue to be protected by hedge operations, and (iii) the ALL expense of Banco Intercap in 4Q13, that reached the limit of R$6.0 million established by the shareholders of both banks for the first year after the merger, concentrating this expense in a single quarter and generating an accounting loss of R$2.3 million for Intercap in 4Q13, further consolidated to the financial statements of Banco BI&P. 4 Expanded Credit Portfolio of R$3.9 billion, with organic and inorganic growth of 15.3% in the quarter and 26.1% in relation to December 2012. Organic portfolio growth, was 9.0% in the quarter and 19.2% in the year. In November 2013, we announced the launch of the project to transform our brokerage arm, Guide Investimentos, which, besides continuing to serve our institutional customers, will now also provide asset management services for high income individuals through an innovative investment platform. With the announcement, in February 2014, of the strategic alliance with Omar Camargo Corretora de Valores, the biggest and oldest company in the sector in the state of Paraná, apart from expanding its customer base, Guide is also embarking on geographical and operational expansion across all states in Southern Brazil. The creation of Guide is strategically important for the Bank, both in terms of distribution of the products developed by our investment banking team and in the diversification of the Bank’s funding sources.
Expanded Credit Portfolio Growth of 26.1% in 12 months 3,867 3,048 3,229 3,355 4Q12 1Q13 2Q13 3Q13* R$ million 3,068 4Q13 Loans and Financing in Real Trade Finance Guarantees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA and CDCA) Private Credit Bonds (PN and Debentures) Portfolio assigned to Intercap 4Q13 47.0% 52.2% 0.8% Average exposure per client | R$ million 3Q13 48.7% 50.5% 0.8% Emerging Companies 5 Corporate Other 3Q13 4Q13 Corporate 8,4 9,2 Emerging Companies 3,2 3,0 * Considers the consolidated Expanded Credit Portfolio, which includes the expanded credit portfolio of Banco Intercap. Note: Other Credits includes Consumer Credit Vehicles. Acquired Loans and Non-Operating Asset Sales Financing.
Expanded Credit Portfolio Development ...focusing on higher quality assets... 3,654 817 (502) (36) Credit Exits Write offs R$ million (66) 3,867 3Q13 Amortized Credits New Transaction R$ million 728 4Q12 6 773 589 1Q13 2Q13 685 3Q13 817 4Q13 99% of the new transactions in the last 12 months are classified between AA and B. New Operations 4Q13
Expanded Credit Portfolio ...and increasing the new products share in the portfolio... 4Q13 4Q12 BNDES Onlendings 11% Trade Finance 14% NCE 3.7% CCE 2.4% Other 1% CCBI 1.7% Discount Receivables 0.3% Confirming 0.1% Credit Assignments 15.6% 7 Guarantees Issued Agricultural 5% Bonds 11% Private Credit Bonds 1.3% Loans & Discounts in Real 57% BNDES Onlendings 8% Trade Finance 10% Loans 33.1% Private Credit Bonds 0.7% Loans & Discounts in Real 56% NCE 5.4% CCE 3.0% Guarantees Issued 5% Agricultural Bonds 19% Other 1% CCBI 4.5% Discount Receivables 0.2% Confirming 0.0% Credit Assignments 8.7% Loans 34.3%
Expanded Credit Portfolio ...with relevant exposure in agriculture... 4Q12 Agriculture Real Estate Food & Beverage Livestock Automotive Oil, Biofuel & Sugar Transport and Logistics Infrastructure Metal Industry Textile, Leather and Confection Chemical & Pharmaceutical Commerce - Retail & Wholesale Pulp & Paper International Commerce Electronics Power Generation & Distribution Education Raw Materials Financial Activities Machinery and Equipments Other industries* 8 15.5% 8.9% 7.7% 7.1% 6.3% 4.7% 4.0% 3.8% 3.6% 3.6% Agriculture 3.4% Real Estate 3.3% Oil, Biofuel & Sugar 3.1% Food & Beverage 3.0% Automotive 2.9% Power Generation & Distribution 2.7% 2.4% Livestock 2.0% Infrastructure 1.6% Commerce - Retail & Wholesale 1.5% Transport and Logistics 8.9% * Other industries with less than 1.4% of share. Textile, Leather and Confection Financial Activities Chemical & Pharmaceutical Raw Materials Metal Industry Education Machinery and Equipments International Commerce Other industries* 4Q13 9.4% 7.6% 6.6% 6.4% 4.2% 3.9% 3.9% 3.8% 3.8% 2.7% 2.3% 2.3% 2.3% 2.1% 2.0% 1.7% 1.6% 11.4% 22.1%
Expanded Credit Portfolio ...and promoting risk dilution. Client Concentration 4Q13 13.1% 4Q12 14.0% 4Q11 16.8% Top 10 29.7% 30.9% 32.0% 11 - 60 largest 25.4% 27.7% 26.8% 61 - 160 largest 31.9% 27.4% 24.4% Other The reduction of concentration is one of the results of the new credit policy adopted since April 2011. 9
Credit Portfolio Quality 99% of loans granted in the quarter were rated from AA to B 83.9% 4Q13 4% 41% 40% 5% 11% Credits rated between D and H totaled R$340.7 million at the end of 4Q13: 79.7% 3Q13 2% 36% 42% 7% − R$270.5 million (79% of Credit Portfolio between DH) in normal payment course; 13% − Only R$70.3 million overdue +60 days; and 79.1% 4Q12 2% 42% AA 35% A B C 13% − 64.7% covered. 8% D-H New Credit Policy* Clients Loan Portfolio 4Q13 A 49% A B 41% 40% AA 4% 10 D-H C 11% 5% * New Credit Policy: adopted since April 2011. AA 3% Previous Credit Policy Clients Loan Portfolio D-H 45% B 43% B 27% C D-H 3% 3% AA 6% A 8% C 14%
Operating Performance and Profitability Adjusted Revenues from Credit Operations and CPR 4Q13 3Q13 4Q13/3Q13 4Q12 4Q13/4Q12 A. Revenues from Credit Operations and agro bonds (CPR) 110.2 79.4 38.8% 68.0 62.1% 1.7 3.0 -43.3% 8.0 -78.6% (2.2) (1.6) 36.8% (0.8) 164.6% 110.7 78.0 41.9% 60.8 81.9% B. Recoveries of written-of operations C. Discounts granted on settled operations Adjusted Revenues from Credit Operations and CPR (A-B-C) Net Interest Margin (NIM) 5.6% 5.3% 5.4% 4.4% 4.1% 4.1% 4Q12 1Q13 2Q13 5.0% 5.7% 4.7% 4.1% 4.0% 4.1% 4.0% 3Q13 4Q13 2012 2013 3.2% NIM without effects of discontinuance of designation of hedge accounting and discounts * Managerial NIM with Clients * 11 * Includes revenues from agro bonds (CPR)
Credit Portfolio Quality NPL 60 days / Credit Portfolio NPL 90 days / Credit Portfolio 14.0% 12.4% 10.6% 9.4% 10.3% 4.9% 8.2% 8.1% 4.5% 2.9% 2.6% 1.5% 2.3% 8.5% 2.3% 1.2% 2.2% 2.6% 2.1% 1.9% 0.4% 0.4% 0.5% 0.6% 0.3% 0.1% 0.4% 0.5% 0.6% 0.3% 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 Clients Previous Credit Policy Clients Previous Credit Policy Total Total Clients New Credit Policy* Clients New Credit Policy* Managerial ALL Expense 1.13% 0.75% 1 0.95% Managerial ALL Expense1 in 4Q13, annualized, was 0.95% of the Expanded Credit Portfolio 2T13 4T13 Managerial Expense with Allowance for Loan Losses (ALL) = ALL expenses + Discounts granted upon settlement of loans – Revenues from recovery of loans written off. | * New Credit Policy: adopted since April 2011. 1 12 3T13
Funding Product mix helps with cost reduction 4Q12 Time Deposits (CDB) 23% 3,893 2,999 3,170 3,142 3,082 LF & LCI 3% Foreign Borrowings 12% Interbank & Demand Deposits 2% R$ million Onlandings 11% 4Q13 4Q12 1Q13 In Local Currency 2Q13 3Q13 4Q13 in Foreign Currency Time Deposits (CDB) 26% Insured Time Deposits (DPGE) 32% LCA 19% Foreign Borrowings 9% Onlandings 8% 13 Insured Time Deposits (DPGE) 30% LCA 19% Interbank & Demand Deposits 2% LF & LCI 4%
Operating Performance and Profitability Return on Average Equity (ROAE) % Net Profit R$ million 14.2 3.6 4Q12 2.0 1Q13 2Q13 -20.6 3Q13 4Q13 2012 2013 2.5 n.r. -10.0 4Q12 -91.4 n.r. 1Q13 2Q13 1.4 3Q13 2.4 n.r. 4Q13 n.r. 2012 2013 -120.0 The quarter result was impacted by: • The more conservative approach to lending • The negative impact, with no cash effect, of the discontinuance of the designation of hedge accounting of operations to protect cash flows, which continue to be protected by hedge operations • ALL expense of Banco Intercap in 4Q13 reached the limit of R$6.0 million established by the shareholders of both banks for the first year after the merger, concentrating this expense in a single quarter 14 n.r.= not representative
Capital Structure and Ratings Leverage Expanded Credit Portfolio / Equity Shareholders’ Equity 674.2 498.4 569.6 574.5 5.2x 6.1x 5.7x 5.7x 5.7x 1Q13 2Q13 3Q13 4Q13 R$ million 587.2 4Q12 1Q13 2Q13 3Q13 4Q13 Basel Index (Tier I) 4Q12 Agency Rating Last Report Standard & Poor’s 4Q12 15 1Q13 14.6% 2Q13 14.5% 3Q13 Global: Ba3/Negative/Not Prime National: A2.br/Negative/BR-1 Jul/13 Fitch Ratings 14.2% Aug/13 Moody’s 14.9% Global: BB/Negative/ B National: brA+/Negative/brA-1 National: BBB/Stable/F3 Sept/13 RiskBank Index: 9.82 Low Risk Short Term (under review) Jan/14 14.8% 4Q13
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