2q12 results presentation
TRANSCRIPT
Results Presentation
2nd Quarter 2012
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, 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.
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• Due to the more conservative approach on account of the macroeconomic scenario, the Expanded Loan Portfolio grew just 1.7% in 2Q12 and 33.1% in 12 months, totaling R$2.8 billion.
• In line with our strategy, the Corporate segment continues to expand, accounting for 47% of the Expanded Loan Portfolio (45% of the Classic Loan Portfolio) at the end of June.
• Continuous improvement in the quality of the expanded loan portfolio: the share of credits rated between AA and B increased to 79%, from 65% in 2Q11. Of the new loans granted in the quarter, 99% are rated between AA and B (97% in 1Q12).
• Reduction in operations overdue more than 90 days to 2.6%, from 6.3% in June 2011, with coverage by provisions of 175.7% (156.4% in March 2012 and 155.8% in June 2011).
• Funding costs continue to decrease, especially due to the higher share of Agribusiness Letters of Credit (LCA) in total funding in Real. Total funding stood at R$2.8 billion, in line with the loan portfolio trends.
• Our Basel Ratio of 17.0% (Tier 1) and our liquidity enable business expansion in the second half of 2012.
• Despite the 59% growth in Income from Financial Intermediation before allowance for loan losses, compared with 2Q11 (from R$37.4 million in 2Q11 to R$59.6 million in the quarter), provisioning of loans granted before 2010 continue to affect Net Profit.
• Our Ratings were reaffirmed by Standard & Poors, BB/B (global) and brA+/brA-1 (local), and Fitch, BBB/F3 (local).
Highlights
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2,109 2,248
2,534 2,759 2,807
2Q11 3Q11 4Q11 1Q12 2Q12
R$
mill
ion
Loans & Discounted Receivables in Reais Trade Finance
Guarantees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA and CDCA)
Private Credit Bonds (PNs and Debentures)
Expanded Credit Portfolio Cautious growth under macroeconomic scenario
3
Expanded Credit Portfolio Evolution Quality growth strategy maintained
414 498
656 646 517
2Q11 3Q11 4Q11 1Q12 2Q12
R$
mill
ion
New Transactions
4
2,759 2,807 517 (367)
(85) (17)
1Q12 Credits received and not renewed
Credit exits
Write offs
New transactions
2Q12
R$
mill
ion
Multiproduct Offering 50+ product portfolio facilitates conquering new customers and enhances our ability to provide more structured solutions
5
Expanded Credit Portfolio Breakdown by product group
Loans & Discounts
in Real 54%
Trade Finance
16%
BNDES Onlendings
9%
Receivables acquired
from Customers
3%
Other 1%
Guarantees Issued
6%
Agricultural Bonds 10%
Private Credit Bonds
1%
• Loans & Discounted Receivables in Real
amounted to R$1.5 billion in 2Q12.
• Trade Finance portfolio totaled R$449.4 million
(US$222.3 million), up 1.5% in the quarter and
5.7% in 12 months.
• BNDES Onlendings reached R$260.8 million,
increasing by 12.9% in 2Q12 and 82.6% in 12
months, mainly in the Corporate segment.
• Guarantees and Letters of Credit issued totaled
R$175.8 million, growing 7.3% in 2Q12 and
156.6% in 12 months.
• Agricultural Bonds portfolio (CPRs and CDA/WAs,
classified as Marketable Securities, and CDCAs, in
the credit portfolio), amounted to R$267.0
million, up 16.2% in the quarter and 622.4% in 12
months.
• Private Credit Bonds portfolio (debentures)
totaled R$30.7 million, 20.2% above the amount
recorded in 1Q12.
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• Agricultural bonds activity started in 1Q11 and plays an
important role in our growing business strategy.
• Our agricultural bonds transactions are focused on
commodities financing, specially grains, cotton, sugar
cane and coffee.
• The expertise of our team combined with the support of
external specialists improve business opportunities
detection and risk mitigation. As an example, this
year’s drought in the Southern Region did not impact
payments in this portfolio.
• We minimize risks, both for the customer and the bank,
by developing commodity price protection instruments.
37 52
129
230 267
2Q11 3Q11 4Q11 1Q12 2Q12
R$
mill
ion
Agricultural Bonds
CPR Warrant (CDA/WA) CDCA
Agricultural Bonds Portfolio Specializing in Agribusiness
Our agricultural bonds activity aims to follow the agribusiness growth in
Brazil and the great moment of the commodities market.
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Expanded Credit Portfolio Significant presence of Agribusiness and Food related activities
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19%
16%
12%
5% 5%
5%
4%
4%
4%
4%
3%
3%
2%
2% 2%
1%
10% Agribusiness
Food & Beverage
Civil Construction
Transportation & Logistics
Chemical & Pharmaceutical
Financial Services
Pulp & Paper
Automotive
Oil & Biofuel
Metal Industry
Textile, Apparel and Leather
Education
Power Generation & Distribution
Financial Institutions
Retail & Wholesale
Electronics
Other Industries (% lower than 1%)
1,604 1,593 1,572 1,501 1,267
2Q11 3Q11 4Q11 1Q12 2Q12
R$
mill
ion
Middle Market
322 436 641
831 1,078
2Q11 3Q11 4Q11 1Q12 2Q12
R$
mill
ion
Corporate
Credit Portfolio Strategy for equilibrium between Corporate and Middle Market segment maintained
• Migration of customers managed by the Middle
Market team to Corporate, responding for R$200
million outstanding volume in 2Q12.
• Middle Market segment accounts for 53% of Credit
Portfolio (63% in 1Q12), and 51% of Expanded
Credit Portfolio.
• Corporate clients account for 45% of Credit
Portfolio (35% in 1Q12), and 47% of Expanded
Credit Portfolio.
• Average Exposure by Customer:
– Middle Market = R$2.2 million
– Corporate = R$6.9 million
Our strategy is to balance our Credit Portfolio
at a ratio of 45% Corporate and 55% Middle
Market customers .
companies with annual revenues between R$40 million and R$400 million
companies with annual revenues between R$400 million and R$2 billion
Note: In addition to the Agro Bonds, the Private Credit Bonds, the Guarantees Issued and the above operations in Middle Market and Corporate portfolios, the Credit Portfolio also includes Other Credits (CDC Vehicles, Acquired Loans and Financing, and Non-Operating Asset Sales Financing), which totaled R$51.0 million in 2Q12 (R$54.2 million in 1Q12).
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up to 90 days 39%
91 to 180 days 19%
181 to 360 days 15%
+360 days 27%
Maturity
Top 10 18%
11 - 60 largest
32%
61 - 160 largest
25%
Other 25%
Client Concentration
Credit Portfolio Exposure by client and term of transactions
• Top 60 borrowers remain at 50% of Credit Portfolio (49% in 2Q11)
• 73% of Credit Portfolio to mature up to 360 days
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• 76.2% of Credit Portfolio are classified between AA and B.
• 99.4% of the transactions disbursed in 2Q12 were classified between AA and B.
• At the end of 2Q12, credits rated between D and H included: – R$122.9 million in normal payment course = 5.1% of credit portfolio, and – R$67.3 million overdue more than 60 days = 2.8% of credit portfolio.
• Allowance for Loan Losses covers 176% of loans overdue more than 90 days.
• R$17 million of fully provisioned H rated loans were written off during the quarter.
6.8% 6.3%
5.0%
3.2% 2.8% 6.3%
4.1% 4.7%
2.7% 2.6%
2Q11 3Q11 4Q11 1Q12 2Q12
NPL / Credit Portfolio
NPL 60 days NPL 90 days
Credit Portfolio Quality Higher quality of new transactions
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2%
4%
6%
40%
39%
37%
28%
32%
34%
20%
17%
16%
10%
8%
8%
4Q11
1Q12
2Q12
Rating
AA A B C D - H
92.1%
91.8%
89.7%
Time deposits
(CDB) 27%
Insured Time
Deposits (DPGE)
28% LCA 12%
LF 1%
Demand Deposits
1%
Interbank Deposits
5%
Foreign Borrowings
16%
Onlendings 10%
• Total Funding of R$2.8 billion at the end of 2Q12,
+0.7% in the quarter and +23.6% in 12 months,
highlighting LCAs and LFs.
• Agribusiness Letters of Credit (LCAs) increased by
12.2% in the quarter and 150.8% in 12 months,
supported by the agricultural bonds portfolio
growth.
• Funding through Bank Notes (LFs) grew from
R$7.4 million in 2Q11 to R$30.6 million, and
accounted for 1.1% of total funding.
• 90% of foreign currency borrowings are Trade
Finance related .
Funding Product mix helps cost reduction
2,230 2,420 2,533 2,736 2,755
2Q11 3Q11 4Q11 1Q12 2Q12
R$
mill
ion
in Real in Foreign Currency
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Performance Net Interest Margin (NIM) and Efficiency Ratio
• Financial intermediation income before ALL
expenses increases NIM, since there was no
material change in the balance of interest
bearing assets.
• The significant improvement in the Efficiency
Ratio keeps the trend started in 3Q11.
• The increasing pipeline of structured
transactions should contribute to improve our
efficiency through service fees.
• No significant headcount additions are
forecasted and internal processes are
continuously reviewed looking for optimizing,
excellence and cost reduction.
78.6% 71.2%
77.6%
68.1% 62.3%
78.6%
65.1%
2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12
Efficiency Ratio
3.7% 4.6% 4.8% 4.9%
5.8% 4.1%
5.3%
5.2% 6.3% 6.6% 6.6%
7.7%
5.5% 7.1%
2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12
NIM
NIM NIM(a) *
* NIM(a) adjusts remunerated average assets by repos with equivalent volumes, tenors and rates both in assets and liabilities. 13
3.6 5.2
7.3
3.5 1.7 2.6
2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12
Return on Average Equity (ROAE) %
5.1 7.3
10.3
5.0 2.4
7.5
2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12
R$
mill
ion
Net Profit
-49.4
0.5 0.7
1.0
0.5 0.2 0.3
2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12
Return on Average Assets (ROAA) %
Profitability
• Net Profit still reflects the higher risk credit
portfolio originated before 2010.
• Bottom line absorbs allowance for loan losses
expenses amounting to R$22.6 million in the
quarter and R$37.0 million in 1H12 (R$103.2
million in 1H11).
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-18.9 -2.5
566.5 577.5 577.1 590.5 582.4
2Q11 3Q11 4Q11 1Q12 2Q12
R$
mill
ion
Shareholders’ Equity
21.3% 21.1% 18.2% 17.5% 17.0%
2Q11 3Q11 4Q11 1Q12* 2Q12
Basel Index (Tier I)
3.7x 3.9x 4.4x 4.6x 4.8x
2Q11 3Q11 4Q11 1Q12 2Q12
Leverage Expanded Credit Portfolio /
Shareholders’ Equity
Capital Structure
Capital (Tier I) and leverage still
allow healthy portfolio growth.
15 * Operating risk calculation for 1Q12 was adjusted, increasing this risk allocation from R$8.2 million to R$20.2 million, with reduction in Basel Index in that quarter from 18.1% to 17.5%.
Ratings
Agency Rating Last Report
Standard & Poor’s Global: BB/ Stable/ B
National: brA+/ Stable/ brA-1 August 2012
Moody’s Global: Ba3/ Stable/ Not Prime
National: A2.br/ Stable/ BR-2 November 2011
FitchRatings National: BBB/ Stable/ F3 July 2012
RiskBank Index: 10.43
Low risk to short term July 2012
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Class Number of Shares
Common Preferred Total
Paid-up Capital 36,945,649 26,160,044 63,105,693
Controlling Group 20,743,333 609,226 21,352,559
Management 277,307 60,125 337,432
Treasury - 734,515 734,515
Free Float 15,925,009 24,756,178 40,681,187
Free Float 43.1% 94.6% 64.5%
Shares and Capital Distribution
2008 2009 2010 2011 1H12
Outstanding Shares 1 43,000,001 42,048,101 40,466,187 62,358,840 62,371,178
IOE gross amount (R$ million) 25.5 27.0 25.1 27.8 -
IOE gross amount per share (R$) 0.59 0.64 0.61 0.53 -
Price to Book Value 0.38 0.81 0.75 0.73 0.72
Market Value (R$ million) 171.6 348.6 321.7 420.9 417.3
Position as of June 29, 2012
1 Issued Shares (-) Treasury Shares
Controlling Group 34%
Management 1%
Treasury 1%
Institutional Investors
14%
Foreign Investors
30%
Individuals 20%
Shareholders Distribution
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Share Performance
IDVL4 in 2Q12
Maximum Share Price in the period R$ 8.65
Minimum Share Price in the period R$ 6.21
Share Price on Mar 30, 2012 R$ 8.60
Share Price on Jun 29, 2012 R$ 6.69
Change in the period -22.2%
IBOVESPA Change in the period -15.7%
IDVL4
Average Daily Volume
- in June 2012 R$ 168,931
- in 2Q12 R$ 117,887
- in 12 months R$ 129,281
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50
60
70
80
90
100
110
120
IBOVESPA IDVL4 IDVL4 adjusted for earnings