banco pine - institutional presentation 4q12
TRANSCRIPT
4Q12 Institutional Presentation
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History and Profile
PINE History
Business Strategy
Competitive Landscape Focus on the Client Corporate Credit FICC PINE Investimentos Pillars Rating Upgrades
Highlights and Results
Corporate Governance and PINE4
Organizational Structure Corporate Governance Committees Dividends and Interest on own Capital
Appendix
Summary
History and Profile
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PINE Specialized in providing financial solutions for wholesale clients…
Credit Portfolio by Annual Client Revenues
Profile
December 31th, 2012
Focused on establishing long-term relationships
Profound knowledge and product penetration
Business is structured along four primary business lines:
• Corporate Credit: credit and financing products • FICC: instruments for hedging and risk
management • Capital Markets: Structuring and Distribution of
Fixed Income Transactions. • Financial Advisory: Project & Structured Finance,
M&A, and hybrid capital transactions.
Over R$1 billion57%
R$500 million to
R$1 billion19%
R$150 million to
R$500 million
19%
Up to R$150 million
5%
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155 184 222 341 521 620 755 663 761 1,214
2,854
4,254 4,804
6,016
7,065
7,948
18 62
121 126 140 136 152 171 209
335
801 827 825
867
1,015
1,220
Dec
-97
Dec
-98
Dec
-99
Dec
-00
Dec
-01
Dec
-02
Dec
-03
Dec
-04
Dec
-05
Dec
-06
Dec
-07
Dec
-08
Dec
-09
Dec
-10
Dec
-11
Dec
-12
Corporate Credit Portfolio (R$ Millions)
Shareholders' Equity (R$ Millions)
History ...with extensive knowledge of Brazil’s corporate credit cycle.
1997 Noberto and Nelson Pinheiro sell their stake in BMC and
found PINE
March, 2007 IPO
1939 Pinheiro Family
founds Banco Central do
Nordeste
1975 Noberto Pinheiro becomes one of
BMC’s controlling shareholders
Devaluation of the real
Nasdaq Sept. 11 Brazilian Elections
(Lula)
Subprime Asian Crisis
Russian Crisis
European Community
May, 2012 15 years
End of 2007 Focus on expanding the Corporate Banking franchise
Discontinuation of the payroll-deductible loan business
May, 2007 Creation of PINE Investimentos products line and
opening of the Cayman branch
2005 Noberto Pinheiro becomes PINE’s sole
shareholder
October, 2007 Beginning of the FICC Business
October, 2011 Subscription of PINE’s capital by DEG
August, 2012 Subscription of PINE’s capital by DEG, Proparco, Controlling Shareholder and Management
November, 2012 Opening of the broker dealer in New York, PINE Securities USA LLC
Business Strategy
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Competitive Landscape PINE serves a niche market of companies that lack adequate banking options, seeking a bank that fully understands their needs.
100% focused on providing complete service to companies, offering customized products
.
Corporate & SME
SME & Retail
Retail
100% Corporate
Large Multi-Services banks
Market
Consolidation of the banking sector has decreased the supply of credit lines and financial instruments for corporate Foreign banks are in a deleveraging process
PINE
Full service Bank – Credit, Hedging, and Investment Bank products – with room for growth ~10 clients per officer Competitive Advantages: Focus Fast response: Strong relationship with
clients, with the credit committee meeting twice a week and response times to clients of no more than one week
Specialized services Tailor-made solutions Product diversity
Foreign and Investment Banks
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Focus Always on the Client The bank develops a strategy of product diversity, tailored to meet the needs of each client.
Working Capital
CDIs
Bank Guarantees
Exclusive Funds
Portfolio Management
Swap NDFs Structured Swaps
BNDES Onlending
Bank Guarantees
Compror
ACC/ACE
Export Finance
Finimp Letters of Credit
2,770 onlending
Overdraft Accounts
Syndicated and Structured Loans
Fixed Income
Currencies
Commodities
Equities
CDBs
CDs
RDBs
LCAs
LCIs
Debentures CRIs
CCBs
Eurobonds
Private Placements
Financial Letters
Clients
Treasury
Corporate Credit
FICC
PINE Investimentos
Distribution
Capital Markets
Financial Advisory
Local Currency
Foreign Currency
Fixed Income Currencies
Commodities
Pricing of Assets and Liabilities
Liquidity Management
Trading
Local Currency
Onlending
Foreign Currency Trade Finance
Participation Funds
Options
Working Capital Underwriting
Corporate & Structured
Finance
M&A
Project Finance
Structured Finance
Private Credit Funds
Real Estate Funds
Rural Credit
Aircraft Financing
Investment Management
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Corporate Credit
Actions Credit Committee
Strong track record and solid credit origination and approval process.
Credit Approval: Electronic Process
Origination Officers
Credit origination Credit analysis, visit to clients, data updates, interaction with internal
research team
Credit Analysts Regional Heads of
Origination and Credit Analysis
Presentation to the Credit Committee
CRO, Executive Directors and Analysts
of Credit
Centralized and unanimous decision making process
CREDIT COMMITTEE
Meets twice a week – reviewing 20 proposals on average
Minimum quorum: 4 members - attendance of CEO or Chairman is mandatory
Members:
Chairman of the Board CEO Chief Operating Officer Chief Administrative Officer Chief Risk Officer
Participants:
FICC Executive Director Credit Analysts Other members of the Corporate Banking origination team
Personalized and agile service, working closely with clients and keeping a low client to account officer ratio: each officer handles ~10 economic groups.
Geographic coverage of clients, providing the bank with local and extremely up-to-date credit intelligence and information.
Established long term relationships with more than 600 economic groups
Origination network is comprised of 11 branches divided into 14 origination platforms in Brazil’s major economic centers
More than 30 credit analysts, assuring that analysis is fundamentally driven and based on industry-specific intelligence
Efficient loan and collateral processes, documentation, and controls, which has resulted in a low NPL track record
Discussion on sizing, collateral, structure, etc.
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FICC
Client Notional Derivatives Portfolio by Market
Market Segments
Notional Value and MtM
Portfolio Profile
Proven trackrecord: 2nd in commodity derivatives1.
Scenario on December 31st, 2012
Duration: 204 days
Mark-to-Market : R$197 million
Stress Scenario (Dollar: +31% and Commodities Prices: -30%):
Stressed MtM: R$498 million
December 31st, 2012
1Source: Cetip Report, December 2012
Fixed Income: Fixed, Floating, Inflation, Libor Currencies: Dollar, Euro, Yen, Pound, Canadian Dollar, Australian Dollar Commodities: Sugar, Soybean (Grain, Meal and Oil), Corn, Cotton, Metals, Energy
R$ millions
Commodities18%
Fixed Income
15%Currencies
67%
3,712 4,287 4,720 4,875 5,036
157 126
256 238 197
354 354
597 629
498
Dec-11 Mar-12 Jun-12 Sept-12 Dec-12
Notional value
MtM
Stressed MtM
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PINE Investimentos Consolidation of the Investment done through the year in the franchise.
Volume of Underwriting Transactions Revenues
Transactions
R$ Millions R$ Millions
Capital Markets: Structuring and Distribution of Fixed
Income Transactions.
Financial Advisory: Project & Structured Finance, M&A,
and hybrid capital transactions.
1
18
915
61
4Q11 3Q12 4Q12 2011 2012
306.7%
233 217 160
856
1,040
4Q11 3Q12 4Q12 2011 2012
21.5%
R$100,000,000
May, 2012
Promissory Notes
Coordinator
R$540,000,000
March, 2012
M&A
Exclusive Advisor
R$67,000,000
June, 2012
Promissory Notes
Coordinator
R$60,000,000
October, 2012
Promissory Notes
Coordinator
R$91,000,000
October, 2012
Debentures
Coordinator
R$52,000,000
July, 2012
Project Finance
Financial Advisor
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Pillars Strategy supported by solid fundamentals, built and achieved over the years…
Strong and motivated team
Meritocracy Right incentives Highly qualified team
Adequate capital structure
Capital Adequacy Ratio (BIS) of 16.2% Regulatory Capital: R$1.5 billion
Corporate clients
Strong relationship Customized service In-depth knowledge of client needs Product diversity
Efficient funding structure Longer average maturities: 17 months (Dec-12) Greater diversification of funding sources PINE issues the first Brazilian Huaso Bond in Chile, the transaction amounted to US$73 million with a 5-year term
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Rating Upgrades ...with market recognition and positive evaluation by rating agencies.
On December 7th, 2011: PINE’s rating in global scale, to BB+ from BB- (two notches) PINE’s rating in national scale, to brAA from brA (three notches)
On August 23rd, 2011:
Local currency rating, to brA from brA- Reaffirmed the Rating in foreign currency in BB- Revision from PINE’s outlook to positive
On May 11th, 2012 Foreign and Local Currency Long-Term IDR to 'BB' from 'BB'- National Long-Term Rating to 'A+(bra)' from 'A(bra)' Viability rating upgraded to 'bb' from 'bb-' Banco Pine S.A. USD 125 million Subordinated notes to 'B+' from 'B'
Fitch attributed this upgrade to the diversification of PINE's funding profile and its good assets and liabilities management, provided by the adequate match of the credit and funding books. In addition, the Agency considered that the positive liquidity gap allied with the good cash position evidences the Bank's overall solid financial strength. According to the Agency, the Bank’s continued increase in fee income, mainly due to higher product penetration, is a good indicator of the successful maintenance of profitability levels.
The agency based its ratings on the strong asset-quality, adequate liquidity, capital, and earnings. S&P also emphasizes the gradual funding diversification, through foreign issuances, securitizations, and the recent capital increase subscribed by DEG.
On August 23rd, 2012: PINE’s outlook upgraded to Positive
Moody's explained that the positive outlook reflects PINE’s profitability through a well-executed strategy, and which has ensured earnings recurrence. The rating action also captures the bank's improved funding diversification, well managed asset quality metrics and its good liquidity and capital management.
Highlights and Results
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4Q12 Events and Highlights
Positive revenue contributions from all business lines in 2012: 62.8% from Corporate Credit, 16.7% from FICC,
10.2% from Treasury and 10.3% from PINE Investimentos, consolidating its strategy.
PINE issues the first Brazilian Huaso Bond in Chile. The transaction amounted to US$73 million with a 5-year
term and the 2nd Islamic format issuance in the amount of US$37.5 million, with a 1-year term.
As announced in August, 2012, Proparco subscribed in February 2013 to approximately R$27 million in PINE4
shares.
Positive liquidity gap maintained for over 10 quarters: 14 months for credit, versus 17 months for funding.
Liquid balance sheet, influenced by increased funding that raised the cash position to R$1.8 billion, equivalent
to 50% of time deposits.
On December 11, 2012, PINE adopted the Equator Principles.
Once again, PINE is one of the 15 largest players in derivative transactions and the 2nd largest in commodity
derivative according to Cetip (OTC Clearing House).
According to Anbima’s Fixed Income Origination ranking, PINE was 9th in origination by number of transactions
and 11th by financial volume.
9th in credit to large companies, 15th largest bank in Brazil offering corporate credit, and 5th in wealth
generated per employee, according to the “Maiores e Melhores” ranking compiled by Exame magazine.
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2012 Financial Highlights The main performance indicators continued to show positive development in the period…
R$ Millions
7,065 7,948
Dec-11 Dec-12
Total Credit Risk1
12.5%
1,015
1,220
Dec-11 Dec-12
Shareholders' Equity
20.2%
61
120
2011 2012
Fee Income
96.7%
162 187
2011 2012
Net Income
15.4%
17.2% 16.8%
2011 2012
ROAE
70 bps
17.9%2
6,544 7,062
Dec-11 Dec-12
Total Funding
7.9%
1 Includes Letters of Credit to be used, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, CRIs, eurobonds and fund shares) 2 Excludes capital increase of R$139.6 million incorporated into shareholders´equity in September 2012
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Product and Revenue Diversification ...with contributions from all business lines, fruits of the strategy of complete service to clients.
Clients with more than one Product Penetration Ratio – Clients with more than one Product
Revenue Mix
Corporate Credit63.7%
FICC24.7%
Treasury8.6%
PINE Investimentos
3.0%
2011
Corporate Credit62.8%
FICC16.7%
Treasury10.2%
PINE Investimentos
10.3%
2012
2.93.0
2.8
Dec-10 Dec-11 Dec-12
47% 59% 61%
53% 41% 39%
Dec - 10 Dec - 11 Dec - 12
More than 1 product 1 product
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Loan Portfolio1
The portfolio resumed its growth to reach 12.5% in the year… R$ millions
3,358 3,132 3,126 3,300 3,289 3,370 3,332 3,274 3,377
71 122 279 322 386 670 683 787 846 881 912 881 883 883
822 800 853 1,022 1,117
1,372 1,534 1,687 1,684 1,599 1,699
2,114
520 622 772
756 782 1,021 1,154 942
781
269 230
190 124 102
81 64 47 36
Dec - 10 Mar - 11 Jun - 11 Sept - 11 Dec - 11 Mar - 12 Jun - 12 Sept - 12 Dec - 12
Individuals
Trade finance
Bank Guarantees
Onlending
Private Securities
Working Capital
6,016 6,053 6,495
6,875 7,065
7,426 7,641 7,444
7,948
1 Includes Letters of Credit to be used, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, CRIs, eurobonds and fund shares)
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Loan Portfolio Quality
Loan Portfolio Quality
Credit Coverage
Non Performing Loans > 90 days
Collaterals
... with quality, collaterals, and adequate credit coverage.
December 31st, 2012
Products Pledge
46%
Receivables28%
Properties Pledge
23%
Investments1%
Guarantees2%
3.4% 3.5% 3.3%
4Q11 3Q12 4Q12
AA - A 51.0%
B 36.9%
C 7.6%
D - E 1.4%
F - H 3.1%
0.6% 0.7%0.6%
0.8%
1.2%
0.2% 0.2% 0.2%
0.4%
0.6%
Dec-11 Mar-12 Jun-12 Sept-12 Dec-12
Contracts overdue
Installments overdue
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Continuous Loan Portfolio Management
4Q12 4Q11
Reduced exposure of the Sugar and Ethanol sector, from 18% to 15%;
Increased participation in other sectors such as Electric and Renewable Energy, Agriculture, and Construction;
Reshuffle of the 20 largest clients in approximately 25%;
20 largest clients represented 28% of the total portfolio.
Sugar and Ethanol15%
Electric and Renewable Energy
13%
Construction12%
Agriculture9%Infrastructure
6%Transportation and Logistics
5%
Specialized Services4%
Metallurgy4%
Foreign Trade4%
Food Industry3%
Vehicles and Parts3%
Metal and Mining2%
Chemicals2%
Telecom2%
Construction Material
2%
Meatpacking2%
Financial Institutions
2%Other10%
Sugar and Ethanol 18%
Construction 10%
Infrastructure 8%
Electric and Renewable Energy
8%Agriculture 7%Transportation
and Logistics 6%
Foreign Trade 5%
Specialized Services
4%
Meatpacking 4%
Food Industry3%
Financial Institutions
3%
Telecom3%
Vehicles and Parts3%
Beverages and Tobacco
3%
Chemicals2%
Metallurgy2%
Other11%
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Funding Diversified sources of funding…
R$ millions
1,592 1,720 1,845 1,965 2,130 2,128 2,153 2,056 2,245
1,530 1,114 1,287 1,253 1,196 1,186 1,228 1,177
1,174
214 218
212 228 250 281 223 213 146 320
272 210 165 106 161 194
176 121 42 41
53 66 112 31 33 33 30
829 867
898 867 934 868 813 840 903
21 33
247 256 281 291 553 640
901
194 185
205 237 246 233
295 260
409
160 282
267 310 353 276
234 156
152
158 155
84 86 250
125 118
180
173
377 435
596 814
686 841
1,089 1,073
808
Dec - 10 Mar - 11 Jun - 11 Sept - 11 Dec - 11 Mar - 12 Jun - 12 Sept - 12 Dec - 12
Trade Finance
Private Placements
Multilateral Lines
Intl Capital Markets
Local Capital Markets
Onlending
Demand Deposits
Interbank Time Deposits
High Net Worth Individual Time Deposits
Corporate Time Deposits
Institutional Time Deposits
5,322 5,437
7,062
5,902 6,248
6,544 6,421
6,933 6,804
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Asset & Liability Management ... presenting a positive gap between credit and funding.
ALM Deposits vs. Total Funding
Matching of Transactions
CREDIT FUNDING
BNDES BNDES
Trade Finance Trade Finance
Deposits Working Capital, Private
Securities1 and Cash Financial Bills
Intl. Funding 1 Includes debentures, CRIs, eurobonds, and fund shares
R$ Millions
Loan / Total Funding
R$ Millions
58% 54% 53%
42% 46% 47%
Dec-11 Sept-12 Dec-12
Others
Total Deposits
6,804 6,544 7,062
77%82%
76%72% 71%
Dec-11 Mar-12 Jun-12 Sept-12 Dec-12
-
3,256
2,312
1,447
449 133 30
2,017
1,628
2,148
1,030
209
No maturity Up to 3 months
(includes Cash)
From 3 to 12 months
From 1 to 3 years
From 3 to 5 years
More than 5 years
Credit Funding
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Capital Adequacy Ratio (BIS) BIS ratio reached 16.2%.
R$ millions BIS Ratio(%)
Tier I 13.4%
Tier II 2.8%
Total 16.2%
1,220
257
1,477
13,8% 13,4% 13,2%15,1% 14,3% 13,3% 12,6% 14,0% 13,4%
3,6% 3,7% 3,4%4,5% 4,2%
3,1% 3,3%3,0% 2,8%
17,4% 17,1% 16,6%
19,6%18,5%
16,4% 15,9%17,0% 16,2%
Dec-10 Mar-11 Jun-11 Sept-11 Dec-11 Mar-12 Jun-12 Sept-12 Dec-12
Tier I Tier II
Minimum Regulatory Capital (11%)
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Capital Increase Beginning of the subscription period.
On February 5, 2013 began the regulatory period of exercise of subscription rights and leftovers for the capital increase by Proparco, who will subscribe a total of R$26,954,999.40 at a unit price of R$14.28. In the regulatory period, shall be subscribed at least 1,887,605 shares and a maximum of 6,030,087 if all minority choose to join the subscription. Accordingly, the BIS ratio will increase in a minimum of 30 bps and a maximum of 60 bps. With the approval of the Central Bank, Proparco will hold approximately 1.7% of PINE’s shares.
Corporate Governance and PINE4
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Management Structure Non-bureaucratic, entrepreneurial, and meritocratic culture with a flat hierarchy, speeding the decision making process.
CEO Noberto N. Pinheiro Jr
COO Norberto Zaiet
CRO Gabriela Chiste
CAO Ulisses Alcantarilla
CFO Susana Waldeck
Origination Investment Banking Sales & Trading Research Macro / Commodities International
Asset & Liabilities Back Office Legal Collaterals Management Special Situations Middle Office
Controlling Accounting Tax Planning IT Accounts Payable Office Management Marketing Investor Relations
Credit and F.I. Research Compliance & Internal Controls Credit, Market ,and Liquidity Risks
INTERNAL AUDIT Tikara Yoneya
COMPENSATION COMMITTEE
AUDIT COMMITTEE
EXTERNAL AUDIT PWC
Noberto Pinheiro Noberto N. Pinheiro Jr Maurizio Mauro Gustavo Junqueira Mailson da Nóbrega
Chairman Vice Chairman Independent Director
External Director
Independent Director
HUMAN RESOURCES Sidney Vilhena
BOARD
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Corporate Governance PINE commits to best corporate governance practices…
Two Independent Members and one External Member on the Board of Directors Mailson Ferreira da Nóbrega: Brazil’s Finance Minister from 1988 to 1990 Maurizio Mauro: Former CEO of Booz Allen Hamilton and Grupo Abril Gustavo Junqueira: Former Head of PINE Investimentos, Member of the Board of Directors at EZTEC, Financial Advisor at Arsenal Investimentos and CFO at Gradiente Eletrônica
São Paulo Stock Exchange (BM&FBovespa) Level 2 Corporate Governance
Audit and Compensation Committee reporting directly to the Board of Directors
100% tag along rights for all shareholders, including non-voting shares
Arbitration procedures for fast settlement of litigation cases First Brazilian bank to release BR GAAP and IFRS quarterly
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Committees …favoring collective decision making.
Main decisions are taken by committees Non-stop exchange of knowledge, ideas, and information Transparency
CEO
Twice a week Weekly Monthly Twice a month Every 2 months Weekly Monthly Quarterly On demand Every 2 months
Bi-annually Monthly 45 days
45 days
RISK COMMITTEE
AUDIT COMMITTEE
BOARD OF DIRECTORS
COMPENSATION COMMITTEE
COMMITTEES
CREDIT ASSET & LIABILITY
COMMITTEE ALCO
EXECUTIVE LITIGATION HUMAN
RESOURCES INVESTMENT
BANK PERFORMANCE EVALUATION IT ETHICS
INTERNAL CONTROLS AND
COMPLIANCE
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Dividends and Interest on Own Capital PINE has delivered an attractive dividend yield paying dividends/interest on own capital on a quarterly basis.
R$ millions
25 25
33
45
30
35
40
35
55
40
60
2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12
Appendix
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Social Instituto Alfabetização Solidária Instituto Casa da Providência
Sports
Minas Tênis Clube: training program for athletes
Most Green Bank Recognized by the International Finance Corporation (IFC), private agency programs of the World Bank as the most "green" bank as a result of its transactions under the Global Trade Finance Program (GTFP) and its onlending to companies focused on renewable energy and ethanol
Global Compact PINE joined the Global Compact initiative in October 2012. The UN initiative mobilizes the international business community to adopt fundamental and internationally accepted values in their business practices in the areas of human rights, labor relations, environment and combating corruption, which are reflected in ten principles.
Social Investment and Responsibility PINE supports and promotes the Brazilian culture and sports
Culture Paulo von Poser: exhibit of the painter Paulo von Poser, who is one of Brazil’s most prominent artists Quebrando o Tabu: documentary based on the analysis from the former President of Brazil, Fernando Henrique Cardoso, on the fight against drugs Além da Estrada: motion picture, which received the award for best director in the 2010 Rio Festival
Responsible Credit “Lists of Exceptions”: the Bank does not finance projects or those organizations that damage the environment, are involved in illegal labor practices or produce, sell or use products, substances or activities considered prejudicial to society. System of environmental monitoring, financed by the IADB and coordinated by FGV, and internally-produced sustainability reports for corporate loans.
Equator Principles
On December 11, 2012, PINE adopted the Equator Principles, which are principles applied to Project Finance transactions where total project capital costs exceed US$10 million and are based on International Finance Corporation Performance Standards on social and environmental sustainability and on the World Bank Group Environmental, Health, and Safety Guidelines (EHS Guidelines).
32/32 Investor Relations | 4Q12|
This report may contain forward-looking statements concerning the business prospects, projections of operating and financial results and growth outlook of PINE. These are merely projections and as such are based solely on management’s expectations regarding the future of the business. These statements depend substantially on market conditions, the performance of the sector and the Brazilian economy (political and economic changes, volatility in interest and exchange rates, technological changes, inflation, financial disintermediation, competitive pressures on products and prices and changes in tax legislation) and therefore are subject to change without prior notice. .
Investor Relations Noberto N. Pinheiro Junior
CEO
Susana Waldeck Norberto Zaiet Junior
CFO / IRO COO
Raquel Varela
Head of Investor Relations
Alejandra Hidalgo
Investor Relations Manager
Eduardo Pinotti
Investor Relations Analyst
Ana Lopes
Investor Relations Analyst
Phone: +55-11-3372-5343
www.pine.com/ir