bi&p- indusval - 3q14 results presentation

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RESULTS PRESENTATION 3Q14

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Banco BI&P Results Presentation - 3rd Quarter 2014

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Page 1: BI&P- Indusval - 3Q14 Results Presentation

RESULTS PRESENTATION

3Q14

Page 2: BI&P- Indusval - 3Q14 Results Presentation

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

Page 3: BI&P- Indusval - 3Q14 Results Presentation

Highlights

3

Expanded Credit Portfolio totaled R$4.0 billion, +1.8% in the quarter and +19.0% in relation to September 2013.

Loans originated in 3Q14 totaled R$1.5 billion, proof of the tremendous asset generation capacity of the commercial area.

Loans rated between AA and B corresponded to 91% of the expanded credit portfolio, compared to 85% in September 2013.

Of the loans granted in the quarter, 99% were rated between AA and B, reflecting the Bank’s focus on preserving the quality of

its credit portfolio.

The Corporate and Emerging Companies segments corresponded to 62% and 38%, respectively, of the expanded credit

portfolio, compared to 50% and 49%, respectively, in September 2013.

Funding totaled R$4.2 billion, +1.2% in the quarter and +35.8% in twelve months. We are continuing to diversify our funding

mix, especially through the issue of agro notes (LCA) and a greater fragmentation of the depositor base, which reached an all-

time high of over 9,000 depositors at the end of the quarter (compared to 2,500 in September 2013), through alliances with

more than 40 brokers and distributors, which has also positively impacted our funding costs. Free Cash totaled R$717.3

million at the end of 3Q14.

Income from services rendered and tariffs totaled R$15.3 million in 3Q14 and R$42.1 million in 9M14, growing 79.2% from

3Q13 and 101.7% from 9M13, chiefly driven by revenue from investment banking operations, whose fee revenue totaled

R$5.4 million in 3Q14 and R$16.2 million in 9M14.

Reflecting the continuous cost control measures taken by the Bank, personnel expenses decreased 8.6% in the quarter and

3.0% from 3Q13, while administrative expenses increased 2.4% in the quarter and 5.6% from 3Q13, with the year-on-year

increase resulting from the investments made to upgrade our technological infrastructure.

The quarterly Result was R$1.7 million. In recent years, we have shifted the Bank's focus to corporate and investment

banking, which provide opportunities for higher growth at a lower risk. Though the entire structure is in full operation, we have

not yet attained our revenue generation potential because: (i) of the need for economies of scale, considering our appetite for

risk and its direct impact on the spread in loan transactions, and (ii) the still negative contribution from Guide Investimentos on

account of the recent investments made in it.

Page 4: BI&P- Indusval - 3Q14 Results Presentation

3,355

3,867 3,926 3,920 3,992

Sept 13* Dec 13 Mar 14 Jun 14 Sept 14

R$

millio

n

Loans and Financing in BRL Trade Finance

Guarantees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA and CDCA)

Private Credit Bonds (Debentures)

Expanded Credit Portfolio

4

Growth of 19% in twelve months

* Including credits from Banco BI&P which were assigned to Banco Intercap in 3Q13.

** Other Credits include Non-Operating Asset Sales Financing, Consumer Credit Vehicles, and Acquired Loans.

Average Exposure per Client

R$ million

Sept

2013

Jun

2014

Sept

2014

Corporate 9.2 11.2 10.9

Emerging Companies 3.2 3.0 3.0

50.2%

61.6%

49.0%

38.0%

0.8%

0.5%

Sept 13

Sept 14

Corporate Emerging Companies Other**

Page 5: BI&P- Indusval - 3Q14 Results Presentation

Expanded Credit Portfolio Development

5

Continuously focusing on higher quality assets

685 817 794 818 732

391 514

381 606 776

1,076

1,331 1,174

1,424 1,508

3Q13 4Q13 1Q14 2Q14 3Q14

R$

millio

n

Credit Origination

New Transactions Renewed Transactions

3,920 3,992 1,508 (1.356)

(68) (12)

Jun 14 Amortized

Credits

Credit

Exits

Write

offs

Credit

Origination

Sept 14

R$

millio

n

99% of the new transactions

in the last 12 months are

classified between AA and B

Page 6: BI&P- Indusval - 3Q14 Results Presentation

Expanded Credit Portfolio

6

* Starting from March 2014, export credit notes (NCE) and export notes (CCE) originated by Banco Intercap are included in Loans &

Financing in BRL, as well as NCE and CCE originated by Banco BI&P are classified.

Loans &

Financing

in BRL*

49%

Trade

Finance*

12%

BNDES

Onlendings

10%

Guarantees

Issued

6%

Agricultural

Bonds

21%

Private Credit

Bonds

1%

Other

1%

September 2013

11.7%

13.4%

12.5%

28.6%

27.5%

27.2%

26.0%

26.2%

26.9%

33.7%

33.0%

33.4%

Sept 13

Jun 14

Sept 14

Client Concentration

top 10 11 - 60 largest 61 - 160 largest Other

Loans &

Financing

in BRL*

52%

Trade

Finance*

13%

BNDES

Onlendings

5%

Guarantees

Issued

5%

Agricultural

Bonds

23%

Private Credit

Bonds

2%

September 2014

Page 7: BI&P- Indusval - 3Q14 Results Presentation

Expanded Credit Portfolio

7

Relevant exposure in agriculture

13.1%

1.5%

1.6%

1.7%

2.2%

2.3%

2.5%

2.6%

3.5%

3.9%

4.0%

4.4%

5.0%

7.0%

11.2%

11.2%

22.3%

Other Industries (% lower than 1.4%)

Raw Materials

Metal Industry

Financial Activities

Power Generation & Distribution

Textile, Leather and Confection

Chemical & Pharmaceutical

International Commerce

Infrastructure

Commerce - Retail & Wholesale

Transport and Logistics

Automotive

Livestock

Food & Beverage

Real Estate

Oil, Biofuel & Sugar

Agriculture

September 2014

11.1%

1.6%

1.8%

2.3%

2.4%

2.6%

2.6%

2.7%

3.4%

3.7%

3.7%

4.3%

4.4%

5.5%

7.5%

7.9%

8.7%

23.6%

Other Industries (% lower than 1.4%)

International Commerce

Financial Activities

Metal Industry

Education

Raw Materials

Chemical & Pharmaceutical

Textile, Leather and Confection

Power Generation & Distribution

Transport and Logistics

Commerce - Retail & Wholesale

Livestock

Infrastructure

Automotive

Oil, Biofuel & Sugar

Food & Beverage

Real Estate

Agriculture

September 2013

Page 8: BI&P- Indusval - 3Q14 Results Presentation

Agricultural Franchise

8

Specialization in the agricultural segment with low levels of loss

CPR &

CDA/WA

69%

Loans

19%

Trade Finance

11%

BNDES

Onlending

1% Guarantees

Issued

0%

Products

Midwest

47%

Southeast

20%

South

17%

Northeast

(State of Bahia)

10% North

6%

Brazilian Regions

Agricultural Portfolio

by Cultivation

Amount

R$ thousand %

Soybean 600,306 67.58%

Corn 92,972 10.47%

Cotton 91,677 10.32%

Coffee 51,969 5.85%

Orange 16,143 1.82%

Fertilizers 13,418 1.51%

Other 21,755 2.45%

Total 888,241 100.00%

More than R$3.2 billion in assets have

been generated over the past three years,

with a loss of 0.03% (annualized).

Position as of September 30, 2014

Page 9: BI&P- Indusval - 3Q14 Results Presentation

Net Interest Margin (NIM)

9

4.08% 3.99% 3.94% 4.43%

4.12%

3Q13 4Q13 1Q14 2Q14 3Q14

Managerial NIM with Clients

Managerial Net Interest Margin with Clients was 4.12% in 3Q14,

compared to 4.43% in 2Q14, impacted by the increased share of the

Corporate segment in the Bank’s loan portfolio.

Page 10: BI&P- Indusval - 3Q14 Results Presentation

Fees, Client Desk, IB and Brokerage Revenues

10

10.3 9.1

12.0

17.9 15.9

24.8

45.8

3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

R$

millio

n

Comercial Fee Client Desk IB Guide Investimentos

During the quarter, we carried out M&A and fixed income operations amounting

to R$1.1 billion, and the number of asset management proposals/mandates

has increased constantly; we currently have 42 ongoing mandates.

85%

Page 11: BI&P- Indusval - 3Q14 Results Presentation

Real Estate

Debenture 476

R$ 175 million

Investment Banking

11

Major IB deals in 9M14

Education

M&A Buy Side

R$ 676 million

Real Estate

CRI

R$ 31 million

Financial

Advisory

R$ 300 million

Telecom

Advisory

Retail, Publishing

& Services

Advisory

Real Estate

M&A Sell Side

Food

M&A Sell Side

Food*

M&A Sell Side

R$ 250 million

2ª Fase

1,487

16,224

9M13 9M14

R$

th

ou

sa

nd

Fees IB

* Pending approval from the Brazil's Council for Economic Defence (Cade).

Page 12: BI&P- Indusval - 3Q14 Results Presentation

* New Credit Policy: adopted since April 2011

Expanded Credit Portfolio Quality

12

99% of loans granted in the quarter were rated from AA to B

Credits rated between D and H totaled R$207.7 million

at the end of 3Q14:

R$147.5 million (71% of the expanded credit portfolio

between D-H) in normal payment course;

Only R$60.2 million overdue +60 days.

Additional ALL not allocated balance = R$18.5 million 2%

2%

2%

48%

57%

56%

35%

32%

33%

6%

4%

4%

9%

5%

5%

Sept 13

Jun 14

Sept 14

AA A B C D - H

90.8%

90.9%

85.0%

AA

2%

AA

1% AA

6%

A

56%

A

60%

A

5%

B

33%

B

34% B

21% C

4% C

2%

C

23% D - H

5% D - H

2%

D - H

46%

New Credit Policy* Clients Previous Credit Policy Clients September 2014

Page 13: BI&P- Indusval - 3Q14 Results Presentation

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

Clients from Previous Credit Policy Total Clientes fro New Credit Policy*

Credit Portfolio Quality

* New Credit Policy: adopted since April 2011. 1 Managerial ALL Expense = ALL expenses + Discounts granted upon settlement of loans – Revenues from recovery of loans written off.

The last 12-month Managerial ALL Expense of Sept/13 and Dec/13 were highly influenced by the additional provision made in 2013.

12.4%

8.1%

15.0%

7.5%

5.3%

2.6% 1.9% 2.6% 1.8% 1.5%

0.6% 0.3% 0.4% 1.0% 1.1%

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

NPL 90 days / Credit Portfolio

14.0%

10.3%

15.2%

7.9% 6.4%

2.9% 2.3% 2.6% 2.0% 2.0%

0.6% 0.3% 0.5% 1.2% 1.5%

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

NPL 60 days / Credit Portfolio

13

0.80% 0.97% 1.10% 0.66%

1.45%

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

Quarterly Managerial ALL Expense 1

(annualized)

0.99% 0.87% 1.05%

Mar 14 Jun 14 Sept 14

Last 12-month

Managerial ALL Expense 1

1,07% for

credits from

new portfolio

0,62% for

credits from

new portfolio

Page 14: BI&P- Indusval - 3Q14 Results Presentation

Time

Deposits

(CDB)

23%

DPGE I

30%

LCA

19%

LF & LCI

3% Interbank &

Demand

Deposits

2%

Onlendings

11%

Foreign

Borrowings

12%

September 2013

3,082

3,893 3,930 4,135 4,186

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

R$

millio

n

in Local Currency in Foreign Currency

Funding

14

Product mix helps with cost reduction

Time

Deposits

(CDB)

20%

DPGE I

22%

DPGE II

10%

LCA

33%

LF & LCI

3% Interbank &

Demand

Deposits

2%

Onlendings

5%

Foreign

Borrowings

5%

September 2014

LCA and LCI account for

36% of funding volume

Page 15: BI&P- Indusval - 3Q14 Results Presentation

Guide Investimentos

15

Important alliances established by Guide in 2014:

AUM: R$500 million

14 independent investment advisors

1,320 Active Clients

AUM: R$300 million

8 independent investment advisors

702 Active Clients

AUM: R$600 million

43 independent investment advisors

1,080 Active Clients

In migration process

1.0 1.5

2.3

Jun 14 Sept 14 Dec 14 E*R

$ b

illio

n

Assets under Management (AUM)

Since the end of 2Q14, Guide Investimentos has risen

10 positions in the Bovespa ranking in terms of volume,

and in October entered the list of the 25 largest

brokerages in equity trading volume on the Bovespa

* Concluded the process of migration of client portfolio of the alliances established in 2014.

Page 16: BI&P- Indusval - 3Q14 Results Presentation

21.5 27.1

24.5 22.8 20.8

10.6 14.2 11.8 11.0 11.2

373 374 381 349 332

0

50

100

150

200

250

300

350

400

450

-

10.00

20.00

30.00

40.00

50.00

60.00

3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14

R$

m

illio

n

Personnel and Administrative Expenses *

Personnel Expenses Administrative Expenses Headcount

Efficiency Ratio

16

• Personnel Expense: Headcount 5% lower in the

quarter and 11% lower when compared to 3Q13.

• Administrative Expense: +2.4% in the quarter and

+5.6 when compared to 3Q13, with the year-on-

year increase resulting from the investments

made to upgrade our technological infrastructure.

79.3% 98.3% 100.5%

72.6% 88.2%

3Q13 4Q13 1Q14 2Q14 3Q14

Efficiency Ratio *

* Information based on the managerial income statement of the financial conglomerate without Guide Investimentos.

Page 17: BI&P- Indusval - 3Q14 Results Presentation

Profitability

17

2.0

-10.0 -9.9

1.1 1.7

3Q13 4Q13 1Q14 2Q14 3Q14

R$

millio

n

Net Result

In recent years, we have shifted the Bank's focus to corporate and investment banking, which provide opportunities for

higher growth at a lower risk. Though the entire structure is in full operation, we have not yet attained our revenue

generation potential because:

• of the need for economies of scale, considering our appetite for risk and its direct impact on the spread in loan

transactions, and

• the negative contribution from Guide Investimentos on account of the recent investments made in it.

On the positive side, this quarter we had the non-recurring effect of the divestment of a fixed asset.

Page 18: BI&P- Indusval - 3Q14 Results Presentation

574.5

674.2 667.1 671.4 672.8

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

R$

millio

n

Shareholders’ Equity

14.5% 14.8% 13.7% 13.3% 13.2%

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

Basel Index (Tier I)

5.7x 5.7x 5.9x 5.8x 5.9x

Sept 13 Dec 13 Mar 14 Jun 14 Sept 14

Leverage

Expanded Credit Portfolio / Equity

Capital Structure and Ratings

18

Agency Rating Last

Report

Standard

& Poor’s

Global: BB-/Negative/B

National: brA /Negative/brA-2 Aug 2014

Moody’s Global: B1/Stable/Not Prime

National: Baa2.br/Stable/BR-3 Sept 2014

Fitch

Ratings National: BBB-/Stable/F3 Sept 2014

RiskBank

Index RiskBank: 9.83

Low Risk Short Term

Disclosure: Excellent

Oct 2014

Page 19: BI&P- Indusval - 3Q14 Results Presentation