Banco Votorantim S.A. Earnings Presentation 3 rd Quarter, 2011 - - PowerPoint PPT Presentation
Banco Votorantim S.A. Earnings Presentation 3 rd Quarter, 2011 - - PowerPoint PPT Presentation
Banco Votorantim S.A. Earnings Presentation 3 rd Quarter, 2011 Disclaimer Certain statements made in this presentation may not be based on historical information or facts. This presentation therefore contains, or may be deemed to contain,
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“Certain statements made in this presentation may not be based on historical information or facts. This presentation therefore contains, or may be deemed to contain, “forward looking statements” (within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), including those relating to the general business plans and strategy, future financial condition and results and growth prospects of Banco Votorantim S.A. (“Banco Votorantim” or the “Company”), and future developments in its industry and its competitive and regulatory
- environment. By their nature, forward‐looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or
may not occur in the future and are based on assumptions, data or methods which, although considered reasonable by the company at the time, may turn out to be incorrect or imprecise, or may not be possible to realize. Accordingly, actual results may differ materially from these forward‐looking statements due to a number of factors, including future changes or developments in the Company’s business, its competitive environment, technology developments and political, economic, legal and social conditions in Brazil. Forward looking information is not merely based on historical fact but also reflects management’s objectives and expectations. The Company can give no assurance that expectations disclosed in this presentation will be confirmed. The words “estimate”, “believe”, "anticipate", “wish", "expect", “foresee", “intend", "plan“, "predict", “forecast", “aim" and similar words, written and/or spoken, are intended to identify affirmations which, necessarily, involve known and unknown
- risks. Known risks include uncertainties which include, but are not limited to, interest rates, product competition, market acceptance of products, the actions of
competitors, regulatory approval, currency type and fluctuations, monetary policy, among others. This presentation is based on events up to September 30th, 2011. The Company or any of its affiliates take no responsibility or liability to update the contents of this presentation in the light of new information and/or future events. Banco Votorantim and/or any of its affiliates do not accept and take no responsibility, whatsoever, direct or indirect, for transactions or investment decisions made on the basis of information contained in this presentation. Banco Votorantim may alter, modify or otherwise change in any manner the contents of this presentation, without the obligation to notify any person of such revision or changes. This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. Recipients of this presentation are not to construe the contents of this summary as legal, tax or investment advice and recipients should consult their own advisors in this regard. The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research, publicly available information and industry publications. Although the Company has no reason to believe that any of this information or these reports are inaccurate in any material respect, the Company has not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications and therefore does not make any representation as to the accuracy of such information. This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without the Company’s prior written consent.”
Disclaimer
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Banco Votorantim overview Strategy and recent developments New context and challenges Financial highlights
Agenda
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Banco Votorantim is one of the leading players in Brazil
3rd largest privately-held Brazilian bank – strong shareholder base and diversified portfolio
Banco Votorantim (BV) is the 3rd largest privately-held domestic bank by assets …
Strong organic growth trajectory
- BV started operating as a multiple bank in 1991…
- …and today is one Brazil’s leading banks
– #7 by total assets¹ (R$124.3B) – #6 by loan portfolio¹ (R$64.0B) – #6 by shareholders’ equity¹ (R$8.7B)
- ~ 7,000 employees (~5.2k in Consumer Finance )
- ~ 5.5M customers
Multi-niche strategy Low fixed-cost business model
- National coverage via third-party distribution
Robust shareholder base and conservative financial policies Culture of excellence, agility and customer orientation Recognized by the market
- Credibility, credit quality and innovation
- Positioned among best places to work
... with a strong shareholder base and a diversified business portfolio
Banco Votorantim overview
- 1. Excluding BNDES (State-owned development bank)
Note: Figures as of Sep/11 Source: Banco Votorantim; Brazilian Central Bank
Consumer Finance
- Auto Finance
- Personal Loans
- Credit Cards
- Insurance broker
Wholesale Banking
- Corporate
- Investment Banking
- Middle Market
- Private Bank
- Asset Management
- Full Service Brokerage House
- Broker Dealer in New York
- Rep office in London
Total: 50% Voting: 49.99% Non-voting: 50.01% Total: 50% Voting: 50.01% Non-voting: 49.99%
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1. Banco do Brasil 2. Itaú Unibanco 3. Bradesco 4. CEF 5. Santander 6. HSBC 7. VOTORANTIM 8. Safra 9. Citibank 10. BTG Pactual 11. Banrisul 12. Credit Suisse 13. BNP Paribas 14. Deutsche Bank 15. BNB
BV is the 7th largest bank in Brazil by total assets…
And is ranked #6 in terms of both loan portfolio and shareholders’ equity
BV overview – Bacen rankings
Total Assets (R$B) Loan portfolio (R$B) Shareholders’ equity
- 1. Excluding BNDES (State-owned development bank)
Source: Banco Votorantim; Brazilian Central Bank as of June/11 (Sep/11 figures not yet available at the time the presentation was developed)
865.0 768.6 607.8 460.1 412.0 144.5 119.2 83.8 54.8 52.2 34.9 29.4 26.2 25.2 24.8 1. Banco do Brasil 2. Itaú Unibanco 3. Bradesco 4. CEF 5. Santander 6. VOTORANTIM 7. HSBC 8. Safra 9. Banrisul 10. Volkswagen 11. Citibank 12. BIC 13. BNB 14. BMG 15. FIBRA 359.5 259.5 218.2 205.8 153.6 61.2 45.4 35.7 18.2 17.7 12.0 11.5 10.5 9.1 7.1 1. Itaú Unibanco 2. Santander 3. Banco do Brasil 4. Bradesco 5. CEF 6. VOTORANTIM 7. HSBC 8. Citibank 9. Safra 10. BTG Pactual 11. Banrisul 12. Classico 13. Credit Suisse 14. BNB 15. BNP Paribas 67.1 65.1 54.6 53.0 18.2 8.7 8.2 7.0 5.9 5.8 4.1 3.9 3.2 2.3 2.2
Largest financial institutions in Brazil¹ according to the Brazilian Central Bank – June 2011
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…with a very robust shareholder base…
Two of the largest and most solid Brazilian institutions as shareholders
- One of the largest privately-held industrial
conglomerates in Latin America
- Founded in 1918
- R$15.8B in revenues and R$3.0B in EBITDA in 1H11
- Market leader in a diversified portfolio of basic
materials and commodities, e.g.: – Pulp & paper: #1 pulp producer in the world – Cement: top 10 global player; #1 in Brazil – Metals: leading global position in zinc and nickel; #1 aluminum, zinc and nickel producer in Brazil – Steel: established presence in long steel in South America – Orange juice: leading global player (~35% share²)
- ~65,000 employees
- Rated: Baa3 (Moody’s) / BBB (S&P) / BBB- (Fitch)
- Largest FI in Brazil, with 200+ years old
- R$6.3B in net profits in 1H11, with 25.4% ROAE
- Market leader¹ in terms of
– Total assets (R$904B) – Total deposits (R$396B) – Loan portfolio (R$421B) – AuM (R$407B)
- Diversified funding base, with low cost deposits
– ~65% of the basic interest rate – Selic
- 59.2% controlled by the Brazilian Government
- Market capitalization¹: R$80.1B
- ~55M retail clients
- ~112,900 employees
- Rated: Baa2 (Moody’s) / BBB (S&P) / BBB (Fitch)
- 1. End of 1S11 figures; 2. Considers Citrovita + Citrosuco figures
Source: Company IR websites
BV overview – Shareholder base
Total: 50% Voting: 49.99% Non-voting: 50.01% Total: 50% Voting: 50.01% Non-voting: 49.99%
Votorantim Group Banco do Brasil (BB)
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…and a strong corporate governance structure
Shared governance between the two shareholders
2-year term and annual Chairman/Vice-Chairman rotation between the two shareholders Professional senior management team Name Position Company
Aldemir Bendine Chairman Banco do Brasil José Ermírio de Moraes Neto Vice-Chairman Votorantim Finanças Ivan de Souza Monteiro Director Banco do Brasil Marcus de Camargo Arruda Director Votorantim Finanças Paulo Rogério Caffarelli Director Banco do Brasil Wang Wei Chang Director Votorantim Finanças
Name Position
João Roberto Gonçalves Teixeira CEO Luis Henrique Campana Rodrigues Executive Vice President Milton Roberto Pereira Executive Vice President Walter Guilherme Piacsek Junior Executive Vice President
Governance Structure
BV overview – Corporate governance
Board of Directors Senior Management (Executive Committee)
Source: Banco Votorantim
Board of Directors Executive Committee Products & Marketing HR Oversight bodies Advisory Committees Internal Committees
(e.g. ALM, Credit etc.)
Fiscal Council Audit Committee Finance
Equal representation
- f each shareholder
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Recap: partnership with Banco do Brasil was established back in 2009, based on a solid strategic rationale
Robust deposit base: Funding Strength and expertise of Brazil’s premier conglomerate Asset origination capacity: Growth Brokerage: high growth potential and scale gains Largest retail customer base in Brazil Stronger and more competitive institution Successful auto finance and alternative channels models National presence through huge distribution network Strength and historic tradition of Brazil’s oldest bank
Strategic partnership – rationale
Source: Banco Votorantim
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Partnership has produced tangible results
Both Banco Votorantim and Banco do Brasil have benefited from the strategic agreement
Strategic partnership – results achieved
Additionally, Banco Votorantim has a stand-by credit facility from BB equal to BV s shareholder’s equity Selected examples of revenue synergies already captured Asset securitization program
- BB regularly acquires credit assets originated by BV Financeira, via an Operational
Agreement, with advantages for both institutions: – Banco do Brasil: growth of its consumer finance credit portfolio¹ – BV Financeira: expansion of its asset origination capability
Growth in Auto Finance
- BV Financeira operates as BB s auto financing arm outside of BB’s retail branches
– BV doubled its origination market share between 2008 (11%) and 1H11 (22%)
Cross-offering
- f investment
products
- VWM&S and BB DTVM have work together to develop and distribute innovative
structured investment products, e.g. – Real Estate (FIIs): BB Votorantim JHSF e BB Renda Corporativa I – Receivables (FIDC): FIDC Fênix (Americanas) – Equity Investment (FIP): BB Votorantim Renewable Energy I, II and III
Growth of BV Corretora
- Increased use of BV s brokerage house by BB to process transactions from its
treasury, investment funds and retail segment (home broker)
- 1. The balance of assets purchased from BV reached R$12.5B em Sep/11, of which R$8,0B were auto loans and the remainder payroll loans
Source: Banco Votorantim; Brazilian Central Bank
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Banco Votorantim overview Strategy and recent developments New context and challenges Financial highlights
Agenda
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BV has a multi-niche strategy, with businesses grouped in Wholesale Banking and Consumer Finance
Shareholders
Consumer Finance Wholesale Banking Auto Finance
2nd largest overall auto finance player by origination Sustain leadership in used auto financing Grow profitably in new auto financing (new car dealers)
Other businesses
Continued growth in credits cards Grow insurance brokerage revenues Increase profitability in individual loans
Corporate & IB (CIB) Wealth Management Middle Market
Continued growth in this rapidly expanding segment of mid-sized companies, gaining scale and efficiency Focus on agility and relationships Leverage CIB structure to enhance product offering
Pillars
BV – Corporate strategy
Source: Banco Votorantim
9th largest asset manager, with innovative products Private Bank focused
- n continued growth
through customized solutions Expand synergies with BB One of the leading players in credit, focused on long-term relationships Strengthen product platform: ECM, DCM, M&A, derivatives, and structured products Enhance distribution
Banco do Brasil Votorantim Group
+
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31 50 76 81 86 50 100 Corporate credit assets¹ - Dec 10 (R$B, estimated) Market Share 19% 18% 17% 11% 7% Wholesale – CIB and Middle
Wholesale : Top 5 player in the Corporate credit market
Cross-selling (esp. fee based) in Corporate, growing fast and gaining scale in Middle Market
~5,5 milhões empresas
Brazilian Wholesale Market³
Middle Market Small Business
~2M companies4 ~20,000 companies
R$400M R$20M Annual Revenues Corporate (CIB)
~1,000 groups
Leading player in lending for the Corporate segment
- High market penetration (~55%)
- Strong track record in providing tailor-made structured products
- Focus on cross-selling (esp. fee-based) within its large client base,
providing investment banking services and derivatives (hedge) Strong growth opportunities in the Middle Market segment
- Low market penetration (-25%), despite recent growth
- Fragmented and rapidly expanding segment of the Brazilian economy,
with attractive spreads
- Focus on agility and proximity to better serve clients, leveraging the
CIB product platform and expertise
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- 1. Includes guarantees and private securities; excludes offshore and “BNDES direto”; 2. Includes Itaú and Itaú BBA; 3. BV Estimate; 4. Excludes ~4M companies without employees
Note: Middle Market classification expanded in July/11 to R$20M-R$400M in annual sales (from R$20M-R$200M) Source: BACEN; MPE Data; Serasa; Bank Annual Reports; Bacen; BCG; press clippings
Complete solution provider, focused on high value-added structured products
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Corporate Middle Sep/11 40.6 31.8 8.8 Sep/10 34.5 30.1 4.5 2010 37.2 31.3 5.9 2009 35.6 33.4 2.1 2008 35.6 33.9 1.7
Wholesale: credit portfolio growth driven by Middle Market (mid-sized companies)
Middle Market expanded loan portfolio nearly doubled over the past 12 months
Wholesale expanded loan portfolio¹ (R$B)
- 1. Includes guarantees provided and private securities; 2. According to Central Bank’s Res. 2,682.
Note: Middle Market classification expanded in July/11 to BRL 20M-BRL 400M (from BRL 20M-BRL 200M) in annual sales, resulting in ~BRL 300M loans transferred from Corporate to Middle Market; Source: Banco Votorantim
CAGR LTM Sep/11 16% 97% 6% Wholesale – CIB and Middle Loan porfolio rated AA – C (%)
95.3% of the Wholesale Banking loan portfolio rated AA - C (Bacen criteria2)
Sep/11 95.3 Sep/10 97.7 2010 98.3 2009 97.3 2008 99.0
Focus on cross-selling in Corporate and gaining efficiency and scale in Middle Market
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23.2 2009 31.9 2010 2008 19.4 28.6 Sep/10 38.5 +28% Sep/11 +35%
VWM&S: VAM is the Top 9 Asset Manager in Brazil
Private Bank has achieved a 26% AuM growth in 2011
Votorantim Wealth Management registered a robust growth in the past 12 months... ...driven by the focus on innovative structured products and estate planning for customers
Asset Management: market share reached 1.9% in Sep/11 (vs. 1.4% in Jan/10)
- Focus on structured products
- Expanding synergies with BB: over R$2.2B in AuM
from funds developed and distributed together, e.g. – FII BB Votorantim JHSF (Real Estate): monthly income through rental of office building – FIP BB Votorantim Renewable Energy (Equity Investment): first infrastructure FIP targeted to individuals – FII BB Renda Corporativa (Real Estate)
- Consistent performance across main products
Private Bank: position itself as a Top 5 PB player
- Continued growth through customized solutions
- Focus on estate planning for customers
- Open architecture
Assets under management (R$B) 13th 12th 10th Ranking1 9th
- 1. Anbima asset managers ranking
Source: Banco Votorantim,
Wholesale – Wealth Management
VWM&S has an important role in further diversifying
- ur revenue base and improving ROE
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BV Financeira: successful business model based on third-party distribution
BVF operates in consumer finance through an extensive third-party distribution Auto Finance: 22% share in the 9M11, with growing presence in new car dealerships
- 1. Estimated share in new loans.
Source: Bacen; ABEL; Banco Votorantim
Consumer Finance Auto Finance: BVF is “Top 2” in origination
- Market leader in used auto financing
- Relevant presence in new car dealerships
- ~5.5 million clients
- Low fixed cost business model, with nationwide
coverage through third-party distribution (~24,000 dealerships) Payroll loans: relevant presence in loans to retirees and pensioners (INSS)
- Payroll loan portfolio reached R$6.0B in Sep/11
Further diversifying into complementary businesses
- Credit cards: 315k active cards by Sep/11, growth of
27% in 12 months
- Fast-growing distribution of insurance products (e.g.
Auto) 22% 22% 21% BVF – Auto finance origination (R$B) and estimated market share¹ (%) New auto dealers/
- rigination (%)
30% 39% Market Share (%) Auto finance
- rigination
(R$B) 11% 16% 2008 2010 2009 9M11 9M10 25.9 11.7 15.2 17.5 18.2
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CAGR 2008-Sep/11 Brazilian Individual Credit Market¹ (R$B)
Individual credit market has expanded at a 18% CAGR since 2008 BV Financeira has outgrown the market since 2008, with a 41% CAGR in the period
139 157 186 199 255 313 374 423 Sep/11 622 2010 560 2009 470 2008 394 20% 14% 18% Auto Finance³ Others²
- 1. Balance of non-earmarked resources (“recursos livres”); 2. Includes payroll, personal credit, credit card installments not financed, credit cards, rural, overdraft, CDC –others, housing credit
and other credit transactions with non-earmarked resources; 3. Includes CDC and Leasing; 4. Includes securitized assets with recourse and FIDCs. Source: Brazilian Central Bank Banco Votorantim
BV Financeira's managed credit portfolio4 (R$B) Sep/11 58.9 48.0 11.0 2010 50.8 41.6 9.2 2009 32.4 26.4 6.0 2008 22.8 20.0 2.8 CAGR 2008-Sep/11 64% 37% 41%
BV expanded the consumer finance business in the post- 2008 crisis, especially after partnership with BB
After the rapid expansion in the post-2008 crisis, BV will favor businesses with higher profitability and lower capital requirement
Auto Finance Others Consumer Finance – BVF growth vs. market
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Banco Votorantim overview Strategy and recent developments New context and challenges Financial highlights
Agenda
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Macro-prudential measures and the international crisis have created new challenges for Brazil’s banking industry
Changes in the banking landscape… …have begun to impose significant challenges to the financial industry, which will endure over the next 12-18 months
New challenges
Macroprudential measures Basel III International crisis
- 1. RWA: Risk-Weighted Assets
Source: Banco Votorantim IR
Increase in capital requirements
- Circ. 3,515: higher spreads don’t compensate for the rise in RWA¹
- Basel III: RWA for tax credits and treatment of sub-debt
- Circ. 3,498: market risk
Economic slowdown, with deceleration in credit expansion
- Consumer Finance particularly affected by Circ. 3,515 (Bacen)
- Lower volume of business transactions (e.g. IB)
Higher levels of delinquency and provisions for loans losses
- Particularly among individuals (consumer credit)
Higher funding costs
- High volatility and risk aversion in international markets
1 2 3 4
The macroprudential measures have particularly affected the consumer finance industry
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In this new regulatory environment, BV and BB have evolved the consumer finance operating model
Adjustments in course
With shareholders’ support, Banco Votorantim has been building solid bases for sustainable growth
- Refinement of BV Financeira’s operating model in
credit asset origination, deepening the partnership with Banco do Brasil
- More conservative position in consumer credit
- Strengthening of credit collection activities
- Gradual increase in the Coverage Ratio
- Continued delivery of integrated financial solutions
for: – Credit; – Structured products; and – Investment banking services
- Clear focus on becoming more relevant for clients, in
line with the approved strategic plan
Ongoing adjustments and initiatives that will further strengthen Banco Votorantim’s position as one of the Brazil’s leading banks
- Increased effectiveness in cost management
- Review capital allocation
- Maintenance of adequate BIS Ratio
Source: Banco Votorantim
Consumer Finance Wholesale Banking Corporate Initiatives – examples
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Banco Votorantim overview Strategy and recent developments New context and challenges Financial highlights
Agenda
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Financial Highlights – 9M11
Financial Highlights - Summary
Liquidity levels remain adequate
BV remains conservative in cash management, besides having a stand-by credit facility with BB. equal to BV’s shareholders’ equity (R$8.7B in Sep/11)
Growing credit portfolio
Managed credit portfolio¹ increased 24.0% from Sep/10, to R$99.4B...
- Middle Market nearly double in 12 months, reaching R$8.8B
- Consumer Finance grew 29.2% from Sep/10, to R$58.9B
Adequate capitalization, with a robust shareholder base
BIS Ratio of 12.7% (13.9% in Jun/11)
- Impacted by Central Bank’s Circ. 3,515, but in line with historical levels of ~13%
Shareholders agree to pursue a 13% BIS Ratio
Growing funding base, with improved profile
Continued expansion in domestic and international long-term funding…
- Local market: funding through Financing Bills reached R$8.1B³ in Sep/11
- International market: issuance of US$1.25B and R$1,0B indexed to IPCA
…with longer average tenor and increased diversification
Credit provisions increased…
Macro-prudential measures and deepening of international crisis have helped decelerate credit expansion and slow down economic growth… …with higher delinquency rates among individuals and increased credit provisios
- 93.9²% of credit portfolio rated between AA – C by Sep/11 (94.8% Jun/11)
...pressing results
Net Interest Margin (NIM) of 5.2% in 9M11 (5.3% in 2010) Net Income of R$455M in the 9M11 (R$743M in 9M10)
- 1. Includes guarantees private securities, securitized assets and FIDCs; 2. Includes securitized assets and FIDCs; 3. Includes R$1.1B of subordinated Financing Bills.
Source: Banco Votorantim
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Financial Highlights – Assets, Loan portfolio and AuM +35% +28% Sep/11 38.5 Sep/10 28.6 2010 31.9 2009 23.2 2008 19.4
Managed credit portfolio¹ (R$B) Total assets (R$B) Assets under management (R$B) Loan portfolio (R$B)
+22% +11% Sep/11 124.4 Sep/10 112.2 2010 107.9 2009 84.9 2008 72.3
- 1. Includes guarantees provided, private securities and securitized assets with recourse; 2. Includes guarantees and private securities
Source: Banco Votorantim
Managed credit portfolio grew 24% in 12 months
AuM reached R$38.5B, a 35% increase on Sep/10
+23% +24% Expanded² Credit Portfolio Securitized assets Sep/11 99.4 82.8 16.6 Sep/10 80.1 69.0 11.2 2010 88.0 74.4 13.5 2009 67.9 61.8 6.1 2008 58.5 54.8 3.6 +21% +22% Sep/11 64.0 Sep/10 52.8 2010 56.8 2009 42.4 2008 38.1
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Credit portfolio growth decelerated to 24% in last 12 months
However, Middle Market segment maintained robust growth, in line with the strategic plan
+30% Corporate Middle Auto finance Other retail² Sep/11 99.4 31.8 8.8 36.0 22.9 Sep/10 80.1 30.1 4.5 29.5 16.1 2010 +24% 88.0 31.3 5.9 32.0 18.8 2009 67.9 33.4 2.1 22.6 9.8 2008 58.4 33.9 1.7 17.1 5.7 CAGR LTM Sep/11 CAGR 09-10 92%
- 6%
176% 42% 6% 97% Securitization (R$B) 6.1 13.5 11.2 16.6 22% 41%
Consolidated managed credit portfolio¹ (R$B)
- 1. Includes guarantees provided, private securities, securitized assets with recourse and FIDCs; 2. Payroll loans, CDC others, Credit Cards and Personal Credit
Source: Banco Votorantim
Financial Highlights – Managed credit portfolio
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Consumer Finance1
Quality of the managed credit portfolio
Banco Votorantim – Consolidated view Wholesale Banking
AA-C D-H Sep/11 93.9% 6.1% Sep/10 96.1% 3.9% 2010 97.4% 2.6% 2009 95.8% 4.2% 2008 97.2% 2.8%
100%
AA-C D-H Sep/11 93.3% 6.7% Sep/10 95.5% 4.5% 2010 97.1% 2.9% 2009 95.0% 5.0% 2008 95.8% 4.2%
100%
AA-C D-H Sep/11 95.3% 4.7% Sep/10 97.7% 2.3% 2010 98.3% 1.7% 2009 97.3% 2.7% 2008 99.0% 1.0% Financial Highlights – Asset Quality
- 1. Managed credit portfolio (Includes credit assignments and FIDCs).
Source: Banco Votorantim
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Higher delinquency rates among individuals in Brazil have pressed BV’s consolidated NPL
0.6 0.9 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 0.5 2.0 1.7 1.4 3.6 Consolidated 1.3 Consumer Finance 4.4 3.3 2.3 1.7 3.1 3.3 3.5 3.5 3.1 2.9 3.2 2.6 2.4 1.4 4.1 0.8 1.1 Wholesale 2.0 2.7
- 1. Considers securitized assets with recourse and FIDCs; 2. Past-due over 90 days – Central Bank criteria (Res. 2,682).
Source: Banco Votorantim
Non-performing loans¹ – NPLs² (%)
Consumer Finance/ Total managed¹ portfolio (%) 45% 59% Financial Highlights – NPL
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Credit provisions increased to 3.7% of the loan portfolio…
Coverage ratio of 104% in Sep/11 (including securitized assets and FIDCs)
Financial Highlights – Credit Provisions
Note: indicators considers securitized assets with recourse and FIDC; Dec-10 indicators benefited from the completion of a onetime securitization transaction of overdue loans (FIDC NP) with the market, which had no impact on net profit. Dec-1o credit provisions/loan portfolio and coverage ration would have been, respectively, 2.4% and 119% without such transaction
- 1. Credit provisions / non-performing loans (past-due over 90 days)
Source: Banco Votorantim
Allowance for loan losses / managed loan portfolio (%) Coverage ratio¹
104% 110% 139% 104% 115% 2008 Sep/11 2009 Sep/10 2010 Sep/10 2.6% 2010 1.9% 2009 2008 2.0% 3.0% Sep/11 3.7%
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2009 Sep/11 2010 37.2% 34.1% 36.9% 34.3% 2008
- 1. Gross financial margin (before allowance for loan losses), divided by average interest-earning assets 2. Efficiency Ratio: ratio, expressed as a percentage, of (a) the sum of personnel
expenses and other administrative expenses and (b) the sum of gross income from financial operations before allowance for loan losses, Income from banking fees and rendered services, Other operating income, Other operating expense and Fiscal hedge adjustment; 3. Indicator was revised from 6.3% to 5.3% due to reclassifications in the 2010 Income Statement
2009 9M11 7.1% 2010 12.7% 11.9% 2008 14.6% 455 743 802 902 9M10 9M11 2010 2008 1,015 2009
- 38.7%
5.2% 2008 6.9% 2010 2009 5.3%³ 9M11 5.9% Financial Highlights – Performance
Net income (R$M) Return on average equity – ROAE (%) Net Interest Margin – NIM (%)¹ Cost to income ratio – Last 12 months (%)²
… and have impacted profitability in 2011
Net Income of R$455M in the 9M11
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Continued growth of long term domestic and international funding sources, enhancing the funding profile
… and increased international funding Funding grew 17.9% from 4Q10… …with steady diversification of local funding sources…
Financial Highlights – Funding Issuance of securities² Sub debt Loans and others¹ Securitization Sep/11 95.4 25.0 20.6 17.9 6.7 8.6 16.6 2010 80.9 23.6 17.7 10.3 6.9 8.8 13.5 2009 62.3 24.5 14.2 +17.9% 4.4 6.9 6.1 2008 49.6 18.9 6.3 6.3 2.9 8.7 3.6 Deposits Repos 9.2 Securitization Financing bills³ (LFs) Sep/11 21.7 13.5 8.1 Dec/10 14.0 11.1 2.9 Eurobonds Sub Debt Loans abroad Sep/11 13.9 6.4 2.2 5.4 Dec/10 9.0 2.9 1.9 4.2
- 1. Includes Box of options and NCE repo; 2. Includes Eurobonds, Debentures, LFs and LCA ; 3.Includes subordinated financing bills (LFs)
Note: International funding is 100% swapped to BRL; Onlending and repos with government securities are not considered funding
Funding evolution (R$B) R$B R$B Securitization to BB (R$B) 9.4 12.5 International / Total funding (%) 11% 15%
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BV maintains a solid capital base
Supported by a robust shareholder base: Banco do Brasil and Votorantim Group
12.7% 8.5% 4.2% 2010 13.1% 9.3% 3.8% 2009 13.0% 10.1% 2.9% 2008 Sep/11 Pro- forma¹ 14.1% 9.5% 4.7% Sep/11 13.5% 11.0% 2.5% Sep/11 8,718 2010 8,389 2009 7,145 2008 6,362
Tier I Tier II
Financial Highlights – Capitalization and Liquidity
Shareholders’ equity (R$M) BIS ratio (%)
Additionally, Banco Votorantim has a stand-by credit facility from BB equal to its shareholders’ equity
- 1. Considers the effects of the Brazilian Central Bank Circular 3,563, published in November 11th 2011
Source: Banco Votorantim.
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Ratings
RATING AGENCIES Global Scale National Scale Long Term Short Term Long Term Short Term Long Term Short Term Fitch Ratings Local Currency Foreign Currency National BBB- F3 BBB- F3 AA+(bra) F1+(bra) Standard & Poor's Local Currency Foreign Currency National BB+ B BB+ B brAA+ brA-1 Moody's Local Currency Deposits Foreign Currency Deposits National A3 P-2 Baa2 P-2 Aaa.br BR-1
Banco Votorantim’s current ratings
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Banco Votorantim overview Strategy and recent developments New context and challenges Financial highlights Appendix
Agenda
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49.99% (ON) 50.01% (PN) 50% Total 50.01% (ON) 49.99% (PN) 50% Total
Banco do Brasil Equity sale (R$ 3.0 B) 1 Equity issuance (R$ 1.2 B) 2
Voting shares (ON) R$ New issue Non-voting shares (PN)
Note: Voting shares (ON): VF with 33,356,791,208 and BB with 33,356,791,198 shares. Non-voting shares (PN): VF with 7,412,620,267 and BB with 7,412,620,277 shares.
Dividend distribution (R$ 0.75 B)
BV Financeira BV Leasing Asset Management (VAM) Brokerage Other businesses
50 – 50 total capital partnership
R$ R$ Strategic partnership - transaction
BB acquired 50% of Banco Votorantim’s total capital in 2009
Details on the transaction
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49.7 47.3 28.5 29.9 Sep 11 Mar 11 Jun 11 Dec 10 44.6 39.7 184.7 43.7 44.0 170.7 49.0 44.1 29.8 25.2 186.7 174.6 44.4 25.4 Dec 09 40.3 159.1
Average market interest rates (% p.y.) – Bacen²
7.9 4.4 3.0 Sep 11 Dec 10 6.8 5.7 9.4 10.1 5.0 4.2 4.4 2.5 Jun 11 Sep 10 6.4 6.0 8.5 9.3 4.7 4.3 3.8 3.1 Mar 11 6.0 Average Overdraft Personal loans Auto Finance Auto loans Personal loans Average Overdraft
Macro-prudential measures Basel III International crisis Changes in banking landscape… … resulted in an increase in interest rates for individuals... ...leading to higher delinquency rates
Bacen² – Average market delinquency¹ for individuals (%)
- 1. Credit in arrears over 90 days; 2. Market data from the Brazilian Central Bank
Source: Bacen (Brazilian Central Bank); Banco Votorantim
Macro-prudential measures and higher interest rates have contributed to higher delinquency among individuals
New context and challenges