Earnings Presentation 1 st Quarter, 2014 Disclaimer: This presentation may include references and statements on expectations, planned synergies, growth estimates, projections of results, and future strategies for Banco Votorantim, it’s associated and affiliated companies, and subsidiaries. Although these references and statements reflect the management’s belief, they also involve imprecision and risks that are highly difficult to be foreseen. Consequently, they may conduct to different results from those anticipated and discussed here. These expectations are highly dependent on market conditions, on Brazil’s economic and banking system performances, as well as on international market conditions. Banco Votorantim is not responsible for bringing up to date any estimate in this presentation.
Executive summary Net income of R$ 152M in 1Q14 Second consecutive quarter of positive results, maintaining the trajectory of gradual improvement 1Q14 Highlights Net income of R$ 152M, exceeding both 4Q13 (R$ 121M) and 1Q13 (R$-278M) results R$ 152M net income In 2014, Banco Votorantim shall consolidate the return to profitability Consistent Net Interest Income (NII) increased 1.7% vs. 1Q13, totaling R$ 1,142M, despite 6.7% decrease in the expanded credit portfolio in the last 12 months (focus on profitability) revenue Net Interest Margin¹ (NIM) of 4.9% p.y. – improvement of 0.7 p.p. on 1Q13 generation 90-day NPL ratio of 6.2% in Mar/14, practically stable compared to Mar/13 Maintained • Excluding a specific Wholesale case, NPL 90 would have been 5.2%, 0.1 p.p. above Dec/13 asset quality BV has been originating quality auto finance portfolios for nearly 30 months Expenses with credit provisions² reduced 43.6% vs. 4Q13 and 19.7% over 1Q13, totaling R$ 714M Reduced credit • Better quality vintages reached 77% of the managed auto finance loan portfolio (57% in Mar/13) provisions 90-day coverage ratio reached 124% in Mar/14 (Mar/13: 106%; Sept/11³: 78%) Administrative and personnel expenses reduced 9.1% over 1Q13 (vs. 6.2% inflation – IPCA) Cost base under control Efficiency Ratio for the last 12 months reached 40.7% (Dec/13: 43.6%; Mar/13: 51.5%) 1. Ratio between Net Interest Income and Average Interest-Earning Assets; 2. Net of income from recovery of written-off loans; includes ALL expenses of the portfolios assigned with recourse; 3. Beginning of the restructuring process 2
Agenda Banco Votorantim – Overview 1Q14 Results Annexes 3
Banco Votorantim – Overview Banco Votorantim is one of the leading banks in Brazil “Top 10” in total assets, with robust and committed shareholders ( Votorantim Group and BB) Banco Votorantim is one of the largest Ownership Structure privately- held Brazilian banks in total assets… Votorantim Group Banco do Brasil 10 largest banks in Dec/13 – Total Assets (R$B)¹ Total: 50.00% Total: 50.00% Voting: 50.01% Voting: 49.99% Shareholder Non-voting: 49.99% Non-voting: 50.01% Banco do Brasil 1,219 50% Total Itaú 1,027 CEF 858 Bradesco 777 BNDES 763 Santander 495 HSBC 160 State-owned Safra 130 Foreign BTG Pactual 116 Governance Structure National privately-held 10 th 106 Votorantim Equal Statutory representation ...and also in terms of loan portfolio of each shareholder Fiscal Council Board of 10 largest banks in Dec/13 – Loan Portfolio² (R$B)¹ Directors Audit Finance Banco do Brasil 583 Committee Committee CEF 485 351 Itaú Compensation Products & 291 Bradesco & HR Marketing 281 BNDES Committee Committee 195 Santander Executive Committee 7 th Votorantim 55 State-owned 54 HSBC Foreign Operating Committes & Safra 46 Commissions National privately-held Banrisul 25 1. Mar/14 information unavailable by the preparation of this presentation; 2. On- balance portfolio according to Bacen’s Res. 2, 682 4
Strategy Diversified business portfolio Focus on profitability and on increasing operating efficiency and synergies with BB Off-balance portfolio¹ R$ 3.6B Assigned to BB Unification of the CIB and Middle Market structures, R$ 0.5B Assigned to FIDCs with efficiency gains R$ 69.2B Wholesale R$ 32.7B Consumer Finance Wealth Mgmt. R$ 36.5B Corporate & Auto Other Wealth IB (CIB) Finance Businesses Mgmt. & BVEP Asset: 10 th largest in the To be the best wholesale To originate portfolios with In Payroll loans, focus on bank to our target clients, quality, scale and market, with innovative INSS (retirees and with: profitability products pensioners) and refinancing • Long-term relationships To focus on used auto R$ 40.6B AuM³ Pillars To expand synergic finance (multi-brand dealers) • Focus on capturing businesses (credit cards, Increase synergies with BB To advance in new auto synergies in the origination insurance sales) Private: focus on estate finance origination in and structuring of integrated To explore new opportunities management through partnership with BB (new financial solutions together with BB (e.g. custom-made solutions car dealers) • Efficient management of syndicated loans, real BVEP: investments in real capital allocation and estate, “ Mais BB” ) estate projects expenses R$ 30.0B R$ 6.5B + Banco do Brasil Votorantim Group Shareholders Expanded credit portfolio² 1. Securitization with substantial risk retention before entry in force of Bacen’s Res. 3,533; 2. Includes guarantees provided and private securities 5
Wholesale Businesses Wholesale: continued focus on return on capital and on strengthening the product portfolio Wholesale Businesses Corporate & Investment Bank (CIB) Highlights Expanded credit portfolio¹ (R$B) Disciplined approach to capital allocation • Credit selectivity • Focus on products with low capital consumption (FX, IB) ∆Mar14 • Accurate asset pricing /Dec13 36.5 35.1 • Active management of the credit portfolio -6.8% 32.7 • Reduced exposure to the “lower middle market” Medium 9.2 7.6 companies 6.9 -9.4% Unification of the CIB and Middle Market structures, with gains in operating efficiency Increased relevance of BV to its target clients • Strengthening the portfolio of products Large 27.3 27.5 25.8 -6.1% companies • Enhancing international distribution (NY and London) • Agile relationships, with long-term vision and industry knowledge Focus on capturing synergies in the origination and structuring of Credit, Capital Markets, Derivatives and FX Mar/13 Dec/13 Mar/14 Guarantees Thorough monitoring of key credits in “financial 12.0 11.1 9.9 provided distress”, with focus on restructuring 1. Includes guarantees provided and private securities 6
Consumer Finance Businesses Consumer Finance: intensified focus on used auto finance and INSS payroll loans (retirees and pensioners) Consumer Finance Businesses Auto Finance Payroll Loans Managed loan portfolio (R$B) Managed loan portfolio (R$B) -2.1% ∆Mar14 ∆Mar14 37.2 9.5 /Dec13 33.7 33.0 /Dec13 Off- Off- 7.3 7.6 2.1 3.8 -20.3% 3.1 7.1 balance balance 1.3 -17.6% 1.1 On- On- 29.9 29.9 30.0 0.3% 7.4 -4.4% balance 6.3 balance 6.0 Mar/13 Dec/13 Mar/14 Mar/13 Dec/13 Mar/14 Used/ INSS/ 71% 76% 57% 63% Total¹ Total Among market leaders in auto financing 7 th largest player in the payroll loan market³ Operates as an extension of Banco do Brasil in auto Focus on INSS (retirees and pensioners) finance outside the branch network Focus on refinancing (vs. growth) Continuous improvement of credit processes Selective operation in private and public payroll loans • 72%² automated credit decisions in Mar/14 (Dec/13: 4,292 Resolution (May/14): Credit portability 65%; Jan/12: 28%) 4,294 Resolution (Jan/15): Deferred Cobans 4 payment 1. Only on-balance loan portfolio; 2. Refers to light vehicles; 3. Banco Votorantim estimate; 4. Banking correspondents 7
Wealth Management Businesses Wealth Management: Asset with focus on high value-added products and Private with focus on estate management Wealth Management Businesses Wealth Management & Services Highlights Asset Management Assets under Management¹ (R$B) • Focus on high value-added structured products • Top 10 in ANBIMA’s ranking of managers +3.2% • Continuous expansion of synergies with BB – volume of partnership funds reached R$ 4.3B • Partnership with Allianz Global Investors in order to better serve institutional investors Private Bank 41.1 40.6 39.4 • Focus on High and Ultra High clients (AuM > R$ 25M) • Integrated estate management, through differentiated and custom-made solutions • ISO 9001:08 certification covering activities of Relationship, Estate Management and Advisory BVEP – BV Empreendimentos e Participações Mar/13 Dec/13 Mar/14 • Focus on real estate, residential, commercial ANBIMA² 9 th 10 th 10 th and logistic projects ranking • Operates in SP, RJ, MG and DF 1. Includes onshore funds ( ANBIMA criteria) and private clients resources; 2. Ranking of Managers 8
Agenda Banco Votorantim – Overview 1Q14 Results Annexes 9
Consolidated results Net Income of R$152M in 1Q14 Second consecutive quarter of positive results, maintaining the trajectory of gradual improvement Net Income evolution (R$M) 385 +26% 156 152 121 -85 -159 -196 -278 -428 -459 -505 -596 -643 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 -187 -1,988 -512 Focus of 2014 is on consolidating profitability. In 2015, the focus will be on increasing ROE. 10
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