DisclaimerThis presentation may contain references and statements representing futureexpectations, plans of growth and future strategies of BI&P. These references andstatements are based on the Bank’s assumptions and analysis and reflect themanagement’s beliefs, according to their experience, to the economic environmentand to predictable market conditions.As there may be various factors out of the Bank’s control, there may be significantdifferences between the real results and the expectations and declarations herewitheventually anticipated. Those risks and uncertainties include, but are not limited toour ability to perceive the dimension of the Brazilian and global economic aspect,banking development, financial market conditions, competitive, government andtechnological aspects that may influence both the operations of BI&P as the marketand its products.Therefore, we recommend the reading of the documents and financial statementsavailable at the CVM website (www.cvm.gov.br) and at our Investor Relations page inthe internet (www.bip.b.br/ir) and the making of your own appraisal.2
Highlights3 This quarter we completed a cycle that has begun in April 2011 with the entry of a newmanagement team and new shareholders, including the private equity fund WarburgPincus. Today, all the teams, processes and strategies are fully operational. During this period, we recycled our loan portfolio by acquiring new clients and throughcredit exit from poor quality loans. To conclude this first cycle and to ensure that the future results of the Bank are notcontaminated, in 1Q13 we decided to strengthen the allowance for loan losses (ALL). Ofthe total ALL expenses of R$133.4 million in the quarter, R$126.5 million pertain exclusivelyto the loans granted before April 2011. Reflecting the more conservative position of the current management, our allowance forloan losses is enough to cover 96.4% of loans classified between D and H in March 2013(47.3% in December 2012). As a result of this allowance, we recorded a loss of R$91.4 million in the 1Q13. We announced a capital increase of up to R$92 million, of which the private equity fundWarburg Pincus and the controlling shareholders have already committed to subscribe toR$82 million. We also announced the closing of the acquisition process of Voga Empreendimentos eParticipações Ltda., which is already fully integrated to BI&P activities.
The cycle of changes started in April 2011 wascompleted...4Broad change in the Management team and the sales forceRepositioning of our target market to focus on biggercompanies with lower riskReconstruction of the credit portfolioMultiple product offering and cross selling to customer baseAttraction of an IB and fixe income teamFunding Diversification & Cost Reduction
Complementary ALL and Capital Increase Allowance for loan losses in 1Q13 of R$133 million• R$126 million related to loans granted before April 2011(R$110 million as additional allowance for loan losses)• ALL enough to cover 96.4% of loans rated from D to H (47.3% in 4Q12) Capital Increase up to R$92 million in Tier I• R$82 million: Warburg Pincus and controlling shareholders Reinforces the confidence of all the partners in BI&P project Maintained the same equity level of December 2012 In case of the capital increase occurred in the end of March 2013:51Q13 1Q13*Index Basel 14.2% 16.8%* In case of the capital increase occurred in the end of 1Q13.
2,759 2,807 2,991 3,068 3,0481Q12 2Q12 3Q12 4Q12 1Q13R$millionLoans and Financing in RealTrade FinanceGuarantees Issued (L/G and L/C)Agricultural Bonds (CPR, CDA/WA and CDCA)Private Credit Bonds (PN and Debentures)-0.7%Expanded Credit PortfolioWe achieved a better balance between Middle Market and Corporatesegments...6
Client Segmentation...Middle Market increases its share in the credit portfolio...739%47%59%51%2%1%4Q121Q13Middle Market Corporate OtherAverage exposure perclient | R$ million1Q13 4Q12Corporate 5.0 5.2Middle Market 3.0 2.41,3961,422 1,2531,2001,4451Q12 2Q12 3Q12 4Q12 1Q13R$millionMiddle Market1,3091,3341,682 1,8201,5671Q12 2Q12 3Q12 4Q12 1Q13R$millionCorporateNote: Other Credits includes Consumer Credit Vehicles, Acquired Loans and Non-Operating Asset Sales Financing.Migration of clients from Middle to Corporate = ~R$200mn as of June 30, 2012 and ~R$260mn as of Sept. 30, 2012Annual revenues from R$40mn to R$400mn Annual revenues of between R$400mn and R$2bn
Expanded Credit Portfolio Development...maintaining the focus on higher quality assets...8646517687 7285891Q12 2Q12 3Q12 4Q12 1Q13R$millionNew Transactions3,068 3,048589(512)(89) (8)4Q12 AmortizedCreditsCreditExitsWrite offs NewOperations1Q13R$million99,1% of the newtransactions in thelast 12 months areclassified betweenAA and B.
Loans45.8%CreditAssignments10.9%Confirming0.8%DiscountReceivables0.3%NCE0.3%CCE0.4%CCBI0.6%Expanded Credit Portfolio...and increasing the new products share in the porfolio...9Loans &Discounts inReal59%TradeFinance16%BNDESOnlendings9%GuaranteesIssued6% AgriculturalBonds8%PrivateCredit Bonds0.9%Other1%1Q12Loans &Discounts inReal56%TradeFinance14%BNDESOnlendings10%GuaranteesIssued6% AgriculturalBonds12%PrivateCredit Bonds1.3%Other1%1Q13Loans32.7%CreditAssignments13.2%Confirming0.0%DiscountReceivables0.2%NCE5.2%CCE2.8%CCBI1.6%
315371529 4824031Q12 2Q12 3Q12 4Q12 1Q13R$millionLarge Corporate Ecosystem*Receivables drawn on Clients Receivables from Clients230 267 307 327 3711Q12 2Q12 3Q12 4Q12 1Q13R$millionAgricultural BondsCPR Warrant (CDA/WA) CDCADeveloping Franchise Value...in specific niches...10416094 92 901Q12 2Q12 3Q12 4Q12 1Q13R$millionFixed Income BondsDebentures Real Estate Credit Bank Notes* Acquisition and/or assignment of receivables originated by our customers andTransactions with receivables of suppliers drawn on our clients (Confirming).The expertise development in certainniches and structures that createcompetitive advantages allowsprofitability increase through fees.
1.4%1.6%1.7%1.7%1.8%2.5%2.9%3.0%3.0%3.0%3.1%3.3%3.9%4.2%5.7%8.0%13.0%13.4%22.8%Financial institutionsPower Gen. & Distr.Machinery and EquipmentsElectronicsFinancial ServicesEducationAdvertising & PublishingCommerceOil & BiofuelMetal IndustryTextile, App. & LeatherPulp & PaperChemical & PharmaTransport. & Log.AutomotiveOther*ConstructionFood & BeverageAgribusiness1Q131.4%1.5%1.9%2.1%2.6%2.9%3.2%3.3%3.5%3.8%3.9%4.2%4.7%5.5%9.4%13.9%14.7%17.6%IndividualsCommerceAdvertising & PublishingFinancial ServicesOil & BiofuelEducationFinancial institutionsPower Gen. & Distr.Metal IndustryChemical & PharmaTransport. & Log.Textile, App. & LeatherPulp & PaperAutomotiveOther*Food & BeverageConstructionAgribusiness1Q12Credit Portfolio...with relevant exposure in agribusiness...11 * Other industries with less than 1.4% of share.
Credit Portfolio...and short term maturity profile maintained.121Q12 1Q13Top 1016%11 - 60largest33%61 - 160largest26%Other25%Client ConcentrationTop 1016%11 - 60largest32%61 - 160largest27%Other25%Client ConcentrationUp to 90days40%91 to 180days18%181 to 360days16%+360 days26%MaturityUp to 90days36%91 to 180days19%181 to 360days16%+360 days29%Maturity
3.2% 2.8% 3.0%1.5%2.3%2.7% 2.6%1.8%1.2%2.2%1Q12 2Q12 3Q12 4Q12 1Q13NPL / Credit PortfolioNPL 60 days NPL 90 daysCredit Portfolio Quality97.8% of loans granted in the quarter were rated from AA to B13 Credits rated between D and H totaledR$228.3 million at the end of 1Q13:− R$169.1 million (74% of Credit Portfoliobetween D and H) in normal payment course;− Only R$59.2 million overdue +60 days;− 96.4% covered (46.7% in the 4Q12).4%2%2%39%42%40%33%35%36%17%13%13%8%8%9%1Q124Q121Q13AA A B C D - H78.2%79.1%75.2%96.4% of creditsrated between D-Hcovered
2,736 2,7552,936 2,9993,1701Q12 2Q12 3Q12 4Q12 1Q13R$millionin Local Currency in Foreign CurrencyFundingProduct mix helps with cost reduction14Timedeposits(CDB)30%InsuredTimeDeposits(DPGE)29%LCA11%LF and LCI0%Interbank &DemandDeposits6%Onlendings9%ForeignBorrowings15%1Q12Timedeposits(CDB)26%InsuredTimeDeposits(DPGE)29%LCA15%LF and LCI2%Interbank &DemandDeposits5%Onlendings10%ForeignBorrowings13%1Q13LCA: Agribusiness Letters of Credit; LF: Bank Notes; LCI: Real Estate Letters of Credit
Operating Performance and Profitability1567.6% 60.8% 69.7% 78.4%155.3%1Q12 2Q12 3Q12 4Q12 1Q13Efficiency Ratio*6.6%7.7%6.1% 5.9%2.7%6.7%5.5% 5.8% 5.3%5.4%1Q12 2Q12 3Q12 4Q12 1Q13Net Interest Margin (NIM)NIM(a)NIM(a) w/o effects of hedge accounting and discounts5.02.4 3.1 3.61Q12 2Q12 3Q12 4Q12 1Q13R$millionNet Profit3.51.7 2.2 2.51Q12 2Q12 3Q12 4Q12 1Q13Return on Average Equity (ROAE) %-91,4n.r.n.r.= not representative* Details about the calculation are available in the 1Q13 Earnings Release at www.bip.b.br/ir .
590.5 582.4 587.6 587.2498.4590.41Q12 2Q12 3Q12 4Q12 1Q13 1Q13*R$millionShareholders’ Equity17.5% 17.0% 15.8% 14.9% 14.2%16.9%1Q12 2Q12 3Q12 4Q12 1Q13 1Q13*Basel Index (Tier I)4.7x 4.8x 5.1x 5.2x6.1x5.2x1Q12 2Q12 3Q12 4Q12 1Q13 1Q13*LeverageExpanded Credit Portfolio/ EquityCapital Structure and Ratings16Agency RatingLastReportStandard& Poor’sGlobal: BB/Negative/ BNational: brA+/Negative/brA-1Mar/13Moody’sGlobal: Ba3/Stable/Not PrimeNational: A2.br/Stable/BR-2Feb/13Fitch Ratings National: BBB/Stable/F3 Nov/12RiskBankIndex: 10.38Low Risk Short TermApr/13* In case of the capital increase occurred in the end of 1Q13.
17Achieve economies of scale through Credit Portfolio growthPromote IB activities – Fixed Income and M&AIncrease product and derivative desk performanceNew Joint Ventures to improve assets generationNew distribution plataforms of our productsContinuous review of processes, systems and controls aiming reduction costsStrategy for 2013