DisclaimerThis presentation may contain references and statements representing futureexpectations, plans of growth and future strategies of BI&P.These references and statements are based on the Bank’s assumptions andanalysis and reflect the management’s beliefs, according to their experience, tothe economic environment and to predictable market conditions.As there may be various factors out of the Bank’s control, there may besignificant differences between the real results and the expectations anddeclarations herewith eventually anticipated. Those risks and uncertaintiesinclude, but are not limited to our ability to perceive the dimension of theBrazilian and global economic aspect, banking development, financial marketconditions, competitive, government and technological aspects that mayinfluence both the operations of BI&P as the market and its products.Therefore, we recommend the reading of the documents and financialstatements available at the CVM website (www.cvm.gov.br) and at our InvestorRelations page in the internet (www.indusval.com.br/ir) and the making of yourown appraisal. 1
New Stage in our 43-year history• 1967 – Brokerage firm foundation• 1991 – Authorized to operate as a Bank• 2003 – Merger with Banco Multistock• 2004 – Sale of Consumer Credit operation• 2006 – Opening of the first 4 branches• 2007 – IPO and opening of 6 new branches• 2010 – Strategic review• 2011 – Banco Indusval & Partners
The New Bank• R$ 201 million Tier I capital increase• New Partners: Warburg Pincus & Controllers of Sertrading• Management team strenghthening• Acquisition of a 17.7% stake in Sertrading• Acquisition of Serglobal Cereais• 5-year Operating Agreement with Sertrading with right of first refusal on the acquisition of receivables• Credit line from JP Morgan and the possibility of a future minority stake in our capital
Well-capitalized Bank, Structured for a new growth cycle To be an innovative bank with excellence in corporate credit and deep understanding of our clients’ businesses and industries they operate,Vision becoming also one of the leading players of the high-growth Brazilian corporate bond market. Board of Directors: well-known professionals in their areas of expertise, 4Management independent members. Executive Board: one of the best management teams in the market. Goals and action plans were defined in a participative way, involving moreGoals & than 150 people from all areas, aiming at a quality leap and theAction Plans development of new products and services to serve as the basis for our growth and profitability in the medium and long run. Development of new products and services to expand client offer, alsoProducts creating franchise value in certain productive chains, adding-up recurring fee income. Ethics, Credibility, Partnership, Excellence, Innovation, Teamwork, andValues Result oriented.
Expanded Credit Portfolio Expanded Credit Portfolio Breakdown 1,994 2,109 1,763 Loans & R$ milion Discounts 67% Agribusiness Notes (CPRs) 2Q10 1Q11 2Q11 2% Guarantees and L/Cs 3% Expanded Credit Portfolio: – Loans, financings and onlendings in Real; Trade Finance – Trade Finance; 20% BNDES Other Onlendings – Guarantees and L/Cs issued; 1% 7% – Agricultural Notes (CPR) from March 2011 with the acquisition of Serglobal. Growth of 6% in the quarter and 20% in 12 months.
Credit PortfolioLoans, Financing and Trade Finance By Economic Activity By Type of Customer Other Individual Other 22% 7% 4% Corporate 16% Financial Interm. 5% Trade 10% Industry Middle 56% Market 80% By Customer Concentration By Maturity Other 10 largest +360 23% 20% days up to 90 30% days 36% 61 - 160 11 - 60 24% 33% 181 to 360 13% 91 to 180 21%
Credit PortfolioSignificant presence of Agribusiness related activities 2% 2% 2% 2% 2% 3% Food & Beverage 3% 9% Agribusiness 3% Civil Construction Financial Institutions 3% Automotive 3% Textile, Apparel and Leather Transportation & Logistics Education 4% 18% Metal Industry Power Generation & Distribution 4% Chemical & Pharmaceutical Oil and Biof uel Pulp & Paper 5% Individuals Financial Services Wood & Furniture Retail & Wholesale 7% Other Industries 16% 11%
Asset Quality Increased Default Index within the expected Risk Category Collaterals 7.2% - Normal Payments AA 4.2% Vehicles 6.8% - NPL 60 days A 3% Real State Aval PN 31.5% 8% D-H 25% 14.1% Securities 3% Other Monitored 2% Pledge 7% C 22.1% Pledge/ B Receivables Lien 28.2% 47% 5% NPL(*) / Total Loans (%) Allowance for Loan Losses(*) Total outstanding amount of contracts with any installment overdue above 60 days 6.8 212.6 6.1 196.6 R$ million 2.6 107.8 2Q10 1Q11 2Q11 2Q10 1Q11 2Q11 Provisioning Coverage = 9.8% of Loan Portfolio and 156% of NPL 90 days
Funding High liquidity, Stable funding volume 2,247 2,230 2,031 1,881 1,881 1,903 1,789 1,772 1,793 1,732 1,600 1,556 1,488 1,233 1,040 868 836R$ million 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 In Local Currency (Real) in Foreign Currency
Funding sources diversification for cost reduction Total Funding Funding Breakdown Local Onlendings 7% Foreign Time Borrowings Deposits 2,247 2,230 19% 30% 1,881 R$ million Interbank Deposits 3% Demand Deposits 2Q10 1Q11 2Q11 3% ALC & BN(*) DPGE(*) 6% 32% Funding kept stable due to cash surplus; CD and DPGEs represent 62% of funding from 67% in March/2011. Replacement of sources and broader depositor base to reduce cost of local Foreign loans grew 18% in the quarter and funding; increased share in total funding from 16% to 19%: Average deposit tenors increased by 39 – Increased correspondent bank lines to finance days to 571 days to mature foreign trade; (DPGE, CDs, Interbank, ALCs and BNs). – Disbursement of J. P. Morgan s credit line. (*) DPGE – Time Deposits bearing Special Insurance from FGC; ALC – Agribusiness Letters of Credit; BN – Bank Notes
Free Cash Liquidity being adjusted with loan portfolio growth 1,027 923 Basel index of 21.6% allows healthy 696 and selective credit portfolio growth, adjusting the cash surplus . R$ million 2Q10 1Q11 2Q11Free Cash (Cash + Liquid Fin. Assets + Securities + Derivatives) (-) (Open Market Funds + Derivatives) = 56% of Total Deposits 163% of Shareholders’ Equity
Financial Intermediation Income Slight increase 2Q11 Credit 245 44% 225 IFD 5% 118 127 110R$ million FX 5% Tradable Sec. 46% 2Q10 1Q11 2Q11 1H10 1H11 1H11 • As expected, aging of default loans in the Credit 51% portfolio impacts credit operations revenues. • Increased income from tradable securities has equivalent impact in intermediation Tradable Sec. expenses for higher average volumes and FX 43% the Selic interest rate. 6% DFI: Derivative Financial Instruments
Financial Intermediation Expenses Influenced by higher average funding balances and ALL 270 2Q11 Borrow, Assign, 180 Onlend 156 4% 91 Loan Loss 77R$ million Open Market Allow 94% 2% 2Q10 1Q11 2Q11 1H10 1H11 1H11 Loan Loss Allowances Loan Loss Allow 58% Loan Loss Allowances booked in the 1Q11 cover the forecasted increase in NPL by the aging of delayed payment portfolio. Borrow, Open Market Assign, 38% Onlend 4%
Gross Result & Interest Margin Reflect excess cash carry-over and non-performing loans 8.5% 8.5% 7.9% 68 36 5.9%R$ million 33 7.0% 6.8% 5.2% 6.5% 4.6% 4Q10 1Q11 2Q11 1H10 1H11 NIM NIM(a) 3.8% -25 2Q10 3Q10 4Q10 1Q11 2Q11 -61 Financial Margin reflects the cash surplus carry-over and the impact of default on revenues from credit operations. The credit portfolio growth resumption, with consequent decline in surplus cash, will have a positive effect on margins by increasing revenues from credit operations and reducing the surplus carry-over costs. NIM(a) net interest margin adjusted by FX effects on financial assets and by deducting the balance of repos from the average interest-bearing assets.
Stable Operating Expenses in the last 4 quarters Recurring Operating Expenses Recurring Efficiency Ratio In % 75.9% 74.1% 70.0 72.3% 59.9 57.5% 58.8% 35.1 34.9 29.4 S&P ModelR$ million 4Q10 1Q11 2Q11 1H10 1H11 4Q10 1Q11 2Q11 1H10 1H11 Compared to the previous year, operating expenses were raised basically by: – BRL appreciation on investments abroad; and – administrative expenses, primarily related to IT and notary, collection, law firms and consultancy expenses, not related to the reorganization project. Non-recurring expenses = R$ 1.2 million in 2Q11 and R$ 3.9 million in the semester, related to the reorganization of the company. Efficiency ratio reflects the lower financial intermediation result.
ProfitabilityReflecting Loan Loss Allowance and conservative liquidity strategies Net Profit (Loss) • Strengthening in provisions for Loan Loss Allowances with R$ million 15.6 8.3 5.1 expenses of R$ 103.6 million in the semester. 2Q10 1Q11 2Q11 1H10 1H11 • Free Cash close to R$ 1 billion. • Non-recurring expenses of approx. R$ 4 million, resulting from the Bank’s reorganization -49.4 to foster the growth cycle. -54.5
Capital Distribution and Free Float Individuals Corporate 3% 1% Controlling Group Foreign 32% Investors 30% Management 6% Treasury Institutional 1% Investors Families 14% 13% Capital Distribution on June 30. 2011 Class # of Shares Controlling Group Management Treasury Free Float % S h Common 27.000.000 17.215.278 2.395.619 - 7.389.103 27.4% a r Preferred 14.212.984 497.578 116.448 746.853 12.852.105 90.4% e s SUB-TOTAL 41.212.984 17.712.856 2.512.067 746.853 20.241.208 49.1% R e Common 9.945.649 2.282.607 961.956 - 6.701.086 - c e Preferred 11.947.060 27.811 211.937 - 11.707.312 - i p t SUB-TOTAL 21.892.709 2.310.418 1.173.893 - 18.408.398 - TOTAL 63.105.693 20.023.274 3.685.960 746.853 38.649.606 -
Shareholder Remuneration Indusval & Partners has maintained the practice of paying quarterly Interest on Equity in anticipation for the annual dividend 27.0 24.5 25.1 6.7 6.4 6.2 15.9 6.6 6.5 6.3 6.1 10.2 9.5 6.9 2.2 6.6 6.3 5.1 R$ million 2.4 5.3 2.7 2.3 6.8 6.0 6.3 2.8 4.2 2.3 2006 2007 2008 2009 2010 2011 Remuneration per share R$ 0.3424 R$ 0.4164 R$ 0.5945 R$ 0.6370 R$ 0.6098 R$ 0.2357
Investor RelationsContact Information Katia Moroni Banco Indusval S/A IRO Rua Boa Vista. 356 – 7º andar 01014-000- São Paulo – SP Phone: (55 11) 3315-6923 Brasil E-mail: email@example.com Maria Angela R. Valente IR website: Head of IR www.indusval.com.br/ri Phone: (55 11) 3315-6821 E-mail: firstname.lastname@example.org