BI&P- Indusval - 2Q13 Earnings Release Report

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  • 1. 1/21 Announcement of merger with Banco Intercap S.A. and conclusion of acquisition of Voga (investment Banking) 5.9% Growth of Expanded Credit Portfolio with continuous improvement in quality (85.1% between AA and B) and ALL expenses in line with the conservative policy adopted by Banco BI&P BI&P - Banco Indusval & Partners is a commercial bank with 45 years of experience in the financial market, focusing on local and foreign currency, fixed income and corporate finance for companies. BI&P relies on a network of 10 branches strategically located in economically relevant Brazilian regions, including an offshore branch in Cayman Islands, its brokerage firm operating at the São Paulo Stock, Commodities and Futures Exchange - BM&FBOVESPA and Serglobal Cereais, acquired in April 2011, which originates agricultural bonds. Highlights  In May, we concluded the acquisition of Voga with the new investment bank team already integrated with our operations.  Announcement of the Merger with Banco Intercap S.A. in June, still awaiting approval from the Central Bank of Brazil, to:  Expand the capital and asset base,  Strengthen the controlling group and Board of Directors by bringing two important Brazilian entrepreneurs, Afonso Antônio Hennel and Roberto de Rezende Barbosa.  The Expanded Credit Portfolio totaled R$3.2 billion, growing by 5.9% in the quarter and 15.0% in 12 months. The share of Emerging Companies and Corporate segments was 47.6% and 51.4%, respectively, in 2Q13.  Loans rated between AA and B still account for the highest share of the expanded credit portfolio, reaching 85.1% in 2Q13, compared to 81.3% in 1Q13 and 79.2% in 2Q12, which reflects our best efforts towards maintaining a superior quality portfolio. We maintained our discipline of building a diversified and top quality portfolio: 98.2% of the loans granted during the quarter were rated between AA and B.  The Managerial Expense with Allowance for Loan Losses (ALL) in the quarter was 1.1% (annualized) of the expanded credit portfolio, in line with the conservative credit adopted by the bank. There were no fresh provisions relating to the credit portfolio prior to April 2011 and we still have an additional allowance (not allocated) of R$40.9 million.  In line with the strategy of increasing revenues, Income from Services Rendered, which includes structuring fees for corporate finance operations, increased by 33.9% in 2Q13 and 26.2% in 1H13 in relation to 1H12, totaling R$8.6 million in the quarter and R$15.1 million in 1H13. With the recent integration of the investment banking team, we expect this revenue to continue growing over the coming quarters.  Adjusted Revenue from Credit Operations and agro bonds (CPR) (vide Page 8), which reflects the bank’s core business, increased 14.0% in the quarter, from R$60.7 million in 1Q13 to R$69.3 million in 2Q13.  The numbers from 2Q13 were extraordinarily impacted by losses resulting from high market volatility and the effect of the discontinuance of hedge accounting designation, which are not related to credit activities, generating a negative result of R$20.6 million.  Considering the conservative risk policy adopted by the Bank, we believe that an adequate remuneration for our capital will come from gains of scale from the credit portfolio and revenues from services as a result of the strategy and structure devised by the current management.   A Administração entende que, dentro da política de risco adotada atualmente pelo Banco, é necessário maior ganho de escala, com o crescimento da carteira de crédito, para gerar resultados em linha com o esperado. IDVL4: R$6.55 per share Closing: August 14, 2013 Outstanding Shares: 62.371.178 Market Cap: R$408.5 million Price/ Book Value: 0.72 Conference Call / Webcast August 15, 2013 In English 2 p.m. (US EST) / 3 p.m. (Brasilia) Connections Brazil: +55 11 4688-6361 EUA: +1 786 924-6977 Code: Banco BI&P In Portuguese 1 p.m. (US EST) / 2 p.m. (Brasilia) Connection: +55 11 4688-6361 Code: Banco BI&P Website www.bip.b.br/ir
  • 2. 2/21 Summary Message from Management.................................................................................................3 Macroeconomic Scenario.....................................................................................................5 Key Indicators ...................................................................................................................6 Operating Performance .......................................................................................................7 Credit Portfolio ................................................................................................................ 10 Funding .......................................................................................................................... 15 Free Cash ....................................................................................................................... 16 Capital Adequacy ............................................................................................................. 16 Credit Ratings.................................................................................................................. 16 Capital Markets................................................................................................................ 17 Balance Sheet ................................................................................................................. 19 Income Statement ........................................................................................................... 21
  • 3. 3/21 Message from Management After the broad restructuring launched in April 2011 we remained focused in the second quarter of 2013 on: (i) gaining scale, with the announcement of the merger with Banco Intercap and 5.9% growth in the expanded credit portfolio during the period; and (ii) generating fee revenues through the new investment banking team, fully integrated with Banco BI&P’s operations in May. In March 2013, we announced a capital increase to maintain the shareholders’ equity at the same level as at the end of 2012. In July, this capital increase of R$90.0 million was ratified by the Board of Directors and is awaiting approval from the Central Bank of Brazil. The private equity fund Warburg Pincus, controlling shareholders and a few other shareholders of the Company participated in this capital increase. Consequently, the capital of Banco BI&P will be R$662.4 million. In line with our strategic plan drawn up in April 2011 and considering the successful track record of the partners of Banco BI&P, we took another step in 2Q13 towards attaining our Vision by announcing the merger of Banco BI&P with Banco Intercap S.A., to strengthen and expand our capital base and strengthen our controlling group. Founded in 1990, Banco Intercap ended June 2013 with shareholders’ equity of R$116 million. Through this merger, Messrs. Afonso Antônio Hennel and Roberto de Rezende Barbosa, currently controlling shareholders of Banco Intercap, will strengthen the controlling group of Banco BI&P without causing any change in its control. They will join the board of directors, bringing fresh and important intellectual capital and experience to the current management of the Bank. Mr. Afonso Antônio Hennel will be appointed Vice- Chairman of the Board of Directors of Banco BI&P and Mr. Roberto de Rezende Barbosa will be a Director. The conclusion of this merger is subject to approval from the Central Bank of Brazil. Moreover, the shareholders of Banco Intercap representing 99.5% of its capital undertook to invest in Banco BI&P the full proceeds received from the acquisition, amounting to around R$116 million, by subscribing to and paying the common shares to be issued by Banco BI&P through a private capital increase. The expanded credit portfolio of Banco Intercap ended June 2013 at R$340.5 million, concentrated in loans and financing in real, granted to the Emerging Companies and Corporate segments. The classic loan portfolio, which does not include guarantees, totaled R$333.7 million, with 84.3% rated between AA and B. A simulated consolidation of the current portfolios of Banco Intercap and Banco BI&P showed that we would maintain the loans rated between AA and B at the same levels. As for the capital adequacy ratio (Basel Index), consolidating the capital of Intercap with that of BI&P, we would have an index of 16.0%, higher than the current 14.6%, which would give us room for expanding our operations. In addition to the merger with Banco Intercap, the joint venture with the trading company Ceagro Agrícola Ltda. and the acquisition of the corporate finance boutique firm Voga Empreendimentos e Participações Ltda. are aimed at diversifying our revenue sources through M&A, fixed income operations and financial advisory services, besides generating quality assets in an innovative manner. 2.5% 2.2% 41.7% 38.1% 37.5% 41.6% 7.5% 7.4% 10.8% 10.6% BI&P BI&P + Intercap AA A B C D - H 82,0% 81,7%
  • 4. 4/21 With regard to our financial performance in the quarter, the negative result of R$20.6 million was not the result of the bank's credit portfolio and core operations. In this regard, note that revenues from credit operations and agro bonds (CPR) totaled R$69.3 million in 2Q13, as against R$60.7 million in 1Q13, excluding the impact of discounts granted upon the settlement of loans (which we consider as managerial ALL expense, as mentioned below) and recovery of loans written off, which increased 14.0% in the quarter as a result of efforts by the commercial area. The managerial expense with allowance for loan losses (ALL) in the quarter, including the ALL reversals originated by discounts granted upon settlement of loans and revenues from recovery of loans written off, was R$8.6 million, equivalent to 1.1% (annualized) of the expanded credit portfolio, which is below management’s expectations and in line with the conservative credit policy adopted by the bank since April 2011. However, the Result from Financial Intermediation was R$2.2 million, compared to R$22.7 million in 1Q13, extraordinarily affected by high market volatility, the effect of discontinuance of hedge accounting designation (with no cash effect, though), and discounts granted upon settlement of loans, generating a negative result in the quarter. In line with the strategy of increasing income from services rendered, which includes structuring fees for corporate finance operations, totaled R$8.6 million in 2Q13 and R$15.1 million in 1H13, up 33.9% on 2Q12 and 26.2% on 1H12. However, the volume is still below the potential of the operation, due to the maturation of the new derivatives desk and, mainly, our investment banking team, which effectively started operating in May 2013 and whose impact is still not yet felt in the second quarter. With the acquisition of Banco Intercap and Voga, we concluded one more stage in the construction of Banco BI&P. Over the past two years:  We shifted the bank’s focus to better quality companies: migration from low middle to “emerging” companies and the corporate market, which entail lower risk;  We renewed more than 80% of the credit portfolio, while growing it from R$1.9 billion to R$3.2 billion during the period (increasing by 61.9% from March 2011 to June 2013), building a better quality credit portfolio (85.1% between AA and B), with a highly conservative level of provision (76.6% of D to H loans provisioned)  We developed a multiproduct bank, with a derivatives and treasury desk operating in all markets, and built a strong investment banking team;  we expanded and diversified our funding base while at the same time reducing our funding costs by 60 bps during the period (cost higher than CDI).  We adopted the best practices in credit analysis, risk management and human resource policies, besides renewing a sizable part of our commercial team.  We simultaneously took measures to maintain our cost structure lean and competitive compared to our peers. At the end of these two years, with the support of our clients, shareholders and employees, we believe we have built an appropriate structure for solid and consistent growth. Considering the conservative risk policy adopted by the Bank, we believe that an adequate remuneration for our capital will come with economies of scale of the credit portfolio and revenue from services, resulting from the strategy and structure devised by the current management.
  • 5. 5/21 Macroeconomic Scenario Positive surprises in April indicated that the Brazilian economy was on course to registering solid performance in the quarter ended June, well above the weak performance in the beginning of the year. But internal factors such as demonstrations around the country and rising inflation caused distortions and economic activity data showed strong positive and negative fluctuations between May and June. These internal factors, combined with the strengthening dollar and an uncertain international scenario, pushed down consumer and business confidence indexes at the end of the quarter to the levels observed in 2009, which were influenced by the financial crisis of 2008. Thus, GDP growth in the second quarter will probably be higher or the same as in the first quarter. Even in a scenario of moderate economic activity, inflation remains high, with the accumulated IPCA inflation index in 12 months surpassing the target ceiling. The index will improve considerably in July due to the seasonal decline in food prices, discount sales in the apparel and home appliance segments, and the withdrawal of the increase in public transport fares. However, once the seasonal effects have passed by the year-end, we expect inflation will increase once again. To curb these pressures on prices, the Central Bank continued its monetary tightening cycle, raising the Selic interest rate to 8.5% p.a. and this tendency should continue during the second half until it is able to control the worsening expectations on inflation. On the foreign exchange front, the high volatility observed since the end of 2012 and which continued in the first quarter of the year, remained in the second quarter. The Central Bank continued to intervene in the market using foreign exchange swaps, taking short positions in the dollar against the real and also removed the tax on financial transactions (IOF) on positions in the futures market. However, its measures could not prevent the dollar from closing the second quarter above R$2.20. These interventions clearly show that the Central Bank’s objective continues to be avoiding the inflationary pressures seen in 2012 when the Brazilian real fell sharply. Credit volume in Brazil’s national financial system grew 4.3% in the quarter to reach R$2.53 trillion. Credit volume in 12 months increased 16.4%, with the average term of loans increasing from 80 months in June 2012 to 93 months at the end of June 2013. Credit as a percentage of GDP closed the second quarter at 55.2%, higher than 53.9% at the end of March, and has remained above 50% since May 2012. Default in the individuals segment dropped from 7.6% in the first quarter of 2012 to 7.2% this quarter, while corporate default remained practically stable at 3.5%. These marginal improvements in default rates are the result of the more selective approach to credit adopted by Brazilian banks. Macroeconomic Data 2Q12 1Q13 2Q13 2013e Real GBP Growth (Q/Previous Q) 0.3% 0.6% 0.6%(e) 2.1% Inflation (IPCA - IBGE) – quarterly change 1.4% 2.2% 1.4% 5.9% Inflation (IPCA - IBGE) – annual change 5.2% 6.6% 6.7% 5.9% FX (US$/R$) – quarterly change -2.9% -2.0% 14.4% 12.1% Interest Rate (Selic) 9.75% 7.25% 8.50% 9.50% e= expected
  • 6. 6/21 Key Indicators The financial and operating information presented in this report are based on consolidated financials prepared in millions of Real (local currency), according to Brazilian GAAP (BRGAAP), except were otherwise stated. Results 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 1H13 1H12 1H13/1H12 Loan Operations & Agro bonds (CPR) adjusted 1 69.2 60.7 14.0% 74.3 -6.9% 129.9 148.7 -12.6% Effect of recoveries and discounts 1 (9.2) (2.2) n.c. (0.6) n.c. (11.4) (0.4) n.c. Revenues from Sec. (w/o CPR), Derivatives & FX 46.6 44.6 4.5% 123.3 -62.2% 91.3 210.5 -56.6% Effect of discontinuance of hedge accounting (13.6) (15.6) 12.9% 25.8 -152.7% (29.2) 25.8 -213.2% Financial Intermediation Expenses 90.6 64.8 39.8% 163.3 -44.5% 155.5 274.2 -43.3% Result from Financial Int. before ALL 2.4 22.7 -89.5% 59.6 -96.0% 25.1 110.4 -77.2% ALL Expenses 2 (0.1) (133.4) 99.9% (22.6) 99.4% (133.5) (37.0) -260.9% Result from Financial Intermediation 2.2 (110.6) 102.0% 37.0 -93.9% (108.4) 73.4 -247.7% Net Operating Expenses (35.7) (33.9) -5.3% (30.7) -16.4% (69.6) (57.8) -20.4% Recurring Operating Result (33.4) (144.5) 76.9% 6.3 n.c. (178.0) 15.6 n.c. Non-Recurring Operating Expenses (0.4) 0.0 n.c. (0.3) -31.0% (0.4) (0.3) -31.0% Operating Result (33.8) (144.5) 76.6% 6.0 n.c. (178.3) 15.3 n.c. Net Profit (Loss) (20.6) (91.4) 77.4% 2.4 n.c. (112.1) 7.5 n.c. Assets & Liabilities 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 Loan Portfolio 2,587.8 2,522.7 2.6% 2,395.6 8.0% Expanded Loan Portfolio 3 3,228.7 3,047.5 5.9% 2,807.1 15.0% Cash & Short Term Investments 297.3 611.3 -51.4% 632.6 -53.0% Securities and Derivatives 1,056.5 769.7 37.3% 1,536.0 -31.2% Securities excl. Agro & Private Credit Bonds 4 626.5 417.4 50.1% 1,300.3 -51.8% Total Assets 4,198.2 4,259.1 -1.4% 4,966.5 -15.5% Total Deposits 2,427.8 2,451.3 -1.0% 2,038.0 19.1% Open Market 176.1 193.2 -8.8% 1,219.6 -85.6% Foreign Borrowings 366.0 396.4 -7.7% 449.2 -18.5% Domestic On-lending 348.6 322.1 8.2% 267.8 30.2% Shareholders’ Equity 569.6 498.4 14.3% 582.4 -2.2% Performance 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 1H13 1H12 1H13/1H12 Free Cash 660.7 760.1 -13.1% 638.0 3.6% NPL 60 days/ Loan portfolio 2.6% 2.3% 0.2 p.p. 3.6% -1.0 p.p. NPL 90 days/ Loan portfolio 2.1% 2.2% -0.1 p.p. 2.6% -0.5 p.p. Basel Index 14.7% 14.2% 0.5 p.p. 17.0% -2.4 p.p. ROAE -14.6% -52.2% 37.6 p.p. 1.7% -16.2 p.p. -35.0% 2.6% -37.6 p.p. Adjusted Net Interest Margin (NIMa) 5 2.9% 4.9% -2.0 p.p. 4.4% -1.5 p.p. 3.8% 5.4% -1.6 p.p. Efficiency Ratio 474.9% 155.2% 319.6 p.p. 60.8% 414.1 p.p. 231.3% 64.1% 167.2 p.p. Other Information 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 Number of Corporate Clients 874 811 7.8% 820 -6.6% Number of Employees 448 449 -0.2% 438 -2.3% Banco BI&P and Voga Employees 390 397 -1.8% 406 -3.9% Brokerage house and Serglobal Employees 58 52 11.5% 32 -81.3% n.c. = not comparable Details in the respective sections of this report: 1 Excluding (i) revenues from recovery of loans written off, and (ii) discounts granted upon settlement of operations in the period. More details in the Profitability section of this report. 2 Including additional provisions. 3 Including Guarantees issued, Private Credit Bonds (PNs and Debentures) and Agro securities (CDCA, CDA/WA and CPR). 4 Excluding Agro Securities (CPRs and CDA/WA) and Private Credit Bonds (PNs and debentures). 5 Excluding (i) repos with equivalent volumes, tenors and rates both in assets, and (ii) effects of the discontinuance of the treatment of hedge accounting, and also discounts granted in operations settled in the period.
  • 7. 7/21 Operating Performance Financial Intermediation Result before Allowance for Loan Losses Net Profit Expanded Credit Portfolio Funding Profitability Financial Intermediation 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 1H13 1H12 1H13/1H12 Financial Intermediation Revenues 93.0 87.6 6.2% 222.8 -58.3% 180.6 384.6 -53.0% Loan Operations and agro bonds (CPR) adjusted * 69.2 60.7 14.0% 74.3 -6.9% 129.9 148.7 -12.6% Effects recoveries and discounts * (9.2) (2.2) n.c. (0.6) n.c. (11.4) (0.4) n.c. Loan Operations and agro bonds (CPR) 60.0 58.6 2.4% 73.7 -18.6% 118.5 148.3 -20.1% Loans, Disc. Receivables and agro bonds (CPR) 49.5 47.4 4.4% 57.2 -13.5% 96.9 124.5 -22.2% Financing 8.8 6.8 28.2% 7.6 15.6% 15.6 13.9 11.8% Other 1.7 4.3 -60.2% 8.9 -80.7% 6.0 9.8 -38.7% Securities 6.7 8.8 -23.6% 103.6 -93.5% 15.5 167.7 -90.8% Derivative Financial Instruments w/o CPR (7.8) 2.0 n.c. 5.5 -240.2% (5.8) 1.8 n.c. FX Operations Result 28.3 10.0 182.6% 40.0 -29.2% 38.4 66.8 -42.5% Financial Intermediation Expenses 90.6 64.8 39.8% 163.3 -44.5% 155.5 274.2 -43.3% Money Market Funding 53.0 53.2 -0.4% 119.4 -55.6% 106.2 204.7 -48.1% Time Deposits 40.4 40.8 -1.0% 40.8 -0.9% 81.2 86.0 -5.6% Repurchase Transactions 3.0 4.6 -33.7% 68.1 -95.5% 7.6 98.6 -92.2% Interbank Deposits 0.8 1.3 -34.8% 3.4 -76.1% 2.1 6.6 -68.3% Agro (LCA), Real State (LCI) & Bank Notes (LF) 8.7 6.5 33.3% 7.0 23.8% 15.2 13.5 13.2% Loans, Assignments & Onlending 37.6 11.6 223.5% 43.9 -14.3% 49.3 69.6 -29.2% Foreign Borrowings 32.2 6.9 n.c. 39.6 -18.5% 39.1 61.7 -36.7% Domestic Borrowings & Onlending 5.4 4.8 12.5% 4.3 23.7% 10.2 7.8 30.0% Gross Result from Fin. Interm. before ALL 2.4 22.7 -89.5% 59.6 -96.0% 25.1 110.4 -77.2% Allowance for Loan Losses (ALL) (0.1) (133.4) 99.9% (22.6) 99.4% (133.5) (37.0) -260.9% Gross Result from Financial Intermediation 2.2 (110.6) 102.0% 37.0 -93.9% (108.4) 73.4 -247.7% * Excluding the effects of (i) recoveries from operations written off, and (ii) discounts granted upon settlement of loans in the period. 59,6 48,4 48,5 22,8 2,4 43,3 45,6 44,3 44,8 26,9 2Q12 3Q12 4Q12 1Q13 2Q13 R$million Financial Intermediation Result before ALL Financial Intermediation Result before ALL adjusted * 2,4 3,1 3,6 7,6 2Q12 3Q12 4Q12 1Q13 2Q13 1H12 1H13 R$million -20.6 2,8 3,0 3,1 3,0 3,2 2Q12 3Q12 4Q12 1Q13 2Q13 R$billion Private Credit Bonds (PNs and Debentures) Agro Bonds (CPR, CDA/WA and CDCA) Guarantees Issued Trade Finance Loans and Financing in Real 2,8 2,9 3,0 3,2 3,1 2Q12 3Q12 4Q12 1Q13 2Q13 R$billion Trade Finance & Foreign Borrowings Domestic Onlending Interbank & Demand Deposits Agro Bonds, Bank & Real Estate Notes Insured Time Deposits (DPGE) Time Deposits 15.0% 14.1% -91.4 -112.1
  • 8. 8/21 Result from financial intermediation before allowance for loan losses totaled R$2.4 million in 2Q13, down 89.5% from the previous quarter and, as in 1Q13, was mainly impacted: (i) in the item Derivative Financial Instruments, due to the discontinuance of the designation of hedge accounting, adopted in 2Q12, of operations to protect the cash flow, which continue to be protected by hedge operations and without cash flow effect; and (ii) in the item Loan Operations, by the discounts granted on loans settled during the period. With regard to adjusted revenue from credit operations and agro bonds (CPR) (ROC), to enable better comparison, the impact of discounts granted upon settlement of loans and recoveries of loans written off, as shown in the table below, were excluded, which results in an increase of around of 14.0% in the quarter, showing that revenues from credit operations continue to grow as planned. Revenues from Credit Operations and CPR adjusted 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 1H13 1H12 1H13/1H12 (A) Revenues from Credit Operations and agro bonds (CPR) 60.0 58.6 2.4% 73.7 -18.6% 118.5 148.3 -20.1% (B) Recoveries of written-of operations 1.7 4.3 -60.2% 8.9 -80.7% 6.0 9.8 -38.7% (C) Discounts granted on settled operations -11 -6.5 69.2% -9.5 15.8% -17.4 -10.2 70.6% Revenues from Credit Oper. + CPR adjusted (A-B-C) 69.3 60.7 14.0% 74.3 -6.9% 129.9 148.7 -12.6% Income from Securities, with offset in funding expenses, increased 13.7% in the quarter, especially due to the CPR (agro bond) operations, classified as fixed income securities. The Result from Derivative Financial Instruments includes results from operations involving swaps, forwards, futures and options used to hedge against exchange and interest rate exposure for funding operations indexed to the inflation indexes, as well as foreign borrowings (non-trade related), hedging of commodity prices resulting from CPR operations and indexers of federal government bonds held in the securities portfolio, in addition to the directional portfolio. As in 1Q13, this item was affected mainly by the effect of discontinuance of the designation of hedge accounting in 2Q12, of operations to protect cash flow from funding indexed to IPCA and IGPM and foreign borrowings, with exposure to the risk of variation in interest and foreign exchange rates, as detailed in notes 3(d) and 5(c) of the financial statements. The impact of this effect was $13.6 million in 2Q13. In 2Q13, both income from Foreign Exchange Operations and expenses with Foreign Borrowings were impacted especially by variations in rates resulting from the appreciation of the U.S. dollar (US$) against the Brazilian real (R$). Expenses with Time Deposits declined in the quarter with the change in the mix between time deposits with special guarantee (DPGE I) and bank deposit certificates (CDB), due to the: (i) reduction in the average balance of DPGE I by around 5.2%; and (ii) increase of 14.5% in the average balance of CDBs, whose costs are lower. In the 12 month comparison, the 0.9% reduction refers mainly to the systematic decline in the benchmark interest rate that began in late 2011 and continued throughout 2012. The decrease in expenses with interbank deposits is directly related to the decline in the average balances of interbank deposits, while expenses with interbank deposits and agribusiness letters of credit (LCA), real estate notes (LCI) and bank notes (LF) increased, mainly due to the increase of their average balances. Expenses with allowance for loan losses (ALL) in the second quarter were only R$145 thousand, due to: (i) the reversals of allowance for doubtful accounts, resulting from the discounts granted on loans settled; and (ii) the allocation of a part of the additional allowance, made in March 2013 exclusively to loans granted before April 2011 under the previous credit policy. The managerial expense with allowance for loan losses (ALL) in the quarter, including the ALL reversals originated by discounts granted upon settlement of loans, as mentioned above, and revenues from recovery of loans written off, was R$8.6 million, equivalent to 1.1% (annualized) of the expanded credit portfolio, which is below management’s expectations and in line with the conservative credit policy adopted by the bank since April 2011. Result from financial intermediation, which was not significant in the quarter, totaled R$2.4 million, compared to R$22.7 million in 1Q13, impacted by discounts granted in the settlement of loans in the period, which reduce Revenue from Credit Operations, and the discontinuance of the designation of hedge accounting which, in a scenario of rising interest rates, negatively affects the item ‘Derivative Financial Instruments’.
  • 9. 9/21 Net Interest Margin (NIM) As described in the section on Profitability, considering the effects on the Result from Financial Intermediation from the discontinuance of the designation of hedge accounting and discounts granted on settled operations, NIM would decrease to 3.2% in 2Q13, as the following table shows: Net Interest Margin 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 1H13 1H12 1H13/1H12 A. Result from Finan. Int. before ALL adjusted 1 26.9 44.8 -39.9% 43.3 -37.8% 71.7 94.8 -24.4% A.a. Result from Financial Int. before ALL 2.4 22.7 -89.5% 59.6 -96.0% 25.1 110.4 -77.2% B. Average Interest bearing Assets 3,626.3 3,603.6 0.6% 4,193.6 -13.5% 3,615.0 4,214.0 -14.2% Adjustm. for non-remunerated average assets 1 (184.0) (229.2) -19.7% (1,006.7) -81.7% (206.6) (1,051.8) -80.4% B.a Adj. Average Interest bearing Assets 3,442.3 3,374.4 2.0% 3,186.9 8.0% 3,408.3 3,162.2 7.8% Net Interest Margin (A.a/Ba) 0,3% 2,7% -2,4 p.p. 7,7% -7,4 p.p. 1,5% 7,1% -5,6 p.p. Net Interest Margin Adjusted (A/Ba) 2 3,2% 5,4% -2,3 p.p. 5,5% -2,4 p.p. 4,3% 6,1% -0,5 p.p. Managerial NIM with Clients 4,1% 4,1% 0,0 p.p. 4,8% -0,7 p.p. 4,1% 4,9% -0,9 p.p. 1 Repos with equivalent volumes, tenors and rates both in assets and liabilities. 2 Excluding (i) effects of the discontinuance of the treatment of hedge accounting, adopted in 2Q12, for booking hedges of cash flows, which continue to be protected by hedge, and (ii) discounts granted in operations settled in the period. Managerial financial margin, which consists of income from credit operations, derivatives, operations with CPR and guarantees with clients, and excludes discounts granted upon settlement of loans, remained stable in the quarter at 4.1%, but declined 0.7 p.p. in 12 months, because (i) the portfolio mix was concentrated in the Corporate segment, and (ii) of a more conservative profile of the portfolio as a whole. We expect margin to stabilize at these levels and could increase slightly with the expected growth of the Emerging Companies credit portfolio to 50% of the bank’s expanded credit portfolio over the coming quarters. Efficiency The efficiency ratio in the quarter was impacted by the modest result from financial intermediation, of R$2.4 million. Efficiency Ratio 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 1H13 1H12 1H13/1H12 Personnel Expenses 26.1 26.4 -0.9% 21.9 19.1% 52.5 44.7 17.5% Contributions and Profit-sharing 2.7 5.4 -50.4% 2.3 19.7% 8.1 4.4 85.1% Administrative Expenses 15.7 13.4 17.4% 13.6 15.2% 29.1 26.7 8.7% Taxes 2.0 3.6 -43.5% 2.3 -13.2% 5.6 6.0 -6.8% A- Total Operating Expenses 46.6 48.8 -4.5% 40.2 16.0% 95.3 81.9 16.5% Gross Income Fin. Interm. (w/o ALL) 2.4 22.7 -89.5% 59.6 -96.0% 25.1 110.4 -77.2% Income from Services Rendered 8.6 6.5 33.9% 5.4 61.0% 15.1 12.0 26.2% Income from Banking Tariffs 0.2 0.2 8.7% 0.2 20.6% 0.4 0.4 1.4% Other Net Operating Income (*) (1.4) 2.0 -168.4% 1.0 -242.1% 0.6 5.1 -87.2% B- Total Operating Income 9.8 31.4 -68.8% 66.1 -85.2% 41.2 127.8 -67.7% Efficiency Ratio (A/B) 474.9% 155.2% 319.6 p.p. 60.8% 414.1 p.p. 231.3% 64.1% 167.2 p.p. (*) Net of other Operating Expenses to offset the cost of acquisition and income on sale of commodities in the activity of Serglobal Cereais. Net Profit Considering the extraordinarily negative impacts above mentioned, the operating income of -R$33,8 million in 2Q13, after (i) the non-operating profit from the sale of properties and non-operating assets of the R$752 thousand, (ii) taxes and contributions of the R$15.1 million, and (iii) profit sharing of the R$2.6 million, resulted in a loss of R$20.6 million.
  • 10. 10/21 Credit Portfolio Expanded Credit Portfolio In June 2013, the Expanded Credit Portfolio expanded by 5.9% in relation to March 2013 and by 15% in 12 months. The Expanded Credit Portfolio includes loan and financing operations in Brazilian Real and trade finance operations, both detailed in note 6(a) to the financial statements, as well as: (i) guarantees issued (sureties, guarantees and letters of credit), (ii) agribusiness bonds originated from the absorption of the operations of Serglobal Cereais (CPR and CDA/WA); and (iii) private credit bonds (promissory notes and debentures). Items (ii) and (iii) are both booked under Securities (TVM) as per Central Bank regulations. Expanded Credit Portfolio by Product Group 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 Loans & Financing in Real 2,016.0 2,019.8 -0.2% 1,844.4 9.3% Trade Finance (ACC/ACE/IMPFIN) 427.3 415.4 2.9% 449.4 -4.9% Guarantees Issued (LGs & L/Cs) 210.9 172.5 22.2% 175.8 20.0% Agro Bonds (Securities: CPRs & CDA/WA; Credit: CDCAs) 477.9 370.9 28.8% 267.0 79.0% Private Credit Bonds (Securities: PNs & Debentures) 39.2 41.1 -4.5% 30.7 27.9% Other 57.4 27.8 106.5% 39.8 44.2% TOTAL 3,228.7 3,047.5 5.9% 2,807.1 15.0% The Emerging Companies segment comprises customers with annual revenue between R$40 million and R$400 million and Corporate segment includes companies with annual revenue between R$400 million and R$2 billion. The Other segment basically refers to Consumer Credit operations for Used Vehicles and financing of non- operating assets. Loans and financing operations in Real, which include loans, discounted bills, acquisition of client receivables and BNDES onlending, represented 62.4% of the Expanded Credit Portfolio at the end of 2Q13. These operations remained practically stable in the quarter and increased by 9.3% in relation to June 2012, especially due to loans and discounted receivables, which increased by 11.0% in 12 months, and to BNDES onlendings, which increased by 33.1% in 12 months. At the end of 2Q13, trade finance operations, which corresponded to 13.2% of the Expanded Credit Portfolio, increased by 2.9% in the quarter but decreased 4.9% in relation to June 2012. These operations consist of import financing, which accounted for 31.5%, and export financing, which accounted for 68.5%. Guarantees issued (sureties, guarantees and import letters of credit) correspond to 6.5% of the expanded credit portfolio, up 22.2% from 1Q13 and 20.0% in 12 months. As a result of the joint ventures and alliances built over the past two years, the portfolio of agribusiness bonds and private credit bonds, which is classified under “held for sale” marketable securities in the balance sheet in accordance with Central Bank regulations due to its tradability, has been growing consistently in recent quarters. The portfolio grew 22.1% in the second quarter of 2013 and 82.5% in 12 months. 51% 42% 39% 47% 48% 48% 56% 59% 51% 51% 2% 2% 2% 1% 1% 2Q12 3Q12 4Q12 1Q13 2Q13 Expanded Credit Portfolio Emerging Companies Corporate Other
  • 11. 11/21 Agro Bonds Portfolio 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 Booked under Securities 390.8 311.2 25.6% 205.0 90.6% Warrants - CDA/WA 7.3 7.1 2.3% 7.5 -3.1% Agro Product Certificate - CPR 383.5 304.1 26.1% 197.5 94.2% Booked under Credit Portfolio - Loans & Financing 87.1 59.7 45.9% 62.0 40.6% Agro Credit Rights Certificate - CDCA 87.1 59.7 45.9% 62.0 40.6% Agricultural Bonds 477.9 370.9 28.8% 267.0 79.0% Our Expanded Credit Portfolio breakdown is as follows: By Economic Activity By Region By Customer Segment By Economic Sector By Product Industry 46% Commerce 28% Other Services 23% Individuals 2% Financial Institutions 1% North 2% Northeast 4% Midwest 19% South 20% Southeast 55% Corporate 51% Emerging Companies 48% Other 1% 9,9% 1,3% 1,3% 1,5% 1,6% 1,6% 1,7% 1,8% 2,0% 2,4% 2,9% 3,6% 3,6% 3,6% 4,3% 5,6% 12,2% 15,8% 23,3% Other (% lower than 1%) Commerce - Retail & Wholesale Plastic and Rubber Individuals Financial Services Electronics Financial Institutions Machinery and Equipments Power Generation & Distribution Education Textile, apparel & Leather Metal Industry Chemical & Pharmaceutical Oil & Biofuel Transportation & Logistics Automotive Construction Food & Beverage Agribusiness Loans & Discounts 52% BNDES Onlending 11% Trade Finance 13% Agro Bonds 15% Guarantees Issued 6% Debentures 1% Other 2%
  • 12. 12/21 Credit Portfolio The “classic” credit portfolio, which does not include guarantees issued and credits classified under “held for sale” marketable securities, totaled R$2.5 billion, practically stable in relation to the previous quarter, with operations in Real accounting for R$2.1 billion and trade finance operations totaling R$427.3 million. At the end of the quarter, the Emerging Companies segment accounted for 49.1% (49.0% in 1Q13) of the classic portfolio and the Corporate segment accounted for 49.7%, the same as at the end of 1Q13. Loans classified as Other include the balance of the direct consumer credit - used vehicles (CDC) portfolio, portfolios acquired from other banks and financing of non-operating assets, corresponded to 1.2% of the portfolio (1.4% in 1Q13). Credit Portfolio By Client Segment 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 Emerging Companies 1,271.4 1,237.1 2.8% 1,266.7 0.4% Local Currency - Real 1,046.5 1,072.6 -2.4% 1,019.4 2.7% Loans & Discounted Receivables 887.2 913.7 -2.9% 854.0 3.9% Financing 0.0 0.0 n.m. 0.0 n.m. BNDES / FINAME 159.3 158.9 0.2% 165.4 -3.7% Foreign Currency 224.9 164.5 36.7% 247.3 -9.1% Corporate 1,284.8 1,251.0 2.7% 1,078.0 19.2% Local Currency - Real 1,082.3 1,000.0 8.2% 875.8 23.6% Loans & Discounted Receivables 894.5 839.6 6.5% 699.7 27.8% BNDES / FINAME 187.9 160.4 17.1% 95.4 97.0% Acquired Receivables 0.0 0.0 n.m. 80.7 -100.0% Foreign Currency 202.4 250.9 -19.3% 202.1 0.1% Other 31.7 34.7 -8.7% 51.0 -37.9% Consumer Credit – used vehicles 0.1 0.3 -52.6% 2.0 -92.6% Acquired Loans & Financing 3.6 4.9 -26.2% 11.2 -67.3% Non-Operating Asset Sales Financing 27.9 29.4 -5.3% 37.8 -26.3% CREDIT PORTFOLIO 2,587.8 2,522.7 2.6% 2,395.6 8.0% n.m. = not measurable By Collateral By Customer Concentration By Maturity Aval PN 50% Receivables 26% Pledge / Lien 8% Property 9% Monitored Pledge 4% Vehicles 2%Securities 1% Top 10 15% 11 - 60 32% 61 - 180 27% Other 26% Up 90 days 32% 91 to 180 days 20% 181 to 360 days 16% +360 days 32%
  • 13. 13/21 Quality of Credit Portfolio Rating AA A B C D E F G H Additional ALL TOTAL ALL/ Credit Portfolio % Required Provision % 0% 0,5% 1% 3% 10% 30% 50% 70% 100% 2Q13 Outstanding Loans 65.7 1,078.0 971.5 192.8 109.9 17.4 30.0 4.0 118.6 - 2,587.8 8.3% Allowance for Loan Losses 0.0 5.4 9.7 5.8 11.0 5.2 15.0 2.8 118.6 40.9 214.4 1Q13 Outstanding Loans 43.9 1,020.3 908.3 321.9 49.0 108.2 42.8 4.5 23.7 - 2,522.7 8.7% Allowance for Loan Losses 0.0 5.1 9.1 9.7 4.9 32.5 21.4 3.1 23.7 110.7 220.2 2Q12 Outstanding Loans 137.5 880.7 807.6 379.6 36.1 88.4 17.8 10.3 37.6 - 2,395.6 4.5% Allowance for Loan Losses 0.0 4.4 8.1 11.4 3.6 26.5 8.9 7.2 37.6 0.0 107.7 We continue our focus on credit to clients with better credit standing, as evident from the high percentage of loans rated between AA and B granted in 2Q13, which reached 98.2% this quarter, compared to 97.8% in 1Q13. The balance of loans classified in the low risk categories (AA to B) accounted for 81.7% of total loan operations in the quarter (78.2% and 76.2%, respectively, at the end of 1Q13 and 2Q12), as the following chart shows: Of the R$279.8 million classified between D and H (R$228.3 million in March 2013 and R$190.2 million in June 2012), R$215.9 million correspond to loans whose payments are regular, equivalent to 77% of the total (74% in March 2013 and 65% in June 2012). The remaining 23% correspond to overdue loans and are detailed below: Default by segment 2Q13 1Q13 > 60 days > 90 days 2Q13 1Q13 2Q13 1Q13 Credit Portfolio NPL % NPL % NPL % NPL % Emerging Companies 1,271.4 1,237.1 51.3 4.0% 45.9 3.7% 40.6 3.2% 44.8 3.6% Corporate 1,284.8 1,251.0 8.4 0.7% 5.5 0.4% 5.9 0.5% 1.9 0.2% Other 31.7 34.7 7.2 22.8% 7.7 22.3% 7.2 22.8% 7.6 21.9% TOTAL 2,587.8 2,522.7 66.9 2.6% 59.2 2.3% 53.8 2.1% 54.3 2.2% Allowance Loan Losses (ALL) 214.4 220.2 ALL / NPL - 320.3% 372.2% 398.7% 405.1% ALL / Loan Portfolio 8.3% 8.7% - - - - The default rate on loans overdue by more than 60 days (NPL 60 days) increased by 0.3 p.p. in the quarter but decreased by 1.0 p.p. from 2Q12, while loans overdue by more than 90 days (NPL 90 days) decreased by 0.1 p.p. in the quarter and 0.5 p.p. in relation to 2Q12. The 0.3 p.p. increase in NPL 60 basically refers to the arrears of a few loans granted before April 2011. The 12 month comparison showed that the indicator either remained unchanged or declined. 5.7% 1.7% 2.5% 0.4 0.4 0.4 33.7% 36.0% 37.5% 15.8% 12.8% 7.5% 0.1 0.1 0.1 2Q12 1Q13 2Q13 AA A B C D - H 81.7% 78.2% 76.2%
  • 14. 14/21 NPL 60 days/ Credit Portfolio Ratio 2Q13 1Q13 2Q12 NPL 60 days/ Credit Portfolio 2.6% 2.3% 3.6% Clients upon the new credit policy 0.5% 0.4% 0.2% Clients acquired before April 2011 (upon the old credit policy) 10.6% 9.4% 9.0% In 2Q13, we maintained the credit portfolio coverage index high at around 8.3% (8.7% in 1Q13), due to the balance allowance for loan losses of R$214.3 million, as against R$220.1 million in 1Q13. This balance provided coverage of 3.2x of the NPL 60 days balance and 4.0x of the NPL 90 days balance at the end of June 2013. The managerial ALL expense in the quarter (annualized) corresponded to 1.1% of expanded credit portfolio, in line with the conservative credit policy adopted by the bank. There were no fresh provisions for the remainder of the loans granted before April 2011 and we still have an additional provision (not allocated) of R$ 40.9 million.
  • 15. 15/21 Funding Funding volume totaled R$3.1 billion at the end of June 2013, practically the same level as in March 2013 and increasing 14.1% in relation to June 2012. Bank Deposit Certificates (CDB) and Time Deposits with Special Guarantee (DPGE I), booked under the item ‘time deposits’, remain the principal funding sources, jointly accounting for 56.2% of total funding. Funding through agribusiness letters of credit (LCA), which are backed by agribusiness operations, a segment in which Banco BI&P specializes, continues to increase its share of total funding, accounting for 15.6% (14.9% in 1Q13). Real Estate Letters of Credit (LCI) and Bank Notes (LF) too have been increasing their share, jointly accounting for 2.4% of total funding in 2Q13 (1.8% in 1Q13). Funding in foreign currency is especially allocated to Trade Finance operations and its balance is impacted by foreign exchange variations. Total Funding 2Q13 1Q13 2Q13/1Q13 2Q12 2Q13/2Q12 Total Deposits 2,427.8 2,451.3 -1.0% 2,038.0 19.1% Time Deposits 822.7 818.1 0.6% 744.9 10.4% Insured Time Deposits (DPGE) 944.8 931.8 1.4% 771.9 22.4% Agro Notes (LCA) 489.2 473.7 3.3% 324.2 50.9% Bank Notes (LF) 34.0 33.1 2.8% 30.6 10.9% Real Estate Notes (LCI) 40.2 23.9 68.3% 0.0 n.m. Interbank Deposits 58.2 91.4 -36.4% 137.0 -57.5% Demand Deposits and Other 38.8 79.3 -51.1% 29.5 31.3% Domestic Onlending 348.6 322.1 8.2% 267.8 30.2% Foreign Borrowings 366.0 396.4 -7.7% 449.2 -18.5% Trade Finance 366.0 345.9 5.8% 398.6 -8.2% Other Foreign Borrowings 0.0 50.5 -100.0% 50.5 -100.0% TOTAL 3,142.3 3,169.7 -0.9% 2,755.0 14.1% By Type By Investor By Maturity The average term of deposits stood at 740 days from issuance (747 days in March 2013) and 353 days from maturity (392 days in March 2013). Average Term in days Type of Deposit from issuance to maturity 1 Time Deposits 414 276 Interbank 127 37 Time Deposits Special Guarantee (DPGE) 1,376 577 Agro Notes (LCA) 144 92 Bank Notes (LF) 891 513 Real Estate Letters of Credit (LCI) 173 104 Portfolio of Deposits 2 740 353 1 From June 30, 2013. | 2 Volume weighted average. Time Deposit 26% Insured Time Dep. (DPGE) 30% Agro Bonds 16% Bank & Real Estate Notes 2% BNDES Onlendings 11% Trade Finance 12% Interbank 2% Demand 1% Institutional Investors 44% Corporates 14% Individuals 7% National Banks 7% Brokers 3% Other 2% BNDES 11% Foreign Banks 12% +360 days 34% Up 90 days 28%91 to 180 days 19% 181 to 360 days 18% demand 1%
  • 16. 16/21 Free Cash On June 30, 2013, the free cash position totaled R$660.7 million, equivalent to 27.2% of total deposits and 1.2x shareholders’ equity. The calculation considers cash, short-term interbank investments and securities less funds raised in the open market and debt securities classified under marketable securities, comprising rural product certificates (CPRs), agribusiness deposit certificates and warrants (CDAs/WAs), debentures and promissory notes (NPs). Capital Adequacy The Basel Accord requires banks to maintain a minimum percentage of the capital weighted by the risk in their operations. In this context, the Central Bank of Brazil has stipulated that banks operating in the country should maintain a minimum percentage of 11%, calculated according to the Basel II Accord regulations, which provides greater security to Brazil’s financial system against oscillations in economic conditions. The following table shows BI&P’s position in relation to the Central Bank’s minimum capital requirements: Basel Index 2Q13 1QT13 2Q13/1Q13 2Q12 2Q13/2Q12 Total Capital 554.3 485.3 14.2% 580.0 -4.4% Tier I 555.3 486.3 14.2% 581.1 -4.4% Tier II 1.3 1.3 -1.0% 1.4 -3.6% Deductions (2.3) (2.3) 0.0% (2.4) -4.8% Required Capital 419.1 376.8 11.2% 374.5 11.9% Credit Risk Allocation 353.3 329.0 7.4% 337.1 4.8% Market Risk Allocation 47.9 29.9 60.2% 17.1 179.5% Operating Risk Allocation 17.9 17.9 0.0% 20.2 -11.4% Excess over Required Capital 135.2 108.5 24.7% 205.6 -34.2% Basel Index 14.6% 14.2% 0.4 p.p. 17.0% -2.5 p.p. Risk Ratings Agency Classification Observation Last Report Financial Data Standard & Poor’s BB / Negative / B brA+ / Negative / brA-1 Global Scale Local Scale - Brazil August 6, 2013 March 31, 2013 Moody's Ba3/ Negative / Not Prime A2.br/ Negative / BR-2 Global Scale Local Scale - Brazil July 4, 2013 March 31, 2013 FitchRatings BBB / Stable / F3 Local Scale - Brazil July 4, 2013 March 31, 2013 RiskBank 9.92 Ranking: 47 RiskBank Index Low Risk Short Term July 15, 2013 March 31, 2013 638 760 661 2Q12 1Q13 2Q13 R$million
  • 17. 17/21 Capital Market Total Shares and Free Float Number of shares as of June 30, 2013 Type Corporate Capital Controlling Group Management Treasury Free Float % Common 36,945,649 20,962,670 57,876 - 15,925,103 43.1% Preferred 26,160,044 399,689 279,462 734,515 24,746,378 94.6% TOTAL 63,105,693 21,362,359 337,338 734,515 40,671,481 64.4% Share Buyback Program The following Stock Option Plans, approved for the Company’s executive officers and managers, as well as individuals who provide services to the Company or its subsidiaries, had the following balances on June 30, 2013: Quantity Stock Option Plan Date of Approval Grace Period Term for Exercise Granted Exercised Extinct Not Exercised I 03.26.2008 Three years Five years 2,039,944 37,938 293,056 1,708,950 II 04.29.2011 Three years Five years 1,840,584 - 361,984 1,478,600 III 04.29.2011 Five years Seven years 1,850,786 - - 1,850,786 IV 04.24.2012 Up to five years Five years 605,541 - 23,640 581,901 6,336,855 37,938 678,680 5,620,237 The aforementioned Stock Options Plans are filed in the IPE system of the Securities and Exchange Commission of Brazil (CVM) and are also available in the Company’s IR website. Remuneration to Shareholder During 1H13 the Bank neither provisioned nor paid interest on equity, calculated based on the Long-Term Interest Rate (TJLP) and towards the minimum dividend for fiscal year 2013. The Board of Directors will, by the end of the year, study the possibility of early payment of interest on equity after considering the results and the tax efficiency of such payment. Share Performance The preferred shares of BI&P (IDVL4), listed in the Level 2 Corporate Governance segment of BM&FBOVESPA, closed June 2013 at R$6.99, for market cap of R$436.0 million, including the shares existing on June 30, 2013 and excluding treasury stock. The price of IDVL4 shares dropped 6.7% in the quarter but increased 6.0% (4.5% adjusted for earnings) in the 12 months ended June 2013. In comparison, the Bovespa Index (Ibovespa) dropped 15.8% in the quarter and 12.7% in relation to 2Q12. At the end of 2Q13, the price/book value (P/BV) was 0.77.
  • 18. 18/21 Share Price evolution in the last 12 months Liquidity and Trading Volume The preferred shares of BI&P (IDVL4) were traded in 96.8% of the sessions in the quarter and 93.0% of the 244 sessions in the past 12 months. The volume traded on the spot market in the quarter was R$7.4 million, involving 1.0 million IDVL4 shares in 815 trades. In the 12 months ended in June 2013, the volume traded on the spot market was R$26.7 million, involving around 3.9 million preferred shares in 2,305 trades. Shareholder Base Position as of June 30,2013 # Type of Shareholder IDVL3 % IDVL4 % TOTAL % 5 Controlling Group 20,962,670 56.7% 399,689 1.5% 21,362,359 33.9% 5 Management 57,876 0.2% 279,462 1.1% 337,338 0.5% - Treasury - 0.0% 734,515 2.8% 734,515 1.2% 28 National Investors 1,201,090 3.3% 8,312,979 31.8% 9,514,069 15.1% 13 Foreign Investors 4,891,304 13.2% 14,012,544 53.6% 18,903,848 30.0% 6 Corporate - 0.0% 6,712 0.0% 6,712 0.0% 277 Individuals 9,832,709 26.6% 2,414,413 9.2% 12,246,852 19.4% 334 TOTAL 36,945,649 100.0% 26,160,044 100.0% 63,105,693 100.0% 70 80 90 100 110 120 130 IBOVESPA IDVL4 adjusted for earnings IDVL4
  • 19. 19/21 Balance Sheet Consolidated R$ thousand Assets 6/30/2012 3/31/2013 6/30/2013 Current 4,112,797 3,295,573 3,128,533 Cash 25,754 64,521 26,552 Short-term interbank investments 606,824 546,759 270,732 Open market investments 569,256 518,490 246,708 Interbank deposits 37,568 28,269 24,024 Securities and derivative financial instruments 1,483,027 718,515 1,011,301 Own portfolio 550,099 515,238 649,604 Subject to repurchase agreements 724,713 51,598 69,426 Linked to guarantees 170,547 127,461 160,716 Subject to the Central Bank - - 89,784 Derivative financial instruments 37,668 24,218 41,771 Interbank accounts 3,195 11,996 3,201 Loans 1,263,526 1,354,555 1,359,621 Loans - private sector 1,281,970 1,451,470 1,408,066 Loans - public sector - - - (-) Allowance for loan losses (18,444) (96,915) (48,445) Other receivables 692,144 545,482 394,416 Foreign exchange portfolio 564,427 508,913 320,987 Income receivables 14 43 58 Negotiation and intermediation of securities 37,365 27,444 61,573 Sundry 94,854 13,909 16,753 (-) Allowance for loan losses (4,516) (4,827) (4,955) Other assets 38,327 53,745 62,710 Other assets 39,960 50,248 56,946 (-) Provision for losses (2,745) - - Prepaid expenses 1,112 3,497 5,764 Long term 801,308 907,312 985,743 Short-term interbank investments - - - Marketable securities and derivative financial instruments 53,002 51,163 45,188 Own portfolio 15,370 42 43 Subject to repurchase agreements - - - Linked to guarantees - - - Derivative financial instruments 37,632 51,121 45,145 Interbank Accounts 4,347 - 3,001 Loans 596,483 625,129 655,164 Loans - private sector 675,150 737,581 807,148 Loans - public sector - - - (-) Allowance for loan losses (78,667) (112,452) (151,984) Other receivables 147,066 199,332 251,685 Credit guarantees honored - - - Trading and Intermediation of Securities 468 517 495 Sundry 152,674 204,788 260,163 (-) Allowance for loan losses (6,076) (5,973) (8,973) Other rights 410 31,688 30,705 Permanent Assets 52,392 56,236 83,929 Investments 24,738 29,403 29,559 Subsidiaries and Affiliates 23,052 27,717 27,868 Other investments 1,842 1,842 1,847 (-) Loss Allowances (156) (156) (156) Property and equipment 13,801 14,077 14,178 Property and equipment in use 1,210 1,210 1,210 Revaluation of property in use 2,634 2,634 2,634 Other property and equipment 19,467 20,481 22,740 (-) Accumulated depreciation (9,510) (10,248) (12,406) Intangible 13,853 12,756 40,192 Goodwill 2,391 2,276 24,585 Other intangible assets 13,100 13,100 18,664 (-) Accumulated amortization (1,638) (2,620) (3,057) TOTAL ASSETS 4,966,497 4,259,121 4,198,205
  • 20. 20/21 Consolidated R$ thousand Liabilities 06/30/12 03/31/13 06/30/13 Current 3,383,145 2,512,472 2,538,587 Deposits 893,007 928,651 1,021,586 Cash deposits 29,527 79,284 38,781 Interbank deposits 136,482 91,336 58,128 Time deposits 726,998 758,031 924,677 Other - - - Funds obtained in the open market 1,219,647 193,228 176,141 Own portfolio 720,294 51,699 56,517 Third party portfolio 130,011 53,211 104,621 Unrestricted Portfolio 369,342 88,318 15,003 Funds from securities issued or accepted 331,483 497,095 550,198 Agribusiness Letters of Credit, Real State Notes & Bank Notes 331,483 497,095 550,198 Interbank accounts 202 180 556 Receipts and payment pending settlement 202 180 556 Interdepartamental accounts 10,218 15,741 9,892 Third party funds in transit 10,218 15,741 9,892 Borrowings 449,157 396,399 365,999 Foreign borrowings 449,157 396,399 365,999 Onlendings 103,582 125,570 131,247 BNDES 62,750 83,659 90,018 FINAME 40,832 41,911 41,229 Other liabilities 375,849 355,608 282,968 Collection and payment of taxes and similar charges 449 287 452 Foreign exchange portfolio 212,693 206,208 5,353 Taxes and social security contributions 3,186 4,156 13,201 Social and statutory liabilities 4,000 2,500 4,500 Negotiation and intermediation securities 114,389 74,364 133,055 Derivative financial instruments 29,580 53,512 75,550 Sundry 11,552 14,581 50,857 Long Term 999,899 1,247,172 1,089,265 Deposits 790,227 992,003 842,830 Interbank Deposits 494 58 32 Time deposits 789,733 991,945 842,798 Funds from securities issued or accepted 23,323 33,503 13,172 Agribusiness Letters of Credit, Real State Notes & Bank Notes 23,323 33,503 13,172 Loan obligations - - - Foreign loans - - - Onlending operations - Governmental Bureaus 164,180 196,525 217,312 Federal Treasure 9,184 7,702 7,435 BNDES 68,282 101,588 122,487 FINAME 86,063 87,017 87,186 Other Institutions 651 218 204 Other liabilities 22,169 25,141 15,951 Taxes and social security contributions 18,872 18,468 7,550 Derivative financial instrument 1,049 2,420 4,246 Sundry 2,248 4,253 4,155 Future results 1,013 1,031 795 Shareholders' Equity 582,440 498,446 569,558 Capital 572,396 572,396 661,812 Capital Reserve 10,343 17,565 19,866 Revaluation reserve 1,364 1,327 1,315 Profit reserve 4,196 - - (-) Treasury stock (5,859) (5,859) (5,859) Asset valuation Adjustment - - 31 Accumulated Profit / (Loss) - (87,860) (108,455) Minority Interest - 877 848 TOTAL LIABILITIES 4,966,497 4,259,121 4,198,205
  • 21. 21/21 Income Statement Consolidated R$ thousand 2Q12 1Q13 2Q13 1H12 1H13 Income from Financial Intermediation 222,829 87,588 93,015 384,607 180,603 Loan operations 62,860 55,972 50,133 133,057 106,105 Income from securities 114,389 19,626 22,316 182,995 41,942 Income from derivative financial instruments 5,549 1,960 (7,780) 1,803 (5,820) Income from foreign exchange transactions 40,031 10,030 28,346 66,752 38,376 Expenses from Financial Intermediaton 185,865 198,223 90,778 311,213 289,001 Money market funding 119,361 53,208 53,005 204,664 106,213 Loans, assignments and onlendings 43,907 11,631 37,628 69,554 49,259 Allowance for loan losses 22,597 133,384 145 36,995 133,529 Gross Profit from Financial Instruments 36,964 (110,635) 2,237 73,394 (108,398) Other Operating Income (Expense) (30,926) (33,887) (36,041) (58,077) (69,928) Income from services rendered 5,364 6,451 8,636 11,954 15,087 Income from tariffs 155 172 187 354 359 Personnel expenses (21,939) (26,373) (26,138) (44,677) (52,511) Other administrative expenses (13,622) (13,371) (15,694) (26,745) (29,065) Taxes (2,342) (3,600) (2,034) (6,047) (5,634) Result from affiliated companies 473 787 402 2,017 1,189 Other operating income 3,739 3,204 1,147 8,710 4,351 Other operating expense (2,754) (1,157) (2,547) (3,643) (3,704) Operating Profit 6,038 (144,522) (33,804) 15,317 (178,326) Non-Operating Profit (1,153) (669) 752 1,731 83 Earnings before taxes ad profit-sharing 4,885 (145,191) (33,052) 17,048 (178,243) Income tax and social contribution (217) 59,189 15,109 (5,196) 74,298 Income tax (6,687) 6,632 1,074 (6,108) 7,706 Social contribution (4,027) 4,057 457 (3,612) 4,514 Deferred fiscal assets 10,497 48,500 13,578 4,524 62,078 Statutory Contributions & Profit Sharing (2,250) (5,431) (2,694) (4,389) (8,125) Net Profit for the Period 2,418 (91,433) (20,637) 7,463 (112,070)