Results Presentation2nd Quarter 2012
Disclaimer    This presentation may contain references and statements representing future expectations,    plans of growth...
Highlights• Due to the more conservative approach on account of the macroeconomic scenario, the Expanded Loan  Portfolio g...
Expanded Credit PortfolioCautious growth under macroeconomic scenario                                                     ...
Expanded Credit Portfolio Evolution   Quality growth strategy maintained             2,759      (367)                     ...
Multiproduct Offering50+ product portfolio facilitates conquering new customers and enhancesour ability to provide more st...
Expanded Credit PortfolioBreakdown by product group                                                              • Loans &...
Agricultural Bonds PortfolioSpecializing in Agribusiness                                                                  ...
Expanded Credit PortfolioSignificant presence of Agribusiness and Food related activities                                 ...
Credit PortfolioStrategy for equilibrium between Corporate and Middle Market segment maintained                           ...
Credit PortfolioExposure by client and term of transactions           Client Concentration                                ...
Credit Portfolio Quality Higher quality of new transactions                                Rating                         ...
Funding  Product mix helps cost reduction                                                 2,736       2,755      •   Total...
PerformanceNet Interest Margin (NIM) and Efficiency Ratio                            NIM                                  ...
Profitability                              Net Profit                                                                • Net...
Capital Structure                             Shareholders’ Equity                                                        ...
Ratings         Agency                     Rating                 Last Report                             Global: BB/ Stab...
Shares and Capital Distribution                                                 Number of Shares                          ...
Share Performance     120     110     100      90      80      70      60                                                 ...
2Q12 Results Presentation
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2Q12 Results Presentation

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2Q12 Results Presentation

  1. 1. Results Presentation2nd Quarter 2012
  2. 2. Disclaimer This presentation may contain references and statements representing future expectations, plans of growth and future strategies of BI&P. These references and statements are based on the Bank’s assumptions and analysis and reflect the management’s beliefs, according to their experience, to the economic environment and to predictable market conditions. As there may be various factors out of the Bank’s control, there may be significant differences between the real results and the expectations and declarations herewith eventually anticipated. Those risks and uncertainties include, but are not limited to our ability to perceive the dimension of the Brazilian and global economic aspect, banking development, financial market conditions, competitive, government and technological aspects that may influence both the operations of BI&P as the market and its products. Therefore, we recommend the reading of the documents and financial statements available at the CVM website (www.cvm.gov.br) and at our Investor Relations page in the internet (www.bip.b.br/ir) and the making of your own appraisal.1
  3. 3. Highlights• Due to the more conservative approach on account of the macroeconomic scenario, the Expanded Loan Portfolio grew just 1.7% in 2Q12 and 33.1% in 12 months, totaling R$2.8 billion.• In line with our strategy, the Corporate segment continues to expand, accounting for 47% of the Expanded Loan Portfolio (45% of the Classic Loan Portfolio) at the end of June.• Continuous improvement in the quality of the expanded loan portfolio: the share of credits rated between AA and B increased to 79%, from 65% in 2Q11. Of the new loans granted in the quarter, 99% are rated between AA and B (97% in 1Q12).• Reduction in operations overdue more than 90 days to 2.6%, from 6.3% in June 2011, with coverage by provisions of 175.7% (156.4% in March 2012 and 155.8% in June 2011).• Funding costs continue to decrease, especially due to the higher share of Agribusiness Letters of Credit (LCA) in total funding in Real. Total funding stood at R$2.8 billion, in line with the loan portfolio trends.• Our Basel Ratio of 17.0% (Tier 1) and our liquidity enable business expansion in the second half of 2012.• Despite the 59% growth in Income from Financial Intermediation before allowance for loan losses, compared with 2Q11 (from R$37.4 million in 2Q11 to R$59.6 million in the quarter), provisioning of loans granted before 2010 continue to affect Net Profit.• Our Ratings were reaffirmed by Standard & Poors, BB/B (global) and brA+/brA-1 (local), and Fitch, BBB/F3 (local).2
  4. 4. Expanded Credit PortfolioCautious growth under macroeconomic scenario 2,759 2,807 2,534 2,248 2,109 R$ million 2Q11 3Q11 4Q11 1Q12 2Q12 Loans & Discounted Receivables in Reais Trade Finance Guarantees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA and CDCA) Private Credit Bonds (PNs and Debentures)3
  5. 5. Expanded Credit Portfolio Evolution Quality growth strategy maintained 2,759 (367) 517 2,807 (85) (17)R$ million 1Q12 Credits Credit Write New 2Q12 received and exits offs transactions not renewed New Transactions 656 646 498 517 414 R$ million 2Q11 3Q11 4Q11 1Q12 2Q12 4
  6. 6. Multiproduct Offering50+ product portfolio facilitates conquering new customers and enhancesour ability to provide more structured solutions5
  7. 7. Expanded Credit PortfolioBreakdown by product group • Loans & Discounted Receivables in Real amounted to R$1.5 billion in 2Q12. • Trade Finance portfolio totaled R$449.4 million (US$222.3 million), up 1.5% in the quarter and Loans &Discounts 5.7% in 12 months. Trade in Real Finance • BNDES Onlendings reached R$260.8 million, 54% 16% increasing by 12.9% in 2Q12 and 82.6% in 12 months, mainly in the Corporate segment. BNDES Onlendings • Guarantees and Letters of Credit issued totaled 9% R$175.8 million, growing 7.3% in 2Q12 and Receivables 156.6% in 12 months. acquired • Agricultural Bonds portfolio (CPRs and CDA/WAs, Other from classified as Marketable Securities, and CDCAs, in 1% Customers 3% the credit portfolio), amounted to R$267.0 Private Agricultural Guarantees million, up 16.2% in the quarter and 622.4% in 12 Credit Bonds Issued months. Bonds 10% 6% 1% • Private Credit Bonds portfolio (debentures) totaled R$30.7 million, 20.2% above the amount recorded in 1Q12.6
  8. 8. Agricultural Bonds PortfolioSpecializing in Agribusiness • Agricultural bonds activity started in 1Q11 and plays an important role in our growing business strategy. Agricultural Bonds • Our agricultural bonds transactions are focused on 267 commodities financing, specially grains, cotton, sugar 230 cane and coffee. 129R$ million • The expertise of our team combined with the support of 37 52 external specialists improve business opportunities detection and risk mitigation. As an example, this 2Q11 3Q11 4Q11 1Q12 2Q12 year’s drought in the Southern Region did not impact CPR Warrant (CDA/WA) CDCA payments in this portfolio. • We minimize risks, both for the customer and the bank, by developing commodity price protection instruments. Our agricultural bonds activity aims to follow the agribusiness growth in Brazil and the great moment of the commodities market.7
  9. 9. Expanded Credit PortfolioSignificant presence of Agribusiness and Food related activities Agribusiness 10% Food & Beverage 1% 19% 2% Civil Construction 2% Transportation & Logistics 2% Chemical & Pharmaceutical 3% Financial Services 3% Pulp & Paper Automotive 4% Oil & Biofuel 16% Metal Industry 4% Textile, Apparel and Leather Education 4% Power Generation & Distribution Financial Institutions 4% Retail & Wholesale 5% 12% Electronics 5% 5% Other Industries (% lower than 1%)8
  10. 10. Credit PortfolioStrategy for equilibrium between Corporate and Middle Market segment maintained Middle Market • Migration of customers managed by the Middle companies with annual revenues between Market team to Corporate, responding for R$200 R$40 million and R$400 million million outstanding volume in 2Q12. 1,604 1,593 1,572 1,501 1,267 • Middle Market segment accounts for 53% of Credit Portfolio (63% in 1Q12), and 51% of Expanded R$ million Credit Portfolio. • Corporate clients account for 45% of Credit 2Q11 3Q11 4Q11 1Q12 2Q12 Portfolio (35% in 1Q12), and 47% of Expanded Credit Portfolio. Corporate • Average Exposure by Customer: companies with annual revenues between – Middle Market = R$2.2 million R$400 million and R$2 billion – Corporate = R$6.9 million 1,078 R$ million 831 641 Our strategy is to balance our Credit Portfolio 322 436 at a ratio of 45% Corporate and 55% Middle Market customers . 2Q11 3Q11 4Q11 1Q12 2Q12 Note: In addition to the Agro Bonds, the Private Credit Bonds, the Guarantees Issued and the above operations in Middle Market and Corporate portfolios, the Credit Portfolio also includes Other Credits (CDC Vehicles, Acquired Loans and Financing, and Non-Operating Asset Sales Financing), which totaled R$51.0 million in 2Q12 (R$54.2 million in 1Q12).9
  11. 11. Credit PortfolioExposure by client and term of transactions Client Concentration Maturity Other Top 10 +360 days 25% 18% 27% up to 90 days 39% 181 to 360 11 - 60 days 61 - 160 largest 15% largest 91 to 180 32% 25% days 19% • Top 60 borrowers remain at 50% of Credit Portfolio (49% in 2Q11) • 73% of Credit Portfolio to mature up to 360 days10
  12. 12. Credit Portfolio Quality Higher quality of new transactions Rating NPL / Credit Portfolio 92.1% 6.8%2Q12 6% 37% 34% 16% 8% 6.3% 5.0% 91.8% 3.2% 6.3% 2.8%1Q12 4% 39% 32% 17% 8% 4.7% 4.1% 89.7% 2.7% 2.6%4Q11 2% 40% 28% 20% 10% 2Q11 3Q11 4Q11 1Q12 2Q12 AA A B C D-H NPL 60 days NPL 90 days • 76.2% of Credit Portfolio are classified between AA and B. • 99.4% of the transactions disbursed in 2Q12 were classified between AA and B. • At the end of 2Q12, credits rated between D and H included: – R$122.9 million in normal payment course = 5.1% of credit portfolio, and – R$67.3 million overdue more than 60 days = 2.8% of credit portfolio. • Allowance for Loan Losses covers 176% of loans overdue more than 90 days. • R$17 million of fully provisioned H rated loans were written off during the quarter. 11
  13. 13. Funding Product mix helps cost reduction 2,736 2,755 • Total Funding of R$2.8 billion at the end of 2Q12, 2,420 2,533 +0.7% in the quarter and +23.6% in 12 months, 2,230 highlighting LCAs and LFs.R$ million • Agribusiness Letters of Credit (LCAs) increased by 12.2% in the quarter and 150.8% in 12 months, supported by the agricultural bonds portfolio 2Q11 3Q11 4Q11 1Q12 2Q12 growth. in Real in Foreign Currency • Funding through Bank Notes (LFs) grew from Insured R$7.4 million in 2Q11 to R$30.6 million, and Time Time deposits Deposits accounted for 1.1% of total funding. (CDB) (DPGE) 27% LCA 28% 12% • 90% of foreign currency borrowings are Trade Onlendings LF Finance related . 10% 1% Foreign Interbank Demand Borrowings Deposits Deposits 16% 5% 1% 12
  14. 14. PerformanceNet Interest Margin (NIM) and Efficiency Ratio NIM 7.7% • Financial intermediation income before ALL 6.6% 6.6% 7.1%5.2% 6.3% 5.5% expenses increases NIM, since there was no material change in the balance of interest 5.8% bearing assets. 4.6% 4.8% 4.9% 5.3%3.7% 4.1% • The significant improvement in the Efficiency2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12 Ratio keeps the trend started in 3Q11. NIM NIM(a) * • The increasing pipeline of structured transactions should contribute to improve our Efficiency Ratio efficiency through service fees.78.6% 77.6% 78.6% 71.2% 68.1% • No significant headcount additions are 62.3% 65.1% forecasted and internal processes are continuously reviewed looking for optimizing, excellence and cost reduction.2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12 * NIM(a) adjusts remunerated average assets by repos with equivalent volumes, tenors and rates both in13 assets and liabilities.
  15. 15. Profitability Net Profit • Net Profit still reflects the higher risk credit 10.3 7.3 7.5 portfolio originated before 2010. 5.1 5.0 2.4 • Bottom line absorbs allowance for loan lossesR$ million 2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12 expenses amounting to R$22.6 million in the quarter and R$37.0 million in 1H12 (R$103.2 million in 1H11). -49.4 Return on Average Equity (ROAE) % Return on Average Assets (ROAA) % 7.3 1.0 5.2 0.7 3.6 3.5 2.6 0.5 0.5 0.3 1.7 0.2 2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12 2Q11 3Q11 4Q11 1Q12 2Q12 1H11 1H12 -18.9 -2.514
  16. 16. Capital Structure Shareholders’ Equity Leverage Expanded Credit Portfolio / Shareholders’ Equity 566.5 577.5 577.1 590.5 582.4 4.6x 4.8x 4.4x 3.7x 3.9x R$ million 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Basel Index (Tier I) 21.3% 21.1% 18.2% 17.5% 17.0% Capital (Tier I) and leverage still allow healthy portfolio growth. 2Q11 3Q11 4Q11 1Q12* 2Q12 * Operating risk calculation for 1Q12 was adjusted, increasing this risk allocation from R$8.2 million15 to R$20.2 million, with reduction in Basel Index in that quarter from 18.1% to 17.5%.
  17. 17. Ratings Agency Rating Last Report Global: BB/ Stable/ B Standard & Poor’s August 2012 National: brA+/ Stable/ brA-1 Global: Ba3/ Stable/ Not Prime Moody’s November 2011 National: A2.br/ Stable/ BR-2 FitchRatings National: BBB/ Stable/ F3 July 2012 Index: 10.43 RiskBank July 2012 Low risk to short term16
  18. 18. Shares and Capital Distribution Number of Shares Shareholders Distribution Class Common Preferred Total Individuals ControllingPaid-up Capital 36,945,649 26,160,044 63,105,693 20% GroupControlling Group 20,743,333 609,226 21,352,559 34%Management 277,307 60,125 337,432 ManagementTreasury - 734,515 734,515 1%Free Float 15,925,009 24,756,178 40,681,187 Foreign Treasury Investors 1%Free Float 43.1% 94.6% 64.5% 30% InstitutionalPosition as of June 29, 2012 Investors 14% 2008 2009 2010 2011 1H12 Outstanding Shares 1 43,000,001 42,048,101 40,466,187 62,358,840 62,371,178 IOE gross amount (R$ million) 25.5 27.0 25.1 27.8 - IOE gross amount per share (R$) 0.59 0.64 0.61 0.53 - Price to Book Value 0.38 0.81 0.75 0.73 0.72 Market Value (R$ million) 171.6 348.6 321.7 420.9 417.3 1 Issued Shares (-) Treasury Shares17
  19. 19. Share Performance 120 110 100 90 80 70 60 IBOVESPA IDVL4 IDVL4 adjusted for earnings 50 IDVL4 in 2Q12 IDVL4 Maximum Share Price in the period R$ 8.65 Average Daily Volume Minimum Share Price in the period R$ 6.21 - in June 2012 R$ 168,931 Share Price on Mar 30, 2012 R$ 8.60 - in 2Q12 R$ 117,887 Share Price on Jun 29, 2012 R$ 6.69 - in 12 months R$ 129,281 Change in the period -22.2% IBOVESPA Change in the period -15.7%18

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