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.2
Highlights Expanded Credit Portfolio came to R$3.1 billion (+2.6% QoQ and +21.0% YoY), with R$728 million new loans granted in the period (11% above 4Q11). The Corporate segment reached 59.3% of the Expanded Credit Portfolio. We have maintained the tactics of originating higher quality assets with shorter term in order to resume origination of higher spread assets in a more favorable macro scenario, expect for 2013. Continuous improvement in the quality of the Credit Portfolio: the share of credits rated from AA to B increased to 79.1% of the Expanded Credit Portfolio at the end of 2012 (69.9% at the end of 2011); 99.2% of the new loans granted in the quarter were rated between AA and B. Reduction in past due loans above 60 days to 1.5% by the end of 2012 (-1.5 p.p. QoQ and 3.5 p.p. YoY) Revenues from Services climbed R$26.4 million in 2012, +32.3% YoY. Net Profit totaled R$3.6 million in 4Q12 (+15.8%) e R$14.2 million in the year. Association with Lifegrain Holding de Participações Ltda, company of the Ceagro Agrícola Ltda, through the creation of the joint venture C&BI Agro Partners. In February 2013, we signed the Purchase and Sale Commitment to acquire Voga Empreendimentos e Participações Ltda.3
Expanded Credit PortfolioGrowth still driven by shorter term assets given the macroeconomicenvironment... 2,991 3,068 2,759 2,807 2,534 R$ million 4Q11 1Q12 2Q12 3Q12 4Q12 Loans and Financing in Real Trade Finance Guarantees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA and CDCA) Private Credit Bonds (PN and Debentures)4
Expanded Credit Portfolio Development...maintaining the focus on higher quality assets... 2,991 3,068 (552) 728 (85) (15) R$ million 3Q12 Amortized Credit Write offs New 4Q12 Credits Exits Operations New Transactions 99,2% of new transactions in 687 728 656 646 4Q12 are classified 517 between AA and B. R$ million 4Q11 1Q12 2Q12 3Q12 4Q125
Multiproduct Offering…employing the +50 product portfolio...6
Expanded Credit Portfolio …and increasing the new products share in the portfolio... 4Q11 4Q12 BNDES BNDES Guarantees Guarantees Trade Trade Onlendings Onlendings Issued Issued Finance 6% Finance 11% 8% 5% 18% Agricultural 14% Agricultural Bonds Loans & Private Bonds 5% Discounts in Loans & Credit Bonds 11% Real Private Discounts in Other 0.4% 57% Credit Bonds Real 1% Other 1.3% 62% 1% NCE CCE CCBI NCE CCE CCBI Discount 0.3% 0.1% 0.2% 3.7% 2.4% 1.7% DiscountReceivables Receivables 0.7% 0.3% Confirming Confirming 1.6% 0.1% Credit Loans Credit Assignments 53.2% Assignments Loans 5.9% 15.6% 33.1% NCE: Export Credit Notes; CCE: Export Credit Certificate; CCBI: Real State Credit Bank Note 7
Developing Franchise Value...in specific niches... Agricultural Bonds Large Corporate Ecosystem (*) 529 482 327 371 267 307 315 230 R$ millionR$ million 189 129 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 CPR Warrant (CDA/WA) CDCA Receivables from Clients Receivables drawn on Clients Fixed Income Bonds 94 92 The expertise development in certain niches andR$ million 60 structures that create competitive advantages 41 15 allows profitability increase through fees. 4Q11 1Q12 2Q12 3Q12 4Q12 PNs Debentures Real State Credit Bank Notes (*) Acquisition and/or assignment of receivables originated by our customers and Transactions with8 receivables of suppliers drawn on our clients (Confirming).
Expanded Credit Portfolio...with relevant exposure in agribusiness... 4Q11 Agribusiness 16.8% Food & Beverage 14.6% Construction 14.4% Other* 8.1% Automotive 6.4% Textile, App. & Leather 4.8% 4Q12 Power Gen. & Distr. 4.5% Pulp & Paper 3.8% Agribusiness 22.2% Chemical & Pharma 3.6% Construction 13.3% Financial Services 3.5% Food & Beverage 13.1% Transport. & Log. 3.4% Other Industry 11.9% Metal Industry 3.1% Education Automotive 6.5% 3.0% Oil & Biofuel 2.6% Transport. & Log. 4.1% Individuals 2.0% Electronics 4.0% Commerce 2.0% Chemical & Pharma 3.9%Advertising & Publishing 1.9% Metal Industry 3.5% Financial institutions 1.6% Commerce 3.5% Textile, App. & Leather 3.2% Pulp & Paper 3.2% Education 2.4% Oil & Biofuel 2.1% Machinery and Equipments 1.6% Financial Services 1.5%9 * Other industries with less than 1.5% of share.
Expanded Credit Portfolio...and lower customer concentration and short term maturity profile maintained. 4Q11 4Q12 Client Concentration Client Concentration 11 - 60 11 - 60 largest largest Top 10 32% Top 10 31% 17% 14% 61 - 160 Other 61 - 160 largest Other 28% 24% largest 27% 27% Maturity Maturity 91 to 180 91 to 180 days days Up to 90 19% Up to 90 16% days days 40% 38% 181 to 360 181 to 360 days days 17% 15% +360 days +360 days 26% 29%10
Client SegmentationCorporate increases its share in the credit portfolio Corporate Tactical decision of originating higher quality assets 59% with shorter term in 2H12. In a better scenario, expected for 2013, we will promote the portfolio reallocation into more favorable spreads. Middle Market Average Exposure per Client: 39% ‒ Corporate = R$5.2 million ‒ Middle Market = R$2.4 million Other 2% Middle Market Corporate Annual revenues from R$40mn to R$400mn Annual revenues of between R$400mn and R$2bn 1,572 1,501 1,267 1,820 1,200 1,374 1,128 1,078 831 R$ million R$ million 641 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Migration of clients from Middle to Corporate = ~ R$200mn as of June 30, 2012 and ~ R$260mn as of Sept.30, 2012 Note: In addition to the Middle Market and Corporate operations above, the Credit Portfolio also includes Other11 Credits of R$43,0 mn in 4Q12 (Consumer Credit Vehicles, Acquired Loans and Non-Operating Asset Sales Financing). The Expanded Credit Portfolio also includes Agricultural Bonds, Private Credit Bonds and Guarantees Issued.
Credit Portfolio Quality 99.2% of loan volumes granted in the quarter were rated from AA to B Rating 79.1%4Q12 2% 42% 35% 13% 8% Credits rated between D and H totaled R$203.2 78.4% million at the end of 2012:3Q12 6% 37% 35% 14% 8% − R$163.5 million (80% of Credit Portfolio between D and H) in normal payment course 69.9% − Only R$39.6 million overdue more than 60 days4Q11 2% 40% 28% 20% 10% AA A B C D-H NPL / Credit Portfolio Credits overdue more than 60 days are derived from: 5.0% − clients acquired up to March 2011: 1.2%; 3.2% 2.8% 3.0% − clients acquired from April 2011: 0.3%. 4.7% 1.5% NPL indexes show significant improvement due to the strategy embraced in 2011, focusing on higher 2.7% 2.6% 1.8% 1.2% quality and shorter term assets. 4Q11 1Q12 2Q12 3Q12 4Q12 NPL 60 days NPL 90 days 12
Funding Product mix helps with cost reduction 4Q11 Insured Time Time deposits Deposits (CDB) (DPGE) 29% 30% LCA Foreign 8% Borrowings LF and LCI 2,936 2,999 18% Onlendings Interbank & 0.3% 2,736 2,755 9% Demand 2,533 Deposits 6%R$ million 4Q12 Insured Time Time deposits Deposits (CDB) (DPGE) 4Q11 1Q12 2Q12 3Q12 4Q12 24% 34% LCA in Local Currency in Foreign Currency Foreign 12% Borrowings 13% Onlendings Interbank & LF and LCI 11% 1% Demand Deposits 5% LCA: Agribusiness Letters of Credit; LF: Bank Notes; LCI: Real State Letters of Credit 13
Operating Performance and Profitability Net Interest Margin Efficiency Ratio* 7.7% 78.4% 6.7% 6.6% 6.1% 5.9% 5.9% 6.4% 74.2% 74.4% 67.6% 69.7% 68.7% 60.8% 5.8% 5.1% 5.0% 4.8% 4.9% 4.8% 4.3%4Q11 1Q12 2Q12 3Q12 4Q12 2011 2012 4Q11 1Q12 2Q12 3Q12 4Q12 2011 2012 NIM NIM(a) * Net Profit Return on Average Equity (ROAE) % 14.2 10.3R$ million 7.3 5.0 3.6 2.4 3.1 3.5 2.5 2.4 1.7 2.2 4Q11 1Q12 2Q12 3Q12 4Q12 2011 2012 4Q11 1Q12 2Q12 3Q12 4Q12 2011 2012 -6.3 -31.7 * Details about the calculation are available in the 4Q12 Earnings Release at www.bip.b.br/ir14
In 2012 the changing cycle started April 2011 wascompleted… Repositioning of the Bank’s Client Profile & Product Line Credit Portfolio Segmentation Franchise Value Developments Funding Diversification & Cost Reduction New Human Resources Policies Control Improvements16
…and 2013 we are seeking synergies and expandingbusiness... SERTRADING IMPROVEMENT OFCREDIT PORTFOLIO THROUGH ITS CLIENTS VOGA C&BI DEVELOPMENT OF AGROSEC INVESTMENT BANKINGAGRO PARTNERS ACTIVITIES IMPROVEMENT OF AGRIBUSINESS PORTFOLIO SECURITIZATION OF AGRO BONDS (expertise in the Midwest - soybeans and corn)17
VOGA: A Full Service Financial Advisory and M&A Boutique VOGA | Areas of Expertise Presence in BrazilMerger and Acquisition Transactions involving mergers, acquisitions, sales or divestures, focused on maximizing client value; Includes corporate finance services related to capital structure, FORTALEZA governance, valuation and business plan development.Capital Raising Services comprising all stages of equity and debt raising, from the development of a business plan and marketing material to the negotiation of final terms with investors.Pre IPO Advisory BELO HORIZONTE Supporting clients in evaluating the appropriateness of an IPO, assisting in its planning, and in the execution of the valuation, RIO DE JANEIRO necessary audits, legal advice and governance analysis. SÃO PAULO (HEADQUARTERS)Restructuring Corporate restructurings including negotiations between PORTO ALEGRE existing shareholders or corporate reorganizations.Corporate Governance and Risk Assessment HEADQUARTERED IN SÃO PAULO, VOGA HAS BRANCHES IN 4 OTHER Advisory on the development of corporate governance BRAZILIAN STATES structures as well in the elaboration of business plan and at the identification of the optimal capital structure, accordingly with the company perspective of growth.18
VOGA Partners: Extensive IB Experience Partners have complementary skills from previous experiences Alexandre Rodrigo Dória Rocha at companies and financial institutions including: (26 years) (17 years) • Mergers and acquisitions / Corporate finance • Restructurings Partners • Capital raising (debt and equity) • Asset management • Consulting Transactions concluded by the partners involve over US$50 Samuel Rogério Oliveira Pacheco billion (25 years) (19 years) STRATEGY: FULLY INTEGRATED WITH BI&P CURRENT STRUCTURE, LEVERAGING CURRENT AND GROWING CLIENT BASE WITH IB-RELATED PRODUCTS, NOTABLY M&A AND FIXED INCOME.
CEAGRO: Acting with excellence in agricultural chain Partner with deep understanding of the agricultural EXPERTISE sector players, both in credit and production; PRESENCE High presence in the state Mato Grosso; Acting with excellence in the agricultural chain VERSATILITY (origination; financing; acquisition and barter of inputs; and warehousing, logistics and distribution for domestic and international markets). FUNDING BI&P has great funding capacity at competitive costs; SECTOR Deep understanding of Brazilian agribusiness sector; BI&P has a diversified and innovative product PRODUCTS portfolio specifically to the sector.20
C&BI Agro Partners: joint venture between BancoIndusval & Partners and Ceagro Agrícola LtdaFocus: financing solutions to soybeans and corn agricultural chain.Objective: To develop and enhance agricultural financial products in the state of Mato Grosso Increase reliability in credit analysis for agricultural producers To provide clear and fast processes for agricultural bonds. A reliable and new financing tool for grain producers Structuring of innovative financial operations to the acquisition of agricultural inputs, as seeds, fertilizers, pesticides and others21
2013 Strategy Achieve economies of scale through Credit Portfolio growth and Fees Resume the strategic Expanded Credit Portfolio balance: 50% Middle Market and 50% Corporate Promote IB activities – Fixed Income through the expertise of Voga Participações e Empreendimentos Ltda Continuous processes, systems and controls review aiming reduction costs to increase efficiency22