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Presentation 3Q10

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  • 1. Presentation on 3Q10 Results 0
  • 2. Credit Behavior in BrazilLoan PortfolioFunding and LiquidityResults from OperationsCapital Market 1
  • 3. Total Credit Volume and Segmentation Volume of Credit Operations R$ billion 1.612 Credit to individuals supported by payroll 1.410 lending, car loans, but mainly by earmarked 1.227 34% 32% resources for real state financing. 936 29% 29% In Corporate Credit earmarked resources from BNDES still stand out, after 24 months, 607 733 66% in September, free credit grew above 71% 71% 68% earmarked. 2005 2006 2007 2008 2009 Set/10 Public institutions still account for 42% of total Nonearmarked Resources Earmarked Resources loans in the financial system Variation % Individuals Corporates Non Non Total Credit Earmarked Earmarked Sep/10 earmarked Total earmarked Total Resource Resources Resource Resources In the month 1.4 2.9 1.8 2.2 1.1 1.7 1.8 In the quarter 4.4 7.6 5.2 4.4 7.5 5.6 5.4 In the year 12.4 20.4 14.5 10.0 19.5 13.6 14.0 In 12 months 16.9 26.0 19.3 13.3 31.2 19.8 19,6 Source: Central Bank of Brazil – Credit Information System - SCR 2
  • 4. Credit Default Ratios Small retreat in Corporate Credit and steady decline for Individuals 10 9 8 7 6 6.0% 5 4.7 4 3 3.5 2Source: BACEN 1 Corporates Individuals Total 0 Dec Dec Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2006 2007 2008 2009 2010 Central Bank Default Rates = loans overdue above 90 days on total loan portfolio Default Rate on Loans to Individuals: Fast retreat from June 2009 Default Rate on Corporate Loans: Accelerated increase until September 2009, with slow decline from November 2009 to March 2010, when it stabilized around 3.6%, retreating to 3.5% in September/10. 3
  • 5. Credit Behavior in BrazilLoan PortfolioFunding and LiquidityResults from OperationsCapital Market 4
  • 6. Loan Portfolio of R$ 1.8 billion* * Including guarantees issued and L/Cs Local Currency Loans Trade Finance R$ Million R$ Million -0.3% 1,429.7 1,405.4 1,425.0 +35.2% 357.1 344.1 254.5 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 Local currency loans maintain 80% share in Trade Finance portfolio comprises export (ACC/ total loan portfolio with a 1.4% growth in the ACE) and import (FINIMP) financing. third quarter The 3.6% drop observed in the figures reported Working Capital Loans and Discounts in Real for the quarter is due to the BRL respond for 70% the loan portfolio appreciation in the period. In foreign currency this portfolio grew by 7% in Guarantees issued responded for 3.5% of the quarter and 41% in 12 months: the loan portfolio being: • US$ 143.2 million in 3Q09 3.3% in Real • US$ 189.2 million in 2Q10 0.2% in Foreign Currency • US$ 201.6 million in 3Q10 Credit Assignment Guarantees issued and L/Cs 5
  • 7. Credit Portfolio Breakdown By Economic Activity By Segment Individuals Financial 8% Upper Cos Middle 1% 6% Other Retail and Services other 25% Industry 4% 55% Middle Market 90% Commerce 11% By Client Concentration By Maturity Above 360 Other 10 largest days Up to 90 25% 18% 30% days 35% 11 - 60 32% 61 - 160 181 to 360 25% 15% 91 to 180 21% 6
  • 8. Loan Portfolio breakdown by Industry FOOD, BEVERAGE AND TOBACCO AGRIBUSINESS HEAVY CONSTRUCTION 14% 19% CHEMICAL AND PHARMACEUTICAL 1% AUTOMOTIVE 2% TRANSPORTATION & LOGISTICS 3% TEXTILE, CLOTHING & LEATHER 3% EDUCATION 3% INDIVIDUALS 3% 17% 3% FINANCIAL SERVICES 4% OIL AND BIOFUEL 4% FINANCIAL INSTITUTIONS 5% 11% 5% 5% METAL INDUSTRY WHOLESALE AND RETAIL TRADE PULP & PAPER OTHER INDUSTRIES 7
  • 9. Loan Portfolio Quality Asset Quality Risk Rating Collacteral Structure D-H Monitored Real State Pledge Vehicles 14.8% 8% 8% 7%11.1% Performing A Securities 34.3% 3% 3.7% Non-Performing + 60 days Pledge/ Lien 5% C Aval PN B Receiv. 23.9% 23% 46% 27.0% NPL(*) / Total Loan (%) Allowance for Loan Losses(*) Total outstanding amount of contracts with any installment overdue above 60 days R$ Million 8.1 133.0 107.8 112.2 3.7 2.6 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 Provisioning Coverage = 6.6% of Loan Portfolio, 44% of loans rated D-H and 179% of NPL 60 days 8
  • 10. Credit Behavior in BrazilLoan PortfolioFunding and LiquidityResults from OperationsCapital Market 9
  • 11. Funding mostly in Local Currency Total Funding Funding Breakdown R$ Million BNDES Onlending +9.9% Foreign 6% 1,880.6 1,902.7 Borrowings 1,732.0 17% Time Deposits Interbank 39% Deposits 4% Demand DepositsLCA 2% 4% DPGE(*) 3Q09 2Q10 3Q10 28% 83% of funding in Real and 17% in foreign CDs and DPGEs(*) account for 67% of total funding currency Average term to maturity for deposits = 526 days Funding composed by: CDs: R$ 753.1 MM - 361 days Deposits – 77% DPGEs: R$ 543.1 MM - 853 days Trade Finance lines– 15% LCAs: R$ 69.6 MM – 167 days IFC A Loan – 2% Interbank Deposits: R$ 67.7 MM - 74 days BNDES Onlending – 6% (*) DPGE – Time Deposits bearing Special Insurance from FGC 10
  • 12. Good Liquidity maintained Free Cash R$ Million Management of liquidity, interest rate, currencies and tenor mismatch risks is our Treasury’s 707.1 695.5 679.7 main task Free Cash: 46% of Total Deposits 157% of Shareholder’s Equity 3Q09 2Q10 3Q10 Assets and Liabilities Management R$ Million 729.9 645.3 Free Cash = 552.7 536.3(Cash + Liquid Financial Assets + Securities + Derivatives) 372.0 (-) 339.6 227.9 238.5 (Open Market Funds + Derivatives) 90 days 180 days 360 days Above 360 days Assets Liabilities 11
  • 13. Credit Behavior in BrazilLoan PortfolioFunding and LiquidityResults from OperationsCapital Market 12
  • 14. Evolution in Financial Intermediation Results Income from Financial Intermediation Gross Profit from Financial intermediation R$ Million R$ Million % +10.8 +60.4 % 348.2 107.4 314.3 .6 % +510 66.9 +31.0% 123.4 39.1 110.4 33.1 94.3 6.4 3Q09 2Q10 3Q10 9M09 9M10 3Q09 2Q10 3Q10 9M09 9M10 12% evolution in the quarter and 31% in 12 Gross Profit from Financial Intermediation months in Income from Financial Intermediation went up by 18% in the quarter and which were composed by corresponds to 32% of Income from Financial revenues from Loans 58% Intermediation in 3Q10 (30% in 2Q10 and 7% revenues from Securities 36% in 3Q09). revenues from Foreign Exchange Operations 5% Reduction of 10% in Loan Loss Provision The smaller share of revenues from foreign Expenses, also contributed to a better result. exchange due to the appreciation of Real, also Allowance for Loan Losses maintained at 6.6% reflected in the decrease of foreign loan expenses of the loan portfolio. 13
  • 15. Slight increase in Operating Expenses Net Operating Expenses Efficiency Ratio R$ Million In % +2.7% +0.5 p.p . p.p. 71.9 +10.2 70.0 60.7 61.2 59.3 55.2 49.1 +17.8% S&P Model 26.5 22.5 20.9 3Q09 2Q10 3Q10 9M09 9M10 3Q09 2Q10 3Q10 9M09 9M10 Increase derived from: The Efficiency ratio reflects this increase in Net Operating Expenses related to FX effects, R$ 1.4 MM net FX variation expenses on offshore assets and liabilities which are taxes and personnel. accounted under “other operating expenses and income” against net revenues of R$ 1.2 MM in 2Q10. Increased tax charges on deals carried abroad: Financial Operations Tax (IOF) and COFINS 14
  • 16. Recovering profitability Net Profit Net Interest Margin (NIM) R$ Million NIM NIM(a) GIM .4% 77 23.1 +1 8.5% 7.0% .3% + 196 5.4% 8.3 7.5 8.3 3Q09 2Q10 3Q10 9M09 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 -7.8 GIM= Gross Interest Margin Net Profit in the quarter was slightly lower than Gross Interest Margin benefited from the 2Q10 for the increased net operating expenses. reduced need for provisioning 9-month accumulated net profit shows good Stable NIM and Adjusted NIM (NIMa) progress, specially in the recurring results. NIM(a) is the NIM adjusted by bringing the exchange rate variation effects accounted as “other operating expenses and income” to the financial intermediation results and by reducing the average balance of repos from the average interest-bearing assets 15
  • 17. Credit Behavior in BrazilLoan PortfolioFunding and LiquidityResult from OperationsCapital Market 16
  • 18. Capital Distribution and Free Float Capital Distribution on Oct. 31, 2010 Controlling Free Class # of Shares Management Treasury Free Float Group Float Common 27,000,000 (17,116,173) (2,574,369) - 7,309,458 27.1% Preferred 14,212,984 (1,026,653) (159,570) (674,998) 12,351,763 86.9% TOTAL 41,212,984 (18,142,826) (2,733,939) (674,998)* 19,661,221 47.7% Board + Officers Treasury 6.6% 1.6% * 4th Share Buyback Program for up to Free Float 1,301,536 preferred shares valid until Controlling Aug. 09, 2011 47.7% Group 44.0% 17
  • 19. Shareholder Remuneration BIM’s practice for shareholder remuneration has been the quarterly anticipated payment of Interest on Equity 27.0 25.5 6.7 6.4 18.9 15.8 6.6 6.5 6.3 11.6 6.1 10.1 2.6 6.9 2.2 6.6 6.3 3.0 2.4 5.1 R$ MM 2.9 2.7 2.3 6.0 6.8 6.3 2.9 2.8 2.3 2005 2006 2007 2008 2009 2010 1Q 2Q 3Q 4Q Remuneration per share R$ 0.3657 R$ 0.34235 R$ 0.41635 R$ 0.59451 R$ 0.63704 R$ 0.45544 18
  • 20. Stock PerformanceIDVL4 X IBOV - 2010 115 IBOVESPA IDVL4 IDVL4 Earnings Adjusted 110 105 100 95 90 85 80 09 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 12 01 01 01 02 02 02 03 03 03 03 04 04 04 05 05 05 06 06 06 06 07 07 07 08 08 08 08 09 09 09 10 10 10 11 11 30/ 08/ 17/ 26/ 04/ 13/ 22/ 03/ 12/ 21/ 30/ 08/ 17/ 26/ 05/ 14/ 23/ 01/ 10/ 19/ 28/ 07/ 16/ 25/ 03/ 12/ 21/ 30/ 08/ 17/ 26/ 05/ 14/ 23/ 01/ 10/ YTD Performance 3Q10 9M10 Nov.10, 2010 IDVL4 -3.74% 4.58% -3.50% IDVL4 (adjusted to earnings) 1.92% 6.67% 2.17% IBOV 4.45% 13.94% 1.23% IGC 15.16% 18.67% 9.99% ITAG 15.18% 20.23% 10.15% Source: Enfoque 19
  • 21. In Summary Business Focus: Corporate lending Credit Behavior in Brazil Private Financial Institutions start reacting. After 24 months, corporate free credit growth exceeds earmarked credit’s in September. Government Financial Institutions respond for 42% of total credit in the Brazilian financial system. Loan Portfolio 90% middle market companies and 6% companies with annual sales above R$ 400 million Our loan portfolio growth in Real is limited by BRL appreciation on the Trade Finance portfolio and the implementation of the business expansion strategy to larger companies. Allowance for Loan Loss provide adequate coverage to NPL. Funding and Liquidity Funding predominantly in local currency deposits (77%) Good volume long term funding available. High liquidity maintained to provide stability Operating Results Evolution on Financial Intermediation Results Taxes and FX expenses increase Other Operating Expenses Accumulated 9-month net profit reaches R$ 23 MM against R$ 8.3 in 9M09. 20
  • 22. Questions and Answers Please pose your questions by utilizing the Q&A button at the right bottom end of the Webcast panel.Please note that this is the English version of the presentation originally prepared in Portuguese. In case of any discrepancy between those versions,the Portuguese version shall prevail. Banco Indusval Multistock complete financial statements are available at www.indusval.com.br/ir, under FinancialInformation – Financial Statements and they are filed with the CVM – Brazilian Securities and Exchange Commission that disposes them to the marketat www.cvm.gov.br.Any reference or statement regarding Banco Indusval Multistock - or its subsidiaries and affiliates - anticipated synergies, growth plans, projectedresults and future strategies are just estimates. Although forward-looking statements reflect management’s good faith beliefs, they involve known andunknown risks and uncertainties that may cause the Company’s actual results or outcomes to be materially different from those anticipated anddiscussed herein. These risks and uncertainties include, but are not limited to, our ability to realize the amount of the projected synergies and in thetimetable projected, as well as economic, competitive, governmental and technological factors affecting Banco Indusval Multistock’s operations,markets, products and prices, and other factors detailed in Banco Indusval Multistock’s filings with the CVM – Brazilian Securities and ExchangeCommission which, readers are urged to read carefully, in analyzing investment alternatiives. 21
  • 23. Investor Relations – Contact InformationZiro Murata Jr. Banco Indusval S/AIRO Rua Boa Vista, 356 – 7º andar 01014-000- São Paulo – SPPhone: (55 11) 3315-6961 BrasilE-mail: ziro@indusval.com.brMaria Angela R. Valente IR Site:Head of IR www.indusval.com.br/irPhone: (55 11) 3315-6821E-mail: mvalente@indusval.com.br 22