Institutional Presentation1st Quarter of 2013Institutional Presentation
2/32Investor Relations | 1Q13 |History and ProfilePINEHistoryBusiness StrategyCompetitive LandscapeFocus on the ClientCorporate CreditFICCPINE InvestimentosRating UpgradesHighlights and ResultsCorporate Governance and PINE4Organizational StructureCorporate GovernanceCommitteesPINE4Ownership StructureSocial Investment and ResponsibilitySummary
4/32Investor Relations | 1Q13 |PINESpecialized in providing financial solutions for large clients…Credit Portfolio by Annual Client RevenuesProfileMarch 311h, 2013Focused on establishing long-term relationshipsProfound knowledge and product penetrationBusiness is structured along three primary business lines:• Corporate Credit: credit and financing products• FICC: instruments for hedging and riskmanagement• PINE Investimentos: Capital Market, FinancialAdvisory, Project & Structured Finance andResearchOver R$2billion39%R$500million toR$2 billion39%R$250millionto R$500million15%Up to R$250million7%
5/32Investor Relations | 1Q13 |155 184 222 341 521 620 755 663 7611,2142,854 3,1044,1915,7466,9637,9128,3791862121 126 140 136 152 171209335801827 8258671,0151,2201,260Dec-97Dec-98Dec-99Dec-00Dec-01Dec-02Dec-03Dec-04Dec-05Dec-06Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Mar-13Corporate Credit Portfolio (R$ Millions)Shareholders Equity (R$ Millions)History...with extensive knowledge of Brazil’s corporate credit cycle.1997Noberto and NelsonPinheiro sell theirstake in BMC andfound PINE1939Pinheiro FamilyfoundsBanco Central doNordeste1975Noberto Pinheirobecomes one ofBMC’s controllingshareholdersDevaluationof the realNasdaq Sept. 11 BrazilianElections(Lula)SubprimeAsianCrisisRussianCrisisEuropeanCommunityEnd of 2007Focus on expanding the Corporate Banking franchiseDiscontinuation of the payroll-deductible loan businessMay, 2007Creation of PINE Investimentos products line andopening of the Cayman branch2005Noberto Pinheiro becomes PINE’s soleshareholderOctober, 2007Beginning of the FICC BusinessOctober, 2011Subscription of PINE’s capital by DEGAugust, 2012Subscription of PINE’s capital by DEG, Proparco, Controlling Shareholder and ManagementNovember, 2012Opening of the broker dealer in New York, PINE Securities USA LLCMarch, 2007IPOMay, 201316 years
7/32Investor Relations | 1Q13 |Competitive LandscapePINE serves a niche market of companies with few options for banks.100% focused on providing complete serviceto companies, offering customized productsCorporate & SMESME & RetailRetail100% CorporateLarge Multi-Services banksMarketConsolidation of the banking sector hasdecreased the supply of credit lines and financialinstruments for corporateForeign banks are in a deleveraging processPINEFull service Bank – Credit, Hedging, andInvestment Bank products – with room forgrowth~10 clients per officerCompetitive Advantages: Focus Fast response: Strong relationship withclients, with the credit committeemeeting twice a week and response timesto clients of no more than one week Specialized services Tailor-made solutions Product diversityForeign andInvestment Banks
8/32Investor Relations | 1Q13 |Focus Always on the ClientStrategy of product diversity, tailored to meet the needs of each individual client.Working CapitCDIsBankGuaranteesExclusive FundsPortfolioManagementSwap NDFsStructured SwapsBNDES OnlendingBank GuaranteesComprorACC/ACEExport FinanceFinimpLettersof Credit2,770 onlendingOverdraftAccountsSyndicated andStructured LoansFixed IncomeCurrenciesCommoditiesEquitiesCDBsCDsRDBsLCAsLCIsDebenturesCRIsCCBsEurobondsPrivatePlacementsFinancialLettersClientsTreasuryCorporateCreditFICCPINEInvestimentosDistributionCapitalMarketsFinancial AdvisoryLocal CurrencyForeign CurrencyFixed Income CurrenciesCommoditiesPricing of Assets andLiabilitiesLiquidityManagementTradingLocal CurrencyOnlendingForeign CurrencyTrade FinanceParticipationFundsOptionsWorking CapitalUnderwritingCorporate &StructuredFinanceM&AProject FinanceStructuredFinancePrivate CreditFundsReal Estate FundsRural CreditAircraftFinancingInvestmentManagementIn addition to theheadquarters located in thecityof São Paulo, PINE has 12branches throughout Brazil, inthe States of Ceará, MatoGrosso, Minas Gerais, Paraná,Pernambuco, Rio de Janeiro,Rio Grande do Sul, SantaCatarina and São Paulo. Theorigination network alsocounts with a Cayman branchand a broker dealer in NewYork (USA).
9/32Investor Relations | 1Q13 |Corporate CreditActions Credit CommitteeStrong track record and solid credit origination and approval process.Credit Approval: Electronic ProcessOrigination OfficersCredit origination Credit analysis, visit to clients, dataupdates, interaction with internalresearch teamCredit AnalystsRegional Heads ofOrigination and CreditAnalysisPresentation to the Credit CommitteeCRO, ExecutiveDirectors and Analystsof CreditCentralized and unanimousdecision making processCREDIT COMMITTEEMeets twice a week – reviewing 20 proposals on averageMinimum quorum: 4 members - attendance of CEO orChairman is mandatoryMembers:Chairman of the BoardCEOChief Operating OfficerChief Administrative OfficerChief Risk OfficerParticipants:FICC Executive DirectorCredit AnalystsOther members of the Corporate Bankingorigination teamPersonalized and agile service, working closely withclients and keeping a low client to account officer ratio:each officer handles ~10 economic groupsGeographic coverage of clients, providing the bank withlocal and extremely up-to-date credit intelligence andinformationEstablished long term relationships with more than 600economic groupsOrigination network is comprised of 12 branches dividedinto 14 origination platforms in Brazil’s major economiccentersMore than 30 credit analysts, assuring that analysis isfundamentally driven and based on industry-specificintelligenceEfficient loan and collateral processes, documentation,and controls, which has resulted in a low NPL track recordDiscussion on sizing, collateral,structure etc.
10/32Investor Relations | 1Q13 |March 31, 2013 R$ millionsScenario on March, 31:Duration: 149 daysMark-To-Market : R$174 millionStress Scenario (Dollar: +31% and Commodities Prices: -30%):Stressed MTM: R$298 millionFixed Income: Fixed, Floating, Inflation, LiborCurrencies: Dollar, Euro, Yen, Pound, Canadian Dollar,Australian DollarCommodities: Sugar, Soybean (Grain, Meal and Oil), Corn,Cotton, Metals, Energy1Source: Cetip Report, March 2013FICCProven trackrecord: 2nd in commodity derivatives1.Client Notional Derivatives Portfolio by MarketMarket SegmentsNotional Value and MtMPortfolio ProfileCommodities20%FixedIncome20%Currencies60%4,287 4,720 4,875 5,036 5,180126256 238197 174354597 629498298Mar-12 Jun-12 Sept-12 Dec-12 Mar-13Notional valueMtMStressed MtM
11/32Investor Relations | 1Q13 |Capital Markets: Structuring and Distribution of FixedIncome Transactions.Financial Advisory: Project & Structured Finance, M&A,and hybrid capital transactions.Research: Macro, Commodities, and Corporate.R$ millions R$ millionsR$50,000,000January, 2013Capital IncreaseAdvisorUS$250,000,000April, 2013Senior NotesBookrunnerR$800,000,000January, 2013DebenturesCoordinator169101Q12 4Q12 1Q13+11.1%PINE InvestimentosConsolidation of the investment done through the years in the franchise.Volume of Underwriting TransactionsTransactionsRevenues3171601,0451Q12 4Q12 1Q13+553.1%
12/32Investor Relations | 1Q13 |Rating Upgrades...with market recognition and positive evaluation by rating agencies.Moodys explained that the positive outlook reflectsPINE’s profitability through a well-executedstrategy, and which has ensured earningsrecurrence. The rating action also captures thebanks improved funding diversification, wellmanaged asset quality metrics and its good liquidityand capital management.The agency based its ratings on the strong asset-quality, adequate liquidity, capital, and earnings.S&P also emphasizes the gradual fundingdiversification, through foreign issuances,securitizations, and the recent capital increasesubscribed by DEG.Fitch attributed this upgrade to PINE’s ability topreserve and to enhance its credit profile in thelast several years. Also, the ratings reflect PINE’sconsistent performance, higher fundingdiversification and sound asset quality, liquidity andcapitalization. According to Fitch, PINE hasmanaged carefully its growth in the corporatesegment with a strategy of revenue diversificationand cross-selling aiming to reduce the dependenceof revenues from lending and to increase theparticipation of its FICC Business and PINEInvestimentos.August 2011UpgradeS&PDecember 2011UpgradeS&PMay 2012Upgradepela Fitch May 2010UpgradeFitch August 2012UpgradePerspectiveMoody’sMay 2013UpgradeFitch
14/32Investor Relations | 1Q13 |Recurring results.1Q13 Events and HighlightsPositive revenue contributions from all business lines in the quarter: 56.6% from Corporate Credit, 34.1% fromFICC, 7.6% from PINE Investimentos, and 1.7% from Treasury.Positive liquidity gap maintained for over 11 quarters: 15 months for credit, versus 17 months for funding.Liquid balance sheet, with cash position of R$1.4 billion, equivalent to 42% of time deposits.PINE continues to be ranked among the 15 largest players in derivative transactions and the 2nd largest incommodity derivatives according to CETIP (OTC Clearing House).On April 19, the Central Bank of Brazil approved the capital increase made by Proparco in the Bank. Thetransaction resulted in the issuance of 2,211,213 preferred shares, totaling approximately R$32 million, with theparticipation of other shareholders who exercised their preemptive rights at the price of R$14.28 per share. Thetransaction resulted in a BIS ratio improvement of 40 bps.On April 25, DEG disbursed the first transaction of the PINE-DEG partnership, totaling US$16 million with an eight-year term for a company in the autoparts sector.On April 30, we concluded our first DCM transaction through our New York broker dealer. The deal amounted toUS$250 million for a Sugar and Ethanol company in the State of São Paulo.1234567
15/32Investor Relations | 1Q13 |R$ millions1 Includes Stand-by Letters of Credit, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, CRIs, eurobonds and fund shares)7,426 8,405Mar-12 Mar-13Loan Portfolio113.2%1,029 1,260Mar-12 Mar-13Shareholders Equity22.4%31 301Q12 1Q13Fee Income-3.2%47 461Q12 1Q13Net Income-2.1%1Q13 Financial HighlightsThe main performance indicators were within expectations in the quarter...19.5% 15.5%1Q12 1Q13ROAE-400 bps6,443 6,589Mar-12 Mar-13Funding2.3%
16/32Investor Relations | 1Q13 |44% 58% 58%56% 42% 42%Mar -11 Mar -12 Mar -13More than 1 product 1 product2.73.02.8Mar -11 Mar -12 Mar -13Product and Revenue Diversification... with contributions from all business lines, fruit of the strategy of complete service to clients.Clients with more than one product Penetration Ratio – Clients with more than one productRevenue MixCorporateCredit57.3%FICC24.3%Treasury8.2%PINEInvestimentos10.2%1Q12CorporateCredit56.6%FICC34.1%Treasury1.7%PINEInvestimentos7.6%1Q13
17/32Investor Relations | 1Q13 |5.0% 5.5%4Q12 1Q13+50 bpsIncreased activity in the FICC businessLoan portfolio growthCash reserves returned to approximately 40% of depositsNet Interest MarginNIM Evolution Impacts in the PeriodNIM CompositionR$ millions1Q13 4Q12 1Q12 QoQ YoYIncome from financial intermediation 102 93 122 9.7% -16.4%Overhedge effect (2) (1) (1) 100.0% 100.0%Income from financial intermediation ex-overhedge 100 92 121 8.7% -17.4%Provision for loan losses (13) (19) (11) -31.6% 18.2%Income from financial intermediation after provision 87 73 110 19.2% -20.9%NIM is within the guidance range.
18/32Investor Relations | 1Q13 |R$ millions1Q13 4Q12 1Q12 QoQ YoYOperating expenses 150 49 46 2.0% 8.7%(-) Non-recurring expenses 1 1 1 - -Recurring Operating Expenses (A) 49 48 45 2.1% 8.9%Revenues 2(B) 130 122 152 6.6% -14.5%Ratio (A/B) 37.7% 39.3% 29.5% -160 bps 820 bps1Other administrative expenses + tax expenses + personnel expenses2Gross Income from financial intermediation - provision for loan losses + fee income + overhedge effectExpenses and Efficiency RatioExpensesEfficiency Ratio2223 2220222429.5%39.3% 37.7%1Q12 4Q12 1Q13Personnel ExpensesOther Administrative ExpensesEfficiency Ratio (%)Rigorous management and control of expenses.
19/32Investor Relations | 1Q13 |R$ millions3,136 3,175 3,329 3,289 3,389 3,382 3,274 3,377 3,55071 122251 322 367 621 683787 670881912881 883884822 800853 8261,1171,3721,534 1,6871,6841,599 1,6992,1142,5016227727567821,0211,154 9427818322301901241028164473626Mar -11 Jun-11 Sept-11 Dec-11 Mar -12 Jun-12 Sept-12 Dec-12 Mar -13Individuals: 0.3%Trade Finance: 9.9%Bank Guarantees: 29.8%BNDES Onlending: 9.8%Private Securities +Working Capital: 50.2%6,5456,8757,0657,4267,6417,4447,9488,4056,0571 Includes Stand-by Letters of Credit, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, CRIs, eurobonds and fund shares)Loan Portfolio1The portfolio maintained its growth to reach R$8.4 billion in March...
20/32Investor Relations | 1Q13 |Sugar and Ethanol15%Electric andRenewable Energy12%Construction11%Agriculture8%Infrastructure7%SpecializedServices6%Transportation andLogistics5%Metallurgy4%Foreign Trade4%Beverages andTobacco3%Vehicles and Parts3%Telecom3%Food Industry3%Chemicals2%Metals and Mining2%Meatpacking2%ConstructionMaterial2%FinancialInstitutions2% Other6%Sugar and Ethanol20%Construction9%Agriculture8%Infrastructure8%Electric andRenewable Energy8%Foreign Trade5%Transportation andLogistics5%Food Industry4%SpecializedServices4%Meatpacking3%Beverages andTobacco3%Metallurgy3%Vehicles and Parts3%Chemicals2%FinancialInstitutions2%Telecom2%ConstructionMaterial2% Other9%1Q13 1Q12Reduced exposure of the Sugar and Ethanol sector, from 20% to 15%;Increased participation in other sectors such as Electric and Renewable Energy, and Construction;Reshuffle of the 20 largest clients in approximately 20%;20 largest clients represented 29% of the total portfolio.Continuous Loan Portfolio Management...with sector diversification...
21/32Investor Relations | 1Q13 |AA-A56.0%B30.4%C9.2%D-E1.4%F-H3.0%3.4%3.7% 3.5%3.3% 3.4%Mar-12 Jun-12 Sept-12 Dec-12 Mar-13March 31, 20130.7%0.6%0.8%1.2% 1.2%0.2% 0.2%0.4%0.6% 0.6%Mar-12 Jun-12 Sept-12 Dec-12 Mar-13Contracts overdueInstallments overdueContracts Overdue: Total amount of the contracts overdue for more than 90 days / Loan Portfolioexcluding Bank Guarantees and Stand-by Letters of Credit.Installents Overdue: Total amount of installments overdue for more than 90 days / Loan Portfolioexcluding Bank Guarantees and Stand-by Letters of Credit.Credit Coverage: Provision / Loan Portfolio excluding Bank Guarantees and Stand-by Letters ofCredit.Loan Portfolio Quality... quality, collaterals, and adequate credit coverage.Loan Portfolio QualityCredit CoverageNon Performing Loans > 90 daysCollateralsProductsPledge39%Receivables28%PropertiesPledge30%Investments2%Guarantees1%
26/32Investor Relations | 1Q13 |Organizational StructureNon-bureaucratic, entrepreneurial, and meritocratic culture with a flat hierarchy.CEONoberto Pinheiro Jr.COONorberto ZaietCROGabriela ChisteCAOUlisses AlcantarillaCFOSusana WaldeckOriginationInvestment BankingSales & TradingResearch Macro/Commodities/CorporateInternationalAsset & Liabilities BackOfficeLegalCollaterals ManagementSpecial SituationsMiddle OfficeControllingAccountingTax PlanningITAccounts PayableOffice ManagementMarketingInvestor RelationsCreditCorporate ResearchCompliance , InternalControls and IT SecurityCredit, Market, Operationaland Liquidity RisksFinancial ModelingINTERNAL AUDITTikara YoneyaCOMPENSATIONCOMMITTEEAUDITCOMMITTEEEXTERNAL AUDITPWCNoberto Pinheiro Noberto Pinheiro Jr. Maurizio Mauro Gustavo Junqueira Mailson da NóbregaChairman Vice Chairman IndependentDirectorExternalDirectorIndependentDirectorHUMAN RESOURCESSidney VilhenaBOARD
27/32Investor Relations | 1Q13 |Corporate GovernancePINE commits to best corporate governance practices…Two Independent Members and one External Member on the Board of DirectorsMailson Ferreira da Nóbrega: Brazil’s Finance Minister from 1988 to 1990Maurizio Mauro: Former CEO of Booz Allen Hamilton and Grupo AbrilGustavo Junqueira: Former Head of PINE Investimentos, Member of the Board of Directors atEZTEC, Financial Advisor at Arsenal Investimentos and CFO at Gradiente EletrônicaSão Paulo Stock Exchange (BM&FBovespa) Level 2 Corporate GovernanceAudit and Compensation Committee reporting directly to the Board of Directors100% tag along rights for all shareholders, including non-voting sharesArbitration procedures for fast settlement of litigation casesFirst Brazilian bank to release BR GAAP and IFRS quarterly
28/32Investor Relations | 1Q13 |Committees…favoring collective decision making.Main decisions are taken by committees.Non-stop exchange of knowledge, ideas, and information.Transparency.CEOBi-annuallyMonthlyAUDITCOMMITTEEBOARD OF DIRECTORSCOMPENSATIONCOMMITTEECOMMITTEESCREDITASSET & LIABILITYCOMMITTEEALCOEXECUTIVETRANSACTIONSMONITORINGHUMANRESOURCESINVESTMENTBANKPERFORMANCEEVALUATIONIT ETHICSINTERNALCONTROLS ANDCOMPLIANCERISKTwice a week WeeklyMonthly Twice a month Every 2 monthsWeekly Monthly Quarterly On demandEvery 2 months45 days45 days
29/32Investor Relations | 1Q13 |R$ thousandsPINE4Price (R$) 14.44P/BV 1.3xP/E(1) 7.6x7.8%6.6% 6.5%4.5% 4.3%1.5%PINE4 Bank 1 Bank 2 Bank 3 Bank 4 Bank 5Average: 4.7%PINE4PINE4 Evolution (since 2012)MultiplesAverage Daily Traded VolumeDividend YieldDividend Yield: Average daily closing prices of the stocks in 1Q13 / Dividends and Interest on OwnCapital of the last twelve months7580859095100105110115120125PINE4: +12.0%IBOV: -2.6%162272 266 2755241Q12 2Q12 3Q12 4Q12 1Q13+90.5%(1) Considers the market consensus for the 2013 net income; source: Bloomberg
30/32Investor Relations | 1Q13 |Ownership StructureHighlightsIssuance of 2,211,213 new shares for the capital increase made by Proparco and minority shareholders on April 30, 2013.PINE hired Itau to serve as Market Maker in order to increase PINE4’s liquidity. The activities of the Market Maker began onMay 13, 2013.As of April 30, 2013Common Preferred Total %Controlling Shareholder 58,444,889 15,410,863 73,855,752 66.6%Management - 6,034,158 6,034,158 5.4%Free Float - 29,935,154 29,935,154 27.0%Individuals - 3,109,773 3,109,773 2.8%Local Institutional Investors - 11,839,327 11,839,327 10.7%Foreign Investors - 8,093,382 8,093,382 7.3%DEG - 5,005,067 5,005,067 4.5%Proparco - 1,887,605 1,887,605 1.7%SubTotal 58,444,889 51,380,175 109,825,064 99.1%Treasury - 1,017,249 1,017,249 0.9%Total 116,889,778 52,397,424 110,842,313 100%
31/32Investor Relations | 1Q13 |Social Investment and ResponsibilityFocus on the short, medium and long term.Social Investment RecognitionPartnershipMost Green BankRecognized by the International Finance Corporation (IFC), privateagency programs of the World Bank as the most "green" bank as a resultof its transactions under the Global Trade Finance Program (GTFP) andits onlending to companies focused on renewable energy and ethanolEfficiency EnergyRecognition by World Bank for support in the Energy Efficiency sector.The UN initiative mobilizes the international businesscommunity to adopt fundamental and internationallyaccepted values in their business practices in the areasof human rights, labor relations, environment andcombating corruption, which are reflected in tenprinciples. Since October 2012Responsible Credit“Lists of Exceptions”: the Bank does not finance projects or thoseorganizations that damage the environment, are involved in illegallabor practices or produce, sell or use products, substances or activitiesconsidered prejudicial to society.System of environmental monitoring, financed by the IADB andcoordinated by FGV, and internally-produced sustainability reports forcorporate loansPrinciples applied to Project Finance transactions wheretotal project capital costs exceed US$10 million and arebased on International Finance Corporation PerformanceStandards on social and environmental sustainability andon the World Bank Group Environmental, Health, andSafety Guidelines (EHS Guidelines). Since December/2012Exhibition and sponsorship of Brazilian artists, for instance Paulo von Poser,in addition to sponsoring and supporting films and documentaries such asQuebrando o Tabu (Fernando Henrique Cardoso on the drug war), Além daEstrada (Charly Braun) and others.
32/32Investor Relations | 1Q13 |This report may contain forward-looking statements concerning the business prospects, projections of operating and financial results and growth outlook of PINE. These are merelyprojections and as such are based solely on management’s expectations regarding the future of the business. These statements depend substantially on market conditions, theperformance of the sector and the Brazilian economy (political and economic changes, volatility in interest and exchange rates, technological changes, inflation, financialdisintermediation, competitive pressures on products and prices and changes in tax legislation) and therefore are subject to change without prior notice..Investor RelationsNoberto Pinheiro Jr.CEOSusana Waldeck Norberto Zaiet JuniorCFO / IRO COORaquel VarelaHead of Investor RelationsAlejandra HidalgoInvestor Relations ManagerEduardo PinottiInvestor Relations AnalystAna LopesInvestor Relations AnalystPhone: +email@example.com