1Q12 Results Presentation


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1Q12 Results Presentation

  1. 1. Results Presentation1st 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• Expanded Credit Portfolio grows 8.9% during 1Q12 and 38.4% in 12 months, reaching R$2.8 billion. Corporate segment already responds for 35% of Credit Portfolio.• Continuous improvement in credit quality: Loans rated from AA to B up from 69.9% in 4Q11 to 75.3% in 1Q12 (vs. 62.3% in 1Q11).• Agro Bonds Portfolio (CPR, CDA/WA e CDCA) reaches R$230 million, up 77.6% in the quarter, and contributes to a more efficient funding mix through the issuance of Agribusiness Letters of Credit (LCAs).• Funding follows the credit portfolio growth adding up to R$2.7 billion. The higher volume of funds obtained through the issuance of LCAs and a marginal decline in cost of our time deposits (CDB) contributed to a reduction in funding costs in Real of 0.9% of CDI during the quarter.• Income from Services (Fees) grew by 90.1% compared to same quarter last year totaling R$6.6 million in the quarter, reflecting the trend to add up higher value added products to our client offering.• Net Profit in the quarter was R$5.0 million. This result is yet below the potential of the bank but it is aligned to the Management’s forecast taking into consideration our leverage level, the seasonality of the first quarter and the increased allowance for loan losses expenses of R$14.4 million in the period, still derived from loans originated before 2011. The Efficiency Ratio and NIM followed the positive trend of the previous quarters.• Our Basel Ratio at 18.1% (Tier 1) is still one of the highest in the industry, allowing a high portfolio growth in 2012.• On March 1st, our shares started trading at Level 2 Corporate Governance at BM&FBOVESPA.2
  4. 4. Expanded Credit PortfolioGrowth with a broader product range 2,759 2,534 2,248 1,994 2,109 R$ million 1Q11 2Q11 3Q11 4Q11 1Q12 Loans & Discounted Receivables in Reais Trade Finance Garantuees 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 EvolutionIncreasing volume of new operations 646 2,759 2,534 (281) (85) (55)R$ million 4Q11 Credits received Credit Write Offs New 1Q12 and not exits operations renewed New Operations 656 646 498 414 R$ miliion 298 1Q11 2Q11 3Q11 4Q11 1Q124
  6. 6. With Multiproduct Offering50+ Financial Products Portfolio • New products launched in the quarter: – Offshore Loan – Real State Letter of Credit (LCI) – Cash Flow Swap – Commodities Options • Revenues from Services (Fees), up 90% compared to 1Q11, to R$6.6 million in the quarter. • Fee income from products launched in the last year represented 25% of revenues from services rendered in 1Q12, and 5% in 4Q11.5
  7. 7. Expanded Credit PortfolioBreakdown by Product Group • Loans & Discounted Receivables in Real ended the quarter at R$1.5 billion. • Trade Finance portfolio totaled R$442.8 million Loans & (US$243.0 million), slightly contracted in theDiscounts Trade quarter due to changes in the foreign exchange in Real 56% Finance rate. 16% • BNDES Onlendings amounted to R$231.1 million, up 11.6% in 1Q12, mainly in Corporate segment. BNDES Onlendings • Guarantees and Letters of Credit issued totaled 9% R$163.8 million, increasing 17.2% in 1Q12. Receivables Aquired • Agricultural Bonds portfolio (Agro Product Other Private 1% from Certificate - CPR, Inventory Financing - CDA/WA, Agricultural Customers and Certificate of Agro Credit Rights - CDCA), Credit Bonds Guarantees 3% Bonds started in 1Q11, increasing by 77.6% in the 8% Issued 1% 6% quarter, amounting to R$229.7 million. • Private Credit Bonds (Promissory Notes and Debentures) totaled R$25.5 million, up 145% compared to the previous quarter.6
  8. 8. Agricultural Bonds Portfolio Specializing in Agribusiness • Agricultural bonds activity started in 1Q11 through Agricultural Bonds the acquisition of the portfolio of the subsidiary 230 Serglobal. 129 • Due to their negotiability, Agro Product CertificateR$ million 52 (CPR) and Inventory Financing (CDA/WA) are 28 37 classified as Marketable Securities, in available-for- sale category; and Certificate of Agro Credit Rights 1Q11 2Q11 3Q11 4Q11 1Q12 (CDCA) are recorded in Loans & Discounted CPR Warrant (CDA/WA) CDCA Receivables in the credit portfolio. That activity is directly related to the performance of Brazilian agribusiness, with high growth prospects and contribution to the expansion and profitability of our business, including the reduction in funding cost through the Agribusiness Letters of Credit (LCA).7
  9. 9. Credit PortfolioStrategy for equilibrium between Corporate and Middle Market segment maintained Middle Market companies with annual revenues between • Middle Market segment accounts for 63% of R$40 million and R$400 million Credit Portfolio (69% in 4Q11), down 4.5% in the quarter and 3.4% in 12 months. 1,554 1,604 1,593 1,572 1,501 • Corporate clients accounts for 35% of Credit R$ million Portfolio (28% in 4Q11), increasing by 29.5% in 1Q12 and 210.9% in 12 months. 1Q11 2Q11 3Q11 4Q11 1Q12 • Average Exposure by Client: Corporate – Middle Market = R$2.9 million – Corporate = R$5.6 million companies with annual revenues between R$400 million and R$2 billion The previously disclosed strategy of maintaining 831 the Corporate / Middle Market credit portfolio mix R$ million 641 322 436 267 at 45% / 55% until the end of 2012 maintained. 1Q11 2Q11 3Q11 4Q11 1Q12 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$54.2 million in 1Q12.8
  10. 10. Credit Portfolio + Agricultural BondsSignificant presence of Agribusiness and Food related activities Agribusiness 7% Agribusiness - Agricultural Bonds 1%1% 16% 1% Civil Construction 2% 2% Food & Beverage 2% Automotive Pulp & Paper 3% Textile, Apparel and Leather 9% 3% Transportation & Logistics Chemical & Pharmaceutical 3% Metal Industry Power Generation & Distribution 3% Financial Institutions Education 3% Oil & Biofuel 13% Financial Services 4% Advertising and Publishing Retail & Wholesale 4% Individuals 4% Non-Financial Holdings 5% 13% Other Industries9
  11. 11. Credit PortfolioExposure by Client and Term of Transations Client Concentration Maturity 10 largest Other 16% +360 days 25% 26% Up 90 days 40% 11 - 60 largest 181 to 360 61 - 160 days largest 33% 16% 91 to 180 26% days 18% Top 60 borrowers remain at 49% of Credit Portfolio (52% in 1Q11). 74% of Credit Portfolio to mature up to 360 days.10
  12. 12. Credit Portfolio Quality Higher quality of new operations Rating NPL / Credit Portfolio 92% 6.8%1Q12 4% 39% 32% 17% 8% 6.1% 6.3% 5.0% 90% 6.3% 3.2%4Q11 2% 40% 28% 20% 10% 4.6% 4.7% 4.1% 85% 2.7%1Q11 2% 35% 25% 23% 15% 1Q11 2Q11 3Q11 4Q11 1Q12 AA A B C D-H NPL 60 days NPL 90 days • 92% of Credit Portfolio are classified between AA and C, out of which 75% between AA e B. • 97% of the operations disbursed in 1Q12 were classified between AA and B. • At the end of 1Q12, credits rated between D and H included: – R$119.5 million in normal payment course = 5.0% of credit portfolio, and – R$75.1 million overdue more than 60 days = 3.2% of credit portfolio. • Allowance for Loan Losses covers 156% of credits overdue more than 90 days. • R$55 million of fully provisioned H rated loans were written off during the quarter. 11
  13. 13. Funding Cost reduction through diversified sources 2,736 • Funding volume increased 8% in the quarter, to 2,420 2,533 2,247 2,230 R$2.7 billion, highlighting time deposits (CDBs). • Funding from Agribusiness Letters of Credit (LCA)R$ million increased by 36% in 1Q12 due to the growth in agricultural bonds portfolio (Agro Product Certificate - CPRs). 1Q11 2Q11 3Q11 4Q11 1Q12 in Reais in Foreign Currency • Reduction of 0,9% of CDI (benchmark rate) in local funding cost during the quarter, for higher volume Insured of LCAs issued and marginal drop in time deposits Time Time (CDB) cost derived from depositor base Deposits Deposits (CDB) diversification with improved risk perception. (DPGE) Agro & 30% 29% Financial Notes • 90% of foreign currency funding is related to Trade (LCA/LF) Finance portfolio. 11% Onlendings Demand 9% Interbank Deposits Foreign Borrowings Deposits 2% 15% 4% 12
  14. 14. PerformanceNIM and Efficiency Ratio NIM • NIM remained unchanged since credit portfolio 6.3% 6.6% 6.6% growth occurred mainly at the end of the5.9% 5.2% quarter, with increased Corporate segment share in the portfolio.4.6% 4.6% 4.8% 4.9% 3.7%1Q11 2Q11 3Q11 4Q11 1Q12 • Improvement of Efficiency Ratio, given that the standardized ratio dropped by 3.0 pp. Despite NIM NIM(a) * the positive trend, the ratio still remains high by (i) the low leverage and (ii) fee income still Efficiency Ratio under the expected level for next quarters.78.6% 78.6% 77.6% 71.2% 68.1% No significant headcount additions are73.3% 76.1% 71.0% 70.9% 68.0% forecasted, thus business growth tends to dilute administrative expenses.1Q11 2Q11 3Q11 4Q11 1Q12 Efficiency Ratio Standardized Efficiency Ratio ** * NIM(a) adjusts remunerated average assets by repos with equivalent volumes, tenors and rates both in assets and liabilities. ** Standardized Efficiency Ratio includes management adjustments in order to (i) eliminate non-recurring revenues and expenses; (ii) standardize personnel expenses, contributions and profit-sharing pro rata temporis; and (iii) exclude sales revenues and costs of agricultural commodities from the activity of the acquired subsidiary of Sertrading to determine the 13 efficiency ratio of the financial activity.
  15. 15. Profitability Net Profit • Net Profit does not yet evidence the credit portfolio growth and it was particularly affected by the increase in expenses with allowance for loan losses for there was no relevant credit recoveries over the 10.3 7.3 quarter.R$ million 5.1 5.0 • 1Q11 result was mainly affected by the increase of R$101.6 million in allowance for loan losses in that 1Q11 2Q11 3Q11 4Q11 1Q12 quarter, in order to protect Bank’s future profitability -31.7 from expected default. Return on Average Equity (ROAE) % Retorn on Average Assets (ROAA) % 7.3 1.0 5.2 0.7 3.6 3.5 0.5 0.5 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 2Q11 3Q11 4Q11 4Q11 14
  16. 16. Capital Structure Shareholders’ Equity Leverage Expanded Credit Portfolio / 563.7 566.5 577.5 577.1 590.5 Shareholders’ Equity 4.4x 4.6x 3.5x 3.7x 3.9xR$ million 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 2Q11 3Q11 4Q11 1Q12 Basel Index (Tier I) 23.7% • Capital Adequacy Index (Basel II) and low 21.6% 21.1% 18.2% 18.1% leverage allow healthy portfolio growth. • Disciplined strategy and business goals monitoring for efficient and profitable growth. 1Q11 2Q11 3Q11 4Q11 1Q1215
  17. 17. Ratings Agency Rating Last Report Global: BB/ Estável/ B Standard & Poor’s December 2011 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 December 2011 Índice: 10,08 RiskBank April 2012 Low risk to short term16
  18. 18. Shares and Capital Distribution Number of Shares Shareholders’ Distribution Class Common Preferred Total Individuals 20% ControllingCapital Social 36,945,649 26,160,044 63,105,693 Group 34%Controlling Group 20,743,333 630,626 21,373,959Management 277,307 60,125 337,432 ManagementTreasury - 734,515 734,515 1% ForeignFree Float 15,925,009 24,734,778 40,659,787 Investors Treasury 30% 1%Free Float 43.1% 94.6% 64.4% Institutional InvestorsPosition as of March 31, 2012. 14% 2008 2009 2010 2011 Outstanding Shares 1 43,000,001 42,048,101 40,466,187 62,358,840 IOE gross amount (R$ million) 25.5 27.0 25.1 27.8 IOE gross amount per share (R$ million) 0.59 0.64 0.61 0.53 Price to Book Value 0.38 0.81 0.75 0.73 Market Value (R$ million) 171.6 348.6 321.7 420.91 Issued Shares (-) Treasury Shares17
  19. 19. Share Performance 110 100 90 80 70 IBOVESPA IDVL4 IDVL4 adjusted for earnings 60 IDVL4 IDVL4 Share Price 12.29.2011 R$ 6.75 Average Daily Volume Share Price 03.30.2012 R$ 8.60 - in March 2012 R$ 156,782 Change in the period + 27.4% - in 1Q12 R$ 193,840 Maximum Share Price R$ 8.90 - in 12 months R$ 216,676 Minimum Share Price R$ 6.41 Market Value in 03.30.2012 R$ 536,286,024 Price to Book Value 0.918