BI&P- Indusval- 2Q14 Earnings Release

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Banco BI&P Earnings Release - 2nd Quarter 2014

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BI&P- Indusval- 2Q14 Earnings Release

  1. 1. 1/18 EARNINGS RELEASE 2nd QUARTER 2014 BI&P - Banco Indusval & Partners is a commercial bank with more than 45 years of experience in the financial market, focusing on local and foreign currency, fixed income and corporate finance for companies. BI&P relies on a network of 7 branches and 2 banking service posts strategically located in economically relevant Brazilian regions, besides an offshore branch in Cayman Islands, its brokerage house Guide Investimentos operating at the São Paulo Stock, Commodities and Futures Exchange - BM&FBOVESPA and Serglobal Cereais, acquired in April 2011, which originates agricultural bonds. Highlights  Expanded Credit Portfolio totaled R$3.9 billion, remaining stable in the quarter but up 21.4% from June 2013.  Loans rated between AA and B corresponded to 91% of the expanded credit portfolio (85% in June 2013). Reflecting the quality of the loan portfolio, 99% of the loans granted in the quarter were rated between AA and B.  The Corporate and Emerging Companies segments accounted for 59% and 40%, respectively, of the expanded credit portfolio, as against 51% and 48% in 2Q13.  The Managerial Expense with Allowance for Loan Losses (annualized) in 2Q14 corresponded to 0.66% of the expanded credit portfolio (1.1% in 1Q14), which is a highly positive outcome of the conservative credit policy being adopted by the bank in recent years.  Funding totaled R$4.1 billion, up 5.2% in the quarter and 31.6% in twelve months, while Free Cash totaled R$748.2 million at the end of 2Q14, reflecting the high liquidity enjoyed by the bank.  Income from services rendered and tariffs (see page 4) totaled R$15.7 million in 2Q14 and R$26.8 million in 1H14, representing growth of 42.3% in the quarter and 117.2% in relation to 1H13. The investment banking area already accounts for 50% of this revenue in 2Q14 (26% in 1Q14) which is the result of investments in the area in 2013 for acquiring the advisory firm VOGA and hiring a few top-notch professionals in this field.  Guide Investimentos, responsible for our wealth management and brokerage operations, entered into important alliances during 2014, with (i) Omar Camargo Corretora de Câmbio e Valores Mobiliários Ltda, (ii) Geraldo Corrêa Corretora de Câmbio e Valores Mobiliários Ltda, and (iii) Bullmark Consultoria Financeira Ltda. With these alliances, Guide has strengthened its distribution network and is now present in important regions across the country. After the migration of all the clients of these partners, Guide will manage assets of around R$2 billion.  The quarterly Result of R$1.1 million already reflects a significant improvement from previous quarters, but still impacted by (i) the non-cash accounting effects of the discontinuation of the designation of hedge accounting of cash flows from a series of funding operations indexed to inflation indices (IPCA and IGPM), which are still protected by hedge operations; (ii) the negative contribution from Guide Investimentos as result of all the investments made in recent quarters; (iii) the still increasing investment banking, structured operations and sales desks which, despite the significant growth from the same period the previous year, still have tremendous potential for growth; and (iv) the need for economies of scale, considering our appetite for risk and its direct impact on loan spreads. IDVL4: R$3.36 per share Closing: June 12, 2014 Outstanding Shares: 88.991.729 Market Cap: R$299.0 million Price/Book Value: 0.45 Conference Call / Webcasts June 13, 2014 In English 11 a.m. (US EST) / 12 a.m. (Brasília) Connections Brazil: +55 11 3193-1001 +55 11 2820-4001 EUA: +1 786 924-6977 Code: Banco BI&P In Portuguese 10 a.m. (US EST) / 11 a.m. (Brasília) Number: +55 11 3193-1001 +55 11 2820-4001 Code: Banco BI&P Website www.bip.b.br/ir Expanded credit portfolio totaled R$3.9 billion, remaining stable in the quarter but up 21.4% in twelve months Income from services rendered and tariffs totaled R$15.7 million, up 42% in the quarter and 117% from 1H13 Managerial ALL Expense was to 0.66%, as against 1.10% in 1Q13, underscoring the quality of the loan portfolio
  2. 2. 2/18 EARNINGS RELEASE 2nd Quarter 2014 Summary Message from the Management ............................................................................................................................................3 Macroeconomic Scenario .......................................................................................................................................................5 Key Indicators ..........................................................................................................................................................................6 Operating Performance...........................................................................................................................................................8 Expanded Credit Portfolio .................................................................................................................................................... 10 Funding ................................................................................................................................................................................. 12 Free Cash.............................................................................................................................................................................. 13 Capital Adequacy.................................................................................................................................................................. 13 Credit Ratings ....................................................................................................................................................................... 13 Capital Markets .................................................................................................................................................................... 14 Balance Sheet ...................................................................................................................................................................... 16 Income Statement................................................................................................................................................................ 18
  3. 3. 3/18 EARNINGS RELEASE 2nd Quarter 2014 Message from the Management In 2Q14, we continued our strategy of growing recurring fees and tariffs, and of prioritizing our Corporate segment portfolio, while maintaining a cautious approach to lending, given the still uncertain and highly volatile macroeconomic scenario. The expanded credit portfolio ended the quarter at R$3.9 billion, stable in relation to March 2014, but growing 21.4% in relation to June 2013, with the focus still on better quality loans - 99% of the loans granted during the quarter were rated between AA and B. The Corporate segment accounted for 59% (51% in 2Q13) of the expanded credit portfolio, while the Emerging Companies segment accounted for 40% (48% in 2Q13). The stability of the expanded credit portfolio was due to three factors: (i) conservative approach to lending; (ii) slowdown in economic activity on account of the World Cup; and (iii) a delay in the plantation of soy and corn crops, considering our specialization in the agricultural segment. We expect to speed up the growth pace in the second half of the year, though maintaining the conservative approach with regard to credit quality. Note that during the quarter, loan settlements totaled R$1,321 million and, despite the above-mentioned factors, loans originated by our sales team - now fully structured and aligned with the current strategy of the bank - totaled R$1,424 million, with fresh loans amounting to R$818 million and loan renewals amounting to R$606 million. Loans overdue more than 60 days (NPL 60) decreased from 2.6% at the end of 1Q14 to 2.0% in 2Q14, and NPL 60 loans in what we call the “new portfolio”, that is, loans granted after March 2011 under the new credit policy adopted in this new phase of the bank, stood at 1.2%. The managerial expense with allowance for loan losses in 2Q14 (annualized) corresponded to 0.66% of the expanded credit portfolio and in the case of the new portfolio, to 0.43%, which proves the quality of our loan portfolio. These percentages reflect the good work done by the bank’s credit and sales teams in recent quarters in both client prospecting and credit analysis. As for funding, total deposits, which include agro notes (LCA), real estate notes (LCI) and bank notes (LF) grew 9.2% in the quarter and 48.8% in relation to June 2013. We continue to diversify our funding mix, especially through: (i) the issue of LCAs, which increased 19.7% in the quarter and 135.9% in twelve months, and (ii) the dispersal of the depositor base through partnerships with more than 40 brokerage firms and distributors. As a result, we reduced funding costs, which reached the lowest ever in 2Q14, and expanded the depositor base, which totaled more than 7,000 at the end of June 2014, an increase of 5,400 in twelve months. Compared to the period when it rolled out the restructuring strategy in April 2011, BI&P today has more stable, dispersed and cheaper funding sources. Financial intermediation result before managerial expense with allowance for loan losses totaled R$43.3 million, 48.7% higher than in 1Q14 and 74.9% higher than in 2Q13. Net interest margin with clients increased from 4.1% in 2Q13 and 3.9% in 1Q14 to 4.4% in 2Q14, since we could negotiate better rates for clients, funding costs decreased and revenue from derivatives increased. Income from services rendered and tariffs totaled R$15.7 million in 2Q14, increasing 42.3% in the quarter and 120.8% in relation to 2Q13. The investment banking area started delivering more consistent results in 2Q14, having concluded M&A operations involving amounts more than R$2 billion, which is the result of investments in the area in 2013 for acquiring the advisory firm VOGA and hiring a few top-notch professionals in this field. A sizeable portion of these fees came from clients from the bank’s sales area, which shows greater potential for cross selling fixed income and M&A products. In May 2014, BI&P obtained authorization from the Central Bank of Brazil to operate as a multiple service bank and approval for its investment portfolio. Consequent to this approval, Banco BI&P started operating with the (i) commercial, (ii) foreign exchange, and (iii) investment portfolios. During the whole of 2014, we exercised strict control over both personnel and administrative expenses. Despite the absorption of Banco Intercap, employee headcount decreased 11% from 2Q13, with personnel expenses declining 7.1% in the quarter and 0.8% in relation to 2Q13, resulting from the policy of constant pursuit of efficiency and investments made by our IT area. In 2Q14 alone, the reduction in staff was 8% and its effects on personnel expenses will be observed from the second half of this year. Administrative expenses decreased 7.5% in the quarter, due to the strict control over expenses in 2014, yet increased 7.1% from 2Q13, mainly impacted by the inflation during the period and investments to improve our technological infrastructure. In the case of Guide Investimentos, there was an increase in both the headcount and in personnel and administrative expenses, due to the investments made in recent quarters and its current phase of structuring and growth. Guide Investimentos, which has already consolidated its position as an important distributor of our funding products, entered into important alliances this year: in February with Omar Camargo Corretora de Valores, the biggest and oldest firm in the sector in the state of Paraná, and in July with Geraldo Corrêa Corretora de Valores, a long-time stockbroker
  4. 4. 4/18 EARNINGS RELEASE 2nd Quarter 2014 in the state of Minas Gerais, and Bullmark, a financial consulting firm focused on wealth management for high net worth individuals. With the help of these alliances, Guide is continuing its strategy of expanding its client’s base and geographic presence. After the migration of all the clients of these partners, Guide will manage assets of around R$2 billion. The quarterly Result of R$1.1 million already reflects a significant improvement from previous quarters, but still impacted by (i) the non-cash accounting effects of the discontinuation of the designation of hedge accounting of cash flows from a series of funding operations indexed to inflation indices (IPCA and IGPM), which are still protected by hedge operations; (ii) the negative contribution from Guide Investimentos as result of all the investments made in recent quarters; (iii) the still increasing investment banking, structured operations and sales desks which, despite the significant growth from the same period the previous year, still have tremendous potential for growth; and (iv) the need for economies of scale, considering our appetite for risk and its direct impact on loan spreads. We remain focused on executing the strategy, always with a keen eye on market challenges and opportunities. Note that we seek growth and adequate profitability in a conscious manner without jeopardizing future results and business sustainability.
  5. 5. 5/18 EARNINGS RELEASE 2nd Quarter 2014 Macroeconomic Scenario Economic activity continued to slow down in the second quarter. In the first quarter of 2014, Gross Domestic Product (GDP) grew just 0.2% in relation to the fourth quarter of 2013, pulled down by sluggish industrial activity and the downturn in retail sales during the period. The macroeconomic scenario did not change between April and June, which led to consumer and business confidence plummeting to the lowest level since the onset of the financial crisis. In this scenario of a slowdown in a few sectors and the decline in the willingness to invest, the probability of registering negative GDP growth in the second quarter is high. As a result, analysts have constantly been reducing their forecasts of economic growth for 2014. According to the Focus report, economists are already expecting a GDP growth of below 1% this year. Added to this is the market uncertainty about the way public accounts are being handled. The continued tax rebate policies and sluggish economic activity have adversely affected federal tax collections. However, government spending has not kept pace with the economic slowdown, such that in the absence of considerable extra revenues, it will be increasingly difficult for the government to achieve the primary surplus target for this year of 1.9%. Despite the more modest economic activity, accumulated inflation in twelve months remains high. In June, the Extended Consumer Price Index (IPCA) went past the inflation target ceiling to reach 6.52%. The supply shock of agricultural products, caused by lack of rainfall at the start of the year and the increase in prices of services, which were pressured by the World Cup, among other factors, were the main reasons behind this increase in prices in the first half of the year. Though the Central Bank of Brazil expects inflation to hover well above the center of the target for the coming months, its concerns about economic activity led it to signal that, after seven successive hikes, it should maintain the interest rate at the current level of 11% p.a. The job market seems to have shown the initial signs of losing steam, with the pace of formal job openings slowing down in recent months. A negative highlight in the period was the decline in industrial jobs. In Brazil’s national financial system, loan operations grew 11.8% in the second quarter of 2014 to reach R$2.830 trillion. Average term of loans increased from 93.6 months in June 2013 to 101.1 months in June 2014. Credit as a percentage of GDP ended the second quarter at 56.3%, slightly higher than 56.0% in the first quarter. In the case of free credit operations, individual defaults dropped from 7.2% in the second quarter of 2013 to 6.5% this quarter, while corporate defaults declined from 3.5% to 3.4%. These marginal improvements in default rates, despite a less favorable economic scenario, are the result of the more selective approach to lending adopted by Brazilian banks. Macroeconomic Data 2Q14 1Q14 2Q13 2013 2014(e) Real GBP Growth (Q/Previous Q) -0.10% 0.20% 1,6% 2.3% 1.00% Inflation (IPCA - IBGE) – quarterly change 1.54% 2.18% 1,18% 2.04% 1.82% Inflation (IPCA - IBGE) – annual change 6.52% 6.15% 6,70% 5.91% 6.32% FX (US$/R$) – quarterly change -2.4% -4.5% 10,6% 15.36% -1.4% Interest Rate (Selic) 11.00% 10.75% 7,25% 10.00% 11.00% e= expected
  6. 6. 6/18 EARNINGS RELEASE 2nd Quarter 2014 Key Indicators The financial and operating information presented in this report are based on consolidated financials prepared in millions of Real (local currency), according to Brazilian Central Bank rules, except were otherwise stated. Starting 2Q14, Banco BI&P presents its results through the Managerial Income Statement, which is based on reclassifications of accounting Income Statement and is provided to help analyses. MANAGERIAL INCOME STATEMENT 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 1H14 1H13 1H14/1H13 Revenues from Loan Operations & Agro bonds 1 110.4 108.9 1.4% 69.2 59.5% 219.3 129.9 68.7% Revenues Securities (w/o Agro bonds), Derivat. & FX 2 37.9 28.3 33.8% 46.6 -18.7% 66.3 91.2 -27.4% Financial Intermediation Expenses (w/o ALL) 3 (105.0) (108.1) -2.9% (91.1) 15.3% (213.1) (156.0) 36.6% Result from Financial Intermediation before ALL 43.3 29.1 48.7% 24.8 74.9% 72.4 65.2 11.1% ALL Expenses 4 (4.9) (9.3) -47.6% (9.4) -48.1% (14.2) (144.9) -90.2% Result from Financial Intermediation 38.4 19.8 93.8% 15.4 150.0% 58.3 (79.7) 173.1% Revenues from services rendered and tariff 5 15.7 11.0 42.3% 7.1 120.8% 26.8 12.3 117.2% Personnel and Administrative Expenses 6 (41.4) (43.2) -4.1% (39.3) 5.3% (84.5) (77.6) 8.9% Personnel Expenses w/o Guide (22.8) (24.5) -7.0% (23.6) -3.4% (47.4) (47.8) -0.8% Personnel Expenses Guide (3.7) (3.0) 25.4% (2.5) 48.6% (6.7) (4.7) 40.9% Administrative Expenses w/o Guide6 (11.0) (11.8) -7.5% (11.2) -2.2% (22.8) (21.3) 7.1% Administrative Expenses Guide 6 (3.9) (3.8) 2.6% (2.0) 96.2% (7.7) (3.8) 101.6% Other operating income and expenses (2.3) 5.1 -145.5% (3.0) -24.1% 2.8 (3.8) 172.5% Recurring Operating Result 10.5 (7.2) 245.1% (19.9) 152.7% 3.3 (148.8) 102.2% Non-Recurring Operating Expenses (2.7) (4.0) -34.0% (13.9) -81.0% (6.7) (29.5) -77.4% Effect of discontinuance of hedge accounting (1.7) (4.0) -58.9% (13.6) -87.8% (5.7) (29.2) -80.6% Other non-Recurring Operating Expenses (1.0) 0.0 n.c. (0.4) 177.7% (1.0) (0.4) 177.7% Operating Result 7.8 (11.2) 169.6% (33.8) 123.1% (3.4) (178.3) -98.1% Non-operating profit (1.4) (1.7) -18.3% 0.8 -282.6% (3.1) 0.1 n.c. Income tax and social contribution (3.5) 5.5 -164.5% 15.1 -123.3% 1.9 74.3 -97.4% Statutory contributions & Profit sharing (1.9) (2.4) -22.3% (2.7) -30.4% (4.3) (8.1) -47.2% Net Profit (Loss) 1.1 (9.9) 110.7% (20.6) 105.1% (8.8) (112.1) -92.1% 1 Excluding the effects of (i) recoveries of loans written off, and (ii) discounts granted upon settlement of loans in the period. 2 Excludes the effect of discontinuance of the designation of hedge accounting in 2Q12. This effect is included in Non-Recurring Operating Expenses. 3 Includes expenses related to financial intermediation, such as (i) expenses related to the joint venture C&BI, (ii) commission paid to the distributors of our funding products, especially LCAs and LCIs, which are classified under administrative expenses. Excludes the accounting heading Result of Sale/Transfer of Financial Assets resulting from the shareholders’ agreement at the time of acquisition of Banco Intercap. This account is considered while calculating the managerial expense with allowance for loan losses. 4 Managerial expense with allowance for loan losses is calculated by adding to the expense with allowance for loan losses, the effects of (i) the recovery of loans written off and (ii) discounts granted upon settlement of loans in the period. Also excludes the impacts of the shareholders’ agreement at the time of acquisition of Banco Intercap in the Income Statement: (i) from the accounting heading Result of Sale/Transfer of Financial Assets; and (ii) from other operating expenses and income. 5 Includes expenses booked under administrative expenses related to income from services rendered. 6 Excludes (i) non-recurring operating expenses, (ii) expenses related to financial intermediation, and (iii) expenses related to income from services rendered. 7 Result of the sum of (i) Other operating income and expenses, (ii) taxes and (iii) Result from affiliated companies. Excludes other operating income and expenses resulting from the shareholders’ agreement at the time of acquisition of Banco Intercap. n.c. = not comparable (percentage above 300% or below -300%, or number divided by zero).
  7. 7. 7/18 EARNINGS RELEASE 2nd Quarter 2014 Operating Performance The financial and operating information presented in this report are based on consolidated financials prepared in millions of Real (local currency), according to Brazilian Central Bank rules, except were otherwise stated. Assets & Liabilities 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 Loan Portfolio 2,930.1 3,014.6 -2.8% 2,587.8 13.2% Expanded Loan Portfolio 1 3,920.1 3,926.1 -0.2% 3,228.7 21.4% Cash & Short Term Investments 150.3 211.4 -28.9% 297.3 -49.4% Securities and Derivatives 1,570.3 1,402.5 12.0% 1,056.5 48.6% Securities excl. Agro Sec. & Private Credit Bonds 2 759.6 702.1 8.2% 626.5 21.3% Total Assets 5,117.3 5,032.4 1.7% 4,198.2 21.9% Total Deposits 3,611.3 3,308.3 9.2% 2,427.8 48.8% Open Market 101.4 95.6 6.1% 176.1 -42.4% Foreign Borrowings 281.4 348.2 -19.2% 366.0 -23.1% Domestic Onlendings 242.1 273.4 -11.4% 348.6 -30.5% Shareholders’ Equity 671.4 667.1 0.6% 569.6 17.9% Performance 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 1H14 1H13 1H14/1H13 Free Cash 748.2 743.2 0.7% 660.7 13.2% NPL 60 days/ Loan portfolio 2.0% 2.6% -0.6 p.p. 2.6% -0.6 p.p. NPL 90 days/ Loan portfolio 1.8% 2.6% -0.8 p.p. 2.1% -0.3 p.p. Basel Index 13.3% 13.7% -0.4 p.p. 14.6% -1.2 p.p. ROAE 0.6% -5.8% 6.4 p.p. -14.6% 15.2 p.p. -2.8% -35.0% 32.2 p.p. Net Interest Margin with clients 4.43% 3.94% 0.49 p.p. 4.06% 0.37 p.p. 4.19% 4.06% 0.13 p.p. Efficiency Ratio 80.7% 106.3% -25.6 p.p. 144.5% -63.7 p.p. 91.9% 116.8% -24.9 p.p. Efficiency Ratio BI&P group w/o Guide Investimentos 72.6% 100.5% -27.9 p.p. 147.2% -74.6 p.p. 84.7% 114.7% -30.0 p.p. Other Information 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 Number of Corporate Clients 1,209 1,128 7.2% 874 38.3% Number of Employees 441 453 -2.6% 448 -1.6% Banco BI&P employees 347 379 -8.4% 390 -11.0% Guide Invstimentos and Serglobal employees 94 74 27.0% 58 62.1% 1 Including Guarantees issued, Private Credit Bonds (PNs and Debentures) and Agro Securities (CDA/WA and CPR). 2 Excluding Agro Securities (CPRs and CDA/WA) and Private Credit Bonds (PNs and debentures) for trading. n.c. = not comparable (percentage above 300% or below -300%, or number divided by zero).
  8. 8. 8/18 EARNINGS RELEASE 2nd Quarter 2014 Operating Performance Financial intermediation result before managerial expense with allowance for loan losses totaled R$43.3 million, 48.7% higher than in 1Q14 and 74.9% higher than in 2Q13, mainly impacted by the increase in the net interest margin with clients, which was 4.4% in 2Q14, since we could negotiate better rates for clients, funding costs decreased and revenue from derivatives increased. The managerial expense with allowance for loan losses (annualized) in 2Q14, corresponded to 0.66% of the expanded credit portfolio, and to 0.43% of the loans we call the “new portfolio”, that is, loans granted after March 2011. The quarterly result was R$1.1 million, still impacted: (i) by the non-cash accounting effects of the discontinuation of the designation of hedge accounting of the cash flows from a series of funding operations indexed to inflation indices (IPCA and IGPM), which are still protected by hedge operation; (ii) the negative contribution from Guide Investimentos as result of all the investments made in recent quarters; (iii) the still increasing investment banking and structured operations which, despite the significant growth from the same period the previous year, still have tremendous potential for growth; and (iv) the need for economies of scale, considering our appetite for risk and its direct impact on spread and the allowance for loan losses. Financial Intermediation Result before Allowance for Loan Losses Net Result Profitability Financial Intermediation 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 1H14 1H13 1H14/1H13 Financial Intermediation Revenues 148.3 137.2 8.1% 115.8 28.0% 285.5 221.2 29.1% Loan Operations and Agro Bonds 110.4 108.9 1.4% 69.2 59.5% 219.3 129.9 68.7% Loans, Discount Receivables and Agro bonds 91.6 92.2 -0.7% 60.4 51.5% 183.7 114.3 60.7% Financing 18.8 16.7 12.7% 8.8 114.4% 35.5 15.6 127.3% Other 0.0 0.0 -2.5% 0.0 290.0% 0.1 0.0 n.c. Securities (w/o Agro bonds) 19.8 21.7 -8.6% 12.5 59.0% 41.6 29.5 40.8% Derivatives 14.6 (4.8) n.c. 5.8 151.3% 9.8 23.3 -58.2% FX Operations Result 3.5 11.4 -69.5% 28.3 -87.7% 14.9 38.4 -61.1% Financial Intermediation Expenses (105.0) (108.1) -2.9% (91.1) 15.3% (213.1) (156.0) 36.6% Money Market Funding (100.3) (93.3) 7.5% (53.5) 87.6% (193.5) (106.7) 81.4% Time Deposits (64.6) (64.2) 0.7% (40.4) 59.9% (128.8) (81.2) 58.6% Repurchase Transactions (2.8) (2.3) 21.3% (3.0) -8.8% (5.1) (7.6) -33.7% Interbank Deposits (0.5) (0.4) 23.3% (0.8) -35.1% (1.0) (2.1) -53.6% Agro Bonds (LCA), Real Estate (LCI) & Bank Notes (LF) (28.7) (23.2) 23.5% (8.7) 229.4% (51.9) (15.2) 240.5% Others (3.6) (3.1) 16.5% (0.4) n.c. (6.8) (0.5) n.c. Loans, Assignments & Onlending (4.7) (14.8) -68.1% (37.6) -87.4% (19.5) (49.3) -60.4% Foreign Borrowings (1.2) (10.1) -88.6% (32.2) -96.4% (11.3) (39.1) -71.2% Domestic Borrowings & Onlending (3.6) (4.7) -23.9% (5.4) -33.6% (8.3) (10.2) -18.6% Gross Result from Financial Intermediation before ALL 43.3 29.1 48.7% 24.8 74.9% 72.4 65.2 11.1% Managerial Expenses with ALL (4.9) (9.3) -47.6% (9.4) -48.1% (14.2) (144.9) -90.2% Gross Result from Financial Intermediation 38.4 19.8 93.8% 15.4 150.0% 58.3 (79.7) 173.1% 24.8 42.5 42.5 29.1 43.3 65.2 72.4 2Q13 3Q13 4Q13 1Q14 2Q14 1H13 1H14 R$million -20.6 2.0 -10.0 -9.9 1.1 -8.8 2Q13 3Q13 4Q13 1Q14 2Q14 1H13 1H14 R$million --112,1
  9. 9. 9/18 EARNINGS RELEASE 2nd Quarter 2014 Net Interest Margin (NIM) Managerial net interest margin with clients was 4.43% in 2Q14, as against 3.94% in 1Q14, since in this quarter we managed to negotiate better rates for customers, funding costs decreased and revenue from derivatives increased. Net Interest Margin 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 1H14 1H13 1H14/1H13 A. Result from Finan. Int. before ALL 43.3 29.1 48.7% 24.8 74.9% 72.4 65.2 11.1% B. Average Interest bearing Assets 4,171.1 4,237.6 -1.6% 3,626.3 15.0% 4,209.3 3,615.0 16.4% Adjustm. for non-remunerated average assets 1 (134.0) (98.3) 36.3% (184.0) -27.2% (119.1) (206.6) -42.4% B.a. Adjusted Average Interest bearing Assets 4,037.1 4,139.3 -2.5% 3,442.3 17.3% 4,090.2 3,408.3 20.0% Net Interest Margin (Aa/Ba) 4.4% 2.8% 1.5 p.p. 2.9% 1.5 p.p. 3.6% 3.9% -0.3 p.p. Managerial NIM with Clients 4,43% 3,94% 0,49 p.p. 4,06% 0,37 p.p. 4,19% 4,06% 0,1 p.p. 1 Repos with equivalent volumes, tenors and rates both in assets and liabilities. Efficiency Efficiency ratio of the group, excluding Guide Investimentos, was 72.6% in the quarter, as against 100.5% in 1Q14. During the course of 2014, we exercised strict control over both personnel and administrative expenses at the Bank. Despite the absorption of Banco Intercap, employee headcount decreased 11% from 2Q13, with personnel expenses declining 7.1% in the quarter and 0.8% in relation to 2Q13, resulting from the policy of constant pursuit of efficiency and investments made by the IT area. In 2Q14 alone, the reduction in staff was 8% and its effects on personnel expenses will be observed from the second half of this year. Administrative expenses decreased 7.5% in the quarter, due to the strict control over expenses in 2014, yet increased 7.1% from 2Q13, mainly impacted by the inflation during the period and investments to improve our technological infrastructure. Efficiency Ratio w/o Guide Investimentos 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 1H14 1H13 1H14/1H13 Personnel Expenses 22.8 24.5 -7.0% 23.6 -3.4% 47.4 47.8 -0.8% Contributions and Profit-sharing 1.7 2.3 -25.9% 2.7 -36.9% 4.0 8.1 -50.6% Administrative Expenses 11.0 11.8 -7.5% 11.2 -2.2% 22.8 21.3 7.1% Taxes 4.0 2.9 38.7% 1.5 159.6% 6.9 4.7 45.9% A. Total Operating Expenses 39.5 41.6 -5.0% 39.1 1.1% 81.1 81.9 -1.0% Gross Income Financial Intermediation (w/o ALL) 40.9 28.1 45.5% 23.4 75.1% 69.1 63.3 9.1% Income from Services Rendered 13.2 7.4 79.8% 4.6 189.7% 20.6 7.4 176.0% Other Net Operating Income 0.2 5.9 -96.4% (1.4) 115.1% 6.1 0.6 n.c. B. Total Operating Income 54.4 41.4 31.4% 26.5 104.9% 95.7 71.4 34.1% Efficiency Ratio (A/B) 72.6% 100.5% -27.9 p.p. 147.2% -74.6 p.p. 84.7% 114.7% -30.0 p.p. The efficiency ratio of the group, including Guide Investimentos, was higher than the previous ratio because of the investments made in recent quarters at Guide on account of its current phase of structuring and growth. Efficiency Ratio 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 1H14 1H13 1H14/1H13 Personnel Expenses 26.5 27.5 -3.5% 26.1 1.5% 54.1 52.5 2.9% Contributions and Profit-sharing 1.9 2.4 -22.3% 2.7 -30.4% 4.3 8.1 -47.2% Administrative Expenses 14.8 15.6 -5.1% 13.2 12.6% 30.5 25.1 21.5% Taxes 4.6 3.5 31.6% 2.0 125.2% 8.1 5.6 43.1% A. Total Operating Expenses 47.8 49.0 -2.5% 44.0 8.6% 96.9 91.4 6.0% Gross Income Financial Intermediation (w/o ALL) 43.3 29.1 48.7% 24.8 74.9% 72.4 65.2 11.1% Income from Services Rendered 15.7 11.0 42.3% 7.1 120.8% 26.8 12.3 117.2% Other Net Operating Income 0.2 6.0 -96.3% (1.4) 115.8% 6.2 0.6 n.c. B. Total Operating Income 59.2 46.1 28.4% 30.5 94.4% 105.4 78.2 34.8% Efficiency Ratio (A/B) 80.7% 106.3% -25.6 p.p. 144.5% -63.7 p.p. 91.9% 116.8% -24.9 p.p.
  10. 10. 10/18 EARNINGS RELEASE 2nd Quarter 2014 Expanded Credit Portfolio In June 2014 the classic credit portfolio totaled R$2.9 billion, down 2.8% in the quarter but up 13.2% in twelve months, while the expanded credit portfolio totaled R$3.9 billion, remaining stable in the quarter but growing 21.4% in twelve months. The stability of the expanded credit portfolio was due to three factors: (i) conservative approach to lending; (ii) slowdown in economic activity on account of the World Cup; and (iii) a delay in the plantation of soy and corn crops, considering our specialization in the agricultural segment. Note that during the quarter, loan settlements totaled R$1,321 million and, despite the above-mentioned factors, loans originated by our sales team - now fully structured and aligned with the current strategy of the bank - totaled R$1,424 million, with fresh loans amounting to R$818 million and loan renewals amounting to R$606 million. Expanded Credit Portfolio by Product Group 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 Loans & Financing in Real 2,272.1 2,344.2 -3.1% 1,852.8 22.6% Assignment of Receivables Originated by our Clients 209.5 222.0 -5.6% 250.3 -16.3% Trade Finance (ACC/ACE/IMPFIN) 433.6 420.0 3.2% 427.3 1.5% Other 14.9 28.3 -47.5% 57.4 -74.1% Credit Portfolio 2,930.1 3,014.6 -2.8% 2,587.8 13.2% Guarantees Issued (LGs & L/Cs) 179.3 211.2 -15.1% 210.9 -15.0% Agro Bonds (Securities: CPRs & CDA/WA; Credit: CDCAs) 729.1 615.2 18.5% 390.8 86.6% Private Credit Bonds (Securities: PNs & Debentures) 81.6 85.1 -4.1% 39.2 108.0% Expanded Credit Portfolio 3,920.1 3,926.1 -0.2% 3,228.7 21.4% 1 Starting from March 2014, export credit notes (NCE) and export notes (CCE) originated by Banco Intercap are included in Loans & Financing in BRL, as well as NCE and CCE originated by Banco BI&P are classified. 2 The Other segment basically consists of Consumer Credit operations for Used Vehicles and financing of non-operating assets. The Corporate segment (companies with annual revenues of between R$400 million and R$2 billion) accounted for 59% of the expanded credit portfolio while the Emerging Companies segment (companies with annual revenues of between R$80 million and R$400 million) accounted for 40%. Note that the share of the Corporate segment of total loans increased during the quarter due to the more conservative lending approach adopted by the bank. Expanded Credit Portfolio by Segment Expanded Credit Portfolio by Client Concentration * The Other segment basically consists of Consumer Credit operations for Used Vehicles and financing of non-operating assets. ** Including R$97,2 million of loans assigned to Banco Intercap. In 2Q14, the agro bonds portfolio totaled R$884.2 million, up 18.4% in the quarter and 85.0% in twelve months. The growth in twelve months is the result of joint ventures and partnerships. Agro Bonds Portfolio 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 Booked under Securities 729.1 615.2 18.5% 390.8 86.6% Warrants - CDA/WA 66.0 35.5 86.1% 7.3 n.c. Agro Product Certificate - CPR 663.1 579.8 14.4% 383.5 72.9% Booked under Credit Portfolio - Loans & Financing 155.2 131.9 17.7% 87.1 78.1% Agro Credit Rights Certificate - CDCA 155.2 131.9 17.7% 87.1 78.1% Agricultural Bonds 884.2 747.1 18.4% 477.9 85.0% 48% 49% 47% 43% 40% 51% 50% 52% 56% 59% 1% 1% 1% 1% 1% Jun13 Sep13** Dec13 Mar14 Jun 14 Emerging Companies Corporate Others* 12% 12% 13% 28% 26% 27% 27% 25% 26% 33% 36% 33% Jun 13 Mar14 Jun14 Top 10 11 - 60 largest 61 - 160 largest Other
  11. 11. 11/18 EARNINGS RELEASE 2nd Quarter 2014 Expanded Credit Portfolio by Region Expanded Credit Portfolio by Economic Sector Quality of Expanded Credit Portfolio In line with the credit policy being adopted since April 2011, we maintained our focus on lending to client’s with better credit standing, which is evident from the high percentage of loans rated between AA and B in 2Q14, which represented 99% of total lending in the period. The balance of loans classified in the low risk categories (AA to B) ended the quarter at 90.9% of total loans (compared to 89.8% and 85.1% respectively, at the end of 1Q14 and 2Q13), as the following chart shows. Expanded Credit Portfolio by Rating Coverage Ratio In June 2014, the decline in the percentage of loans rated between D and H was mostly due to the settlement of loans in these ratings. Of the R$207.6 million rated between D and H, R$148.9 million, or 72%, consists of loans whose payments are regular. The default rate on loans overdue more than 60 days (NPL 60) decreased 0.6 p.p. in the quarter and in twelve months. Loans overdue more than 90 days (NPL 90) decreased 0.8 p.p. in the quarter and 0.3 p.p. in relation to June 2013. Default by segment Jun 14 Mar 14 > 60 days > 90 days Jun 14 Mar 14 Jun 14 Mar 14 Credit Portfolio NPL % NPL % NPL % NPL % Emerging Companies 1,141.5 1,252.4 55.9 4.9% 61.1 4.9% 49.3 4.3% 60.0 4.8% Corporate 1,768.1 1,727.6 2.7 0.2% 9.9 0.6% 2.7 0.2% 9.9 0.6% Other 20.6 34.5 0.2 0.8% 7.3 21.1% 0.1 0.6% 7.3 21.0% TOTAL 2,930.1 3,014.6 58.7 2.0% 78.3 2.6% 52.1 1.8% 77.2 2.6% Allowance for Loan Losses (ALL) 110.8 150.1 The managerial expense with allowance for loan losses (annualized) in the quarter corresponded to 0.66% of the expanded credit portfolio, and to 0.43% of the loans we call the “new portfolio”, that is, loans granted after March 2011 under the new credit policy adopted in this new phase of the Bank, which proves the quality of our credit portfolio. North 3% Northeast 6% Midwest 20% Southeast 56% South 15% 13.6% 1.5% 1.7% 1.9% 2.0% 2.3% 2.3% 2.6% 3.5% 3.9% 4.1% 4.3% 5.5% 6.9% 10.7% 12.0% 21.0% Other Sectors (less than 1.4%) Raw Materials Financial Activities International Commerce Metal Industry Chemical & Pharmaceutical Textile, Leather and Confection Power Generation & Distribution Commerce - Retail & Wholesale Infrastructure Transport and Logistics Automotive Livestock Food & Beverage Oil, Biofuel & Sugar Real Estate Agriculture
  12. 12. 12/18 EARNINGS RELEASE 2nd Quarter 2014 Funding Funding totaled R$4.1 billion in June 2014, up 5.2% in the quarter and 31.6% in twelve months. Worth special mention were funding through agro notes (LCA), which increased 19.7% in the quarter and 135.9% from June 2013, and diversification of the depositor base, which totaled more than 7,300 at the end of the quarter, growing 25% from March 2014 and 292% from June 2013. Note that LCAs, which provide tax advantages for individual investors, are backed by agribusiness operations in which Banco BI&P enjoys operational expertise. Total Funding 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 Total Deposits 3,611.3 3,308.3 9.2% 2,427.8 48.8% Time Deposits 868.3 807.7 7.5% 822.7 5.6% Insured Time Deposits (DPGE) 1,364.3 1,307.1 4.4% 944.8 44.4% DPGE I 949.2 1,023.8 -7.3% 944.8 0.5% DPGE II 415.1 283.3 46.5% 0.0 n.c. Agro Notes (LCA) 1,153.8 964.0 19.7% 489.2 135.9% Real Estate Notes (LCI) 116.3 119.3 -2.5% 40.2 189.5% Bank Notes (LF) 24.1 57.1 -57.8% 34.0 -29.0% Interbank Deposits 27.6 15.9 73.3% 58.2 -52.6% Demand Deposits and Other 56.9 37.1 53.4% 38.8 46.7% Domestic Onlending 242.1 273.4 -11.4% 348.6 -30.5% Foreign Borrowings 281.4 348.2 -19.2% 366.0 -23.1% Trade Finance 248.2 314.6 -21.1% 366.0 -32.2% Other Foreign Borrowings 33.3 33.6 -1.2% 0.0 n.c. TOTAL 4,134.9 3,930.0 5.2% 3,142.3 31.6% By Type By Investor By Maturity * Insured time deposits are represented by DPGE. DPGE I and II are two types of time deposits insured by FGC and differ in cost and framework. The average term of deposits stood at 637 days from issuance (690 days in March 2014) and 321 days from maturity (335 days in March 2014). Average Term in days Type of Deposit from issuance to maturity 1 Interbank 225 51 Time Deposits 693 547 Time Deposits with Special Guarantee (DPGE) 959 328 Agro Notes (LCA) 254 163 Real Estate Letters of Credit (LCI) 252 119 Bank Notes (LF) 1.141 822 Portfolio of Deposits 2 637 321 1 From June 30, 2014. | 2 Volume weighted average. Time Deposits 21% DPGE I * 23% DPGE II * 10% Agro Bonds 28% Bank & Real Estate Notes 3% BNDES Onlending s 6% Trade Finance 6% Foreign Loans 1% Interbank & Demand 2% Institutional Investors 34% Enterprises 16% National Banks 11% Brokers 13% Individuals 11% Other 2% BNDES Onlending 6%Foreign Banks 7% Demand 1% Up to 90 days 26% 91 to 180 days 18% 181 to 360 days 21% +360 days 34%
  13. 13. 13/18 EARNINGS RELEASE 2nd Quarter 2014 Free Cash On June 30, 2014, the free cash position totaled R$748.2 million, equivalent to 20.7% of total deposits and 1.1x shareholders’ equity. The calculation considers cash, short-term interbank investments and securities less funds raised in the open market and debt securities classified under marketable securities, comprising rural product certificates (CPRs), agribusiness deposit certificates and warrants (CDAs/WAs), debentures and promissory notes (NPs). Capital Adequacy The Basel Accord requires banks to maintain a minimum percentage of the capital weighted by the risk in their operations. In this context, the Central Bank of Brazil has stipulated that banks operating in the country should maintain a minimum percentage of 11%, calculated according to the Basel II and Basel III Accord regulations, which provides greater security to Brazil’s financial system against oscillations in economic conditions. The following table shows BI&P’s position in relation to the Central Bank’s minimum capital requirements: Basel Index 2Q14 1Q14 2Q14/1Q14 2Q13 2Q14/2Q13 Total Capital 600.6 605.5 -0.8% 554.3 8.4% Tier I 600.6 605.5 -0.8% 555.3 8.2% Tier II 0.0 0.0 n.c. 1.3 n.c. Deductions 0.0 0.0 n.c. (2.3) n.c. Required Capital 496.7 485.1 2.4% 419.1 18.5% Credit Risk allocation 458.1 454.5 0.8% 353.3 29.7% Market Risk Allocation 22.6 14.7 54.2% 47.9 -52.8% Operating Risk Allocation 16.0 16.0 0.0% 17.9 -10.9% Excess over Required Capital 104.0 120.4 -13.6% 135.2 -23.1% Basel Index 13.3% 13.7% -0.4 p.p. 14.6% -1.2 p.p. Note that the Basel index decreased in 2Q14, mainly due to: (i) the increase in exposure to market risks, especially in operations carried out by the proprietary desk; and (ii) the reduction in total capital due to the increase in the account of prudential adjustments resulting from tax liabilities on tax losses. Risk Ratings Agency Classification Observation Last Report Standard & Poor’s BB- / Stable / B brA / Stable / brA-2 Global Scale Local Scale - Brazil April 14, 2014 Moody's Ba3 / Negative / Not Prime A2.br / Negative / BR-1 Global Scale Local Scale - Brazil July 04, 2013 FitchRatings BBB / Stable / F3 Local Scale - Brazil September 05, 2013 RiskBank 9,65 Ranking: 56 RiskBank Index Low Risk Short Term April 17, 2014 758 743 748 Dec 13 Mar 14 Jun 14 R$million
  14. 14. 14/18 EARNINGS RELEASE 2nd Quarter 2014 Capital Market Total Shares and Free Float Number of shares as of June 30, 2014 Type Corporate Capital Controlling Group Management Treasury Free Float % Common 58,513,218 31,352,736 57,876 - 27,102,606 46.3% Preferred 31,021,907 648,521 279,362 543,396 29,550,628 95.3% TOTAL 89,535,125 32,001,257 337,238 543,396 56,653,234 63.3% Share Buyback Program The following Stock Option Plans, approved for the Company’s executive officers and managers, as well as individuals who provide services to the Company, had the following balances on June 30, 2014: Stock Option Plan Date of Approval Grace Period Term for Exercise Quantity Granted Exercised Extinct Not Exercised I 03.26.2008 Three years Five years 2,039,944 229,057 449,123 1,361,764 II 04.29.2011 Three years Five years 1,840,584 - 377,761 1,462,824 III 04.29.2011 Five years Seven years 1,850,786 - - 1,850,786 IV 04.24.2012 Up to five years Five years 867,425 - 41,644 825,781 Total 6.598.739 229.057 868.528 5.501.155 The aforementioned Stock Options Plans are filed in the IPE system of the Securities and Exchange Commission of Brazil (CVM) and are also available in the Company’s IR website. Remuneration to Shareholder During 1H14 the Bank neither provisioned nor paid interest on equity, calculated based on the Long-Term Interest Rate (TJLP) and towards the minimum dividend for fiscal year 2014. The Board of Directors will, by the end of the year, study the possibility of early payment of interest on equity after considering the results and the tax efficiency of such payment. Share Performance The preferred shares of BI&P (IDVL4), listed in the Level 2 Corporate Governance segment of BM&FBOVESPA, closed June 30, 2014 at R$3.12, for a market cap of R$278 million, including the shares existing on June 30, 2014 and excluding treasury stock. The price of IDVL4 shares decreased 22% in the quarter and 55% % in the 12 months ended June 2014. In comparison, the Bovespa Index (Ibovespa) increased 5% in the quarter and 12% in relation to the closing of June 2013. At the end of 2Q14, the price/book value (P/BV) was 0.41.
  15. 15. 15/18 EARNINGS RELEASE 2nd Quarter 2014 Share Price evolution in the last 12 months Liquidity and Trading Volume The preferred shares of BI&P (IDVL4) were traded in 100% of the sessions in the quarter and 96.0% of the 247 sessions in the past 12 months. The volume traded on the spot market in the quarter was R$13.9 million, involving 3.9 million IDVL4 shares in 1,085 trades. In the 12 months ended in June 2014, the volume traded on the spot market was R$50.2 million, involving around 10.5 million preferred shares in 3,207 trades. Shareholder Base Position as of June 30,2014 # TYPE OF SHAREHOLDER IDVL3 % IDVL4 % TOTAL % 8 Controlling Group 31,352,736 53.6% 648,521 2.1% 32,001,257 35.7% 4 Management 57,876 0.1% 279,362 0.9% 337,238 0.4% - Treasury - 0.0% 543,396 1.8% 543,396 0.6% 16 National Investors 1,201,090 2.1% 8,251,081 26.5% 9,452,171 10.6% 10 Foreign Investors 11,964,301 20.4% 18,158,686 58.5% 30,122,987 33.6% 7 Corporate - 0.0% 20,414 0.1% 20,414 0.0% 283 Individuals 13,937,215 23.8% 3,120,447 10.1% 17,057,662 19.1% 328 TOTAL 58,513,218 100.0% 31,021,907 100.0% 89,535,125 100.0%
  16. 16. 16/18 EARNINGS RELEASE 2nd Quarter 2014 Balance Sheet CONSOLIDATED R$ thousand ASSETS 6/30/2013 3/31/2014 6/30/2014 Current 3,159,122 3,864,643 4,000,221 Cash 26,552 37,068 8,515 Short-term interbank investments 270,732 174,298 141,822 Open market investments 246,708 144,999 118,998 Interbank deposits 24,024 29,299 22,824 Securities and derivative financial instruments 1,011,301 1,369,422 1,542,837 Own portfolio 649,604 1,097,481 1,331,462 Subject to repurchase agreements 69,426 26,233 52,027 Linked to guarantees 160,716 186,969 111,808 Subject to the Central Bank 89,784 3,022 - Derivative financial instruments 41,771 55,717 47,540 Interbank accounts 3,201 3,105 8,125 Loans 1,359,621 1,573,308 1,605,604 Loans - private sector 1,408,066 1,618,575 1,640,393 Loans - public sector - - - (-) Allowance for loan losses (48,445) (45,267) (34,789) Other receivables 394,416 607,637 544,975 Credit guarantees honored - - - Foreign exchange portfolio 320,987 316,949 284,288 Income receivables 58 537 483 Negotiation and intermediation of securities 61,573 38,148 34,896 Sundry 16,753 257,407 232,071 (-) Allowance for loan losses (4,955) (5,404) (6,763) Other assets 93,299 99,805 148,343 Long term 955,154 1,070,663 1,020,719 Short-term interbank investments - - - Marketable securities and derivative financial instruments 45,188 33,064 27,477 Own portfolio 43 14,110 14,658 Derivative financial instruments 45,145 18,954 12,819 Interbank Accounts 3,001 3,038 - Loans 655,164 710,730 671,325 Loans - private sector 807,148 798,753 735,572 Loans - public sector - - - (-) Allowance for loan losses (151,984) (88,023) (64,247) Other receivables 251,685 323,109 320,827 Credit guarantees honored - 507 507 Trading and Intermediation of Securities 495 540 408 Foreign exchange portfolio - 4,656 - Income receivables - - 5,620 Sundry 260,163 328,791 319,281 (-) Allowance for loan losses (8,973) (11,385) (4,989) Other assets 116 722 1,090 Permanent Assets 83,929 97,106 96,323 Investments 29,559 34,361 35,590 Subsidiaries and Affiliates 27,868 32,668 33,897 Other investments 1,847 1,849 1,849 (-) Loss Allowances (156) (156) (156) Property and equipment 14,178 13,088 12,130 Property and equipment in use 1,210 1,152 1,152 Revaluation of property in use 2,634 2,634 2,634 Other property and equipment 22,740 24,575 23,756 (-) Accumulated depreciation (12,406) (15,273) (15,412) Intangible 40,192 49,657 48,603 Goodwill 24,585 27,868 27,868 Other intangible assets 18,664 27,031 26,960 (-) Accumulated amortization (3,057) (5,242) (6,225) TOTAL ASSETS 4,198,205 5,032,412 5,117,263
  17. 17. 17/18 EARNINGS RELEASE 2nd Quarter 2014 CONSOLIDATED R$ thousand LIABILITIES 6/30/2013 3/31/2014 6/30/2014 Current 2,538,587 2,988,178 2,972,918 Deposits 1,021,586 1,118,475 1,148,862 Cash deposits 38,781 37,095 56,892 Interbank deposits 58,128 15,897 27,553 Time deposits 924,677 1,065,483 1,064,417 Funds obtained in the open market 176,141 95,601 101,419 Own portfolio 56,517 26,199 51,419 Third party portfolio 104,621 69,402 50,000 Unrestricted Portfolio 15,003 - - Funds from securities issued or accepted 550,198 1,060,943 1,213,308 Agribusiness Letters of Credit, Real Estate Notes & Bank Notes 550,198 1,060,943 1,213,308 Interbank accounts 556 565 313 Interdepartamental accounts 9,892 4,083 7,603 Borrowings 365,999 314,592 248,658 Foreign borrowings 365,999 314,592 248,658 Onlendings 131,247 109,752 103,218 BNDES 90,018 61,557 57,634 FINAME 41,229 48,195 45,584 Other liabilities 282,968 284,167 149,537 Collection and payment of taxes and similar charges 452 1,225 649 Foreign exchange portfolio 5,353 38,676 11,158 Taxes and social security contributions 13,201 16,022 12,428 Social and statutory liabilities 4,500 1,352 3,226 Negotiation and intermediation securities 133,055 189,391 86,002 Derivative financial instruments 75,550 15,126 14,888 Sundry 50,857 22,375 21,186 Long Term 1,089,265 1,372,811 1,468,902 Deposits 842,830 1,049,373 1,168,189 Interbank Deposits 32 - - Time deposits 842,798 1,049,373 1,168,189 Funds from securities issued or accepted 13,172 79,499 80,981 Agribusiness Letters of Credit, Real Estate Notes & Bank Notes 13,172 79,499 80,981 Loan obligations - 33,645 32,776 Foreign loans - 33,645 32,776 Onlending operations - Governmental Bureaus 217,312 163,694 138,928 Federal Treasure 7,435 6,747 6,552 BNDES 122,487 75,975 62,503 FINAME 87,186 80,753 69,683 Other Institutions 204 219 190 Other liabilities 15,951 46,600 48,028 Taxes and social security contributions 7,550 31,977 32,057 Derivative financial instrument 4,246 7,358 8,289 Sundry 4,155 7,265 7,682 Future results 795 4,289 4,012 Shareholders' Equity 569,558 667,134 671,431 Capital 661,812 769,843 769,843 Capital Reserve 19,866 24,159 27,275 Revaluation reserve 1,315 1,278 1,265 Profit reserve - - - (-) Treasury stock (5,859) (4,283) (4,283) Asset valuation Adjustment 31 (169) (53) Accumulated Profit / (Loss) (108,455) (124,462) (123,340) Minority Interest 848 768 724 TOTAL LIABILITIES 4,198,205 5,032,412 5,117,263
  18. 18. 18/18 EARNINGS RELEASE 2nd Quarter 2014 Income Statement CONSOLIDATED R$ thousand INCOME STATEMENT 2Q13 1Q14 2Q14 1H13 1H14 Income from Financial Intermediation 93,015 133,063 147,580 180,603 280,643 Loan operations 50,133 85,787 89,324 106,105 175,111 Income from securities 22,316 44,671 41,827 41,942 86,498 Income from derivative financial instruments (7,780) (8,839) 12,935 (5,820) 4,096 Income from foreign exchange transactions 28,346 11,444 3,494 38,376 14,938 Expenses from Financial Intermediaton 90,778 118,335 95,911 289,001 214,246 Money market funding 53,005 90,147 96,632 106,213 186,779 Loans, assignments and onlendings 37,628 14,807 4,725 49,259 19,532 Sales operations/transfer of financial assets - - 4,620 - 4,620 Allowance for loan losses 145 13,381 (10,066) 133,529 3,315 Gross Profit from Financial Instruments 2,237 14,728 51,669 (108,398) 66,397 Other Operating Income (Expense) (36,041) (25,958) (43,852) (69,928) (69,810) Income from services rendered 8,636 12,645 18,652 15,087 31,297 Income from tariffs 187 208 182 359 390 Personnel expenses (26,138) (27,515) (26,539) (52,511) (54,054) Other administrative expenses (15,694) (20,569) (22,602) (29,065) (43,171) Taxes (2,034) (3,480) (4,580) (5,634) (8,060) Result from affiliated companies 402 2,580 2,058 1,189 4,638 Other operating income 1,147 12,839 5,901 4,351 18,740 Other operating expense (2,547) (2,666) (16,924) (3,704) (19,590) Operating Profit (33,804) (11,230) 7,817 (178,326) (3,413) Non-Operating Profit 752 (1,681) (1,373) 83 (3,054) Earnings before taxes ad profit-sharing (33,052) (12,911) 6,444 (178,243) (6,467) Income tax and social contribution 15,109 5,450 (3,517) 74,298 1,933 Income tax 1,074 (488) 2,071 7,706 1,583 Social contribution 457 (437) 1,338 4,514 901 Deferred fiscal assets 13,578 6,375 (6,926) 62,078 (551) Statutory Contributions & Profit Sharing (2,694) (2,412) (1,875) (8,125) (4,287) Net Profit for the Period (20,637) (9,873) 1,052 (112,070) (8,821)

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