EARNINGS RELEASE
3rd QUARTER 2013

Investment platform ‘guide’ launched
Managerial ALL expenses in the quarter (annualized...
EARNING RELEASE
rd

3 QUARTER 2013

Summary

Message from Management ........................................................
EARNING RELEASE
rd

3 QUARTER 2013

Message from the Management
In the third quarter, we concluded a few more stages of th...
EARNING RELEASE
rd

3 QUARTER 2013

Macroeconomic Scenario
July was marked by the announcement of negative data about busi...
EARNING RELEASE
rd

3 QUARTER 2013

Key Indicators
The financial and operating information presented in this report are ba...
EARNING RELEASE
rd

3 QUARTER 2013

Operating Performance
Financial Intermediation Result
before Allowance for Loan Losses...
EARNING RELEASE
rd

3 QUARTER 2013
Result from financial intermediation before allowance for loan losses totaled R$46.0 mi...
EARNING RELEASE
rd

3 QUARTER 2013

Net Interest Margin (NIM)
As described in the section on Profitability, considering th...
EARNING RELEASE
rd

3 QUARTER 2013

Credit Portfolio
Expanded Credit Portfolio
In September 2013, the expanded credit port...
EARNING RELEASE
rd

3 QUARTER 2013
Central Bank regulations due to its tradability, has been growing consistently in recen...
EARNING RELEASE
rd

3 QUARTER 2013

Credit Portfolio
The ‘classic’ credit portfolio, which does not include guarantees iss...
EARNING RELEASE
rd

3 QUARTER 2013

Quality of Credit Portfolio
Rating

AA

A

3Q12 2Q13 3Q13

Required Provision %

0%

O...
EARNING RELEASE
rd

3 QUARTER 2013

NPL 60 days/ Credit Portfolio Ratio

3Q13

2Q13

3Q13/2Q13

3Q12

3Q13/3Q12

NPL 60 da...
EARNING RELEASE
rd

3 QUARTER 2013

Funding
Funding volume totaled R$3.1 billion at the end of September 2013, down 1.9% f...
EARNING RELEASE
rd

3 QUARTER 2013

Free Cash
629

661

658

3Q12

2Q13

3Q13

R$ million

On September 30, 2013, the free...
EARNING RELEASE
rd

3 QUARTER 2013

Capital Market
Total Shares and Free Float
Number of shares as of September 30, 2013
T...
EARNING RELEASE
rd

3 QUARTER 2013

Share Price evolution in the last 12 months
130
120
110
100
90
80
70

IBOVESPA

IDVL4 ...
EARNING RELEASE
rd

3 QUARTER 2013

Balance Sheet
R$ thousand

Consolidated
Assets

9/30/2012

6/30/2013

9/30/2013

Curre...
EARNING RELEASE
rd

3 QUARTER 2013

R$ thousand

Consolidated
Liabilities

9/30/2012

6/30/2013

9/30/2013

2,496,098

2,5...
EARNING RELEASE
rd

3 QUARTER 2013

Income Statement

3Q12

2Q13

3Q13

9M12

R$ thousand
9M13

131,684
62,885
53,436
4,73...
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BI&P- Indusval- Earnings Release 3Q13

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Banco BI&P Earnings Release - 3rd Quarter 2013

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BI&P- Indusval- Earnings Release 3Q13

  1. 1. EARNINGS RELEASE 3rd QUARTER 2013 Investment platform ‘guide’ launched Managerial ALL expenses in the quarter (annualized) was 0.75%, compared to 1.1% in the previous quarter, reflecting the quality of Banco BI&P’s credit portfolio Highlights IDVL4: R$5.71 per share Closing: November 12, 2013 Outstanding Shares: 74.698.289 Market Cap: R$426.5 million Price/Book Value: 0.74 Conference Call / Webcasts 13/11/2013 In English 10 a.m. (US EST) / 1 p.m. (Brasília) Connections Brazil: +55 11 4688-6361 EUA: +1 786 924-6977 Code: Banco BI&P In Portuguese 9 a.m. (US EST) / 12 p.m. (Brasília) Number: +55 11 4688-6361 Code: Banco BI&P • Volume of origination by the Banco BI&P commercial team: the Expanded Credit Portfolio, including the loans assigned to Banco Intercap, totaled R$3.4 billion, up 3.9% in the quarter and 12.2% from September 2012. Including the Banco Intercap portfolio, the consolidated Expanded Credit Portfolio totaled R$3.6 billion, representing growth of 21.5% in the year. • The Emerging Companies and Corporate segments accounted for 48.7% and 50.5%, respectively, of the expanded credit portfolio of Banco BI&P. • Loans rated between AA and B corresponded to 84.5% of the expanded credit portfolio of Banco BI&P. Noteworthy are the loans granted during the period: 99.9% were rated between AA and B • The Managerial Expense with Allowance for Loan Losses (ALL) in 3Q13 (annualized) was 0.75% of the expanded credit portfolio (1.1% in 2Q13), in line with the conservative credit policy adopted by the Bank and lower than Management’s expectations. • Funding volume totaled R$3.1 billion and Free Cash totaled R$657.9 million at the end of 3Q13, in line to the growth of the loan portfolio. • Adjusted Revenue from Credit Operations and Agro Bonds (CPR), (see page 7), which reflects the Bank's core business, totaled R$78.0 million in the period, increasing 12.7% in the quarter and 32.7% in 12 months. • Income from Services Rendered, which includes fees for structuring corporate finance operations, increased 16.7% in 3Q13 and 31.6% in 12 months. • Net Income from the quarter was R$2.0 million, mainly due to the increase in revenues from credit operations and agro bonds (CPR). Website www.bip.b.br/ir • In the beginning of November, we announced the launch of guide investimentos, which will provide asset management services for highincome individuals through an investment platform that includes investment consulting and advice, financial content and intelligence, and a tailor-made product offering selected by analysts and economists. • On November 4, 2013, we concluded the acquisition of Banco Intercap S.A. and, consequently, announced a capital increase of R$107 million, to be subscribed by the shareholders of Banco Intercap. Messrs. Roberto de Rezende Barbosa and Afonso Antônio Hennel will join the Bank BI&P’s controlling group, and also, after approval by the extraordinary shareholders’ meeting, the Board of Directors of the Bank as Vice Chairman and Director, respectively. 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 10 branches strategically located in economically relevant Brazilian regions, including an offshore branch in Cayman Islands, its brokerage firm operating at the São Paulo Stock, Commodities and Futures Exchange - BM&FBOVESPA and Serglobal Cereais, acquired in April 2011, which originates agricultural bonds. 1/20
  2. 2. EARNING RELEASE rd 3 QUARTER 2013 Summary Message from Management ................................................................................................. 3 Macroeconomic Scenario ..................................................................................................... 4 Key Indicators ................................................................................................................... 5 Operating Performance ....................................................................................................... 6 Credit Portfolio .................................................................................................................. 9 Funding .......................................................................................................................... 14 Free Cash ....................................................................................................................... 15 Capital Adequacy ............................................................................................................. 15 Credit Ratings.................................................................................................................. 15 Capital Markets ................................................................................................................ 16 Balance Statement ........................................................................................................... 18 Income Statement .......................................................................................................... 20 2/20
  3. 3. EARNING RELEASE rd 3 QUARTER 2013 Message from the Management In the third quarter, we concluded a few more stages of the cycle of changes we rolled out in 2011, with the Bank’s commercial area maintaining the brisk pace in originating quality assets, and the investment banking area working on a robust pipeline. The idea behind these measures is to gain scale and drive revenue and fee generation. In November 2013, we launched ‘guide investimentos’, an innovative investment platform that broadens the scope of activity of our brokerage arm. The investment platform, which includes investment consulting and advice, product offerings selected by analysts and economists, financial content and intelligence, and a tailormade offering for each client, was developed over the past 12 months for high-income individual investors. With ‘guide investimentos’, we plan to expand our distribution capacity for investment products, diversify our funding sources and increase our revenue and fee sources. This month we also concluded the acquisition of Banco Intercap, announced in June this year. Consequently, we announced a capital increase of R$107.5 million, which will be subscribed to by the shareholders of Banco Intercap and which will increase the capital stock of Banco BI&P to R$769.8 million. Messrs. Roberto de Rezende Barbosa and Afonso Antônio Hennel will join the Bank BI&P’s controlling group, and also, after approval by the extraordinary shareholders’ meeting, the Board of Directors of Banco BI&P as Vice Chairman and Director, respectively. This quarter, Banco BI&P’s commercial area once again demonstrated its excellent capacity to originate quality assets, which resulted in the Expanded Credit Portfolio, which includes loans assigned to Banco Intercap, growing 3.9% in the quarter and 12.2% in 12 months to reach R$3.4 billion. Loans to Emerging companies corresponded to 48.7% and loans to the Corporate segment accounted for 50.5%. The expanded credit portfolios of Banco BI&P and Banco Intercap jointly amounted to R$3.6 billion at the close of the quarter. In the past 12 months, the consolidated portfolio grew 21.5%. Thanks to the more conservative lending policy we adopted in 2011, the managerial expense with allowance for loan losses (ALL) in the quarter corresponded to 0.75% (annualized) of the expanded credit portfolio, which was lower than management’s expectations, reflecting our stricter criteria for loan origination and management. The investment bank operation has been integrating with other areas of the Bank. During the quarter, we had 52 ongoing M&A and funding mandates, apart from the over 65 proposals already made to potential clients. Result from financial intermediation before allowance for loan losses increased from R$2.4 million in 2Q13 to R$46.0 million in 3Q13, mainly due to the increase in revenues from credit operations and agro bonds (CPR), from R$69.2 million in 2Q13 to R$78.0 million in 3Q13. Driven by this result, and with operating expenses strictly under control, we posted net income of R$2.0 million in the quarter. We continued to diversify our funding sources, with funding through agribusiness letters of credit (LCA) and real estate notes (LCI) increasingly sharply, from 12.6% of total funding in September 2012 to 22.0% in September 2013. The number of investors also increased sharply during the period, from around 1,200 to 2,700. The Bank has started registering more stable results in the third quarter, thanks to the growth of the credit portfolio, absence of additional provisions and recurring revenues from structuring fee and derivatives for clients. Funding client base has been increased as well as funding through securities exempt from income tax for individuals, such as LCAs and LCIs. The phase of changes and establishment of new areas was concluded with the acquisition of Banco Intercap and the launch of ‘guide investimentos’. Our objective remains to gain scale based on a solid foundation, with growing impact on our profitability. 3/20
  4. 4. EARNING RELEASE rd 3 QUARTER 2013 Macroeconomic Scenario July was marked by the announcement of negative data about business activity and overall confidence, reflecting the street protests across Brazil and the uncertain scenario abroad. However, this gloom surrounding the economic scenario improved during the third quarter, backed by surprisingly positive data about the job market. The continuation of the unemployment rate at historical lows has been the result of the higher-than-expected performance of the services and business sectors. On the other hand, industry continued to deliver weak results between July and September, pushing economic growth projections for the third quarter to almost zero, with a negative bias, after the solid growth between April and June. During the coming months, the Brazilian government’s handling of the auctions for infrastructure concessions and the consequent growth of investments will be fundamental for improving the expectations of market players and for the country’s economic growth. Even in an environment of moderate economic activity, inflation remains at uncomfortably high levels, with the Extended National Consumer Price Index (IPCA) well above the center of the target of 4.5%. After exceeding the target ceiling at the end of the second quarter, the price index dropped significantly in July due to seasonal factors and the withdrawal of the hike in public transport fares. Nevertheless, it once again increased towards the end of the third quarter, indicating that this trend should continue through the closing months of the year. To contain these pressures on prices, the Brazilian Central Bank continued its monetary tightening cycle, raising the basic interest rate (Selic) to 9.0% p.a. and signaling that this cycle should continue at the upcoming meetings of the Monetary Policy Committee to be held later this year. In the foreign exchange market, July and August were marked by high volatility of the U.S. dollar caused by the market’s fears that the U.S. Federal Reserve would start scaling down its monetary stimulation policy in September. These fluctuations and the consequent depreciation of the Brazilian real against the dollar forced the Brazilian Central Bank to implement a policy of daily intervention in the exchange market until the year-end. This supply of exchange swaps, combined with the Federal Reserve’s decision to continue its monetary policy, reduced exchange volatility and brought the dollar to close to R$2.20. Credit volume in Brazil’s national financial system grew 9.7% until September 2013 to reach R$2.597 trillion. Credit volume growth in 12 months was 15.7%, with the average loan term increasing from 80.6 months in September 2012 to 96.7 months in September 2013. Credit as a percentage of GDP ended September at 55.5%, higher than 55.2% at the end of June, and has remained above 50% since May 2012. Default in the individuals segment dropped from 8.1% in the first quarter of 2012 to 7.0% this quarter, while corporate default declined from 3.7% to 3.4%. These marginal improvements in default rates are the result of the more selective approach to credit adopted by Brazilian banks. Macroeconomic Data 3Q12 2Q13 3Q13 2013e Real GBP Growth (Q/Previous Q) 0.4% 1.5% 0.0% (e) 2.5% Inflation (IPCA - IBGE) – quarterly change 1.4% 1.2% 0.6% 5.8% Inflation (IPCA - IBGE) – annual change 5.3% 6.7% 5.9% 5.8% FX (US$/R$) – quarterly change 2.1% 10.1% -0.4% 7.4% Interest Rate (Selic) 7.5% 8.0% 9.0% 10.0% e= expected 4/20
  5. 5. EARNING RELEASE rd 3 QUARTER 2013 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 GAAP (BRGAAP), except were otherwise stated. Results 3Q13 Loan Operations & Agro Bonds (CPR) adjusted 1 Effect of recoveries and discounts 1 2Q13 3Q13/2Q13 78.0 69.2 12.7% 3Q12 3Q13/3Q12 9M13 9M12 9M13/9M12 58.8 32.7% 207.9 207.5 0.2% 1.4 (9.2) 115.3% 4.1 -65.5% (10.0) 3.7 n.c. 46.9 46.6 0.6% 64.2 -26.9% 138.1 274.7 -49.7% Effect of discontinuance of hedge accounting (0.1) (13.6) -98.9% 4.6 -103.2% (29.3) 30.4 -196.4% Financial Intermediation Expenses (w/o ALL) (80.2) (90.6) -11.5% (83.3) -3.7% 46.0 2.4 n.c. 48.4 -5.1% 71.1 (6.7) (0.1) n.c. (11.9) -43.9% (140.2) (48.9) 186.8% 39.3 2.2 n.c. 36.5 7.5% (69.1) 109.9 -162.9% 19.5% (101.9) (84.8) 20.1% -26.5% (171.0) 25.1 n.c. (1.0) (0.3) 274.7% Revenues from Securities (w/o CPR), Derivatives & FX Result from Financial Int. before ALL ALL Expenses 2 Result from Financial Intermediation Net Operating Expenses (235.7) (357.5) 158.8 -34.1% -55.2% (32.3) (35.7) -9.4% (27.0) 7.0 (33.4) 120.9% 9.5 (0.7) (0.4) 86.1% 0.0 Operating Result 6.3 (33.8) 118.7% 9.5 -33.6% (172.0) 24.8 n.c. Net Profit (Loss) 2.0 (20.6) 109.7% 3.1 -36.1% (110.1) 10.6 n.c. Recurring Operating Result Non-Recurring Operating Expenses Assets & Liabilities Loan Portfolio 3Q13 3 2,549.0 Expanded Loan Portfolio 3 4 2Q13 3Q13/2Q13 2,587.8 3,355.2 3,228.7 Cash & Short Term Investments -1.5% n.c. 3Q12 3Q13/3Q12 2,548.4 0.0% 3.9% 2,990.9 12.2% 179.8 Securities excl. Agro. & Private Credit Bonds 5 Total Assets 297.3 -39.5% 955.1 -81.2% 1,278.7 Securities and Derivatives 1,056.5 21.0% 613.1 108.6% 673.1 626.5 7.4% 338.1 99.1% -0.6% 4,337.1 -3.8% 4,171.0 4,198.2 Total Deposits 2,391.2 2,427.8 -1.5% 2,194.5 9.0% Open Market 107.5 176.1 -39.0% 597.2 -82.0% Foreign Borrowings 365.3 366.0 -0.2% 432.0 -15.4% Domestic Onlendings 325.4 348.6 -6.6% 309.3 5.2% Shareholders’ Equity 574.5 569.6 0.9% 587.6 -2.2% Performance 3Q13 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 Free Cash 657.9 660.7 -0.4% 628.7 4.6% NPL 60 days/ Loan portfolio 2.9% 2.6% 0.3 p.p. 3.1% -0.2 p.p. NPL 90 days/ Loan portfolio 9M13 9M12 9M13/9M12 2.6% 2.1% 0.6 p.p. 1.9% 0.7 p.p. 14.5% 14.6% -0.1 p.p. 15.8% -1.3 p.p. 1.4% -14.6% 16.0 p.p. 2.2% -0.8 p.p. 0.0% 0.0% 0.0 p.p. 5.6% 3.2% 2.4 p.p. 5.8% -0.2 p.p. 4.7% 5.9% -1.3 p.p. Efficiency Ratio 84.0% 474.9% n.c. 69.7% 14.3 p.p. 1.5 p.p. 65.8% 81.3 p.p. Other Information 3Q13 Basel Index ROAE Adjusted Net Interest Margin (NIMa) 6 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 Number of Corporate Clients 865 874 -1.0% 774 -11.8% Number of Employees 437 448 -2.5% 423 -3.3% 376 390 -3.6% 388 -3.1% 61 58 5.2% 35 -74.3% Banco BI&P and Voga employees Brokerage house and Serglobal employees n.c. = not comparable (percentage above 300% or below -300%, or number divided by zero). Details in the respective sections of this report: 1 Excluding (i) revenues from recovery of loans written off, and (ii) discounts granted upon settlement of operations in the period. More details in the Profitability section of this report. 2 Including additional provisions. 3 Including credits assigned to Banco Intercap. 4 Including Guarantees issued, Private Credit Bonds (PNs and Debentures) and Agro Securities (CDCA, CDA/WA and CPR). 5 Excluding Agro Securities (CPRs and CDA/WA) and Private Credit Bonds (PNs and debentures) for trading. 6 Excluding (i) repos with equivalent volumes, tenors and rates both in assets, and (ii) effects of the discontinuance of the treatment of hedge accounting, and also discounts granted in operations settled in the period. 5/20
  6. 6. EARNING RELEASE rd 3 QUARTER 2013 Operating Performance Financial Intermediation Result before Allowance for Loan Losses R$ million 48.5 44.3 46.047.7 44.8 10.6 26.9 22.8 R$ million 48.4 45.6 Net Profit 3Q12 4Q12 1Q13 2Q13 3Q13 3.1 3.6 3Q12 2.4 4Q12 Financial Intermediation Result before ALL Financial Intermediation Result before ALL adjusted * 2.0 1Q13 2Q13 3Q13 9M12 9M13 -91.4 -20.6 Expanded Credit Portfolio -110.1 Funding 5.0% 2.9 3.1 3.2 3.4 1Q13 2Q13 3Q13 3.0 3.2 3.1 3.1 4Q12 1Q13 2Q13 3Q13 R$ billion R$ billion 3.0 4Q12 3.0 3Q12 3Q12 Credits assigned to Banco Intercap Private Credit Bonds (PNs and Debentures) Agro Bonds (CPR, CDA/WA and CDCA) Guarantees Issued Trade Finance Loans and Financing in Real Total Trade Finance & Foreign Borrowings Domestic Onlending Interbank & Demand Deposits Agro Bonds, Bank & Real Estate Notes Insured Time Deposits (DPGE) Profitability Financial Intermediation 3Q13 2Q13 3Q13/2Q13 Financial Intermediation Revenues 126.2 93.0 78.0 69.2 12.7% 58.8 32.7% 207.9 207.5 Effects recoveries and discounts * 1.4 (9.2) 115.3% 4.1 -65.5% (10.0) 3.7 n.c. Loan Operations and Agro Bonds 79.4 60.0 32.4% 62.9 26.3% 198.0 211.2 -6.3% 68.7 49.5 38.9% 49.1 39.9% 165.6 173.7 -4.6% Financing 7.7 8.8 -12.3% 7.9 -2.2% 23.3 21.8 6.8% Other 3.0 1.7 75.2% 5.9 -49.1% 9.0 15.7 -42.6% Loan Operations and Agro Bonds (CPR) adjusted * Loans, Discount Receivables and Agro bonds (CPR) Securities (w/o agro bonds (CPR)) Derivatives 3Q12 3Q13/3Q12 35.7% 131.7 -4.2% 12.5 71.2% 53.4 -60.0% 50.9 221.2 -77.0% 137.8% 4.7 -37.8% (2.9) 6.5 -144.0% 60.8 77.4 -21.4% 235.7 357.5 -34.1% 22.4 28.3 -20.9% 10.6 111.0% 90.6 -11.5% 83.3 -3.7% Interbank Deposits Agro (LCA), Real Estate (LCI) & Bank Notes (LF) Loans, Assignments & Onlending Foreign Borrowings Domestic Borrowings & Onlending 0.2% (7.8) 80.2 Repurchase Transactions -40.6% 2.9 Financial Intermediation Expenses Time Deposits 306.8 516.3 21.4 FX Operations Result Money Market Funding 9M13 9M12 9M13/9M12 56.4 53.0 6.5% 69.2 -18.5% 162.7 273.9 40.8 40.4 0.9% 37.3 9.5% 122.0 123.3 -40.6% -1.0% 2.7 3.0 -12.8% 22.7 -88.3% 10.3 121.3 -91.5% -70.4% 0.6 0.8 -32.3% 2.4 -76.4% 2.6 8.9 12.4 8.7 42.8% 6.9 81.4% 27.7 20.3 36.2% 23.2 37.6 -38.2% 14.0 65.5% 72.5 83.6 -13.3% 18.3 32.2 -43.1% 8.5 115.6% 57.4 70.3 -18.2% 12.8% 4.9 5.4 -9.1% 5.5 -11.6% 15.1 13.3 0.5 0.0 n.c. 0.0 n.c. 0.5 0.0 n.c. Gross Result from Fin. Interm. before ALL 46.0 2.4 n.c. 48.4 -5.1% 71.1 158.8 -55.2% Allowance for Loan Losses (ALL) (6.7) (0.1) n.c. (11.9) Gross Result from Financial Intermediation 39.3 2.2 n.c. 36.5 Sales operations/transfer of financial assets * -43.9% (140.2) (48.9) 186.8% 7.5% (69.1) 109.9 -162.9% Excluding the effects of (i) recoveries from operations written off, and (ii) discounts granted upon settlement of loans in the period. 6/20
  7. 7. EARNING RELEASE rd 3 QUARTER 2013 Result from financial intermediation before allowance for loan losses totaled R$46.0 million in 3Q13, versus R$2.4 million in 2Q13, due to the increase in revenue from credit operations and agro bonds (CPR). Adjusted Revenues from credit operations and CPR, from which the impact of discounts granted upon settlement of loans and recoveries of loans written off is excluded to enable better comparison, as shown in the table below, increased 12.7% in 3Q13, reflecting the increase in the average balance of the credit portfolio and CPR in the quarter. Revenues from Loan Operations and CPR adjusted A. Revenues from Loan Operations and Agro Bonds (CPR) B. Recoveries of written-off operations 3Q13 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 9M13 9M12 9M13/9M12 79.4 60.0 3.0 32.4% 62.9 26.3% 198.0 211.2 -6.3% 1.7 75.2% 5.9 -49.1% 9.0 15.7 -42.6% C. Discounts granted upon settlement of operations (1.6) (11.0) -85.5% (1.8) -11.4% (19.0) (12.0) 58.3% Adj. Revenues from Loan Operations and CPR (A-B-C) 78.0 12.7% 58.8 32.7% 207.9 207.5 0.2% 69.2 Income from Securities, with offset in funding expenses, increased 60.6% in the quarter, mainly driven by the income from fixed-income securities, especially CPRs and government bonds. The Result from Derivative Financial Instruments includes results from operations involving swaps, forwards, futures and options used to hedge against exchange and interest rate exposure for funding operations indexed to the inflation indexes, as well as foreign borrowings (non-trade related), hedging of commodity prices resulting from CPR operations and indexers of federal government bonds held in the securities portfolio, in addition to the directional portfolio. During the quarter, this item totaled R$2.9 million, versus a negative result of R$7.8 million in 2Q13 and R$4.7 million in 3Q12. Both Income from Foreign Exchange Operations and Expenses with Foreign Borrowings were especially impacted by the variation in the dollar/real exchange rate during the quarter and by the decline in demand from clients. With regard to Expenses with Foreign Borrowings, note that the loan obtained from JP Morgan in 2011, in the amount of US$25 million, matured in June 2013 and, in August 2013, we obtained a loan from IFC in the amount of US$15 million, with maturity in July 2016. Expenses with Time Deposits increased slightly in the quarter due to the combination of the following factors: (i) increase of R$11.6 million in the average balance of funding through time deposits with special guarantee (DPGE I); (ii) decrease of R$55.4 million in the average balance of bank deposit certificates (CDB); and (iii) consecutive hikes in the basic interest rate (Selic) during the period. The decrease in Expenses with Interbank Deposits is directly related to the decline in the average balances of interbank deposits, while Expenses with Agribusiness Letters of Credit, Real Estate Notes and Bank Notes increased, mainly due to the increase in their average balances. The managerial expense with allowance for loan losses (ALL) in the quarter, which includes the reversals to ALL originated by discounts granted upon settlement of loans and recoveries of loans written off, was R$6.1 million, equivalent to 0.75% (annualized) of the expanded credit portfolio, which is below management’s expectations and in line with the conservative credit policy adopted by the Bank since April 2011. The Result from financial intermediation totaled R$39.3 million in the quarter, compared to R$2.2 million in 2Q13, mainly due to the above-mentioned factors. 7/20
  8. 8. EARNING RELEASE rd 3 QUARTER 2013 Net Interest Margin (NIM) As described in the section on Profitability, considering the effects on the result from financial intermediation from the discontinuance of the designation of hedge accounting and discounts granted upon settlement of loans, adjusted NIM increased from 3.2% in 2Q13 to 5.6% in 3Q13, as the following table shows: Net Interest Margin A. Result from Finan. Int. before ALL adjusted 3Q13 1 3Q12 3Q13/3Q12 9M13 9M12 9M13/9M12 2 26.9 77.2% 45.6 4.6% 119.4 140.4 -15.0% 2.4 n.c. 48.4 -5.1% 71.1 158.8 -55.2% 3,657.9 B. Average Interest bearing Assets 47.7 46.0 A.a. Result from Finan. Interm. before ALL Adjustm. for non-remunerated average assets 2Q13 3Q13/2Q13 3,626.3 0.9% 4,106.5 -10.9% 3,629.3 4,178.2 -13.1% (189.2) -80.9% (154.4) (184.0) -16.1% (874.3) -82.3% 3,503.5 3,442.3 1.8% 3,232.2 8.4% 3,440.0 3,185.5 8.0% Net Interest Margin (Aa/Ba) 5.4% 0.3% 5.1 p.p. 6.1% -0.8 p.p. 4.2% 10.2% -6.0 p.p. Adj. Net Interest Margin (A/Ba) 1 5.6% 3.2% 2.4 p.p. 5.8% -0.2 p.p. 7.1% 9.0% -1.9 p.p. Managerial NIM with Clients 4.1% 4.1% 0.0 p.p. 4.5% -0.4 p.p. 4.1% 4.8% -0.7 p.p. B.a. Adjusted Average Interest bearing Assets (992.6) 1 Repos with equivalent volumes, tenors and rates both in assets and liabilities. Excluding (i) effects of the discontinuance of the treatment of hedge accounting, adopted in 2Q12, for booking hedges of cash flows, which continue to be protected by hedge, and (ii) discounts granted in operations settled in the period. 2 Managerial Interest Margin with Clients, which consists of revenues from loan operations, derivatives, CPR operations and guarantees issued to clients, and excludes discounts granted upon settlement of loans, remained stable in the quarter at 4.1%. In twelve months, margin declined 0.4 p.p., as a result of a more conservative profile of the portfolio. We expect margin to stabilize at these levels but could increase slightly with the expected growth of the Bank’s expanded credit portfolio over the coming quarters. Efficiency The efficiency ratio in the quarter stood at 84.0%, resulting from the growth in income from financial intermediation, especially driven by revenues from credit operations. Efficiency Ratio Personnel Expenses Contributions and Profit-sharing Administrative Expenses Taxes 3Q13 2Q13 24.1 26.1 -7.8% 21.4 12.4% 76.6 66.1 15.9% 1.9 2.7 -30.7% 3.0 -37.1% 10.0 7.4 35.8% 17.2 15.7 9.4% 13.0 31.7% 46.2 39.8 16.2% 3Q13/2Q13 3Q12 3Q13/3Q12 9M13 9M12 9M13/9M12 2.9 2.0 44.8% 2.3 30.8% 8.6 8.3 3.4% 46.1 46.6 -1.0% 39.7 16.0% 141.4 121.6 16.3% Gross Income Financial Intermediation (w/o ALL) 46.0 2.4 n.c. 48.4 -5.1% 71.1 158.8 -55.2% Income from Services Rendered 10.1 8.6 16.7% 7.7 31.6% 25.2 19.6 28.3% A. Total Operating Expenses Income from Banking Tariffs Other Net Operating Income * B. Total Operating Income Efficiency Ratio (A/B) 0.2 0.2 -1.6% 0.2 -0.5% 0.5 0.5 0.7% (1.4) (1.4) -3.5% 0.7 -290.3% (0.7) 5.8 -112.2% 54.9 9.8 n.c. 57.0 -3.7% 96.1 184.7 -48.0% 14.3 p.p. 147.2% 65.8% 81.3 p.p. 84.0% 474.9% n.c. 69.7% (*) Net of other Operating Expenses to offset the cost of acquisition and income on sale of commodities in the activity of Serglobal Cereais. Net Profit The operating income in the quarter was R$6,3 million, and after (i) the non-operating profit from the sale of properties and non-operating assets of the R$367 thousand, (ii) taxes and contributions of the R$2.8 million, and (iii) profit sharing of the R$1.9 million, resulted in a profit of R$2.0 million. 8/20
  9. 9. EARNING RELEASE rd 3 QUARTER 2013 Credit Portfolio Expanded Credit Portfolio In September 2013, the expanded credit portfolio, including the loans assigned to Banco Intercap, totaled R$3.4 billion, +3.9% in the quarter and +12.2% in 12 months. The expanded credit portfolio of Banco BI&P totaled R$3.3 billion, up 0.9% from June 2013 and 8.9% in 12 months. The portfolio consists of loan and financing operations in Brazilian real and trade finance operations, both detailed in note 6(a) to the financial statements, as well as: (i) guarantees issued (sureties, guarantees and letters of credit), (ii) agribusiness bonds generated by the absorption of the operations of Serglobal Cereais (CPR and CDA/WA); and (iii) private credit bonds (promissory notes and debentures). Items (ii) and (iii) are both booked under Securities (TVM) as per Central Bank regulations. Expanded Credit Portfolio by Product Group 3Q13 Loans & Financing in Real + Credits Assigned to Banco Intercap 1,803.1 (-) Credits assigned to Banco Intercap 2Q13 3Q13/2Q13 1,765.7 2.1% 3Q12 3Q13/3Q12 1,464.9 23.1% 81.9 0.0 n.c. 0.0 n.c. 1,721.2 1,765.7 -2.5% 1,464.9 17.5% 186.5 250.3 -25.5% 509.5 -63.4% Trade Finance (ACC/ACE/IMPFIN) 404.9 427.3 -5.3% 463.0 -12.6% Guarantees Issued (LGs & L/Cs) 185.4 210.9 -12.1% 167.5 10.7% 701.4 477.9 46.8% 306.7 128.7% Loans & Financing in Real Assignment of Receivables Originated by our Customers Agro Bonds + Agro Bonds Assigned to Banco Intercap (-) Agro Bonds Assigned to Banco Intercap 15.3 0.0 n.c. 0.0 n.c. 686.2 477.9 43.6% 306.7 123.7% Private Credit Bonds (Securities: PNs & Debentures) 29.5 39.2 -24.8% 41.1 -28.3% Other 44.4 57.4 -22.6% 38.1 16.5% EXPANDED CREDIT PORTFOLIO 3,258.0 3,228.7 0.9% 2,990.9 8.9% EXPANDED CREDIT PORT. + CREDIT ASSIGNMENTS TO INTERCAP 3,355.2 3,228.7 3.9% 2,990.9 12.2% Agro Bonds (Securities: CPRs & CDA/WA; Credit: CDCAs) Expanded Credit Portfolio 1% 1% 0.8% 51% 51% 50.5% 39% 47% 48% 48.7% 4Q12 1Q13 2% 2% 56% 59% 42% 3Q12 Emerging Companies 2Q13 Corporate 3Q13 The Emerging Companies segment consists of companies with annual revenue between R$80 million and R$400 million, while the Corporate segment includes companies with annual revenue between R$400 million and R$2 billion. The Other segment basically consists of Consumer Credit operations for Used Vehicles and financing of nonoperating assets. Other Loans and financing in Brazilian real, which include bills discounted and also credits assigned to Banco Intercap, increased 2.1% at the end of 3Q13 and 27.1% in twelve months. Receivables originated by our customers assigned to Banco Bi&P represented 5.7% of the expanded credit portfolio in the quarter, down 25.5% in 3Q13 and 63.4% in 12 months, as a result of the reallocation of the portfolio to assets with higher returns. At the end of 3Q13, Trade Finance operations, which accounted for 12.4% of the expanded credit portfolio, decreased 5.3% in the quarter and 12.6% from September 2012, mainly due to the reduction in client demand. These operations consist of import and export financing, which corresponded to 28.1% and 71.9%, respectively. Guarantees issued (sureties, guarantees and import letters of credit), which correspond to 5.7% of the expanded credit portfolio, decreased 12.1% from 2Q13 but increased 10.7% in 12 months. As a result of the joint ventures and alliances built over the past two years, the portfolio of agribusiness and private credit bonds, classified under ‘held for sale’ marketable securities in the balance sheet in accordance with 9/20
  10. 10. EARNING RELEASE rd 3 QUARTER 2013 Central Bank regulations due to its tradability, has been growing consistently in recent quarters, totaling R$605.6 million in 3Q13, up 44.4% in the quarter and 125.7% in 12 months. Including the credits assigned to Banco Intercap, it totaled R$701.4 million, up 46.8% in 3Q13 and 128.7% in 12 months. Agro Bonds Portfolio 3Q13 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 Booked under Securities 576.0 390.8 47.4% 233.9 146.3% Warrants - CDA/WA 11.5 7.3 57.1% 7.7 48.0% 564.6 383.5 47.2% 226.1 149.7% 110.1 87.1 26.4% 72.9 51.1% 110.1 87.1 26.4% 72.9 51.1% Agricultural Bonds 686.2 477.9 43.6% 306.7 123.7% AGRO BONDS PORTFOLIO 701.4 477.9 46.8% 306.7 128.7% Agro Product Certificate - CPR Booked under Credit Portfolio - Loans & Financing Agro Credit Rights Certificate - CDCA Our Expanded Credit Portfolio breakdown is as follows: By Economic Activity Commerce 26% By Region Other 1% Southeast 55% Other Services 22% Emerging Companies 49% North 2% Individuals 2% Industry 50% Financial Institutions 0% By Customer Segment Northeast 4% South 20% Corporate 50% Midwest 19% By Economic Sector Agriculture Construction Food & Beverage Oil, Biofuel & Sugar Automotive Infrastructure Livestock Commerce - Retail & Wholesale Transportation & Logistics Power Generation & Distribution Textile, apparel & Leather Chemical & Pharmaceutical Raw Materials Education Metal Industry Financial Instituitions Other industries* By Product 23.6% 8.7% 7.9% 7.5% 5.5% 4.4% 4.3% 3.7% 3.7% 3.4% 2.7% 2.6% 2.6% 2.4% 2.3% 1.8% Agro Bonds 21% Trade Finance 12% BNDES Onlending 10% Guarantees Issued 6% Debentures 1% Other 1% Loans & Discounts 49% 12.8% 10/20
  11. 11. EARNING RELEASE rd 3 QUARTER 2013 Credit Portfolio The ‘classic’ credit portfolio, which does not include guarantees issued and loans classified under ‘held for sale’ marketable securities and includes loans assigned to Banco Intercap, totaled R$2.5 million, down 1.5% in the quarter and unchanged in the 12-month period. The classic credit portfolio of Banco BI&P closed 3Q13 at R$2.5 billion, down 4.7% from the previous quarter, of which R$2.1 billion were loans in Brazilian real and R$404.9 million pertained to trade finance operations. At the end of the quarter, the Emerging companies segment accounted for 47.4% (49.1% in 2Q13) of the classic portfolio and the Corporate segment accounted for 51.5% (49.6% in 2Q13). Loans classified as Other, which include the balance of the direct consumer credit - used vehicles (CDC) portfolio, portfolios acquired from other banks and financing of non-operating assets, correspond to 1.1% of the total portfolio (1.2% in 2Q13). Credit Portfolio By Client Segment 3Q13 Emerging Companies 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 1,168.4 1,271.4 -8.1% 1,127.7 3.6% 960.0 1,046.5 -8.3% 880.2 9.1% 866.5 880.8 -1.6% 712.3 21.6% 41.4 0.0 n.c. 0.0 n.c. 825.0 880.8 -6.3% 712.3 15.8% Assignment of Receivables Originated by our Customers 1.2 6.4 -81.9% 31.4 -96.3% Financing 0.0 0.0 n.c. 0.0 n.c. 133.8 159.3 -16.0% 136.6 -2.0% Local Currency - Real Loans & Discount of Receivables + Credits Assigned to Intercap (-) Credits assigned to Banco Intercap Loans & Discounted Receivables BNDES / FINAME Foreign Currency 208.4 Loans & Discount of Receivables + Credits Assigned to Intercap (-) Credits assigned to Banco Intercap -7.3% 247.5 -15.8% 1,284.8 -1.1% 1,373.6 -7.5% 1,074.6 Local Currency - Real 224.9 1,271.0 Corporate 1,082.3 -0.7% 1,158.2 -7.2% 739.8 650.5 13.7% 515.6 43.5% 40.5 0.0 n.c. 0.0 n.c. Loans & Discounted Receivables 699.3 650.5 7.5% 515.6 35.6% Assignment of Receivables Originated by our Customers 185.3 243.9 -24.0% 478.1 -61.2% BNDES / FINAME 15.5% 190.0 187.9 1.1% 164.5 Foreign Currency 196.5 202.4 -3.0% 215.5 -8.8% Other 27.6 31.7 -12.9% 47.0 -41.3% Consumer Credit – used vehicles 0.0 0.1 -70.5% 1.1 -96.1% Acquired Loans & Financing 2.4 3.6 -33.1% 8.9 -72.5% 25.1 27.9 -9.9% 37.0 -32.2% CREDIT PORTFOLIO 2,467.0 2,587.8 -4.7% 2,548.4 -3.2% CREDIT PORTFOLIO WITH CREDIT ASSIGNMENTS TO INTERCAP 2,549.0 2,587.8 -1.5% 2,548.4 0.0% Non-Operating Asset Sales Financing By Collateral By Customer Concentration Receivables 25% Pledge / Lien 7% Top 10 15% 11 - 60 32% By Maturity 91 to 180 days 17% 181 to 360 days 18% Property 10% Aval PN 49% Monitored Pledge 5% Vehicles Securities 2% 2% Other 26% 61 - 180 27% Up 90 days 32% +360 days 33% 11/20
  12. 12. EARNING RELEASE rd 3 QUARTER 2013 Quality of Credit Portfolio Rating AA A 3Q12 2Q13 3Q13 Required Provision % 0% Outstanding Loans 56.3 Allowance for Loan Losses Outstanding Loans Allowance for Loan Losses Outstanding Loans Allowance for Loan Losses B 0.5% C 1% 3% D E 4.4 65.7 1,078.0 0.0 5.4 158.2 948.3 0.0 4.7 G 25.7 41.0 6.9 113.5 13.1 7.7 20.5 4.8 113.5 971.5 192.8 109.9 17.4 30.0 4.0 118.6 5.2 15.0 2.8 118.6 45.8 103.5 12.4 3.9 34.8 6.2 2.7 34.8 10.3 5.5 9.7 5.8 892.4 349.2 8.9 10.5 11.0 4.6 31.1 ALL/ Credit Portfolio % H Additional ALL 10% 30% 50% 70% 100% 877.4 1,032.5 183.0 130.7 0.0 F TOTAL - 2,467.0 30.6 8.5% 210.4 - 2,587.8 40.9 8.3% 214.4 - 2,548.4 0.0 4.1% 103.5 We remain focused on lending to clients with better credit standing, which is evident from the high percentage of loans rated in the low risk categories (between AA and B), which reached 99.9% in 3Q13, compared to 98.2% in 2Q13. The balance of loans rated between AA and B ended the quarter at 79.7% of total loans (compared to 81.7% and 78.4% respectively, at the end of 2Q13 and 3Q12), as the following chart shows: Of the R$317.7 million classified between D and H (R$279.8 million in June 2013 and R$200.4 million in September 2012), R$247.6 million correspond to loans whose payments are regular, equivalent to 78% of the total (compared to 77% in June 2013 and 61% in September 2012). The remaining 22% correspond to overdue loans and are detailed below: Default by segment 3Q13 2Q13 Credit Portfolio > 60 days 3Q13 NPL Emerging Companies 1,168.4 1,271.4 Corporate 1,271.0 1,284.8 27.6 31.7 2,467.0 2,587.8 % 51.6 Other TOTAL Allowance for Loan Losses (ALL) 210.4 ALL / NPL ALL / Loan Portfolio NPL 4.4% 1.0% 7.2 26.1% 71.7 2.9% % 51.3 12.9 3Q13 NPL 4.0% 0.7% 7.2 22.8% 66.9 2.6% % 46.6 8.4 2Q13 NPL % 4.0% 40.6 3.2% 11.1 0.9% 5.9 0.5% 7.2 26.1% 7.2 22.8% 64.9 2.6% 53.8 2.1% 214.4 293.6% 8.5% > 90 days 2Q13 8.3% 320.3% 324.0% 398.7% - - - - The default rate on loans overdue by more than 60 days (NPL 60 days) increased 0.3 p.p. in the quarter but decreased 0.2 p.p. from 3Q12. Loans overdue by more than 90 days (NPL 90 days) increased 0.5 p.p. in the quarter and 0.7 p.p. in relation to 3Q12. The increase in NPL 90 days in both the quarter and the 12-month period is mainly due to the arrears of a few loans granted before April 2011. 12/20
  13. 13. EARNING RELEASE rd 3 QUARTER 2013 NPL 60 days/ Credit Portfolio Ratio 3Q13 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 NPL 60 days/ Credit Portfolio 2.9% 2.6% 0.3 p.p. 3.1% -0.1 p.p. 14.0% 10.6% 3.4 p.p. 7.5% 0.9 p.p. 0.6% 0.5% 0.1 p.p. 1.1% -0.4 p.p. Clients upon the new credit policy Clients upon the previous credit policy (acquired before April 2011) In 3Q13, the credit portfolio coverage index remained high at around 8.5% (8.3% in 2Q13), due to the balance allowance for loan losses of R$210.4 million, as against R$214.4 million in 2Q13. This balance allowance provided coverage of 2.9x of the NPL 60 balance and 3.2x of the NPL 90 balance at the end of September 2013. The managerial expense with allowance for loan losses (ALL) corresponded to 0.75% (annualized) of the expanded credit portfolio, in line with the conservative credit policy adopted by the Bank. There were no fresh provisions for the balance of loans granted prior to April 2011 and we still have an additional allowance (not allocated) of R$30.6 million. 13/20
  14. 14. EARNING RELEASE rd 3 QUARTER 2013 Funding Funding volume totaled R$3.1 billion at the end of September 2013, down 1.9% from June 2013 and up 5.0% from September 2012. Bank Deposit Certificates (CDB) and Time Deposits with Special Guarantee (DPGE I), booked under the item ‘time deposits’, remain the principal funding sources, jointly accounting for 53.8% of total funding. Funding through LCAs, which are backed by agribusiness operations, a segment in which Banco BI&P specializes, continues to increase its share of total funding, accounting for 18.8% of total funding, compared to 15.6% in 2Q13. Real estate letters of credit (LCI) and bank notes (LF) too have been increasing their share, jointly accounting for 3.3% of total funding in 3Q13, compared to 2.4% in 2Q13. Funding in foreign currency is especially allocated to trade finance operations and its balance is impacted by foreign exchange variations. Total Funding 3Q13 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 Total Deposits 2,391.2 2,427.8 -1.5% 2,194.5 9.0% Time Deposits 719.4 822.7 -12.6% 664.6 8.2% Insured Time Deposits (DPGE) 939.9 944.8 -0.5% 1,019.0 -7.8% Agro Notes (LCA) 578.1 489.2 18.2% 328.8 75.8% Real Estate Notes (LCI) 65.8 40.2 63.8% 5.3 n.c. Bank Notes (LF) 34.8 34.0 2.4% 36.4 -4.5% Interbank Deposits 15.7 58.2 -73.1% 92.1 -83.0% 37.6 38.8 -3.2% 48.3 -22.3% Domestic Onlending Demand Deposits and Other 325.4 348.6 -6.6% 309.3 5.2% Foreign Borrowings 365.3 366.0 -0.2% 432.0 -15.4% 332.1 366.0 -9.3% 381.1 -12.9% Trade Finance Other Foreign Borrowings 33.2 0.0 n.c. 50.8 -34.7% 3,081.9 TOTAL 3,142.3 -1.9% 2,935.8 5.0% By Type Demand 1% By Investor Time Deposit 23% Individuals 7% Insured Time Dep. (DPGE) 30% Interbank 1% By Maturity National Banks 5% Corporates 11% Brokers 8% Other 2% Trade Finance 11% BNDES Onlendings 11% BNDES 11% Agro Bonds 19% Bank & Real Estate Notes 3% Institutional Investors 44% demand 1% +360 days 33% 181 to 360 days 16% 91 to 180 days 19% Foreign Banks 12% Up 90 days 31% The average term of deposits stood at 757 days from issuance (740 days in June 2013) and 324 days from maturity (353 days in June 2013). Average Term in days from issuance to maturity 1 Interbank Time Deposits Time Deposits with Special Guarantee (DPGE) Agro Notes (LCA) Real Estate Letters of Credit (LCI) Bank Notes (LF) 344 431 1,389 184 205 891 161 272 499 122 133 421 Portfolio of Deposits 2 757 324 Type of Deposit 1 From September 30, 2013. | 2 Volume weighted average. 14/20
  15. 15. EARNING RELEASE rd 3 QUARTER 2013 Free Cash 629 661 658 3Q12 2Q13 3Q13 R$ million On September 30, 2013, the free cash position totaled R$657.9 million, equivalent to 27.5% 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 Accord regulations, which provides greater security to Brazil’s financial system against oscillations in economic conditions. In a simulation, if the acquisition of Banco Intercap was concluded at the close of 3T13, our Basel Index at the end of September 2013 would be 15.4%, 0.9 pp higher than the current Basel index of Banco BI&P of 14,5%. The following table shows BI&P’s position in relation to the Central Bank’s minimum capital requirements: Basel Index 3Q13 2Q13 3Q13/2Q13 3Q12 3Q13/3Q12 Total Capital 554.9 554.3 0.1% 585.2 -5.2% 555.8 555.3 0.1% 586.2 -5.2% Tier I Tier II 1.3 Required Capital 1.3 -0.7% 1.4 -3.5% (2.3) Deductions (2.3) 0.0% (2.4) -4.8% 3.6% 421.6 419.1 0.6% 407.0 Credit Risk allocation 362.6 353.3 2.7% 350.7 3.4% Market Risk Allocation 42.5 47.9 -11.4% 36.6 16.0% Operating Risk Allocation 16.5 17.9 -7.9% 19.7 -16.3% Excess over Required Capital 133.3 135.2 -1.4% 178.2 -25.2% 14.5% 14.6% -0.1 p.p. 15.8% -1.3 p.p. Basel Index Risk Ratings Agency Classification Observation Last Report Financial Data Standard & Poor’s BB / Negative / B brA+ / Negative / brA-1 Global Scale Local Scale - Brazil August 6, 2013 March 31, 2013 Moody's Ba3/ Negative / Not Prime A2.br/ Negative / BR-2 Global Scale Local Scale - Brazil July 4, 2013 March 31, 2013 FitchRatings BBB / Stable / F3 Local Scale - Brazil September 5, 2013 June 30, 2013 RiskBank 9.80 Ranking: 51 RiskBank Index Low Risk Short Term October 11, 2013 June 30, 2013 15/20
  16. 16. EARNING RELEASE rd 3 QUARTER 2013 Capital Market Total Shares and Free Float Number of shares as of September 30, 2013 Type Corporate Capital Controlling Group Common 44,410,897 22,166,552 Preferred 31,021,907 399,889 75,432,804 22,566,441 337,365 TOTAL Management Treasury Free Float % 57,876 - 22,186,469 50.0% 279,489 734,515 29,608,014 95.4% 734,515 51,794,483 68.7% 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 or its subsidiaries, had the following balances on September 30, 2013: Quantity Stock Option Plan I II Date of Approval Grace Period Term for Exercise Granted Exercised Extinct Not Exercised 26.03.2008 29.04.2011 Three years Three years Five years Five years 2,039,944 1,840,584 37,938 - 657,662 367,243 1,544,344 1,473,341 1,850,786 - - 1,850,786 605,541 - 35,044 570,498 6,336,855 37,938 859,949 5,438,969 III 29.04.2011 Five years Seven years IV 24.04.2012 Up to five years Five years 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 9M13 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 2013. 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 September 2013 at R$6.30, for market cap of R$470.6 million, including the shares existing on September 30, 2013 and excluding treasury stock. The price of IDVL4 shares decreased 9.9% in the quarter and -4.4% in the 12 months ended September 2013. In comparison, the Bovespa Index (Ibovespa) dropped 10.3% in the quarter and -11.6% in relation to 3Q12. At the end of 3Q13, the price/book value (P/BV) was 0.82. 16/20
  17. 17. EARNING RELEASE rd 3 QUARTER 2013 Share Price evolution in the last 12 months 130 120 110 100 90 80 70 IBOVESPA IDVL4 adjusted for earnigns IDVL4 60 Liquidity and Trading Volume The preferred shares of BI&P (IDVL4) were traded in 96.9% of the sessions in the quarter and 94.7% of the 246 sessions in the past 12 months. The volume traded on the spot market in the quarter was R$6.4 million, involving 0.9 million IDVL4 shares in 587 trades. In the 12 months ended in September 2013, the volume traded on the spot market was R$25.6 million, involving around 2.2 million preferred shares in 3,664 trades. Shareholder Base Position as of September 30,2013 # Type of Shareholder 5 Controlling Group 5 Management - Treasury % IDVL4 % TOTAL % 22,166,552 49.9% 399,889 1.3% 22,566,441 29.9% 57,876 0.1% 279,489 0.9% 337,365 0.4% - 0.0% 734,515,00 2.4% 734,515 1.0% National Investors 1,201,090 2.7% 8,648,620 27.9% 9,849,710 13.1% Foreign Investors 10,681,337 24.1% 17,815,852 57.4% 28,497,189 37.8% 22 11 6 Corporate 274 Individuals 323 IDVL3 TOTAL - 0.0% 6,712 0.0% 6,712 0.0% 10,304,042 23.2% 3,136,830 10.1% 13,440,872 17.8% 44,410,897 100.0% 31,021,907 100.0% 75,432,804 100.0% 17/20
  18. 18. EARNING RELEASE rd 3 QUARTER 2013 Balance Sheet R$ thousand Consolidated Assets 9/30/2012 6/30/2013 9/30/2013 Current 3,433,129 3,128,533 3,131,671 6,324 26,552 36,653 Short-term interbank investments Open market investments Interbank deposits 941,951 921,810 20,141 270,732 246,708 24,024 143,122 117,499 25,623 Securities and derivative financial instruments Own portfolio Subject to repurchase agreements Linked to guarantees Subject to the Central Bank Derivative financial instruments 568,460 364,271 9,056 172,429 22,704 1,011,301 649,604 69,426 160,716 89,784 41,771 1,236,149 954,523 25,871 210,730 45,025 Cash Interbank accounts Loans Loans - private sector Loans - public sector (-) Allowance for loan losses Other receivables Credit guarantees honored Foreign exchange portfolio Income receivables Negotiation and intermediation of securities Sundry (-) Allowance for loan losses Other assets Other assets (-) Provision for losses Prepaid expenses Long term Short-term interbank investments Marketable securities and derivative financial instruments Own portfolio Derivative financial instruments Interbank Accounts 2,680 3,201 2,545 1,366,002 1,384,176 (18,174) 1,359,621 1,408,066 (48,445) 1,269,980 1,342,186 (72,206) 498,874 415,595 52 21,341 66,379 (4,493) 394,416 320,987 58 61,573 16,753 (4,955) 375,392 507 323,650 1,058 37,418 22,611 (9,852) 48,838 48,911 (2,757) 2,684 62,710 56,946 5,764 67,830 59,227 8,603 852,124 985,743 951,854 6,824 - - 44,626 41 44,585 45,188 43 45,145 42,525 31 42,494 4,202 3,001 3,066 Loans Loans - private sector Loans - public sector (-) Allowance for loan losses 651,963 726,648 (74,685) 655,164 807,148 (151,984) 630,239 755,413 (125,174) Other receivables Credit guarantees honored Trading and Intermediation of Securities Sundry (-) Allowance for loan losses 144,171 778 518 148,986 (6,111) 251,685 495 260,163 (8,973) 248,551 498 251,246 (3,193) 338 30,705 27,473 Other rights Permanent Assets 51,895 83,929 87,522 Investments Subsidiaries and Affiliates Other investments (-) Loss Allowances 23,968 22,282 1,842 (156) 29,559 27,868 1,847 (156) 31,630 29,939 1,847 (156) Property and equipment Property and equipment in use Revaluation of property in use Other property and equipment (-) Accumulated depreciation 14,401 1,210 2,634 19,965 (9,408) 14,178 1,210 2,634 22,740 (12,406) 13,639 1,210 2,634 22,739 (12,944) Intangible Goodwill Other intangible assets (-) Accumulated amortization 13,526 2,391 13,100 (1,965) 40,192 24,585 18,664 (3,057) 42,253 25,030 20,945 (3,722) 4,337,148 4,198,205 4,171,047 TOTAL ASSETS 18/20
  19. 19. EARNING RELEASE rd 3 QUARTER 2013 R$ thousand Consolidated Liabilities 9/30/2012 6/30/2013 9/30/2013 2,496,098 2,538,587 2,547,624 Deposits Cash deposits Interbank deposits Time deposits Other 808,109 48,334 91,878 667,897 - 1,021,586 38,781 58,128 924,677 - 959,086 37,559 15,674 905,853 - Funds obtained in the open market Own portfolio Third party portfolio Unrestricted Portfolio 597,214 9,302 240,045 347,867 176,141 56,517 104,621 15,003 107,500 25,800 81,700 - Funds from securities issued or accepted Agribusiness Letters of Credit, Real State Notes & Bank Notes 341,511 341,511 550,198 550,198 645,621 645,621 185 185 556 556 391 391 8,312 8,312 9,892 9,892 11,811 11,811 Borrowings Foreign borrowings 431,964 431,964 365,999 365,999 332,193 332,193 Onlendings BNDES FINAME 128,029 82,609 45,420 131,247 90,018 41,229 122,375 80,798 41,577 Other liabilities Collection and payment of taxes and similar charges Foreign exchange portfolio Taxes and social security contributions Social and statutory liabilities Negotiation and intermediation securities Derivative financial instruments Sundry 180,774 820 54,286 2,864 2,000 95,942 13,576 11,286 282,968 452 5,353 13,201 4,500 133,055 75,550 50,857 368,647 565 24,771 15,920 2,188 219,743 67,325 38,135 1,252,501 1,089,265 1,046,932 1,015,931 195 1,015,736 842,830 32 842,798 753,396 753,396 28,943 28,943 13,172 13,172 33,095 33,095 - - 33,072 33,072 181,267 8,733 85,132 86,985 417 217,312 7,435 122,487 87,186 204 203,037 6,956 111,416 84,461 204 26,360 22,099 1,203 3,058 15,951 7,550 4,246 4,155 24,332 7,853 7,253 9,226 990 795 2,035 587,559 572,396 12,331 1,352 7,339 (5,859) - 569,558 661,812 19,866 1,315 (5,859) 31 (108,455) 848 574,456 662,384 22,223 1,302 (5,859) (2) (106,406) 814 4,337,148 4,198,205 4,171,047 Current Interbank accounts Receipts and payment pending settlement Interdepartamental accounts Third party funds in transit Long Term Deposits Interbank Deposits Time deposits Funds from securities issued or accepted Agribusiness Letters of Credit, Real State Notes & Bank Notes Loan obligations Foreign loans Onlending operations - Governmental Bureaus Federal Treasure BNDES FINAME Other Institutions Other liabilities Taxes and social security contributions Derivative financial instrument Sundry Future results Shareholders' Equity Capital Capital Reserve Revaluation reserve Profit reserve (-) Treasury stock Asset valuation Adjustment Accumulated Profit / (Loss) Minority Interest TOTAL LIABILITIES 19/20
  20. 20. EARNING RELEASE rd 3 QUARTER 2013 Income Statement 3Q12 2Q13 3Q13 9M12 R$ thousand 9M13 131,684 62,885 53,436 4,730 10,633 93,015 50,133 22,316 (7,780) 28,346 126,177 64,950 35,848 2,944 22,435 516,291 195,942 236,431 6,533 77,385 306,780 171,055 77,790 (2,876) 60,811 Expenses from Financial Intermediaton Money market funding Loans, assignments and onlendings Sales operations/transfer of financial assets Allowance for loan losses 95,145 69,220 14,043 11,882 90,778 53,005 37,628 145 86,883 56,440 23,237 536 6,670 406,358 273,884 83,597 48,877 375,884 162,653 72,496 536 140,199 Gross Profit from Financial Instruments 36,539 2,237 39,294 109,933 (69,104) (27,046) 7,656 185 (21,441) (13,042) (2,252) 1,138 6,053 (5,343) (36,041) 8,636 187 (26,138) (15,694) (2,034) 402 1,147 (2,547) (32,986) 10,077 184 (24,091) (17,171) (2,945) 2,311 1,501 (2,852) (85,123) 19,610 539 (66,118) (39,787) (8,299) 3,155 14,763 (8,986) (102,914) 25,164 543 (76,602) (46,236) (8,579) 3,500 5,852 (6,556) 9,493 (33,804) 6,308 24,810 (172,018) (1,230) 752 367 501 450 8,263 (33,052) 6,675 25,311 (171,568) Income tax and social contribution Income tax Social contribution Deferred fiscal assets (2,160) (1,970) (1,170) 980 15,109 1,074 457 13,578 (2,805) (1,400) (683) (722) (7,356) (8,078) (4,782) 5,504 71,493 6,306 3,831 61,356 Statutory Contributions & Profit Sharing (2,972) (2,694) (1,868) (7,361) (9,993) 3,131 (20,637) 2,002 10,594 (110,068) Consolidated Income from Financial Intermediation Loan operations Income from securities Income from derivative financial instruments Income from foreign exchange transactions Other Operating Income (Expense) Income from services rendered Income from tariffs Personnel expenses Other administrative expenses Taxes Result from affiliated companies Other operating income Other operating expense Operating Profit Non-Operating Profit Earnings before taxes ad profit-sharing Net Profit for the Period 20/20

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