earnings presentation - bancobv.com.brthe 1q13 results once again confirmed concrete advances in the...
TRANSCRIPT
Earnings Presentation
1st Quarter, 2013
1
Disclaimer
Disclaimer
“Certain statements made in this presentation may not be based on historical information or facts. This presentation therefore contains, or may be deemed to
contain, “forward looking statements” (within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended), including those relating to the general business plans and strategy, future financial condition and results and growth
prospects of Banco Votorantim S.A. (“Banco Votorantim” or the “Company”), and future developments in its industry and its competitive and regulatory
environment. By their nature, forward‐looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or
may not occur in the future and are based on assumptions, data or methods which, although considered reasonable by the company at the time, may turn out to
be incorrect or imprecise, or may not be possible to realize. Accordingly, actual results may differ materially from these forward‐looking statements due to a
number of factors, including future changes or developments in the Company‟s business, its competitive environment, technology developments and political,
economic, legal and social conditions in Brazil.
Forward looking information is not merely based on historical fact but also reflects management‟s objectives and expectations. The Company can give no
assurance that expectations disclosed in this presentation will be confirmed. The words “estimate”, “believe”, "anticipate", “wish", "expect", “foresee", “intend",
"plan“, "predict", “forecast", “aim" and similar words, written and/or spoken, are intended to identify affirmations which, necessarily, involve known and unknown
risks. Known risks include uncertainties which include, but are not limited to, interest rates, product competition, market acceptance of products, the actions of
competitors, regulatory approval, currency type and fluctuations, monetary policy, among others.
This presentation is based on events up to March 31st, 2013. The Company or any of its affiliates take no responsibility or liability to update the contents of this
presentation in the light of new information and/or future events.
Banco Votorantim and/or any of its affiliates do not accept and take no responsibility, whatsoever, direct or indirect, for transactions or investment decisions
made on the basis of information contained in this presentation.
Banco Votorantim may alter, modify or otherwise change in any manner the contents of this presentation, without the obligation to notify any person of such
revision or changes.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor
anything contained herein shall form the basis of any contract or commitment whatsoever. Recipients of this presentation are not to construe the contents of this
summary as legal, tax or investment advice and recipients should consult their own advisors in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research,
publicly available information and industry publications. Although the Company has no reason to believe that any of this information or these reports are
inaccurate in any material respect, the Company has not independently verified the competitive position, market share, market size, market growth or other data
provided by third parties or by industry or other publications and therefore does not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without the Company‟s
prior written consent.”
2
The successful implementation of the Change Agenda
indicates a 2013 with substantially better results
Executive summary – Message from the CEO
The 1Q13 results once again confirmed concrete advances in the Change Agenda
• Maintenance of excellent quality in Consumer Finance production. BV Financeira has been originating high quality
auto finance for over 15 months and, in 1Q13, strengthened its position as the market leader in used vehicles
• Consistent drop in delinquency¹. Consolidated NPL 90¹ decreased to 6.2% in Mar/13, vs. 6.6% in Dec/12
• New reduction in credit provision expenses. Consolidated credit provision expenses reduced 6.5% (or R$ 62M) vs.
4Q12 – fourth consecutive quarterly reduction
• Reduced cost base. Non-interest expenses dropped 14.4% (or R$ 144M) vs. 4T12, reflecting the effectiveness of the
initiatives for cost reduction and operating efficiency gains
These important achievements in our Change Agenda were once again accompanied by the solid performance of
both business divisions – Consumer Finance and Wholesale
The combination of consistent revenue generation by the business areas and the new reduction in credit provision
expenses led to Net Financial Margin of R$ 234M in 1Q13, 14.0% growth over 4Q12
The 1Q13 results were still impacted by:
• Still high credit provisions expenses due to delinquency of auto finance portfolios originated between July/10 and Sept/11
• Expenses with the early settlement of credits assigned with recourse until Dec/11 (before Res. 3,533)
• Expenses with provisions for contingencies, mainly related to the restructuring process
Nevertheless, results maintained their trajectory of gradual improvement (1Q13: R$-278M, 4Q12: R$-358M)
In 2013 we will conclude the adjustment process in order to resume profitable growth in a sustainable way
• In the short-term, results will still be impacted by the same factors that affected 1Q13
The success already shown in the implementation of the Change Agenda indicates that 2013 will be a year of
substantially better results, mainly in the second semester
1. Operations past due over 90 days
3
Banco Votorantim overview
Results and recent Change Agenda advances
Appendix – financial highlights
4
Banco Votorantim is one of the leading players in Brazil...
Banco Votorantim is one of the largest
privately-held Brazilian banks in total assets...
...and is well-positioned to consolidate itself
as one of the largest banks in Brazil
Banco Votorantim – Overview
...and also in terms of loan portfolio...
6188
112
121127
458
703
755
951
Citibank BTG Pactual
Safra Votorantim
HSBC Santander
CEF
Bradesco Itaú Unibanco
Banco do Brasil 1,087
State-owned
Foreign
National privately-held
22
23
42
47
57185
260
312
354
491
Volkswagen
Banrisul
Safra
HSBC Votorantim²
Santander
Bradesco
Itaú Unibanco
CEF
Banco do Brasil
Foreign
State-owned
National privately-held
1. Excluding BNDES (state-owned development bank); 2. Considers BV‟s on balance loan portfolio (excluding off balance securitization); 3. Considers credit assignments with recourse Source: Banco Votorantim; Bacen; Anbima
Diversified business portfolio
• Wholesale Banking
– “Top 5” in credit for large enterprises
• Consumer Finance
– Among the leaders in auto finance
– 7th largest player in payroll loans³
– ~ 4.9 million customers
• Wealth Management
– 9th largest asset manager by Anbima‟s managers‟
ranking: R$41.1B in AuM
Strategic partnership with Banco do Brasil, the largest
financial institution in Latin America
Strong and committed shareholder base
• Banco do Brasil and Votorantim Group
Low fixed-cost business model
• Extensive third-party distribution network in Consumer
Finance (vs. branches)
+
Shareholder
50% total
Largest Financial Institutions in Dec/12 - Assets (R$B)¹
Largest Financial Institutions in Dec/12 – Loan Portfolio (R$B)¹
5
...and has a diversified business portfolio, internally
divided into Wholesale and Consumer Finance
Banco Votorantim – Corporate strategy
Shareholders
Pillars
1. Financial Institutions; 2. Includes guarantees provided and private securities, besides on balance loan portfolio according to Bacen‟s Res. 2,682
Cons. Finance Wholesale
Auto
Finance
Market leader in used auto finance
Ensure quality and profitability of new
vintages
Focus on used vehicles (multi-brand
dealers) for own portfolio
Partnership with BB in new auto financing (new car dealers)
Other
Businesses
Increase profitability
in payroll loans,
acting selectively with
focus on lucrative
agreements
Continue to grow in
credit cards
Expand insurance
brokerage revenues
(e.g. Auto and Credit)
Corporate &
IB (CIB)
Wealth
Management
Middle
Market
Grow with quality and profitability among
mid-sized companies (R$50M-R$600M annual revenues)
Increase efficiency and scale gains
Focus on relationship and operational agility
Strengthen product offering
Banco do Brasil Votorantim Group
9th largest Asset in the market, with
innovative products
Private focused on estate planning via
customized solutions and an open
architecture concept
Continuous growth of synergies with BB
Position itself as a relevant partner by building agile and
long-term relationships, as well as offering integrated financial solutions (IB, derivatives, structured
products and distribution), always
suitable for each client‟s needs
+
R$37.7B R$39.3B
R$76.9B
X Expanded² credit portfolio
Off balance assets
R$7.7B
R$1.7B
Assigned to FI¹
Assigned to FIDC
6
Shared governance between the shareholders Board of Directors‟ Chairman position is annually alternated between the shareholders
• Equal representation of each shareholder
• 2-year term of office, with Chairman and Vice-Chairman
positions annually alternated between shareholders
• Decisions are made by absolute majority, with no “casting vote”
• Gestão profissional com executivos experientes
Name Position Shareholder
José Ermírio de Moraes Neto Chairman Votorantim Finanças
Aldemir Bendine Vice-Chairman Banco do Brasil
Ivan de Souza Monteiro Director Banco do Brasil
Marcus de Camargo Arruda² Director Votorantim Finanças
Paulo Rogério Caffarelli Director Banco do Brasil
Wang Wei Chang Director Votorantim Finanças
Name Position
João Roberto Gonçalves Teixeira CEO
Alvaro Jorge Fontes de Azevedo Executive Director
Elcio Jorge dos Santos Executive Director
Marcos Lima Monteiro Executive Director
Pedro Paulo Mollo Neto Executive Director
Ricardo Ramos de Arruda Executive Director
Robert John van Djik Executive Director
Governance structure
Banco Votorantim – Corporate governance
Board of Directors
Executive Committee
1. Money Laundering Prevention; 2. Deceased in August/12; new member, elected in the Ordinary General Shareholders‟ Meeting held on April/13, is subject to approval by the Brazilian Central Bank
Board of
Directors
Operating Committees
Executive
Committee
Fiscal Council
Audit
Committee
Compensation
& HR
Committee
Statutory
Products &
Marketing
Committee
Finance
Committee
Equal
Representation of
each shareholder
MLP¹
Communication
Expenses (CAAD)
Internal Controls
Ombudsman
Projects
Technology Sustainability
Products
ALM, Risks & Capital
Businesses
Human Resources
Credit
Investment Bank (IB)
Tax
7
Banco Votorantim overview
Results and recent Change Agenda advances
Appendix – financial highlights
8
1. Ratio between ALL balance and balance of operations past due by over 90 days
The 1Q13 results confirm, once again, the consistent
progress made in the Change Agenda
Progress in the Change Agenda
Progress made in the Change Agenda during 1Q13 – highlights
Agenda
Progress
Delinquency
reduction
NPL 90 for light vehicles decreased to 7.2% in Mar/13 (7.7% in Dec/12)
• Driven by the increased participation in the portfolio of better quality vintages (after Sept/11)
Consolidated NPL 90 decreased to 6.2% in Mar/13 (6.6% in Dec/12)
Cost base
reduction
Non-interest expenses showed a 14.4% reduction in the 1Q13 QoQ
• R$857M in 1Q13 vs. R$1,001M in 4Q12 – R$144 million reduction
• Reflects the initiatives for greater operating efficiency
Credit provision
reduction
Allowance for loan losses expenses (ALL) reduced 6.5% in 1Q13 QoQ...
• R$889M in 1Q13 vs. R$951M in 4Q12 – fourth consecutive quarterly reduction
...simultaneously to the increase in the Coverage Ratio¹ (Mar/13: 106%; Mar/12: 84%)
2
3
4
Origination
with quality 1
Maintenance of solid quality in auto finance origination
• Vintages from last 15+ months registered low “Inad 30” (1st installment delinquency)
Increased origination in 1Q13, strengthening leadership position in used vehicles
The progress in the Change Agenda creates the conditions for
the Bank to resume profitable growth in a sustainable way
9
Production Banco Votorantim has been originating auto finance
portfolios with solid quality for more than 15 months
Change Agenda – Consumer Finance production
Mar/13
1.0
Dec/12
1.1
June/12 Dec/11
1.0
June/11 Dec/10
2.1
June/10 Dec/09
1.5
June/09
1.1
Light vehicles1 – Origination by channel (R$B) and first installment delinquency2 (%)
Vintages indicating lower quality
64% 71% Multi-brand dealers/
Total production
1st installment delinquency ("Inad 30")
Multi-brand dealers (R$B)
New car dealers (R$B)
Record quality
vintages
80% 78%
In 1Q13, the Bank reinforced its focus on multi-brand dealers
and strengthened its position as leader in used vehicles
1. Includes CDC – vehicles and vans (excludes leasing); 2. % of each month‟s production with first installments past due over 30 days
10
Mar/13
24.4
Dec/12
23.5
Sept/12
24.1
June/12
24.5
Mar/12
26.8
Dec/10
24.6
Quality of vintages originated after Sept/11 is partly due
to greater conservatism towards credit concession
NPL 90 by vintage, 4 months after
concession – Auto finance (%) Auto production average interest rate (%p.y.)
Auto production – tenor and down payment Auto finance origination – by payment option
1. Data published semiannually in Bacen‟s Financial Stability Report (“Relatório de Estabilidade Financeira”) Source: BVF, Bacen
84%100% 100% 100% 100% 100%
16%
1Q13 4Q12 3Q12 2Q12 1Q12 4Q10
Other options 60 month, no down payment
32%41% 41% 42% 44%44%
444444464652
1Q13 4Q12 3Q12 2Q12 1Q12 4Q10
Average tenor (months) Down payment%
0.5 Month of
concession D
12
S
12
J
12
M
12
D
11
0.6
J
11
2.7
D
10
J
10
D
09
0.6
Market¹
BV Financeira
Consumer Finance – Production quality
Production
Banco Votorantim also has been continuously improving
its credit policies, processes and models
11
Delinquency Increased participation of better quality auto finance
vintages has contributed to delinquency reduction
Vintages with better quality (after Sept/11)
reached 44% of the portfolio...
26% 22% 19% 15% 13%
59%57%
52%
47%43%
15%21%
29%38%
44%
100%
Until
June/10
July/10 to
Sept/11
After
Sept/11
Mar/13 Dec/12 Sept/12 June/12 Mar/12
...contributing to consistently
reduce delinquency
Managed auto finance portfolio¹ by vintage (%)
Mar/13
6.2%
7.2%
Dec/12
6.6%
7.7%
Sept/12
7.4%
9.1%
June/12
7.5%
9.5%
Mar/12
7.0%
8.9%
NPL 90 – managed loan portfolio (%)
Total
Light vehicles
Change Agenda – Delinquency
Total delinquency decreased to 6.2% in Mar/13, third
consecutive quarterly reduction
Note: managed portfolio includes on balance loan portfolio according to Bacen‟s Res. 2,682, and off balance credits assigned with substantial risk retention until Dec/11, before entry in force of Bacen‟s Res. 3,533
12
ALL
ALL expenses dropped 6.5% in 1Q13 vs. 4Q12 Even with reduced provisions, there was a new increase in the consolidated Coverage Ratio
Credit provision expenses reduced
for the fourth consecutive quarter
1. Ratio between ALL balance and balance of operations past due by over 90 days
Note: ALL expenses include expenses related to credit assignments with recourse (both on and off balance), as well as revenues from write-off recovery
Consolidated Coverage Ratio reached
106% in Mar/13, vs. 84% in Mar/12
770 733
125121
119
181156
4Q12
951
1,167
3Q12 2Q12
1,398
1,286
-6.5%
Consumer
Finance
Wholesale
1Q13
889
1,277
1Q12
1,456
1,331
∆ 1Q13/
4Q12
-5%
-14%
Allowance for loan losses expenses – ALL (R$M) Managed loan portfolio‟s Coverage Ratio¹ (%)
93.3%
93.1%
84.1%
June/12 Dec/12
87.4%
78.3%
Mar/12
99.9%
84.1%
75.4%
90.2%
Sept/12
106.4%
Mar/13
Total
Consumer Finance
Change Agenda – ALL and Coverage
13
Expenses
Non-interest expenses (R$M)
The Bank has also advanced in cost reduction Non-interest expenses decreased 14% in 1Q13 vs. 4Q12, especially Administrative and Personnel
362443
367
235
279
228
122
250
212
Administrative
Personnel
Contingencies²
Others¹
1Q13
857
4Q12
1,001
1Q12
742
Important initiatives were adopted regarding
cost reduction and efficiency gains...
...and resulted in -14% non-interest expenses
in 1Q13 vs. 4Q12, despite contingencies
• Adequacy of organizational structures to the new
level of origination in Consumer Finance
• Integration of corporate areas – Legal, Risks,
Finance, HR, Operations and Technology, that used to
work separately in the past
• Adjustment in the commissions paid to distribution
channels (auto finance and payroll loans)
• Implementation of a new compensation policy
• Rationalization of rental expenses, e.g.:
– Space reduction at the Rochaverá, Berrini and
Paulista sites
• Review of expenses with consulting, telephony,
media, events, travel and sponsorships, etc
∆ 1Q13/
1Q12
15%
75%
-3%
2%
∆ 1Q13/
4Q12
-14%
-15%
-18%
-17%
Examples of initiatives for cost reduction
Change Agenda – Non-interest expenses
Increasing operating efficiency is one of Banco
Votorantim’s main focuses for 2013
1. Other operating and other tax (Federal, state and local taxes (excludes ISS, PIS and Cofins)); 2. Expenses with provisions for civil and labor contingencies
14
...despite 4% decrease in the expanded credit
portfolio in the period
Change Agenda advances were accompanied by the good
performance of businesses in 1Q13
Consolidated results
229 255
1,123
+1%
Net Interest
Income (NII)
Fees and others
1Q12 1Q13
1,378 1,365
1,136
-4%
Wholesale
Consumer
Finance
Mar/13
37.7
Mar/12
76.9
39.3
79.9
41.5
38.5
13.6 7.7 Financial Institutions²
4.3 1.7 FIDC³
1. Includes guarantees provided and private securities; 2. Off balance credit assignments to Financial Institutions; 3. Off balance credit assignments to FIDCs (Fundos de Investimento em Direitos Creditórios) of which Banco Votorantim owns 100% of the subordinated shares
Total revenues slightly increased
in 1Q13 vs. 1Q12...
Off balance
portfolio
Total revenues (R$M) Expanded¹ credit portfolio (R$B)
15
Managed loan portfolio Operating strategy
Consumer Finance: the Bank maintained its focus on used
vehicles and INSS payroll loans (retirees and pensioners)
Consumer Finance – Auto finance and payroll loans
1. Credits assigned with substantial risk retention until Dec/11 (before Res. 3,533 came into force); 2. Only on balance loan portfolio; 3. On and off balance loan portfolios
BV Financeira acts as an extension of Banco do Brasil (BB) in
auto finance outside branch network
Banco Votorantim is one of the leading players in the auto
finance market
• Market leader in used auto finance
• Extensive network of third-party distribution
Model for direct origination (BVO) to BB under implementation
• Focus on new car dealers (new vehicles) and BB clients
• The Bank will be commissioned by the originated volume
Au
to f
ina
nc
e
Pa
yro
ll l
oa
ns
Payroll loan operations focused on INSS (retirees and
pensioners)
• Presents better risk profile
• Represents ~64% of the managed payroll loan portfolio
Selective position towards both private and public sectors
• Focus on partnerships with attractive profitability
Greater focus on refinancing contracts
On balance
Off balance¹
Mar/13
37.2
29.9
7.3
Mar/12
45,6
31.4
14.2
Mar/11
43.5
33.0
10.5
Managed auto finance loan portfolio (R$B)
Managed payroll loan portfolio (R$B)
Used/
Total² 70% 67% 70%
INSS/
Total³ 64% 60% 56%
On balance
Off balance¹
Mar/13
9.5
7.4
2.1
Mar/12
10.5
6.7
3.8
Mar/11
9.5
5.2
4.3
Stable
vs. Dec/12
16
29.9
39.3
Mar/13
Middle
Market
CIB
-5.4%
9.4
Mar/12
41.5
32.4
9.1
Mar/11
38.5
31.8
6.8
Contraction of expanded credit portfolio reflects
greater discipline towards capital allocation CIB – Operating strategy
1. Includes guarantees provided and private securities; 2. Ratio between ALL balance and balance of operations past due over 90 days
Wholesale – CIB and Middle Market
Expanded¹ Wholesale credit portfolio (R$B)
Middle Market – Operating strategy
Wholesale: CIB and Middle Market kept focus on
profitability and conservatism towards credit provisions
∆ Mar13/
Mar12
+3.1%
-7.7%
Coverage Ratio² 204%
Focus on clients with revenues above R$600M/year
Disciplined capital allocation (focus on profitability)
Increased relevance to its customers, through strengthening
the product platform
• Structured products, derivatives (hedge), IB services
1Q13 highlights:
• ECM: Leading Coordinator of Senior Solution‟s IPO
• Fixed income: 5 concluded operations (~R$2.2B)
Focus on clients with revenues between R$50M and
R$600M/year
Disciplined capital allocation
Conservatism towards credit provisions 217%
Focus on exploring opportunities related to infrastructure
investments and the growth of capital markets
17
Private Bank – Operating strategy
VAM is the 9th largest asset manager according
to Anbima’s managers’ ranking Asset Management – Operating strategy
Wholesale – Wealth Management
Focus on high-value added structured products
Enhanced synergies with BB: assets from funds structured in
partnership reached R$3.7B³
• E.g. the “BB Progressivo II” real estate fund
VAM’s consistent performance has been highlighted in
many rankings, e.g.
• “Guia Exame de Investimentos Pessoais 2012” (personal
investments)
• “Star Ranking da Valor Investe / S&P”
Focus on integrated estate planning, via customized and
differentiated solutions
ISO 9001:08 Certificate regarding Relationship, Wealth
Management and Advisory activities
VWM&S reached R$41.1B in assets under management Partnership with BB was enhanced and consistent performance was recognized
+15.1%
Mar/13
41.1
Mar/12
44.6
Mar/11
35.7
VWM&S assets under management² (R$B)
10º Anbima¹
ranking 9º
VWM&S aims at being one of the best in structuring and
managing high value-added products
1 Votorantim Asset Management „s(VAM) position in Anbima‟s managers‟ ranking ; 2. Includes Treasury, Brokerage and offshore products; 3. Total assets by the end of the period Source: Banco Votorantim; Anbima
18
The Bank has been increasing real estate investments Through BVEP – “BV Empreendimentos e Participações” (enterprises and participations)
Operating sectors Portfolio of more than 20 projects – examples
Offices
VGV: R$130M
Rio de Janeiro/RJ Rio de Janeiro/RJ
Offices
VGV: R$250M
Osasco/SP
Development:
Lindencorp / EZTec
Launch: Oct/12
VGV: R$1.5B
São Paulo/SP
Development:
Tecnisa / PDG
1st phase: Mar/13
VGV: R$804M
Commercial
Shopping
Malls
Residential
Logistics
Class A properties in major
urban centers
Average and above average
income public
Class A logistics warehouses, in
sites with logistical potential
Shopping malls and power
centers focused on cities less
served by the sector
Commercial highlights
Residential highlights
Other businesses – BVEP
BVEP focuses on originating, structuring and
managing real estate investments
Note: BVEP is a real estate investment company controlled by Banco Votorantim
19
1Q13 results maintained trajectory of gradual improvement... Driven by solid performance of businesses and reduction of ALL and Non-interest expenses
Total revenues (Net interest income, Fee/Banking fee income and Other revenues) Allowance for loan losses expenses – ALL
Non-interest expenses (Personnel, Administrative, Operating and Other tax¹) Net income and Net financial margin
R$ million
770 733
-6.5%
Consumer
Finance
Wholesale
1Q13
889 156
4Q12
951 181
3Q12
1,286
1,167
119
2Q12
1,398
1,277
121
1Q12
1,456
1,331
125
-278-358
-497-536-596
234205
-299-320
1Q13 4Q12 3Q12
-166
2Q12 1Q12
1Q13
1,378
4Q12
1,563
3Q12
1,403
2Q12
1,354
1Q12
1,365
362 372 395 443 367
235 244 221279
228
139 183250
212
-14.4%
Administrative
Personnel
Contingencies²
Others
1Q13
857
4Q12
1,001
3Q12
829
2Q12
773
1T12
742
122
Net financial margin (R$M) Net income (R$M)
1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies
Consolidated results
Successful implementation of the Change Agenda
indicates that the results in 2013 will be substantially better
20
quarterly average
(R$B)
2010
6.5
1Q13
3.3
2012
2.9
2011
5.3
8098
182
151
1Q13 2012 2011 2010
889877
263
1Q13 2012
1,273
2011 2010
...but were still impacted by three main factors Expenses with ALL, early settlement of assigned portfolios and contingencies
ALL expenses Expenses with early settlements
Delinquency and Coverage Off balance credit assignments4 Auto finance origination
2
Expenses with contingencies³
3
80% 100% 106%73%
Mar/13
6.2%
Dec/12
6.6%
Dec/11
5.8%
Dec/10
2.6%
Total NPL 90²
Consolidated Cov. Ratio¹
1. Ratio between ALL balance and balance of operations past due by over 90 days; 2. Refers to the managed loan portfolio; 3. Provisions for civil and labor
contingencies; 4. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533)
212
174
78
19
1Q13 2012 2011 2010
Mar/13
9.4
7.7
1.7
Dec/12
11.4
9.1
2.4
Dec/11
20.5
15.4
5.2
Dec/10
13.5
11.1
2.4
to FI to FIDC (R$B)
Consolidated results
1
quarterly average
(R$B)
quarterly average
(R$B)
quarterly average
(R$B) Despite reduction,
still high ALL
New origination levels
demanded the adaptation of
organizational structures
21
9.0%
Mar/12
13.0%
8.7% Tier I
13.6%
Mar/13
Liquidity
1. Includes other deposits, other issuances (LCA, LCI and Debentures), borrowings, subordinated debt (CDs and subordinated notes); 2. Credits assigned with substantial risk
retention under Resolution 3,533 (i.e. does not include off balance credit assignments); 3. Includes Subordinated Financing Bills; 4. Linked to repo operations
In this context, the Bank kept its conservatism towards the
management of Liquidity, Provisions, Funding and Capital
Credit risk quality
Funding Capital
Basel Ratio Total Funding (R$B)
• Free cash continues at highly
conservative levels
– Above historic average
• R$~7B stand-by credit facility from
Banco do Brasil
– Important liquidity reserve
– Has never been tapped
• Slight contraction of the loan portfolio
reduced the need for additional
funding
• The Bank has successfully acted on
improving its funding profile
– Increasing the participation of
long-term instruments...
– ...and reducing deposits (CDs)
• Basel Ratio of 13.6% in Mar/13
• Shareholders increased the Bank‟s
capital by R$2 billion in June/12...
• ...and keep committed to maintain
an adequate capital structure
– As set out in the Shareholders‟
Agreement
8%
Time
Deposits
25%
12%
82.5
17%
Mar/13
25%
32%
24%
Mar/12
86.7
12%
27%
7%
11%
Debentures4
Financing
Bills3
Private
Securities
Securit.²
Others¹
Min. 11%
Coverage Ratio
Mar/13
106.4%
Mar/12
84.1%
ALL balance / NPL 90 balance
22
Banco Votorantim overview
Results and recent Change Agenda advances
Appendix – financial highlights
23
Financial highlights
Total revenues (Net Interest Income, Fee Income and Other Operating Income) Allowance for loan losses expenses – ALL
Financial highlights
Non-interest expenses (Personnel, Administrative, Operating and Other Tax¹) Net income and Net financial margin
R$ million
770 733
-38.9% -6.5%
Consumer
Finance
Wholesale
1Q13
889 156
4Q12
951 181
3Q12
1,286
1,167
119
2Q12
1,398
1,277
121
1Q12
1,456
1,331
125
-278-358
-497-536-596
234205
-299-320
1Q13 4Q12 3Q12
-166
2Q12 1Q12
+0.9% -11.8%
1Q13
1,378
4Q12
1,563
3Q12
1,403
2Q12
1,354
1Q12
1,365
362 372 395 443
235 244 221279
228
250
212
367
183139
+15.5% -14.4%
Administrative
Personnel
Contingencies²
Others
1Q13
857 50
4Q12
1,001 30
3Q12
829 30
2Q12
773 18
1Q12
742
122 23
Net financial margin Net Income (R$M)
1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies
24
Financial highlights
Efficiency ratio (%)
Financial highlights
1Q13
4.2
4Q12 2Q12 3Q12
4.2 4.4 4.4 4.3
1Q12
Net Interest Margin¹ – NIM (% p.y.)
1Q13 4Q12 3Q12 1Q12 2Q12
50.7 54.4
44.2
51.2
45.8 44.3
50.3 48.6
49.9
51.8
49.6
44.3
47.2
40.6
43.5
ER =
Administrative and Personnel Expenses
Net Int. Income, Fee/Banking Fee Income, Equity in Income
from Subsidiaries, and Other Operating Income/Expenses
1. Annualized indicator Note: criteria for calculating the Efficiency Ratio was refined in the 1Q13, when it started to consider Equity in Income from Subsidiaries in the
denominator; this change was reflected in the graph‟s history
Quarterly
NIM =
Net Interest Income
Average Interest Earning Assets (Interbank Funds Applied,
Securities, Loan Portfolio and Bacen‟s Compulsory Reserves)
12 months 12 months (excluding contingencies)
25
Mar/13
41.1
Dec/12
47.3
Sept/12
45.6
June/12
43.2
Mar/12
44.6
Expanded¹ managed² credit portfolio
Total assets Assets under management
On balance loan portfolio
Mar/13
119.7
Dec/12
121.0
Sept/12
111.6
June/12
113.6
Mar/12
112.8
1. Includes guarantees provided and private securities; 2. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533)
Financial highlights Off balance credit assignments with risk retention tend to zero because of Bacen‟s Res. 3,533
-4.2%
Expanded
credit portfolio¹
Off balance
securitization²
Mar/13
86.3
76.9
9.4
Dec/12
90.1
78.6
11.4
Sept/12
92.6
79.2
13.4
June/12
95.7
80.3
15.4
Mar/12
97.6
79.6
18.0
-0.7%
Mar/13
56.5
Dec/12
57.0
Sept/12
58.1
June/12
58.8
Mar/12
58.8
Financial highlights
R$ billion
26
Credit portfolio by segment
Expanded credit portfolio (Includes guarantees provided and private securities)
Expanded managed² credit portfolio (Expanded credit portfolio plus off balance securitization)
R$ billion
6.7
-2.3%
Corporate
Middle
Market
Auto
Finance
Others¹
Mar/13
76.9
29.9
9.4
29.9
7.7
Dec/12
78.6
31.8
9.5
29.9
7.4
Sept/12
79.2
32.2
9.5
30.3
7.2
June/12
80.3
32.7
9.6
30.9
7.0
Mar/12
79.6
32.4
9.1
31.4
86.3
29.9
37.2
-4.2%
9.4
Mar/13
31.8
9.5
Dec/12
90.1
40.8
10.1
June/12
95.7
32.7
9.6
43.0
10.4
Mar/12
97.6
32.4
9.1
45.6
10.5
9.5
38.8
Sept/12
9.9 9.8
92.6
32.2
-0.9%
-4.2%
-1.6%
-6.0%
∆Mar13
/Dec12
3.9%
-
-1.6%
-6.0%
∆Mar13
/Dec12
7.7 13.6 FI³ 9.1
Financial highlights
1.7 4.3 FIDC 2.4
1. Payroll loans, credit cards and individual loans; 2. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533); 3. Financial Institutions
Off balance
securitization
27
Mar/13
6.5%
4,313
Dec/12
6.6%
4,518
Sept/12
6.9%
4,914
June/12
6.9%
4,842
Mar/12
5.9%
4,535
Mar/13
106.4%
Dec/12
99.9%
Sept/12
93.1%
June/12
87.4%
Mar/12
84.1%
ALL balance² (R$M) Coverage ratio³ (%)
NPL 90/
Managed loan portfolio¹ (%)
NPL 60/
Managed loan portfolio (%)
ALL balance/Managed loan portfolio¹ ALL balance (R$M)
Credit Indicators Improvement in asset quality and coverage indicators
Financial highlights
1. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533); 2. Refers to managed loan portfolio; 3. Ratio between ALL balance and
balance of operations past due by over 90 days
Mar/13
2.3%
6.2%
7.7%
Dec/12
2.4%
6.6%
8.3%
Sept/12
2.4%
7.4%
9.4%
June/12
2.0%
7.5%
9.6%
Mar/12
1.8%
7.0%
8.9%
Wholesale Total Cons. Finance
Mar/13
7.7%
8.0%
Dec/12
8.2%
8.6%
Sept/12
8.8%
9.4%
June/12
9.2%
10.2%
Mar/12
8.8%
10.2%
On balance Managed¹
28
Write-off (R$M) Write-off recovery (R$M)
Credit indicators
Financial highlights
650
5.7%
3.4%
1Q12
1,027
1,341
6.9%
2Q12
1,205
3Q12
1,061
6.6%
4Q12
8.1%
1Q13
Write-off / Managed loan portfolio¹ (% p.y.)
Write-off (net of Recovery) (R$M)
1. Ratio between the quarter‟s accumulated write-off and the managed loan portfolio by the end of the quarter; 2. Ratio between the quarter‟s accumulated income from write-off recovery
and the managed loan portfolio by the end of the quarter Note: Annualized indicators
46 49
69
89 88
0.2%
1Q12 4Q12
0.5% 0.5%
3Q12
0.4%
1Q13 2Q12
0.3%
Recovery / Managed loan portfolio² (% p.y.)
Recovery
29
Funding Sources Increased participation of long-term funding instruments (e.g. Financing Bills, Securitization)
9.7
82.5
11.7
12.5
20.3
Deposits
Financing Bills
Loans and Onlendings
On balance securitization²
Others¹
+2.1%
Issuances
Debentures3
Mar/13
Subordinated Debt
6.7
10.9
9.7
Dec/12
80.7
20.2
15.5
11.0
10.2
7.0
11.9
3.5
Sept/12
79.0
19.8
18.4
9.8
10.2
8.0
10.3
0.9
June/12
81.1
16.2
23.0
10.1
11.0
7.8
11.3
0.1
Mar/12
86.7
20.7
25.6
8.4
10.9
7.5
10.7 0.1
1. Includes Option box and NCE repo; 2. Balance of credits assigned with substantial risk retention under Res. 3,533 (i.e. does not include off balance credit assignments); 3.
Linked to repo operations; 4. Credits assigned to other financial institutions and to FIDCs with substantial risk retention until Dec/11 (before Res. 3,533)
Note: International funding is 100% swapped for BRL
Funding evolution (R$B)
∆Mar13
/Dec12
Financial highlights
-8.4%
-5.3%
-4.2%
-19.2%
0.8%
6.7%
175.4%
19.9 Off balance4
securitization
(R$B) 10.8 12.8
30
Basel Ratio and Capital
9.3%
5.0%
Sept/12
15.2%
9.9%
5.3%
June/12
15.5%
10.2%
5.3%
Mar/12
13.0%
8.7%
4.4%
Tier I
Tier II
Mar/13
13.6%
9.0%
4.6%
Dec/12
14.3%
Basel ratio
Shareholders‟
Equity
Mar/13
11,430
7,671
Dec/12
12,111
8,210
Sept/12
13,002
8,829
June/12
13,624
9,304
Mar/12
11,282
7,349
Capital (R$M)
Financial highlights
Additionally, Banco Votorantim has a stand-by credit
facility of ~R$7B from BB, which has never been tapped
31
Banco Votorantim’s main ratings
Ratings
Banco Votorantim is an Investment Grade bank by Fitch, Moody’s and S&P
RATING
AGENCIES
International National
Long-Term Short-Term Long-Term Short-Term Long-Term Short-Term
Fitch Ratings Local Currency Foreign Currency National
BBB- F3 BBB- F3 AA+(bra) F1+(bra)
Moody’s Local Currency Deposits Foreign Currency Deposits National
Baa2 P-2 Baa2 P-2 Aaa.Br BR-1
Standard & Poor's Local Currency Foreign Currency National
BBB- A-3 BBB- A-3 brAAA brA-1
32
Conciliation between 1Q13 Managerial and Accounting results
Managerial x Accounting results
Net Interest Income 1.263 (25) (90) (25) 1.123
Allow ance for Loan Losses (1.004) - 90 25 (889)
Net Financial Margin 259 (25) - - 234
Other Operating Income/Expenses (682) 12 - - (669)
Fee Income 239 - - - 239
Personnel and Administrative Expenses (595) - - - (595)
Tax Expenses (126) 2 - - (124)
Equity in Income of Subsidiaries 24 - - - 24
Other Operating Income/Expenses (224) 11 - - (213)
Operating Income (423) (12) - - (435)
Non-operating Income (18) - - - (18)
Income before Taxation and Profit Sharing (441) (12) - - (453)
Provision for Income Tax and Social Contribution 205 12 - - 217
Profit Sharing (42) - - - (42)
Net Income (Loss) (278) - - - (278)
1. Foreign exhange variation of overseas investments, accounted in Other Operating Income (Expenses), as w ell as f iscal and tax effects from the
foreign investments hedge strategy, accounted in Tax Espenses (PIS/Cofins) and IT/SC, w ere relocated to Income from Derivative Financial
Instruments;
2. Income from the recovery of w rite-offs to loss accounted in Income from Loans and relocated to Allow ance for Loan Losses;
3. Expenses w ith credit provisions related to credit assignments w ith recourse accounted in Income from Loans and relocated to Allow ance for
Loan Losses.
INCOME STATEMENT SUMMARY
(R$ Million)
Accounting
1Q13Hedge¹
Write-off
Recovery²
Managerial
1Q13
ALL Credit
Assignments³