presentation 2q19 - banco bmgbancobmg.mzweb.com.br/wp-content/uploads/sites/88/2019/08/bm… · 1 -...
TRANSCRIPT
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Institutional Presentation2Q19
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Agenda
2
History
Corporate Governance
Products
Funding
Ratings
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History
3
FoundationPayroll Loan
BMG Card
• Beginning of the payroll credit card business
• Pioneer and benchmark in payroll loan in Brazil
PayrollLoan
Acquisitions
• Acquisition of 100% of Banco GE and Banco BCV
• Creation of Joint Venture with Itaúdedicated to Payroll Loans
JV with Itaú
Payroll Credit Card
Exclusive Margin
• Exclusive margin to operate payrollcredit cardin INSS
Help /Insurance
• Launch of the franchise network “help!”
Digital Payments
1930 90s-00s 20112005 20152012 20182016
• TheGuimarãesFamily creates the Banco de Minas Gerais, focused on individual and corporate credit
• Partnership with Generali
• Launch of the Full Digital Bank
• Acquisition of Granito -acquiring company
• Sale of BMG participation in the JV to Itaú
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Corporate Governance
Corporate Structure
Ownership Breakdown Board of Directors
IM: Independent Member
4
Shareholders % ON % PN % Total
Flávio Pentagna Guimarães 0.0% 55.0% 11.0%
BMG Participações S.A 38.6% - 30.9%
Ângela Annes Guimarães 12.9% 9.0% 12.1%
Regina Annes Guimarães 12.9% 9.0% 12.1%
Ricardo Annes Guimarães 12.9% 9.0% 12.1%
João Annes Guimarães 12.9% 9.0% 12.1%
Antônio Mourão Guimarães Neto 4.7% 9.0% 5.6%
Other 5.1% 0.0% 4.7%
Total number of shares (million) 400 100 500
Board of Directors Position
Flavio Pentagna Guimarães Honorary ChairpersonAna Karina Bortoni Chairperson (IM)Ângela Guimarães MemberAntônio Mourão Guimarães Neto MemberJosé Eduardo Dominicale MemberOlga Colpo Member (IM)Regina Guimarães MemberRicardo Guimarães MemberTemporarily vacant Member (IM)
Banco Cifra
BMG Leasing
Banco BCV
99.99% 100.00% 100.00%
BMG Bank
Cayman
100.00%
CB Fácil Corretora
100.00%
BMG Participações em Negócios
BMG SegurosME
Promotora
BMG Soluções
Eletrônicas
94.50%
CMG Corretora de
Seguros
Cifra Financeira
80.00%
99.99%
99.74% 100.00%99.00%
Help Franchising
99.98%
65.00%
Granito
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Corporate Governance
5
Management and control
Audit Committee
Asset and Liability Committee
Transparency and quality of information
Disclosure Committee
Credit analysis
Credit Committee
Definition of policies and actions to prevent
money laundering
Money LaunderingPreventionCommittee
Organizational culture
Remuneration, People and Governance Committee
Initiatives to improve protection, technology
and innovation
Information Security
Committee
Evaluates and addresses market, credit,
operational and liquidity risks and manages
capital
Risk and Capital Management
Committee
3 Monthly 3 Weekly 5 Quarterly 3 Weekly
3 Monthly 5 Quarterly 9 Weekly 3 Weekly
# of permanent members
Main Committees
DeliberativeCommittee
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2.03Cross-selling IndexFull Digital
Banking
6
Client-centricityOne-Stop Shop and Client Lifecycle
Tech-enabled
Direct Debit Loan
Insurance Investments
Payroll Credit Card
Checking Account
Full Biometric Profile
DataAnalytics
ArtificialIntelligence
Omnichannel
3.8 mm Clients
2.0k Third-party bank correspondents
+58 NPS620Stores
InvestorSaver
Consumer &Precautionary
No-choice borrower
Traditional borrower
Partnerships
Customers with different needs impact the channel strategy and define the products
Banco BMG
Credit and Debit Card
DudaVirtual
specialist
Save for Me
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62%73%
75% 74%
1%
3%
5%6%
1%
2%
3%4%
18%
15%
13%14%
18%7%
4%
2%
8,486 8,633
9,513
10,261
2016 2017 2018 1H19
Payroll Credit Card Direct Debit Loan U.S. Payroll Wholesale Portfolio Run off Total
Credit Portfolio
7
Retail64%
Retail
Retail83%
1 - Payroll loan, lendico, home equity and. vehicles
1
R$ Million
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PAYROLL CREDITCARD
TRADICIONALCARD
Credit bureau No Yes
Annuity / sign-up fee No Yes
Interest rate 3% - 5% p.m. ~11% p.m.
Maximum number of installments
Up to 96 months Up to 12 months
Delinquency (NPL) 3% 35%
Target - retirees, pensioners and public employees1
Endorsement of 5% to 10%2 of salary
Minimum installment directly discounted from
payroll
Important mean of payment
Stable and. predictable default rate
Main features
FAVORABLE REGULATORYENVIRONMENT
New Central Bank measures to
reduce bank spread strengthen
payroll credit card
8
1990
Law 8.112:Payroll loan
Law 10.820/03:Payroll loan for CLT employees, Social
Security retirees and pensioners
2003 2005
INSS/DC 121: Payroll credit card for Social security
(INSS)
2015
Law 13.172/15 : Exclusive margin of 5% on the payroll credit card for
Social Security retirees and pensioners and
government employees
Payroll Credit Card
Competitive Advantages
ROBUST LEGISLATION
1 - Market can also operate with private company2 - For municipal and states employees, the consignable margin of the card may vary, reaching up to 10%
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Federal Government
risk1
7,3167,553
6,805 6,928 7,120
2Q18 3Q18 4Q18 1Q19 2Q19
Payroll Credit Card
9
82.5%
Portfolio Quality – E-H
R$ Million
Portfolio
1 - Social Security (INSS) + federal government employees 2 - Management view without the loss mitigation of the lender insurance3 - Frequency in which customers used the payroll credit card for purchases in the last 12 months
4.3 4.65.3
5.7 5.7
2Q18 3Q18 4Q18 1Q19 2Q19
Interchange fees
R$ Million
3.9%3.3% 3.1% 3.0% 3.2%
3.9%3.3% 3.2% 3.2% 3.4%
2Q18 3Q18 4Q18 1Q19 2Q19
E-H portfolio E-H portfolio without insurance
of the transactions made with the payroll credit card are for purchases3
UBER
NETFLIX
99main merchants where the
card is used
2
94%
Card Usage
DIGITAL INCLUSION
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43% of the portfolio comes
from clients who receive the INSS benefit at BMG
Direct Debit Loan
Portfolio
R$ Million / p.m.
10
BMG is payer of Social Security (INSS) benefit
Higher efficiency when collecting installments
Lower default rates
Better credit appraisal
Higher cross-selling potencial
Greater bargaining power on agreements
Direct Debit Loan features
Portfolio Quality
Personal credit with direct debit from the customer checking account aiming financial reintegration;
Maximum term12 months
358 400 447 532
612
21.1% 20.9% 20.7% 20.5% 20.4%
-30,0%
-20,0%
-10,0%
0,0%
10,0%
20,0%
-
100
200
300
400
500
600
700
800
900
2Q18 3Q18 4Q18 1Q19 2Q19
Portfolio Interest rate
28.5% 31.1% 32.9% 30.0% 27.4%
17.1% 17.1%20.3% 19.3% 16.8%
2Q18 3Q18 4Q18 1Q19 2Q19
E-H portfolio Overdue installments over 90 days
75% of Direct Debit clients have BMG Payroll Credit Card.
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5.8% 5.6%6.7% 6.8% 7.4%
2Q18 3Q18 4Q18 1Q19 2Q19
E-H Portfolio
13.0% 14.9% 16.3%19.2% 21.5%
3.1% 3.6% 3.9% 4.7% 5.3%
2Q18 3Q18 4Q18 1Q19 2Q19
E-H Portfolio Overdue installments past 90
216
266 299358 383
56 66 7792 100
0
20
40
60
80
100
120
140
160
180
200
0
50
100
150
200
250
300
350
400
450
2Q18 3Q18 4Q18 1Q19 2Q19
Balance (R$) Balance (US$)
Other Portfolios
Credit Portfolio
U.S. Payroll Loan
BMG Money is an independent company that operates inthe United States with focus on payroll loan for the publicsector employees throughout 27 states;
The transaction is reflected in Banco BMG throughparticipation agreements entered into between BMGMoney and BMG Bank (Cayman).
R$ Million
11
Run-off Portfolio
Credit PortfolioR$ Million
Portfolio Quality Portfolio Quality
Banco BMG has the following run-off portfolios: payrollloan, Lendico, home equity and. vehicle financing;
Represents 2.8% of total portfolio.
520 479432
333282
2Q18 3Q18 4Q18 1Q19 2Q19
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12
R$ Million
Partnership with Generali
BMG Card Credit Insurance
Average Ticket: R$ 100
Direct Debit Credit Insurance
Average Ticket: R$ 92
September 2016, BMG and Generalisigned a 20-year exclusivity agreement for the sale of retail insurance products
in BMG’s distribution network
Partnership with high cross-sell and up-sell potential
Mass Insurance
4944
48 47
57
2Q18 3Q18 4Q18 1Q19 2Q19
R$ 16 million in service revenue net of commission
expense;
Profit share of R$ 15 million;
Reduction of R$ 14 million in provision expenses;
Earnout after 2021.
80% of penetration in the
Direct Debit portfolio
31% of penetration in the Payroll Credit Card
portfolio
Sources of income – 1H19:
Life InsuranceAverage Ticket: R$ 31
Portfolio Penetration Issued Premiums Evolution
Insurance is sold through CMG Corretora - BMG's indirect subsidiary
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13
Means of Payment
Acquiring company focused on small business establishments located near help! stores and bank correspondents, thus forming
a complete retail ecosystem in Brazil
Microregion
Ecosystem
Bar
Beauty shopLocal shop
Gas station
Newstand Bakery
Construction store
In 2018, the Bank acquired 65% of Granito, with the purpose of
bolstering its product portfolio and increasing its capillarity with BMG's
existing distribution channels. Granito stands out for its
differentiated solutions from the market.
TPV (Total Payment Volume) ofR$ 590 milhões;
+11,000 active clients.
1H19 Highlights
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Complete Biometric
Profile
Asset Light Omnichannel
Third-Party Bank Correspondents
2KCorrespondents
14KConsultants
620stores
One-Stop Shop
Digital Bank
User-friendly
Any time, anywhere, any device
+450Kaccounts opened
14
Long history of partnership with BMG
Points of SaleWhite Label
partnership with soccer clubs
Franchises network with culture of being fair with customers
1.2 new store per dayin 1H19
ONLY AND TRULY PHYGITAL
PHYSICAL DIGITAL
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Full Digital Bank
15
Help on the clientonboarding
Offer voice recognition functions
Improve user experience
Allow interaction through voice or text
Investments“Save for me”
Payments
Credit Card
Phone Recharging
Duda
Full DigitalBanking
Based onWhatsApp, mostused app in Brazil
Machine Learning
Artificial intelligence
Checking Account
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Wholesale Portfolio
Companies
Structured Operations
16
structured operations for banking correspondents andsoccer clubs, with collateral that mitigates the issuers' risks.
The portfolio is composed of financing and of structuredfinancial services for medium and large companies.
658 686 747875
972
1.5%1.0%
1.5%2.3% 2.0%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
-
200
400
600
800
1.000
1.200
2Q18 3Q18 4Q18 1Q19 2Q19
Portfolio NPL (E-H portfolio)
537 507 469 439 45837.0% 35.2% 32.8%
25.5%
13.7%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
-
100
200
300
400
500
600
700
800
900
2Q18 3Q18 4Q18 1Q19 2Q19
Portfolio NPL (E-H portfolio)
Created in July 2016, BMG Seguros is an insurance company focused exclusively on the Surety Bond
Segment.
Company belongs to Banco BMG;
Target Audience: Corporate & Large-
Corporate;
Main modalities: Bid Bond, Performance
Bond, Judicial Guarantee, Guarantee of
Payment.
Written Premiums: R$ 94 million
Retained Premiums: R$ 45 million
Net Income: R$ 0.2 million
BMG Seguros
Financial Highlights – 1H19
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Diversified Funding
17
55%
71%77% 77%
23%
14%
13% 13%
12%
8%6% 5%
6%
5%3% 4%
4%
2%1% 1%
10,215
11,93912,354 12,723
2016 2017 2018 1H19
Deposits External Funding Credit Assignment + Securitization Financial Bills Other Total
Time deposits
43%
Time deposits
77%
+140k direct and indirect retail
investors
~50brokers and distributors$
1 – Considers CDB with the Market2 – Remaining average term
1 1
2 years and 3 monthsAverage term of
deposits 2
R$ Million
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13.2%
15.7%
19.0%
22.3%
5.6%
9.7%
12.9%14.2%
2016 2017 2018 1H19
NIM NIM adjusted to cost of credit
+9.1 p.p.
+8.6 p.p.
% per year
18
Profitability
Margin Evolution
1 - Methodology: interest margin + Income from services rendered / average interest-earning assets.2 - Methodology: interest margin after loan provision expenses net of recovery and agents commission + Income from services rendered / average interest-earning assets.
21
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R$ Million
19
Capital
Shareholders’ Equity and Basel Ratio
48% 51% 52% 54% 56%
2.701 2.757 2.640 2.673 2.700
13.9% 13.1% 12.4% 12.4% 13.6%
13.9% 13.1% 12.4% 12.4% 13.6%
2Q18 3Q18 4Q18 1Q19 2Q19
Reference Equity Tier 1 Shareholders' Equity Basel Ratio Basel Ratio - Tier 1
+ 8p.p.
Capital qualityimprovement
R$ 124 million in Perpetual and Subordinated Financial Bills
13.9% Basel Ratio1
1 - R$ 86 million has already been authorized by BACEN and is comprised in the capital calculation. With the authorization of the remaining amount, Basel Ratio would be 13.9%.
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20
Securitization
Securitization of payroll credit card – CBMG11
Positive performance in the secondary market
CDI+1.90% p.a.
CDI+0.68% p.a.
Yield reduction
BMG's improved credit risk andasset quality
• Public offer in terms of instruction CVM 476 • Amount issued: R$ 502 million• Term : 5 years• Rating: AA (Fitch)
Characteristics of the offer:(Sep/17)
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Main Indicators
21
Financial Highlights (R$ Million) 2Q19 1Q19 4Q18 3Q18 2Q18
Net Income - Recurring1 84 99 61 77 67
Net Income 62 77 40 55 45
ROAE - Recurring1 14.1% 17.2% 10.4% 13.1% 11.7%
ROAE 9.5% 12.1% 6.0% 8.3% 6.9%
ROAA 1.5% 1.8% 0.9% 1.3% 1.1%
Basel Index 13.6% 12.4% 12.4% 13.1% 13.9%
Net Interest Margin 23.3% 22.7% 22.6% 20.2% 19.8%
Efficiency Ratio 49.8% 50.6% 45.6% 54.3% 52.3%
NPL2 – E-H Portfolio 5.6% 6.0% 6.6% 6.7% 7.2%
NPL3 – Overdue installments 3.3% 3.6% 3.9% 3.9% 4.5%
Balance Sheet (R$ Million) 2Q19 1Q19 4Q18 3Q18 2Q18
Total Credit Portfolio 10,261 9,853 9,513 9,265 9,096
Retail Portfolio4 8,548 8,206 7,866 7,593 7,380
Wholesale Portfolio5 1,430 1,314 1,215 1,193 1,196
Run-off Portfolio 6 282 333 432 479 520
Total Assets 17,331 16,830 16,938 16,959 16,170
Shareholders’ Equity 2,700 2,673 2,640 2,757 2,701
Total Funding 12,723 12,234 12,354 12,489 11,852
1 - Recurring Net Income and ROAE, excluding the effects of goodwill, see "Net Income and Profitability“ in the Earnings Release.2 - Methodology: Portfolio classified by E-H/Total Portfolio, including overdue plus falling due installments.3 - Methodology: Installments overdue more than 90 days/Total Portfolio. 4 - The retail portfolio includes Payroll Credit Card and Personal Credit.5 - Wholesale portfolio includes structured operations and companies6 - The run off portfolio includes the payroll loan, Lendico, vehicles and home equity loan.
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Ratings
22
Agency Date Rating Perspective
FITCH January 2019
Local currency A- (bra)
Stable
Foreign currency B+
Moody‘s March 2019
Local currency Baa2.br
Stable
Foreign currency B1
RISKbank July 2019 9.82Low Risk Medium
Term 2
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23
Contact & Disclaimer
INVESTOR RELATIONS TEAM
Tel.: +55 11 3067-2048
www.bancobmg.com.br/IR
We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of ourmanagement. and on information currently available to us. Forward-looking statements include statements regarding our intent. belief or currentexpectations or that of our directors or executive officer.Forward-looking statements also include information concerning our possible or assumed future results of operations. as well as statements preceded by.followed by. or that include the words ''believes'' ''may'' ''will'' ''continues'' ''expects'' ''anticipates'' ''intends'' ''plans'' ''estimates'' or similar expressions.Forward-looking statements are not guarantees of performance. They involve risks. uncertainties and assumptions because they relate to future eventsand therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressedin or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control orpredict.