rd quarter 2018 - bancovotorantim.com.br · source: cetip; bacen; ibge; ibge; 6. does not consider...

1

3rd quarter 2018

EARNINGS RELEASE

www.bancovotorantim.com.br/ri

COVER

2

CONTENTS

Executive Summary

Key Information

Corporate strategy

Analysis of Managerial Result

Net interest income

Cost of credit

Income from services and insurance

Administrative and personnel expenses

Other operating income and expenses

Balance sheet analysis

Balance sheet

Loan portfolio

Auto finance

Loan portfolio quality

Funding and Liquidity

Capital

Ratings

Corporate Governance

Accounting x Managerial

Reconciliation

Appendices

3

EXECUTIVE SUMMARY

Executive Summary | 2Q18 Earnings Release

Net income for the 9M18 totaled R$ 779 million

– equivalent to annualized return on equity

(ROE) of 11.5% p.y., comparable to R$ 426

million for the 9M17, representing growth of

83.0% over the period. In the 3Q18, net income

totaled R$ 268 million, with ROE of 11.9% p.y.

Total income (net interest income + income

from services and insurance brokerage) grew

6.3% in 9M18/9M17 and 3.8% in relation to

2Q18. Net interest income grew 4.9% in the

first nine months of 2018, reflecting the higher

businesses return. Net Interest Margin (NIM)

increased to 6.2% in the 9M18, as compared

to 5.5% in the 9M17.

Result of loan losses and impairments

decreased 34.3% in the 9M18/9M17

comparison due to the lower credit cost of

businesses. Coverage Ratio reached 174% in

the end of Sept.18, as compared to 165% in

Sept.17. In the 3Q18, the result of loan losses

and impairments decreased 22.9%, reflecting

lower provisions and higher revenues from

credit recovery.

The 90-day NPL ratio of the loan portfolio

ended Sept.18 at 4.2%, 0.2 p.p. higher in the

quarter, due to a specific Wholesale’s case

properly provisioned.

The effective management of the cost base

and the consistent and diversified revenues

generation in 2018 contributed to the

improvement in the Efficiency Ratio for the

last 12 months to 33.2%.

EXECUTIVE SUMMARY

Funding: funding sources totaled R$ 61.6

billion in Sept.18. Stable funding instruments

accounted for more than half of total funding.

Liquidity: cash at a conservative level, more

than sufficient to fully cover funding with daily

liquidity.

Capital: Basel Ratio reached 16.4% in

Sept.18, of which 13.1% of Tier I Capital,

which consists of the sum of Equity Tier

(11.1%) and Additional Capital (2.1%).

The Bank keeps focused on its strategy to

leverage businesses returns, increase

operational efficiency, and diversify income

sources, continuously investing in digital

transformation aimed at improving client

experience.

In this sense, the Bank advanced on new

partnerships in this quarter, as the exclusive

agreement for BV to offer credit solutions to

Yalo’s clients, the first benefit platform of

healthcare procedures and wellness services

in the Brazilian market.

As a result of the continuous investment in

customer relationship in its digital trans-

formation process, the Bank was recognized

with the “PrêmioABT 2018” (2018 ABT Award),

in the “Innovation in Processes” category, for

the “Artificial intelligence in Customer Service”

case created by the Data Science area,

responsible for collecting and analyzing infor-

mation on client interaction, producing solu-

tions that gain their satisfaction.

Besides, in Sep.18 the Bank launched its new

institutional website with an updated interface,

providing a user friendlier and more intuitive

browsing experience, combining in one site

information and access to several areas of the

institution.

4 Executive Summary | 3Q18 Earnings Release

Key Information

Key Information

We show below Banco Votorantim’s select managerial information and indicators aimed at enabling analyses on

same comparison bases.

Variation Variation

3Q18/2Q18 9M18/9M17

RESULTS (R$ Million)

Net Interest Income 1,323 1,259 1,326 3,749 3,931 5.3% 4.9%

Result of loan losses and impairments (567) (379) (292) (1,517) (997) -22.9% -34.3%

Income from services and banking fees 326 344 341 943 1,010 -1.1% 7.2%

Personnel and admin. expenses (w/ profit sharing) (594) (541) (674) (1,746) (1,868) 24.7% 7.0%

Operating Income 264 468 543 729 1,515 16.1% 107.9%

Net Income 153 256 268 426 779 4.7% 83.0%

MANAGERIAL INDICATORS (%)

Return on Average Equity¹ (ROAE) 7.3 11.6 11.9 6.7 11.5 0.3 p.p. 4.8 p.p.

Return on Average Assets² (ROAA) 0.6 1.1 1.1 0.6 1.1 0.0 p.p. 0.5 p.p.

Net Interest Margin³ (NIM) 6.0 6.1 6.4 5.5 6.2 0.3 p.p. 0.7 p.p.

Efficiency Ratio (ER) - accumulated of 12 months4 35.1 32.9 33.2 35.1 33.2 0.3 p.p. -1.9 p.p.

Basel ratio 14.6 16.0 16.4 14.6 16.4 0.4 p.p. 1.8 p.p.

Tier I Capital Ratio 10.9 12.8 13.1 10.9 13.1 0.3 p.p. 2.2 p.p.

MACROECONOMIC INDICATORS5

CDI - in the period (%) 2.3 1.6 1.6 10.4 4.8 0.0 p.p. -5.6 p.p.

Selic rate- end of the period (p.y.%) 8.25 6.50 6.50 8.25 6.50 0.0 p.p. -1.8 p.p.

IPCA - in the period (%) 0.6 1.9 0.7 1.8 3.3 -1.2 p.p. 1.5 p.p.

Dolar exchange rate - end of the period (R$) 3.17 3.86 4.00 3.17 4.00 3.8% 26.4%

Variation Variation

Sept18/Jun18Sept18/Sept17

BALANCE SHEET (R$ Million)

Total assets 99,420 98,154 97,256 -0.9% -2.2%

Expanded loan portfolio 59,651 59,197 59,418 0.4% -0.4%

Wholesale segment 24,707 22,353 22,031 -1.4% -10.8%

Consumer Finance segment 34,944 36,844 37,388 1.5% 7.0%

Funding sources 64,777 63,820 61,606 -3.5% -4.9%

Shareholders' equity 8,777 9,349 9,498 1.6% 8.2%

LOAN PORTFOLIO QUALITY INDICATORS (%)

90-day NPL 4.1 4.0 4.2 0.2 p.p. 0.1 p.p.

Coverage Ratio (90-day NPL) 165 184 174 -10.4 p.p. 8.8 p.p.

OTHER INFORMATION

Employees6 (quantity) 3,889 3,831 3,892 1.6% 0.1%

AuM7 (R$ Million) 55,277 50,122 50,121 0.0% -9.3%

Sept17 Jun18 Sept18

3Q17 2Q18 3Q18 9M17 9M18

1. Ratio between net income and average equity of the period. This ratio is annualized; 2. Ratio between net income

and average assets of the period. This ratio is annualized; 3. Ratio between net interest income and average interest-

earning assets of the period. This ratio is annualized; 4. ER = administrative and personnel expenses / (net interest

income+ fee income/ banking fees income + equity in income from subsidiares + other operational income and

expenses); 5. Source: Cetip; Bacen; IBGE; IBGE; 6. Does not consider trainees and statutory; 7. Includes onshore

funds (ANBIMA criteria) and private clients' resources.

5

CORPORATE STRATEGY

Corporate Strategy | 3Q18 Earnings Release

In addition, the Bank has specific strategies for

other loans and financing products.

Payroll loan

Aims to maintain an important position in the

market of payroll loans, focusing on Private

categories (organic portfolio growth) and INSS –

National Institute of Social Security (refinancing

of portfolio).

Individual loans and other business

• Individual Loan: partnership with fintechs (ex.:

Pocket Guide and Neon Pagamentos) and

leveraging BV’s clients;

• Student loan: partnership with Ideal Invest and

Kroton;

• Real Estate Credit;

• Financing for acquisition of residential solar

power panel - partnership with Portal Solar.

Using the client base of Vehicles, the Bank seeks

to diversify its sources of revenues through credit

cards and insurance brokerage, both products

with well-defined strategies:

Credit cards

Seeks to increase the volume of active cards –

issued with the brands MasterCard and Visa,

through the offer to the current client base of auto

finance, as well as for the offer to clients of

commercial partners.

Insurance Brokerage

Through Votorantim Corretora de Seguros, the

aim is to increase revenues from insurance

brokerage. Besides continuing to grow in

products such as Auto and Credit Insurance, the

Bank has also been diversifying its portfolio,

which currently includes capitalization and life,

residential, and personal accident insurance.

Consumer Finance Business

The core business of Consumer Finance is Auto finance, in which the Bank operates through the

subsidiary BV mainly in the used and light auto finance market (multi-brand dealers), in which it has history of

leadership and recognized expertise. Its competitive differentials include: (i) expertise in pricing, credit

concession and collection; (ii) high capillarity through extensive outsourced distribution chain; (iii) agility in

decision-making; and (iv) relationship with dealers.

In addition, the Bank has been seeking to increase income from commissions of Promotiva S.A., joint-venture with BB

which is mainly engaged in the origination of payroll loan (Public and INSS) directly to the shareholder.

Banco Votorantim aims to consolidate its position among

the main national privately-held banks, leveraging

synergies with shareholders and bringing the client to the

center of the business. For this purpose, the Bank has

focused on the generation of income from the

businesses, increase of operating efficiency and

diversification of sources of revenues, continuously

investing in the digital transformation aimed at improving

the client’s experience. The portfolio of the Bank is divided

in three business units:

• Consumer Finance business

• Wholesale Bank (Corporate Bank)

• Wealth Management

CORPORATE STRATEGY

6 Corporate Strategy | 3Q18 Earnings Release

Private Bank

It is among the best private banks in the market,

expanding its performance in integrated patrimo-

nial management through differentiated solutions.

Private Bank adopts a macro approach,

evaluating different scenarios to identify the best

investment options, always supported by modern

management tools, statistical models, and

systems specially developed to interpret stress

scenarios and monitor risks to prioritize the

hedging of invested capital.

Large Corporate

Clients¹ (including financial institutions) with annual

revenues above R$ 1.5 billion, whose main focus is

to operate in the capital market, financial

structuring, guarantees and treasury.

Corporate

Clients¹ with annual revenues of up to R$ 1.5 billion,

whose focus is to operate selectively in cash

management, financial structuring, guarantees,

floating capital, hedge, foreign exchange, capital

markets and mergers and acquisitions.

Wholesale Bank (Corporate Bank)

Wide range of products

Wealth Management

Asset Management

It is recognized for its consistent performance and

for developing solutions appropriate to the clients’

needs by means of its capacity for innovation and

differentiated capacity for restructuring and

managing products that have a high added value.

Votorantim Asset Management (VAM) holds an

important position within its peer group (assets

managements without branch network structure)

and has its partnership with BB to structuring,

management, administration and distribution of

investment funds.

The Wealth Management business develops and provides sustainable wealth management solutions, with clearly

set strategic goals for the two distinct markets in which operates:

With a diversified portfolio of products and banking services, sectorial expertise and an agile and customized

service, the Wholesale Bank serves clients with minimum annual billing of R$ 300 million, which are internally

grouped in two sectors.

Foreign Currency & FX

Local Currency & Cash Management

Funding

Derivatives

Corporate Finance

Project Finance

Capital Markets & M&A

1. Economic groups

7

ANALYSIS OF MANAGERIAL RESULT

Managerial result analysis | 3Q18 Earnings Release

Variation (%) Variation (%)

3Q18/2Q18 9M18/9M17

Net Interest Income - NII 1,323 1,259 1,326 5.3 3,749 3,931 4.9

Results of Loan Losses and impairments (567) (379) (292) (22.9) (1,517) (997) (34.3)

Net financial margin 756 880 1,034 17.5 2,232 2,935 31.5

Other operating income/expenses (491) (412) (491) 19.1 (1,504) (1,420) (5.6)

Fee income 326 344 341 (1.1) 943 1,010 7.2

Personnel and administrative expenses (594) (541) (674) 24.7 (1,746) (1,868) 7.0

Tax expenses (106) (109) (99) (9.1) (286) (300) 4.8

Equity in income of subsidiaries 80 83 87 5.1 204 250 22.3

Other operating income/(expenses) (197) (190) (145) (23.4) (618) (511) (17.3)

Operating income 264 468 543 16.1 729 1,515 107.9

Non-operating income (loss) 24 (2) (2) (1.9) 8 (7) -

Income before taxes 289 466 541 16.1 736 1,509 104.9

Income tax and social contribution (136) (210) (273) 30.2 (310) (729) -

Net income 153 256 268 4.7 426 779 83.0

Return on Equity (ROE) 7.3% 11.6% 11.9% 6.7% 11.5%

9M17 9M183Q17 2Q18 3Q18INCOME STATEMENT

(R$ Million)

Net interest income (R$M) and NIM¹ (% p.y.)

In this chapter the main components of Banco

Votorantim’s financial and operational result will be

discussed.

Net income totaled R$ 779 million in the 9M18, a growth

of 83.0% in relation to the same period of the previous

year, basically explained (i) by the growth in Net

Interest Income, (ii) by lower expenses with loan

losses, (iii) by higher result from insurance

brokerage, and (iv) by lower expenses with

contingent liabilities. The ROE reached 11.5% p.y. in

the 9M18, against 6.7% p.y. in the 9M17.

NII grew 4.9% in 9M18/9M17 comparison and 5.3% in

3Q18/2Q18, due to the higher profitability of the

businesses, particularly the Consumer Finance

operation, whose share in the portfolio has grown on

consistent basis. It is worth mentioning that funding

expenses decreased in both comparison periods, a

change resulting from lower CDI and reduction in the

average funding sources balance.

NIM grew to 6.2% p.y. in 9M18, due to the increase of

the share of Vehicles and Cards in the mix of portfolio.

Net Interest Income (NII)

6.0% 6.1%

1. Net Interest Margin: Ratio between Gross Margin and Average Profitable Assets

NIM1

ANALYSIS OF MANAGERIAL RESULT

2Q183Q17 3Q18

1,323 1,259 1,326

+5.3%

9M17 9M18

3,9313,749

+4.9%

6.4% 5.5% 6.2%

In the 3Q18, profit amounted to R$ 268 million, with

growth of 4.7% in relation to the 2Q18. The main

positive effects during the last quarter were

(i) the growth in NII with clients, and (ii) the

reduction in the result with loan losses and

impairments, reflecting a higher credit recovery

volume and lower credit cost. Meanwhile, in the

3Q18 personnel and administrative expenses

increased, mainly due to the collective bargaining

agreement of financing/bank employees, and the

growth in profit sharing distribution, following the

business performance improvement.

8 Managerial result analysis | 3Q18 Earnings Release

Result of loan losses and Impairments (R$M)

Income from services and Insurance (R$M)

Result of loans losses and impairments

The result of loan losses and impairments in the

9M18 decreased 34.3% in relation to 9M17, and

22.9% in the 3Q18/2Q18 comparison, mainly due to

lower credit cost and consistent volume of revenues

from credit recovery.

The Bank’s credit risk management aims at maintaining

the provision of loan portfolio at adequate levels for each

segment. It is thus possible to note a gradual reduction

in the relation of the result of loan losses with the

average credit portfolio (on-balance).

Income from services² and insurance¹

The income from services and banking fees grew

10.9% in the 9M18/9M17 comparison, reflecting the

higher auto finance origination in 2018, and the higher

income from credit card portfolio. It is worth

emphasizing that the total income from insurance

brokerage grew 23.5% against 9M17, aligned with the

strategy to use the Auto client base to diversify

insurance income.

When comparing with the 2Q18, income from services

remained practically stable, mainly due to lower

revenues from investment fund performance fees, which

accounting recognition occurs in June and December.

2. Includes Banking Fees Income.

ALL and income from services

326 344 341

118115108

2Q183Q17 3Q18

434 459 458

943

279345

1,222

9M17 9M18

1,355

1,010

+10.9%Insurance (brokerage)¹

Services and Tariffs

4.1 4.1 4.3 11.3 12.4

Auto Finance Origination (R$B)

1. Income from Votorantim Corretora de Seguros (VCS) insurance brokerage, and the result

of recognized under the equity method of accounting. For more details, see page 24.

768579 513

(201) (200) (221)

3Q17

567

2Q18 3Q18

379292

-22.9%

2.1421.552

(625) (555)

997

9M17 9M18

1,517

-34.3%

Provisions for loan losses and impairments

Revenues from recovery of loans written-offs

2.7% 2.7%

Result of loan losses/Loan Portfolio (%p.y.)

1.9% 3.0% 2.3%

Variation (%) Variation

3Q18/2Q18 9M18/9M17

Allowance for loan losses expenses (516) (527) (454) (1,687) (1,381) (14.0) (18.1)

Revenues from recovery of written-off loans 201 200 221 625 555 10.3 (11.3)

Impairments (252) (52) (60) (455) (170) 14.9 (62.6)

Result of loan losses and impairments (567) (379) (292) (1,517) (997) (22.9) (34.3)

3Q17 2Q18 3Q18 9M17 9M18R$ Million


3Q18/2Q18 9M18/9M17

Master file registration and Appraisal of assets 187 176 176 500 530 0.2 5.9

Credit cards 53 61 63 151 185 3.6 22.0

Income from guarantees provided 27 26 28 86 76 7.4 (11.9)

Management of investment funds 31 46 33 89 111 (29.3) 23.8

Other 30 36 42 115 109 14.8 (5.3)

Total Income From Services 326 344 341 943 1,010 (1.1) 7.2

Revenues from insurance brokerage 108 115 118 279 345 2.3 23.5

Total Income From Services and Insurance 434 459 458 1,222 1,355 (0.2) 10.9

INCOME FROM SERVICES²

(R$ Million)3Q17 2Q18 3Q18 9M17 9M18


Administrative and Personnel Expenses

General personnel and administrative expenses,

including profit sharing, totaled R$ 1,868 million in the

9M18, with increase of 7.0% in relation to the 9M17

mainly due to higher expenses on labor lawsuits and

administrative expenses. In the comparison with the

2Q18, general expenses grew 24.7%, reflecting the

growth in personnel expenses in the 3Q18.

Personnel expenses grew 3.5% as compared to the

9M17, impacted by higher labor provisions, which in turn

grew due to the inflation adjustment to the amount of

lawsuit provisions, posting a considerable drop in the

filing of new lawsuits. In comparison to the 2Q18, total

personnel expenses grew because of the collective

bargaining agreement of financing/bank employees, and

because of the increase with provisions related to

variable remuneration.

The Efficiency Ratio for the last 12 months ended Sept.18 at 33.2%, better in relation to 35.1% in Sept.17, reflecting

the ongoing efforts of effective management of cost base, in compliance with Bank’s income diversification strategy

and increase in operational efficiency.

Administrative and Personnel Expenses (R$M)

Efficiency Ratio² (past 12 months)

Administrative and Personnel Expense

293 301 338

259 194265

71

3Q18

42

3Q17

46

2Q18

594541

674

+24.7%

825 915

785 731

2221,746

136

9M17 9M18

1,868

+7.0%

35.1% 32.9% 33.2%

Labor claims

Personnel - Other¹

Administrative

1. Considers PLR expenses; 2. Does not consider labor lawsuits and PLR.

At the end of Sept.18, Banco Votorantim had 3,892 employees, excluding interns and statutory employees.

Administrative expenses increased 11.0% in the 9M18/9M17 comparison, and 12.2% in the 3Q18/2Q18

comparison. In both periods the growth is explained by higher expenses with (i) data processing, reflecting higher

investments in technology in 2018, in line with the Bank's digital transformation process, and with (ii) specialized

technical service, due to higher one-off expenses with legal fees, whose impact was neutralized by lower expenses

with provisions for contingent liabilities (see item other operating income and expenses).


3Q18/2Q18 9M18/9M17

Personnel Expenses (301) (240) (337) (921) (953) 40.4 3.5

Salaries, Benefits e Social Charges (217) (185) (213) (645) (614) 15.0 (4.8)

Labor lawsuits (42) (46) (71) (136) (222) 55.7 62.7

Profit sharing expense (41) (7) (51) (137) (114) - (17.1)

Training (1) (2) (2) (3) (4) 7.4 41.1

Administrative Expenses (293) (301) (338) (825) (915) 12.2 11.0

Specialized technical services (95) (99) (119) (268) (310) 20.5 15.7

Data processing (52) (51) (61) (153) (162) 18.2 5.5

Services of the financial system (23) (27) (25) (72) (77) (8.4) 7.7

Judicial and Notary public fees (26) (19) (23) (72) (62) 16.9 (13.2)

Marketing (7) (15) (15) (18) (38) (3.7) -

Other (89) (88) (95) (242) (266) 7.5 9.8

Total (594) (541) (674) (1,746) (1,868) 24.7 7.0

9M183Q17 2Q18 3Q18 9M17ADMINISTRATIVE AND PERSONNEL EXPENSES

(R$ Million)



Other operating income and expenses totaled R$ 511 million in the 9M18, with reduction of 17.3% in relation to the

9M17, mainly because of lower expenses on provision for contingent liabilities related to civil lawsuits.

In relation to the 2Q18, other operating income and expenses decreased 23.4%, impacted by lower expenses for

contingent liabilities and higher reversals of provisions for provided guarantees.


Variation (%)

3Q18/2Q18 9M18/9M17

Costs associated with the production (159) (148) (144) (470) (442) (2.7) (5.9)

Reversal (provision) for contingent liabilities (44) (51) (29) (180) (112) (43.3) (38.0)

Reversal (provision) for unhonored guarantees (6) 2 27 (22) 25 - -

Other 12 8 1 53 17 (88.1) (68.3)

Total Other Operating Income/(Expenses) (197) (190) (145) (618) (511) (23.4) (17.3)

9M183Q17 2Q18 3Q18 9M17OTHER OPERATING INCOME/(EXPENSES)

(R$ Million)

11

BALANCE SHEET HIGHLIGHTS

Balance sheet highlights | 3Q18 Earnings Release

Balance sheet

Total assets reached R$ 97,256 million in the end of Sept.18, with growth of 0.9% in three months and reduction of

2.2% in 12 months. Shareholders’ equity totaled R$ 9,498 million in the same period.

EQUITY HIGHLIGHTS

Variation (%)

Sept18/Jun18 Sept18/Sept17

CURRENT AND LONG-TERM ASSETS 98,505 96,750 95,729 (1.1) (2.8)

Cash and cash equivalents 102 92 405 340.6 297.8

Interbank funds applied 17,903 20,658 13,815 (33.1) (22.8)

Securities and derivative financial instruments 22,682 15,143 20,341 34.3 (10.3)

Derivative financial instruments 3,419 4,817 4,536 (5.8) 32.7

Interbank accounts or relations 401 1,297 646 (50.2) 61.0

Loan Operations, Leases and Others receivables 46,103 47,434 48,065 1.3 4.3

Alowance for loan losses (3,196) (3,622) (3,635) 0.3 13.7

Tax credit 7,311 7,042 6,997 (0.6) (4.3)

Other Assets 3,780 3,891 4,559 17.2 20.6

NON-CURRENTS 915 1,404 1,527 8.8 67.0

Investments 661 1,092 1,196 9.6 81.0

Fixed 102 108 110 2.1 8.0

Intangible and Diferred 152 204 221 8.0 45.6

TOTAL ASSETS 99,420 98,154 97,256 (0.9) (2.2)

Variation (%)


CURRENT AND LONG-TERM LIABILITIES 90,604 88,766 87,717 (1.2) (3.2)

Deposits 9,945 12,636 10,971 (13.2) 10.3

Demand and interbank deposits 2,249 1,984 2,069 4.3 (8.0)

Time deposits 7,696 10,652 8,902 (16.4) 15.7

Money market borrowings 26,289 22,124 20,767 (6.1) (21.0)

Acceptances and endorsements 24,840 26,058 28,452 9.2 14.5

Interbank accounts 77 72 594 - -

Borrowings and onlendings 4,468 4,111 4,394 6.9 (1.7)

Derivative financial instruments 2,856 4,285 4,110 (4.1) 43.9

Other obligations 22,129 19,480 18,428 (5.4) (16.7)

Subordinated debts 5,294 6,352 6,461 1.7 22.0

Credit transactions subject to assignment 11,510 8,198 6,635 (19.1) (42.4)

Other 5,326 4,930 5,332 8.2 0.1

DEFERRED INCOME 39 40 41 2.1 5.9

SHAREHOLDERS’ EQUITY 8,777 9,349 9,498 1.6 8.2

TOTAL LIABILITIES 99,420 98,154 97,256 (0.9) (2.2)

Sept17 Jun18 Sept18BALANCE SHEET | Assets

(R$ Million)

BALANCE SHEET | Liabilities

(R$ Million)Sept17 Jun18 Sept18

12 Balance sheet highlights | 3Q18 Earnings Release

34%

41%

28%Sept/17 21%2%

24% 22.020%

12%

2%

10%Sept/18

24.7

Credit Portfolio

In the end of Sept.18, the expanded credit portfolio

(including guarantees provided and private

securities) reached R$ 59.4 billion, with growth of

0.4% in relation to the previous quarter and increase

in participation of Consumer Finance business.

In Consumer Finance, the loan portfolio reached

R$ 37.4 billion in Sept.18, 7.0% higher than in Sept.17

and 1.5% when compared to Jun.18, leveraged by the

growth in Auto Finance, specially used cars.

It is worth mentioning the 17.4% growth in the credit

card portfolio over the last 12 months, a result of the

strategy on the diversification of revenues. The Bank

has strengthened its credit card portfolio and making

more sophisticate offering to current clients and

business partners.

Mix of credit (Wholesale) – expanded portfolio (R$B) Mix of credit (Consumer Finance) (R$B)

Loan Portfolio

75%

79%

9%

7%

9%

Sept/18

2%Sept/17

5%

6%

5%

2%

NewUsed

34.9

37.4

The expanded credit portfolio in Wholesale reached

R$ 22.0 billion in Sept.18, with reduction of 10.8% in the

past 12 months, mainly in the private securities balance.

In the quarterly comparison, the reduction was 1.4%.

BNDES Onlendings

Loans Other

Export./Import. financing

Guarantees provided

Private Securities

Vehicles

Payroll loan Cards Personal loans + Other

Loan portfolio

1. Payroll loans (INSS, private and government), individual loans (with and without guarantee), home equity, student credit and solar. For more

details, see page 24.

Variation (%)


Wholesale segment (a) 12,664 12,326 12,383 0.5 (2.2)

Consumer Finance segment (b) 34,944 36,844 37,388 1.5 7.0

Auto finance 29,446 31,578 32,225 2.1 9.4

Loans and financing¹ 3,750 3,274 3,110 (5.0) (17.1)

Credit Cards 1,748 1,992 2,053 3.1 17.4

On-balance loan portfolio (a+b) 47,608 49,170 49,771 1.2 4.5

Guarantees provided (c) 5,140 5,512 5,299 (3.9) 3.1

Private securities (d) 6,903 4,515 4,349 (3.7) (37.0)

Expanded credit portfolio (a+b+c+d) 59,651 59,197 59,418 0.4 (0.4)

Wholesale segment (a+c+d) 24,707 22,353 22,031 (1.4) (10.8)

Consumer Finance segment (b) 34,944 36,844 37,388 1.5 7.0

Sept17 Jun18CREDIT PORTFOLIO

(R$ Million)Sept18


The auto finance loan origination volume was R$ 4.3

billion in the quarter, of which used cars accounted for

88%. The combination of continuous improvements in

the credit processes and models and the prudence in

the granting of loans has maintained the quality in

vehicle origination, whose volume grew 6.3% in relation

to 3Q17.

+5.0%

+16.3%

∆3Q18

/3Q17

The Bank remained conservative regarding the auto

finance market, with an average down payment

percentage of 41% and an average term of 45

months.

Banco Votorantim is one of the leaders of the

auto finance market.

Auto finance origination (R$B)

Auto finance

Auto finance

0.4

3.6(89%)

3Q17

0.4

3.8(88%)

2Q18

3.7

(89%)

0.5

3Q18

4.34.1 4.1

+6.3%

Used CarsOther

vehicles

Variation (%)

3Q18/2Q18 3Q18/3Q17

Average rate (% p.y.) 23.3 21.5 23.2 1.7 p.p. -0.1 p.p.

Average term (months) 44 44 45 0 1

Down payment (%) 41.5 41.2 40.9 -0.3 p.p. -0.7 p.p.

Used cars/Auto finance origination (%) 89.1 89.4 88.1 -1.4 p.p. -1.0 p.p.

Total auto finance origination (R$ billion) 4.1 4.1 4.3 4.6% 6.3%

Variation (%)


Average rate (% p.y.) 26.2 24.3 24.0 -0.3 p.p. -2.2 p.p.

Maturity (months) 46 45 45 0 -1

Used cars/Auto finance portfolio (%) 85.4 87.7 88.0 0.3 p.p. 2.6 p.p.

Average vehicle age (years) 5 5 6 0 0

Sept17 Jun18

3Q18

Sept18

3Q17 2Q18


Coverage ratio (90-day Coverage Ratio)

All the segmentations of the credit portfolio risk in this section refer to the loan portfolio (Res. CMN No. 2.682/99),

unless otherwise indicated. The Bank maintains a consistent process of evaluation and monitoring of the credit risk

on operations carried out with clients.

Reflecting the solid risk management model and the continuous balance sheet strengthening, the Coverage Ratio of

90-Day NPL balance remained at a sturdy level, evolving to 174% in Sept.18 (Sept.17: 165%).

Coverage ratio

Loan Portfolio Quality

Loan portfolio quality

165%192% 191% 184% 174%

Sept/17 Dec/17 Mar/18

3,688

Jun/18

1,947

3,218

Sept/18

1,924

3,551

1,861

3,630

1,969

3,644

2,095

ALL balance (R$M) 90-Day NPL balance (R$M)

90-day

Coverage

Ratio

1. D NPL quarterly + write-offs of loss for the period) / Loan Portfolio for the immediately preceding quarter; 2. Includes, in Sep.18, R$ 9M of “

generic” credit provision recognized as Liabilities in the "Other" line (Note # 18d of 3Q18 FS).

90-Day NPL balance 1,947 1,969 2,095

90-Day NPL ratio 4.1% 4.0% 4.2%

Write-off (a) (549) (557) (436)

Credit recovery (b) 201 200 221

Net Loss (a+b) (348) (357) (215)

Net Loss / Loan portfolio - annualized 3.0% 2.9% 1.7%

New NPL 431 665 562

New NPL / Loan portfolio¹ - quarter 0.9% 1.4% 1.1%

ALL balance² 3,218 3,630 3,644

ALL balance / Loan portfolio 6.8% 7.4% 7.3%

ALL balance / 90-day NPL 165% 184% 174%

AA-C balance 42,630 43,654 44,390

AA-C balance / Loan portfolio 89.5% 88.8% 89.2%

Sept17 Jun18 Sept18LOAN PORTFOLIO QUALITY INDICATORS

(R$ Million, except where indicated)


Loan Portfolio per Risk Level (%)

Loans classified between “AA-C”, according to

Resolution No. 2.682 of the Brazilian Central Bank

(BACEN) represented, at the end of Sept.18,

89.2% of the loan portfolio, against 88.8% in

Jun.18, ratifying the quality of the portfolio.

Banco

Votorantim

Consumer

Finance

Wholesale

Delinquency of loan portfolio - 90-day NPL ratio

The Bank’s credit risk management aims at maintaining

the loan portfolio quality at adequate levels for each

market segment.

Loan Portfolio per Risk Level (%)

89.2%

10.8%

Sept/18Sept/17

10.5%

89.5% 88.7%

11.2%11.3%

Dec/17 Mar/18

88.8%

Jun/18

10.8%

89.2%

D-H

AA-C

The consolidated ratio of delinquency over 90 days (90-day NPL ratio) reached 4.2% in the end of Sept.18,

compared to 4.0% in Jun.18 and 4.1% in Sept.17. The increase in the indicator in the quarter reflects an occasional

case in Wholesale that is properly provisioned. In Wholesale, 90-day NPL ratio attained 2.1% in Sept.18, from 1.3%

in Jun.18. Disregarding the specific case, the consolidated ratio would be 4.0%, and the Wholesale’s would be

1.3%, comparable to the last quarter level.

Consumer Finance 90-day NPL ratio ended Sept.18 at 4.9%, an increase of 0.1 p.p. in relation to Sept.17. This

behavior reflects the quality of the Auto Finance portfolio, which 90-day NPL ratio ended in Sept.18 stable at 4.4%.

5.5%

4.6%5.3%

3.9%4.5%

4.1% 4.0% 4.2%

4.0%

4.8%5.3% 5.2%

5.4% 5.6%

5.3%

5.5% 5.2% 4.8%

4.4%4.3%

4.6%

4.1%

4.9%

4.4%

4.9%

Consumer Finance Vehicles

Mar/17Mar/16Sept/15 Jun/17Dec/15 Jun/16 Sept/16 Dec/16 Sept/17 Dec/17 Mar/18 Jun/18 Sept/18

5.3%5.0%2.4%

2.6% 2.1% 1.5% 1.3% 2.1%

1.3%

Disregarding specific case

Disregarding

specific case


Jun/18Sept/17 Sept/18

5,319 5,390 5,184

2,1711,832

2,478

1,2541,009

2,251

1,966

1,173

1,759

Renegotiated loan portfolio (R$M)

New NPL Ratio

The New NPL, that considers the volume of loans that became default above 90 days in the quarter, was

R$ 562 million in 3Q18. Due to this, the New NPL in relation to portfolio was 1.14% in Sept.18.

Renegotiated Loan

Consum

er

Fin

ance

In the chart below are segregated the operations

renegotiated by segment, considering all renegotiation

types, whether not past due, past due, and those arising

from the credit recovery written-off to loss.

The balance of renegotiated loans amounted to R$

5,184 million in Sept.18, a reduction of 2.5% in 12

months and 3.8% in the quarter. The reduction was

observed in both Wholesale and Consumer Finance.

It is worth mentioning that most of balance of the

renegotiated Consumer Finance portfolio is composed

of renewed operations without delay (refinancing),

mainly of Payroll loans product.

1. D NPL quarterly + write-offs of loss for the period) / Credit Portfolio for the immediately previous quarter.


0.97%0.86%

2.17%

0.92%1.26%1.15%

0.92%1.38%

1.14%

3Q16 4Q174Q16

0.44

2Q17

0.59

1Q17 3Q17 2Q181Q18 3Q18

1.02

0.540.41 0.43 0.47

0.670.56

New NPL (R$B)New NPL¹ Ratio

Wholesale Payroll loan Other


It is worth mentioning the decrease in the balance of

repos backed by BV Leasing debentures, reflecting

the regulatory change introduced by Res. No. 4.527,

which made it impossible new repos operations with

debentures of lease subsidiaries as of 2018. As a

substitute for this instrument, the Bank increased the

volume of funding with bank deposit certificates

(CDB) and Commercial Leasing Bills (LAM).

In relation to liquidity, the Bank has maintained its

cash at a very conservative level enough to cover

our funding with daily liquidity. Additionally, it is

important to emphasize that the Bank has a

credit facility at BB since 2009, which represents

a significant liquidity reserve and that has never

been used.

The table below demonstrates the LCR calculation,

which objective is to measure short-term liquidity of

banks in stress scenario.

Further details about the LCR may be found in the

Report on Management of Risks and Capital at the

website of RI: www.bancovotorantim.com.br/ir.

The total amount of funding reached R$ 61.6 billion in

Sept.18, down 4.9% in 12 months and 3.5% in 3Q18.

The funding from Bills continued to post growth in the

quarter, and combined with loans securitized with

recourses and subordinated debts – more stable

funding instruments, accounted for 60% of total funding

sources in Sept.18.

The Bank remains with a diversified portfolio and keeps

providing terms and conditions appropriate to the profile

of its assets.


1. Mainly federal public securities and bank reserves;

Variation (%)


Debentures (repos) 8.7 6.5 4.7 (27.4) (46.2)

Deposits 9.9 12.6 11.0 (13.2) 10.3

Time deposits 7.7 10.7 8.9 (16.4) 15.7

Deposits on demand and interbank 2.2 2.0 2.1 4.3 (8.0)

Subordinated debts 5.3 6.4 6.5 1.7 22.0

Subordianted Financing bills 2.6 2.0 2.1 2.4 (18.9)

Others subordinated debts 2.7 4.3 4.4 1.4 61.2

Borrowings and onlendings 4.5 4.1 4.4 6.9 (1.7)

Bills 23.9 25.5 27.8 9.1 16.0

Financing bills 21.3 20.8 23.6 13.3 11.1

Agribusiness credit bills ("LCA") and real estate credit bills ("LCI") 2.7 2.6 2.5 (5.0) (8.4)

Financial lease bills ("LAM") - 2.0 1.7 (15.7) -

Securitization with recourses 11.5 8.2 6.6 (19.1) (42.4)

Securities abroad 0.9 0.6 0.7 12.0 (24.0)

Other 0.0 - - - -

Total funding 64.8 63.8 61.6 (3.5) (4.9)

Sept17 Jun18 Sept18FUNDING SOURCES

(R$ Billion)

Total high-quality liquid assets (HQLA)¹ 11,172 12,361

Total cash outflows 6,496 7,937

LCR 172% 156%

Liquidity Coverage Ratio (LCR)

(R$ Million)2Q18 3Q18


The Basel ratio was determined pursuant to Basel III

method for calculating minimum Reference Equity, Tier

I capital and principal capital requirements. In 2018, the

minimum capital requirement was 10.50%, where

7.88% was the minimum for Tier I Capital, and 6.38%

for Equity Tier (CET1).

Capital

Capital

Basel Ratio reached 16.4% in Sept.18, with increase

of 1.8 p.p. in relation to Sept.17, mainly due to the

Tier I Additional Capital increment arising from the

issue of perpetual bonds abroad in Nov.17. The

capital index Tier I reached 13.1%, of which 11.1% of

Equity Tier.

Change in Basel ratio for 3Q18

0.2%

Basel

Jun/18

0.4%

0.5%

Prudential

adjustments

Risk-

weighted

assets

Net income

3Q18

0.1%

Additional

Capital

Basel

Sept/18

16.0%

16.4%

In relation to Jun.18, the Ratio grew

0.4 p.p., impacted by (2) the

reduction in market risk due to lower

exposures of Treasury and ALM, (3)

by the generation of net income for

the 3Q18, and (4) by the exchange

rate change of Additional Tier I

Capital.

This growth was partially offset (1) by

greater regulatory adjustments,

mainly due to deferred tax assets.

1 2 3 4

Total Capital 8,808 9,578 9,731

Tier I Capital 6,592 7,634 7,801

Common Equity Tier I 6,592 6,477 6,570

Additional Tier I - 1,157 1,230

Tier II Capital 2,216 1,944 1,930

Risk Weighted Assets (RWA) 60,213 59,790 59,364

Credit risk 53,267 51,824 51,842

Market risk 1,557 2,326 1,926

Operational risk 5,390 5,640 5,597

Minimum Capital Requirement 5,570 5,157 5,120

Basel Ratio (Capital/RWA) 14.6% 16.0% 16.4%

Tier I Capital Ratio 10.9% 12.8% 13.1%

Common Equity Tier I Ratio 10.9% 10.8% 11.1%

Additional Tier I Ratio - 1.9% 2.1%

Tier II Capital Ratio 3.7% 3.3% 3.3%

Sept17 Jun18 Sept18BASEL RATIO

(R$ Million)

19

RATINGS

Ratings | 3Q18 Earnings Release

Banco Votorantim is rated by international rating agencies and the ratings assigned reflect its operating

performance, financial soundness and the quality of its management, in addition to other factors related to the

financial sector and economic environment in which the company is operating. It should be stressed that the long-

term rating in foreign currency is limited to Brazil’s sovereign rating.

The table below presents the ratings assigned by the main agencies:

In Oct.18, Moody's rating agency reaffirmed the Bank’s rates, maintaining them as Ba2 (local currency) and

Ba3 (foreign currency), both with negative outlook.

RATINGS

RATING AGENCIESInternational National

Local Foreign Local

Moody’s

Long-term Ba2 Ba3 Aa3.br

Short-term NP NP BR-1

Standard & Poor’s

Long-term BB- brAAA

Short-term B brA-1+

Brazil

Sovereign rating

Ba2

BB-

20

CORPORATE GOVERNANCE

Corporate Governance | 3Q18 Earnings Release

Total: 50.00%

Com. shares: 49.99%

Pref. shares: 50.01%

Total: 50.00%

Com. shares: 50.01%

Pref. shares: 49.99%

Votorantim S.A. Banco do Brasil

Executive Board

Corporate Governance Bodies

Ownership Structure

Also included in the governing bodies are the Fiscal

Council and the BD advisory forums, as well as the

Executive Board, Executive Committee and internal

governance technical committees.

It is worth emphasizing that the Risk and Capital

Committee was implemented in the beginning of 2018,

with reporting to the CA and whose principal attribution

is the assessment of the operation of the structures of

Management of Risks and Capital of the Bank.

Board of

Directors Advisory

Committee

Risk and

Capital

Committee

The Bank's management is shared between the

shareholders Votorantim Finanças and Banco do Brasil,

with an equal participation of both in the Board of

Directors (BD), which is composed of six members.

The Board of Directors meetings are periodically held to

deliberate on strategic issues and track the business

performance. With respect to decision-making process,

the Board of Directors decisions are made by absolute

majority with no “casting vote”.

Each member holds office for a two-year term, and the

positions of CEO and Vice-President are annually

alternated between both shareholders.

CORPORATE GOVERNANCE

General

Shareholders' Meeting

Fiscal Council

Audit

Committee

Compensation

& HR

CommitteeManagement

The Votorantim Financial Conglomerate adopts the best governance practices, guaranteeing transparency and

equity in the information, in order to contribute to the decision-making process.

Name Position Shareholder

Paulo Rogério Caffarelli Chairman Banco do Brasil

José Luiz Majolo Vice-Chairman Votorantim Finanças

Antonio Mauricio Maurano Director Banco do Brasil

Celso Scaramuzza Director Votorantim Finanças

Marcelo Augusto Dutra Labuto Director Banco do Brasil

Jairo Sampaio Saddi Director Votorantim Finanças

Members of the Board of Directors

21

RECONCILIATION BETWEEN ACCOUNTING AND MANAGERIAL INCOME STATEMENT

Reconciliation of accounting vs. managerial income statement | 3Q18 Earnings Release

INCOME STATEMENT RECONCILIATION

In order to enable a better understanding, comparison and analysis of the Bank’s results and the performance of its

businesses, the explanations contained in this report are based on the Managerial Statement of Income, which

considers certain managerial reallocations made in the audited Statement of Income, with no impact in net income.

These reallocations refer to:

• Income from credit recovery written-off to loss, recorded in “Revenues from loans” and reallocated to “Allowance

for Loan Losses”;

• Expenses with allowance for loan losses characteristics recorded in “Other Operating Income (Expenses)”,

which were reallocated to “Allowance for Loan Losses”; and

• Impairment of Wholesale segment’s private securities, classified as Net Interest Income, which were reclassified

to “Allowance for loan losses”.

• Fiscal and tax effects of the hedge in relation to changes in exchange rates for overseas investments, which are

recorded in “Tax Expenses” (PIS and Cofins) and “Income Tax and Social Contribution”, and that were also

reallocated to “Derivative Financial Instruments”.

The management strategy of the foreign exchange risk of resources invested abroad is intended to avoid

effects resulting from exchange-rate change on income, and for this purpose, foreign exchange risk is

neutralized using derivative financial instruments.

Reconciliation of Audited and Managerial Income Statement – 3Q17, 2Q18 and 3Q18

1. Includes income from loan assets assigned with recourse under Resolution 3,533

Income from financial intermediation 3,103 (19) 3,084 3,313 (10) 3,303 3,053 (94) 2,959

Loans¹ 2,351 (201) 2,150 2,604 (312) 2,291 2,471 (221) 2,249

Leases 21 - 21 13 - 13 11 - 11

Securities 779 252 1,031 627 52 679 625 60 684

Derivative f inancial instruments (50) (70) (120) (84) 250 167 (114) 68 (46)

Foreign exchange operations (3) - (3) 142 - 142 46 - 46

Compulsory deposits 6 - 6 11 - 11 15 - 15

Expenses from financial intermediation (1,769) 7 (1,762) (2,044) - (2,044) (1,634) - (1,634)

Money market borrow ings (1,438) - (1,438) (1,610) - (1,610) (1,321) - (1,321)

Borrow ings and onlendings 7 - 7 (239) - (239) (115) - (115)

Sale or transfer from financial assets (338) 7 (331) (196) - (196) (198) - (198)

Net interest income - NII 1,334 (12) 1,323 1,269 (10) 1,259 1,419 (94) 1,326

Result of loan losses and impairments (514) (53) (567) (639) 261 (379) (449) 157 (292)

Net financial margin 820 (65) 756 629 250 880 971 63 1,034

Other operating income/expenses (452) 1 (451) (395) (10) (405) (444) 4 (440)

Fee income 326 - 326 344 - 344 341 - 341

Personnel and administrative expenses (553) - (553) (533) - (533) (624) - (624)

Tax expenses (112) 6 (106) (99) (10) (109) (98) (1) (99)

Equity in income of subsidiaries 80 - 80 83 - 83 87 - 87

Other operating income/expenses (192) (5) (197) (190) (0) (190) (150) 5 (145)

Operating income (loss) 369 (64) 305 235 240 475 527 67 594

Non-operating income (loss) 24 - 24 (2) - (2) (2) - (2)

Income (loss) before taxes and contributions 393 (64) 330 233 240 473 525 67 592

Provision for income tax and social contribution (199) 64 (136) 31 (240) (210) (206) (67) (273)

Profit sharing (41) - (41) (7) - (7) (51) - (51)

Net income (loss) 153 0 153 256 - 256 268 0 268

INCOME STATEMENT

(R$ Million)

3Q17

Audited

Adjust

ments

3Q17

Managerial

2Q18

Audited

Adjust

ments

2Q18

Managerial

3Q18

Audited

Adjust

ments

3Q18

Managerial

22 Reconciliation of accounting vs. managerial income statement | 3Q18 Earnings Release

Reconciliation of Audited and Managerial Income Statement – 9M17 and 9M18

1. Includes income from loan assets assigned with recourse under Resolution 3,533

Income from financial intermediation 10,325 (215) 10,109 9,186 (171) 9,015

Loans¹ 7,336 (625) 6,711 7,398 (667) 6,731

Leases 25 - 25 33 - 33

Securities 2,949 455 3,404 1,774 170 1,944

Derivative f inancial instruments (48) (45) (93) (252) 326 74

Foreign exchange operations 45 - 45 206 - 206

Compulsory deposits 17 - 17 27 - 27

Expenses from financial intermediation (6,401) 41 (6,360) (5,083) - (5,083)

Money market borrow ings (5,137) - (5,137) (4,030) - (4,030)

Borrow ings and onlendings (140) - (140) (411) - (411)

Sale or transfer from financial assets (1,123) 41 (1,082) (642) - (642)

Net interest income - NII 3,923 (174) 3,749 4,102 (171) 3,931

Result of loan losses and impairments (1,646) 129 (1,517) (1,488) 492 (997)

Net financial margin 2,278 (45) 2,232 2,614 321 2,935

Other operating income/expenses (1,371) 5 (1,366) (1,299) (6) (1,306)

Fee income 943 - 943 1,010 - 1,010

Personnel and administrative expenses (1,609) - (1,609) (1,754) - (1,754)

Tax expenses (290) 4 (286) (289) (11) (300)

Equity in income of subsidiaries 204 - 204 250 - 250

Other operating income/expenses (619) 1 (618) (516) 5 (511)

Operating income (loss) 907 (41) 866 1,315 314 1,629

Non-operating income (loss) 8 - 8 (7) - (7)

Income (loss) before taxes and contributions 914 (41) 874 1,308 314 1,622

Provision for income tax and social contribution (351) 41 (310) (415) (314) (729)

Profit sharing (137) - (137) (114) - (114)

Net income (loss) 426 (0) 426 779 - 779

9M17

Audited

INCOME STATEMENT

(R$ Million)Adjustments

9M17

Managerial

9M18

AuditedAdjustments

9M18

Managerial

23

APPENDICES

Appendices | 3Q18 Earnings Release

Shareholders

Pillars

Banco do Brasil Votorantim S.A.+

R$ 59.4B

Expanded¹ credit porfolio

Auto

FinanceTo focus on used auto finance (multi-brand dealers), where BV has a history of leadership and expertise

To originate portfolios with quality, scale and profitability

Innovation and digital transformation

R$ 32.2B

Other

BusinessesCredit Cards and Insurance:

revenue diversification cross-

selling to Auto customer base

Loans: revenue diversification

• Payroll loans

• Personal loans

• Home equity

• Student loans

• Solar energy

Promotiva: dedicated payroll

loans origination to BB

R$ 5.2B

Consumer Finance R$ 37.4B

Corporate

BankCorporate: growth

• cash management, financial structure, guarantees, floating capital, hedge, FX, capital markets and M&A

Large Corp.: profitability

• capital markets, financial structure, guarantees and treasury

Agility and flexibility to serve

Capital discipline (RAR²)

Wealth

ManagementAsset: 12th largest in the market, with innovative products and relevant synergies with BB

R$ 50.1B in AuM

Private: focus on asset management through tailor-made solutions

Wholesale

R$ 22.0B

APPENDICES

10 Largest Banks in Loan Portfolio - Jun/18 (R$B)

Overview – Banco Votorantim’s Position

1. Includes provided guarantees and corporate securities; 2. Risk-adjusted return.

10 Largest Banks in Assets - Jun/18 (R$B)

Strategy – Vision by business

Banco Votorantim is one of the largest Brazilian privately-held banks in total assets and loan portfolio.

9th

8th

836

729

172

161

98

79

BNDES

CEF

1,388Itaú

BB

Santander

Bradesco

BTG Pactual

Safra

Votorantim

Cielo S.A.

1,449

1,272

1,071

684

624

537

440

299

289

64

49

31

19

BNDES

CEF

BB

Itaú

Santander

Votorantim

Bradesco

Safra

Banrisul

PAN

Public Foreign Brazilian and private ForeignPublic Brazilian and private

24 Appendices | 3Q18 Earnings Release

Consumer finance - Other businesses

Payroll loan

▲ Focus on the refinancing of the payroll

loan portfolio INSS (retirees and

pensioners)

▲ Growth in the payroll loan portfolio Private

▲ Selective operation in public/government

agreements

▲ Continuous improvement in management

tools (pricing, credit, collection, etc.)

Payroll loans - Loan Portfolio (R$B)

Credit cards

▲ Issue of credit cards with Visa and

Mastercard brands

▲ Focus on exploring the current client base

of auto finance loans

▲ Growth organically by entering into new

business partnerships (e.g.: Netpoints)

Active cards (Million) and Portfolio (R$B)

Active Cards 0.90.91.0

Insurance Brokerage

▲ To boost insurance brokerage revenues,

leveraging the Consumer Finance

customer base

▲ Diversify insurance portfolio :

• Life

• Homeowners

• Accident, etc.

Insurance Premiums (R$M)

1.5

Sept/17

0.8

0.3(9%)

0.2

(9%)0.8

2.0

0.8

Jun/18

0.2(9%)

1.2

Sept/18

Public

Private

INSS

3.0

2.42.2

Jun/18Sept/17 Sept/18

Portfolio

1,751,99 2,05

2Q18

Auto

28

3Q17

40

145 138

36

54

36

52

138

3Q18

228

Other

Credit

Insurance

214226

25 Appendices | 3Q18 Earnings Release

Only 7.0% of credit risk is concentrated in the 10

largest debtors.

Sectoral concentration – Wholesale

Credit Concentration

10 Major debtors¹

1. Balance does not consider corporate securities and is net of loan loss allowances

100 Major debtors¹

1. In relation to consolidated loan portfolio.

Quality of the Loan Portfolio - Wholesale

7,4% 7,6% 7,0%

Sept/17 Jun/18 Sept/18

21,1% 19,6% 19,2%

Sept/17 Sept/18Jun/18

R$M Part.(%) R$M Part.(%)

Financial Institutions 1,793 10.9% 2,321 14.5%

Sugar and Ethanol 1,875 11.4% 1,576 9.8%

Telecom 1,522 9.3% 1,532 9.6%

Retail 956 5.8% 1,013 6.3%

Automotive/Auto parts/Car Dealers 319 1.9% 849 5.3%

Mining 970 5.9% 764 4.8%

Railways 645 3.9% 575 3.6%

Government 437 2.7% 509 3.2%

Food and beverages industry 404 2.5% 486 3.0%

Oil & Gas 410 2.5% 479 3.0%

Slaughterhouses 231 1.4% 435 2.7%

Industry 243 1.5% 412 2.6%

Trading Agro 330 2.0% 382 2.4%

Services 318 1.9% 356 2.2%

Agrochemistry 64 0.4% 346 2.2%

Agribusiness 51 0.3% 295 1.8%

Electricity Distribution 267 1.6% 271 1.7%

Car Rental 294 1.8% 268 1.7%

Eletricity Generation 487 3.0% 257 1.6%

Cooperatives 56 0.3% 256 1.6%

Other 4,732 28.8% 2,651 16.5%

Total¹ 16,406 100.0% 16,033 100.0%

Wholesale Sectorial concentrationSept/17 Sept/18

rd quarter 2018 - bancovotorantim.com.br · source: cetip; bacen; ibge; ibge; 6. does not consider...

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