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Year 01 • No. 02 • bb.com.br

BB invests R$57 million

in water conservation

Water

BB and Mapfre: a new generation of insurances

BB launches innovations in the card segment

New FrontsBusinesses

The Bank for development

loans

AbroadFrom Brazil to the world

We believe that confi dence is achieved through the use of a transparent approach. This and other values are essential when it’s time to invest in a company.

For more than 200 years, we have been strengthening our values to achieve a solidity able to provide you all the confi dence to invest and grow with us together.

Banco do Brasil. From Brazil to the world. From the world to Brazil.

LETTER TO READERS

It is with much satisfaction that I revisit the pages of our magazine Conexão BB to talk about Banco do Brasil’s main achievements in the first half of 2011.

Once again we have delivered consistent and growing earnings. We reported net income of R$6.3 billion, up 23.4% compared to the same period a year earlier, and distributed R$2.5 billion in dividends to shareholders and investors, exceeding the market’s expectations. We have consolidated our significant leadership positions in the Brazilian Banking Industry, particularly in terms of credit, with a loan portfolio of R$421.3 billion, and assets which totalled R$904.1 billion, enabling us to maintain our position as the largest bank in Latin America.

This achievement is the direct result of the performance and dedication of BB’s employees, as well as the new business strategies we have developed. You will learn about some of these in the following pages.

In reading the material, you will note that sustainability, as in the previous edition, appears right throughout the content and not as a specific theme. This “across-the-board” approach is because our concern about the sustainable development of the Country is an intrinsic part of our management, and is reflected in our day-to-day operations.

These operations have been strengthened by some significant moves. The offering of credit for investment, the initiative involving the production-based guided microcredit and the establishment of partnerships, such as the creation of the insurance group formed by Banco do Brasil and Mapfre, one of the largest insurance groups in the Country, are some examples that deserve to be pointed out.

Also on the subject of partnerships, in April BB began sales of the Ourocard Elo card, a product which encourages the inclusion of the population into the banking system and reflects BB’s concern to serve all its clients with quality, and provide them with the conditions to use Banco do Brasil’s products in a planned and aware manner.

BB has also expanded its distribution network, because we are aware that many of our clients still require the use of a physical customer service outlet. From January 2012 we will begin to operate through Banco Postal, providing us a presence in 2,170 municipalities where we do not yet have branches. This move will enable us to reach our goal of having a presence in every municipality in Brazil, ahead of schedule and with a significant saving in investment terms.

Our investment also involves expansion abroad. We have made some significant moves, with the acquisition of shareholder control of Banco Patagonia, in Argentina, and the purchase of Eurobank, in the United States. It is in this way that Banco do Brasil is able to provide a service to its 55 million customers wherever needed, with quality, convenience and security.

The prospects for the future are extremely positive, and we are convinced that BB will remain at the forefront of the banking business in Brazil and abroad.

There have been many innovations and there will continue to be great challenges ahead as we strive to fulfil our central mission: “To be a competitive and profitable bank, promoting the sustainable development of Brazil, and fulfilling our public role in an efficient manner”.

Good reading! And do not forget to check out the interactive Ipad version!

The prospects for the future are extremely positive, and we are convinced that BB will remain at the forefront of the banking business in Brazil and abroad

Aldemir Bendine CEO

CreditsConexão BB is released in a half-yearly basis, part of the Banco do Brasil’s Annual Report.

Edition No. 2 – Year I – August/2011 – Circulation: 2,400 copies – Distribution Free

Content coordination: Investor Relations Unit and Sustainable Development Unit. Creation Coordination: Marketing

and Communication Directorship, Institutional Advertising Division. Production: TheMediaGroup. Editor and Responsible Journalist: Bruno Starnini Junior – MTb 18.981/SP. Photos: Iara Venanzi, Thompson Comunicação (River-

based banking representatives, page 8), Shutterstock, and BB Publications. Translation from the original Portuguese: Ashley Huggins

For any queries or suggestions, please contact Banco do Brasil on the following relationship channels: Investor Relations

Unit: [email protected] – Sustainable Development Unit: [email protected].

For additional information access www.bb.com.br/ir. See also the version of this magazine for Ipad.This document was printed on paper from responsibly managed forests.

In thIs EdItIon

ArtIclEs

My MoneyFinance in focus

New Fronts BB and Mapfre: a new generation of insurances

Connection and Sustainability Improvement in customer service, with a focus on efficiency

ExpressA New Space for Banco do Brasil. BB: GRI Organizational Stakeholder. APIMEC BB main figures p. 10

WaterBB invests R$57 million in water conservation p. 12

VolunteersBB’s Volunteers working for Brazil transformation p. 18

Digital InclusionComputing to benefit everyone p. 19

BusinessesThe Bank for development loans p. 20Guided, Production-Based Microcredit p. 23

New Fronts BB launches innovations in the card segment p. 26

AbroadFrom Brazil to the world p. 28

6

16 24

6 | Conexão BB

Banco do Brasil continually seeks to improve its client service and expand its distribution channels. In the first half of 2011, BB invested R$534 million in property (remodelling and construction), information technology and equipment.

Aligned to its strategic plan to expand its client service network throughout the Country, Banco do Brasil won the tender for the use of the network of Banco Postal, part of Correios, the Brazilian post service. “The success in the tender bidding process for the use of the Banco Postal network will enable Banco do Brasil to enlarge its client base, its level of profitability, while also expanding its distribution network to 96% of Brazil’s municipalities, achieving its strategy of extending its service outlets throughout the Country in 2012, earlier than planned”, explained the Senior Vice-President of Retail Services, Distribution and Operations, Alexandre Corrêa Abreu.

Banco Postal’s service network consists of 6,195 service outlets, distributed across 5,270 Brazilian municipalities. The target public for BB through these branches of Banco Postal will be socio-economic classes ‘D’ and ‘E’, tranches of the population, which, due to an increase in spending power as a result of economic policy over the last few years, show great potential for the consumption of banking products and services.

In addition, Banco Postal will contribute to better access on banking services for micro-entrepreneurs in Brazil’s urban centers, while also providing them with business guidance, generating sustainable business and contributing to the development of the Country.

BB in slum communitiesConsistent with its strategy of being

present in all Brazil’s municipalities, Banco

6 | Conexão BB

connection and sustainability

Improvement in customer service, with a focus on efficiency Banco do Brasil invests in the expansion of the distribution network and offers more convenience and accessibility

do Brasil has expanded its presence in slum communities. In January 2011, the BB inaugurated branches in Morro do Alemão and Cidade de Deus, both in Rio de Janeiro/RJ, contributing to banking inclusion and the development of the local economy, while also implementing new Sustainable Regional Development (DRS) projects.

The DRS business strategy aims to stimulate the development of the regions where Banco do Brasil has a presence, supporting activities which encourage social inclusion and the generation of jobs and incomes – in a sustainable, inclusive and participative manner.

BB is already present in the slum communities of Paraisópolis, in the city of São Paulo/SP and in Jardim Ingá, in Luziânia/GO. Soon, the slum communities of Heliópolis and Pantanal II in São Paulo, and Rocinha in Rio de Janeiro, will also receive new branches.

1st semester 2011 | 7

In the first half of 2011, Banco do Brasil continued the strategy of improving the relationship with its retail customers. Begun in July 2009, the Program has reorganized and expanded its scope in an integrated manner, leading initiatives for the planning, coordination, management and monitoring. The main objective of the Program is to improve operational efficiency at BB, while modernizing the segment, with focus on customer service. Among the main initiatives carried out under this Program during the half, we can highlight:

• A new relationship model for individual customers: establishing an appropriate number of customer under the responsibility of each relationship manager, intensifying the client contact and transaction processes, as well as making improvements to the service provided.

• Consumption propensity models: consumer propensity models were developed for eight banking products that were given priority in the commercial retail operation. The new models increase the assertiveness of the direct marketing initiatives and provide guidelines for the services offered by the salesforce.

• New branches: 86 new branches were inaugurated during the semester, and a further 102 have been adapted to the new visual standard applied to the customer service environment. The new architectural model adopted at the branches is more modern, providing greater comfort and convenience to customers, as well as

attributing more worth to the space reserved for the carrying out of transactions.

• Revision of processes: 15 processes in high demand in the area of customer services have been reviewed, reducing the total time spent on these processes by up to 60%.

• Strategic Convenience Plan: development of the Strategic Convenience Plan 2011/2015 which consolidates BB investment proposals over the next few years.

• Qualification and training: training and updating of more than 73,600 employees in the branch network in terms of transaction and service practices. Implementation of the new business platform has also been completed, with corresponding training of the salesforce. This platform rationalizes the main sales processes, expanding the knowledge of customer opportunities available and increasing the assertiveness of the service provided.

• Agribusiness: adoption of a personalized model for agribusiness clients, offering specific products and services, as well as specialist consultancy.

• DIREC: creation of the Directorship for Individual Customers. This is an area which should contribute to the results obtained from the retail operations, taking over the institutional dealing of many initiatives that have been originated under the Program, and operating in a strategic manner in terms of sales and relationship initiatives.

With these and other initiatives, the Retail Transformation Program is producing its first results. There has been an increase of R$510 million in the monthly profitability of individual customers, compared to the same period in 2010. The client satisfaction index based on polls in 2010, has shown an improvement of 2.5 percentage points compared to that seen in recent years.

Reorganization of the Retail segment

8 | Conexão BB

2

3

4

5 6

71

5,094With the largest

distribution network in Brazil, with

5,094 branches

43,920ATM distributed

all over the Country

90%of the branches are

adapted for customers with disabilities

80%of ATMs are adapted for customers with

disabilities

55.2 millioncustomers and 35.6 million of

checking accounts

BB has the largest distribution network in Brazil

River-based banking correspondents

Since April 2011, Banco do Brasil has had river-based banking correspondents on the Amazonas rivers, and since June has had a boat that serves the population that lives around the waters of Pará.

Customers of Banco do Brasil in the Amazon region are served by three river-based banking correspondents. In a partnership signed between BB and the State government, these boats regularly travel along the main river channels in the State, benefiting 58 riverside communities, in 35 municipalities. In Pará, the correspondent serves riverside communities between Belém and Santarém, in four municipalities.

Banco do Brasil aims to provide easier access to banking, providing services to the inhabitants of these communities. The customers are able to pay bills and make payments of municipal, state and federal taxes. In addition, they can receive social benefits and INSS payments, check their bank balances and make cash withdrawals from checking accounts, savings accounts and “Poupex” accounts.

State of Amazonas

1. Negro River

2. Japurá River

3. Solimões River

4. Juruá River

5. Purus River

6. Madeira River

7. Amazonas River


Banco do Brasil brought credibility, sustainability and development for our community

Nilcea Rocha da ConceiçãoPresident of the Residents’ Association of Morro do Adeus, in Rio de Janeiro/RJ

Banco do Brasil has restructured its wholesale banking network with the objective of improving service quality, enabling progress to be made in terms of efficiency indicators, reinforcing BB’s competitive positioning in the market. The customer service model for company clients with annual gross revenues of more than R$25 million has been reviewed. Moreover, revision of the customer segmentation model, used in the network of superintendencies and branches, has been completed, as well as the structuring of credit operations for large clients. The segmentation of the service for corporate clients has been reconfigured, and now consists of the following segments: Large Corporate, Corporate, Upper Middle and Middle.

With these changes, the headquarters of the Commercial Directorship and its departments linked to the structuring of transactions, strategies and distribution network, have been transferred from Brasília/DF to São Paulo/SP, where most of BB’s wholesale customers are concentrated.

In the second half of this year, Banco do Brasil will concentrate its initiatives for the training and management of employees, increasing the centralization of middle office services, strategies for improving profitability and the development of innovative products and services. These initiatives will provide a significant improvement in the quality of service, reinforcing BB’s leadership position in the corporate sector. ó

Segmentation – Services to CompaniesAnnual Revenues (R$)

200 mm

25 mm

LargeCorporate

Business Retail

Middle Business

Upper Middle Business

Corporate

2 bn

25 mm

Industry Commerce and Services

120 mm

400 mm

1.5 bn

600 mm

Transformations in the wholesale businesses

connection and sustainability

10 | Conexão BB

express

21 towns and citiesBB’s Apimec meetings will be held in 21 Brazilian towns and cities until the end of the next semester. To consult the full meeting calendar schedule, please access www.bb.com.br/ir

1,701 presentThe meetings held in June and July brought together analysts, shareholders, opinion formers, BB employees and professional staff in the investor relations area

274 people connectedThe BB Apimec meeting in São paulo can be seen on webcast video in the portuguese version, with simultaneous translation available in english. At this meeting, BB’s ceO and senior vice-presidents held seminars and answered questions and queries of those present. The webvideo of this meeting is available on the following website link www.bb.com.br/ir

In May 2011, Banco do Brasil became an Organizational Stakeholder (OS), part of the Global Reporting Initiative (GRI), a non-profit multi-stakeholders organization responsible for the development of directives to the drawing up of sustainability reports. This methodology is one of the most widely used throughout the world. As an OS, the BB has become an integral part of GRI governance and has started to play a direct part in the development and strengthening of the structure of corporate reports, based in the economic, social and environmental company’s performance. BB has adopted these directives since 2006.

APIMEC BB main figures

BB again demonstrated its pioneering approach. In May, it inaugurated a new space – Espaço Banco do Brasil, in the Iguatemi Shopping Center – Brasília/DF. This room was constituted as an experimental environment where trends and innovations in banking service are put on display. Instead of the traditional cash points, electronic terminals are available, as well as Ipads and laptops with access to the Internet – in addition to a direct line to Banco do Brasil’s Call Center. This space also provides “pocket” shows, seminars and workshops, which touch on themes such as citizenship, culture, sport and sustainability.

A New Space for Banco do Brasil

The meetings of the Association of Capital Markets Analysts and Investment Professionals (APIMeC) aim to strengthen Banco do Brasil’s communication with its stakeholders, being carried out following the highest standards of corporate governance.

BB: GRI Organizational Stakeholder

1º semestre 2011 | 11

For global investors who want to do

who want to do business globally.business with Brazil. Or for Brazilian investors

Banco do Brasil. From Brazil to the world. From the world to Brazil.

12 | Conexão BB

water

BB invests R$57 million in water conservation Pollution and inappropriate use compromises the availability of water resources in various regions

The planet Earth could be named Water, seeing that 2/3 of it is made up of this element. Despite this very large quantity, only 2.5% of it is fresh water, and of this total only 0.3% can be found in rivers and lakes, ready for consumption. The rest is in water tables, watercourses, polar ice caps, glaciers, permanent snow and other reservoirs, such as swamps, for example. The other 97.5% of the world’s water is in the seas and oceans.

In view of these figures, in March 2010 Banco do Brasil decided that the theme of “Water” would be the principal focus of its sustainability initiatives. To promote awareness and a change in attitudes with respect to the preservation and conservation of water resources, BB signed a letter of intent with Agência Nacional das Águas (the National Water Agency), the Banco do Brasil Foundation and the NGO WWF, for the development of the Água Brasil (Brazil Water) Program.

During the first five years of this partnership, Banco do Brasil and the Banco do Brasil Foundation will invest R$57 million in projects aimed at improving the quality and supply of water, and expanding the coverage of natural vegetation in 14 micro-watersheds. In addition to this, the program will stimulate consumer awareness about the appropriate treatment of solid residues in five Brazilian municipalities. The program also aims at disseminating the best agricultural and cattle breeding practices among rural producers, encouraging the implementation of sustainable business models.

During the first quarter of 2011 the program, with its objectives and targets, was presented to each one of the superintendencies involved. BB mobilised the employees in the location selected for implementing the initiatives of the program, and began the work of diagnosing and identifying the specific actions needed for each locality.

According to the Senior Vice-President of Human Resources and Sustainable Development, Robson Rocha, the criteria adopted for the selection of the various locations took into account the size of the territory, regional representation, the existence of human capital, and the experience of the partners involved.

Rural environmentThe projects focused on the rational use

of water resources in agriculture include rural properties situated in the micro-watersheds of the Guariroba stream, in Mato Grosso do Sul; the Sepotuba river, in Mato Grosso; the Pipiripau river and the São Bartolomeu river in Distrito Federal and Goiás, and the Peruaçú river, in Minas Gerais, which comprises the Cerrado and Pantanal biomas. In the Mata Atlântica (Atlantic Forest) bioma, the initiatives focused on sustainable agriculture will be implemented in the micro-watersheds of the Lençóis, Cancã and Moinho rivers in


São Paulo, the Beneventes river in Espírito Santo and the Pedras river, in Rio de Janeiro.

As representative areas of the Amazon bioma, the micro-watersheds in the State of Acre and Alto Teles Pires river in Mato Grosso, were selected. While in the biomas of Caatinga and Pampa, initiatives of the program will be implemented in the micro-watersheds of the Longa river in Piauí and the Camaquã river, in the State of Rio Grande do Sul.

Urban environmentIn the urban environment, initiatives

focused on consumption awareness and the recycling of solid residues, in partnership with waste collection cooperatives, are being developed in towns and cities that are

representative of each of Brazil’s regions. In the Midwest, the town participating in the program is Pirenópolis, in Goiás; in the South, Caxias do Sul, in Rio Grande do Sul; in the North, Rio Branco, in Acre; in the Northeast, Natal, in Rio Grande do Norte and finally, in the Southeast, Belo Horizonte, in Minas Gerais.

Between October last year and May 2011, technical visits were carried out to the towns and cities covered by the Program, with meetings being held with waste collection organizations, as well as identification and contact being made with other important local players, with respect to the treatment of residues. In the second half of this year, the diagnoses will be completed and prognosis workshops will be held to draw up detailed action plans for

each of the localities involved in the Program.Likewise, technical field visits were

carried for the preparation of economic and socioenvironmental diagnosis of eight of the 14 selected watersheds.

“The dissemination of good practices and the development of sustainable production chains are the principal initiatives of this partnership in the countryside. The broader objective is to develop models which preserve our water sources, combining production with conservation. By the same token, taking care of our waste is also a way of reducing pollution and alleviating pressure on our natural resources. For this reason, we will be operating in the towns and cities, promoting awareness and the recycling of solid residues”, emphasises the General Secretary of WWF Brasil, Denise Hamú.

Biomas in Brazil

Amazônia

Cerrado

Mata Atlântica

Caatinga

Pantanal

Zona Costeira

Amazônia

Cerrado

Mata Atlântica

Caatinga

Pantanal

Pampa

Brasil is divided into seven biomas which make up a combination of different

ecosystems. The largest one is the Amazônia bioma,

with almost 8 million km2, covering nine countries in

South America. If it were to be formed into one country, it would be the equivalent size of the United States and the

whole of Western Europe.

Pampa

14 | Conexão BB

water

BB will be promoting the training of waste collectors

A waste selection plan will be introduced, involving the organization and production methods at the sorting units of the waste collection companies located in Rio Branco/AC

In Natal/RN, BB will be carrying out professionalization of waste collection organizations, in terms of the methodology used for the sorting of material and the logistics used for collection

North Northeast

“The partnership with Banco do Brasil is strategic for Agência Nacional das Águas, seeing that it enables us to incorporate important water resource management principles in the initiatives to be implemented under the Água Brasil (Water Brazil) Program”, points out the CEO of the Agência Nacional das Águas, Vicente Andreu.

Water footprint The Água Brasil Program will

contribute to the reduction in Water Footprint in the countryside. Water Footprint is a tool for the management of water resources, which indicates the consumption of fresh water in production, based on its direct and indirect use. The methodology created

by the scientific director of the organization Water Footprint Network (WFN), Arjen Hoekstra, allows to quantify the amount of water needed for the production of various products throughout their production chain.

Other initiatives carried out by Banco do Brasil underline its determination in adopt the principles of socio-environmental responsibility in its operational strategy. As an example of this, we draw attention to the adoption of the Ecuador Principles, which bring together a group of financial institutions which, in their directives, incorporate socio-environmental criteria in the analysis of investment projects, and also adherence to “The CEO Water Mandate”, a proposal by

the United Nations Organization, whereby signatory companies of the Global Compact have agreed to consider water management in their corporate strategies, thus contributing to its conservation.

New businessesBB DTVM, Banco do Brasil’s asset

management company, raised more than R$33 million with the BB Multimercado Global Acqua LP Private fund. The fund’s portfolio, focused on water preservation, introduces a new investment fund concept, which combines sophistication and socio-environmental responsibility, pre-requisites which are highly valued by the private-banking segment, the target consumers of this product.


BB will be providing support for the management of the waste collection organizations, building a warehouse for the sorting process, and implementing waste segregation in the town of Pirenópolis/GO

In Belo Horizonte (MG), BB will be contributing to the professionalization of the waste collection organizations, in terms of the methodology used for the sorting of material, and in the logistics used for collection

Banco do Brasil will be contributing to the organization, production methodology and strengthening of the commercial networks, of the waste collection associations in Caxias do Sul/RS

Midwest Southeast South

97.5% salt water

2.5% fresh water

Investing part of its equity in Brazilian and global companies l inked to extraction activities, infrastructure and water distribution, the initiative confirms the perception that these companies are part of a production chain which requires much care to be taken. The fund also takes into consideration the probable appreciation of the assets of these companies, due to increasing demand for environmentally correct products and processes.

Created in partnership with the Swiss asset management company Pictet Asset Management, which has portfolios focused on clean energy, bio-technology and water, the Acqua fund underlines the focus of BB DTVM on sustainability, and converges

with the strategy of Banco do Brasil in embracing the water cause.

Following the Principles of Responsible Investment (PRI), three investment funds were developed in partnership with Banco Votorantim, for investment in equity stakes in infrastructure: BB Votorantim Energia Sustentável I, II and III, dedicated to the sector for the generation of sustainable energy. Included in the portfolios of the funds are small hydroelectric power plants, wind generation parks and biomass plants powered by sugarcane bagasse, among other sustainable sources of energy. The funds which are already in the capital raising stage, will be distributed by BB DTVM and Banco Votorantim.

In April, Banco do Brasil launched a special overdraft facility for individual checking accounts holders with a grace period of 10 days before interest is charged. The new product has a particular differential compared to others already offered in the market, which is that 5% of the fee package charged is earmarked to the Água Brasil Program.

The overdraft facility exempts those clients from the payment of interest who use the credit limit offered by Banco do Brasil for a period of 10 days or less, from the date chosen for the application of charges. In order to use this benefit, the customer must adhere to a package of Environmental Bonus services offered by Banco do Brasil. Since its creation, R$150,000 has already been onlended to the Água Brasil Program. ó

Breakdown of fresh and salt water in the world

Breakdown of fresh water in the world.Of these 2.5%:

69% glaciers and permanent

covers of snow

0.3% rivers and lakes

30% groundwater

0.9% soil humidity,

floatings polar ice caps and swamps

Among the actions of Água Brasil Program, highlights for the initiatives of streams recovery, for the river’s edge vegetal cover revitalization and terracing in pastures to avoid soil erosion

16 | Conexão BB

My Money

Finance in focus BB teaches and encourages financial planning by individuals, families and small businesses, through its Financial Education Program

The economic stability in Brazil brought by bringing inflation under control, the drop in interest rates, and the reduction in the unemployment rate, together with the application of continuous social assistance, the increase in the minimum salary, and greater credit availability, have all offered a new financial reality to millions of Brazilians.

This new panorama of increased purchasing power among the social classes has given rise to the need for the promotion of initiatives to help people rethink their way of dealing with money, becoming more conscious of their financial decisions.

In keeping with these needs, Banco do Brasil is showing its commitment as a facilitating agent for banking inclusion in the Country. These efforts have been taking place on two fronts: one aimed at low-income clients, in partnership with the Banco do Brasil Foundation – FBB, and the other aimed at the potential investing public who access the information and the simulators on BB’s website.

The idea is to discuss basic financial concepts, how to use credit and banking services in a correct and organized manner,

how to carry out personal budgeting and budget planning for businesses, and how to control expenses. All these factors contribute to enabling the customer to transform simple knowledge into improvement of life’s quality.

The Director for Individual Clients, Sérgio Nazaré, explains that the financial education initiatives contribute to increasing customer satisfaction, as well as being part of BB’s social responsibility. “Banco do Brasil is in tune with the best market practices, offering appropriate products and services for everyone’s needs. The communication process is being perfected, improving customer understanding in the use of products and services”.

Practical Financial Education

In the communitiesBanco do Brasil has been acting in

partnership with the Banco do Brasil Foundation – FBB and Cooperforte Institute, running Financial Education Workshops in communities. Paraisópolis/SP and Brazlândia/DF were the first communities where this initiative was

applied, providing guidance on dealing with money and credit in a planned manner, as well as financial relationships, so allowing dreams to be realized.

The plan is to hold these workshops throughout the Country, principally for the public audience targeted by the Regional Sustainable Development program (DRS) – BB’s national business strategy that seeks to encourage sustainable development by providing support for economically viable production activities, that are socially just and environmentally correct – as well as the public audience targeted by Programa Nacional de Fortalecimento da Agricultura Familiar (National Program for the Strengthening of Family Agriculture – Pronaf), a program which finances projects that generate income for family farmers, and based on agricultural reform.

Banco do Brasil strategies also include initiatives for the support of financial education within the government programs: Minha Casa Minha Vida, Microcrédito Produtivo Orientado and Estratégia Nacional de Educação Financeira.


Financial Practices TheaterIn 2010, Ourocard supported the

“Financial Practices Theater”, a play which presents basic concepts about personal financial practices. This play tells the story of two friends and uses soccer as the theme to convey financial education messages in a simple and amusing manner. The event was held at the Banco do Brasil Cultural Center (CCBB SP), in 10 closed sessions for schools in the public network. About 1,500 students participated. This partnership is continuing, and the play is planned to run in a further four towns and cities over the next few months.

With the students BB has also developed the University

Student Project 2010, which involves seminars on financial education for students. Presentations on this theme were held in Campina Grande/PB, Santos/SP and Cabo Frio/RJ, for 1,200 students from seven high schools. In Brasília/DF, 120 pupils participated from 6th elementary grade to the 1st year of high school.

On the Internet Since July 2010, BB’s portal has carried

a page on Financial Education, which can be found on the tab “Investments”. Since its launch, there have been more than 200,000 accesses registered. With easy navigation and accessible language, the site offers links with an educational application, information on various investment alternatives, and guidelines on budget control.

Users also have access to practical guidelines, spreadsheets for expenditure control, educational games, simulators, specialist articles, a financial dictionary, and access to the sites of the BB’s partners.

UniBB

Banco do Bras i l ’s Corporate University – UniBB, has also contributed to expanding and strengthening BB’s actions in the area of banking inclusion, with activities aimed at financial education. “Using a series of teaching methods, we have managed to develop skills among our target public audiences,

• Personal Financial Planning: tips on personal financial planning and better money management.

• Practical guidelines: three information pamphlets, with guidelines about Investment Funds, CDBs (deposit certificates) and savings.

• Itineraries for the investor: a space which teaches the basic principles which can be used for the financial planning of the Internet surfer.

• Understanding the investment market: a section with a description of the main investment alternatives and their characteristics.

• Financial dictionary: a glossary with an explanation of the main terms used in the financial market.

• Bills at your fingertips: a link to the site developed by the Brazilian Banking Federation, with guidelines for those interested in organizing their bills month-by-month.

• Financial soccer game: developed by Visa, this is an interactive soccer game which tests financial knowledge as soccer players advance across the playing field, before arriving at the goal mouth.

so that they become more aware of the risks and opportunities when they use financial products and services”, says Amauri Niehues, Director of Personnel Management.

To learn about UniBB’s site, please access the following link www.unibb.com.br. There, you will get to know about the various courses available, be able to read articles, interviews, news and book outlines, as well as having access to the Library. The online courses: Consumer Rights, Navigation on the Internet and Financial Planning, can be accessed, at no cost, by employees, customers and those who do not hold checking accounts. ó

What we promote

18 | Conexão BB

volunteers

BB’s Volunteers working for Brazil transformation

4.2 thousand

47

R$13.5

205

57

volunteers throughout Brazil

Citizenship Committees

million invested over seven years

projects served between 2004 and 2010

projects pre-selected in 2011

History of the Volunteer Program

Creation of the first Citizenship Committees

1989

Partnership with the Banco do Brasil Foundation

2004

Updating and relaunch of portal on the Intranet

2007

Launching of the Corporate Program

2001

Definition of action lines and launching of the portal on the Intranet

2006

Improvement Initiatives2009 / 2010

Revitalization of the Program

2010 / 2012

In its quest for continually raising awareness and mobilizing its employees in initiatives which promote sustainable development in communities at social risk, in July BB began the process of revitalizing its Volunteer Program.

Currently, the Program involves approximately 4,000 employees, a number which has grown following the revitalization of the program, an increase of 46.7% compared to June. Through its “Voluntary Action” course, Banco do Brasil provides training in this area to all the volunteers registered under the scheme. The Volunteer Program includes the BB Volunteers Project, which invests in the carrying out of projects in which employees take part, from two distinct sources: the Banco do Brasil Foundation, and those allocated by BB to the Fundo dos Direitos da Criança e do Adolescente – FIA (Fund for the Rights of Children and Adolescents), referring to the application of up to 1% of Income Tax due.

The first one source allocates funds to initiatives aimed at the poverty eradication through the generation of jobs and income. The FIA exclusively finances projects aimed at children and adolescents in vulnerable situations.

Engagement The success of the BB Volunteers Project is based on the engagement

of volunteers from BB. The Citizenship Committees bring together various initiatives which have transformed the hard reality of slum communities, and prove that commitment to a social cause makes the realization of dreams possible.

An example of this transformation is the Domestic Services offered by the Hope Committee in Distrito Federal which prepares unemployed women, free of charge, for the labor market, with the help of volunteer instructors from BB. Currently, in its third intake, 200 course students have been trained, with all of them successfully placed in the labor market.

“The feeling of solidarity achieved by volunteer initiatives is a tradition of the BB’s employees, which has contributed to the eradication of extreme poverty in Brazil”, says the General Manager of the Sustainable Development Unit, Rodrigo Santos Nogueira. ó

Volunteer Program

BB Volunteers Project*

* The BB Volunteers Project is one of the social responsibility initiatives which is

part of the Volunteer Program

18 | Conexão BB


digital inclusion

Computing to benefit everyone

Nowadays, use of the computer and internet is as necessary as knowing how to read and write. However, not all Brazilians know how to use these resources or have access to them. Thinking along these lines, in 2004 BB and the Banco do Brasil Foundation – FBB created Programs for Digital Inclusion, in order to offer access to digital communication in low-income communities.

“BB’s Program for Digital Inclusion focuses on the introduction of community Tele-Centers and providing support for charitable organizations, promoting the strengthening of citizenship values”, explains BB’s Technology Director, Luiz Henrique Guimaraes de Freitas.

Over this seven year period, the Program has reached out to 879 municipalities across every State in Brazil, with the donation of more than 40,000 computers. The Digital Stations of FBB are also spread out across the Country, with 348 units in 194 municipalities.

One of the highlights is the Beija Flor (Hummingbird) Program, a partnership with the State Secretariat for Aquiculture and Fishery of Santa Catarina, under which 148 Tele-Centers were set up, benefiting more than 15,000 people, with the further aim of contributing an additional 7,000 computers to expand the network in the region.

Merger In April, the programs were merged to provide better integration of

initiatives, as well as strengthening the social nature of the program. “We want to provide the communities with favourable conditions so that they are protagonists for the transformation which they wish to achieve in their lives, strengthening their relationship with society and public audiences in the building of a country without poverty”, opines the General Manager for Sustainable Development, Rodrigo Santos Nogueira.

Under the new scheme, the Banco do Brasil Foundation will be responsible for the management and integration of the digital inclusion spaces, which were previously managed autonomously by BB (Tele-Centers) and FBB (Digital Stations).

BB makes decisions with regard to the donation of computers that have been replaced, having come to the end of their useful life within the Institution – to entities which demonstrate the capacity to encouraging the achievement of social objectives in the “digital spaces”, so that these areas continue to play an integral and active part in the day-to-day life of the community. ó

40 thousand

879

348

15 thousand

computers were donated

More than

municipalities were assisted

Digital Stations in 194 municipalities

people were benefited with the Tele-Centers


20 | Conexão BB

businesses

The Bank for development

loans

Banco do Brasil offers a complete portfolio of credit

solutions which enables the

companies that it supports to

achieve competitive

and sustainable growth


For more than two centuries, BB has played a fundamental role in Brazil's development. During this period, it has participated in the granting of credit in many production cycles of the economy, such as coffee and rubber. The growth and development of the Country is something that is intrinsically linked to BB's history and operations, particularly at the moment and over the next few years, with the advent of the World Cup and the Olympic Games, as well as the exploration of the pre-salt layer, says Allan Simões Toledo, Senior Vice-President of International Business, Wholesale and Private Banking.

The scenario in which we are living today in Brazil, with the continual increase in incomes among the working classes, falling rates of unemployment and expansion in the ratio of credit to GDP, is extremely favorable for long-term and sustainable investment, explains the Senior Vice-President.

For Banco do Brasil, to invest in Brazil is more than a business opportunity, it is the exercising of a vocation, and to this end BB has been guaranteeing credit for investment, providing support for customers ranging from the micro-entrepreneur to major investment projects.

Operations

One of BB's operational fronts is in the granting of credit to the shipping industry. In Rio de Janeiro, BB has a branch that is specialized in serving this sector with a loan portfolio of approximately R$3.9 billion to the shipping industry. Behind these figures, there is an area of BB that is expert in identifying and prospecting non-standard credit operations, and offering solutions that are appropriate to specific customer requirements.

BB also provides support to the shipping sector through the Merchant Marine Fund (FMM). In the first half of 2011 alone, this

fund was responsible for financing the construction of 48 ships, as well as 3 shipyards, with total lending of R$3.1 billion. With this, the total volume of projects financed in the first half amounted to R$4.3 billion, an increase of 410% compared to the same period in 2010.

Banco do Brasil is the financial agent for the Constitutional Fund for Financing of the Midwest (FCO). This fund was created in 1989 by the Federal Government and has the objective of contributing to the economic and social development of the Midwest, through the financing of production activities, focused on industry, agro-industry, animal breeding, mining, tourism, commerce, and services.

In the first half of 2011, BB provided financing of R$2.2 billion in 35,000 transactions using FCO funds, serving 463 municipalities in the region. This figure represents an increase of 27.6% compared to the first half of 2010. Of particular note was the fact that 86.6% of those benefited were micro, mini and small-sized businesses.

BB is also always one of the market leaders in BNDES fund transfers. Up to the end of April, in the global ranking

of BNDES funding, Banco do Brasil had a market share of 18.3%, with a total of R$4.3 billion disbursed. Disbursements made with BNDES cards up to the end of April amounted to a total of R$1.1 billion, representing 59.4% of this market. In the Finame category, Banco do Brasil recorded an outlay of R$1.9 billion, corresponding to 43.4% of the total of BNDES’ resources released by Banco do Brasil up to April 2011.

The loans provided with BNDES resources caters to companies that require long-term financing for the building of new assets, expansion, overhauling or modernization of existing assets. In addition to this, financing is also available for the purchase of machinery and equipment, as well as working capital associated with the investment.

Also with respect to loans, in its Project Finance operations, BB adopts socio-environmental criteria in the evaluation of credit limits for companies with current or projected net operating revenues of more than R$50 million, and investment projects with a value to be financed by BB of R$2.5 million or more. In addition, BB applies the Ecuador Principles in its credit granting process.

Ecuador Principles*

200million

1project

2projects

215million

PuBliC

level of risk

Amount finAnCed

QuAntity of ProjeCtsseCtor

energy

Low

Medium

* The Ecuador Principles are a combination of socio-environmental responsibility criteria applicable to investment projects which use, as a reference, the social and environmental sustainability performance standards of the International Finance Corporation (IFC) and the World Bank.

22 | Conexão BB

businesses

Banco do Brasil continues to be the main partner serving small and micro enterprises. At the end of June 2011, BB had 2 million micro and small business customers, driving efforts on developing solutions to better serve this segment.

The loan portfolio balance for small and micro enterprises at the end of June amounted to R$59.9 billion, up 14.7% compared to June 2010. It should be pointed out that R$42.6 billion was directed to working capital operations, an increase of 11.6% compared to June 2010.

Of particular note is the credit facility BB Giro Empresa Flex which reached a balance of R$12.3 billion, which corresponds to 28.8% of the working capital portfolio. In addition, investment transactions to micro companies amounted to R$2.4 billion and other R$8.1 billion to small companies.

main partner for micro and small enterprises

sme

Private Equity & Venture CapitalThe Private Equity & Venture Capital

industry is characterized by investment in companies with a high growth potential and high expectation of a return over the medium and long-term, involving an active participation in the strategic management of the companies invested in. The resources are invested through closed investment funds, with a duration period of 10 to 12 years, on average, through the acquisition of minority or majority stakes in the companies.

BB Banco de Investimentos is a quota holder in the decision making process of 13 Funds, of which 10 are investment funds in equity stakes, and 3 are mutual investment funds in emerging companies, carrying out investments in many regions of the Country. An example is BB

operation in Santa Catarina, in the town of Itapoá, where BB coordinates a Private Equity in the port of Itapoá. The port has an initial installed capacity to handle approximately 300,000 containers a year and is considered to be a benchmark in terms of productivity and safety among Brazil's ports. In addition, the port is designed to receive large ships from abroad in order to redistribute cargo to other ports in Brazil and Latin America, in particular Argentina and Uruguay.

“The Private Equity & Venture Capital industry has been achieving outstanding growth, not only in the area of infrastructure investment, but also in innovation and technology. Furthermore, investments for the 2014 World Cup and the 2016 Olympic Games in Rio de Janeiro/RJ, will be relying on capital from this industry”, affirms Ivan

Monteiro, BB’s Chief Financial Officer. The investment consultancy services

provided by Banco do Brail among other aspects include the prospecting/origination of investment opportunities for funds, the analysis of investment/divestment opportunities in combination with the managers, and the monitoring of the performance of the assets invested in.

“BB's operations in the Private Equity market, either as an investor or as adviser, has resulted in not only growth in capital market business, but, on a broader basis, has also enabled BB to act as one of the main conduits for the development of one of the most diverse segments of the economy, fulfilling its institutional mission of promoting the sustainable development of Brazil”, added the CFO Ivan Monteiro. ó


From September 2011, micro-entrepreneurs who are customers of Banco do Brasil will have a new product available, the “Guided, Production-Based Microcredit” (MPO), a credit facility designed to serve the financial needs of small businesses, either private individuals or companies, that carry out low scale production activities. The credit granting methodology is based on a direct relationship with the entrepreneurs in the locality where they carry out their economic activity.

BB will be operating through its branch network, with employees trained and prepared to provide guidance to micro-entrepreneurs on business planning and defining credit needs focused on the development of the business.

The main case of microcredit use was ideal ized by the Bengalese economist Muhammad Yunus, winner of the Nobel Peace Prize in 2006. The research carried out by Yunus led to the founding of Grameen Bank, which has become one of the best-known microcredit institutions in the world.

Guided, Production-Based Microcredit

Based on Yunus' experience, Banco do Brasil signed a letter of intent with the Yunus Center, on May 2011, to encourage access to microcredit in Brazil.

a focus on the urban environment. “Banco do Brasil's operation is focused on serving formal and informal entrepreneurs, including micro companies and individual-entrepreneurs. With this strategy, BB plans to expand credit access and banking services as well as encourage the businesses' formalization”, he says.

Currently, in accordance with the legislation, BB applies 2% of the demand deposits to consumer microcredit. “From now on, we will be allocating a minimum of 80% of these funds to guided, production-based microcredit”, explains Nogueira.

To meet the demand of these micro-entrepreneurs , BB has tra ined approximately 2,000 employees in classroom courses and more than 16,000 in distance learning. "Expectations to 2012 are that each branch will have one employee that has been trained in this area. The training course has the objective of providing basic concepts on the microcredit question in Brazil and in the rest of the world, as well as theoretical aspects linked to microfinance”, reveals Banco do Brasil's Human Resources Director, Amauri Niehues. ó

Throughout BrazilAccording to the General Manager of

Banco do Brasil's Sustainable Development Unit, Rodrigo Santos Nogueira, MPO's strategy will have a nationwide reach, with

businesses

With this strategy we plan to expand access to credit and banking services as well as encouraging the formalization of the businessesrodrigo sAntos nogueirAGeneral Manager of Banco do Brasil's Sustainable Development Unit

24 | Conexão BB

NEW FRONTS

BB and Mapfre: a new generation of insurancesMerger between BB and Mapfre creates one of the largest insurance groups in the Country. As a result of this partnership, BB increases revenues and market share

Since June 1st, 2011, Banco do Brasil and Mapfre started to operate together, forming one of the largest groups in insurance prize revenues, in the Brazilian market. The deal resulted in two holding companies, one for the area of life insurance, housing and rural insurance, BB Mapfre SH1, and the other for vehicles and P&C insurance, Mapfre BB SH2.

In combining the brand names of BB and Mapfre and their strengths of quality, specialist sales force, market recognition and extensive distribution network, this partnership brings positive synergies in terms of expanding and diversifying the BB’s businesses and pushing up the percentage contribution of the insurance business to the overall profits of the BB Conglomerate.

According to the Superintendence of Private Insurance (SUSEP), the premiums issued by the Brazilian insurance market totaled R$ 24.6 billion up to May 2011, an increase of 16.9% compared to the same period a year earlier. This is an expanding business segment in Brazil, in which, in terms of the premium volumes collected, the Grupo Segurador Banco do Brasil e Mapfre –

Insurance Group formed by BB and Mapfre – has become the leader in the personal insurance business, while ranking in 2nd place in vehicles and other types of insurance.

BB’s share of the insurance, pension and savings bond market was previously 16.5%. As a result of the partnership with Mapfre, the market share of the insurance group BB/MAPFRE has risen to 20.3%, according to figures from SUSEP from May 2011.

Strategy “Our strategy is clear and well-defined. We

wish to increase the share of revenues from the insurance businesses in the Conglomerate’s overall result and, to this end, Banco do Brasil has been consistently investing in the restructuring of this area and in the corporate reorganization of its affiliates, consolidating and creating new partnerships”, affirms the Senior Vice-President of Retail Services, Paulo Rogério Caffarelli.

Market share increased from 11.5% to 18.1%

Rising to first position in ranking terms (BB by itself 4th position)

Accumulated revenues of R$1.4 billion


Rising to 2nd position in ranking terms (BB by itself 6th position)

Accumulated revenues of R$1.3 billion


Rising to 2nd position in ranking terms (BB by itself 6th position)

Accumulated revenues of R$854 million

PEOPLELife and Personal Accident

VEHICLES

ACCIDENT & DAMAGE(P&C)

Great Synergies1

1 Market share from May, 2011


The corporate reorganization process in the insurance, pension and savings bond companies began in 2009. Since that time, new businesses have been introduced with new partners, such as the Principal Financial Group, in the supplementary pension segment, the Grupo Icatu, in the savings bond segment, as well as Mapfre in general insurance.

This strategy has already shown positive results. In the first half of 2011, insurance incomes amounted to a total of R$772.6 million, up 29.3% compared to the same period in 2010, which represents 12.6% of the recurring profits of the Conglomerate. Up to the end of 2013, the target is for the insurance businesses to account for 24% of BB’s recurring profits. ó

Corporate Structure of Grupo Segurador Banco do Brasil e MAPFRE

Life / Rural / Real EstateAliança do BrasilMapfre VC Vida

Vida Seguradora

Vehicles / P&CMapfre VC SeguradoraMares Riscos Especiais

BrasilveículosAliança do Brasil Seguros

BB Mapfre SH1

BB

BB

Mapfre

Mapfre

ON

ON

49.99%

49%

50.01%

51%

2.01%

50%

K Total

K Total

74.99%

50%

Mapfre BB SH2

Insurance Strategy

Complete Corporate Reorganization

Increase share of insurance businesses in the results of BB

Boost revenues and reduce costs through strategic partnerships

Operational Highlights

BB Mapfre SH1 (June 2011)

Mapfre BB SH2 (June 2011)

Brasilcap (June 2011)

Brasilprev (June 2011)

15,277 (thousand)

2,366(thousand)

3,607(thousand)

8.4%

21,764(R$ thousand)

22.6% 3rd

1st

18.6%

14.7%

4,618 (R$ million)

2,656(R$ million)

4,669(R$ million)

2,203(thousand)

23.5%

17.9%

1st

1st

2nd

64.7%

89.1%

4,388

43,226(R$ million)

24.1%

2nd

1st

Lives insured at

Fleet

Quantity of bonds issued

(except incentive)

Rate of Redemption

Sum of prizes distributed

Ranking Collection

Ranking Reserves

Ranking Collection

Market share life insurance

segment

Market share

Volume of managed portfolio

Volume of managed portfolio

Volume of managed

portfolio

Active agreements

The market share rankings are available from SUSEP, whose figures are based on the month of May 2011.

Market share Collection

Ranking Reserves

Ranking Reserves

Ranking in rural insurance

Ranking Premium retained

Market share rural segment

Rate of portfolio retention

Quantity of prize-winning

bonds

Volume of managed

portfolio

Market share Reserves

Ranking Collection

Ranking in life insurance


NEW FRONTS

26 | Conexão BB

With a base of 84.7 million of cards issued up to the end of June 2011, Banco do Brasil has a share of 21.1% of the debit and credit card market.

It is important to note that, in 12 months, Banco do Brasil’s cards turn over in-creased by 28.5%, while the market grew between 23% and 24% over the same period, which confirms BB’s solid and competitive position in the segment, says Paulo Rogério Caffarelli, Senior Vice-President of the Retail Services.

The expansion of the card businesses reflects BB’s perception that the differential in this market is in the details. In view of this, Banco do Brasil seeks to create attributes and differentials of its own, such as, for example, the Visa Travel Money card, which is a prepaid card issued in US dollars or Euros, to be used for purchases abroad; the agricultural card, which in addition to its debit, credit and banking functions, also offers agricultural financing, and the BNDES card, focused on micro, small and medium-size companies, of which BB is responsible for 66% of the cards issued in the Brazilian market.

BB’s innovative stance in the launching of its cards can also be observed in the range of personalized cards available, for which the customers can choose the image to be printed on their Ourocard or the

Ourocard Bonus Celular, for which the customer may take advantage of the benefit of transforming the annual payment and part of the card expenses into credits to recharge their prepaid cell phones.

As a result of this, BB is increasing the close relationship with its customers and is being recognized for its quality and mo-dern approach. In the first half of 2011, the Ourocard was elected as the preferred card by Brazilians, according to research carried out by Cardmonitor/Instituto Me-dida Certa, between December 2010 and January 2011. It was also elected as the best credit card (brand name strength) in research carried out by CVA Solutions, in February and March 2011.

“The card businesses are an important segment for the diversification of reve-nues, and have been showing significant growth. In the first half of 2011, income from debit and credit card fees amounted to R$1.8 billion, representing 21.7% of the total. On a comparative basis over the same period in 2010, this signifies a gro-wth of 23.1%, and an increase in the per-centage total of charge revenues of 230 basis points”, cites Caffarelli.

With an eye on the potential expansion in the credit card market, Banco do Brasil, Bradesco and Caixa Econômica Federal have come together with the aim of

developing a new business model in the Brazilian card market: the creation of the first genuinely Brazilian card brand name, Elo. With this partnership, the institutions involved are combining synergies and sharing decisions and strategies.

Signed in April 2010, this partnership made consistent progress in the first half of 2011. In March, BB and Bradesco signed a Memorandum of Understanding for the development and integration of the combined businesses, in particular for the formation of Elo Participações, which has the function of integrating and managing the businesses of the partnership.

BB begins sales of Ourocard Elo card

Banco do Brasil began sales of the Ourocard Elo card in April 2011. The Ourocard Elo is a multiple card with a nationwide reach, with one of the lowest annual fees in the market, with “Brazilian-ness” as its main attribute. Its principal characteristics are: the security provided by its chip, the payment of bills using the credit function, the minimum monthly payment required and the points accumulated under the BB Relationship Program (Ponto Pra Você – points for you).

Another interesting aspect of the Ourocard Elo card is that, in addition to

BB launches innovations in the card segment

(R$ billion)

Cards Turn Over63.6

49.5

28.5%

1S111S10

contributing to expanding BB’s market share in the card market, the product also contributes to the process of banking inclusion in Brazil.

According to the Senior Vice-President of the Retail Services, Paulo Caffarelli, one of the benefits of creating the brand name is that there is no requirement to pay royalties on the international brand names in transactions carried out with credit cards in Brazil. “If we consider that throughout the whole financing process or in the use of a credit card, with Elo there will be no need to depend on international brand names, so we will be able to avoid paying almost R$1 billion in royalties abroad over the next five years – this just as a consequence of not paying royalties on foreign card brand names”, affirms the Senior Vice-President . “The intention is to concentrate our efforts on the sale of Elo for those who use plastics only for local payments, whether or not they are checking account holders at BB”, concludes Caffarelli.

The brand name Elo was born with the target of achieving a 15% market share of total card sales by the end of 2015. This is a market in which there is plenty of room for growth. ó


no exteriorABroAD

From Brazil to the world BB strengthens its internationalization strategy

As the largest financial institution in Latin American in asset terms, with R$904 billion at the end of June 2011, Banco do Brasil has been making efforts in the last few years to expand its international presence and, in this regard, there have been important steps made with the acquisition of shareholder control of Banco Patagonia, a transaction that was completed in April 2011, as well as the announcement of the purchase of the US bank, EuroBank, that took place in the same month.

United States

EUROBANK Approximately 12 months after the announcement of its first acquisition abroad, BB signed a contract for the acquisition of the US bank, EuroBank. The deal, already authorized by Central Bank of Brazil is currently undergoing the approval phase by the US banking regulatory authorities and will allow BB to play a stronger part in the US retail banking market. As a result of this, BB has strengthened an important front in terms of its international operations. “The United States today has the largest contingent of Brazilian immigrants, numbering about 1.5 million. This is the public audience that we wish to prioritize and serve, with the quality of service and recognition achieved by BB in Brazil and in other countries, such as Japan”, affirms Vice-President Allan Toledo. EuroBank was founded in 1991, and ended 2010 with assets of US$102.1 million and a loan portfolio of US$74.8 million. Banco do Brasil has three branches in the State of Florida, with a base of approximately 1,300 customers and 1,800 accounts. Banco do Brasil is likely to expand its operations still further in the United States, and over the next 5 years, intends to open approximately 20 branches in regions that have a strong concentration of Brazilians, such as New York, New Jersey and Massachusetts, in addition to Florida.

BANCO PATAGONIA The acquisition of shareholder control of Banco Patagonia underlines the priority of South America as the market in which BB wishes to expand its operations. In fact, trade between Brazil and Argentina has increased by approximately 70% over the last four years. Moreover, that country has a large number of Brazilian companies with local operations, as well as a strong presence of Brazilian tourists and residents. According to the Central Bank of Argentina (ranking as at the end of March 2011), Banco Patagonia is the 11th largest bank in Argentina in asset terms, with ARS14.9 billion (equivalent to R$5.9 billion), with 145 branches throughout the country, its main emphasis being on individuals, salary accounts and credit for micro and small companies. With the acquisition of Banco Patagonia, BB aims to strengthen its operations in the wholesale business, while maintaining its retail side. The acquisition of Banco Patagonia has been authorized by the regulatory authorities of Brazil and Argentina, and with the public share offering – scheduled to take place in the next few months – BB is authorized by Central Bank of Brazil to increase its equity stake in the Argentinean bank to up to 75%. Currently, Banco do Brasil holds a 51% stake.

28 | Conexão BB

Argentina

1º semestre 2011 | 29

The acquisition of these institutions is part of Banco do Brasil’s internationalization strategy which consists of the analysis of opportunities in foreign markets, based on three principles: a) to establish a presence where Brazilian companies already are, accompanying the strong internationalization wave of these companies; b) to be where there are Brazilians abroad (tourists or residents); and c) to be present in those countries with which Brazil has strong commercial relationship as a consequence of the intense flow of Brazilian trade with the rest of the world.

“With these acquisitions abroad, BB is increasing the reach of its network and the range of products and services offered, in addition to operating in new

market niches,” says the Senior Vice-President of Wholesale, International Business and Private Banking, Allan Simões Toledo. “Internationalization enables Banco do Brasil to gain knowledge of new markets and brings benefits to Brazilian citizens and companies abroad, as well as those who wish to invest in Brazil”, emphasized the Senior Vice-President.

Banco do Brasil is the Brazilian financial institution with the largest presence abroad, with 47 units in 23 countries. The acquisition of shareholder control of Banco Patagonia was BB’s first initiative in acquiring financial institutions abroad. Up to that time, BB had operated in other countries through branches, offices and wholly-owned subsidiaries. ó

Japan

In March 2011, Japan was hit by a strong earthquake, followed by a tsunami which devastated the Northeast of the country. Having a strong presence in Japan, BB took measures to help that community, particularly Brazilians living in Japan, through initiatives in partnership with the Brazilian Embassy and the Council of Brazilian Representatives Abroad. Banco do Brasil has exempted the fee charges on financial settlements and on sending of remittances abroad to customers in the provinces affected, carried out collections of clothes, food, toys, and school material in its seven Japanese branches, providing support to the representative bodies in helping those who had to flee from their homes. BB has had a presence in Japan since 1972 and has branches in Tokyo, Hamamatsu, Nagoya, Gunma, Ibaraki, Nagano and Gifu, in which work 166 employees, 11 of these being expatriates. These branches have approximately 125,000 clients. “With my checking account at BB Tokyo I receive a differentiated service. I use Ouro savings (Dollar/Yen) and occasionally make remittances. The major advantage of being a checking account holder is the security that I feel in depositing my money, even at times of instability”, affirms Shunsuke Furuya, a customer since 1997. “Even at the most difficult moments the doors of our branches were always open to help our clients”, affirms the Regional Manager of the Asian block and Oceania, José Luis Prola Salinas. It is this credibility which BB has achieved during 40 years in Japan, and which it wishes to extend to other countries.


PERSONALIZED SERVICE In Brazil BB offers special meeting rooms to the Japanese community, known as Nippon-Brazilian Spaces, which provide services and general information in Portuguese and Japanese. They are located in the towns of Londrina/PR, São José dos Campos/SP, Marília/SP, Mogi das Cruzes/SP and Campo Grande/MS and in the district of Liberdade, in São Paulo city. “BB has always been present at various moments in my life. Moreover to the financial aspect, it has acted as a bridge which has expanded my cultural and professional horizons. It was through BB that I had the opportunity to meet people, companies and institutions”, says Shunsuke Furuya. A professional photographer, Furuya disembarked in Fernando de Noronha/PE in 1978. From there he visited other Brazilian States, always with an interest in Nippon-Brazilian society. To learn more about BB’s products and services for individuals and companies in Brazil and Japan, please access the website bb.com.br/japan.

Net Income(R$ billion)

Total Assets(R$ billion)

Financial indicators

6.0

2.4

5.1

2.0

8.8

3.5 4.1

10.1

4.7

11.7

5.1

2.1

6.3

2.5

Recurring ROE (%)Dividends distributed

19.5

24.7 25.8

24.6 24.924.6

26.1

Highlights

2006 20062007 20072008 20082009 20092010 20101H10 Jun/10 Jun/111H11

296.4

367.2

521.3

708.5

811.2755.7

904.1

365.1

163.7

107.4

19.4

74.6

388.2

176.4

113.1

23.0

75.7

421.3

350.5

191.2157.5

122.6

101.1

26.1

20.981.5

71.0

328.1

65.6

148.7

95.1

18.7

321.3

67.1

144.0

91.8

18.4

350.5

157.5

71.0

101.1

20.9

Loan Portfolio(1)

(R$ billion)

AbroadAgribusinessIndividualBusinesses

(1) Includes loan portfolio in Brazil and abroad, guarantees provided and securities.

(1) With 50% of Banco Votorantim, as of 2009.

Sep/10 Jun/10Dec/10 Jun/11Mar/10Dec/09 Jun/10

Funding(R$ billion)

208.1

49.3

158.8

260.6

72.3

188.3

362.0

91.1

270.8

498.4

160.8

337.6

519.0

142.2

376.9

510.6

344.0

166.6

589.0

396.2

192.9

DepositsMoney Market Borrowing

2006 2007 2008 2009 2010 Jun/10 Jun/11

Shareholders’ Equity (R$ billion)

20.824.3

29.9

36.1

50.4

39.3

54.6

2006 2007 2008 2009 2010 Jun/10 Jun/11

14.8

7.6

7.2

19.6

9.7

9.9

21.5

10.2

11.3

21.8

10.0

11.8

30.4

12.9

17.5

21.9

8.9

13.0

30.5

14.0

16.5

Free Float(%)

Foreign Capital

Others

2006 2007 2008 2009 2010 Jun/10 Jun/11

NPL 90 days(%)

2.52.7

2.4

3.3

2.3

2.7

2.0

2006 2007 2008 2009 2010 Jun/10 Jun/11

Asset Management(1)

(R$ billion)

182.7

220.1246.3

316.2

372.3354.4

421.4

2006 2007 2008 2009 2010 Jun/10 Jun/11

Cards Turn Over(R$ billion)

38.6

50.5

66.2

88.6

111.2

49.5

63.6

2006 2007 2008 2009 2010 1H10 1H11

(1) Banking Industry.

3.7

4.4

3.2

3.73.4

3.2 3.2

NPL 90 BI(1)

NPL 90 BB

Eco-EfficiEncy

3,547 3,412 3,437 3,516

1,670 1,762

Paper Consumption(tons)

2007 2008 2009 2010 1H111H10

2,395 2,4632,588

2,139

1,0291,127

Energy Consumption (TJh)

2007 2008 2009 2010 1H10 1H11

(1) From 2009, BB, in its water calculation, started to consider in addition to headquarter buildings I, II and III, a further three buildings: Headquarters IV, CCT and the Tancredo Neves Building.

Water Consumption – Strategic Buildings(m3)(1)

131,036119,290

202,931 203,348

128,068

96,941

2007 2008 2009 2010 1H111H10

co2 Emissions invEntory(1)

Source 2009 2010 ∆(%)

SCOPE 1: Fleet of company-owned or rented vehicles in use in the facilities

4,495 tCO2e (Alcohol – 534,600 liters)(Gasoline – 2.6 million liters)(Diesel – N.A.)

4,850 tCO2e(Alcohol – 500,000 liters)(Gasoline – 2.38 million liters)(Diesel – 243,000 liters)

8

SCOPE 1: Energy generators 982 tCO2e (365,100 oil liters) 1,221 tCO2e (477,000 oil liters) 24SCOPE 1: Biomass 1,731 tCO2e 1,596 tCO2e (8)SCOPE 2: Acquired energy 17,591 tCO2e 29,767 tCO2e 69

SCOPE 3: Indirect Emissions 8,233 tCO2e (Air Travel)22,294 tCO2e (Air Travel) (Road Travel) (Transport of Cash)

171

(1) The quantification process of Banco do Brasil’s emissions is under constant improvement. We considered in GHG 2010 Report, scope 3, two more emission sources: express mail and employees road travels, which were not accounted in 2009.

Global ratinGs

Fitch RatingsIndividual C / DShort-Term – Local Currency F2Long-Term – Local Currency BBBShort-Term – Foreign Currency F2Long-Term – Foreign Currency BBBShort-Term – National F1+(bra)Long-Term – National AAA(bra)Moody'sFinancial Strength C+Short-Term – Local Currency P-1 Short-Term – Foreign Currency P-2 Long-Term Debt – Foreign Currency Baa1 Long-Term Deposits – Local Currency A2Long-Term Deposits – Foreign Currency Baa2 Short-Term – National BR-1Long-Term – National Aaa.brStandard & Poor'sLong-Term – Local Currency BBB-Long-Term – Foreign Currency BBB-

StRuctuRal Data2006 2007 2008 2009 2010 2Q10 2Q11

Points of Service(1) 16,975 18,364 21,666 39,588 49,546 43,707 53,445 Branches 3,969 4,008 4,342 4,897 5,087 4,984 5,094 ATM (owned) 39,661 39,279 39,714 45,442 44,954 43,942 43,920 Employees 82,672 81,855 88,972 103,971 109,026 106,241 112,913 Customers ('000)(2) - 42,776 48,022 52,695 54,366 53,349 55,190 Checking Accounts ('000) 25,710 27,414 30,378 34,988 35,934 34,920 35,596 Capital StructureBIS Ratio 17.3 15.6 15.2 13.8 14.1 12.8 14.4 Tier I 11.7 10.7 10.9 10.6 11.0 8.8 11.1 Tier II 5.6 4.9 4.3 3.2 3.1 4.1 3.3 ProductivityEfficiency(3) 47.5 46.2 45.6 43.4 42.6 44.0 41.1Coverage(3) 112.9 127.7 136.2 128.2 125.4 123.1 128.3SharesEarnings per Share (R$)(4) 7.4 3.2 3.4 4.0 4.3 1.1 1.2Book Value per Share (R$)(4) 8.4 9.8 11.7 14.1 17.6 15.3 19.1Price/Book Value per Share(4) 2.5 3.1 1.3 2.1 1.8 1.6 1.5Price/Last 12 Months Earnings 8.6 14.9 4.3 7.5 7.7 5.7 6.2Payout (%) 40.0 40.0 40.0 40.0 40.0 40.0 40.0Dividend Yield (%) 4.6 2.7 9.3 5.3 5.2 1.7 1.7Market Capitalization (R$ billion) 52.8 75.3 37.7 76.3 89.9 63.3 80.1Share Price Variation (%) +65.8 +47.0 -49.1 +117.0 +12.7 -17.4 -5.2Ownership Structure (%)Federal Government 68.7 67.1 65.6 65.3 59.2 59.2 59.1Previ 11.4 10.7 10.4 10.4 10.4 10.4 10.4Free Float 14.8 19.6 21.5 21.8 30.4 30.4 30.5BNDESPar 5.0 2.6 2.5 2.4 0.0 0.0 0.0Market Share (%)Assets(5) 16.8 15.6 17.2 22.0 20.8 21.2 20.9Deposits(5) 21.4 21.3 22.2 26.5 24.3 26.3 26.0Credit Cards 16.5 16.0 17.1 20.1 19.8 20.1 19.6Asset Management(6) 19.1 18.3 20.7 21.1 21.2 22.3 22.0Card Turn Over(7) 15.7 16.8 19.2 20.3 20.7 20.3 21.1ACC/ACE(8) 31.2 32.7 28.2 34.7 33.6 31.0 33.9Export Exchange(8) 26.5 26.6 27.9 31.1 31.0 31.9 29.5Import Exchange(8) 23.8 24.2 24.7 25.4 24.0 24.9 22.2

(1) Includes own branch network and representative banks. Since 2009 also includes shared network; (2) Composed of checking account holders, savings account holders and INSS beneficiaries; (3) Does not include extraordinary items; (4) Series adjusted to take account of share split (1:3) which took place in the second quarter of 2007; (5) “50 Maiores” Central Bank of Brazil Report: banking consolidation I+II excluding BNDES. For 2Q11, March 2011 data; (6) ANBID figures. Does not include data from BV; (7) Source: Associação Brasileira das Empresas de Cartões de Crédito e Serviços (ABECS); (8) Source: Central Bank of Brazil.

BRancheS netwoRk

270 Branches

437 Branches

1,029 Branches

2,293 Branches

1,065 Branches5.3%

8.6%

20.9%

45.0%

20.2%

2010 Annual Report

You may access our Report through various channels

• Online version• Card drive• Conexão BB Magazine

• Ipad • Iphone• Mobile

V Award, March 19:During the VI Brazilian Auctioneers Congress, Banco do Brasil’s e-Licitações portal won three of the five prizes offered in the category of “Electronic Bidding Systems”: the largest number of tender bids sessions conducted and completed in 2010; Best Electronic Bidding System 2010; and Best Interaction with Suppliers.

2011 Awards Pool accomplished by Cardmonitor/

CVA Solutions / Medida Certa Institute: Ourocard was elected as the Preferred Card for Brazilians, according to research conducted by Cardmonitor/Medida Certa Institute, carried out between December 2010 and January 2011. It was also elected as best credit card (brand name strength) according to research by CVA Solutions, carried out in February and March 2011.

X e-Finance Award: Granted by Editora Executivos Financeiros Winner of the category “GED-Gerenciador Eletrônico de Documentos” (Electronic Document Manager), for the following cases: “Electronic Dossier – Stage II” and “Servicing Center Europe – Electronic Document Generation for the European Block”.Brasilia Concept Store (Espaço Banco do Brasil) and New York Convenience Room

water abroad businesses - você | banco do brasil · inaugurated branches in morro do alemão and...

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