Summary of the Results 4Q11

Transcription

1 Summary of the Results Results BB's Recurring Income grew 10.2% in 2011 Banco do Brasil recorded a recurring income of R$ 11,751 million in 2011, up 10.2% over the amount verified in 2010 that corresponds to an annualized return on average shareholders' equity (ROAE) of 21.7%. The net income reached R$ 12,126 million in 2011, increasing 3.6% if compared with The one-off effects amounted to R$ 375 million in 2011 due to the following reasons: disposal of BB's interest in Visa Internacional and Mastercard (R$ 169 million); tax efficiency (R$ 386 million); economic plans (-R$ 103 million) and R$ -78 million due to tax effects and statutory profit sharing on these items. Figure 1. Income (R$ million) and Return on Average Equity (ROAE) (%) ,703 11,751 12,126 10,664 3,704 4,002 2,573 2,891 3,025 2,972 4Q10 3Q Recurring Net Income Net Income ROAE - % Recurring ROAE - % Revenues from financial intermediation surpassed the milestone of R$ 100,000 million in 2011, reached R$ 102,849 in 2011, representing a 27.9% increase over Income from loan and lease operations followed loan portfolio performance (+19.4%) and grew 20.7% in The securities income in 2011 was driven by the increase of the average Selic rate (TMS), depreciation of the Brazilian real in relation to the US dollar and increase in average balances of securities. Additional information regarding Bank investments can be consulted in Chapter 7 of the MD&A report. Regarding market funding expenses, the growth of 43.1% in 2011 over 2010 was mainly due to change in deposits mix and greater share of time deposits in detriment of others. This happened because of the strategy to enhance the liquidity of BB in the 3Q11 and. Even in view of this change, BB s net interest income closed the year with growth of 11.1% over 2010, within the proposed guidance. The administrative expenses remained under control in 2011 and grew 9.7% over 2010, and 12.2% in the -3Q11 comparison. Average salary adjustment of 9.0% (September base date) and the increase in the number of employees led in growth of personnel expenses. Regarding other administrative expenses, the advances observed are in line with the contractual adjustments made and with the organic growth of transactions. 1 - Banco do Brasil Summary of the Results 4 th Quarter/2011

2 In addition to the administrative costs control, the expenses with allowance for loan losses increased at a slower pace than the loan portfolio due to improvement in the portfolio risk and low levels of delinquency, contributing for the results presented in the period. The following table, extracted from the statement of income with reallocations, presents the main highlights of the period. The breakdown of reallocations is in Section of the MD&A report. Table 1. Income Statement with Reallocations Main Lines Quarterly Flow Chg. % Annual Flow Chg. % R$ million 4Q10 3Q11 On 4Q10 On 3Q On 2010 Financial Intermediation Income 21,417 30,271 25, (14.2) 80, , Loan Operations¹ + Leasing 14,207 17,806 16, (5.5) 54,219 65, Securities 6,137 10,574 7, (32.0) 23,238 30, Financial Intermediation Expenses (11,568) (19,626) (14,622) 26.4 (25.5) (42,038) (60,173) 43.1 Net Interest Income 9,849 10,645 11, ,398 42, Allowance for Loan Losses (2,139) (3,259) (2,892) 35.2 (11.3) (10,675) (11,827) 10.8 Net Financial Margin 7,711 7,386 8, ,724 30, Fee income 4,306 4,720 5, ,173 18, Income f/ Insur., Pension Plans and Sav. Bonds (9.6) 1,888 2, Contribution Margin 11,539 11,670 12, ,157 47, Administrative Expenses (6,068) (6,208) (6,966) (22,565) (24,752) 9.7 Personnel Expenses (3,270) (3,481) (3,954) (12,244) (13,943) 13.9 Other Administrative Expenses (2,798) (2,727) (3,012) (10,322) (10,809) 4.7 Commercial Income 5,452 5,395 5, ,484 22, Legal Claims 35 (122) (427) (135) (68.3) Labor Lawsuits 92 (369) (278) - (24.7) (649) (724) 11.5 Other Operating Income 608 (1,031) (966) - (6.3) (908) (2,533) Income Before Taxes 6,186 3,897 4,940 (20.2) ,543 18, Income and Social Contribution Taxes (1,923) (924) (1,425) (25.9) 54.3 (5,242) (5,388) 2.8 Corporate Profit Sharing (559) (373) (450) (19.5) 20.5 (1,637) (1,737) 6.1 Recurring Net Income 3,704 2,573 3,025 (18.3) ,664 11, (1) Historical series reviewed since 1Q10 accounting for two items in loan operations income that previously included in Other Operating Expenses / Revenue: amortization of premiums paid on portfolio acquisitions and expenses for settlement / prepayment contracts. One-Off Items The following table shows the description of the one-off items which added R$ 375 million to BB's net income in 2011, net amount of taxes and statutory profit sharing. In the quarter, only the amount referring to economic plans was treated as one-off items. Table 2. One-Off Items R$ million 4Q10 3Q Recurring Net Income 3,704 2,573 3,025 10,664 11,751 (+) One-Off Items of the Period (53) 1, Sale of Investments Economic Plans (145) (35) (95) (371) (103) Tax Efficiency Contingent Liabilities (BESC) Additional Allowance for Loan Losses Reversal of Labor Liabilities Capital Gain - BB Seguros Participações Tax Eff. and Stat. Profit Sharing on One-Off Items (16) (33) 42 (527) (78) Net Income 4,002 2,891 2,972 11,703 12, Banco do Brasil Summary of the Results 4 th Quarter/2011

3 Table 3. Main Indicators of Income/Expenses Indicators - % 4Q10 3Q Net Interest Margin (NIM)¹ Expenses with Allowance for Loan Losses over Portfolio² Cost-Income Ratio³ Cost-Income Ratio - 12 Months Recurring Return on Equity¹ Effective Tax Rate (1) Annualized indicators. (2) Accumulated Allowance for Loan Losses expenses for the 12-month period divided by the average loan portfolio in the same period. (3) The One-Off Items of the period were segregated in the calculation. Shareholder's Return Earnings per share reached R$ 4.28 The earnings per share attained R$ 4.28 in 2011, against R$ 4.34 recorded in The following table shows this indicator. Figure 2. Earnings per Share Q10 3Q Remuneration to shareholders reached R$ 4.9 billion for the year Banco do Brasil maintained the policy of paying out 40% of its net income to its shareholders. R$ 4.9 billion was set aside as shareholders' compensation in 2011, representing a growth of 4.1% in relation to Banco do Brasil Summary of the Results 4 th Quarter/2011

4 Figure 3. Dividend and Interest on Own Capital 4,706 2,403 4,899 3,051 1,603 2,302 1,157 1,237 1, Q10 3Q Dividends (R$ million) Interest on Own Capital (R$ million) Net Interest Income In the following table, the items Loan Operations and Funding Expenses do not consider the effect of exchange rate changes. The item treasury includes: (i) the result with interest, (ii) the revenue with remunerated compulsory deposit, (iii) tax hedge, derivative transactions and other financial instruments that offset the effects of change in exchange rate over the result. The item other consists mainly of the resources provisioned in BB linked to loans with official funds, such as, Finame, BNDES and FCO. Table 4. NII Breakdown Quarterly Flow Chg. % R$ million 4Q10 1Q11 2Q11 3Q11 On 4Q10 On 3Q11 Net Interest Income 9,849 10,159 10,524 10,645 11, Loan Operations 13,468 13,928 14,647 15,737 16, Funding Expenses (5,294) (5,625) (6,202) (7,048) (6,845) 29.3 (2.9) Recovery of Write-offs Loans (1.4) (13.6) Treasury 1,885 2,088 2,167 1,950 2, Other (1,073) (1,087) (1,041) (979) (1,073) (0.1) 9.6 Managerial Margin and Spread The table below presents BB managerial margin segmented into loan operations and deposits. Each line is calculated by the difference between financial revenues/expense and the respective opportunity financial cost/revenue of each line, for example, average Selic rate (TMS), long term interest rate (TJLP), reference rate (TR). 4 - Banco do Brasil Summary of the Results 4 th Quarter/2011

5 Table 5. Managerial Margin Quarterly Flow Chg. % Annual Flow Chg. % R$ million 4Q10 3Q11 On 4Q10 On 3Q On 2010 Loan Operations 6,869 7,708 8, ,676 30, Individuals 3,946 4,295 4, ,812 17, Businesses 1,854 2,286 2, ,827 8, Agribusiness 1,068 1,127 1, ,037 4, Deposits 1,287 1,481 1, (12.9) 4,708 5, Time Deposits (13.9) 2,676 3, Demands Deposits (7.5) (11.2) 1,298 1, Saving Deposits (1.9) (12.0) BB's loan portfolio to individual customers is concentrated in consumer credit, payroll loans, vehicles financing and mortgage loans that together accounted for 80% of the individual customers portfolio. Traditionally, these facilities have lower spreads than others in the individual loan portfolio. In relation to the agribusiness spread, the increase of the quarterly rate was mainly influenced by the growth of equalization revenues which grew 11.7% comparison -3Q11 and 20.2% in the - 4Q10. "Risk-Adjusted Net Interest Margin" is calculated based on ratio between net financial margin and profitable assets, that is, it considers expenses with allowance for loan losses. The table below presents the performance of the spread indices by portfolio. Table 6. Annualized NIM % 4Q10 3Q Loan Operations Individuals Businesses Agribusiness Deposits Time Deposits Demands Deposits Saving Deposits Net Interest Margin (NIM) Risk Adjusted NIM Assets Total assets grew 21.0% in twelve months Total assets of Banco do Brasil attained R$ 981,230 million in Dec/11, corresponding to a 21.0% growth over Dec/10. The main lines of assets are loan operations, securities and short-term interbank investments that accounted for 73.0% of BB's total assets in Dec/11 compared to 70.6% in Dec/10. The following table presents the main items of the assets. 5 - Banco do Brasil Summary of the Results 4 th Quarter/2011

6 Table 7. Main Equity Items Chg. % R$ million Dec/10 Sep/11 Dec/11 On Dec/10 On Sep/11 Total Assets 811, , , Loan Portfolio¹ 388, , , Securities 143, , , Short-Term Interbank Operations 107, , , Deposits 376, , , Demand Deposits 63,503 57,614 62,016 (2.3) 7.6 Savings Deposits 89,288 95, , Interbank Deposits 18,998 13,586 14,450 (23.9) 6.4 Time Deposits 204, , , Money Market Borrowing 142, , , Shareholder s Equity 50,441 56,713 58, (1) It is included guarantees provided and private securities Loan Portfolio Credit grows 19.8% in twelve months Amplified loan portfolio, which includes guarantees provided and private securities in the portfolio, attained R$ 465,093 million, growth of 5.3% in the quarter and 19.8% in twelve months. Banco do Brasil s market share in the domestic loan portfolio was 19.2% in Dec/11. Table 8. Amplified Loan Portfolio¹ Balance Chg. % R$ million Dec/10 Share % Sep/11 Share % Dec/11 Share %On Dec/10On Sep/11 Loan Portfolio (a) 358, , , Brazil 337, , , Individuals 113, , , Payroll Loan 44, , , Consumer Loan Backed by Direct Deposits 12, , , Vehicle Loans 27, , , (0.3) Mortgage 2, , , Credit Card 11, , , Overdraft Accounts 2, , , (1.7) (17.9) Other 10, , , Businesses 149, , , SME 56, , , Middle and Large 92, , , Agribusiness 75, , , Individuals 48, , , Businesses 26, , , Abroad 20, , , Private Securities (b) 29,858 39,024 42, Amplified Loan Portfolio (a + b) 388, , , Individuals 113, , , Businesses 176, , , Agribusiness 75, , , Abroad 23, , , (1) It is included guarantees provided and private securities. 6 - Banco do Brasil Summary of the Results 4 th Quarter/2011

7 Mortgage surpasses R$ 7.6 billion in Dec/11 Starting its operations with housing loans for individual clients in 2Q08, BB has henceforth exhibited continuous growth, and ended Dec/11 with a sum of R$ 6,035 million in this category, an amount 20.0% higher than that observed in Set/11. The amount disbursed in was R$ 1,098 million, a volume 96.5% higher than the one recorded in the same quarter of For corporate customers the outlay was R$ 391 million in and the portfolio balance reached R$ 1,571 million. The total amount of the loan portfolio for individual customers (R$ 130,589 million) exhibited a expansion of 15.5% over December 2010, and of 3.8% over September The portfolio of loans to corporate customers ended Dec/11 with a balance of R$ 210,167 million, which represents growth of 5.6% over Sep/11 and 19.2% in twelve months. This result was driven by the portfolio of large and mid-sized companies, which besides demanding credit through traditional lines (investment and working capital) raise funds through the issue of private securities. The balance of the portfolio of these securities added to the offering of guarantees ended Dec/11 at R$ 42,104 million. In SME sector, the loan portfolio presented expansion of 19.5% compared to the observed in 2010 december and 9.2% against last September, with a balance of R$ 68,062 million. Banco do Brasil used the Fundo de Garantia de Operações FGO (Operations Guarantee Fund) to allow a greater access credit for SME, to reduce the costs for the final borrower and to expand the portfolio volume. Another mechanism that supports the operations contracting of investment financing is the Fundo de Aval às Micro e Pequenas Empresas Fampe (Endorsement Fund for SMEs). This fund is comprised by resources from Serviço Nacional de Apoio às Micro e Pequenas Empresas Sebrae (National Service for SMEs Support) and complements up to 80% of the needed guarantees value to contract operations with SMEs that have gross annual turnover up to R$ 2.4 million. The agribusiness loan portfolio ended the quarter with a balance of R$ 89,361 million, which corresponds to growth of 6.7% over Sep/11 and of 18.0% in twelve months. The quarterly performance results mainly from loans to individual customer in investment lines. The low rate of default on the agribusiness loan portfolio merits special emphasis. The indicator that measures the ratio between the loan portfolio and transactions over ninety days past due ended the quarter with a percentage of 0.7%, compared to 2.5% in the same period of Delinquency remains at rates below than observed in the Banking Industry The delinquency indicators of Banco do Brasil continue better than those observed in the Banking Industry (BI) in December The indicator that measures non-performing loans (NPL) for more than 90 days (ratio between loans for more 90 days and the loan portfolio) of the Banking Industry ended this quarter at 3.6%, compared to 2.1% of BB. Practically all of BB's credit quality indicators improved when compared to December 2010 and remained in line with the indices observed in the previous quarter. Comparing operations classified by risk level, BB also presents a better loan structure than BI. Operations rated at risk levels AA-C at Dec/11 closed in 93.9% of the total portfolio, against 92.3% verified in the BI. The following table presents indexes of quality loan portfolio. 7 - Banco do Brasil Summary of the Results 4 th Quarter/2011

8 Table 9. Loan Portfolio Quality Indicators % Dec/10 Sep/11 Dec/11 NPL + 15 days/total Portfolio (%) NPL days/total Portfolio (%) NPL + 60 days/total Portfolio (%) NPL days/total Portfolio (%) NPL + 90 days/total Portfolio (%) AA - C Loans / Total Portfolio (%) Allowance/Loan Portfolio Individuals Allowance/Loan Portfolio Business Allowance/Loan Portfolio Allowance/NPL + 60 days Allowance/NPL + 90 days Average Risk BB Average Risk Banking Industry NPL + 90 days/total Portfolio BI Expenses with allowance for loan losses in the outlook of twelve months showed an increase of 10.8% in 2011 over previous year; while the loan portfolio increase 18.0% in this period. Consequently, the indicator that measures portfolio expenses recorded an improvement of 20 bps in comparison to Table 10. Expenses with Allowance for Loan Losses over Loan Portfolio R$ million 4Q10 3Q11 (A) Allowance for Loan Losses - Quarterly (2,139) (3,259) (2,892) (B) Allowance for Loan Losses - 12 Months (10,675) (11,074) (11,827) (C) Loan Portfolio 358, , ,989 (D) Average Portfolio 3 Months 352, , ,439 (E) Average Portfolio 12 Months 325, , ,408 Expenses over Portfolio (A/D) - % Expenses over Portfolio (B/E) - % The balance of allowance for loan losses ended the quarter at R$ 19,015 million, which provides coverage of 215.6% of non-performing loans more than 90 days, percent higher than in BI which reached 158.9% in Dec/11. The following table shows the renegotiated loan portfolio of non-performing loan operations. Note that the coverage ratio reached 272.6% in Dec/11 against 214.3% in the same period in the previous year. Table 11. Renegotiated Loan Portfolio R$ milhões Dec/10 Sep/11² Dec/11 Renegotiated Loan Portfolio¹ 10,226 7,004 6,991 Allowance 2,406 1,689 1,606 NPL + 90days 1, Allowance/Loan Portfolio - % NPL + 90 days/loan Portfolio - % Allowance/NPL + 90 days - % (1) Refers to renegotiated loan portfolio of non-performing loan operations (2) Historical series reviewed due to change in methodology in the calculation of the information. 8 - Banco do Brasil Summary of the Results 4 th Quarter/2011

9 Basel BIS ratio higher than minimum required The capital ratio (K) of Banco do Brasil ended December at 14.0%, higher than the minimum required by the Central Bank of Brazil (11%). The BIS ratio presented indicates an excess of Referential Shareholders Equity of R$ 17.2 billion, which enables an expansion of up to R$ billion in credit assets, considering a weighting of 100%. In January 2012, an external issuance in the amount of US$ 1 billion was carried out for the funding of Perpetual Bonuses. BB is awaiting Central Bank of Brazil authorization to classify the fund as Tier I capital and, in case this amount becomes part of the Referential Shareholders Equity, BIS Ratio would reach 14.3%, considering Dec/2011 figures. Figure 4. BIS Ratio Dec/10 Sep/11 Dec/11 Tier I Tier II Fee Income Fee Income reflects business diversification It is worth highlighting the greater diversification of BB revenues, due to projects such as the restructuring of activities in the retail segment, focused on customer base service and profitability, and corporate restructuring of the insurance area. Fee income, a line that includes both services income (RPS), and banking fee income (RTB) reached R$ 18,242 million in 2011, a result 12.8% higher than the observed in the previous year and inside the estimated range for 2011 Guidance. It is worth to highlight the fee income from credit/debit cards and management of investment fund. Results from insurance, pension plans and saving bonds operations reached R$ 2,265 million in 2011, rose by 20.0% over In -3Q11 comparison, the decrease of 9.6% was due the growth of retained claims (+7.9%) and marketing expenses (+17.7%), mainly, with insurance operations. The indicator that measures the ratio between commercial revenues (sum of Net Interest Income, fee income and results from insurance operations) and the average client base reached R$ 302.7, in this 9 - Banco do Brasil Summary of the Results 4 th Quarter/2011

10 quarter, in comparison to R$ in 4Q10. This index shows, on average, the value of business generated per client. Table 12. Fee Income and Results from Insurance Operations Quarterly Flow Chg. % Annual Flow Chg. % R$ million 4Q10 3Q11 On 4Q10 On 3Q On 2010 Fee Income 4,306 4,720 5, ,173 18, Account Fees 1,006 1,054 1, ,714 4, Credit / Debit Cards , ,306 3, Investment Fund Management Fees (1.9) 2,672 3, Loan Fees ,710 1, Collections ,197 1, Insurance, P. Plans and Savings Bonds Billings Interbank (0.2) Capital Market Fees (15.7) (19.9) Other ,543 1, Insurance P. Plans and Sav. Bonds Income (9.6) 1,888 2, Administrative Expenses Administrative Expenses in Conformity with Guidance According to the Guidance forecast, administrative expenses are under control. In 2011, these expenses amounted to R$ 24,752 million, a growth of 9.7% over the previous year. These expenses include personnel and other administrative expenses, which grew, respectively, in the year-over-year comparison, 13.9% and 4.7%. In the twelve-month comparison, the growth of Personnel Expenses line was mainly due to three reasons: (i) salary adjustment, granted in the base date of Sept/2010; (ii) increase of administrative provisions by the inflation; (iii) and to the increase of 4.7% in staff numbers in relation to the 4Q10, which reflects the Retail Revitalization Program. In relation to the other administrative expenses, the performance is in line with the contractual adjustments made and with the organic growth of transactions. Table 13. Administrative Expenses Quarterly Flow Chg. % Annual Flow Chg. % R$ million 4Q10 3Q11 On 4Q10 On 3Q On 2010 Administrative Expenses (6,068) (6,208) (6,966) (22,565) (24,752) 9.7 Personnel Expenses (3,270) (3,481) (3,954) (12,244) (13,943) 13.9 Other Administrative Expenses (2,798) (2,727) (3,012) (10,322) (10,809) 4.7 Cost Income Ratio Cost income ratio, a ratio between administrative expenses and operating revenues, improved 200 bps in the 4Q101-3Q11 comparison. In the quarter, operating revenues increased 8.8%, against 4.0% in administrative expenses, which improved the indicator. While in the -4Q10 comparison, it is worth emphasizing that Previ's Plan I actuarial gains in the amount of R$ 1.4 billion were recognized in 4Q10, event that did not occur in this quarter. This fact adversely impacted the indicator Banco do Brasil Summary of the Results 4 th Quarter/2011

11 Cost Income ratio based on cumulative 12 months allows an analysis with lower volatility, specially in the comparison with pair quarters (2Q and 4Q), periods in which revenues from actuarial revaluation of Previ's 1 plan is accounted for. We verified that even with actuarial gains not being recognized in 2H11, there was an improvement of 50 bps in twelve months. Figure 5. Cost Income Ratio Without One-Off Items % Q10 3Q11 4Q10 3Q11 Cost-Income Ratio (last 12 months) Cost-Income Ratio Insurance Income from Insurance The insurance ratio that measures the share of this segment in the recurring net income of BB has been growing and went from 12.7% in 2010 to 13.7% in This evolution is in line with the strategy adopted by BB of raising participation of the insurance segment in the conglomerate. The table below presents the breakdown of insurance income, as well as the insurance ratio. Table 14. Consolidated Insurance Ratio Quarterly Flow Chg. % Annual Flow Chg. % R$ million 4Q10 3Q11 On 4Q10 On 3Q On 2010 Insurance Income ,354 1, Brokerage Net Income Service Fee Net Income Equity in the Earnings (8.5) BB Recurring Income 3,704 2,573 3,025 (18.3) ,664 11, Insurance Ratio Guidance The table below presents the 2011 guidance with the respective results verified. There were deviations between realized and projected interval in individual loan portfolio, business loan portfolio, and allowance for loan losses Banco do Brasil Summary of the Results 4 th Quarter/2011

12 Table Guidance Items Performance Guidance Recurring Return on Equity 21.7% 21% - 24% Net Interest Income 11.1% 11% - 13% Total Deposits 17.4% 14% - 18% Domestic Loan Portfolio 15.6% 15% - 18% Individuals 15.4% 17% - 21% Businesses 14.3% 16% - 19% Agribusiness 18.2% 8% - 12% Allowance for Loan Losses 3.1% 3,3% - 3,7% Fee Income 12.8% 12% - 17% Administrative Expenses 9.7% 9% - 12% Tax Rate 31.3% 31% - 34% The main reasons for deviations in the 2011 guidance are: a) Individual Loan Portfolio influence of macroprudential measures, requiring higher capital requirement for vehicle financing and payroll loans, with consequent reduction in financing terms; b) Business Loan Portfolio part of large companies' credit demand was met mainly through the issuance of debentures, promissory notes and credit notes (private securities), which grew 41.0% in 12 months; c) Allowance for Loan Losses detailed studies allow BB to understand its clients in a better way, regarding the business potential and credit risks. This approach results in a significantly improve in the allowance for loan losses indicator and is based on continuous improvement in credit granting methodologies Guidance The following table presents the 2012 guidance: Table Guidance Items 2012 Guidance Recurring Return on Equity 19% - 22% Net Interest Income 11% - 15% Total Deposits 14% - 18% Domestic Loan Portfolio 17% - 21% Individuals 19% - 23% Businesses 18% - 22% Agribusiness 9% - 12% Allowance for Loan Losses 3,1% - 3,5% Fee Income 13% - 18% Administrative Expenses 8% - 12% Tax Rate 31% - 34% The 2012 forecasts were prepared regarding the following assumptions: 12 - Banco do Brasil Summary of the Results 4 th Quarter/2011

13 Assumptions influenced by management 1. Increase in customer portfolio profitability as a way to boost revenues; 2. Expansion of the service network, based on new clients, and profitability of the current customer portfolio, considering the partnership with Banco Postal; 3. Maintenance of the current business model, without considering new acquisitions and/or partnerships that might be entered into to exploit specific segments; 4. Alignment of the cost structure to business volume growth; 5. Adjustments in contracts to suppliers and collective bargaining agreement in line with market practices; 6. Recognition of actuarial gains and losses in the Previ Benefit Plan I, as established by the CVM Resolution 600/2009. Assumptions that are not under management control: 1. Low growth of developed economies in 2012; 2. Greater resistance, but not immunity, of the Brazilian economy to foreign shocks; 3. A political environment without institutional rupture; 4. Maintenance of Brazilian sovereign rating as investment grade; 5. Maintenance of the current domestic macroeconomic policy structure: floating exchange rate, inflation targets (nominal anchor) and fiscal discipline, entailing a gradual and consistent reduction of the relationship between Public Sector Net Debt (PSND) and the Gross Domestic Product (GDP); 6. Increase of the Brazilian trade balance and its effects in the foreign trade; 7. A gradual increase in the Brazilian economy's potential for growth (potential GDP); 8. Evolution of interest rates, foreign exchange, inflation rate and GDP according to the market's consensus; 9. An advancement of the regulatory mark / microeconomic agenda with stimulus to public and private investment; 10. Regulatory stability, also in what concerns the rates of taxes levied on the Bank's activities, labor legislation, and social security legislation; 11. Change in capital consumption rules and rates of the compulsory payment macroprudential measures; 12. Implementation of Basel III recommendations; 13. Guidelines of the 2012/2013 crop plan Banco do Brasil Summary of the Results 4 th Quarter/2011