Banco do Brasil. 1Q10 Results. Conference Call

Transcription

1 Banco do Brasil 1Q10 Results Conference Call 1

2 Disclaimer This presentation may include references and statements, planned synergies, increasing estimates, projections of results and future strategy for Banco do Brasil, it s Associated and Affiliated Companies and Subsidiaries. These expectations are highly dependent on market conditions, on Brazil s economic and banking system performances, as well as on international market one. Banco do Brasil is not responsible for bringing up to date any estimate in this presentation. Banco do Brasil informs that on May 6, 2010 an application was filed with Associação Brasileira das Entidades dos Mercados Financeiros e de Capitais ( ANBIMA ) for a preliminary review of a registration statement for a Primary and Secondary Public Offering of common shares and, pursuant to the CVM Regulation 400/03, Banco do Brasil will be in quiet period until the offering closure announcement. By the time of the offer, before investing in stocks of Banco do Brasil read carefullfy the Offering Memorandum, specially the Risk Factors section. 2

3 Solid result keeps the profitability of BB ,155 1,665 1,523 2,348 1,727 1,979 1,764 1,819 2,351 1,967 1Q09 2Q09 3Q09 4Q09 1Q10 Net Income R$ million ROAE - % Recurring Net Income R$ million Recurring ROAE - % 3

4 Extraordinary effects have positively impacted the result. R$ million 1Q09 4Q09 1Q10 Recurring Net Income 1,523 1,819 1,967 Extraordinary Effects of the Period 142 2, Sale of interest in VISA Internacional Economic plans (95) 530 (85) Credit assignment Previ - recognition of actuarial gains - 3,030 - Provision for labor, civil and fiscal claims (1,367) - - Tax credits activation - differential of CSLL rate 1, Voluntary resignation program - BNC - (215) - Reversal of labor liabilities Tax impacts and PLR on extraordinary items 557 (1,895) (313) Update of actuarial assets - Previ (166) - - Net Income 1,665 4,155 2,351 4

5 BB maintains its leadership in the key segments of the industry. Market Share - % Assets¹ 22.0 Domestic Loan Portfolio² 19.8 Total Funding¹ 26.3 Total Deposits¹ 26.5 Demand Deposits¹ 32.8 Savings Deposits¹ 23.7 Time Deposits¹ 25.8 Assets Under Management ³ 22.3 ACC/ACE Foreign Exchange Exports Foreign Exchange Imports 24.6 Card Revenues Sources: (1) Banco Central do Brasil (Central Bank of Brazil) - Top 50 banks: Total Banking - Consolidated I + II (as of Dec/09) (2) Banco Central do Brasil (Central Bank of Brazil) - Press Releases (3) Ranking ANBIMA (assets managed by Banco do Brasil + 50% of the assets managed by Banco Votorantim) (4) Banco Central do Brasil (Central Bank of Brazil) - Economic indicators (5) Associação Brasileira das Empresas de Cartões de Crédito e Serviços (Brazilian Association of Credit Cards and Services Companies ) 5

6 BB B maintains its leadership in Total Assets¹. #1 R$ billion Total Assets BB triple its size since December Mar/10 CAGR CAGR = 20.1% 20.1% (1) Source: Economática 6

7 Loan expansion boosts Net Interest Income... R$ billion Q09 2Q09 3Q09 4Q09 1Q10 Net Interest Income Interest Expenses Other Interest Income Loan Income 7

8 ... backed by funding expansion. Total Funding Total Deposits = 0.4% = 1.5% = 21.6% = 12.3% Mar/09 Dec/09 Mar/10 Savings Deposits Time Deposits Mar/09 Dec/09 Mar/ = 3.9% = 2.3% = 11.6% = 10.9% Mar/09 Dec/09 Mar/10 Balance R$ billion Mar/09 Dec/09 Mar/10 Cost - % Selic 8

9 BB s s spread goes in line with the SELIC rate performance. NIM by Product NIM vs. Selic Q09 2Q09 3Q09 4Q09 1Q10 Individuals Businesses Agribusinesses Q09 2Q09 3Q09 4Q09 1Q10 Global Spread¹/Cumulative Selic² Cumulative Selic² Global Spread¹ (1) Net Interest Income over Earning Assets (2) Annualized 9

10 Loan Portfolio¹ rises 26% in 12 months Market Share² - % Offshore R$ billion Agribusiness Individuals Agribusiness Companies % 6.1% 26.6% % % 5.7% 21.2% 31.1% Individuals Businesses % % Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 = 26.3% (1) Portfolio balance includes Banco Votorantim (2) Source: Banco Central do Brasil - Press Releases - Domestic Portfolio 10

11 Mortgage Vehicles Loan Market Share¹ - % Overdraft Account R$ billion Consumer Finance backed by Direct Deposits Payroll and Vehicle loans are the main drivers of this growth % 11.5% % 22.1% Credit Card Other % % Payroll Loan Mar/09 Jun/09 Sep/09 Dec/09 Mar/ (1) Source: Banco Central do Brasil - Press Releases: Loan as Reference for Interest Rate 11

12 Business loans grow 26% in 12 months. Market Share¹ - % R$ billion Small and Micro Enterprises % % % 35.3% Medium and Large Enterprises % % Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 (1) Source: Banco Central do Brasil - Press Releases: Loan as Reference for Interest Rate 12

13 BB maintains its leadership¹ in foreign trade Portfolio Balance US$ - billion R$ billion FINIMP BNDES - Exim Pre-payment ACC/ACE Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 (1) Source: Banco Central do Brasil - Economic Indicators Consider market shares in ACC/ACE, import exchange, export exchange and BNDES - Exim 13

14 As a partner of the Brazilian agribusiness... R$ billion Small Enterprises and Cooperatives % 5.5% 17.7% % 12.2% 12.5% Agroindustrial Credit % % Family Farming Other Individual Producers % % Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 14

15 Working Capital (R$ billion)... BB extends the use of agricultural insurance each crop. Crop Insurance Breakdown- % 50% 38% 37% 59.6% 50% 62% 63% 72.5% 71.9% Crop 2007/2008 Crop 2008/2009 Crop 2009/2010* 39.1% With insurance *until March/2010 Reinsurance Everest RE 1% Hannover RE 3% Catlin RE 3% Mapfre RE 4% Other 10% Without insurance IRB 24% 75.6% Working Capital R$ million Total Insured % Insured North % Münchener Rück do Brasil 10% Partner RE 15% Northeast % Mid-west 2, , % Southeast 4, , % Scor RE 15% Swiss RE 15% South 5, , % Total 12, , % 15

16 Provisions guarantee a confortable credit risk coverage , ,172 3,017 2,950 3,026 Provision Charges / Loan Portfolio¹ - % Provision Charges² - R$ million 1Q09 2Q09 3Q09 4Q09 1Q Required and Additional Provision/ Loan Portfolio - % Annualized Net Loss³ / Loan Portfolio - % NPL Ratio (90 days) - % 1Q09 2Q09 3Q09 4Q09 1Q10 (1) Average Loan Portfolio and 12 months expenses (2) Does not consider one-off items (3) Net of credit recovery 16

17 NPL Ratios keep falling. Individuals Loan Portfolio¹ NPL Ratio - % Business Loan Portfolio¹ NPL Ratio - % NPL ratio (90 days) Industry² NPL ratio (90 days) BB Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 NPL Ratio (61-90 days) - % BV Loan Portfolio NPL Ratio - % Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 NPL Ratio (61-90 days) BB Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 NPL Ratio (90 days) Banco Votorantim (1) Loan as Reference for Interest Rate (2) Source: Banco Central do Brasil Press Releases 17

18 Newest vintage lines¹ shows the quality of BB credit granting. Delinquency +90 days Vintage Months Individual Annual Vintage Analysis (since 2004) Customer Risk: A,B,C,D and E Delinquency: 90 days Credit Assignment Effects (1) Individual Loan Operations except overdraft account, credit cards and vehicle loans. 18

19 Administrative Expenses¹ drop 3% qoq. R$ million 4,892 4,897 5,465 5,300 3,931 1,801 2,279 2,203 2,621 2,449 2,129 2,613 2,693 2,844 2,851 1Q09 2Q09 3Q09 4Q09 1Q10 = (3.0)% (3.0)% Personnel Expenses Other Administrative Expenses (1) Personnel Expenses + Other Administrative Expenses Does not include civil and labor claims, premiuns paid to customers and one-off items. 19

20 R$ billion 2.9 Fee Income Asset Management, credit cards and insurance businesses boost revenues. Asset Management¹ Asset Management Fees - R$ million R$ billion = 0.8% = 7.5% 1Q09 2Q09 3Q09 4Q09 1Q10 Card Revenues R$ billion Q09 2Q09 3Q09 4Q09 1Q10 Insurance Net Income Insurance Ratio² - % R$ million = (6.9)% = 24.2% 1Q09 2Q09 3Q09 4Q09 1Q10 (1) Including BV 1Q09 2Q09 3Q09 4Q09 1Q10 (2) Insurance Net Income / BB s Recurring Net Income 20

21 BB-Mapfre partnership: Duration of 20 years Creation of two holding companies : BB makes strategic partnerships in the insurance market and... BB Mapfre SH1 Participações S.A. individuals, houses and rural Mapfre BB SH2 Participações S.A. P&C and vehicles, excluding real estate and rural Shared governance Acquisition of the stake previously owned by Sul América in Brasilveículos Individuals¹ 3 rd 4 th P&C 8 th 2 nd Auto² 6 th 4 th Source: SUSEP Feb/2010 (1) Insurance premiums (net premiums written). (2) Retained premiums - does not consider DPVAT (Compusory insurance for personal injuries caused by motor vehciles for road). 21

22 ... in credit cards. Strategic partnership: creation of a holding company for joint business management Bank that will manage Elo, a new Brazilian brand, and portfolios of private label products Consolidation of stakes in companies that provide card services, in a block of management and services - Promoter to offer, jointly, products and services Reinforce the partnership in Cielo Synergies in the operation focused on the card s business 22

23 Basel Index in line with the strategy of business growth. Basel Index - % Tier II - % Tier I - % Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 23

24 Market ratios comparison between BB and its peers.¹ Appreciation of 76.9% in 12 months (87.8% adjusted for dividends and interest on own capital). 4.7 million of ADRs issued. Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 Price / Book Value BBAS Market peers average Price / Earnings BBAS Market peers average ¹ Source: Economática - simple average of the ratios of the top 2 Brazilian banks by total assets, excluding BB. 24

25 1Q10 performance confirms most estimates Items Performance 2010 Guidance Recurring Return on Equity 23.1% 21%- 24% Net Interest Margin 6.5% 6.5% - 7.0% Total Deposits 8.3% 12% - 16% Domestic Loan Portfolio 16.8% 18% - 23% Individuals 32.8% 27% - 32% Businesses 15.6% 16% - 21% Agribusiness 0.9% 4% - 9% Allowance for Loan Losses 4.5% 4.4% - 4.8% Fee Income 9.2% 7% - 10% Administrative Expenses 10.8% 10% - 12% Tax Rate 33.6% 31% - 34% 25

26 2010 Guidance Assumptions (Part 1) Assumptions affected by the Management: Improve the profitability of the customers base as a way to boost revenues; Alignment of the cost structure to the growth of the business volume; Contractual adjustments and collective bargaining agreement; Growth of sales force appropriate to the strategy of improving the profitability of the customers base; Current business model, not considering further acquisitions and/or strategic partnerships, which may occur for the exploration of specific segments; Account of actuarial profit and losses of Plano de Benefícios I from Previ, in accordance with paragraph 55 of CVM Regulation 371/

27 Guidance 2010 Assumptions (Part 2) Assumptions that get out of the Management control : Gradual resumption of the global and Brazilian economic growth in 2010; Increased resistance, but not immunity, of the Brazilian economy to external shocks; Additional improvement of the conditions of domestic loan granting; Political environment without institutional rupture; Maintenance of the current architecture of the domestic macroeconomic policy: floating exchange rate, inflation targeting (nominal anchor) and fiscal discipline, implying gradual and consistent reduction of the relation between the Public Sector Net Debt (PSND) and the Gross Domestic Product (GDP); Advance of the regulatory framework / microeconomic agenda, with incentives to public and private investments; Gradual increase in the growth potential of the Brazilian economy (potential GDP); Maintenance of the investment grade status for Brazil; 2009/2010 crop plan; Regulatory stability, including tax rates on the Bank s activities and labor and social security laws; Interest rates, inflation and GDP evolution in line with market consensus. 27

28 Investor Relations Unit SBS - Quadra 1 - Bloco C - Ed. Sede III 5th floor Brasília (DF) Phone: 55 (61) Fax: 55 (61) bb.com.br ri@bb.com.br For further information access bb.com.br/ir 28

29 Additional slides 29

30 Macroeconomic data reflect the economic recovery Price Index IPCA¹ - % Interest Rate Selic² - % Mar/10 (1) 12 months Source: IBGE Mar/10 (2) End of Period Source: Banco Central do Brasil Total Payroll Index³ Unemployment Index 4 - % Mar/10 (3) Base 100 May/2002 Source: IBGE Mar/10 (4) 12 months average Source: IBGE 30

31 ... backed by the banking industry credit expansion, highlighting individual operations. Banking Industry Loan Portfolio - R$ trillion Banking Industry Loan Operations¹ - R$ trillion Mar/ Mar/10 Loan/GDP - % Public Private Individuals Businesses Consumer Loans² - R$ billion Credit Risk Mar/10 Vehicles Payroll Mortgage (1) Loan as Reference for Interest Rate (2) Free Resources Source: Central Bank Mar/10 Allowance / Loan Portfolio - % Past Due Loan +90 days / Loan Portfolio - % 31