1q12 results presentation
TRANSCRIPT
Results Presentation
1st Quarter 2012
Disclaimer
This presentation may contain references and statements representing future expectations, plans of growth and future strategies of BI&P. These references and statements are based on the Bank’s assumptions and analysis and reflect the management’s beliefs, according to their experience, to the economic environment and to predictable market conditions.
As there may be various factors out of the Bank’s control, there may be significant differences between the real results and the expectations and declarations herewith eventually anticipated. Those risks and uncertainties include, but are not limited to our ability to perceive the dimension of the Brazilian and global economic aspect, banking development, financial market conditions, competitive, government and technological aspects that may influence both the operations of BI&P as the market and its products.
Therefore, we recommend the reading of the documents and financial statements available at the CVM website (www.cvm.gov.br) and at our Investor Relations page in the internet (www.bip.b.br/ir) and the making of your own appraisal.
1
• Expanded Credit Portfolio grows 8.9% during 1Q12 and 38.4% in 12 months, reaching R$2.8 billion. Corporate segment already responds for 35% of Credit Portfolio.
• Continuous improvement in credit quality: Loans rated from AA to B up from 69.9% in 4Q11 to 75.3% in 1Q12 (vs. 62.3% in 1Q11).
• Agro Bonds Portfolio (CPR, CDA/WA e CDCA) reaches R$230 million, up 77.6% in the quarter, and contributes to a more efficient funding mix through the issuance of Agribusiness Letters of Credit (LCAs).
• Funding follows the credit portfolio growth adding up to R$2.7 billion. The higher volume of funds obtained through the issuance of LCAs and a marginal decline in cost of our time deposits (CDB) contributed to a reduction in funding costs in Real of 0.9% of CDI during the quarter.
• Income from Services (Fees) grew by 90.1% compared to same quarter last year totaling R$6.6 million in the quarter, reflecting the trend to add up higher value added products to our client offering.
• Net Profit in the quarter was R$5.0 million. This result is yet below the potential of the bank but it is aligned to the Management’s forecast taking into consideration our leverage level, the seasonality of the first quarter and the increased allowance for loan losses expenses of R$14.4 million in the period, still derived from loans originated before 2011. The Efficiency Ratio and NIM followed the positive trend of the previous quarters.
• Our Basel Ratio at 18.1% (Tier 1) is still one of the highest in the industry, allowing a high portfolio growth in 2012.
• On March 1st, our shares started trading at Level 2 Corporate Governance at BM&FBOVESPA.
Highlights
2
1,994 2,109 2,248
2,534 2,759
1Q11 2Q11 3Q11 4Q11 1Q12
Loans & Discounted Receivables in Reais Trade Finance
Garantuees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA and CDCA)
Private Credit Bonds (PNs and Debentures)
Expanded Credit Portfolio Growth with a broader product range
R$
mill
ion
3
Expanded Credit Portfolio Evolution Increasing volume of new operations
4Q11
2,534
Credit exits
New operations
Credits received and not renewed
1Q12
(85) (55)
(281)
646 2,759
Write Offs
298 414
498 656 646
1Q11 2Q11 3Q11 4Q11 1Q12
New Operations
R$
mill
ion
R$
mili
ion
4
With Multiproduct Offering 50+ Financial Products Portfolio
• New products launched in the
quarter:
– Offshore Loan
– Real State Letter of Credit (LCI)
– Cash Flow Swap
– Commodities Options
• Revenues from Services (Fees), up
90% compared to 1Q11, to R$6.6
million in the quarter.
• Fee income from products launched
in the last year represented 25% of
revenues from services rendered in
1Q12, and 5% in 4Q11.
5
Expanded Credit Portfolio Breakdown by Product Group
Loans & Discounts
in Real 56%
Trade Finance
16%
BNDES Onlendings
9%
Receivables Aquired
from Customers
3%
Other 1%
Guarantees Issued
6%
Agricultural Bonds
8%
Private Credit Bonds
1%
• Loans & Discounted Receivables in Real ended the
quarter at R$1.5 billion.
• Trade Finance portfolio totaled R$442.8 million
(US$243.0 million), slightly contracted in the
quarter due to changes in the foreign exchange
rate.
• BNDES Onlendings amounted to R$231.1 million,
up 11.6% in 1Q12, mainly in Corporate segment.
• Guarantees and Letters of Credit issued totaled
R$163.8 million, increasing 17.2% in 1Q12.
• Agricultural Bonds portfolio (Agro Product
Certificate - CPR, Inventory Financing - CDA/WA,
and Certificate of Agro Credit Rights - CDCA),
started in 1Q11, increasing by 77.6% in the
quarter, amounting to R$229.7 million.
• Private Credit Bonds (Promissory Notes and
Debentures) totaled R$25.5 million, up 145%
compared to the previous quarter.
6
• Agricultural bonds activity started in 1Q11 through
the acquisition of the portfolio of the subsidiary
Serglobal.
• Due to their negotiability, Agro Product Certificate
(CPR) and Inventory Financing (CDA/WA) are
classified as Marketable Securities, in available-for-
sale category; and Certificate of Agro Credit Rights
(CDCA) are recorded in Loans & Discounted
Receivables in the credit portfolio.
28 37 52
129
230
1Q11 2Q11 3Q11 4Q11 1Q12
Agricultural Bonds
CPR Warrant (CDA/WA) CDCA
Agricultural Bonds Portfolio Specializing in Agribusiness
That activity is directly related to the performance of Brazilian agribusiness, with high
growth prospects and contribution to the expansion and profitability of our business,
including the reduction in funding cost through the Agribusiness Letters of Credit (LCA).
R$
mill
ion
7
1,554 1,604 1,593 1,572 1,501
1Q11 2Q11 3Q11 4Q11 1Q12
Middle Market
Credit Portfolio Strategy for equilibrium between Corporate and Middle Market segment maintained
• Middle Market segment accounts for 63% of
Credit Portfolio (69% in 4Q11), down 4.5% in the
quarter and 3.4% in 12 months.
• Corporate clients accounts for 35% of Credit
Portfolio (28% in 4Q11), increasing by 29.5% in
1Q12 and 210.9% in 12 months.
• Average Exposure by Client:
– Middle Market = R$2.9 million
– Corporate = R$5.6 million
The previously disclosed strategy of maintaining
the Corporate / Middle Market credit portfolio mix
at 45% / 55% until the end of 2012 maintained. 267 322 436 641
831
1Q11 2Q11 3Q11 4Q11 1Q12
Corporate
companies with annual revenues between R$40 million and R$400 million
companies with annual revenues between R$400 million and R$2 billion
Note: In addition to the Agro Bonds, the Private Credit Bonds, the Guarantees Issued and the above operations in Middle Market and Corporate portfolios, the Credit Portfolio also includes Other Credits (CDC Vehicles, Acquired Loans and Financing, and Non-Operating Asset Sales Financing), which totaled R$54.2 million in 1Q12.
R$
mill
ion
R
$ m
illio
n
8
16%
9%
13%
13% 5% 4%
4%
4%
3%
3%
3%
3%
3%
2%
2% 2%
1% 1% 1%
7% Agribusiness
Agribusiness - Agricultural Bonds
Civil Construction
Food & Beverage
Automotive
Pulp & Paper
Textile, Apparel and Leather
Transportation & Logistics
Chemical & Pharmaceutical
Metal Industry
Power Generation & Distribution
Financial Institutions
Education
Oil & Biofuel
Financial Services
Advertising and Publishing
Retail & Wholesale
Individuals
Non-Financial Holdings
Other Industries
Credit Portfolio + Agricultural Bonds Significant presence of Agribusiness and Food related activities
9
10 largest 16%
11 - 60 largest
33% 61 - 160 largest
26%
Other 25%
Client Concentration
Credit Portfolio Exposure by Client and Term of Transations
Top 60 borrowers remain at 49% of Credit Portfolio (52% in 1Q11).
74% of Credit Portfolio to mature up to 360 days.
Up 90 days 40%
91 to 180 days 18%
181 to 360 days 16%
+360 days 26%
Maturity
10
2%
2%
4%
35%
40%
39%
25%
28%
32%
23%
20%
17%
15%
10%
8%
1Q11
4Q11
1Q12
Rating
AA A B C D - H
90%
• 92% of Credit Portfolio are classified between AA and C, out of which 75% between AA e B.
• 97% of the operations disbursed in 1Q12 were classified between AA and B.
• At the end of 1Q12, credits rated between D and H included: – R$119.5 million in normal payment course = 5.0% of credit portfolio, and – R$75.1 million overdue more than 60 days = 3.2% of credit portfolio.
• Allowance for Loan Losses covers 156% of credits overdue more than 90 days.
• R$55 million of fully provisioned H rated loans were written off during the quarter.
6.1% 6.8%
6.3%
5.0%
3.2%
4.6%
6.3%
4.1% 4.7%
2.7%
1Q11 2Q11 3Q11 4Q11 1Q12
NPL / Credit Portfolio
NPL 60 days NPL 90 days
85%
92%
Credit Portfolio Quality Higher quality of new operations
11
Time Deposits
(CDB) 30%
Insured Time
Deposits (DPGE)
29% Agro &
Financial Notes
(LCA/LF) 11%
Demand Deposits
2%
Interbank Deposits
4%
Foreign Borrowings
15%
Onlendings 9%
• Funding volume increased 8% in the quarter, to
R$2.7 billion, highlighting time deposits (CDBs).
• Funding from Agribusiness Letters of Credit (LCA)
increased by 36% in 1Q12 due to the growth in
agricultural bonds portfolio (Agro Product
Certificate - CPRs).
• Reduction of 0,9% of CDI (benchmark rate) in local
funding cost during the quarter, for higher volume
of LCAs issued and marginal drop in time deposits
(CDB) cost derived from depositor base
diversification with improved risk perception.
• 90% of foreign currency funding is related to Trade
Finance portfolio.
Funding Cost reduction through diversified sources
2,247 2,230 2,420 2,533
2,736
1Q11 2Q11 3Q11 4Q11 1Q12
in Reais in Foreign Currency
R$
mill
ion
12
Performance NIM and Efficiency Ratio
• NIM remained unchanged since credit portfolio
growth occurred mainly at the end of the
quarter, with increased Corporate segment
share in the portfolio.
• Improvement of Efficiency Ratio, given that the
standardized ratio dropped by 3.0 pp. Despite
the positive trend, the ratio still remains high by
(i) the low leverage and (ii) fee income still
under the expected level for next quarters.
78.6% 78.6% 71.2%
77.6%
68.1%
73.3% 76.1% 71.0% 70.9% 68.0%
1Q11 2Q11 3Q11 4Q11 1Q12
Efficiency Ratio
Efficiency Ratio Standardized Efficiency Ratio **
4.6% 3.7%
4.6% 4.8% 4.9%
5.9% 5.2%
6.3% 6.6% 6.6%
1Q11 2Q11 3Q11 4Q11 1Q12
NIM
NIM NIM(a) *
No significant headcount additions are
forecasted, thus business growth tends to
dilute administrative expenses.
* NIM(a) adjusts remunerated average assets by repos with equivalent volumes, tenors and rates both in assets and liabilities. ** Standardized Efficiency Ratio includes management adjustments in order to (i) eliminate non-recurring revenues and expenses; (ii) standardize personnel expenses, contributions and profit-sharing pro rata temporis; and (iii) exclude sales revenues and costs of agricultural commodities from the activity of the acquired subsidiary of Sertrading to determine the efficiency ratio of the financial activity. 13
3.6 5.2
7.3
3.5
1Q11 2Q11 3Q11 4Q11 1Q12
Return on Average Equity (ROAE) %
5.1 7.3
10.3
5.0
1Q11 2Q11 3Q11 4Q11 1Q12
Net Profit
-31.7
0.5 0.7
1.0
0.5
1Q11 2Q11 3Q11 4Q11 4Q11
Retorn on Average Assets (ROAA) %
Profitability
• Net Profit does not yet evidence the credit portfolio
growth and it was particularly affected by the
increase in expenses with allowance for loan losses
for there was no relevant credit recoveries over the
quarter.
• 1Q11 result was mainly affected by the increase of
R$101.6 million in allowance for loan losses in that
quarter, in order to protect Bank’s future profitability
from expected default.
R$
mill
ion
14
563.7 566.5 577.5 577.1 590.5
1Q11 2Q11 3Q11 4Q11 1Q12
Shareholders’ Equity
23.7% 21.6% 21.1%
18.2% 18.1%
1Q11 2Q11 3Q11 4Q11 1Q12
Basel Index (Tier I)
3.5x 3.7x 3.9x 4.4x 4.6x
1Q11 2Q11 3Q11 4Q11 1Q12
Leverage Expanded Credit Portfolio /
Shareholders’ Equity
Capital Structure
• Capital Adequacy Index (Basel II) and low
leverage allow healthy portfolio growth.
• Disciplined strategy and business goals
monitoring for efficient and profitable growth.
R$
mill
ion
15
Ratings
Agency Rating Last Report
Standard & Poor’s Global: BB/ Estável/ B
National: brA+/ Stable/ brA-1 December 2011
Moody’s Global: Ba3/ Stable/ Not Prime
National: A2.br/ Stable/ BR-2 November 2011
FitchRatings National: BBB/ Stable/ F3 December 2011
RiskBank Índice: 10,08
Low risk to short term April 2012
16
Class Number of Shares
Common Preferred Total
Capital Social 36,945,649 26,160,044 63,105,693
Controlling Group 20,743,333 630,626 21,373,959
Management 277,307 60,125 337,432
Treasury - 734,515 734,515
Free Float 15,925,009 24,734,778 40,659,787
Free Float 43.1% 94.6% 64.4%
Shares and Capital Distribution
Position as of March 31, 2012.
1 Issued Shares (-) Treasury Shares
Controlling Group 34%
Management 1%
Treasury 1%
Institutional Investors
14%
Foreign Investors
30%
Individuals 20%
Shareholders’ Distribution
17
2008 2009 2010 2011
Outstanding Shares 1 43,000,001 42,048,101 40,466,187 62,358,840
IOE gross amount (R$ million) 25.5 27.0 25.1 27.8
IOE gross amount per share (R$ million) 0.59 0.64 0.61 0.53
Price to Book Value 0.38 0.81 0.75 0.73
Market Value (R$ million) 171.6 348.6 321.7 420.9
Share Performance
60
70
80
90
100
110
IBOVESPA IDVL4 IDVL4 adjusted for earnings
18
IDVL4
Share Price 12.29.2011 R$ 6.75
Share Price 03.30.2012 R$ 8.60
Change in the period + 27.4%
Maximum Share Price R$ 8.90
Minimum Share Price R$ 6.41
Market Value in 03.30.2012 R$ 536,286,024
Price to Book Value 0.9
IDVL4
Average Daily Volume
- in March 2012 R$ 156,782
- in 1Q12 R$ 193,840
- in 12 months R$ 216,676