2q14 earnings release - bb · 2q14 earnings release . banco do brasil s.a. – second quarter 2014...

1

1

2Q14 Earnings

Release

2 Banco do Brasil S.A. – Second Quarter 2014 Earnings 2

Disclaimer

This presentation may include references and statements, planned synergies,

estimates, projections of results, and future strategy for Banco do Brasil, its

Associated and Affiliated Companies, and Subsidiaries. Although these references

and statements reflect the management’s belief, they also involve estimates and

unforeseen risks. Consequently, results may differ from those anticipated and

discussed here. These expectations are highly dependent on market conditions, on

Brazil’s economic and banking system performances, as well as on international

market conditions. Banco do Brasil is not responsible for updating any estimate in

this presentation.


Highlights

(1) It includes private securities and guarantees.

Loan Portfolio – Broad Concept¹ grew 12.5% in twelve months

NPL 90 Ratio (1.99%) remains below the Banking Industry (3.00%)

Adjusted Net Income reached R$ 3.0 billion in 2Q14

NII grew by 7.2% compared to the First Half of 2013


Earnings Highlights

(1) Historical data revised, due to adjustments in other credits without characteristics of loans operations.

(2) It includes Other Operating Revenues net of Other Operating Expenses, Equity Earnings of Subsidiaries and Affiliates and Insurance, Pension Plans and Premium Bonds.

R$ million

On 2Q13 On 1Q14 On 1H13

Operating Revenues 17.245 17.861 19.065 33.450 36.926 10,6 6,7 10,4

Net Interest Income¹ 11.611 11.830 12.353 22.561 24.183 6,4 4,4 7,2

Fee Income 5.917 5.741 6.169 11.305 11.909 4,2 7,5 5,3

Previ 187 446 446 374 891 138,3 0,0 138,3

Other Items² (470) (156) 98 (790) (58) - - (92,7)

Operating Expenses (13.169) (13.731) (14.105) (25.133) (27.835) 7,1 2,7 10,8

Administrative Expenses (7.311) (7.729) (7.819) (14.361) (15.548) 6,9 1,2 8,3

Allowance for Loan Losses (4.216) (4.187) (4.570) (7.490) (8.757) 8,4 9,2 16,9

Tax Expenses (1.203) (1.248) (1.314) (2.341) (2.563) 9,3 5,3 9,5

Legal Risk (440) (567) (401) (941) (968) (8,8) (29,2) 2,9

Non Operating Result 77 98 36 86 134 (53,1) (63,2) 55,3

Income Taxes, Statutory Profit Sharing and

Minority Shareholders(1.519) (1.791) (1.995) (3.083) (3.786) 31,3 11,3 22,8

Adjusted Net Income 2.634 2.436 3.002 5.319 5.438 14,0 23,2 2,2

Adjusted ROE (%) 16,4 14,0 17,1 16,3 15,3 - - -

Net Income 7.472 2.678 2.829 10.029 5.506 (62,1) 5,6 (45,1)

ROE (%) 51,8 15,5 16,1 31,9 15,5 - - -

Chg. %2Q13 1Q14 2Q14 1H13 1H14


Sources and Uses

(1) It includes Foreign Lending/Onlending, securities abroad, Subordinated Debt issued Abroad and Hybrid Capital Instruments issued abroad.

(2) Since 4Q13, segregated from the subordinated debt instruments, according to Bacen Circular 3.624/2013.

(3) It includes Financial Letters and Debentures.

Jun/13 Mar/14 Jun/14 Chg. %

R$ billion Balance Share % Balance Share % Balance Share % On Jun/13 On Mar/14

Sources 660.6 100.0 755.4 100.0 774.4 100.0 17.2 2.5

Commercial Funding 541.9 82.0 608.2 80.5 618.9 79.9 14.2 1.8

Total Deposits 478.3 72.4 482.2 63.8 479.9 62.0 0.3 (0.5)

Agrib. LC + Real Estate LC 48.6 7.4 97.2 12.9 108.1 14.0 122.3 11.3

Repos w/ Corporate Bonds 15.0 2.3 28.8 3.8 30.9 4.0 106.5 7.3

Domestic Onlending 70.0 10.6 91.3 12.1 93.0 12.0 32.9 1.8

Foreign Borrowing¹ 63.9 9.7 65.5 8.7 62.9 8.1 (1.5) (4.0)

Debt Instruments eligible for capital² - 0.0 8.2 1.1 16.3 2.1 - 98.4

Subordinated Debt 39.9 6.0 44.2 5.8 43.5 5.6 9.0 (1.5)

Others Commercial Papers³ 9.6 1.5 9.7 1.3 9.6 1.2 (0.2) (1.4)

Domestic Hybrid Debt Capital Instr. 8.3 1.3 8.2 1.1 8.3 1.1 0.0 1.3

Financial and Development Funds 5.8 0.9 7.7 1.0 8.4 1.1 44.0 8.7

Compulsory Deposits (78.9) (11.9) (87.8) (11.6) (86.6) (11.2) 9.8 (1.4)

Uses 660.6 100.0 755.4 100.0 774.4 100.0 17.2 2.5

Net Loan Portfolio (a) = (b) + (c) + (d) 595.8 90.2 652.2 86.3 670.6 86.6 12.5 2.8

Loan Portfolio (b) 575.5 87.1 631.3 83.6 649.6 83.9 12.9 2.9

Private Securities (c) 41.9 6.4 44.9 5.9 45.8 5.9 9.2 1.9

Allowance for Loan Losses (d) (21.6) (3.3) (24.1) (3.2) (24.8) (3.2) 14.6 3.0

Available Funds 64.8 9.8 103.2 13.7 103.9 13.4 60.4 0.7

Adjusted Net Loan Portfolio (a) - (e) 494.1 74.8 525.8 69.6 541.2 69.9 9.5 2.9

Onlending in the Country (e) 101.8 15.4 126.4 16.7 129.4 16.7 27.1 2.4

Ratio - %

Net Loan Portfolio / Total Deposits 124.6 135.2 139.7

Net Loan Portfolio / Commercial Funding 109.9 107.2 108.3

Adj. Net Loan Portfolio / Comm. Funding 91.2 86.5 87.4

Net Loan Portfolio / Sources 90.2 86.3 86.6

6

Spread by Segment (%)¹ Global Spread (%)¹

6

Net Interest Income and Net Interest Margin

(1) Annualized data.

2Q14

4.8

5.4

7.5

13.8

1Q14

4.7

5.2

7.2

13.2

4Q13

4.6

4.8

7.0

13.2

3Q13

4.6

4.8

7.1

13.2

2Q13

4.6

5.1

7.4

13.6

Agribusiness NIM Companies NIM Loan Operations NIM Individuals NIM

On 2Q13 On 1Q14

Net Interest Income¹ 11,611 11,830 12,353 22,561 24,183 6.4 4.4

Loan Operations Income 16,969 19,209 20,227 33,420 39,436 19.2 5.3

Funding Expenses (7,497) (9,974) (10,526) (14,600) (20,501) 40.4 5.5

Institutional Funding Expenses² (1,568) (1,604) (1,604) (2,844) (3,209) 2.3 0.0

Treasury Income³ 2,364 3,238 3,181 4,437 6,419 34.6 (1.8)

Recovery of Write-offs Loans⁴ 1,181 809 871 1,875 1,680 (26.2) 7.7

Other 163 152 204 273 357 25.6 34.2

2T13R$ million

Chg. %1H13 1H142T141T14

2Q14

2.6

4.1

1Q14

2.6

4.1

4Q13

2.8

4.3

3Q13

2.9

4.4

2Q13

2.9

4.5

Risk Adjusted NIM NIM

(1) Revised data from 1Q13 due to adjustment in other credits without operating characteristic credit. (2) Included senior debt, subordinated debt and hybrid capital instrument and

abroad (IHCD). (3) Included interest income, profitable compulsory deposits income, tax hedge, derivatives and other financial instruments that compensate the exchange variation in

result. (4) Reallocation held in 1T14, referring to the restoration and recovery of write-off in this month.

Banco do Brasil S.A. – Second Quarter 2014 Earnings


Loan Portfolio – Broad Concept¹

R$ billion

Jun/14

718.8

335.3

173.0

157.2

53.2

Mar/14

699.3

323.5

169.7

150.0

56.2

Dec/13

692.9

322.3

167.9

144.8

57.8

Sep/13

652.3

303.4

163.8

130.1

55.0

Jun/13

638.6

296.3

161.3

127.1

53.9

Companies Individuals Agribusiness Offshore

46.7%

24.1%

21.9%

7.4%

46.4%

25.3%

19.9%

8.4%

12.5 18.0 19.3

22.5 25.7

12 months growth

12.5% in 12 months

(1) It includes private securities and guarantees provided.

8

On Jun/13 On Mar/14

Payroll 50,5 40,1 53,3 38,9 55,6 39,1 10,1 4,3

Salary Loans 18,3 14,6 18,1 13,2 18,1 12,7 (1,2) 0,1

Mortgage 13,8 10,9 20,9 15,2 23,5 16,5 71,1 12,7

Auto Loans 12,1 9,6 11,4 8,3 10,9 7,7 (9,4) (3,6)

Credit Cards 16,2 12,9 19,1 13,9 19,3 13,6 19,0 1,0

Consumer Finance 6,2 4,9 5,7 4,2 6,3 4,4 1,4 9,9

Overdraft 2,7 2,2 2,8 2,0 2,8 2,0 1,9 0,1

Microcredit 1,0 0,8 0,8 0,6 1,0 0,7 2,0 18,1

Other 5,0 4,0 4,9 3,6 4,8 3,4 (4,2) (2,0)

Individuals Loan Portfolio 125,8 100,0 137,0 100,0 142,3 100,0 13,2 3,9

Chg. %Jun/13 Mar/14 Jun/14Share % Share % Share %

Banco do Brasil S.A. – Second Quarter 2014 Earnings 8

Organic Individuals Loan Portfolio¹ ²

R$ billion

(1) Classified Concept.

(2) Does not include BV operations and acquired portfolios.

75.3% 76.0%

9 Banco do Brasil S.A. – Second Quarter 2014 Earnings

Growth in lower risk lines

Mortgages (R$ billion) Auto Loans – Organic Portfolio (R$ billion)

Payroll (R$ billion)

17.3

13.8

3.6

27.5

20.9

6.6

Dec/13

24.4

18.5

5.9

Sep/13

20.2

15.8

4.5

Jun/13 Jun/14

32.0

23.5

8.4

Mar/14

Mortgages with Individuals Mortgages with Companies

26.6% Market Share

in 12 months

+84.5%

+71.1%

+136.5%

19.4%

19.4%

61.2%

Jun/14

10.9

17.8% 17.6%

64.6%

Mar/14

11.4

18.1% 17.9%

64.0%

Jun/13

12.1

Up to 5 years From 5 to 10 years Account Time - Over 10 years

63,462,262,061,661,5

Dec/13 Sep/13

+3,1%

Jun/14 Mar/14 Jun/13


Loans to Companies – Broad Concept¹

R$ billion


On Jun/13 On Mar/14

Working Capital 162.4 54.8 174.9 54.1 181.2 54.0 11.6 3.6

Investiments 49.9 16.8 58.4 18.1 60.2 17.9 20.6 3.0

Corporate Bonds & Notes 38.5 13.0 40.7 12.6 41.5 12.4 7.8 2.1

Guarantees 18.3 6.2 19.1 5.9 19.5 5.8 6.4 2.1

Trade Finance 16.2 5.5 15.1 4.7 16.1 4.8 (0.9) 6.5

Mortgage 3.6 1.2 6.6 2.1 8.4 2.5 136.5 27.1

Other 7.4 2.5 8.7 2.7 8.4 2.5 13.8 (2.9)

Companies Loan Portfolio 296.3 100.0 323.5 100.0 335.3 100.0 13.2 3.7

Chg. %Jun/13 Share % Mar/14 Share % Jun/14 Share %

11

Corporate Portfolio by Size SME – Operations Guarantee Fund (FGO) and FAMPE – a SME Guarantee Fund


Loans to Companies – Broad Concept¹ R$ billion

(1) It includes private securities and guarantees provided. (2) Companies with annual revenues up to R$ 25 million.

+16.6%

Jun/14

23.3 3.6

19.7

Mar/14

22.1 3.5

18.6

Jun/13

20.0

3.7

16.3

+13.2%

Jun/14

335.3

234.2

101.1

Mar/14

323.5

223.3

100.2

Jun/13

296.3

202.3

94.0

Medium and Large Companies Micro and Small Enterprises²

SME – Time of Relationship (% of credit concession)

Jun/14

101.1

38.9%

30.8%

24.2% 6.2%

Mar/14

100.2

38.5%

29.5%

25.1% 7.0%

Jun/13

94.0

36.6%

29.8%

26.0% 7.5%

More than 10 years

From 5 to 10 years

From 2 to 5 years

Up to 2 years

Fampe FGO

12

Agribusiness Loan Portfolio¹ (R$ billion)

Jun/14

157.2

109.7

47.5

Mar/14

150.0

100.4

49.6

Dec/13

144.8

96.3

48.5

Sep/13

130.1

87.6

42.5

Jun/13

127.1

86.5

40.6

Individuals Companies


Agribusiness

(1) It includes Rural Product Bills and guarantees provided.

Mitigators Use (Working Capital for Input Purchase)

R$ billion

47.7% 52.3% Not Insured

Insured

Vintage 13/14 (Jun/14)

Vintage 12/13 (Jun/13)

36.3%

63.7%

Not Insured

Insured

13

Coverage Ratio +90 days (%)

NPL Ratio +90 days (%)

13

Delinquency and Coverage Ratios

Jun/14

1.99

3.00

Jun/13

1.87

3.40

Jun/12

2.19

3.80

Jun/11

2.04

3.38

Jun/10

2.72

3.66

Banco do Brasil (Consolidated) Banking Industry

Jun/14

192.1

159.3

Jun/13

201.6

152.3

Jun/12

202.1

149.8

Jun/11

226.5

165.4

Jun/10

203.9

169.1

Banco do Brasil (Consolidated) Banking Industry


14

Asset Quality

Write-off Ratio³ (%) Recovery Ratio4 (%)

Average Risk¹ (%)

Jun/14

24.84

22.53

Mar/14

23.81

25.00

Dec/13

22.83

25.34

Sep/13

20.85

27.62

Jun/13

19.50

28.77

Mar/13

20.08

31.24

Dec/12

20.19

31.80

Sep/12

22.68

32.00

Jun/14

4.96

2.31

Mar/14

5.21

2.35

Dec/13

5.36

2.33

Sep/13

5.63

2.47

Jun/13

5.67

2.47

Mar/13

5.47

2.36

Dec/12

5.53

2.49

Sep/12

5.20

2.45

(1) Required Provision / Classified Loan Portfolio. (2) It considers the data reported by the three largest Brazilian private banks. (3) Accumulated write-off in 12 months / Loan portfolio

average in 12 months. (4) Recoveries / Accumulated write-off in 12 months.

Jun/14

4.99

4.78

3.57

Jun/13

5.18

3.56

Jun/12

5.69

4.09

Jun/11

5.59

4.15

Jun/10

6.20

BI Average Risk BB Average Risk (Consolidated)


Banco do Brasil Peers Average² Banco do Brasil Peers Average²


Delinquency per Segment¹

(1) It does not include Banco Votorantim operations.

%

2.32

4.27

2.44

4.58

2.56

4.14

2.50

4.43

2.40

4.14

2.43

3.81

2.24

3.84

2.28

3.34

2.24

3.55

2.14

3.06

Jun/14

0.56

0.91

Mar/14

0.74

1.10

Dec/13

0.78

1.16

Sep/13

0.68

1.11

Jun/13

0.48 0.78

92.9 92.8 92.6 92.8 92.5

95.3 95.6 95.8 95.6 95.1

96.4 96.1 96.2 96.1 95.8

AA - C Risk NPL 90 NPL 15

Ind

ivid

ual

s C

om

pan

ies

Agr

ibu

sin

ess

16

New NPL¹ , Write Off and NPL Formation Rate

New NPL¹ , Write Off and NPL Formation Rate - Adjusted

NPL Formation

(1) Quaterly change in the balance of past-due for over 90 days operations + current quarter write-off.

(2) It considers the classified loan portfolio of the previous quarter.


2Q14

4.16 4.62

1Q14

3.70 3.80

4Q13

3.06 3.89

3Q13

3.45 4.23

2Q13

3.97 3.99

1Q13

3.06 2.98

4Q12

3.23 3.52

3Q12

2.82 3.26

2Q12

2.71 3.20

0.73 0.61

0.66 0.74 0.74

0.57

0.73 0.71 0.74

2Q14

4.16 4.62

1Q14

3.70 3.80

4Q13

3.06 3.89

3Q13

3.45 4.23

2Q13

3.52 3.54

1Q13

3.51 3.43

4Q12

3.23 3.52

3Q12

2.82 3.26

2Q12

2.71 3.20

Write Off (R$ billion) New NPL (R$ billion)

0.73 0.61

0.66 0.74

0.66 0.65 0.73 0.71 0.74

New NPL / Loan Portfolio² (%) New NPL (R$ billion) Write Off (R$ billion)

New NPL / Loan Portfolio² (%)

17

Allowance for Loan Losses (ALL) and Loan Portfolio

Allowance for Loan Losses (12 months) / Loan Portfolio

Classified Loan Portfolio – Growth by Risk Level

2.2 0.1 1.6 4.2

(5.8)

71.9

575.5

649.6

Jun/13 Jun/14 AA-C D E F G H

2.79 2.91 2.76 2.81 2.77

ALL / Loan Portfolio (%) ²

(1) Average classified loan portfolio (2) ALL accumulated in 12 months / 12 months Average Loan Portfolio (3) 3 months Average Loan Portfolio.

(4) Quarterly ALL / 3 months Average Loan Portfolio.

Allowance for Loan Losses (Quarterly) / Loan Portfolio

2Q14

4.6

642.7

1Q14

4.2

626.5

4Q13

4.2

604.7

3Q13

3.9

579.4

2Q13

4.2

555.9

Allowance for Loan Losses

Loan Portfolio³

R$ billion

2Q14

16.9 16.5

587.4 610.4

1Q14

15.6

3Q13

511.4

4Q13

563.9

2Q13

14.9 15.0

538.3

Allowance for Loan Losses

Loan Portfolio¹

+12.9% in 12

months

0.71 0.67 0.69 0.68 0.76

ALL / Loan Portfolio (%) ⁴


18

Banco Votorantim

R$ million


BV – Net Income

140 152 121

(159) (196)

2Q14 1Q14 4Q13 3Q13 2Q13

BV – Light Vehicles1: Production per Business Channel and Delinquency

(1) Comprised of CDC Veículos (Autos Consumer Credit) and vans.

1Q14

6.3

0.6

2.7

4Q13

6.2

0.6

2.8

3Q13

6.5

0.7

2.6

2Q13

6.8

0.6

2.5

1Q13

7.2

0.6

2.5

4Q12

7.7

0.6

2.3

3Q12

9.1

0.5

2.0

2Q12

9.5

0.5

1.9

6.5

0.5

-0.3

2.5

2Q14

Car dealers (R$ billion) Multi-brand car dealers (R$ billion) NPL 90 – Managerial Loan Portfolio (%)

19

Banco Votorantim – Asset Quality

Vintage of the Managerial Auto Loan Portfolio

Allowance for Loan Losses (managerial¹) – R$ million

38% 33%27% 23% 19%

52% 59% 67% 72% 77% 82%

Dec/14

16%

Jun/14

4%

Mar/14

4%

Dec/13

6%

Sep/13

8%

Jun/13

11%

from Jul/10 to Sep/11 after Sep/11 up to Jun/10

Estimate

2%

669 563 417 557 408

290199

849

156

2Q13

959 -26.7%

2Q14

523 115

1,266

3Q13

761

1Q14

714

4Q13

Retail Wholesale

(1) Includes provision for credit assignment with substantial risk retention, net of credit recovery.



Fee Income

R$ million

Chg. %

On 2Q13 On 1Q14On 1H13

Fee Income 5,917 5,741 6,169 11,305 11,909 100.0 4.2 7.5 5.3

Credit / Debit Cards 1,368 1,502 1,567 2,661 3,069 25.8 14.6 4.3 15.4

Account Fees 1,053 959 980 2,065 1,939 16.3 (7.0) 2.2 (6.1)

Asset Management Fees 950 938 969 1,816 1,907 16.0 2.1 3.4 5.0

Loan Fees 681 560 601 1,184 1,161 9.7 (11.8) 7.4 (2.0)

Collections 361 351 363 691 714 6.0 0.6 3.6 3.3

Insurance, Pension and Premium Bonds 316 290 394 613 684 5.7 24.6 35.6 11.7

Billings 222 227 229 433 456 3.8 3.0 0.5 5.4

Interbank 183 179 185 354 364 3.1 1.0 2.9 2.7

Capital Market 181 97 131 298 228 1.9 (27.3) 36.0 (23.4)

Fiduciary Services 96 104 106 184 210 1.8 10.5 1.8 14.0

Other 507 534 644 1,006 1,177 9.9 27.0 20.5 17.1

2Q13 1Q14 2Q14 1H13 1H14 Share %


Cards – Organization Chart

28,76%

22

Elo Cards Brand: Turnover and Cards Base

Cards

R$ billion


+78.7%

2Q14

6.1

1Q14

4.2

2Q13

3.4

Turnover

7.2 6.8 5.6 Cards Base – R$ million

Total Turnover Net Income

972

738

497475384

+31.7%

+29.4%

1H14 1H13 2Q14 1Q14 2Q13

+19.2%

2Q14

59.2

25.5

33.8

1Q14

54.2

21.9

32.4

2Q13

49.7

20.3

29.4

Debit Cards Credit Cards

R$ billion R$ million


Administrative Expenses

R$ million

Chg. %

On 2Q13 On 1Q14 On 1H13

Personnel Expenses (4.196) (4.476) (4.465) (8.254) (8.940) 6,4 (0,2) 8,3

Other Administrative Expenses (3.115) (3.253) (3.354) (6.107) (6.608) 7,7 3,1 8,2

Expenses with Outsourced Services (673) (662) (640) (1.305) (1.302) (4,8) (3,2) (0,2)

Telecommunications and Data Processing (593) (590) (613) (1.118) (1.203) 3,3 3,8 7,6

Expenses with Premises and Equipment (532) (577) (588) (1.063) (1.165) 10,6 2,0 9,5

Security, Guard, and Transport Services (463) (546) (539) (922) (1.085) 16,3 (1,3) 17,6

Amortization and Depreciation (223) (298) (316) (520) (614) 41,4 6,0 18,1

Marketing and Public Relations (160) (162) (210) (289) (372) 31,7 29,9 28,6

Other Administrative Expenses (472) (419) (449) (889) (868) (4,9) 7,0 (2,4)

Administrative Expenses (7.311) (7.729) (7.819) (14.361) (15.548) 6,9 1,2 8,3

2Q13 1Q14 2Q14 1H13 1H14

24 24

Cost to Income Ratio (12 months)¹

(1) Administrative Expenses / Operating Revenues. Data from the Income Statement with Reallocations.

%

Jun/14

44.1

Mar/14

44.4

Dec/13

44.4

Sep/13

43.5

Jun/13

43.7


25 25

BIS Ratio¹ ²

%

Jun/14

14.19

10.13

4.06

Mar/14

13.84

9.93

3.91

Jun/13

15.92

10.21

5.71

Tier I

Tier II

Considering the full implementation of the adjustments for Basel III, measured over June/2014³, the estimated BIS Ratio would reach 12.91% and the Tier I, 8.77%

(1) Financial Consolidated.

(2) Methodology used since Oct. 01st., 2013, according to CMN Resolution 4.192/2013.

(3) These numbers are based on information available at the time of the simulations, which involve limitations and risks hard to foresee and hence may present different results

from those reported. Banco do Brasil’s future performance is subject to external factors, including interest rates, exchange rates and its securities portfolio market value, as well as

the performance of the domestic and foreign economic and the domestic and international’s financial systems.


26 26

Guidance

(1) Adjusted ROAE for 2013 and 2014, uses estimate of adjusted shareholders equity, ex effects of actuarial assets and liabilities update, due to CVM deliberation 695.

(2) Commercial Funding includes Total Deposits, Agribusiness Letter of Credit, Real Estate Letters of Credit and Repos with Corporate Bonds.


(4) Allowance for Loan Losses expenses of the last twelve months / Average Classified loan portfolio for the same period.


Adjusted Return on Equity¹ 12 - 15 15.3 14 - 17

Net Interest Income 3 - 7 7.2 5 - 9

Commercial Funding² 14 - 18 14.2 Unchanged

Domestic Loan Portfolio³ - Broad Concept 14 - 18 13.8 Unchanged

Individuals 12 - 16 7.2 Unchanged

Companies 14 - 18 13.2 Unchanged

Agribusiness 18 - 22 23.7 Unchanged

Allowance for Loan Losses⁴ 2.7 - 3.1 2.8 Unchanged

Fee Income 9 - 12 5.3 6 - 9

Administrative Expenses 5 - 8 8.3 Unchanged

2Q14 Performance2014 Guidance Revised guidance

%


Contacts

Investor Relations Unit

Av. Paulista, 2.163 – 2nd Floor

01311-933 - São Paulo (SP)

Telephone: +55 (11) 3066 9110

bb.com.br/ir

[email protected]


Appendix

30. One-Off Items

31. Funding

32. Foreign Borrowing

33. Loans to Individuals – Broad Concept

34. Individuals Loan Portfolio

35. Individuals Loan Portfolio – Average

Rates/Tenor

36. Banco Votorantim – Auto Loans Portfolio

37. Banco Votorantim – Asset Quality

38. Loans to Companies - SME

39. Agribusiness Portfolio by Purpose

40. Agribusiness

41. Total Loan Portfolio - Risk Level

42. Loans to Individuals – Risk Level

43. Loans to Companies – Risk Level

44. Agribusiness – Risk Level

45. Renegotiated Loan Portfolio

46. Actuarial Assets (Previ) - CVM 695/12

47. Actuarial Liabilities (Cassi) - CVM 695/12

48. Amounts recognized in equity because

of the adoption of CVM 695/12

49. Distribution Network


One-Off Items

R$ million

Adjusted Net Income 2,634 2,436 3,002 5,319 5,438

(+) One-Off Items 4,838 241 (173) 4,709 68

Economic Plans 16 (343) (328) (332) (672)

Tax Efficiency 142 260 - 142 260

Additional Allowance for Loan Losses - Semi-annual revision 38 - (143) 38 (143)

Provision Legal Lawsuits - Adjust. Parameters and Policies Agreements - 385 - - 385

Provision for Agreement Committee - - - (186) -

Lawsuits Reconciliation - - - 303 -

BB Seguridade Shares Disposal (IPO) 9,820 - - 9,820 -

Expenses of BB Seguridade Shares Disposal (IPO) (172) - - (172) -

Extraordinary Provision for Lawsuits (1,267) 133 163 (1,267) 296

Tax Eff. and Stat. Profit Sharing on One-Off Items (3,739) (193) 135 (3,637) (58)

Net Income 7,472 2,678 2,829 10,029 5,506

2Q13 1Q14 2Q14 1H13 1H14


R$ billion

Funding

On Jun/13 On Mar/14

Time Deposits 257.2 33.2 238.6 27.6 235.2 26.8 (8.6) (1.4)

Judicial Deposits 94.2 12.2 104.3 12.1 107.2 12.2 13.9 2.8

Saving Deposits 129.0 16.7 144.1 16.7 146.5 16.7 13.5 1.6

Demand Deposits 72.2 9.3 72.1 8.3 69.4 7.9 (3.9) (3.7)

Interbank Deposits 19.9 2.6 27.4 3.2 28.8 3.3 44.8 5.1

Money Market Borrowing 238.0 30.7 282.6 32.7 289.1 32.9 21.5 2.3

Agribusiness Letters of Credit 48.2 6.2 89.0 10.3 99.6 11.3 106.8 11.9

Other Commercial Papers 9.6 1.2 9.7 1.1 9.6 1.1 (0.2) (1.4)

Total 774.1 100.0 863.5 100.0 878.2 100.0 13.4 1.7



Foreign Borrowing

US$ billion +21.6%

Jun/14

56.0

2.0 3.1

9.3

17.5

24.0

Mar/14

53.4

2.3

3.0

9.5

16.5

22.1

Jun/13

46.1

1.1 3.0

10.2

12.2

19.5

Repo + Other Individuals Companies Interbanking Fixed Income and Deposit Certificates

32

On Jun/13 On Mar/14

Payroll 61.5 38.1 62.2 36.7 63.4 36.6 3.1 1.9

Auto Loans 36.3 22.5 34.6 20.4 33.2 19.2 (8.4) (4.1)

Salary Loans 18.3 11.4 18.1 10.7 18.1 10.5 (1.2) 0.1

Mortgage 13.8 8.5 20.9 12.3 23.5 13.6 71.1 12.7

Credit Cards 16.3 10.1 19.3 11.3 19.5 11.3 19.2 1.2

Consumer Finance 6.2 3.8 5.7 3.4 6.3 3.6 1.7 9.9

Overdraft 2.7 1.7 2.8 1.6 2.8 1.6 1.9 0.1

Other 6.2 3.9 6.1 3.6 6.2 3.6 (0.2) 2.1

Individuals Loan Portfolio 161.3 100.0 169.7 100.0 173.0 100.0 7.2 2.0



Loans to Individuals – Broad Concept¹

R$ billion

(1) It includes guarantees provided.

80.6% 80.1%


Individuals Loan Portfolio

R$ billion

Acquired Portfolios

Market Share

(1) It includes loans portfolio acquired with co-obligation in compliance with Resolution CMN 3.533/08.

(2) Free Resources

On Jun/13On Mar/14

Auto loans 12.1 59.1 12.7 64.3 11.6 65.9 (4.0) (8.3)

Payroll loans 8.4 40.9 7.0 35.7 6.0 34.1 (28.2) (14.7)

Total 20.5 100.0 19.7 100.0 17.6 100.0 (13.9) (10.6)



BB¹ Industry Share % BB¹ Industry Share % BB¹ Industry Share %

Payroll Loans 61.5 209.4 29.4 62.2 229.6 27.1 63.4 238.0 26.6

Auto loans² 36.3 205.7 17.6 34.6 196.1 17.7 33.2 191.5 16.9

Mortgage 13.8 298.4 4.6 20.9 360.8 5.8 23.5 384.5 6.1


Individuals Loan Portfolio – Average Rates/Tenor


Banco do Brasil

Auto loans

Average rate - % p.m 1.24 1.31 1.35

Average term - months 35 33 32

Mortgage

Average contracted amount - R$ thousand 145.1 112.5 115.4

Average Rate - % p.y. 8.4 7.8 7.6


Payroll loans

Average rate - % p.m 1.84 1.77 1.76


BV - Auto Loans

Average rate - % p.m 1.81 1.99 1.97


35

Banco Votorantim – Asset Quality – Managerial Portfolio

Delinquency and Risk(%)

New NPL¹, Write-off and NPL Formation (R$ billion)

2Q14

0.86 0.96

1Q14

0.83

1.31

4Q13

0.87 0.58

3Q13

0.90 0.66

2Q13

1.34

0.90

1Q13

1.14

0.68

4Q12

1.43

0.68

Write-off New NPL¹

2Q14

11.5

88.5

1Q14

11.6

88.4

4Q13

11.1

88.9

3Q13

9.9

90.1

2Q13

10.0

90.0

1Q13

10.3

89.7

4Q12

9.9

90.1

D-H Levels AA-C Levels

6.5 6.2 5.1 5.5 5.7 6.2 6.6

NPL + 90 days

(1) Quarterly change in the balance of past-due for over 90 days operations + current quarter write-off.

(2) Considers the Classified loan portfolio of the previous quarter.

1.65 2.19

0.94 1.04 1.36 1.00 0.95


New NPL / Loan Portfolio ² (%)

36

Average Tenor and Average Down-payment (origination)

Auto Loans Origination (R$ billion)

Banco Votorantim – Auto Loan Portfolio

4444454544

2Q14

39%

1Q14

39%

4Q13

38%

3Q13

37%

2Q13

37%

Average tenor (months) Average down payment

2Q14

3.2

0.6

2.6

1Q14

3.4

0.7

2.7

2Q13

3.3

0.9

2.4

Other Vehicles Used Light Vehicles



Loans to Companies - SME

R$ billion

Loans per Segment

Products

On Jun/13 On Mar/14

Commerce 38.9 41.4 41.1 41.0 42.3 41.8 8.7 3.0

Manufacturing Industries 30.6 32.5 30.0 29.9 29.5 29.1 (3.6) (1.7)

Services Segment 24.5 26.1 29.1 29.1 29.4 29.0 19.8 0.7

Total 94.0 100.0 100.2 100.0 101.1 100.0 7.6 0.9

Jun/13Chg. %

Share % Mar/14 Share % Jun/14 Share %

On Jun/13 On Mar/14

Working Capital 61.1 65.0 64.5 64.4 65.5 64.7 7.1 1.5

Investment 30.1 32.0 33.6 33.5 33.2 32.8 10.4 (1.2)

Foreign Trade 2.8 3.0 2.1 2.1 2.5 2.4 (12.0) 16.8

Total 94.0 100.0 100.2 100.0 101.1 100.0 7.6 0.9



Agribusiness Portfolio by Purpose

R$ billion

On Jun/13 On Mar/14

Investment 50.1 39.4 61.2 40.8 65.3 41.6 30.5 6.7

Work. Cap. for Input Purchase 41.7 32.8 45.0 30.0 50.6 32.2 21.5 12.5

Agroindustry 28.7 22.6 35.2 23.5 31.6 20.1 10.1 (10.1)

Crop Trading 4.1 3.3 5.7 3.8 5.8 3.7 41.1 2.7

Other 1.7 1.3 2.1 1.4 2.2 1.4 29.4 3.2

Classified Loan Portfolio 126.3 99.4 149.3 99.5 155.6 99.0 23.2 4.3

Rural Product Bills and Guarantees 0.8 0.6 0.7 0.5 1.6 1.0 105.8 128.3

Loan Portfolio - Broad Concept 127.1 100.0 150.0 100.0 157.2 100.0 23.7 4.8



Agribusiness

R$ billion Loan Portfolio per Customer Size¹

(1) Loan portfolio – broad concept.

Segment Jun/13 Share % Mar/14 Share % Jun/14 Share %

Medium and Large Sized 55.5 43.7 66.8 44.6 74.1 47.2

Businesses 34.3 27.0 42.9 28.6 40.0 25.4

Small 24.8 19.5 29.4 19.6 31.7 20.1

Cooperatives 6.2 4.9 6.7 4.5 6.6 4.2

Rural Prod. Bills and guarantees 0.8 0.6 0.7 0.5 1.6 1.0

Total 127.1 100.0 150.0 100.0 157.2 100.0


Total Loan Portfolio¹ - Risk Level

(1) Classified loan portfolio does not consider Banco Votorantim operations.

R$ million

Balance Provision Share% Balance Provision Share% Balance Provision Share% BI

AA 188,131 - 32.7 351,142 - 55.6 366,044 - 56.4 35.5

A 145,361 727 25.3 103,199 516 16.3 106,034 530 16.3 35.0

B 181,553 1,816 31.5 118,954 1,190 18.8 118,893 1,189 18.3 15.6

C 29,531 886 5.1 25,928 778 4.1 25,528 766 3.9 7.1

D 9,889 989 1.7 4,391 439 0.7 4,073 407 0.6 2.0

E 4,345 1,303 0.8 8,021 2,406 1.3 8,498 2,549 1.3 1.1

F 2,086 1,043 0.4 3,351 1,675 0.5 3,643 1,821 0.6 0.7

G 3,030 2,121 0.5 2,554 1,788 0.4 3,109 2,176 0.5 0.5

H 11,581 11,581 2.0 13,808 13,808 2.2 13,743 13,743 2.1 2.6

Total 575,505 20,465 100.0 631,347 22,600 100.0 649,564 23,182 100.0 100.0

AA-C 544,575 3,428 94.6 599,223 2,483 94.9 616,498 2,485 94.9 93.1

D-H 30,931 17,037 5.4 32,124 20,117 5.1 33,066 20,697 5.1 6.9



Loans to Individuals¹ – Risk Level

R$ million


Balance Provision Share % Balance Provision Share % Balance Provision Share %

AA 31,453 - 21.5 48,581 - 31.0 50,377 - 31.5

A 35,151 176 24.0 29,566 148 18.9 29,700 149 18.6

B 52,082 521 35.6 51,825 518 33.1 53,029 530 33.2

C 16,628 499 11.4 15,439 463 9.9 15,429 463 9.6

D 3,161 316 2.2 1,759 176 1.1 1,703 170 1.1

E 1,341 402 0.9 2,372 712 1.5 2,634 790 1.6

F 644 322 0.4 1,260 630 0.8 1,350 675 0.8

G 776 543 0.5 674 472 0.4 849 594 0.5

H 5,000 5,000 3.4 5,206 5,206 3.3 4,883 4,883 3.1

Total 146,235 7,779 100.0 156,683 8,325 100.0 159,955 8,255 100.0

AA-C 135,313 1,195 92.5 145,411 1,129 92.8 148,535 1,142 92.9

D-H 10,922 6,584 7.5 11,272 7,196 7.2 11,420 7,113 7.1



Loans to Companies¹ – Risk Level

R$ million



AA 103,082 - 44.3 183,356 - 71.6 193,993 - 72.7

A 54,684 273 23.9 31,641 158 12.4 31,186 156 11.7

B 59,302 593 25.6 25,711 257 10.0 25,802 258 9.7

C 3,007 90 1.3 4,046 121 1.6 3,398 102 1.3

D 2,856 286 1.2 1,170 117 0.5 1,173 117 0.4

E 1,656 497 0.7 2,279 684 0.9 2,576 773 1.0

F 932 466 0.4 1,244 622 0.5 1,468 734 0.5

G 1,705 1,193 0.7 962 673 0.4 1,295 906 0.5

H 4,128 4,128 1.8 5,647 5,647 2.2 6,111 6,111 2.3

Total 231,351 7,527 100.0 256,055 8,279 100.0 267,003 9,158 100.0

AA-C 220,074 957 95.1 244,754 537 95.6 254,379 516 95.3

D-H 11,277 6,570 4.9 11,301 7,742 4.4 12,624 8,642 4.7



Agribusiness¹ – Risk Level

R$ million



AA 26,363 - 20.9 83,817 - 56.2 87,145 - 56.0

A 32,450 162 25.7 25,288 126 16.9 28,941 145 18.6

B 56,355 564 44.6 31,901 319 21.4 31,121 311 20.0

C 5,789 174 4.6 2,391 72 1.6 2,785 84 1.8

D 2,758 276 2.2 546 55 0.4 468 47 0.3

E 774 232 0.6 2,918 876 2.0 2,883 865 1.9

F 219 110 0.2 388 194 0.3 394 197 0.3

G 276 193 0.2 221 155 0.1 279 195 0.2

H 1,316 1,316 1.0 1,794 1,794 1.2 1,603 1,603 1.0

Total 126,300 3,026 100.0 149,265 3,590 100.0 155,620 3,446 100.0

AA-C 120,957 899 95.8 143,397 517 96.1 149,993 539 96.4

D-H 5,343 2,126 4.2 5,868 3,073 3.9 5,627 2,907 3.6



Renegotiated Loan Portfolio

R$ million

BB Consolidated

2Q13 1Q14 2Q14

Credits Renegotiated 10,298 9,575 12,063

Renovated 1,062 923 968

Renegotiated overdue Loans 9,236 8,652 11,095

Credits Renegotiated by Delay - Changes

Initial Balance 7,639 8,192 8,555

Contracts 1,062 923 968

Interest Received and Appopriated (0) (187) (294)

Write-Off (475) (373) (571)

Overdue Renegotiated Loan Portfolio 8,226 8,555 8,658

Allowance for Loan Losses Balance 4,900 5,362 5,277

NPL + 90 days 1,283 1,698 1,364

Indicators - %

All. for Loan Losses / Loan Portfolio 59.6 62.7 61.0

NPL + 90 days / Loan Portfolio 15.6 19.9 15.8

All. for Loan Losses Balance/NPL + 90 days 381.9 315.7 387.0


Actuarial Assets (Previ – Plano I) - CVM 695/12

R$ million

2Q13 1Q14 2Q14

(a) Fair Value of the Plan's Assets 134,982 144,421 141,679

(b) Present Value of Actuarial Liabilities (122,121) (113,523) (122,205)

(c) Surplus BB = [(a) + (b)] x 50% 6,430 15,449 9,737

(d) Actuarial Assets (Initial Period) 12,352 15,449 16,024

(e) Anticipated Financial Results - Monthly 187 446 446

(f) Contributions of Funds 130 129 172

(g) Reversal of Contribuição and Destinação Funds- - -

(h) Half-year Adjustment on Shareholders Equity (6,238)-

(6,905)

(i) Actuarial Assets (Period End) = (d) + (e) + (f) + (g) + (h) 6,430 16,024 9,737


Actuarial Liabilities (Cassi) - CVM 695/12

R$ million

2Q13 1Q14 2Q14

(a) Fair Value of the Plan's Assets - - -

(b) Present Value of Actuarial Liabilities (7,255) (6,334) (5,790)

(c) Deficit BB = [(a) + (b)] (7,255) (6,334) (5,790)

(d) Acturial Liabilities (Initial Period) (7,801) (6,334) (6,457)

(e) Amounts recognized in statement of income (194) (241) (241)

(f) BB - Amount paid 128 117 121

(g) Amount Recognized in Half-Yearly Adjust-Shareholders' Eq. 612-

786

(h) Actuarial liabilities (Period End) = [(d) + (e) + (f) + (g)] (7,255) (6,457) (5,790)


Amounts recognized in equity – CVM 695/2012

R$ million

Jun/13 Previ Plano 1 Cassi Others Plans Total

Valuation Adjustments (6,238) 612 387 (5,239)

Tax Effects 2,669 (245) (156) 2,268

Effects on Shareholders Equity (3,569) 367 231 (2,970)

Dec/13 Previ Plano 1 Cassi Others Plans Total

Valuation Adjustments 7,100 1,090 259 8,449

Tax Effects (3,038) (436) (104) (3,578)

Effects on Shareholders Equity 4,062 654 155 4,870

Jun/14 Previ Plano 1 Cassi Others Plans Total

Valuation Adjustments (6,905) 786 (153) (6,271)

Tax Effects 2,955 (315) 61 2,701

Effects on Shareholders Equity (3,950) 472 (91) (3,570)


Service Network

(1) Caixa Econômica Federal – Lottery Stores, Banco 24h, ATMs from Banco Regional de Brasília and Caixa Econômica Federal.

(2) Revision of agreements with agents in the country

Total Distribution Network Jun/14

Shared Distribution Channels¹ 34,080

Automated Points of Service 11,777

Banking Agents² 9,082

Banco Postal 6,188

Branches 5,490

Points of Service 1,725

Total 68,342

2q14 earnings release - bb · 2q14 earnings release . banco do brasil s.a. – second quarter 2014...

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