earnings conference call 3rd quarter of 2018 · same period of 2017. in nine months ended 2018, it...

EarningsConference Call

3rd Quarter of 2018

November 7th, 2018

Estratégia, segmentos e produtos

Organizational Shifts

2

CURRENT ORGANIZATIONAL CHART (valid until December 31, 2018)

Board of

Direc tors

C EO

Anis Chacur Neto

Executive VP

Inves tment Banking

José Eduardo

Cintra Laloni

Executive VP

C ommercial

Gustavo A. Lanhoso

&

Antonio Sanchez Jr.

Exeuctive VP

International &

Financ ial

Sergio Lulia

Jacob

Executive VP

A dministrative & IRO

Sergio Ricardo

Borejo

Executive VP

Risk

Renato Pasqualin

Sobrinho

Internal A udit

Merger &

A cquisitions

Debt C apital

Markets

Dis tribution

C ommercial

Large C orporate

Financ ial

Ins titutions

T reasury

P roduc ts

C redit A nalysis

Risk Management

& C redit

A dministration

Finance & MIS

Back O ffice

IT

HR, Marketing &

A dministrative

Services

Funding

C ommercial

C orporate

Legal &

Compliance

P lanning

Inves tor Relations

A udit committee Risk C ommitteeRemuneration

C ommittee

Group A udit

(Bank ABC)

C hannels

Economic Research


Organizational Shifts

3

UPCOMING ORGANIZATIONAL CHART (Taking effect on January 1 st, 2019)

Board of Directors

CEOAnis Chacur Neto

Internal Audit

HR, Marketing &Administrative

Services

Legal &Compliance

Audit Committee Risk CommitteeRemuneration

Committee

Group Audit(Bank ABC) Deputy CEO

Sergio Lulia Jacob

ExecutiveVice President

José EduardoCintra Laloni


Antonio Sanchez Jr.


Antonio JoséNicolini


Sergio Ricardo Borejo


To be defined

Merger &Acquisitions

Debt CapitalMarkets

Distribution

CommercialLarge Corporate

FinancialInstitutions

Treasury

Clients Desk

ProductsFinance & MIS

Back Office

ITFunding

CommercialCorporate

Planning

Investor Relations

Channels

Economic Research


Renato Pasqualin Sobrinho

Credit Analysis

Risk Management& Credit

Administration

Innovation


Highlights

4

Recurring Net Income reached BRL 116.1 million in 3Q18, an increase of 4.0% incomparison to the previous quarter and 11.5% in relation to the same period of thelast year.

Recurring Return on Average Equity (ROAE) was 13.3% pa in 3Q18, higher 0.3 p.p.in relation to 2Q18 and flat compared to 3Q17.

Revenues from Capital Markets and M&A reached BRL 27.5 million in 3Q18, agrowth of 28.8% compared to the previous quarter and 205.9% in relation to thesame period of 2017. In nine months ended 2018, it reached BRL 62.3 million,growth of 72.8% compared to the same period of 2017.

The Expanded Credit Portfolio* reached BRL 25.3 billion at the end of September2018, flat quarter over quarter and hike of 10.0% over the last 12 months.

*Includes loans, guarantees issued and corporate securities portfolios.

(BRL million) Sep/18 Jun/18 Chg 3M Sep/17 Var 12M Dec/17 Chg 9M

Loans 12,436.8 12,352.4 0.7% 11,629.8 6.9% 12,095.1 2.8%

Large Corporate 8,074.8 8,167.9 -1.1% 8,188.6 -1.4% 8,397.3 -3.8%

Corporate 4,362.0 4,184.5 4.2% 3,441.2 26.8% 3,697.9 18.0%

Guarantees Issued 10,718.3 10,753.6 -0.3% 9,285.5 15.4% 10,049.1 6.7%

Large Corporate 10,202.5 10,272.1 -0.7% 8,962.9 13.8% 9,676.9 5.4%

Corporate 515.8 481.5 7.1% 322.6 59.9% 372.2 38.6%

Corporate Securities 2,167.9 2,221.1 -2.4% 2,101.7 3.2% 2,386.1 -9.1%

Large Corporate 2,003.3 2,109.6 -5.0% 2,018.7 -0.8% 2,307.3 -13.2%

Corporate 164.6 111.5 47.7% 83.0 98.3% 78.7 109.1%

Expanded Credit Portfolio 25,323.0 25,327.0 0.0% 23,017.0 10.0% 24,530.3 3.2%

Large Corporate 20,280.6 20,549.6 -1.3% 19,170.2 5.8% 20,381.5 -0.5%

Corporate 5,042.4 4,777.4 5.5% 3,846.8 31.1% 4,148.8 21.5%

Expanded Credit Portfolio

5

350 355 370

496 498 503

Estratégia, segmentos e produtosStrategy and business segments6

Segments Highlights

Credit Portfolio

Loans and Guarantees Issued(BRL million)

Sep/17 Jun/18 Sep/18

Large Corporate Corporate

Average Ticket(BRL million)

Average Tenor(days)

Total Numberof Clients

Clients withCredit Exposure

Large Corporate: Clients with annual revenues above BRL 800 million. | Corporate: Clients with annual revenues between BRL 100 and 800 million.


746 771 765

34.6 37.0 36.3

1,155 1,068 1,089

304 322 322

52% 51% 50%

23% 22% 23%

14% 15% 14%

11% 12% 13%


South

SP Countryside, Midwest andNorth

Rio de Janeiro, Minas Geraisand Northeast

SP Capital

17,152 18,440 18,277

38% 38% 40%

22% 21% 20%

21% 20% 19%7% 8% 8%6% 7% 7%

6% 6% 6%


Minas Gerais

Midwest

Rio de Janeiro

SP Countryside

South

SP Capital

3,764 4,666 4,878

761 750 757

4.9 6.2 6.4

48.9 54.1 50.2 55.3 57.9 56.6 54.9 50.8

22.5

33.1 33.1

Mar/16 Jun/16 Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Dec/17 Mar/18 Jun/18 Sep/18

LLP Expenses(BRL million)

1.7% 2.0% 1.9% 2.0% 2.1% 2.0% 2.0% 1.7%0.7% 1.1% 1.1%

% of loan portfolio(annualized)

Credit Portfolio Quality

Financial highlights7

Loans overdue for more than 90 days (includes falling due and overdue installments)

% of loan portfolio

Loans Loss Reserve% of loan portfolio

Loans rated D and E-H (Brazilian Central Bank Resolution No. 2682)

% of loan portfolio

Quarterly Loan Loss Provision (LLP)

1.0%

1.9%1.1%

0.5% 0.4%

1.2%

1.7%1.4%

0.7%0.7% 0.5%

1.2%1.9%

1.1%0.7% 0.7%

1.4%1.4% 1.2% 0.7%

0.6% 0.5%

1.9%

1.7%

1.1% 1.2% 1.3% 1.8%

0.7% 0.6% 0.6% 0.5% 0.4%


Large Corporate

Total

Corporate

3.1% 3.8% 3.6% 3.6% 3.9%

4.2% 4.0%3.6% 2.9% 2.9% 3.2%3.4% 3.9% 3.6% 3.7% 3.9% 4.0%

3.6% 3.3% 2.8% 2.6% 2.9%

4.2% 4.2% 3.6% 3.9% 3.9%

3.4%2.5% 2.6% 2.5% 2.2% 2.2%


Large Corporate

Total

Corporate

3.1% 4.0% 3.9% 4.5% 4.0% 4.0%3.3% 2.7%

2.2% 2.2%

2.8%

2.5% 3.2% 2.7%1.4% 1.7%

3.2% 2.7% 2.6%2.5% 2.9%

2.6%


E-H

D

Funding & Ratings

Funding and capital base8

Local

Aa2.Br

AAA

brAAA

Global

Ba2

BB

BB-

Moody’s

Fitch Ratings

Standard & Poor’s

Sovereign

Ba2

BB-

BB-

BrazilABC BrasilRatings

Diversified funding with access to local and international sources

3% 3% 3% 4%1%2% 2% 2% 2%5%

Basel 2

Basel 3

1,110 1,176 1,215 1,514 1,555

7% 6% 6% 5% 5%BNDES (Onlending)

1,842 1,591 1,452 1,267 1,313

11% 10% 9% 9% 12%10% 9% 8% 11% 10% Trade Finance

Multilateral Agencies,

Deposits & Others5,122 4,913 4,274 5,102 5,783

International

18% 19% 19% 19% 17%

14% 15% 15% 14% 14%

19% 19% 20% 20% 20%

4% 4% 4% 3% 2%Financial Institutions

(LF & DI)

Institutional Investors

(CDB & LF)

Individual Investors

(LCA & LCI)

Corporate Investors

(CDB)13,875 13,936 14,443 14,450 14,173

Domestic

55% 57% 58% 56% 53%

Sep/17 Dec/17 Mar/18 Jun/18 Sep/18

25,177 24,900 24,804 25,779 26,443 Total (BRL mi llion)

13% 13% 14% 13% 14%

Shareholders' Equity

3,228 3,284 3,420 3,446 3,619

Subordinated Debt5% 5%5% 6%

21% 19% 17% 20%22%

6%

Basel Ratio & Shareholders’ Equity

Funding and capital base9

Capital Adequacy (BRL million) Sep/18 Jun/18 Chg 3M Sep/17 Var 12M

Reference Equity 4,249.7 4,153.2 2.3% 3,631.5 17.0%

Required Capital Base 2,267.2 2,220.0 2.1% 1,969.8 15.1%

Excess of equity in relation to limit 1,982.5 1,933.3 2.5% 1,661.7 19.3%

Basel Ratio 16.17% 16.14% 0.03 17.05% -0.88

Tier 1 (Core Capital) 13.23% 13.08% 0.15 14.68% -1.45

Tier 2 2.94% 3.06% -0.12 2.37% 0.57

14.68% 14.04% 13.83% 13.08% 13.23%

2.37% 2.27% 2.29% 3.06% 2.94%

Sep/17 Dec/17 Mar/18 Jun/18 Sep/18

Tier 2 (Basel 3)

Tier 1

17.05% 16.31% 16.12% 16.14% 16.17%

3,631 3,807 3,953 4,153 4,250

3,228 3,284 3,420 3,446 3,619

Referential Equity

Shareholders' Equity

(BRL million)

Net Interest Income


NIM(% p.a.)

Net Interest Income(BRL million)

(BRL million) 3Q18 2Q18 3Q18x2Q18 3Q17 3Q18x3Q17 9M18 9M17 9M18x9M17

Net Interest Income 239.3 257.1 -7.0% 260.2 -8.0% 729.9 801.8 -9.0%

Shareholders' Equity Remunerated at CDI Rate

45.0 44.6 0.9% 59.5 -24.4% 130.3 210.0 -38.0%

Financial Margin with Clients 143.7 145.2 -1.1% 150.1 -4.3% 431.2 439.5 -1.9%

Financial Margin with Market 50.6 67.3 -24.8% 50.6 0.0% 168.4 152.3 10.5%

Loan Loss Provision (LLP) (33.1) (33.1) 0.0% (54.9) -39.6% (88.7) (169.4) -47.6%

Net Interest Income after LLP 206.1 224.0 -8.0% 205.3 0.4% 641.2 632.4 1.4%

150 156 142 145 144

439 43160 47 41 45 45

210130

51 74 51 67 51

152168

3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18

Financial Marginwith Market

Shareholders' EquityRemunerated at CDIRate

Financial Marginwith Clients

260 277234 257 239

802730-8.0%

-7.0%

-9.0%

4.1%4.4%

3.7%4.0%

3.6%4.2%

3.8%

3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18

Service Revenues


Service Fees (BRL million) 3Q18 2Q18 3Q18x2Q18 3Q17 3Q18x3Q17 9M18 9M17 9M18x9M17

Guarantees Issued 57.1 56.4 1.2% 51.8 10.2% 168.3 159.8 5.3%

Capital Markets and M&A Fees 27.5 21.4 28.8% 9.0 205.9% 62.3 36.1 72.8%

Commercial Banking Tariffs 11.4 13.7 -16.7% 10.4 9.7% 34.5 27.3 26.3%

Total 96.0 91.5 5.0% 71.2 34.9% 265.1 223.2 18.8%

35.2 37.2 36.6 41.6 45.3 48.5 52.2 53.0 54.0 54.1 51.8 52.5 54.8 56.4 57.14.5 7.1 1.2

8.5 2.46.7 5.9 7.0 15.7 11.4 9.0

20.7 13.521.4 27.5

5.7 6.2 7.38.1 8.4

9.6 7.9 9.56.7 10.2 10.4

10.49.4

13.711.4

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

Banking Tariffs

Capital Markets and M&AFees

Guarantees Issued

(BRL million)

50.5 45.158.2 56.1

64.9 66.0 69.576.3 75.7 71.2

83.7 77.691.5

45.3

96.0

18.9% 20.1% 16.2% 19.5% 19.3% 21.5% 22.1% 21.6% 23.5% 23.0% 23.0% 26.2% 26.5% 29.4% 31.0%

Services RevenueTotal Revenue

Expenses and Efficiency Ratio


Recurring Efficiency Ratio (Expenses/Revenues)

From 2018 on, the managerial income statement considers the following reclassification: (i) INSS (Social Security) expenses related to the variable

compensation will be reclassified to the line “Profit Sharing”, where the variable compensation is accounted, from the line “Personnel Expenses”; and (ii)

expenses with initiatives that set tax shields such as the Rouanet Law (cultural incentive), Sports Incentive Law and FUMCAD (incentives for Child and

Adolescent rights) will be reclassified to the line “Income Tax and Social Contribution” from the line “Other Administrative”.

32.2% 33.1%36.4% 34.6% 35.2%

30.8%35.3%

3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18

Expenses (BRL million) 3Q18 2Q18 3Q18x2Q18 3Q17 3Q18x3Q17 9M18 9M17 9M18x9M17

Personnel Expenses (adjusted) (48.6) (47.7) 1.8% (44.9) 8.2% (144.1) (135.4) 6.4%

Other Administrative (28.8) (29.1) -1.2% (25.7) 11.9% (83.9) (78.0) 7.5%

Subtotal (77.4) (76.8) 0.7% (70.6) 9.5% (228.0) (213.5) 6.8%

Profit Sharing (39.2) (39.2) 0.0% (36.4) 7.9% (118.5) (105.0) 12.9%

Total (116.6) (116.1) 0.5% (107.0) 9.0% (346.6) (318.5) 8.8%

Profitability


Recurring Net Income (BRL million) Recurring ROAE (% p.a.)

Recurring ROE (p.a.) x CDI (p.a.)

104.1 110.6 108.5 111.7 116.1

322.4 336.3

3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18

11.5%

4.0%

4.3%

13.3% 13.6% 13.0% 13.0% 13.3% 14.1%13.1%

3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18

15.0% 15.7% 15.0% 15.2% 15.1% 14.0% 13.3% 13.6% 13.0% 13.0% 13.3%14.1% 14.1% 14.1% 13.8% 12.5% 10.8%9.1% 7.4% 6.7% 6.3% 6.3%

0.9% 1.6% 0.9% 1.4% 2.6% 3.2% 4.2% 6.2% 6.3% 6.7%7.0%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

ROE CDI Gap

Guidance

14

*Includes Loans, Guarantees Issued and Corporate Securities.

2018Expanded Loan Portfolio* 9% a 13%

Personnel and Other Administrative Expenses 4% a 6%

Investor Relations

Website: www.abcbrasil.com.br/ir

Email: [email protected]

Phone: +55 (11) 3170-2186

16

Disclosure

The following material, on this date, is a presentation containing general information about the Banco ABC Brasil S.A. We offer no guarantee andmake no declaration, implicitly or explicitly, as to the accuracy, completeness or scope of this information.

This presentation may include forward-looking statements of future events or results according to the regulations of the Brazilian andInternational securities and exchange commissions. These statements are based on certain assumptions and analyses by the Company thatreflect its experience, the economic environment, future market conditions and expected events by the company, many of which are beyond thecontrol of the Company. Important factors that may lead to significant differences between the actual results and the statements of expectationsabout future events or results include the company’s business strategy, Brazilian and International economic conditions, technology, financialstrategy, financial market conditions, uncertainty regarding the results of its future factors, operations, plans, objectives, expectations andintentions, among others. Considering these factors, the actual results of the company may be significantly different from those shown orimplicit in the statement of expectations about future events or results.

The information and opinions contained in this presentation should not be understood as a recommendation to potential investors and noinvestment decision is to be based on the veracity, current events or completeness of this information or these opinions. No advisors to thecompany or parties related to them or their representatives should have any responsibility for any losses that may result from the use orcontents of this presentation.

earnings conference call 3rd quarter of 2018 · same period of 2017. in nine months ended 2018, it...

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