institutional presentation 2_q15

Institutional PresentationInstitutional Presentation 2Q15

2/28Investor Relations | 2Q15 |

Profile and History

Pine

History

Business Strategy

Competitive Landscape

Focus Always on the Client

Corporate Credit

FICC

Pine Investimentos

Highlights and Results

Corporate Governance


Committees

Social Investment and Responsibility

Summary

Profile and History


Over R$2 billion39%

R$500 million to R$2 billion

34%

Up to R$500 million

27%

PineSpecialized in providing financial solutions for corporate clients…

Credit Portfolio by Annual Client Revenues

Profile

Focused on establishing long-term relationships

Profound knowledge and product penetration

Business is structured along three primary business lines:

• Corporate Credit: credit and financing products

• FICC: instruments for hedging and risk management

• Pine Investimentos: Capital Markets, Financial Advisory, Project & Structured Finance and Research

June 30th, 2015


184 222 341 521 620 755 663 761 1.214

2.854 3.105 4.192

5.763 6.963

7.912

9.920 9.826 8.621

62 121 126 140 136 152 171

209

335

801 827 825

867

1.015

1.220 1.272 1.256 1.208

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

jun/

05

Corporate Credit Portfolio (R$ Million)

Shareholders' Equity (R$ Million)

...with extensive knowledge of Brazil’s corporate credit cycle.

History

1997Noberto and

Nelson Pinheiro sell their stake in BMC and found

Pine

1939Pinheiro Family

foundsBanco Central do

Nordeste

1975Noberto Pinheiro becomes one of

BMC’s controlling shareholders

Devaluationof the real

Nasdaq Sept. 11 Brazilian Elections

(Lula)

SubprimeAsian Crisis

Russian Crisis

European Community

End of 2007Focus on expanding the Corporate Banking franchise

Discontinuation of the payroll-deductible loan business

May, 2007Creation of Pine Investimentos products line and

opening of the Cayman branch

2005Noberto Pinheiro becomes Pine’s sole

shareholder

October, 2007Beginning of the FICC Business

October, 2011Subscription of Pine’s capital by DEG

August, 2012 Subscription of Pine’s capital by DEG, Proparco, Controlling Shareholder and Management

November, 2012Opening of the broker dealer in New York, Pine Securities USA LLC

March, 2007IPO

May, 201518

years

Business Strategy


Competitive LandscapePine serves a niche market of companies with few options for banks.

100% focused on providing complete service to companies, offering

customized products

Corporate & SME

SME & Retail

Retail

100% Corporate

Large Multi-Services banks

Market

Consolidation of the banking sector has decreased the supply of credit lines and financial instruments for corporate

Foreign banks are in a deleveraging process

PINE

Full service Bank – Credit, Hedging, and Investment Bank products – with room for growth

~15 clients per officer

Competitive Advantages: Focus Fast response: Strong relationship with

clients, with the credit committee meeting twice a week and response times to clients of no more than one week

Specialized services Tailor-made solutions Product diversity

Foreign and Investment

Banks

http://www.banrisul.com.br/

http://www.ibefmg.com.br/?url=http://www.bicbanco.com.br/

http://www.daycoval.com.br/

http://www.sofisa.com.br/

http://www.bancobmg.com.br/novo_site_bmg/INHomeProduto.aspx

https://www.btgpactual.com/home/home.aspx/Index


Focus Always on the ClientProducts tailored to meet the needs of each individual client.

In additionto the

headquarterslocatedin the

city ofSão Paulo, Pine has10

branchesthroughoutBrazil, in

theStates ofCeará, Mato

Grosso, Minas Gerais, Paraná,

Pernambuco, Rio de Janeiro,

Rio Grande do Sul, and

São Paulo. The origination

network also counts with a

Cayman Branch and a broker

dealerin New York (USA).


Corporate Credit

Actions Credit Committee

Strong track record and solid credit origination and approval process.

Credit Approval: Electronic Process

Origination Officers

Credit origination Credit analysis, visit to clients, data updates, interaction with

internal research team

Credit AnalystsRegional Heads of

Origination and Credit Analysis

Presentation to the Credit Committee

CRO, Executive Directors and

Analysts of Credit

Centralized and unanimous decision making process

CREDIT COMMITTEE

Meets once a week – reviewing 20 proposals on average

Minimum quorum: 4 members - attendance of CEO or Chairman is mandatory

Members:Chairman of the BoardCEOChief Risk OfficerChief Financial Officer

Participants:FICC Executive Director Credit Analysts TeamOther members of the Corporate Banking origination team

Personalized and agile service, working closely with clients and keeping a low client to account officer ratio: each officer handles ~15 economic groups

Geographic coverage of clients, providing the bank with local and extremely up-to-date credit intelligence and information

Established long term relationships with more than 600 economic groups

Origination network is comprised of 10 branches divided into 14 origination platforms in Brazil’s major economic centers

Pine has approximentely 25 professionals in the credit analysis area, assuring that analysis is fundamentally driven and based on industry-specific intelligence

Efficient loan and collateral processes, documentation, and controls, which has resulted in a low NPL track record

Discussion on sizing, collateral, structure etc.


Commodities10%

Fixed Income7%

Currencies83%

14,382 8,376 7,703 7,482 7,948

354 288

221

349 366

(532)

(47)

(365)

(103)

33

J un-14 Sept-14 Dec-14 Mar-15 J un-15

Notional Amount

MtM

Stressed MtM

June 30th, 2015

Scenario on June 30th,2015:

Duration: 153 days

Mark-to-Market: R$366 million

Stress Scenario (Dollar: +31% and Commodities Prices: -30%):

Stressed MtM : R$33 million

R$ million

FICCProven trackrecord: 4rd in commodity derivatives1.

Client Notional Derivatives by Market

Market Segments

Notional Value and MtM

Portfolio Profile

1Source: Cetip Report, June 2015

FixedIncome: Fixed, Floating, Inflation, Libor

Currencies: Dollar, Euro, Yen, Pound, Canadian Dollar,Australian Dollar

Commodities: Sugar, Soybean (Grain, Meal and Oil), Corn,Cotton, Metals, Energy


3 2

1Q15 2Q15

6 6

1H14 1H15

August, 2014

Export Prepayment Finance

Structuring Agent

August, 2014

Long Term Loan

Financial Advisor

US$58,000,000US$25,000,000

September, 2014

Debentures

R$50,000,000

Lead Coordinator

R$45,200,000

November, 2014

Debentures

Lead Coordinator

December, 2014

BNDES Onlending

R$630,000,000

Coordinator

J uly, 2014

February, 2015March, 2015

Project Finance

R$391,459,000

Financial Advisor

Project Finance

R$30,000,000

Lead Coordinator

Structuring CRP

R$24,000,000

Lead Coordinator

R$20,000,000

J une, 2015

CRI

Lead Coordinator

R$ million

Pine Investimentos

Fee Generation

Selected Transactions

Capital Markets: Structuring and Distribution of

Fixed Income Transactions.

Financial Advisory: Project & Structured Finance,

M&A, and hybrid capital transactions.

Research: Macro and Commodities.

Highlights and Results


2Q15 Events and Highlights

1.Sound positive liquidity gap in the past years, with 385 days for loan portfolio versus 501 days for funding.

2.Liquid balance sheet, with a cash position of R$1.2 billion, equivalent to 47% of time deposits.

3.Active and constant liability management generates benefits both in cost and terms of funding.

4.Loan portfolio coverage ratio above 4% as a result of a preemptive increase in provisions in the last twelve months.

5.Further reduction of personnel and administrative expenses, as a result of the diligence and anticipation of an adverse

market in 2015.

6.16tth largest bank in derivative transactions and the 4th largest in commodity derivatives according to CETIP – OTC

Clearing House.


1,244 1,208

Mar-15 J un-15

Shareholders' Equity

-2.9%

9,657 8,621

Mar-15 J un-15

Total Loan Portfolio1

-10.7%

8,367 7,564

Mar-15 J un-15

Total Funding

-9.6%

2Q15 Financial Highlights

1 Includes Stand by LCs, Bank Guarantees, Credit Securities to be Received and Securities (bonds, CRIs, eurobonds and fund shares)

R$ million

The main performance indicators were within expectations in the period.

3.3% 3.3%

1Q15 2Q15

ROAE

4.0%3.3%

1Q15 2Q15

NIM Evolution

-70 bps

10 10

1Q15 2Q15

Net Income


Net Interest Margin

NIM Evolution Main Impacts

NIM Breakdown

Lower transactions in FICC business;

No revenue generation in Treasury;

Smaller proportion of the loan portfolio over total

assets;

Prudential adjustments (Resolution 4277); and

Marginal increase in spreads.

4.0%3.3%

1Q15 2Q15

NIM Evolution

-70 bps

R$ million

2Q15 1Q15 2Q14 1H15 1H14

Financial Margin

Income from financial intermediation 80 54 96 134 205

Overhedge effect (10) 34 (3) 24 (6)

Income from financial intermediation ex overhedge 70 88 93 158 199


R$ million

2Q15 1Q15 2Q14 1H15 1H14

Operating expenses1 48 45 45 93 97

(-) Non-recurring expenses (4) (1) (1) (5) (5)

Recurring Operating Expenses (A) 44 43 43 87 92

Recurring Revenues2 (B) 98 110 116 208 238

Recurring Efficiency Ratio (A/B) 44.9% 39.1% 37.1% 41.8% 38.7%

1 Other administrative expenses + tax expenses + personnel expenses2 Gross Income from financial intermediation - provision for loan losses + fee income + overhedge effect - hedge impact - prudential adjustment according to Resolution 4277.

22 23 2220

1817

37.1% 39.1%44.9%

- 1 0 0 . 0 %

- 8 0 . 0 %

- 6 0 . 0 %

- 4 0 . 0 %

- 2 0 . 0 %

0 . 0 %

2 0 . 0 %

4 0 . 0 %

6 0 . 0 %

0

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

5 0

2Q14 1Q15 2Q15

46 4446

35

38.7% 41.8%

- 1 0 0 . 0 %

- 8 0 . 0 %

- 6 0 . 0 %

- 4 0 . 0 %

- 2 0 . 0 %

0 . 0 %

2 0 . 0 %

4 0 . 0 %

6 0 . 0 %

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

1 4 0

1H14 1H15

Personnel Expenses

Other administrative expenses

Recurring Efficiency Ratio (%)

Expenses and Efficiency Ratio

Expenses

Efficiency Ratio

Rigorous cost control.


4,284 4,509 5,050 5,093 4,904 4,731 4,730 4,440

4,066

844 990

1,068 1,103 1,071 1,248 1,302

1,118 1,074

2,807

3,073

2,909 2,905 2,941 2,896 2,969

3,191

2,896

1,059

965

903 989 1,116 924 826 909

585

J un-13 Sept-13 Dec-13 Mar-14 J un-14 Sept-14 Dec-14 Mar-15 J un-15

Trade finance: 6.8%

Bank Guarantees: 33.6%

BNDES Onlending : 12.5%

Working Capital: 47.2%

9,657

8,6218,994

9,5379,930

10,090 10,0329,800 9,826

1 Includes Stand by LC2 Includes debentures, CRIs, Hedge Fund Shares, Eurobonds, Credit Portfolio acquired from financial institutions with recourse and Individuals

R$ million

Loan PortfolioThe portfolio amounted to R$8.6 billion...

-14.1

%

-10.7%

1

2


38.2%38%40%44%42%

6.7%7%5%5%5%

8.5%8%8%7%8%

9.7%10%10%7%8%

12.2%13%12%14%20%

12.3%12%13%12%9%

12.4%12%12%11%8%

Jun-15Mar-15Jun-14Jun-13Mar-12

Energy

Real Estate

Sugar and Ethanol

Agriculture

Engineering

Transportation and Logistics

Others

Energy12%

Real Estate12%

Sugar and Ethanol12%

Agriculture10%

Engineering9%

Transportation and Logistics

7%

Chemicals5%

Foreign Trade4%

Telecom4%

Specialized Services

4%

Metallurgy3%

Vehicles and Parts3%

Retail3%

Meatpacking2%

Construction Material

2% Food Industry1%

Other7%

Continuous Loan Portfolio Management

Sectors Rebalance

...with improved sector diversification.

The composition of the portfolio of the 20 largest clients changed by over 20% in the past twelve months;

The share of wallet of the 20 largest clients remained below 30%, in line with market peers.


Residential37%

Residential Lots35%

Warehouse15%

Mall7%

Commercial6%

Working Capital55%

Guarantees26%

BNDES Onlending

11%Trade

Finance9%

SP73%

MG19%

PR7%

GO2%

Working Capital77%

Guarantees23%

Main SectorsEnergy| Real Estate | Agriculture

Energy (12.4%) Real Estate (12.3%)

Sugar and Ethanol (12.2%)

Exposure by Product Exposure by Segment Exposure by Product Exposure by Segment

Exposure by Product Exposure by State

Guarantees74%

Working Capital17%

BNDES Onlending

9%

Wind Energy57%

UTE14%

Distributors10%

Transmitting9%

Equipment Supplier

6%

SHPs UHEs3%


MT31%

SP37%

PR10%

BA11%

MS3%

Others8%

Working Capital

84%

Guarantees12%

BNDES Onlending

4%

Working Capital

71%

BNDES Onlending

17%

Trade Finance

12%

Guarantees1%

Concession35% Transportation

32%

Industrial24%

Oil and Gas9%

Energy1%

Main SectorsAgriculture| Engineering

Agriculture (9.7%) Engineering (8.5%)

Exposure by Product Exposure by Product

Exposure by Segment

Exposure by State


5.0%

6.4% 6.6%

2.9%4.1% 4.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%

Dec-14 Mar-15 J un-15

D-H Portfolio Coverage of Total Portfolio Coverage of D-H Overdue Portfolio

162% 161% 172%

50%

250%

450%

650%

1.1% 0.7%0.1%

0.7% 0.3% 0.3%1.1%

2.1% 1.8%

J un-13 Sep-13 Dec-13 Mar-14 J un-14 Sep-14 Dec-14 Mar-15 J un-15AA-A38.1%

B38.3%

C17.0%

D-E4.0%

F-H2.6%

Products Pledge39%

Receivables20%

Properties Pledge39%

Investments3%

June 30th, 2015

Contracts Overdue: total amount of the contracts overdue for more than 90 days / Loan Portfolio excluding Bank Guarantees and Stand-by Letters of Credit.

1D-H Portfolio: D-H Portfolio / Loan Portfolio Res. 2,6822Coverage of Total Portfolio: Provisions / Loan Portfolio Res. 2,682 3Coverage D-H Overdue Portfolio: Provisions / D-H Overdue Portfolio

Loan Portfolio Quality93.4% of loan portfolio classified between AA-C ratings.

Loan Portfolio Quality – Res. 2,682

Credit Coverage

Non Performing Loans > 90 days (Total Contract)

Collaterals

1 2 3


2,185 1,944 2,175 2,314 2,271 1,905 1,720

1,209 951

1,013 1,048

1,112 1,022 761

731 545

361 291

254 372 475 659

908 920

1,122

1,273 1,322

110 93 90

76 80 98

69

157 197

19 20 23

27 41 30

27 24 18

862 1,099 1,141

1,174 1,086 1,292

1,333

1,161 1,091

286 649

632 582 594 709

635

509 476

689

762

792 833

508 892 747

796 787

435

437

459 434

427 323

347

338 272

80

69

113 364

346 388

687

837

819 181

429

500

478

473 531 430

773

735 997

973

871

834 1,064

819 839 929

605

8,367

7,564

7,111

7,8948,383

8,7978,559 8,638 8,500


Trade Finance: 8%

Private Placements: 9.7%

Multilateral Lines: 10.8%

International Capital Markets: 3.6%

Financial Letter : 10.4%

Local Capital Markets: 6.3%

Onlending: 14.4%

Demand Deposits: 0.2%

Interbank Time Deposits: 2.6%

High Net Worth Individual Time Deposits: 17.5%

Corporate Time Deposits: 3.8%

Institutional Time Deposits: 12.6%

R$ million

FundingDiversified sources of funding...

58%

48%

48%

44%

41%

39%

41%

35%

47%

Cash over Deposits

-9.6%

-11.6%

8.0%


7.9x 7.7x 7.8x 7.8x7.1x

5.6x 5.4x 5.4x 5.2x4.7x

-

1 . 0

2 . 0

3 . 0

4 . 0

5 . 0

6 . 0

7 . 0

8 . 0

9 . 0

1 0 . 0


Expanded loan Porfolio

Loan Portfolio excluding Bank Guarantees 83%

80% 80%77% 76%

Jun-14 Sept-14 Dec-14 Mar-15 Jun-15

47% 43% 41% 36% 37%

53% 57% 59% 64% 63%


Total Deposits Others

Leverage: Expanded Loan Portfolio / Shareholders’ Equity Expanded Loan Portfolio excluding Bank Guarantees and Stand-by Letters of Credit / Shareholders’ Equity

Credit over Funding ratio: Loan Portfolio excluding Bank Guarantees and Stand-by Letters ofCredit / Total Funding

Asset & Liability Management... keeping a positive gap between credit and funding.

Leverage

ALM – Average Maturity

Credit over Funding Ratio

Total Deposits over Total FundingR$ milliondays

8,638 8,367 7,5648,559 8,500

GAP: +116 days

488 472 498 514 501

410 398

371 362

385


Funding

Credit


14.7% 13.7%12.0% 12.2% 12.2% 12.4% 12.4% 12.2% 12.3%

2.3%2.2%

2.1% 1.5% 1.5% 1.4% 1.4% 0.8% 0.8%13.0% 13.1%

17.0%15.9%

14.1% 13.7% 13.7% 13.8% 13.9%


Tier II Tier I

Minimum Regulatory Capital (11%)

Capital Adequacy Ratio (BIS), Basel III BIS ratio reached 13.1%

R$ Milion BIS Ratio (%)

Tier I 1,174 12.3%

Tier II 75 0.8%

Total 1,248 13.1%


Corporate GovernancePine is committed to best corporate governance practices…

One Independent Member and Two External Members on the Board of DirectorsMailson Ferreira da Nóbrega: Brazil’s Finance Minister from 1988 to 1990Gustavo Junqueira: Former Head of Pine Investimentos, Member of the Board of Directors at EZTEC, Financial Advisor at Arsenal Investimentos and CFO at Gradiente Eletrônica Harumi Susana Ueta Waldeck: Former CFO of Pine, with over 17 years of experience at the company. She brings the day-to-day experience to the Board.

São Paulo Stock Exchange (BM&FBOVESPA) Level 2 Corporate Governance

Audit and Compensation Committee reporting directly to the Board of Directors

100% tag along rights for all shareholders, including non-voting shares

Arbitration procedures for fast settlement of litigation cases


Social Investment and ResponsibilityFocus on the short, medium and long term.

Social Investment Recognition

Partnerships

Most Green Bank

Recognized by the International Finance Corporation (IFC), private agency programs of the World Bank as the most "green" bank as a result of its transactions under the Global Trade Finance Program (GTFP) and its onlending to companies focused on renewable energy and ethanol

Efficiency Energy

Recognition by World Bank for support in the Energy Efficiency sector.

Responsible Credit

“Lists of Exceptions”: the Bank does not finance projects or those organizations that damage the environment, are involved in illegal labor practices or produce, sell or use products, substances or activities considered prejudicial to society.

System of environmental monitoring, financed by the IADB and coordinated by FGV, and internally-produced sustainability reports for corporate loans

Protocolo Verde – “Green Protocol”, an agreement between FEBRABAN and the Ministry of the Environment to support development that does not compromise future generations.

Exhibition and sponsorship of Brazilian artists, for instance Paulo von

Poser and Miguel Rio Branco, in addition to sponsoring and supporting

films and documentaries such as Quebrando o Tabu (Fernando

Henrique Cardoso on the drug war), O Brasil deu certo, e agora?

(idealized by Mailson da Nóbrega), Além da Estrada (Charly Braun) and

others.

Sustainability Annual Report

Sixth consecutive year disclosing the Sustainability Report in the GRI standard. The 2014 report, with its high level of clarity, transparency and quality was recognized with the second place in the Abrasca Annual Report Award, considering its category of companies with net income to R$3 billion.


This report may contain forward-looking statements concerning the business prospects, projections of operating and financial results and growth outlook of PINE. These are merely projections and as such are based solely on management’s expectations regarding the future of the business. These statements depend substantially on market conditions, the performance of the sector and the Brazilian economy (political and economic changes, volatility in interest and exchange rates, technological changes, inflation, financial disintermediation, competitive pressures on products and prices and changes in tax legislation) and therefore are subject to change without prior notice.

Noberto N. Pinheiro Junior

CEO/IRO

João BritoCFO

Raquel Varela BastosHead of Investor Relations, Marketing & Press

Luiz MaximoInvestor Relations Specialist

Ana LopesInvestor Relations Analyst

Gabriel NettoInvestor Relations Analyst

Phone: (55 11) 3372-5343

[email protected]

Investor Relations

institutional presentation 2_q15

Investor Relations

corporate foreign banks

credit committee

investor relations 2q15

ficc business

service bank credit

supply of credit lines

deleveraging process

investment banks