31
Banco Votorantim S.A. Earnings Presentation 4 th Quarter, 2012
Banco Votorantim S.A. Earnings Presentation
4th Quarter, 2012
1
Disclaimer
Disclaimer
“Certain statements made in this presentation may not be based on historical information or facts. This presentation therefore contains, or may be deemed to
contain, “forward looking statements” (within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended), including those relating to the general business plans and strategy, future financial condition and results and growth
prospects of Banco Votorantim S.A. (“Banco Votorantim” or the “Company”), and future developments in its industry and its competitive and regulatory
environment. By their nature, forward‐looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or
may not occur in the future and are based on assumptions, data or methods which, although considered reasonable by the company at the time, may turn out to
be incorrect or imprecise, or may not be possible to realize. Accordingly, actual results may differ materially from these forward‐looking statements due to a
number of factors, including future changes or developments in the Company‟s business, its competitive environment, technology developments and political,
economic, legal and social conditions in Brazil.
Forward looking information is not merely based on historical fact but also reflects management‟s objectives and expectations. The Company can give no
assurance that expectations disclosed in this presentation will be confirmed. The words “estimate”, “believe”, "anticipate", “wish", "expect", “foresee", “intend",
"plan“, "predict", “forecast", “aim" and similar words, written and/or spoken, are intended to identify affirmations which, necessarily, involve known and unknown
risks. Known risks include uncertainties which include, but are not limited to, interest rates, product competition, market acceptance of products, the actions of
competitors, regulatory approval, currency type and fluctuations, monetary policy, among others.
This presentation is based on events up to December 31st, 2012. The Company or any of its affiliates take no responsibility or liability to update the contents of
this presentation in the light of new information and/or future events.
Banco Votorantim and/or any of its affiliates do not accept and take no responsibility, whatsoever, direct or indirect, for transactions or investment decisions
made on the basis of information contained in this presentation.
Banco Votorantim may alter, modify or otherwise change in any manner the contents of this presentation, without the obligation to notify any person of such
revision or changes.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor
anything contained herein shall form the basis of any contract or commitment whatsoever. Recipients of this presentation are not to construe the contents of this
summary as legal, tax or investment advice and recipients should consult their own advisors in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research,
publicly available information and industry publications. Although the Company has no reason to believe that any of this information or these reports are
inaccurate in any material respect, the Company has not independently verified the competitive position, market share, market size, market growth or other data
provided by third parties or by industry or other publications and therefore does not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without the Company‟s
prior written consent.”
2
Success in implementing the Change Agenda indicates that
2013 will have substantially better results
Executive summary – Message from the CEO
4Q12 results once again confirmed concrete advances in the implementation of the Change Agenda
• Excellent quality of Consumer Finance production after Sept/11, which allowed us to gradually increase origination
volumes, regaining market leadership in the used auto finance market in 4Q12
• Consistent drop in delinquency¹(NPL) in Cons. Finance’s light vehicles loan portfolio (Dec/12: 7.7%; Sept/12: 9.1%)
• New reduction in allowance for loan losses (ALL) expenses. Reduction of 34% (or R$397 million) in Consumer
Finance‟s ALL expenses in 4Q12 vs. 3Q12 – third consecutive quarterly reduction
• Continuous governance improvement and efficiency gains
These important achievements in our Change Agenda were also accompanied by significant advances in all of the main
businesses in 2012 – Consumer Finance, Wholesale and Wealth Management
The combination of this strong operating performance of business areas and the significant reduction in ALL expenses
allowed Banco Votorantim back to reporting positive Net Financial Margin in 4Q12
However, as previously disclosed to the market, our 4Q12 results were still impacted by: (i) delinquency of auto finance
portfolios originated between July/10 and Sept/11; (ii) entry into force of Bacen’s Resolution 3,533; (iii) 45% reduction
in the volume originated by Consumer Finance; and (iv) increase of the Coverage ratio²
Even in view of these factors, consolidated results showed new improvement in relation to the previous quarter (R$-
358M in 4Q12; R$-497M in 3Q12), confirming the trend of progressive improvement in the results
Additionally, we continued to strengthen the quality of our credit risk, adopting conservative policies in Liquidity,
Funding and Capital management
In 2013, we will continue advancing in all fronts of our Change Agenda in order to complete the structural adjustment
process and resume growth with profitability in a sustainable way. The success already show in implementing the
Change Agenda during 2012 indicates that 2013 will be a year of substantially better results
1. Operations past due over 90 days; 2. Ratio between ALL balance and balance of operations past due over 90 days
3
Banco Votorantim and the implications of the economic-regulatory context
Businesses and Change Agenda advances
Annexes – Financial highlights
Agenda
4
63
86
93
121
143453
673
742
901
1.046
Citibank
BTG Pactual
Safra Votorantim
HSBC Santander
CEF
Bradesco
Itaú Unibanco
Banco do Brasil
21
23
42
48
57183
254
309
324
448
Bradesco
Itaú Unibanco
CEF
Banco do Brasil
Volkswagen
Votorantim² Santander
Banrisul
Safra
HSBC
Banco Votorantim is one of the leading players in Brazil... 3rd largest privately-held Brazilian bank in total assets and loan portfolio
Banco Votorantim is the 3rd largest privately-
held Brazilian bank in total assets...
...and is well-positioned to consolidate itself
as one of the largest banks in Brazil
Banco Votorantim – Overview
Largest Financial Institutions - Assets (R$B)¹
...and also in terms of loan portfolio...
Largest Financial Institutions – Loan Portfolio (R$B)¹
1. Excluding BNDES (state-owned development bank); figures as of Sept/12, except for Banco Votorantim (Dec/12); 2. Considers BV‟s own portfolio (excluding securitization); 3. Includes credit assignments with recourse Source: Banco Votorantim; Bacen; Anbima
Diversified business portfolio
• Wholesale Banking
– “Top 5” in credit for large enterprises
• Consumer Finance
– Among the leaders in used auto finance
– 6th largest player in payroll loans³
– ~ 5.6 million customers
• Wealth Management
– 9th largest asset manager by Anbima‟s managers‟
ranking: R$47.3B in AuM
Strategic partnership with Banco do Brasil, the largest
financial institution in Latin America
Strong and committed shareholder base
• Banco do Brasil and Votorantim Group
Low fixed-cost business model
• Extensive third-party distribution network in Consumer
Finance (vs. branches)
+
Shareholder
50% total
State-owned
Foreign
National privately-held
National privately-held
Foreign
State-owned
5
...and has a diversified business portfolio, internally
divided into Wholesale and Consumer Finance
Banco Votorantim – Corporate strategy
Shareholders
Pillars
Cons. Finance² Wholesale
Auto
Finance
Among the top players
in the market,
enhancing partnership
with BB
Focus on used auto
finance
(multi-brand dealers)
Partner with BB in new
auto finance
(new car dealers)
Other
businesses Increase profitability in
individual loans, with
focus on INSS
payroll loans
Continue to grow in
credit cards
Expand insurance
brokerage revenues
(e.g. Auto)
Corporate &
IB (CIB)
Wealth
Management
Middle
Market
Continue to grow with
quality in this segment
of mid-sized
companies, gaining
scale and efficiency
Focus on
relationships and
operational agility
Enhance product
offering
9th largest asset
manager, with
innovative products
Private Bank focused
on estate planning,
offering customized
solutions, with an
open architecture
Continuously expand
synergies with BB
Position CIB as a relevant partner, by building agile and
long-term relationships, as well as offering integrated
financial solutions (IB, derivatives,
structured products and distribution), suitable for each
client
Banco do Brasil Votorantim Group +
1. Expanded loan portfolio: includes guarantees provided and private securities; 2.Consumer Finance‟s own loan portfolio totaled R$37.4B in Dec/12, besides R$11.4B in credit assignments ((including R$9.0B with recourse and R$2.4B in FIDCs of which Banco Votorantim owns 100% of subordinated shares)
R$37.4B R$41.3B
R$78.8B
X Expanded¹ loan portfolio
6
Shared governance between the shareholders Board of Directors‟ Chairman position alternates annually between shareholders
• Gestão profissional com executivos experientes
Name Position Shareholder
José Ermírio de Moraes Neto Chairman Votorantim Finanças
Aldemir Bendine Vice-Chairman Banco do Brasil
Ivan de Souza Monteiro Director Banco do Brasil
Marcus de Camargo Arruda¹ Director Votorantim Finanças
Paulo Rogério Caffarelli Director Banco do Brasil
Wang Wei Chang Director Votorantim Finanças
Name Position
João Roberto Gonçalves Teixeira CEO
Alvaro Jorge Fontes de Azevedo Executive Officer
Elcio Jorge dos Santos Executive Officer
Marcos L. Monteiro Executive Officer
Pedro Mollo Neto Executive Officer
Ricardo Arruda Executive Officer
Robert John van Djik Executive Officer
Governance Structure
Banco Votorantim – Corporate Governance
Board of Directors
Executive Committee
1. Deceased in August/12; new member will be elected in the Annual General Shareholder‟s Meeting to be held in April/13
• Equal representation of each shareholder
• 2-year term of office, and annual Chairman/Vice-Chairman
rotation between the two shareholders
• Decisions are made by absolute majority, with no “casting vote”
Board of
Directors
Operating Committees
Executive
Committee
Communication
Credit
Business
Products
Human Resources
Technologies
Tax
Sustainability
ALM, Risks & Capital
Internal Controls
Ombudsman
Expenses (CAAD)
Projects
Fiscal Council
Audit
Committee
Compensation
& HR
Statutory
Products &
Marketing
Finance
Equal representation of each shareholder
7
In 2012, the financial industry faced relevant changes in
the economic-regulatory context
Deceleration of economic activity
• Moderation in the pace of credit expansion
Rise in delinquency (Indiv. and Entities)
• Auto finance: 6.1% in May/12, all-time record
Reduction in interest rates, spreads and tariffs
• Individual‟s average interest rate dropped
~920 bps in 2012 (Dec/12: 34.6%; Dec/11:
43.8%)
Effectiveness of Res. 3,533 since Jan/12
• Changed the rules for recording credit
assignments with recourse
• Impacted the securitization market and
operations of banks acting on it
90-day delinquency (%) – Bacen
Legal
Entities
Auto
finance
Total
Individuals
Dec/12
4.0
5.3
7.9
June/12
4.0
6.0
7.8
Dec/11
3.9
5.0
7.4
June/11
3.8
6.4
Dec/10
3.5
2.5
5.7
Off balance credit assigments¹ byBanco
Votorantim (R$B)
FI assign.
Dec/11
11.4
FIDC assign.
Dec/12
11.1 9.1
2.4 2.4
Dec/09
20.5
15.4
5.2
6.1
Dec/10
13.5
4.9 1.2
1. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs (“Fundos de Investimento em Direitos Creditórios”) of which Banco Votorantim owns 100% of the subordinated shares; 2. Before early settlement and allowance for loan losses expenses
Gross² results from credit
assignments (R$M) 2,244 37
BV initiates its
restructuring process
Examples of economic-regulatory changes
1
2
3
4
Economic-regulatory changes
8
Banco Votorantim and the implications of the economic-regulatory context
Businesses and Change Agenda advances
Annexes – Financial highlights
Agenda
9 9
June/12
1.1
Dec/12 Dez/11
1.0
June/11 Dec/10
2.1
June/10 Dec/09
1.5
June/09
1.1
Consumer Finance originated record quality operations Excellent quality of recent vintages allowed gradual increase in production
BV Financeira ended Dec/12 as the #1 used auto
finance player, with ~20% of market share
Record quality
vintages
64% 71% Multi-brand
dealers/total
Focus on
multi-brand
dealers
New car dealers (R$B)
Multi-brand dealers (R$B)
1st installment delinquency ("Inad 30")
78%
Consumer finance – Production
1. Includes CDC – vehicles and vans (excludes leasing); 2. % of each month‟s production with first installments past due over 30 days
Light vehicles1 – Origination by channel (R$B) and first installment delinquency2 (%)
Vintages indicating lower quality
10
June/12
24.5
Mar/12
26.8
Dec/11
26.4
Dec/10
24.6
Dec/12
23.5
Sept/12
24.1
Quality of recent vintages is due to the strict criteria
adopted for credit concession
NPL 90 days by vintage, 4 months after
concession – Auto finance (%) Auto production average interest rate (%p.y.)
Auto production – tenor and down payment Auto finance origination – by payment plan
84% 84%100% 100% 100%100%
16%16%
4Q12 3Q12 2Q12 1Q12 4Q11 4Q10
Other plans 60 months, no down payment
32% 38% 41% 41% 44% 42%
444446464752
4Q12 3Q12 2Q12 1Q12 4Q11 4Q10
Average tenor (months) Down payment %
M
11
2.7
D
10
S J M
10
D
09
0.5
J F A M
12
Month of
concession A
0.3
J J M J
12
0.6
D
11
S
Consumer finance – Quality of production
Market¹
BV Financeira
1. Data published semiannually in Bacen‟s Economic Stability Report (“Relatório de Estabilidade Econômica”); updated data was not available by the preparation of this presentation Source: BVF, Bacen
Higher than the SFN:
19.9% in Dec/12
11
Vintages of better quality already represent 38% of the loan
portfolio, helping reduce auto finance delinquency
Vintages of better quality already represent
38% of the auto finance loan portfolio...
Note: Banco Votorantim reports quality indicators for its managed loan portfolio because it is responsible for the risk of off balance credit assignments with recourse and for FIDCs 1. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs (“Fundos de Investimento em Direitos Creditórios”) of which Banco Votorantim owns 100% of the subordinated shares; 2. Operations past due over 90 days; 3. According to Bacen‟s Res. 2,682 criteria
30% 26% 22% 19% 15%
62%59%
57%
52%
47%
8%15%
21%29%
38%
June/12 Mar/12
Until
June/10
Dec/12 Sept/12
After
Sept/11
100%
Dec/11
July/10-
Sept/11
...and have contributed to the reduction of
auto finance delinquency
7.7% 7.8%
Dec/12
8.7%
Sept/12
5.9%
Mar/12 June/12 Dec/11
8.7%
E-H NPL³ – managed¹ auto finance loan portfolio (%)
9.1%
Sept/12
7.7% 9.5% 8.9%
Mar/12 Dec/11 Dec/12 June/12
7.4%
90-day NPL² - managed¹ light vehicle loan portfolio (%)
Consumer finance – production
Auto finance loan porfolio¹ by vintage (%)
12
Cons. Finance’s ALL expenses reduced 34% in 4Q12 QoQ Despite the ALL reduction, there was a new increase in the consolidated coverage ratio
ALL expenses dropped for the third
consecutive quarter
Note: from 3Q12, the income from the recovery of write-offs to loss started to be allocated as part of “ALL Expenses”, adjusting both ALL and Total Revenues previous figures
1. Ratio between ALL balance and balance of operations past due over 90 days
The consolidated coverage ratio reached 100%
in Dec/12 (80% in Dec/11)
ALL and Coverage ratio
770
146
124119
119
182
Consumer
Finance
Wholesale
4Q12
951
3Q12
1,286
1,167
2Q12
1,398
1,279
1Q12
1,456
1,332
4Q11
1,294
1,147
∆ 4Q12/
3Q12
-34%
-26%
Dec/12
99.9%
Sept/12
93.1%
June/12
87.4%
Mar/12
84.1%
Dec/11
80.0%
2,854 2,238 -22%
Allowance for loan losses (ALL) expenses (R$M) Consolidated coverage ratio¹ (%)
13
Examples of initiatives for cost reduction and greater
efficiency implemented in 2012
• Adequacy of organizational structures to the new
level of origination in Consumer Finance
• Integration of corporate areas – Legal, Risks,
Finance, HR, Operations and Technology, that used to
act in a separate way in the past
• Adjustment in the commissions paid to distribution
channels (auto finance and payroll loans)
• Implementation of a new compensation policy
• Rationalization of rent expenses, e.g.:
– Space reduction on the sites Rochaverá, Berrini and
Paulista
• Revision of expenses with advisory, telephony,
media, events, travel and sponsorships, etc
Efficiency: important restructuring and cost reduction
initiatives impacted non-interest expenses in the short-term
Adopted initiatives shall lead to a
reduced cost base in 2013 YoY
Excluding contingencies, non-interest
expenses increased only 2.7% in 2012 YoY
Non-interest expenses
1. Other operating and other tax (Federal, state and local taxes (excludes ISS, PIS and Cofins)); 2. Expenses with provisions for civil and labor contingencies
Level of non-interest expenses
in 2013 shall be lower than in 2012
Non-interest expenses
859 978
694
3,346
+15.7%
Admin.
Personnel
Contingencies²
Others¹
2012
1,572
2011
2,893
1,545
310
Non-interest expenses excluding contingencies
859 978
2,652 +2.7%
Admin.
Personnel
Others¹
2012
1,572
2011
2,582
1,545
14
Wholesale businesses also maintained their good
performance in 2012, with consistent income generation
Note: the first series of CART debentures was the first major long-term infrastructure debenture issue under Law 12.431/11 1. Net of credit recovery; 2. Includes banking fee income; 3. Anbima‟s ranking (Associação Brasileira das Entidades dos Mercados Financeiros e de Capitais) Source: Anbima
Wholesale
+10%
2012
479
2011
437
946 986
415543ALL
expenses¹
+12%
2012
1,530
Net margin
2011
1,362
Banco Votorantim continues well
positioned in Local Fixed Income
Wholesale shall keep reporting good results
in all its businesses in 2013
Local Fixed Income operations – 4Q12
In 2012, Wholesale’s net
income grew 12% YoY...
CRA – 4-year
R$ 50,000,000
Leading Coordinator
Nov/2012
Debentures – 5 and 7-year
R$ 293,985,000
Leading Coordinator
Nov/2012
Debentures – 12-year
R$ 750,000,000
Coordinator
Dec/2012
Promissory Note – 180-day
R$ 100,000,000
Leading Coordinator
Sept/2012
Debentures – 5-year
R$ 130,000,000
Coordinator
Nov/2012
Promissory Note – 60-day
R$ 36,000,000
Leading Coordinator
Nov/2012
...and fee income generation
increased 10%
Net interest income (R$M) Fee income² (R$M)
Banco Votorantim‟s distribution rankings³ in 2012:
• 6th place – Local Fixed Income
• 2nd place – FIDC and Securitization
• 4th place – CRI
15
Focus on opportunities related to infrastructure
investments and the growth of capital markets
Wholesale: expanded¹ loan portfolio
reached R$41.3B in Dec/12 Corporate & IB (CIB) highlights
1. Includes guarantees provided and private securities; 2. Ratio between ALL balance and balance of operations past due over 90 days; 3. Operations past due over 90 days
Wholesale – CIB and Middle Market
Middle Market highlights
CIB and Middle Market have reinforced their focus on
profitability, and kept conservatism in credit provisions
More disciplined capital allocation (focus on profitability)
Focus on clients with annual revenues exceeding R$600M
Improved relevance to customers, through strengthening of
the product platform. 2012 highlights:
• Derivatives (hedge): “Top 10” in CETIP‟s ranking
• Investment Bank: 42 Fixed Income (R$27.0B) ; 3 Equities
(R$1.4B), and the announcement of 7 M& A operations (R$4.4B)
• Solid performance in Project Finance and Corporate Finance
• “One-stop-shop Project Structuring factory”
Focus on profitability (vs. growth)…
• Cautious loan portfolio expansion
• Delinquency³ levels below market average (3.1% in Dec/12)
… and on clients with annual revenues above R$50M
Corporate
(CIB)
Middle
Market
2012
41.3
2011
39.2
31.8
9.5
30.2
9.0
2010
37.2
31.3
5.9
2009
35.6
33.4
2.1
∆
‟12/‟11
5.5%
5.4%
5.5%
Coverage ratio² 185%
Wholesale expanded¹ loan portfolio (R$B)
16
Private Bank highlights
VWM&S reached R$47.3B in assets under management Partnership with BB was enhanced and consistent performance was recognized
Wealth Management expanded 10% in 12 months
and VAM established itself as 9th largest Asset¹ Asset Management highlights
1 Votorantim Asset Management „s(VAM) position in Anbima‟s managers‟ ranking ; 2. Includes Treasury, Brokerage and offshore products; 3. Total assets by the end of Dec/12 Source: Banco Votorantim; Anbima
Brazil’s 9th largest asset manager – Anbima‟s managers‟
ranking
Enhanced synergies with BB: assets from funds structured in
partnership reach R$3.3B³
• Demand for “BB Progressivo II”, a R$1.6B real estate fund,
exceeded R$20B
VAM’s consistency of performance was highlighted in
major 2012 rankings
• “Guia Exame de Investimentos Pessoais 2012” (Personal
investments)
• “Star Ranking da Valor Investe / S&P”
11% growth in assets under management (AuM)
ISO 9001:2008 Certificate for the scope of Relationship,
Wealth Management and Advisory
Focus on estate planning via customized solutions, with
an open architecture concept
Wholesale – Wealth Management
VWM&S aims at being one of the best in structuring and
managing high value-added products
2008
22.9
2010
47.3
19.1
31.4
2009
43.0
2011 2012
+10%
13th Anbima¹
ranking 9th
VWM&S assets under management²(R$B)
17
Summarizing, great progress was made in the Change
Agenda during 2012, with full support from Shareholders
Change
Agenda
Production
Quality
Credit: improvement of credit policies, processes and models
• Incorporation of new variables into credit models (e.g.: BB‟s internal ratings; Serasa Experian)
• Implementation phase of the new “credit motor” (FICO® Blaze Advisor®) – will allow increase in automated
credit decisions and expansion in the capacity of risk discrimination
Profitability: adaptation of origination volumes and commissions paid to distribution channels
Operating model:
• Origination to Banco Votorantim: intensified focus on multi-brand dealers (used auto finance);
• Origination to BB: in 2013, implementation of the model for direct origination to BB (“BV Originadora”)
Handling of
the Stock
Credit collection: revision and intensification of collection processes, with more segmented action
• New collection platform was acquired (named Cyber Financial)
• Coverage ratio¹: gradual increase of the Consumer Finance indicator (90% in Dec/12 vs. 70% in Dec/11)
Efficiency
and
Governance
Structure: integration of corporate areas and adaptation of structures to the new level of origination
Compensation: revision of the internal compensation model and of incentives to distribution channels
Talents: attraction of market experienced professionals and appreciation of internal talent
Processes and controls: strengthening of internal controls and improvement in policies and processes (e.g.:
downgrading initial ratings for auto finance)
Progress made in the Change Agenda during 2012 – examples
Change Agenda
In 2013, Banco Votorantim will complete its process of
structural adjustment, started in 4Q11 1. Ratio between ALL balance and balance of operations past due over 90 days
18
Even with all the improvements, results in 2012 were
impacted by four main factors
Delinquency and Coverage
Fee income - Cons. Finance Expenses with contingencies4
(R$B)
(R$M) (R$M)
+47%
2012
4,548
2011
3,092 556
809
-31%
2012 2011
70% 78% 90%
9.5
June/12 Dec/11
7.4
Dez/12
7.7
(R$M)
1. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs (“Fundos de Investimento em Direitos Creditórios”) of which Banco Votorantim
owns 100% of the subordinated shares; 2. Ratio between ALL balance and balance of operations past due over 90 days; 3. Impact on the Net interest income before early settlement expenses
and credit provisions; 4. Provisions for civil and labor contingencies
Change Agenda
ALL expenses – Cons. Fin.
Gross results from credit
assignments³
Resolution 3,533
• Effective since Jan/12
• Changed the rules for recording
credit assignments with recourse
– Revenues cannot be recognized
by the time of the assignment
• BVF keeps responsible for
expenses with the early settlement
of credits assigned until Dec/11
(2012: R$394M)
37
2011 2012
2,244
(R$M)
1 e 2
Cons. Finance² Cov. Ratio
Auto finance delinquency¹ (%)
3
Consumer finance origination
4
694
310
+124%
2012 2011
Others
-45%
2012
15,0
Auto
finance 11,4
3,6
2011
27,3
21,1
6,2
• Reduced origination
– Focus on both quality and
profitability of new vintages
• Adaptation of organizational
structures to the new
origination levels
19
Total revenues (Net interest income, Fee income and Other revenues) Allowance for loan losses (ALL) expenses
Non-interest expenses (Personnel, Administrative, Operating and Other tax¹) Net income and Net financial margin
R$ million
4Q12 results kept trajectory of gradual improvement With a significant 34% reduction in Consumer Finance‟s ALL expenses and positive Net margin
Consolidated results
770
Consumer
Finance
Wholesale
4Q12
951 182
3Q12
1,286
1,167
119
2Q12
1,398
1,279
119
1Q12
1,456
1,332
124
4Q11
1,294
1,147
146
-358-497-536
-597
205
-299-320-392
4Q12 3Q12
-166
2Q12 1Q12 4Q11
-643³
4Q12
1,563
3Q12
1,403
2Q12
1,354
1Q12
1,365
4Q11
1,168
Net financial margin Net income (R$M)
2,854 2,238 -22%
433 362 372 395 443
209235 244 221
279
181250
183139Personnel
Administrative
Contingencies²
Others
4Q12
1.001 30
3Q12
829 30
2Q12
773 18
1Q12
742
122 23
4Q11
823
∆ 4Q12/
3Q12
-34%
-26%
Note: from 3Q12, income from the recovery of write-offs to loss started being allocated as part of “ALL expenses”, therefore both ALL and Total revenues previous figures were adjusted
1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies; 4. 4Q11 changed according to accounting reclassification
20
In this context, Banco Votorantim kept on strengthening the
quality of its credit risk
Banco Votorantim – credit risk quality
Liquidity Free cash continues at conservative levels – above historic average
~R$7B stand-by credit facility from Banco do Brasil, which has never been tapped
Funding
After successfully extending the average funding tenor, with reduction of the maturity
mismatch between assets and liabilities, moderation in the loan portfolio’s growth
substantially reduced the need for additional funding
• Favorable context allows greater focus on the reduction of funding costs
Coverage
Ratio¹
Wholesale: Coverage Ratio maintained at higher levels (Dec/12: 185%)
Consumer Finance: gradual Coverage Ratio increase in 2012 (Dec/12: 90%; Dec/11: 70%)
Capital
Basel Ratio of 14.3% in Dec/12 (14.1% in Dec/11), with a 9.3% Tier I ratio
Maintenance of the capital structure at adequate levels, as set out in the
Shareholders’ Agreement
Strengthening of Banco Votorantim‟s credit risk quality – examples
1. Ratio between ALL balance and balance of operations past due over 90 days
Success in the implementation of the Change Agenda during
2012 indicates a year of 2013 with substantially better results
21
Banco Votorantim and the implications of the economic-regulatory context
Businesses and Change Agenda advances
Annexes – Financial highlights
Agenda
22
Financial highlights Reduced allowance for loan losses in 4Q12 contributed to positive Net Financial Margin (+R$205M)
Total revenues (Net interest income, Fee Income and Other Operating Income) Allowance for loan losses expenses
Financial highlights
Non-interest expenses (Personnel, Administrative, Operating and Other Tax¹) Net income and Net financial margin
R$ million
770
-26%
Consumer
Finance
Wholesale
4Q12
951 182
3Q12
1,286
1,167
119
2Q12
1,398
1,279
119
1Q12
1,456
1,332
124
4Q11
1,294
1,147
146
-358-497-536
-597
205
-299-320-392
2Q12 1Q12 4Q11
-643³
4Q12 3Q12
-166
+11%
4Q12
1,563
3Q12
1,403
2Q12
1,354
1Q12
1,365
4Q11
1,168
433 362 372 395
209235 244 221
279
181
443
250
183139
Administrative
Personnel
Contingencies²
Others
4Q12
1,001 30
3Q12
829 30
2Q12
773 18
1Q12
742
122 23
4Q11
823
Net income (R$M) Net financial margin
Note: from 3Q12, the income from the recovery of write-offs to loss started to be allocated as part of “ALL Expenses”, adjusting both ALL and Total Revenues previous figures
1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies; 3. 4Q11 amended according to accounting reclassification
23
Dec/12
51.0
Sept/12
52.6
June/12 Mar/12
43.7
Dec/11
39.3
49.0
Note: criteria for calculating the efficiency ratio was revised in Dec/12, and is reflected in the graph‟s history
1.Ratio between (a) the sum of Personnel and Other administrative expenses and (b) the sum of Net interest income, Fee income, Other operating income/expenses
1Q12
4.2 4.3
4Q11
3.3
2Q12
4.4
4Q12 3Q12
4.4
Net Interest Margin – NIM (% p.y.) Efficiency ratio1(%) – last 12 months
Financial highlights
ER impacted by the reduction in
Income from credit assignments
Financial highlights
24
47.3 +4%
Dec/12 Sept/12
45.6
June/12
43.2
Mar/12
44.6
Dec/11
43.0
Expanded¹ managed² loan portfolio
Total assets Assets under management
Loan portfolio
121.0 +8%
Dec/12 Sept/12
111.6
June/12
113.6
Mar/12
113.5
Dec/11
111.9
Financial highlights Off balance credit assignments with risk retention tend to zero because of Bacen‟s Res. 3,533
-3%
Expanded¹
loan portfolio
Off balance
securitization
Dec/12
90.1
78.6
11.4
Sept/12
92.6
79.2
13.4
June/12
95.7
80.3
15.4
Mar/12
97.6
79.6
18.0
Dec/11
97.4
76.8
20.5
Dec/12
-2%
57.0
Sept/12
58.1
June/12
58.8
Mar/12
58.8
Dec/11
58.7
Financial highlights
R$ billion
1 Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs (“Fundos de Investimento em Direitos Creditórios”) of which Banco Votorantim owns 100% of the subordinated shares
25
Expanded managed loan portfolio by segment
Expanded loan portfolio (Includes guarantees provided and private securities)
Expanded managed² loan portfolio (Expanded loan portfolio, plus credit assignments and FIDCs)
R$ billion
30.9
7.0
Mar/12
79.6
32.4
9.1
31.4
6.7
Dec/11
76.8
30.2
9.0
31.3
6.4
-1%
80.3
Middle
market
Auto
finance
Others¹
Dec/12
78.6
31.8
9.5
29.9
7.4
Sept/12
79.2
32.2
9.5
30.3
7.2
June/12
32.7
9.6
Corporate
43.0
32.4
9.1
45.6
Dec/11
97.4
30.2
9.0
47.5
10.6
-3%
38.8
9.9
97.6 92.6
Dec/12
90.1
32.2
9.5
40.8
10.1
31.8
9.5
June/12
95.7
32.7
9.6
10.5
Mar/12
10.4
Sept/12
-1.8%
-4.8%
-
-1.1%
∆Dec12
/Sept12
3.1%
-1.3%
-
-1.1%
∆Dec12
/Sept12
9.1 15.4 Credit assignments³
with recourse (R$B) 10.5
Financial highlights
2.4 5.2 Credit assignments³
for FIDCs (R$B) 2.9
1. Payroll loans, CDC, credit cards and individual loans; 2. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs (“Fundos de Investimento em Direitos Creditórios”) of which Banco Votorantim owns 100% of the subordinated shares; 3. Refers to off balance resources
26
Dec/12
6.6%
4,518
Sept/12
6.9%
4,914
June/12
6.9%
5,091
Mar/12
5.9%
4,536
Dec/11
4.6%
3,675
Dec/12
99.9%
Sept/12
93.1%
June/12
87.4%
Mar/12
84.1%
Dec/11
80.0%
Allowance for loan losses balance³ (R$M) Coverage ratio4 (%)
90-day NPL/
Managed loan portfolio¹(%)
E-H NPL²/
Managed loan portfolio (%)
ALL balance/Managed loan portfolio
ALL balance
Credit indicators Improvement in coverage and asset quality indicators
Financial highlights
1 1. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs (“Fundos de Investimento em Direitos Creditórios”) of which Banco Votorantim
owns 100% of the subordinated shares; 2. According to Bacen‟s Res. 2,682 criteria; 3. Refers to the managed loan portfolio; 4. Ratio between ALL balance and balance of operations past due
over 90 days
Dec/12
2.4%
6.6%
8.3%
Sept/12
2.4%
7.4%
9.4%
June/12
2.0%
7.5%
9.6%
Mar/12
1.8%
7.0%
8.9%
Dec/11
1.4%
5.8%
7.4%
Dec/12
2.5%
6.0%
7.4%
Sept/12
2.5%
6.5%
8.1%
June/12
2.1%
6.3%
8.0%
Mar/12
2.0%
5.8%
7.1%
Dec/11
1.7%
4.5%
5.5%
Total Wholesale Consumer Finance Consumer Finance Total Wholesale
27
Funding sources Financing bills and debentures gained importance in the Bank‟s funding composition
Dec/11
20.7
86.6
13.5
7.5
10.9
8.4
25.6
20.7
81.0
12.9
7.8
11.0
Subordinated debt
13.5
7.4
Loans and Onlendings 11.5
Dec/12
Issuances and Others¹
Financing bills² 7.1
Deposits 25.6
Debentures³
85.8
Sept/12
10.1
78.1
10.2
19.8
7.0
15.5
June/12
23.0
11.8
9.8
77.2
10.2
20.2
Mar/12
16.2
8.0
18.4
13.4
11.0
(Financing bills4 +
Debentures³)/Total 32%
1. Includes Eurobonds, Debentures, LCA, Option box and NCE repo; 2. Does not include Subordinated financing bills; 3. Linked to repo operations; 4. Includes Subordinated financing bills;
5. Includes both on and off balance assets Note: International funding is 100% swapped for BRL; the above graph does not consider sources from credit assignments
Funding evolution (R$B)
38% 40%
∆Dec12
/Sept12
-1.1%
13.4%
0.5%
-13.1%
-15.9%
1.9%
Securitization5 (R$B) 20.5 13.4 14.4
11.5%
Financial highlights
Additionally, Banco Votorantim has a stand-by credit
facility of ~R$7B from BB, which has never been tapped
28
Basel Ratio and Shareholders’ Equity
Tier I
Tier II
Dec/12
14.3%
9.3%
5.0%
Sept/12
15.2%
9.9%
5.3%
June/12
15.5%
10.2%
Dec/11
14.1%
9.5%
4.7% 5.3%
4.4%
8.7%
Mar/12
13.0%
Basel Ratio
7,566
Mar/12
9,304
Dec/12 Dec/11
7,824 8,210
Sept/12
8,829
June/12
Shareholders’ Equity (R$M)
R$2B capital
increase in June/12
Financial highlights
29
Banco Votorantim’s main ratings
Ratings
Banco Votorantim is an Investment Grade bank by Fitch, Moody’s and S&P
RATING
AGENCIES
International National
Long-Term Short-Term Long-Term Short-Term Long-Term Short-Term
Fitch Ratings Local Currency Foreign Currency Nacional
BBB- F3 BBB- F3 AA+(bra) F1+(bra)
Moody’s Local Currency Deposits Foreign Currency Deposits Nacional
Baa2 P-2 Baa2 P-2 Aaa.Br BR-1
Standard & Poor's Local Currency Foreign Currency Nacional
BBB- A-3 BBB- A-3 brAAA brA-1
30
Conciliation between 4Q12 Managerial and Accounting results
Managerial x Accounting results
Income from Financial Intermediation 3.352 (2) (114) 3.236
Loans 2.148 - (114) 2.034
Derivative Financial Instruments (405) (2) - (406)
Expenses from Financial Intermediation (2.079) - - (2.079)
Net Interest Income 1.273 (2) (114) 1.156
Allow ance for Loan Losses (1.066) - 114 (951)
Net Financial Margin 207 (2) - 205
Other Operating Income/Expenses (679) (2) - (712)
Fee Income 286 - - 286
Personnel and Administrative Expenses (721) - - (721)
Tax Expenses (129) 0 - (128)
Other Operating Income/Expenses (168) (2) - (171)
Operating Income (503) (4) - (507)
Non-operating Income (24) - - (24)
Income before Taxation and Profit Sharing (527) (4) - (530)
Provision for Income Tax and Social Contribution 288 4 - 292
Net Income (Loss) (358) - - (358)
ALL Credit
Assignments²
Managerial
4Q12
1. Foreign exhange variation of overseas investments, accounted in Other Operating Income (Expenses), as w ell as f iscal and tax
effects from the foreign investments hedge strategy, accounted in Tax Espenses (PIS/Cofins) and IT/SC, w ere relocated to Income
from Derivative Financial Instruments;
2. Expenses w ith allow ance for loan losses related to credit assignments w ith recourse, and Income from the recovery of w rite-
offs to loss, both accounted in Loans and relocated to Allow ance for Loan Losses.
INCOME STATEMENT SUMMARY
(R$ Million)
Accounting
4Q12Hedge¹
