Institutional Presentation
2Q16
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.
Agenda
Company Profile 1
Banking Industry
2
Earnings Highlights 3
Macroeconomic Information 4
Company Profile
1
5
Founded in 1808
54.4%1 controlled by the Federal Government
Largest Bank in Latin America in total assets
Acess to a broad spectrum of clients
5
1st company listed on the stock exchange in Brazil
(1) As of Jun/2016.
6
Large, diversified and stable funding base
Business diversification including:
Banking Services
Asset Management
Means of Payment
International Franchise
6
Insurance
Capital Market
7
1. Market Leadership
2. Solid Financial Performance
3. Focus on Services
4. Lowest deliquency of the Brazilian
Banking Industry
5. Stable and Diversified Funding
200(+) years of solid performance
Investment Highlights
8
Timeline / Governance
BB Shares enter the ISE portfolio
2005
Follow on (primary shares)
2010
Conversion of preferred shares to commom shares
2001 Private offering of subscription bonus
2004
ADR 1 Launching
2009
100% Tag Along clause
2002
BB Shares enter the ITAG portfolio
2003
Follow on (secondary shares)
2007
Banco do Brasil joined “Novo Mercado” (BOVESPA)
2006
BB Shares enter the IBRX-50 portfolio
1998
BB Shares enter the IBrX portfolio
1995
Capitalization and Restructuring Plan
1996
The Board of Directors of BB approved the migration of its program of American Depositary Receipt-ADR from level I to level II
2014
BB Seguridade IPO
2013
BB Shares enter Dow Jones Sustainability Index (DJSI) of NY stock exchange
2012
8
1st company listed on the stock exchange in Brazil
1906
9
Ownership Structure
Free Float 42.8% as of Jun/2016 Free Float Breakdown (%)
Treasury Shares 2,8%
National Treasury
54,4%
Foreign Investors
19,8%
Other 23,0%
21,6 21,6 21,1 19,9 19,8
18,1 18,1 18,6 22,2 23,0
39,7 39,8 39.7 42,1 42,8
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Foreign Investors Other
10
Global Presence 10
Banco do Brasil in the world
Presence in 24 countries with 38 points of service
Branches
Sub-branches
Representative Offices
Subsidiaries and affiliates
Shared Services Units
11
4
7
14
2
11
Presence in Brazil
NORTH
27.7% NORTHEAST
31.4%
SOUTHEAST
20.5%
SOUTH
24.9%
MIDWEST
26.5%
Structural data (Jun/16)
Points of services1
17,181
Branches
5,428
Clients
64,192 mil
Employees
109,615 (1) Own Service Network
Own Service Network
Branches
MaisBB Network¹
Shared Service Network2
17,181
5,428
14,110
35,680
Total 66,971
(1) Banking Agents and Postal Bank branches.
Market Share – 23.9%
(Number of branches)
Brazil Total Service Network Jun/16
(2) Shared Service Network: lotteries (CEF), Banco 24h
e ATM (BRB+CEF).
Our more than 64 million clients count on more than 66 thousand points of service, present in 99.8% of the Brazilian municipalities and an increasingly digital Bank.
12
12
The Banco do Brasil App is 5th main App in
Brazilian’s everyday life.¹
(1) Source: eMarketer – Jun/2016. *NPS – Net Promoter Score
Digital Experience
Innovation
1. WhatsApp
2. Facebook
3. Google
4. Instagram
5. Banco do Brasil
Ourocardo ELO NOW International
Acceptance at Discover and Diners
networks.
Available in more than 39 millions
places in 185 countries.
1.7 million ATM´s for withdrawals
abroad
Profitability increase in about 20% to 44%.
35% of efficiency growth.
Estilo customers satisfaction and loyalty (NPS)* is 16% higher.
BB Estilo Digital e BB Exclusivo
Clients June/16
Estilo Digital – 552 thousand
Estilo – 521 thousand
Personalizado – 3,089 thousand
Exclusivo – 52 thousand
Estimated
2016
Estilo /
Estilo Digital 1.3 million
Exclusivo /
Personalizado 3.7 million
13
13
Automated Service Channels - Transactions BB Digital – Mobile (million transactions)
1,662
2,512
Ourocard APP
Cards Block/Unblock function
Expenses in Timeline format
Function New at the Market – Allows
questioning unrecognized purchases
“Tap and pay” – payment agility
Authorization for abroad usage
Ourocard-e
+250 thousand virtual cards, 108%
growth compared to 2Q15
1.2 million transactions since launch
in Aug/14
R$160 million total turnover on the
last 12 months
(1) Owned by BB.
2Q15
2Q16
Jun/16 Internet
26.6%
Mobile
36.8%
ATM¹
18.6%
In Branches
4.4%
Others
13.6% +51.1%
Innovation
14
Customer Segmentation
Individuals Companies
14
Private > R$ 2mm
Estilo / Estilo Digital > R$ 8k
Personalizado / Exclusivo¹ > R$ 4k < R$ 8k
Mercado Emergente < R$ 1.5k
Varejo > R$ 1.5k < R$ 4k
> R$ 1.5bn > R$ 2bn Large Corporate
> R$ 400mm < R$ 1.5bn
> R$ 600mm < R$ 2bn
Corporate
> R$ 120mm < R$ 400mm
> R$ 200mm < R$ 600mm
Empresarial Upper Middle
> R$ 25mm < R$ 120mm
> R$ 25mm < R$ 200mm
Empresarial Middle
> R$ 5mm < R$ 25mm Empresa
> R$ 1mm < R$ 5mm Pequena Empresa
< R$ 1mm Microempresa
Industry Services
(1) Digital service only.
15
Assets and Market Share
(1) Source: Central Bank of Brazil (*) Mar/2016
1,445.1
Available Funds, Short-Term
Interbank Investments, Interbank and
Intrabank Accounts
Securities and Financial Derivatives
R$ Billion
Loans
Permanent Assets
Other
1.371,0 1.402,0 1.401,1 1.404,9 1.445,1
20,9 20,1 20,2 20,3 20.3*
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Assets Market Share¹ (%)
2,2%
13.3%
8.4%
34,8%
41.4%
Part. % - Jun/16
16
Loan Portfolio – Broad Concept¹
(1) It includes private securities and guarantees provided. (2) It considers the classified loan portfolio.
346,4 355,2 364,6 348,5 327,6
176,8 179,7 183,3 185,9 187,9
168,3 171,8 174,9 179,5 184,5
68,5 81,7 73,8 61,7
51,2
760,0 788,4 796,7
775,6 751,2
20,3 20,3 20,4 20,6 20,6
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Corporates Individuals Agribusiness Abroad Market Share² - %
R$ Billion
9.0%
22.1%
23.3%
45.6%
6.8%
24.6%
25.0%
43.6%
9.6% on Jun/15
6.3% on Jun/15
17
17
Jun/15 Mar/16 Jun/16
Balance Provision Share %
Balance Provision Share %
Balance Provision Share %
AA 389,667 - 56.7 371,909 - 53.0 341,937 - 49.6
A 111,259 556 16.2 138,407 692 19.7 132,192 661 19.2
B 121,023 1,210 17.6 115,445 1,154 16.4 120,082 1,201 17.4
C 27,623 829 4.0 25,554 767 3.6 39,567 1,187 5.7
D 5,102 510 0.7 6,303 630 0.9 8,465 847 1.2
E 10,056 3,017 1.5 12,353 3,706 1.8 15,443 4,633 2.2
F 3,556 1,778 0.5 5,352 2,676 0.8 5,161 2,580 0.7
G 3,699 2,589 0.5 7,133 4,993 1.0 4,537 3,176 0.7
H 15,680 15,680 2.3 19,570 19,570 2.8 22,684 22,684 3.3
Total 687,664 26,170 100.0 702,027 34,189 100.0 690,067 36,968 100.0
AA-C 649,571 2,595 94.5 651,315 2,613 92.8 633,778 3,049 91.8
D-H 38,093 23,575 5.5 50,711 31,575 7.2 56,289 33,919 8.2
Total Loan Portfolio - Risk Level¹
R$ Million
(1) BB Classified Loan Portfolio.
18
Jun/15 Mar/16 Jun/16
Payroll 61,087 62,589 62,959
Mortgage 32,833 38,446 39,706
Salary Loans 18,784 19,161 20,482
Auto Loans 9,487 7,844 7,333
Credit Cards 21,552 22,730 22,906
Consumer Finance 6,764 7,607 7,392
Overdraft 2,525 2,830 2,775
Microcredit 810 706 700
Other 5,052 7,140 7,801
TOTAL 158,894 169,054 172,054
76.9% 75.7% 75.8%
Loans to Individuals¹
R$ Million
(1) It considers the organic loan portfolio.
19
32,8 38,4 39,7
11,2 11,9 11,9
44,1 50,3 51,6
1,22 1,38 1,29
Jun/15 Mar/16 Jun/16
Mortgages withCompanies
Mortgages withIndividuals
Mortgage NPL +90days (%)
Salary Loans Auto Loans
Mortgages Payroll²
Growth in lower risk lines¹
88.9% 88.7% 88.6%
7.4% 8.1% 8.3% 3.7% 3.2% 3.1%
61,1 62,6 63,0
1,32 1,28 1,25
Jun/15 Mar/16 Jun/16
Private SectorEmployees
INSS Retirees andPensioners
Civil Servants
Payroll NPL +90 days(%)¹
18,8 19,2 20,5
2,61 2,30 2,52
Jun/15 Mar/16 Jun/16
Total
Salary Loans NPL +90days (%)
24,4 22,6 21,5
0,79 0,93 0,95
Jun/15 Mar/16 Jun/16
Auto Loans
Auto Loans NPL +90days (%)
(1) Classified Loan Portfolio (2) Organic Loan Portfolio
+9.0%
+3.1%
-12.0%
R$ Billion
+17.1%
20
Relationship
Individuals Portfolio¹ Individuals Portfolio Profile²
66,6% 68,2% 68,8%
20,9% 19,9% 19,7%
7,9% 8,0% 8,1%
4,6% 3,9% 3,4%
Jun/15 Mar/16 Jun/16
Time of Relationship
More than 10 years From 5 to 10 years From 2 to 5 years Up to 2 years
79,2% 79,4% 79,6%
13,6% 12,9% 12,5%
7,2% 7,7% 7,8%
Jun/15 Mar/16 Jun/16
Direct Consumer Credit + Auto Loans
Civil Servants
Private Sector Employees
INSS Retirees and Pensioners
(1) Classified Loan Portfolio (2) Organic Loan Portfolio
21
178,9 172,1 160,6
103,5 105,6 99,8
22,7 20,3 15,2 18,2 19,7 19,1
23,1 30,8 32,8
346,4 348,5 327,6
Jun/15 Mar/16 Jun/16
Working Capital² Investments + Private Securities Guarantees Trade Finance³ Other
(1) It includes private securities and guarantees provided. (2) It includes Working Capital, Receivables, Credit Card and Overdraft Account. (3) It Includes FEC/ACE and BNDES Exim. (4) Companies with annual revenues up to R$ 25 million.
Corporate Portfolio by Size
-5.4%
-2.4% on Jun/15
-13.7% on Jun/15
Loans to Companies – Broad Concept¹
R$ Billion
252,4 262,6 246,4
94,1 85,9 81,2
346,4 348,5 327,6
Jun/15 Mar/16 Jun/16
Very Small and Small companies⁴ Total
22
Relationship Amount Distribution by Time of
Company Foundation – Very Small
and Small Companies Portfolio (R$ bn)
(1) BB Classified Loan Portfolio - Companies with annual revenues up to R$ 25 million.
Total
Amount
R$81.1bn
41,3% 43,9% 44,8%
33,9% 34,1% 34,3%
20,2% 19,3% 18,5%
4,5% 2,7% 2,4%
Jun/15 Mar/16 Jun/16
Time of Relationship
More than 10 years From 5 to 10 years From 2 to 5 years Up to 2 years
0,7
8,5
23,4
28,4
20,1
Up to 2years
From 2 to5 years
From 5 to10 years
From 10to 20years
More than20 years
Very Small and Small Companies Portfolio¹
23
Carteira PJ por setor
Jun/15 Share % Mar/16 Share % Jun/16 Share % Oil and Gas 45,997 10.2% 45,739 10.1% 42,595 10.1%
Mining and Metallurgy 41,917 9.3% 42,310 9.3% 38,732 9.2%
Eletricity 40,182 8.9% 39,416 8.7% 38,274 9.1%
Government 33,017 7.3% 39,858 8.8% 37,997 9.0%
Foodstuffs of Vegetable Origin 35,732 7.9% 33,862 7.5% 33,532 8.0%
Transportation 30,945 6.9% 32,095 7.1% 27,080 6.4%
Automotive 27,633 6.1% 26,372 5.8% 23,041 5.5%
Services 24,371 5.4% 23,056 5.1% 21,525 5.1%
Real Estate Agents 20,587 4.6% 21,358 4.7% 20,778 4.9%
Retail Trade 19,217 4.3% 18,099 4.0% 17,194 4.1%
Financials Institutions 12,268 2.7% 16,933 3.7% 16,439 3.9%
Foodstuffs of Animal Origin 14,824 3.3% 17,188 3.8% 16,427 3.9%
Specific Activities of Construction 14,840 3.3% 14,733 3.3% 13,821 3.3%
Agricultural Inputs 10,856 2.4% 11,105 2.5% 10,191 2.4%
Textile and Clothing 12,475 2.8% 11,103 2.5% 10,116 2.4%
Pulp and Paper 10,779 2.4% 9,776 2.2% 8,765 2.1%
Electrical and Electronic Goods 9,648 2.1% 8,841 2.0% 8,048 1.9%
Heavy Construction 8,978 2.0% 7,865 1.7% 7,067 1.7%
Chemicals 9,291 2.1% 8,056 1.8% 7,065 1.7%
Wholesale and Various Industries 6,851 1.5% 7,122 1.6% 6,945 1.6%
Telecommunication 8,342 1.8% 7,449 1.6% 5,894 1.4%
Woodworking and Furniture 6,836 1.5% 6,036 1.3% 5,576 1.3%
Leather and Shoes 3,054 0.7% 2,793 0.6% 2,631 0.6%
Beverages 1,741 0.4% 1,631 0.4% 1,598 0.4%
Other Activities 1,119 0.2% 69 0.0% 45 0.0%
Total 451,502 100% 452,866 100% 421,374 100%
Companies Portfolio by Macro-sector¹
(1) Included Companies and Agro Companies Portfolio.
R$ Million
24
9.6% growth in the past 12 months
62.0%* of the total Rural Credit is at Banco do Brasil
24.6% of Banco do Brasil Credit Portfolio**
Agribusiness
Portfolio
R$184.5Billion
24
The Agribusiness Bank in Brazil
*As of May/16 **It considers Agribusiness Broad Concept Portfolio
25
Agribusiness
Agribusiness Loan Portfolio by Costumer Type¹
(1) It includes Rural Product Bills and guarantees provided. (2) Source: Central Bank of Brazil – May/16.
Harvest 15/16 (Jun/16)
Use of Mitigators (Working Capital for Input Purchase)
120,7 120,6 123,3 125,9 131,3
47,6 51,2 51,6 53,6 53,2
168,3 171,8 174,9 179,5 184,5
61,0 60,5 60,9 61,2 62,0
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Individuals Companies Market Share - %
Insured
64.9%
Not Insured
35.1%
Total disbursement in15/16 harvest
R$ 82.4 billion, 12,4% higher than
the 14/15 harvest. 1st 62.0 % Market Share²
+9.6%
26
The Brazilian Foreign Trade Bank
Operating abroad for over 50 years,
Banco do Brasil has supported Brazil's
relations with its trading partners, being
a reference point for entrepreneurs,
investors, economic agents and
foreign governments that maintain or
wish to maintain investments in Brazil.
26
3.047
1.865
2.276
27,6 26,7
24,2
2Q15 1Q16 2Q16
Contracted Amount (US$ million) Market share (%)
FCE/ACE
27
R$ Millions Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Commercial Funding¹ 632,913 641,603 639,193 660,175 669,506 638,611 624,778
Domestic Onlending 89,157 90,686 90,032 90,543 90,065 88,082 86,603
Financial and Development Funds 10,840 12,265 12,404 14,677 15,003 14,781 13,741
Subordinated Debt 49,413 49,664 50,764 54,256 54,018 51,903 52,265
Capital Eligible Debt³ 29,351 32,876 32,441 37,926 35,393 33,728 32,053
Commercial Papers ⁴ 2,549 2,630 2,735 47 2,117 2,309 2,393
HCDI domestic 150 110 175 210 256 20 46
Foreign Borrowing² 61,654 71,821 72,518 94,590 82,306 65,668 56,262
Compulsory Deposits (63,224) (56,613) (57,168) (60,362) (60,811) (62,613) (65,404)
Total 812,803 845,042 843,092 892,061 887,854 832,489 802,737
Sources
(1) Includes part of the balances of Private Securities (Note 17c).
(2) Includes Foreign Borrowing, Foreign Securities, Foreign Onlending, Subordinated Debt Abroad, Hybrid Capital Debt Instruments and Judicial Deposits.
(3) From 3Q14 on, includes Capital Eligible Debt reallocated to Core Capital, as authorized by the Central Bank by Official Letter 15006/2014-BCB/DEORF/DIFIN.
(4) Includes Letters of Credit and Debentures.
28
Sources
R$ Millions Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Foreign Securities 28,560 31,167 34,773 44,103 33,500 22,885 18,631
Foreign Borrowing 20,516 25,133 23,074 31,236 29,617 25,178 22,763
Foreign Onlending 0 0 0 9 10 0 0
HCDI Abroad 4,716 6,158 5,485 7,641 7,611 7,205 5,351
Subordinated Debt Abroad 7,862 9,361 9,186 11,600 11,569 10,400 9,517
Total² 61,654 71,821 72,518 94,590 82,306 65,668 56,262
R$ Millions Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Demand Deposits 74,224 73,705 64,755 66,063 66,550 62,631 62,550
Savings Deposits 148,699 144,089 147,306 149,764 151,845 151,919 148,368
Interbank Deposits 30,354 36,736 33,337 41,465 41,483 36,885 27,473
Time Deposits 99,889 93,304 82,126 89,068 90,890 88,433 85,804
Judicial Deposits 115,010 118,591 116,805 116,107 113,652 114,140 116,655
Agribusiness Letters of Credit 102,325 118,263 132,372 134,555 134,823 135,420 135,418
Mortgage Bonds 14,156 19,067 18,526 18,474 18,121 18,681 18,066
Repurchase Agreement with Private Sec.¹ 48,256 37,848 43,965 44,678 52,142 30,471 30,415
Total 632,913 641,603 639,193 660,175 669,506 638,611 624,778
Commercial Funding
Foreign²
(1) Includes part of the balances of Private Securities (Note 17c).
(2) Includes Foreign Borrowing, Foreign Securities, Foreign Onlending, Subordinated Debt Abroad, Hybrid Capital Debt Instruments and Judicial Deposits.
29
Emissões no Exterior
Bonds Issued Abroad
Issue Date Volume (US$
million) Currency Term in Years Maturity Coupon (%) Structure
Rating (S&P / Moody´s/Fitch)
07/18/2007 187 BRL 10 07/18/2017 9.750 SR / Ba2 / SR
04/29/2008 150 USD 10 04/29/2018 5.250 BBB / Ba1 / SR
10/20/2009 1,500 USD Perpetual Perpetual 8.500 Perpetual SR / B2 / SR
01/22/2010 500 USD 10 01/22/2020 6.000 BB / Ba2 / BB
10/05/2010 660 USD 10 10/05/2020 5.375 Subordinated SR / Ba3 / SR
05/26/2011 1,500 USD 10 05/26/2021 5.875 Subordinated SR / Ba3 / SR
11/23/2011 500 USD 5 11/23/2016 3.875 SR / Ba2 / SR
01/20/2012 1,000 USD Perpetual Perpetual 9.250 Perpetual B- / SR / SR
03/05/2012 750 USD Perpetual Perpetual 9.250 Perpetual B- / SR / SR
06/19/2012 750 USD 10 06/19/2022 5.875 Subordinated B / Ba3 / SR
10/10/2012 1,925 USD 10 10/10/2022 3.875 BB / Ba2 / BB
01/31/2013 2,000 USD Perpetual Perpetual 6.250 Perpetual B- / SR / SR
07/25/2013 930 EUR 5 07/25/2018 3.750 BB / Ba2 / BB
12/20/2013 307 CHF 5.5 06/20/2019 2.500 BB / Ba2 / BB
03/26/2014 417 EUR 5 03/26/2019 3.750 BB / Ba2 / BB+
06/18/2014 2,500 USD Perpetual Perpetual 9.000 Perpetual B- / B2 / SR
Foreign Borrowing
30
R$ Millions Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Available Funds 122,554 142,744 137,925 168,680 154,936 118,235 107,819
Net Loan Portfolio (a) = (b) + (c) + (d) 690,249 702,298 705,167 723,381 732,918 714,254 694,918
Classified Loan Portfolio (b) 669,020 682,188 687,664 710,612 717,849 702,027 690,067
Private Securities (c) 46,524 46,973 45,078 44,695 48,645 47,625 41,819
Allowance for Loan Losses (d) (25,295) (26,862) (27,575) (31,926) (33,577) (35,398) (36,968)
Adjusted Net Loan Portfolio (a) - (e)* 569,635 578,161 580,929 595,903 604,599 588,131 570,687
Domestic Onlending Loans (e) 120,614 124,137 124,238 127,478 128,319 126,122 124,232
Uses 812,803 845,042 843,092 892,061 887,854 832,489 802,737
Uses
Indicators (%)
Adjusted Net Loan Portfolio* / Commercial Funding** 90.0 90.1 90.9 90.3 90.3 92.1 91.3
Commercial Funding** 632,913 641,603 639,193 660,175 669,506 638,611 624,778
31
Compulsory/Reserve Requirements (%) 2Q15 3Q15 4Q15 1Q16 2Q16
Demand Deposits
Reserve Requirement 45 45 45 45 45
Additional Reserve Requirement 0 0 0 0 0
Marked to Rural 34 34 34 34 34
Marked to Micro Finance 2 2 2 2 2
Unmarked 19 19 19 19 19
Savings Deposits
Rural
Reserve Requirement 15.5 15.5 15.5 15.5 15.5
Additional Reserve Requirement 5.5 5.5 5.5 5.5 5.5
Marked 72 74 74 74 74
Unmarked 7 5 5 5 5
Mortgage
Reserve Requirement 24.5 24.5 24.5 24.5 24.5
Additional Reserve Requirement 5.5 5.5 5.5 5.5 5.5
Marked 65 65 65 65 65
Unmarked 5 5 5 5 5
Time Deposits
Reserve Requirement 20 25 25 25 25
Additional Reserve Requirement 11 11 11 11 11
Unmarked 69 64 64 64 64
Compulsório e Direcionamento Compulsory and Reserve Requirements
32
Means of Payment
Banco do Brasil BB Banco de Investimentos
BB Adm Cartões
BB ELO Cartões
100%
100%
100%
|
Serviços
49.99%
70%
66.64%
100%
40.95%
50.1%
100%
100%
\
100%
70%
100%
100%
30%
28.65%
30%
Banco
CBSS 100%
Promotora
33
Leadership
Assets (R$ billion – Jun/16)
Loan Portfolio (R$ billion – Jun/16)
Assets Under Managmt.¹ (R$ billion – Jun/16)
Deposits (R$ billion– Jun/16)
1.445,1 1.395,9
1.105,2
BB Bank A Bank B
(1) Source: Central Bank of Brazil - Market Share as of Mar/2016.
20.3% Market Share¹
751,2
608,6
447,5
BB Bank A Bank B
(1) Source: Central Bank of Brazil - Market Share as of Jun/16 for domestic loan portfolio.
20.6% Market Share¹
660,5
534,9
416,8
BB Bank A Bank B
(1) It does not include Banco Votorantim
22.2% Market Share
440,9
309,0
179,4
BB Bank A Bank B
(1) Source: Central Bank of Brazil - Market Share as of Mar/2016.
23.7% Market Share¹ 1st 1st 1st 1st
34
Leadership
Cards
Total turnover
Debit
Credit
1st
2nd
Insurance
Business 2Q16
Rural
Pension Plan
Life
Premium Bonds
Vehicle
Source: Abecs Jun/16 Source: Susep Jun/16
1st
1st
2nd
1st
2nd
35
16,8% 15,8%
13,7% 13,7%
11,4%
BB Bank 1 Bank 2 Bank 3 Bank 4
23,4%
17,1%
12,9%
7,9% 6,6%
BB Bank 1 Bank 2 Bank 3 Bank 4
Foreign Exchange Export Contracts Foreign Exchange Import Contracts
Leadership in Foreign Trade
1st 1st
Source: Central Bank of Brazil – YTD Jun/16
36
Awards and Achievements
37
Decisions at any level of the Company are made collectively. With the purpose of involving all the executives in the definition of strategies and approval of proposals for the different businesses of Banco do Brasil.
The Only Brazilian Bank listed since 2006, in this BM&F Bovespa segment, destined to companies that voluntarily adopt the best practices for corporate governance.
Corporate Governance
3 Higher Committees
15 Executive Committees
Other Committees
Global Risk Committee Asset and Liabilities Management
and Liquidity Committee Investor Relations
Executive Committee
Credit Risk Executive Committee
Credit Limit Executive Committee Ethics Executive
Committee
Capital Management Executive Committee
Products and Services Executive Committee
Market and Liquidity Risk Executive Committee
Related Companies Governance Executive Committee
Internal Controls and Operational Risk Executive Commitee
Prevention of Financial,Foreign Exchange Illicit and Information Security Executive Committee
Administrative and Operational Executive Committee
Credit Transactions Executive Committee
Information Technology Executive Committee
Human Resources Executive Committee
Disciplinary Review Executive Committee
Credit Transactions Committee Human Resources Committee Information Technology
Committee
Objective Mitigate risks, share visions, aggregate value and quality to the decision process and disseminate knowledge.
Asset & Liability Management and Liquidity Executive Committee
38
Banco do Brasil: Ratings
2012 2013 2014 2015 2Q16
Standard & Poor's
Long-Term - Local Currency BBB BBB BBB- BB+ BB
Long-Term - Foreign Currency BBB BBB BBB- BB+ BB
Moody's
Financial Strength C- C- C- - -
Long-Term Debt - Foreign Currency Baa1 Baa2 Baa2 Baa3 Ba2
Long-Term Deposits - Foreign Currency Baa2 Baa2 Baa2 Baa3 Ba3
Long-Term Deposits - Local Currency A3 Baa2 Baa2 Baa3 Ba2
Fitch Ratings
Long-Term - Local Currency BBB BBB BBB BB+ BB
Long-Term - Foreign Currency BBB BBB BBB BB+ BB+
38
Banking Industry
2
40
81,3 81,4 81,6 88,2 89,1 89,1 92,1 93,0 92,6
5 Largest 10 Largest 20 Largest
78,2 77,5 77,4
88,0 88,1 87,7 93,1 93,2 93,1
5 Largest 10 Largest 20 Largest
Concentration - %
Assets Loans
Source: Central Bank of Brazil
2014 2015 Mar/16 2014 2015 Mar/16
41
67,1 69,3 70,6
88,7 88,8 88,4
5 Largest Banks 10 Largest Banks
Concentration - %
Deposits Assets under Management Credit Card Revenue**
82,5 79,8 79,7
88,2 90,8 90,6 93,6 95,1 95,0
5 Largest Banks 10 Largest Banks 20 Largest Banks
2014 2015 2Q16* 2014 2015 Mar/16
Source: Central Bank of Brazil *As of May/16 ** Source: CardMonitor Research as of 1Q16 per issuer.
87,8 86,9
95,8 95,6
5 Largest 10 Largest
1Q15 1Q16
Earnings Highlights
3
43
Net Interest Income Grew by 17.5%.
Pre-Tax and Pre-Provision Earnings Increased by 14.9%.
Fee Income 12.8% Growth.
Administrative Expenses Under control (2.7% growth).
Cost to income ratio Improved to 39.7%.
Highlights 2Q16 / 2Q15
44
Net Income
(6,577) (402)
6.065
3.891
824
(714)
3.087
1.738 4.824
1H15Adj. Net Income
NII ALL Fee Income AdministrativeExpenses
Other 1H16Adj. Net Income
One-Off Items 1H16 Net Income
R$ Million
ROE
6.6%
ROE
10.4%
2Q15 1Q16 2Q16 1H15 1H16 ROE 15.3% 11.9% 12.3% 22.8% 12.0%
Adjusted ROE 14.2% 5.6% 7.7% 14.2% 6.6%
Market ROE 16.1% 6.6% 9.2% 16.0% 7.9%
Shareholders ROE 17.6% 7.3% 10.2% 17.4% 8.7%
Profitability Ratios
Accumulated
45
Pre-Tax and Pre-Provision Earnings
9,4 10,3 10,7
2Q15 1Q16 2Q16
R$ Billion
36,7 41,7
2Q15 2Q16
+13.5%
Quarterly change Adjusted Annual change¹
+14.9%
+3.9%
(1) Pre-Tax and Pre-Provision Earnings accumulated in four quarters.
46
Earnings per Share (R$)
Market Ratios
1,05 1,08
0,89 0,83 0,88 1,06 1,01
0,92
0,45
0,63
2Q15 3Q15 4Q15 1Q16 2Q16Earnings per Share Adjusted Earnings per Share
Dividend Yield1 (%)
8,56 8,74
13,96
7,38 7,62
2Q15 3Q15 4Q15 1Q16 2Q16
(1) Dividends and Interest on Capital 12 months / Market Capitalization. Source: Economatica.
Source: Economatica. Source: Economatica.
Price/Book Value Price/Earnings 12 months
4,66
2,86 2,86
5,05 4,60
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
0,81
0,51 0,50 0,66
0,57
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
47
Annual Vintage – Very Small and Small Companies Loan
Portfolio Annual Vintage – Individuals Loan Portfolio
Vintages
48
27.807
32.354
29.366
25.750
19.326
344 504 505 423 430
1,2% 1,6% 1,7% 1,6% 2,2%
2Q15 3Q15 4Q15 1Q16 2Q16
Guarantees Provided (balance) Provisions (balance) Provisions / Guarantees Provided
R$ Million
Guarantees provided and Provisions
49
NPL Ratio +90 days (%)
NPL Ratio +15 days (%)
(1) BB Classified Loan Portfolio. (2) Simulation excluding an oil and gas specific case effect. (3) Simulation considering the Companies portfolio balance as of mar/16.
NPL Ratio +90 Days (%)
2,70 2,80 2,90 3,10
3,40 3,50 3,50
1,86 1,84 1,89 2,06
2,24
2,60
3,27
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Banking Industry Banco do Brasil
2,30 2,20 2,16 2,17 2,17 2,41 2,40
0,69 0,82 0,73 0,84 0,97 1,19 0,95
2,59 2,52 2,72 3,10
3,42 4,01
4,82
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Individuals Agribusiness Companies
4,26
4,60
4,47
4,79 4,52 5,51
4,59 3,90
4,69
4,50
5,62 5,56
7,07 7,09
1,19 1,29 1,29 1,69 1,66 1,80 1,45
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Individuals Companies Agribusiness
NPL Ratio +90 days (%) excluding a specific case²
Delinquency Ratios¹
2,70 2,80 2,90 3,10
3,40 3,50 3,50
1,86 1,84 1,89 2,06
2,24
2,60 2,85
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Banking Industry Banco do Brasil
4,62³
50
Allowance for Loan Losses
(1) BB Classified Loan Portfolio. (2) Simulation excluding an oil and gas specific case effect. (3) Quarterly ALL. It does not consider additional provision.
Coverage Ratios (%) and ALL Balance (R$ million)¹
ALL by Segment³
206 144 246 391 1.942
804
3.142 3.810 3.832 4.319
4.754 5.794
1.405 680 1.221
1.326
1.408 1.282
902 557 536
954
1.041 396
5.654 5.191
5.835
6.991
9.145
8.277
Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Agribusiness
Individuals
Companies
Abroad
25.482 26.170 28.220 30.349 34.189 36.968
1.380 1.405 3.705 3.228
1.209 26.862 27.575
31.926 33.577 35.398
175,00 172,41 177,42 167,65 171,43
180,00
213,99 211,79 218,07 209,19 193,83
163,87
98,89 119,14 113,11
119,68 104,05 109,06
Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Additional (Complementary) Provision
Required Allowance - R$ million
Banking Industry + 90 days
Banco do Brasil + 90 days
Banco do Brasil + 15 days
187,71²
51
(1) Required Provision / BB Classified Loan Portfolio. (2) Simulation excluding an oil and gas specific case effect
ALL Evolution
4,90 4,90 5,00
5,50 5,70
6,00 6,30
3,57 3,74 3,81
3,97 4,23
4,87
5,36
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Banking Industry Banco do Brasil
ALL and Average Risk
Average Risk¹ (%)
5,2 5,8 7,0 7,3 6,9
1,9 1,4
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Allowance for Loan Losses Risk downgrades + specific case
9.1 8.3
R$ Billion
4.16
4.60
4.94²
52
(1) Quarterly 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. (3) Simulation excluding an oil and gas specific case effect.
New NPL¹, Write Off and NPL Formation Rate excluding a specific case³
4,28 4,91 5,59 6,22
7,39 6,87
4,16 4,45 3,97 4,81 5,18 5,43
0.64 0.72 0.81 0.88 1.03 0.98
131,99 105,64 104,33 112,32
123,80 120,55
Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
New NPL (R$ billion)
Write Off (R$ billion)
Quarterly ALL/New NPL (%)
New NPL / Loan Portfolio² (%)
NPL Formation
4,28 4,91 5,59 6,22 7,39
9,73
4,16 4,45 3,97 4,81 5,18 5,43
0.64 0.72 0.81 0.88 1.03 1.39
131,99 105,64 104,33 112,32
123,80 85,05
Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
New NPL (R$ billion)
Write Off (R$ billion)
Quarterly ALL/New NPL (%)
New NPL / Loan Portfolio² (%)
New NPL¹, Write Off and NPL Formation Rate
53
(1) Quarterly 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 . (3) Estimated flow of the Renegotiated loan portfolio contracts of past due for over 90days operations. (4) Simulation excluding an oil and gas specific case effect.
New NPL¹, Write Off and NPL Formation Rate including the Past Due Renegotiated loan Portfolio³, excluding a specific case4
New NPL¹, Write Off and NPL Formation Rate including the Past Due Renegotiated loan Portfolio²
4,81 5,98 6,73
8,03 8,47 8,37
4,16 4,45 3,97 4,81 5,18 5,43
0.72 0.88 0.98 1.13 1.18 1.19
117,46 86,77 86,73 87,07 107,97 98,84
Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
New NPL with Past due Credits Portfolio (R$ million)
Write Off (R$ billion)
Quarterly ALL/New NPL (%)
New NPL with Past due Credits Portfolio /Loan Portfolio² (%)
NPL Formation
4,81 5,98 6,73
8,03 8,47
11,24
4,16 4,45 3,97 4,81 5,18 5,43
0.72 0.88 0.98 1.13 1.18
1.60
117,46 86,77 86,73 87,07 107,97 73,64
Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
New NPL with Past due Credits Portfolio (R$ million)
Write Off (R$ billion)
Quarterly ALL/New NPL (%)
New NPL with Past due Credits Portfolio /Loan Portfolio² (%)
54
Renegotiated Overdue Loan Portfolio¹
2Q15 1Q16 2Q16
Renegotiated Overdue Loan Portfolio - Changes
Initial Balance 10,183 19,653 22,038
Contracts 3,561 3,611 5,026
Payments received minus capitalized interest (397) (449) (979)
Write Off (646) (777) (1,036)
Final Balance 12,701 22,038 25,050
Allowance for Loan Losses Balance 6,616 9,495 10,369
NPL + 90 days 1,729 4,303 5,642
Indicators - %
ALL for Loan Losses / Loan Portfolio 52.1 43.1 41.4
NPL + 90 days / Loan Portfolio 13.6 19.5 22.5
ALL for Loan Losses Balance/NPL + 90 days 382.7 220.7 183.8
Credits Renegotiated/Classified Loan Portfolio 1.8 3.1 3.6 (1) Table according Explanatory Notes 10.k.
R$ Million
0.33 0.68 0.79 1.24 1.55 1.91 2.38
0.51 0.51 0.65 0.50 0.84 0.78 1.04
4,14 7,50 7,73
9,80 9,96 9,71 10,78
403,08 384,91 382,74
302,24 270,72
220,67 183,79
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
New NPL - Renegotiated Overdue Loan Portfolio (R$billion)
Write Off (R$ billion)
New NPL/Past due Renegotiated Portfolio²
ALL Balance/NPL + 90 days
New NPL¹, Write Off and NPL Formation Rate
(1) Quarterly 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.
Jun/16
Balance Share %
AA 218 0.9
A 1,604 6.4
B 3,426 13.7
C 3,154 12.6
D 1,301 5.2
E 4,988 19.9
F 2,369 9.5
G 1,897 7.6
H 6,094 24.3
Total 25,050 100.0
AA-C 8,401 33.5
D-H 16,649 66.5
55
(1) It corresponds to two large Brazilian private banks.
BB x Peers¹
Renegotiated Loan Portfolio – 2Q16
25.050 18.981
3,6 4,5
BB Peers Average¹
Renegotiated Loan Portfolio
Renegotiated Loan Portfolio/ClassifiedLoan Portfolio (%)
6.982 7.414 8.112 8.563
9.760
6.616 7.464
8.585 9.495
10.369
17,5 16,5 18,5
23,0 23,5
13,6 15,9 16,1
19,5
22,5
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Peers Average - ALL Balance
BB - ALL Balance
Peers Average - Renegotiated Portfolio NPL +90days (%)
BB - Renegotiated Portfolio NPL +90 days (%)
R$ Million
Renegotiated Loan Portfolio
56
Allowance for Loan Losses (12 months) / Loan Portfolio Allowance for Loan Losses (Quarterly) / Loan Portfolio
Classified Loan Portfolio – Growth by Risk Level
0.3%
in 12 months
(1) Average classified loan portfolio 12 months. (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 (ALL) and Loan Portfolio
659.843 675.671 690.144 699.218 702.224
20.036 21.571 23.671 27.161 30.248
3,0 3,2 3,4 3,9
4,3
2Q15 3Q15 4Q15 1Q16 2Q16
Loan Portfolio¹ Allowance for Loan Losses ALL / Loan Portfolio (%)²
683.547 695.770 711.477 710.697 696.907
5.191 5.835 6.991 9.145 8.277
0,8 0,8 1,0
1,3 1,2
2Q15 3Q15 4Q15 1Q16 2Q16
Loan Portfolio³ Allowance for Loan Losses ALL / Loan Portfolio (%)⁴
687.664 15.793 3.363 5.387 1.605 838 7.003 690.067
Jun/15 AA-C D E F G H Jun/16
R$ Billion
57
Write-off – Percentage of the Classified Loan Portfolio¹
(1) Write-offs to losses accumulated in 12 months / average balance of the classified credit portfolio in 12 months. (2) It corresponds to the three largest Brazilian private banks.
2,38 2,37 2,49 2,61 2,75
4,05 4,03 4,23
4,47 4,61
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Banco do Brasil Peers Average²
58
ALL Balance – Current and Past Due Operations
1,4
3,7 3,2
1,2 0,0
13,1 13,1 14,8
16,4 16,3 13,1
15,1 15,6
17,8
20,7
27,6
31,9 33,6
35,4 37,0
2Q15 3Q15 4Q15 1Q16 2Q16
Additional (Complementary) Provision Current (Generic) Past Due (Specific) Total
R$ Billion
59
Net Interest Income
Global Spread (%)³ Spread by Portfolio (%) ³
(1) It Includes senior debt, subordinated debt and hybrid capital instrument (HCDI). (2) It included interest income, profitable compulsory deposits income, tax hedge, derivatives and other financial instruments that compensate the exchange rate variation in result. (3) Annualized data. (4) Series revised from 1Q15 due to methodology adjustments. (5) It does not include loans with government sector.
4,3 4,5 4,8 4.8 4,9
2,5 2,5 2,4
1,7 2,1
2Q15 3Q15 4Q15 1Q16 2Q16
NIM Risk Adjusted NIM
7,0 7,1 7,4 7,5 7,7
14,0 14,9
15,5 15,8 16,3
5,6 5,7 5,8 5,9 5,9
4,8 4,5 4,8 4,8 4,9
2Q15 3Q15 4Q15 1Q16 2Q16
Loan Operations NIM⁴ Individuals NIM Companies NIM⁵ Agribusiness NIM
2Q15 1Q16 2Q16
Change % Change %
R$ million on 2Q15 on 1Q16 1H15 1H16 on 1S15
Net Interest Income 12.457 14,276 14,633 17.5 2.5 25,019 28,909 15.6
Loan Operations Income 22.738 25,450 25,423 11.8 (0.1) 44,577 50,873 14.1
Funding Expenses (10.308) (10,930) (11,034) 7.0 1.0 (19,618) (21,965) 12.0
Institutional Funding Costs¹ (3.371) (3,733) (3,785) 12.3 1.4 (6,691) (7,518) 12.4
Recovery of Write-offs Loans 911 861 1,384 51.8 60.7 1,751 2,245 28.2
Treasury Income² 2.487 2,628 2,646 6.4 0.7 5,000 5,274 5.5
60
Net Interest Income
Revenue from Loans
Funding Costs
8,9 9,1 9,3 10,3 11,6 11,3 10,9 11,0
2,9 3,0 3,3 3,4 3,8 3,8 3,7 3,8
10,4 10,9 11,3 11,9 12,6 13,4 14,2 14,2
76,5 76,8 75,9 76,8 75,9 74,9 75,4 74,7
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Funding Expenses Institutional Funding Accumulated Selic (% accumulated in 12 months)¹ Funding Expenses % Selic
(1) Source: Central Bank of Brazil
20,5 21,3 21,8 22,7 24,8 25,3 25,5 25,4
10,4 10,9 11,3 11,9 12,6 13,4 14,2 14,2
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Revenue from Loans Accumulated Selic (% accumulated in 12 months)¹
61
Fee Income 61
R$ Million
2Q15 1Q16 2Q16 Change %
1H15 1H16 Change %
on 2Q15 on 1Q16 on 1H15
Fee Income 5,374 5,558 6,063 12.8 9.1 10,797 11,621 7.6
Account Fees 1,252 1,435 1,534 22.6 7.0 2,394 2,969 24.0
Asset Management Fees 880 906 974 10.7 7.5 1,693 1,880 11.0
Insurance, Pension and Premium Bonds 779 697 835 7.2 19.8 1,475 1,532 3.9
Collections 426 419 421 (1.1) 0.6 844 840 (0.5)
Loan Fees 420 360 444 5.7 23.4 771 804 4.3
Credit / Debit Cards 273 321 331 21.3 3.3 954 652 (31.7)
Billings 273 260 257 (5.7) (1.0) 533 517 (2.9)
Interbank 193 202 223 15.3 10.0 379 425 12.2
Fiduciary Services 124 129 133 7.8 3.5 237 262 10.6
Consortium 110 115 123 11.3 6.1 205 238 15.9
Capital Market 96 110 174 81.7 59.2 262 284 8.2
Other 547 604 612 11.9 1.5 1,049 1,216 16.0
62
BB Seguridade
Adjusted Net Income (R$ million)
995 958 1.087
1.944 2.044
2Q15 1Q16 2Q16 1H15 1H16
+9.3%
+5.2%
63
Banco Votorantim
Net Income (R$ million)
Delinquency and Risk Level
146 137
77 86 108
2Q15 3Q15 4Q15 1Q16 2Q16
89,8% 89,7% 88,8% 90,6% 90,2%
10,2% 10,3% 11,2% 9,4% 9,8%
5,2% 5,3% 5,7% 4,6% 4,6%
2Q15 3Q15 4Q15 1Q16 2Q16
AA-C D-H NPL + 90 days / Loan Portfolio
64
Administrative Expenses and Cost to Income Ratio¹
(1) Administrative Expenses / Operating Revenues. Data from the Income Statement with Reallocations. 1H15 and 1H16 cost to income ratio is accumulated in 12 months.
4,9 4,8 5,0
2,9 3,0 3,0
43,4
40,8 39,7
2Q15 1Q16 2Q16
Personnel Expenses Other Expenses Cost to Income Ratio (%) - 12 months
R$ Million
9,5 9,7
5,9 6,0
42,8
39,1
1H15 1H16
Cost to Income Ratio (%)
65
8,71 8,07 8,17 8,26 8,42
2,64 3.54 3,22 3,12 2,92
16.18 16.20 16.13 16.24 16.45
Jun/15 Sep/15 Dec/15 Mar/16 Jun/16
Core Capital Additional Tier I Tier 2
BIS Ratio %
4.82 4.58 4.74 4.87
Tier I 11.34%
5.11
66
BIS Ratio
Tier 1
Full application of Basel III rules
16,45 15,69 15.42
1.17
16.59
(0.76) (0.28)
BIS Ratio Deductions ScheduleAnticipation
BIS Ratio with fulldeductions
RWA RulesAnticipation
BIS Ratio with FullyLoaded Basel III Rules
Use of Tax Credits Simulated BIS Ratiounder complete Basel
III Rules
10.47 10,29
11,42 11.34
(0.86) (0.19) 1.13
Tier 1 Deductions ScheduleAnticipation
Tier 1 with fulldeductions
RWA Rules Anticipation Tier 1 with Fully LoadedBasel III Rules
Use of Tax Credits Simulated Tier 1 undercomplete Basel III Rules
67
BIS III – Capital Requirements % 67
2016 2017 2018 2019
Common Equity Tier I (CET1) 4.500 4.500 4.500 4.500
Tier 1 6.000 6.000 6.000 6.000
Brazilian BIS Ratio 9.875 9.250 8.625 8.000
Capital Conservation Buffer 0.625 1.250 1.875 2.500
Additional CET1 Countercyclical Buffer (superior limit) 0.625¹ 1.250 1.875 2.500
Additional CET1 Systemic (D-SIB) Buffer 0.000 0.250 0.500 1.000
CET1 + Buffers 5.125¹ 7.250 8.750 10.500
Tier 1 + Buffers 6.625¹ 9.000 10.250 12.000
Brazilian BIS Ratio + Buffers 10.500¹ 12.000 12.875 14.000
Implementation Schedule
(1) The Additional CET1 Countercyclical Buffer was not activated by the Central Bank in 2016, according to Central Bank Circular 3,769/15.
68
Tax Rate R$ Million
EBT Reallocations 2,472
Additional ALL 1,209
Tax Hedge 928
Other One-Off Items 74
Tax Base 4,683
IR/CSLL Reallocations 12
Interest on Own Capital Tax Benefit (344)
Statutory Profit Sharing (141)
Eq. Int. in Results of Subsidiaries and Affiliates (491)
Tax Hedge (928)
Tax Effect on One-Off Items (544)
Other 328
IR/CSLL (2,107)
EBT Effects Tax Rate Effects
Source: Income Statement with Reallocations and Explanatory Note 24.
Tax Rate: 45%
69
(1) Adjusted ROE estimated for 2015 uses estimated adjusted shareholders’ equity, free from the effects of: (i) the restatement of actuarial assets and liabilities arising from the Deliberation CVM/695; and (ii) minority interests in controlled companies. (2) It includes private securities and guarantees provided. (3) Allowance for Loan Losses expenses of the last twelve months / Average Classified loan portfolio for the same period.
2016 Guidance 2016 Performance 2016 Guidance
Revised
Adjusted Return on Equity¹ 9 to 12 6.6 Unchanged
Net Interest Income 7 to 11 15.6 11 to 15
Domestic Loan Portfolio² - Broad Concept 3 to 6 1.2 -2 to 1
Individuals 5 to 8 6.3 Unchanged
Companies 1 to 4 -5.4 -10 to -6
Agribusiness 6 to 9 9.6 Unchanged
Allowance for Loan Losses³ 4.0 to 4.4 4.3 Unchanged
Fee Income 7 to 11 7.6 Unchanged
Administrative Expenses 5 to 8 2.6 Unchanged
Guidance
Macroeconomic Information
4
71
Inflation and Selic Rate
6,50 5,84 5,91
6,41
10,67
8,89 9,39 8,84
7,21
5,20
11,00
7,25
10,00
11,75
14,25 13,75 14,25 14,25 13,50
11,00
4,50
1,41
4,09
5,34
3,58
4,86 4,86 5,41
6,29
5,80
2011 2012 2013 2014 2015 2Q15 1Q16 2Q16 2016 2017
IPCA – IBGE (% accumulated in 12 months) Selic (% - end of the period) Real Interest Rate¹
Source: Central Bank of Brazil and IBGE. Projection for 2016 and 2017, according to Boletim Focus as of 29/07/2016. (1) Real Interest Rate = Selic - IPCA
72
GDP
50,3 52,6 53,1 54,2 53,4 53,1 51,9
32,3 30,6
33,1 36,2
33,8
39,0 39,7
1,9
3,0
0,1
-3,8
-1,7
-4,7
2,2
1,7
-0,6 -1,9
-0,8
-2,3 -2,5
2012 2013 2014 2015 2Q15 1Q16 2Q16
Credit/GDP (% YTD in 12 months) PSND (% GDP) GDP (% YTD in 12 months) Primary Surplus (%GDP in 12 months)
Source: Central Bank of Brazil .
73
Loans/GDP
Loans/GDP (%) and Evolution of Loan Portfolio of Banking Industry
Source: Central Bank of Brazil
50,3 52,6 53,1 54,2 53,4 51,9
3.060,7 3.100,4 3.017,5 3.216,9 3.100,4 3.130,3
2012 2013 2014 2015 2Q15 2Q16
Credit/GDP (% YTD in 12 months) Loan Portfolio Banking Industry (R$ billion)
74
Unemployment
100,0 98,7 97,9 96,3 97,6 98,6 97,6
105,2 101,0
37,5 38,6 37,2 35,7 36,4 36,5 37,4 41,3
45,7
Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
Consumer Expectations (INEC) Business Confidence (ICEI)
-2,3
2,1
-3,0
-8,3
-4,7
-9,5
5,5 5,4 4,8
6,8 7,4
9,8
2012 2013 2014 2015 2Q15 2Q16
Industrial Production (% accumulated in 12 months)
Unemployment Rate (% accumulated in 12 months)
Source: IBGE and Confederação Nacional da Indústria
75
Trade Balance US$ Billion
29,8
19,4
2,3
-4,0
19,7
51,1 50,0
7,8 8,4
23,7
2011 2012 2013 2014 2015 2016 2017 2Q15 1Q16 2Q16
Source: MDIC. Projection for 2016 and 2017, according to Boletim Focus as of 29/07/2016.
76
International Reserves
Gross Foreign Debt (R$ billion) International Reserves (US$ billion)
516,0
570,8
621,4
712,7
665,1 675.8*
352,0
378,6 375,8 374,1
368,7
376,7
2011 2012 2013 2014 2015 2Q16
Source: Central Bank of Brazil. *As of Mar/2016
77
Source: World Bank and FAO
Brazil has the ideal conditions for sustainable growth Only a few countries have the same potential as Brazil
Sustainable Growth
Urban Population > 80 million people* (2011)
GDP > US$ 1 trillion*
UK
France
Korea
Italy
Canada Germany
Spain
Mexico
Japan
Indonesia
Kasakhstan
Argentina
Brazil
India
USA China Russia
Planting Area > 140 million ha*
Australia
*2011
78
Main Pilars of Brazilian Growth
Agriculture Foreign Trade Infrastructure
78
79
Overview
Area 8.5 million Km²
Population (2015) 204 million
GDP (1Q16)* -4.7%
Agribusiness GDP (1Q16)* -1.0%
Brazil’s Unique Advantages
Greater availability of low cost arable land
in the world
Easy access to clean water supplies
Competitive prices for land
Excellent climate
Rich soil
Source: Agriculture Ministry and IBGE * Change on 12 months.
Brazilian Agribusiness: Overview
80
Brazilian Agribusiness: Area X Production
Planted Area (thousands Ha) vs Production (thousands Tons)
47.674 47.416 49.873 50.885 53.563 57.060 57.931 58.146
135.135
149.255 162.803 166.172
188.658 193.622
207.667
189.271
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 E
Planted Area Production
CAGR
4.3%
CAGR
3.1%
Source: CONAB
81
Brazilian Agribusiness: Undisputable Leadership
Brazil: World Commodities Ranking
Coffee
Orange Juice
Sugar
Soybean
Poultry
Beef
Corn
Production Export
Source: Agriculture Ministry
1st
1st
1st
2nd
3rd
1st
1st
1st
1st
1st
2nd
2nd
2nd
2nd
82
Source: Federal Government (MPOG) - Jul/16 *Private Service Terminal
The Federal Government holds Investment Programs in progress
R$51.9 bn IN PROGRESS
R$198.4 bn AUCTION LAUNCHED
PIL – Logistics Investment Program – Stage I (2012-2014)
PIL – Logistics Investment Program – Stage II (2015-2018)
R$186.0 bn AUCTION LAUNCHED
PIEE – Electricity Investment Program
+ than R$400bn Total Investment Forecast
R$8.5bn
Airports
R$86.4bn
Railroad
R$66.1bn
Highway
R$37.4bn
Ports
6 projects - R$27.7bn
Highway
5 projects - R$21.0bn
Airports
6 projects - R$3.2bn
TUPs*
R$116bn
Generation
R$70 bn
Transmission
Infrastructure: Investment Programs
83
Brazilian Foreign Trade Balance Evolution (US$ billion)
Brazilian Foreign Trade Balance: Overview
242,6 242,0 225,1
191,1
94.3 90.3
223,2 239,7
229,1
171,5
92.1
66.6
2012 2013 2014 2015 Jun/15 Jun/16
Exports (US$ billion - year accumulated) Imports (US$ billion - year accumulated)
Source: Ministry of Development, Industry and Foreign Trade.
19,4 2,3 -4,0
19,7 2,2
23,7
Trade Balance (US$ billion – year accumulated)
84
Brazilian Exports (by country of destination¹)
Brazilian Foreign Trade Balance: Exports
20,1%
12,0%
7,4%
5,4%
3,0% 2,5% 2,3% 2,0% 1,9% 1,8% 1,7% 1,5%
China USA Argentina Netherlands Japan Germany Chile Mexico Italy Belgium South Korea UK
Source: Ministry of Development, Industry and Foreign Trade. (1) YTD April/2016
85
Summary Table
Annual Collected Data Quarterly Data
2011 2012 2013 2014 2015 2Q15 1Q16 2Q16
Economic Activity
GDP (% YTD in 12 months) 3.9 1.9 3.0 0.1 -3.8 -1.7 -4.7 -
Family Consumption 4.7 3.5 3.5 1.3 -4.0 -0.7 -5.2 -
Government Consumption 2.2 2.3 1.5 1.2 -1.0 0.0 -1.3 -
Gross Fixed Capital Formation 6.7 0.8 5.8 -4.5 -14.1 -9.3 -15.9 -
Exports 4.8 0.3 2.4 -1.1 6.1 1.0 8.3 -
Imports 9.4 0.7 7.2 -1.0 -14.3 -4.6 -18.3 -
Use of Installed Capacity (%) 82.8 82.8 82.3 81.1 77.6 79.7 76.8 77.4
Economically active population - PEA (% YTD in 12 months) 1.2 1.7 -0.8 -0.1 -0.3 -0.4 1.8 2.0
Unemployment Rate (% YTD in 12 months) 6.0 5.5 5.4 4.8 9.3 7.4 9.3 9.8
Formal employment – net creation in 12 m (thousand jobs) 1,566.0 868.2 730.7 152.7 -1,625.6 -729.9 -1,883.7 -1,805.7
Industrial Production (% YTD in 12 months) 0.4 -2.3 2.1 -3.0 -8.3 -4.7 -9.6 -9.5
External Sector
Current Transactions (% GDP in 12 months) -3.0 -3.1 -3.1 -4.3 -3.3 -4.4 -2.4 -1.7
Direct Foreign Investment (US$ billion - year accumulated) 101.2 86.6 69.2 96.9 75.1 30.9 16.9 29.9
International Reserves (US$ billion – end of period) 352.0 378.6 375.8 374.1 368.7 372.2 375.2 376.7
Sovereign Risk (basis points – EOP) 223.0 142.0 224.0 259.0 432.0 304.0 502.0 404.0
Trade Balance (US$ billion – year accumulated) 29.8 19.4 2.3 -4.0 19.7 2.2 8.4 23.7
Exports (US$ billion – year accumulated) 256.0 242.6 242.0 225.1 191.1 94.3 40.6 90.3
Imports (US$ billion – year accumulated) 226.2 223.2 239.7 229.1 171.5 92.1 32.2 66.6
Trade Balance (US$ billion – quarterly accumulated) - - - - - 7.8 8.4 23.7
Exports (US$ billion – quarterly accumulated) - - - - - 51.6 40.6 90.3
Imports (US$ billion – quarterly accumulated) - - - - - 43.8 32.2 66.6
Ptax Dollar Rate (EOP) – R$ 1.9 2.0 2.3 2.7 3.9 3.1 3.6 3.2
Ptax Dollar Rate (% YTD in 12 months) 12.6 8.9 14.6 13.4 47.0 40.9 10.9 3.5
All indicators were obtained from official sources such as Central Bank of Brazil, FGV( Getúlio Vargas Foundation), IBGE, etc.
86
Summary Table
Annual Collected Data Quarterly Data
2011 2012 2013 2014 2015 2Q16 1Q16 2Q16
Monetary Ratios
IGP-DI FGV (% YTD in 12 months) 5.0 8.1 5.5 3.8 10.7 6.2 11.1 12.3
IGP-M FGV (% YTD in 12 months) 5.1 7.8 5.5 3.7 10.5 5.6 11.6 12.2
IPCA – IBGE (% YTD in 12 months) 6.5 5.8 5.9 6.4 10.7 8.9 9.4 8.8
Selic (EOP %) 11.00 7.25 10.00 11.75 14.25 13.75 14.25 14.25
Accumulated Selic (% YTD in 12 months) 11.62 8.49 8.22 10.90 13.37 11.88 14.15 14.15
Accumulated TR (exBTN) (% YTD in 12 months) 1.4 0.3 0.3 1.0 1.8 1.4 2.1 2.1
TJLP - IBGE (EOP %) 6.0 5.5 5.0 5.0 7.0 6.0 7.5 7.5
Libor (EOP %) 0.4 0.4 0.2 0.2 0.3 0.3 0.6 0.6
Public Finance
Primary Surplus (% GDP 12 months accumulated) 2.9 2.2 1.7 -0.6 -1.9 -0.8 -2.3 -2.5
Public Sector Gross Debt (% GDP) 51.3 53.8 51.7 57.2 66.5 61.8 67.4 68.6
Public Sector Net Debt (% GDP) 34.5 32.3 30.6 33.1 36.2 33.8 39.0 39.7
Credit Ratios
Banking Industry Loan Portfolio (R$ billion) 3,017.5 3,060.7 3,100.4 3,017.5 3,216.9 3,100.4 3,160.7 3,130.3
Individuals (R$ billion) 40.9 1,075.8 1,245.8 1,412.1 1,512.2 1,463.4 1,520.6 1,530.1
Companies (R$ billion) 40.9 1,292.6 1,465.5 1,605.4 1,707.2 1,637.0 1,640.4 1,600.3
Credit/GDP (% YTD in 12 months) 46.5 50.3 52.6 53.1 54.2 53.4 53.1 51.9
Household Debt (%) 41.6 43.6 45.1 46.0 45.6 46.1 44.5 -
Total Default (% past due loans over 90 days) 3.6 3.7 2.8 2.7 3.1 2.9 3.5 3.5
All indicators were obtained from official sources such as Central Bank of Brazil, FGV( Getúlio Vargas Foundation), IBGE, etc.
87
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Av. Paulista 2163, 2nd Floor – Cerqueira César
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