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1 2 nd Quarter 2019 EARNINGS RELEASE www.bancovotorantim.com.br/ir CAPA
1
2nd Quarter 2019
EARNINGS RELEASE
www.bancovotorantim.com.br/ir
CAPA
2
CONTENTS
Executive Summary
Key Information
Corporate strategy
Analysis of Managerial Result
Net interest income
Cost of credit
Income from services and insurance
Administrative and personnel expenses
Other operating income and expenses
Balance sheet analysis
Balance sheet
Loan portfolio
Auto finance
Loan portfolio quality
Funding and Liquidity
Capital
Ratings
Corporate Governance
Accounting x Managerial
Reconciliation
Appendices
ÍNDICE
3
EXECUTIVE SUMMARY
Executive Summary | Earnings Release | 2Q19
Net income totaled R$ 352 million in 2Q19,
compared to R$ 336 million in 1Q19, and
equivalent to an annualized return on equity
(ROE) of 15.2% p.y. In 1H19, net income
totaled R$ 688 million, 35% higher than in
1H18.
Total revenues (net interest margin + income
from services and insurance brokerage) grew
3.5% compared to 1Q19 and 12.6% compared
to 1H18. In both comparisons there was
growth in both Margin and service and
insurance revenues, reflecting the higher
profitability in all businesses, and by the
greater participation of Consumer Finance in
the portfolio through the greater origination of
Auto Finance. As a result, Net Interest Margin
(NIM) increased to 7.6% in 2Q19 from 7.0%
in 1Q19.
Credit costs decreased in relation to 1Q19
in line with the reduction in delinquency,
mainly in Auto Finance. In the comparative
1H19/1H18, there was an increase of 29.1%
mainly due to the growth of the Consumer
Finance loan portfolio. Coverage Ratio of
operations past due over 90 days reached
178% at the end of Jun.19.
The 90-day NPL ratio of the loan portfolio
ended Jun.19 at 4.4%, down 0.1 pp in the
quarter and up 0.4 pp in the last 12 months.
Auto Finance delinquency has maintained a
downward trend since Jun.18, and the
Wholesale indicator decreased to 3.1% in
2Q19.
Effective cost base management and
consistent and diversified revenue generation
in 2Q19 contributed to improve the Efficiency
Ratio over the past 12 months, which was
reduced to 32.7% in Jun.19 (32.9% in Jun. 18).
SUMÁRIO EXECUTIVO
Funding: Funds raised totaled R$ 61.1 billionin Jun.19. Stable funding instruments repre-sented 61% of total funding.
Liquidity: cash reserve at a conservative andvery comfortable level to fully cover fundingsources with daily liquidity.
Capital: The Basel Ratio reached 15.8% inJun.19, with 14.0% of Tier I Capital, consistingof the sum of Common Equity (12.2%) andAdditional Capital (1.9%).
The Bank has advanced in its strategy of
improving the profitability of businesses,
increasing operating efficiency and diversifying
revenue sources by continuously investing in
digital transformation aimed at enhancing the
client experience.
In Consumer Finance, the Bank strengthened its
activities with “GuiaBolso”, and also advanced in
partnerships with startups “Olivia” and “Neon
Payments” - one of the most innovative fintech in
terms of reinventing the financial services
experience, and in which the Bank has been
acting as custodian since May.18.
Additionally, through the Capital Markets
division, on June 19, the Bank coordinated
Nubank's first public offering of Financial Bills,
reinforcing its support to fintech in offering agile
and efficient solutions to the market.
In May.19, Votorantim Asset Management
completed the raising of R$ 1.2 billion for a new
real estate fund, the FII Green Towers. The
fund, whose shares began being traded on B3,
attracted approximately 7,000 shareholders,
almost all individuals, being the largest real
estate fund raised in Brazil in the last six years.
4 Executive Summary | Earnings Release | 2Q19
Key Information
Principais informações
The table below present Banco Votorantim’s managerial information and indicators aimed at enabling analyses on
same comparison bases.
1. Ratio between net income and average equity of the period. This ratio is annualized; 2. Ratio between net income and
average assets of the period. This ratio is annualized; 3. Ratio between net interest income and average interest-earning
assets of the period. This ratio is annualized; 4. ER = administrative and personnel expenses / (net interest income+ fee
income/ banking fees income + equity in income from subsidiaries + other operational income and expenses); 5.
Source: Cetip; Bacen; IBGE; 6. Does not consider trainees and statutory; 7. Includes onshore funds (ANBIMA criteria)
and private clients' resources.
Note: In line with market best practices and in synergy with shareholders, from 2Q19 on we will disclose the ROE
calculated by the exponential and linear methodology.
Variation Variation
2Q19/1Q19 1H19/1H18
RESULTS (R$ Million)
Net Interest Income 1,259 1,469 1,530 2,606 2,999 4.2% 15.1%
Results of loan losses, guarantees provided and impairments (377) (464) (447) (706) (911) -3.7% 29.1%
Income from services and banking fees 344 340 343 669 684 0.9% 2.2%
Personnel and admin. expenses (includes profit sharing) (541) (643) (628) (1,194) (1,271) -2.3% 6.5%
Operating Income 468 507 521 972 1,029 2.8% 5.8%
Net Income 256 336 352 511 688 4.8% 34.6%
MANAGERIAL INDICATORS (%)
Return on Average Equity¹ (ROAE) - exponential 11.6 14.8 15.2 11.6 14.8 0.4 p.p. 3.6 p.p.
Return on Average Equity¹ (ROAE) - linear 11.1 14.0 14.4 11.2 14.3 0.4 p.p. 3.3 p.p.
Return on Average Assets² (ROAA) 1.1 1.4 1.5 1.1 1.4 0.1 p.p. 0.4 p.p.
Net Interest Margin³ (NIM) 6.1 7.0 7.6 6.2 7.2 0.6 p.p. 1.5 p.p.
Efficiency Ratio (ER) - accumulated of 12 months4 32.9 33.3 32.7 32.9 32.7 -0.6 p.p. -0.2 p.p.
Basel ratio 16.0 16.0 15.8 16.0 15.8 -0.2 p.p. -0.2 p.p.
Tier I Capital Ratio 12.8 14.0 14.0 12.8 14.0 0.0 p.p. 1.2 p.p.
Common Equity Tier I 10.8 12.1 12.2 10.8 12.2 0.1 p.p. 1.4 p.p.
MACROECONOMIC INDICATORS5
CDI - in the period (%) 1.6 1.5 1.5 3.2 3.1 0.0 p.p. -0.1 p.p.
Selic rate- end of the period (p.y.%) 6.50 6.50 6.50 6.50 6.50 0.0 p.p. 0.0 p.p.
IPCA - in the period (%) 1.9 1.5 0.7 2.6 2.2 -0.8 p.p. -1.2 p.p.
Dolar exchange rate - end of the period (R$) 3.86 3.90 3.83 3.86 3.83 -1.7% -0.6%
Variation Variation
Jun19/Mar19 Jun19/Jun18
BALANCE SHEET (R$ Million)
Total assets 98,154 93,417 93,579 0.2% -4.7%
Expanded loan portfolio 59,197 60,116 61,738 2.7% 4.3%
Wholesale segment 22,353 20,446 20,730 1.4% -7.3%
Consumer Finance segment 36,844 39,670 41,008 3.4% 11.3%
Funding sources 63,820 60,790 61,088 0.5% -4.3%
Shareholders' equity 9,349 9,788 9,745 -0.4% 4.2%
LOAN PORTFOLIO QUALITY INDICATORS (%)
90-day NPL 4.0 4.5 4.4 -0.1 p.p. 0.4 p.p.
Coverage Ratio (90-day NPL) 200 175 178 3.7 p.p. -22.0 p.p.
OTHER INFORMATION
Employees6 (quantity) 3,831 3,769 3,776 0.2% -1.4%
AuM7 (R$ Million) 50,122 48,538 50,980 5.0% 1.7%
Jun18 Mar19 Jun19
2Q18 1Q19 2Q19 1H18 1H19
5
CORPORATE STRATEGY
Corporate Strategy | Earnings Release | 2Q19
In addition, the Bank has specific strategies for
other loan and financing products.
Consigned Payroll Credit
It aims to maintain a relevant position in the
payroll-deductible loan market, focusing on the
Private Loan portfolio through the increase of
new agreements.
Individual loans and other businesses
• Individual loans: partnership with fintech (e.g.
Guia Bolso, Yalo, and Neon Payments) and
leveraging the BV customer base;
• Student Credit: a partnership with Kroton and
PRAVALER;
• Real estate secured credit;
• Financing for acquisition of residential solar
energy plates in partnership with Portal Solar.
Leveraging its Auto customer base, the Bank
seeks to diversify revenue sources through credit
cards and insurance brokerage, both with well-
defined strategies:
Credit Cards
It seeks to expand the volume of active cards -
issued under the Elo, MasterCard and Visa
brands, both by offering to the current auto
finance customer base and by offering it to
customers of business partners.
Insurance Brokerage
Through Votorantim Insurance Broker, it aims to
increase insurance brokerage revenues. In
addition to continuing to grow in products such as
Auto and Lender, the Bank has also diversified its
portfolio, which currently includes capitalization
and life insurance, as well as residential, personal
accident, and other types of insurance.
Consumer Finance Business)
Consumer Finance's core business is Auto Finance, in which the Bank operates through its subsidiary BV,
mainly in the used car financing market (multi-brand dealers), where it has a history of leadership and
recognized expertise. Among its competitive advantages, it is worth mentioning: (i) expertise in pricing, lending
and collection; (ii) high capillarity through an extensive outsourced distribution network; (iii) agility in decision
making; and (iv) relationship with resellers.
In addition, the Bank has sought to increase commission income from Promotiva S.A., a joint venture with BB that
primarily operates in the origination of payroll loans (Public and INSS pension) directly to the shareholder.
Banco Votorantim seeks to consolidate itself among the
leading national private banks, leveraging synergies with
shareholders and bringing the customer to the core of the
business. Therefore, the Bank has focused on business
profitability, increased operating efficiency and
diversification of revenue sources, continuously
investing in digital transformation aimed at improving the
client experience. The Bank's portfolio is divided into three
business units:
• Consumer Finance business
• Wholesale Bank (Corporate Bank)
• Wealth Management
ESTRATÉGIA CORPORATIVA
6 Corporate Strategy | Earnings Release | 2Q19
Private Bank
It offers products and financial solutions tailored
to the needs of each investor, whose profile is
always carefully analyzed, and always seeks the
best solutions in asset and portfolio
management. It is supported by modern
management tools, advanced statistical models
and systems specially developed for a better
interpretation of stress scenarios and risk
monitoring.
Large Corporate
Clients¹ (includes financial institutions) with annual
revenues above R $ 1.5 billion, focused mainly on
capital market operations, financial structuring,
guarantees and treasury.
Corporate
Clients¹ with revenues of up to R$ 1.5 billion, whose
focus is to operate selectively in cash management,
financial structuring, guarantees, working capital,
hedge funds, currency exchange, capital markets,
and mergers and acquisitions.
Wholesale Bank (Corporate Bank)
Broad offer of products
Wealth Management
Asset Management
Recognized for a consistent performance, great
innovative capacity, development of solutions
tailored to customer needs and extensive
knowledge of real economy, Votorantim Asset
Management (VAM) has a prominent position in
the resource management industry in Brazil,
ranking 13th in the ANBIMA ranking, and
positioned as the second-largest real estate fund
manager in the country.
The Wealth Management business develops and provides sustainable solutions in asset management, with well-
defined strategic objectives for the two distinct markets in which it operates:
With agile, tailor-made solutions that streamline everyday business processes, Corporate & Investment Banking
(CIB) offers a wide range of loans, capital market, treasury, and service products, and also enables fast and secure
integration with systems from our corporate customers and fintechs through the availability of various APIs. CIB
addresses economic groups with annual revenues of over R$ 300 million, classified into two segments:
Foreign Currency & FX
Local Currency & Cash Management
Funding
Derivatives
Corporate Finance
Capital Market & M&A
1. Economic groups
7
ANALYSIS OF MANAGERIAL RESULT
Managerial result analysis | Earnings Release | 2Q19
Variation (%) Variation (%)
2Q19/1Q19 1H19/1H18
Net Interest Income - NII 1,259 1,469 1,530 4.2 2,606 2,999 15.1
Results of Loan Losses, guarantees provided and impairments (377) (464) (447) (3.7) (706) (911) 29.1
Net financial margin 881 1,004 1,083 7.9 1,900 2,087 9.9
Other operating income/expenses (414) (497) (562) 13.1 (927) (1,059) 14.2
Fee income 344 340 343 0.9 669 684 2.2
Personnel and administrative expenses (541) (643) (628) (2.3) (1,194) (1,271) 6.5
Tax expenses (109) (102) (158) 54.7 (201) (260) 29.6
Equity in income of subsidiaries 83 91 87 (5.1) 163 178 9.5
Other operating income/(expenses) (191) (184) (205) 11.9 (364) (389) 6.7
Operating income 468 507 521 2.8 972 1,029 5.8
Non-operating income (loss) (2) 1 (1) (163.3) (5) 0 (108.7)
Income before taxes 466 508 521 2.4 967 1,029 6.4
Income tax and social contribution (210) (172) (169) (2.2) (456) (341) (25.2)
Net income 256 336 352 4.8 511 688 34.6
Return on Equity (ROAE) - exponential 11.6% 14.8% 15.2% 11.6% 14.8%
Return on Equity (ROAE) - linear 11.1% 14.0% 14.4% 11.2% 14.3%
1H18 1H192Q18 1Q19 2Q19INCOME STATEMENT
(R$ Million)
Net Interest Income (R$M) and NIM¹ (% p.y)
This section presents the components of Banco
Votorantim's financial and operating results.
NII grew 4.2% compared to 1Q19, and 15.1% over
the previous half, reflecting the higher profitability of
the business, particularly in the Consumer Finance
operation, whose participation in the portfolio has been
growing consistently. In both periods, there was an
increase in the market margin as well as the margin with
clients, the latter being driven by portfolio growth and the
greater representation of products with higher spreads.
NIM¹ grew to 7.6% p.y. in 2Q19, driven by the increase
in the share of Auto and Cards participation in the
portfolio mix.
Net Interest Income (NII)
1. Net Interest Margin: Quotient between NII and Average Profitable Assets
NIM1
ANÁLISE DO RESULTADO GERENCIAL
2Q18 1Q19 2Q19
1,2591,469 1,530
+4.2%
6.1% 7.0% 7.6%
Net income totaled R$ 352 million in 2Q19, an
increase of 4.8% over 1Q19. This increase reflects the
advance in the strategy and was driven by (i) the
growth in NII and revenues from services and
insurance brokerage, (ii) lower credit costs, and (iii)
lower administrative and personnel expenses, in line
with the strategy of increasing operational efficiency.
ROE reached 15.2% p.y. in 2Q19, compared to 14.8%
p.y. in 1Q19 and 11.6% p.y. in 2Q18.
1H19
2,606
1H18
2,999
+15.1%
6.2% 7.2%
In the half-year comparison, net income grew
34.6%, mainly driven by the expansion of NII,
reflecting the higher profitability in the segments. On the
other hand, in 1H19 provisions for loan losses
increased due to the increase in the Consumer Finance
portfolio in the last 12 months. It is worth mentioning the
reduction in the effective tax rate in 1H19, impact of the
return of the CSLL rate to 15%, compared to 20% until
Dec.18.
ROE reached 14.8% p.y in 1Q19, compared to 11.6%
p.y in 1Q18.
In line with market best practices and in synergy with shareholders, from 2Q19 on we will disclose the ROE
calculated by the exponential and linear methodology.
8 Managerial result analysis | Earnings Release | 2Q19
669 684
227 262
1H18 1H19
897 946
+5.5%
Credit Costs (R$M)
Income from services² and Insurance¹ (R$M)
Credit Cost
As from 1Q19, provisions for provided guarantees were
managerially reclassified in order to compose the credit
cost, and the history was adjusted.
Compared to 1Q19, the cost of credit decreased by
3.7%, in line with the reduction in delinquency, mainly
for Auto.
Compared to 1H18, the cost of credit increased by
29.1%, mainly reflecting the (i) growth of the Consumer
Finance portfolio in the last 12 months and (ii) lower
revenues from credit recovery.
Income from services² and Insurance¹
Revenues from services, fees and insurance grew
1.4% in 2Q19/1Q19, reflecting (i) the higher revenues
with performance fees from investment funds which
have accounting recognition made in June and
December, and (ii) higher commissions on securities
placements linked mainly to the raising of the Green
Towers real estate fund, led by Asset.
In the half-year comparison, the 5.5% growth in
revenues mainly reflects the higher origination of Auto in
2019. Compared to 1H18, insurance brokerage
revenues grew 15.3%, in line with the strategy of
expanding higher margin segments (Life insurance,
Capitalization Bonds and Residential insurance), in
addition to continuing to leverage the potential of the
Automotive branch through the client base of the Auto
portfolio.
PDD e Receitas Prestação de serviços
344 340 343
115 129 133
2Q18 1Q19 2Q19
459 470 476
+1.4%
Insurance (brokerage)¹ Services and fees
4.1 4.7 5.0
Auto Finance Origination (R$B)
1. Income from Votorantim Corretora de Seguros (VCS) insurance brokerage, and the result
of recognized under the equity method of accounting. For more details, see page 24.
578 613 575
(200) (128)
2Q18 2Q19
(149)
1Q19
464377 447
-3.7%
ALL, guarantees provided and impairment expenses
Credit recovery revenue
ALL expenses (net) / Credit portfolio (% p.y.)
2.6% 3.6% 3.8%
(334) (276)
1H18 1H19
911706
1,040 1,188
+29.1%
2.4% 3.6%
8.5 9.7
Variation (%) Variation
2Q19/1Q19 1H19/1H18
Allowance for loan losses expenses (managerial) (527) (613) (629) (928) (1,243) 2.6 33.9
Revenues from recovery of written-off loans 200 149 128 334 276 (14.1) (17.2)
Impairments (52) (59) 49 (111) (10) (182.8) (90.8)
Reversal (provision) for guarantees provided 2 59 6 (2) 65 (90.6) -
Credit costs (377) (464) (447) (706) (911) (3.7) 29.1
2Q18 1Q19 2Q19 1H18 1H19Result of loans losses, guarantees provided and impairments
(R$ Million)
Variation (%) Variation
2Q19/1Q19 1H19/1H18
Master file registration and Appraisal of assets 176 186 185 354 371 (1.0) 4.9
Credit cards 61 68 46 122 114 (32.7) (6.7)
Income from guarantees provided 26 21 23 48 44 6.5 (8.0)
Management of investment funds 46 32 36 78 68 11.8 (13.2)
Commissions on placing of securities 13 13 32 22 44 143.9 100.4
Other 24 20 23 46 43 15.8 (6.2)
Total Income From Services 344 340 343 669 684 0.9 2.2
Revenues from insurance brokerage 115 129 133 227 262 2.7 15.3
Total Income From Services and Insurance 459 470 476 897 946 1.4 5.5
INCOME FROM SERVICES AND FEES
(R$ Million)2Q18 1Q19 2Q19 1H18 1H19
9 Managerial result analysis | Earnings Release | 2Q19
Personnel and Administrative Expenses
General personnel and administrative expenses,
including profit sharing (PLR), totaled R$ 628 million in
2Q19, 2.3% lower if compared to 1Q19 due to lower
personnel expenses, mainly due to lower labor claims.
In the semiannual comparison, general expenses
increased 6.5% - already considering the financial/bank
agreements - which represent progress below the 12.6%
growth in total revenues.
Personnel expenses decreased by 5.5% if compared to
1Q19 and increased by 3.6% in the 1H19/1H18
comparison. In both comparisons, there was a reduction
in expenses with labor claims, an effect offset by higher
provisions linked to variable compensation, due to the
better performance of the businesses.
The Efficiency Ratio ended Jun.19 at 32.7%, an
improvement over the Jun.18 ratio of 32.9%,
reflecting consistent and diversified revenue generation
and the continued efforts of effective cost base
management, in line with the Bank's strategy of
increasing operating efficiency.
Administrative and Personnel Expenses (R$M)
Efficiency Ratio² (past 12 months)
Despesa de pessoal e administrativas
301 315 318
199268 271
4039
2Q18
60
1Q19 2Q19
541643 628
-2.3%
32.9% 33.3% 32.7%
Personnel – Labor Claims
Personnel – Compensation, Charges, Training, Profit Sharing
Administrative
1. Considers PLR expenses; 2. Does not consider labor lawsuits and PLR.
Administrative expenses increased by 1.1% compared
to 1Q19. Compared to 1H18, the 9.5% increase is
explained by higher expenses (i) in the specialized
technical services line with collection advice, fraud
prevention and information security, and (ii) in the data
processing. Both reflect the largest amount of credit
origination and the largest investments in technology, in
line with the Bank's digital transformation process.
The Bank ended Jun.19 with 3,776 employees
(excluding interns and statutory officers)
578 633
474539
142
1H191H18
1,19499
1,271
+6.5%
Variation (%) Variation
2Q19/1Q19 1H19/1H18
Personnel Expenses (240) (328) (310) (616) (638) (5.5) 3.6
Salaries, Benefits e Social Charges (191) (224) (219) (409) (442) (2.3) 8.2
Labor lawsuits (40) (60) (39) (142) (99) (35.4) (30.3)
Profit sharing expense (7) (44) (51) (63) (94) 16.3 49.5
Training (2) (1) (2) (2) (3) 171.2 30.8
Administrative Expenses (301) (315) (318) (578) (633) 1.1 9.5
Specialized technical services (99) (113) (112) (191) (225) (1.0) 17.9
Data processing (51) (65) (55) (101) (119) (15.5) 18.5
Services of the financial system (27) (22) (24) (52) (45) 11.2 (12.7)
Judicial and Notary public fees (19) (19) (22) (40) (41) 20.0 3.7
Marketing (15) (9) (12) (24) (21) 23.9 (10.2)
Other (88) (87) (93) (171) (180) 7.1 5.6
Total (541) (643) (628) (1,194) (1,271) (2.3) 6.5
2Q18 1Q19 2Q19 1H18ADMINISTRATIVE AND PERSONNEL EXPENSES
(R$ Million)1H19
10 Managerial result analysis | Earnings Release | 2Q19
Other operating income and expenses
As from 1Q19, provisions for provided guarantees were managerially reclassified from Other Operating Revenues
and Expenses in order to compose the Credit Cost, and the history was adjusted.
Other operating income and expenses increased by 11.9% over 1Q19 and 6.9% in the half-year comparison, mainly
due to the costs related to the higher origination of auto finance.
Outras receitas e despesas operacionais
Variation (%)
2Q19/1Q19 1H19/1H18
Costs associated with the production (148) (155) (162) (298) (317) 4.8 6.4
Reversal (provision) for contingent liabilities (51) (29) (36) (83) (65) 26.3 (21.6)
Other 8 (0) (7) 16 (7) - (146.4)
Total Other Operating Income/(Expenses) (191) (184) (205) (364) (389) 11.9 6.7
1H192Q18 1Q19 2Q19 1H18OTHER OPERATING INCOME/(EXPENSES)
(R$ Million)
11
BALANCE SHEET HIGHLIGHTS
Balance sheet highlights | Earnings Release | 2Q19
Balance Sheet
Total assets reached R$ 93,579 million at the end of Jun.19, down 4.7% in twelve months, and practically stable in
the quarter. Shareholders' equity totaled R$ 9,745 million in the same period.
DESTAQUES PATRIMONIAIS
Variation (%)
Jun19/Mar19 Jun19/Jun18
CURRENT AND LONG-TERM ASSETS 96,750 91,066 91,183 0.1 (5.8)
Cash and cash equivalents 92 157 306 95.4 233.0
Interbank funds applied 20,658 9,924 6,745 (32.0) (67.4)
Securities and derivative financial instruments 15,143 20,213 23,132 14.4 52.8
Derivative financial instruments 4,817 3,748 2,896 (22.7) (39.9)
Interbank accounts or relations 1,996 1,145 868 (24.2) (56.5)
Loan Operations, Leases and Others receivables 46,736 48,454 50,347 3.9 7.7
Alowance for loan losses (3,622) (3,799) (3,906) 2.8 7.8
Tax credit 7,042 6,621 6,405 (3.3) (9.0)
Other Assets 3,891 4,605 4,391 (4.6) 12.9
NON-CURRENTS 1,404 2,350 2,396 1.9 70.6
Investments 1,092 1,963 1,962 (0.1) 79.7
Fixed 108 103 98 (4.8) (9.2)
Intangible and Diferred 204 284 336 18.4 64.4
TOTAL ASSETS 98,154 93,417 93,579 0.2 (4.7)
Variation (%)
Jun19/Mar19 Jun19/Jun18
CURRENT AND LONG-TERM LIABILITIES 88,766 83,597 83,768 0.2 (5.6)
Deposits 12,636 11,200 12,709 13.5 0.6
Demand and interbank deposits 1,984 2,165 2,151 (0.7) 8.4
Time deposits 10,652 9,034 10,558 16.9 (0.9)
Money market borrowings 22,124 16,651 17,349 4.2 (21.6)
Acceptances and endorsements 26,058 30,475 30,509 0.1 17.1
Interbank accounts 1,199 1,445 1,575 9.0 31.4
Borrowings and onlendings 4,111 3,374 3,324 (1.5) (19.1)
Derivative financial instruments 4,285 3,383 2,506 (25.9) (41.5)
Other obligations 18,354 17,069 15,795 (7.5) (13.9)
Subordinated debts 6,352 6,357 6,362 0.1 0.1
Credit transactions subject to assignment 8,198 6,776 5,575 (17.7) (32.0)
Other 3,804 3,936 3,858 (2.0) 1.4
DEFERRED INCOME 40 32 66 108.3 64.3
SHAREHOLDERS’ EQUITY 9,349 9,788 9,745 (0.4) 4.2
TOTAL LIABILITIES 98,154 93,417 93,579 0.2 (4.7)
Jun18 Mar19 Jun19BALANCE SHEET | Assets
(R$ Million)
BALANCE SHEET | Liabilities
(R$ Million)Jun18 Mar19 Jun19
12 Balance sheet highlights | Earnings Release | 2Q19
Credit Portofolio
At the end of Jun.19, the expanded loan portfolio
(including guarantees provided and private
securities) reached R$ 61.7 billion, a 4.3% growth in
the last 12 months and 2.7% in relation to Mar.19,
with an increased share of the Consumer Finance
business in both comparisons.
In the Consumer Finance segment, the credit portfolio
reached R$ 41.0 billion in Jun.19, showing an increase
of 11.3% compared to Jun.18, and 3.4% compared to
Mar.19, driven by the growth in Auto Finance, mainly
used cars.
It is worth highlighting the 22.3% growth in the credit
card portfolio in the last 12 months, reflecting the
strategy of revenue diversification. The Bank has been
strengthening its credit card portfolio and refining its
offer to current customers and business partners.
Mix of credit Wholesale – expanded portfolio (R$B) Mix of credit Consumer Finance (R$B)
Carteira de crédito
5%
87%
7%
6%
86%
4%
Jun/18
Jun/19
Vehicles
36.8
41.0
Wholesale expanded portfolio reached R$ 20.7 billion in
Jun.19, a 7.3% decrease in the last 12 months, mainly in
the private securities balance. Compared to Mar.19
there was a growth of 1.4%.
Used Cars
88%
Loan portfolio
1. Payroll loans (INSS, private and government), individual loans (with and without guarantee), home equity, student credit and solar; For more
details, see page 24.
10%2%
20%
Jun/19 27%
Guarantees
provided
Jun/18 25%39%
18%3%
7%41%
Private
securities
22.4
20.7
Payroll loans Cards Personal loans + Other
Export./Import. financingLoans
BNDES Onlendings Other
Other Vehicles
12%
Variation (%)
Jun19/Mar19 Jun19/Jun18
Wholesale segment (a) 12,326 11,534 11,472 (0.5) (6.9)
Consumer Finance segment (b) 36,844 39,670 41,008 3.4 11.3
Auto finance 31,578 34,486 35,726 3.6 13.1
Loans and financing¹ 3,274 2,886 2,845 (1.4) (13.1)
Credit Cards 1,992 2,298 2,436 6.0 22.3
On-balance loan portfolio (a+b) 49,170 51,203 52,480 2.5 6.7
Guarantees provided (c) 5,512 5,455 5,543 1.6 0.6
Private securities (d) 4,515 3,457 3,715 7.5 (17.7)
Expanded credit portfolio (a+b+c+d) 59,197 60,116 61,738 2.7 4.3
Wholesale segment (a+c+d) 22,353 20,446 20,730 1.4 (7.3)
Consumer Finance segment (b) 36,844 39,670 41,008 3.4 11.3
Jun18 Mar19CREDIT PORTFOLIO
(R$ Million)Jun19
13 Balance sheet highlights | Earnings Release | 2Q19
Auto finance origination volume totaled R$ 5.0 billion in
the quarter, of which 87% was used light vehicles. The
combination of continuous improvements in credit
processes and models, and prudent loan granting has
maintained the origination quality of Auto loans, which
had its volume grown by 20.4% if compared to 2Q18.
+17.3%
+47.1%
∆2Q19
/2Q18
The Bank maintained its conservatism in the
origination of auto loans, with an average down
payment of 39% and an average term of 45 months.
Banco Votorantim is one of the leaders in the
Auto finance market.
Auto finance origination (R$B)
Auto Finance
Financiamento de veículos
0.6
2Q18
3.7(89%)
1Q19
0.40.5
4.2(88%)
4.3(87%)
2Q19
4.1
4.75.0
+20%
Used CarsOther Vehicles
Variation (%)
2Q19/1Q19 2Q19/2Q18
Average rate (% p.y.) 21.5 22.5 21.3 -1.2 p.p. -0.2 p.p.
Average term (months) 44 45 45 0 1
Down payment (%) 41.2 39.5 39.3 -0.2 p.p. -1.9 p.p.
Used cars/Auto finance origination (%) 89.4 88.4 87.1 -1.3 p.p. -2.3 p.p.
Total auto finance origination (R$ billion) 4.1 4.7 5.0 5.5% 20.4%
Variation (%)
Jun19/Mar19 Jun19/Jun18
Average rate (% p.y.) 24.3 23.5 23.1 -0.4 p.p. -1.2 p.p.
Maturity (months) 45 46 46 0 0
Used cars/Auto finance portfolio (%) 87.3 88.0 87.7 -0.3 p.p. 0.4 p.p.
Average vehicle age (years) 5 6 6 0 1
Auto Finance portfolio (R$ billion) 31.6 34.5 35.7 3.6% 13.1%
AUTO FINANCE - Origination
AUTO FINANCE - Loan Portfolio Jun18 Mar19
2Q19
Jun19
2Q18 1Q19
14 Balance sheet highlights | Earnings Release | 2Q19
Coverage ratio (90-day Coverage Ratio)
All credit portfolio risk segmentations in this section refer to the classified portfolio (Res. CMN No. 2,682 / 99) unless
otherwise stated. The Bank maintains a consistent credit risk assessment and monitoring process in its operations
with clients.
Reflecting the sound risk management model and the soundness of the balance sheet, the Coverage Ratio of 90-
Day NPL continued at a comfortable level, reaching 178% in Jun.19.
Coverage Ratio
Quality of the Credit Portfolio
Qualidade de carteira de crédito
200% 188% 185% 175% 178%
Jun/18
3,942
Sept/18
2,128
Dec/18
1,969
Mar/19
3,928
Jun/19
3,930
2,095
4,031 4,135
2,310 2,320
ALL balance (R$M) 90-Day NPL balance (R$M)
90 day-CR
1. D NPL quarterly + write-offs of loss for the period) / Loan Portfolio for the immediately preceding quarter; 2. Provision for financial guarantees
provided is considered as of Mar.19. Adjusted history. Includes credit provision recognized as Liabilities in the "Other" line.
90-Day NPL balance 1,969 2,310 2,320
90-Day NPL ratio 4.0% 4.5% 4.4%
Write-off (a) (557) (450) (521)
Credit recovery (b) 312 149 128
Net Loss (a+b) (245) (301) (393)
Net Loss / Loan portfolio - annualized 2.0% 2.4% 3.0%
New NPL 665 630 469
New NPL / Loan portfolio¹ - quarter 1.4% 1.2% 0.9%
ALL balance² 3,942 4,031 4,135
ALL balance / Loan portfolio 8.0% 7.9% 7.9%
ALL balance / 90-day NPL 200% 175% 178%
AA-C balance 43,654 45,563 46,743
AA-C balance / Loan portfolio 88.8% 89.5% 89.1%
LOAN PORTFOLIO QUALITY INDICATORS
(R$ Million, except where indicated)Jun18 Mar19 Jun19
15 Balance sheet highlights | Earnings Release | 2Q19
Loan Portfolio per Risk Level (%)
Loans rated “AA-C” under Central Bank Resolution
number 2,682 represented 89.1% of the loan
portfolio at the end of Jun.19, compared to 88.8%
in Jun.18, confirming the quality of the loan
portfolio.
Banco
Votorantim
Consumer
Finance
Wholesale
Credit Portfolio Deliquency – 90-day NPL ratio
The Bank's credit risk management aims to maintain the
quality of the loan portfolio at levels that are appropriate
for each market segment.
Credit portfolio by risk level (%)
Jun/18
88.8%
11.2% 10.8%
89.2%
Sept/18
10.1%
89.9%
Dec/18
10.5%
89.5%
Mar/19
10.9%
89.1%
Jun/19
D-H
AA-C
The portfolio quality indicators were kept under control, supported by the combination of continuous improvements
in credit models and prudent loan granting.
The consolidated 90-day NPL ratio reached 4.4% at the end of Jun.19, a reduction of 0.1 p.p. compared to Mar.19,
and 0.4 p.p. greater than Jun.18.
In Consumer Finance, the 90-day NPL ratio ended Jun.19 at 4.8%, stable compared to Mar.19 and 0.1 p.p. lower
than in Jun.18. It is worth mentioning that the Consumer Finance portfolio grew 11.3% in the last 12 months, driven
by the growth in Auto, which had 90-day NPL ratio ending Jun.19 at 4.2% and has maintained a downward trend
since Jun.18.
In Wholesale, 90-day NPL ratio decreased to 3.1% in Jun.19, from 3.5% in Mar.19.
5.5%
4.6%
4.4% 4.2%4.0%4.0%4.5% 4.4%
4.2%5.1%
4.7%
5.7%
4.7%5.4%
5.5% 5.2% 4.9%
4.4%
4.8%
4.3%
4.8%
4.3%
4.8%
4.2%
VehiclesConsumer Finance
Dec/18Dec/17
2.0%
Mar/19Jun/16 Jun/17Dec/16 Jun/18 Jun/19
2.2%
5.6%
2.3% 1.8% 1.3%
3.5% 3.1%
16 Balance sheet highlights | Earnings Release | 2Q19
Loan portfolio renegotiated for delay (R$ M)
New NPL Ratio
The New NPL, which considers the volume of credit operations that became delinquent over 90 days in the quarter,
was R$ 469 million in 2Q19. As a result, the New NPL in relation to the portfolio was 0.92% in Jun.19, lower than
1.25% in Mar.19.
Past due renegotiated loan portfolio
The following graph present information on the credit portfolio renegotiated due to late payment.
More information can be found in the Jun.19, NE 9k Financial Statements.
1. D NPL quarterly + write-offs of loss for the period) / Credit Portfolio for the immediately previous quarter.
Funding e Liquidez
0.92%1.27%
0.97%0.92%
1.38% 1.25%1.14% 1.13%0.92%
0.47
2Q18 4Q183Q182Q17 3Q17
0.560.59
1Q19
0.44
4Q17 1Q18 2Q19
0.43 0.47
0.670.56
0.63
New NPL (R$B)New NPL¹ Ratio
452 385 348
888780 747
Jun/18 Jun/19Mar/19
Loan portfolio renegotiated for delayALL balance
50.8% 46.6%Coverage
The balance of late renegotiated credit operations totaled R$ 747 million in Jun.19. Compared to Jun.18, there was
a 15.9% drop in the balance of the renegotiated portfolio, mainly in the Wholesale segment.
Delinquency over 90 days (90-Day NPL ratio) have remained broadly stable over the past 12 months, while the
portfolio coverage ratio has decreased by 4.2 pp from Jun.18.
1. Delinquency ratio over 90 days (90-day NPL ratio)
44.0% 43.9%90-Day
NPL ratio¹
49.5%
44.5%
17 Balance sheet highlights | Earnings Release | 2Q19
It is noteworthy that the reduction in funding with
debentures in the last 12 months is due to the lower
balance of BV Leasing's repurchase commitment,
reflecting the regulatory change introduced by Res.
4,527, which made it impossible to perform new
repurchase agreements with debentures of
subsidiaries from 2018 on. In place of this
instrument, the Bank has increased the volume of
fundraising in time deposits (CDB) and Financial
Bills.
With regards to liquidity, the Bank has kept its free
cash at a very conservative level, which is quite
comfortable to cover the total funding with daily
liquidity. In addition, it is important to note that
the Bank has had a credit line with BB since
2009, which represents a significant liquidity
reserve and has never been used.
The following table shows the calculation of the
“LCR” indicator, which aims to measure banks' short-
term liquidity in a stress scenario, with the regulatory
minimum of 100%.
Further details on LCR can be found in the “Risk and
Capital Management Report” on the RI website:
www.bancovotorantim.com.br/ir.
The total funding sources reached R$ 61.1 billion in
Jun.19, stable in the quarter and a 4.3% reduction in 12
months. Funding with Financial Bills continued to grow
in this quarter, and together with assignments with
recourse and subordinated debt - more stable funding
instruments, represented 61% of total funds raised in
Jun.19.
The Bank has a diversified portfolio and continues to
practice terms and conditions appropriate to the profile
of its assets.
Funding and Liquidity
1. Mainly federal public securities and bank reserves;
Variation (%)
Jun19/Mar19 Jun19/Jun18
Debentures (repos) 6.5 2.6 2.6 0.0 (59.7)
Deposits 12.6 11.2 12.7 13.5 0.6
Time deposits 10.7 9.0 10.6 16.9 (0.9)
Deposits on demand and interbank 2.0 2.2 2.2 (0.7) 8.4
Subordinated debts 6.4 6.4 6.4 0.1 0.1
Subordianted Financing bills 2.0 2.2 2.2 2.4 9.4
Others subordinated debts 4.3 4.2 4.1 (1.2) (4.2)
Borrowings and onlendings 4.1 3.4 3.3 (1.5) (19.1)
Bills 25.5 30.0 29.7 (0.8) 16.8
Financing bills 20.8 25.0 25.4 1.4 21.9
Agribusiness credit bills ("LCA") and real estate credit bills ("LCI") 2.6 2.2 2.1 (5.9) (20.2)
Financial lease bills ("LAM") 2.0 2.7 2.3 (17.1) 12.1
Securitization with recourses 8.2 6.8 5.6 (17.7) (32.0)
Securities abroad 0.6 0.5 0.8 54.2 27.7
Total funding 63.8 60.8 61.1 0.5 (4.3)
FUNDING SOURCES
(R$ Billion)Jun18 Mar19 Jun19
High Quality Liquidity Assets (HQLA)¹ 11,355 11,663
Total cash inflows 7,356 7,461
LCR 154% 156%
2Q19Liquidity Coverage Ratio (LCR) 1Q19
18 Balance sheet highlights | Earnings Release | 2Q19
The Basel Ratio was calculated according to the Basel
III methodology to determine the minimum
requirements of Reference Equity, Tier I and Common
Equity capital. In 2019, the minimum capital
requirement is 10.50%, with a minimum of 8.5% for Tier
I Capital and 7.00% for Common Equity (CET1).
Capital
Compared to Jun.18, the Basel Ratio decreased by
0.2 p.p., mainly due to the decrease of subordinated
debt that makes up Tier II Capital. However, Tier I
Capital grew 1.2 p.p. over the same period due to
consistent generation of net income.
Change in Basel ratio for 2Q19
Basel Ratio
Jun.19
RWABasel Ratio
Mar.19
Net Income
2Q19
0.6%0.2%
Tier II
0.0%
0.5%
Other
15.8%16.0%
Compared to Mar.19, the index
decreased by 0.2 p.p., mainly
impacted by (2) the decrease of
subordinated debts that make up Tier
II Capital, (3) the increase in risk-
weighted assets due to the increase
in business portfolios, and (4)
provision of dividends in the amount
of R$ 400 million to be paid by
Dec.19.
This reduction was partially offset by
(1) profit generation of R$ 352 million
in 2Q19.
1 2 3
The Basel Ratio reached 15.8% in Jun.19, with the Tier I Capital ratio totaling 14.0%, with 12.2% of Core Capital
and 1.9% of Supplementary Capital.
4
Total Capital 9,576 9,903 9,808
Tier I Capital 7,633 8,658 8,695
Common Equity Tier I 6,476 7,460 7,544
Additional Tier I 1,157 1,198 1,151
Tier II Capital 1,944 1,245 1,113
Risk Weighted Assets (RWA) 59,784 61,763 61,912
Credit risk 51,819 53,105 53,448
Market risk 2,326 2,257 2,063
Operational risk 5,640 6,401 6,401
Minimum Capital Requirement 5,156 4,941 4,953
Basel Ratio (Capital/RWA) 16.0% 16.0% 15.8%
Tier I Capital Ratio 12.8% 14.0% 14.0%
Common Equity Tier I Ratio 10.8% 12.1% 12.2%
Additional Tier I Ratio 1.9% 1.9% 1.9%
Tier II Capital Ratio 3.3% 2.0% 1.8%
Jun18 Mar19 Jun19BASEL RATIO
(R$ Million)
19 Ratings | Relatório Gerencial de Resultados | 2Q19
RATINGS
Banco Votorantim is rated by international rating agencies and its ratings reflect its operating performance, financial
soundness and the quality of its management, as well as other factors related to the financial sector and the
economic environment in which the company operates. It is noteworthy that the long-term foreign currency rating is
limited to Brazil's sovereign rating.
The table below shows the ratings assigned by major agencies:
In Mar.19 the Bank had its ratings reaffirmed with international agencies. Standard & Poor's reaffirmed the
rating on a global scale, maintaining it at ‘BB-’, with the outlook at stable, following the outlook at sovereign.
Moody's, not only has reaffirmed the global rating at ‘Ba2’ (local currency), but also has changed the outlook
from negative to stable, equaling the country's rating.
RATINGS
RATING AGENCIESInternational National
Local Foreign Local
Moody’s
Long-termBa2
(stable)Ba3 Aa3.br
Short-term NP NP BR-1
Standard & Poor’s
Long-term BB- brAAA
Short-term B brA-1+
Brazil
Sovereign rating(outlook)
Ba2
(stable)
BB-
(stable)
20
CORPORATE GOVERNANCE
Corporate Governance | Earnings Release | 2Q19
Name Position Shareholder
José Luiz Majolo Chairman Votorantim Finanças
Rubem de Freitas Novaes Vice-Chairman Banco do Brasil
Celso Scaramuzza Director Votorantim Finanças
Carlos Hamilton V. Araújo Director Banco do Brasil
Jairo Sampaio Saddi Director Votorantim Finanças
Marcelo Augusto Dutra Labuto Director Banco do Brasil
Members of the Board of Directors
Governing bodies also include the Fiscal Council and
the advisory forums to the Board of Directors, as well as
the Executive Committee, and technical committees of
internal governance.
At the Ordinary General Meeting held in Apr.19, in
addition to the reelection of the members of the Board
of Directors for the next biennial term of office that will
be effective until 2021, José Luiz Majolo and Rubem de
Freitas Novaes were re-elected, respectively, for the
positions of Chairman and Vice-Chairman of the Board.
The Bank's management is shared among the
shareholders Votorantim Finanças and Banco do Brasil,
with their equal participation in the Board of Directors,
which is composed of six members.
Board of Directors meetings are held at least monthly to
deliberate on strategic issues and to monitor and guide
the business of the Conglomerate. Decisions are taken
by an absolute majority, with no casting vote.
Each board member has a two-year term and the
positions of chairman and vice-chairman have alternated
annually between the two shareholders.
GOVERNANÇA CORPORATIVA
The Votorantim Financial Conglomerate adopts the best governance practices, ensuring transparency and equity in
information, in order to contribute to the decision-making process.
Corporate Structure
Total: 50.00%
Com. shares: 49.99%
Pref. shares: 50.01%
Total: 50.00%
Com. shares: 50.01%
Pref. shares: 49.99%
Votorantim S.A. Banco do Brasil
Executive Board
Corporate Governance Bodies
Board of
DirectorsAdvisory
Committee
Risk and
Capital
Committee
General
Shareholders' MeetingFiscal
Council
Audit
Committee
Compensation
& HR
CommitteeManagement
21
RECONCILIATION BETWEEN ACCOUNTING AND MANAGERIAL INCOME STATEMENT
Reconciliation of accounting vs. managerial income statement | Earnings Release | 2Q19
RECONCILIACAO DRE
For a better understanding and analysis of the Bank's performance, the explanations in this report are based on the
Management Income Statement, which considers some management reallocations made in the audited Corporate
Income Statement, without impact on net income. These reallocations refer to:
• Income from credit recovery written-off to loss that is recorded under “Revenue from Loan Operations” and that
has been reallocated to “Allowance for Loan Losses”;
• Expenses with characteristics of credit provisions that are accounted under “Other Operating Income
(Expenses)” and that have been reallocated to “Allowance for Loan Losses”;
• Impairments of private securities of the Wholesale segment classified in Net Interest Income, which have been
reallocated to “Allowance for Loan Losses”;
• Expenses with provisions for provided financial guarantees that are accounted under “Other Operating Income
(Expenses)” and have been reallocated to “Allowance for Loan Losses”;
• Tax and fiscal effects of the hedge funds relating to foreign currency exchange variations of investments made
abroad that are accounted in “Tax Expenses” (PIS and Cofins) and “Income Tax and Social Contribution”, and
which have been reallocated to “Results with Financial Derivative Instruments”.
The foreign currency exchange risk management strategy of funds invested abroad aims to avoid effects
arising from currency exchange variation on the result, and to this end, foreign currency exchange risk is
neutralized by means of the use of derivative financial instruments.
Reconciliation between Accounting and Management Results - 2Q19, 1Q19 and 2Q18
1. Includes revenues from credit portfolios assigned with recourse under Resolution 3,533.
Income from financial intermediation 3,313 (10) 3,303 2,850 (93) 2,757 2,930 (195) 2,735
Loans¹ 2,604 (312) 2,291 2,352 (149) 2,204 2,395 (128) 2,267
Leases 13 - 13 8 - 8 6 - 6
Securities 627 52 679 564 59 624 821 (49) 772
Derivative f inancial instruments (84) 250 167 (114) (4) (117) (307) (19) (326)
Foreign exchange operations 142 - 142 30 - 30 7 - 7
Compulsory deposits 11 - 11 8 - 8 9 - 9
Expenses from financial intermediation (2,044) - (2,044) (1,288) - (1,288) (1,205) - (1,205)
Money market borrow ings (1,610) - (1,610) (1,088) - (1,088) (1,061) - (1,061)
Borrow ings and onlendings (239) - (239) (65) - (65) (4) - (4)
Sale or transfer from financial assets (196) - (196) (135) - (135) (140) - (140)
Net interest income - NII 1,269 (10) 1,259 1,562 (93) 1,469 1,726 (195) 1,530
Result of loan losses, guarantees and impairments (639) 262 (377) (618) 153 (464) (628) 181 (447)
Net financial margin 629 252 881 944 60 1,004 1,098 (14) 1,083
Other operating income/expenses (395) (12) (406) (388) (65) (453) (506) (5) (511)
Fee income 344 - 344 340 - 340 343 - 343
Personnel and administrative expenses (533) - (533) (599) - (599) (577) - (577)
Tax expenses (99) (10) (109) (101) (1) (102) (157) (1) (158)
Equity in income of subsidiaries 83 - 83 91 - 91 87 - 87
Other operating income/expenses (190) (2) (191) (120) (64) (184) (201) (4) (205)
Operating income (loss) 235 240 475 556 (5) 551 592 (20) 572
Non-operating income (loss) (2) - (2) 1 - 1 (1) - (1)
Income (loss) before taxes and contributions 233 240 473 557 (5) 552 591 (20) 571
Provision for income tax and social contribution 31 (240) (210) (177) 5 (172) (188) 20 (169)
Profit sharing (7) - (7) (44) - (44) (51) - (51)
Net income (loss) 256 0 256 336 (0) 336 352 - 352
INCOME STATEMENT
(R$ Million)
2Q18
Audited
Adjust
ments
2Q18
Managerial
1Q19
Audited
Adjust
ments
1Q19
Managerial
2Q19
Audited
Adjust
ments
2Q19
Managerial
22 Reconciliation of accounting vs. managerial income statement | Earnings Release | 2Q19
Reconciliation between Accounting and Management Results - 1H19 and 1H18
Income from financial intermediation 6,133 (77) 6,055 5,780 (289) 5,492
Loans¹ 4,927 (446) 4,481 4,747 (276) 4,471
Leases 22 - 22 15 - 15
Securities 1,149 111 1,259 1,385 10 1,395
Derivative f inancial instruments (137) 258 120 (421) (22) (443)
Foreign exchange operations 160 - 160 37 - 37
Compulsory deposits 12 - 12 17 - 17
Expenses from financial intermediation (3,450) - (3,450) (2,493) - (2,493)
Money market borrow ings (2,710) - (2,710) (2,149) - (2,149)
Borrow ings and onlendings (297) - (297) (69) - (69)
Sale or transfer from financial assets (444) - (444) (275) - (275)
Net interest income - NII 2,683 (77) 2,606 3,287 (289) 2,999
Result of loan losses, guarantees and impairments (1,040) 334 (706) (1,246) 334 (911)
Net financial margin 1,643 256 1,900 2,042 46 2,087
Other operating income/expenses (855) (9) (864) (894) (70) (964)
Fee income 669 - 669 684 - 684
Personnel and administrative expenses (1,131) - (1,131) (1,177) - (1,177)
Tax expenses (191) (10) (201) (258) (2) (260)
Equity in income of subsidiaries 163 - 163 178 - 178
Other operating income/expenses (366) 2 (364) (321) (68) (389)
Operating income (loss) 788 247 1,035 1,148 (25) 1,123
Non-operating income (loss) (5) - (5) 0 - 0
Income (loss) before taxes and contributions 783 247 1,030 1,148 (25) 1,124
Provision for income tax and social contribution (209) (247) (456) (366) 25 (341)
Profit sharing (63) - (63) (94) - (94)
Net income (loss) 511 0 511 688 (0) 688
Adjustments1H18
Managerial
1H19
AuditedAdjustments
1H19
Managerial
1H18
Audited
INCOME STATEMENT
(R$ Million)
1. Includes revenues from credit portfolios assigned with recourse under Resolution 3,533.
23
APPENDICES
Appendices | Earnings Release | 2Q19
ANEXOS
10 Largest Banks in Loan Portfolio – Mar.19 (R$B)
Overview – Banco Votorantim Position
10 Largest Banks in Assets – Mar.19 (R$B)
Strategy – View per business
Banco Votorantim is one of the largest Brazilian private banks in total assets and credit portfolio.
9th
8th
1.517
1.491
1.293
1.142
849
789
190
163
93
84
Banco do Brasil
BNDES
Bradesco
BTG Pactual
Itaú
CEF
Santander
Safra
Votorantim
Cielo S.A.
Public Foreign Brazilian and private
686
628
544
420
310
292
66
51
34
22
Safra
Itaú
Banrisul
CEF
Votorantim
Banco do Brasil
Bradesco
Santander
BNDES
BTG Pactual
Public Foreign Brazilian and private
Auto
Finance
Other
Businesses
Corporate
Bank
Wealth
Management
R$ B Expanded credit portfolio in Jun/19 (includes guarantees provided by the Bank and private securities)
CONSUMER FINANCE WHOLESALE
R$ 61.7B
▲ To focus on used auto finance (multi-brand dealers), where BV has a history of leadership and expertise
▲ To originate portfolios with quality, scale and profitability
▲ Innovation and digital transformation
▲ Credit Cards and Insurance:
revenue diversification
cross-selling to auto customer base
▲ Loans: revenue diversification
• Payroll loans
• Personal loans
• Home equity
• Direct Consumer Credit (solar, student,
tourism, health)
▲ Promotiva: dedicated payroll loans origination
to BB
▲ Corporate (R$300M to R$ 1.5B):
Focus on growing
• cash management, financial structure,
guarantees, working capital, hedge, FX,
capital markets and M&A
▲ Large Corporate (>R$ 1.5B):
Focus on increasing profitability
• capital markets, financial structure,
guarantees and treasury
▲ Agility and flexibility to serve
▲ Capital discipline (Risk-Adjusted Return)
▲ Asset: 13th largest in the market, with
innovative products and relevant
synergies with BB
▲ R$ 51.0B in AuM
▲ Private: focus on asset management
through tailor-made solutions
Banco do Brasil Votorantim S.A.Shareholders
R$ 5.3B
R$ 35.7B R$ 20.7B
24 Appendices | Earnings Release | 2Q19
Retail - Other Business
Consigned Payroll
▲ Reduction in the exposure of the portfolios
from Public and INSS agreements
▲ Growth of the consigned payroll loan
portfolio through the increase of new
agreements
▲ Continuous improvement of management
tools (pricing, credit, collection, etc.)
Payroll loans - Loan Portfolio (R$B)
Credit Cards
▲ Elo, Visa and Mastercard credit card
issuance
▲ Focus on exploring the current Auto
Finance customer base
▲ Grow organically through new business
partnerships (e.g. Netpoints)
▲ Invest in new technologies (digital wallet,
artificial intelligence, virtual card, etc.)
Active cards (Million) and Portfolio (R$B)
Active Cards 0.920.920.89
Insurance Brokerage
▲ Increase brokerage revenue by leveraging
retail's customer base
▲ Diversify the insurance portfolio:
• Life Insurance
• Residential Insurance
• Personal Accident Insurance, etc
Insurance premiums (R$M)
0.2(9%)
0.8
1.5
0.8
Jun/18
0.2(8%)
0.9
Mar/19
2.4
0.1(8%)
0.8
0.8
Jun/19
Public
Private
INSS
1.91.7
1,992,30 2,44
Portfolio
Jun/18 Mar/19 Jun/19
43
54
46
138
2Q18
61
148
1Q19
40
64
148
2Q19
Other
235
Auto
Credit
Insurance
255 251
25 Appendices | Earnings Release | 2Q19
Only 5.6% of credit risk is concentrated in the 10
largest debtors.
Sector Concentration - Wholesale
Credit Concentration
10 Major debtors¹
1. Numbers exclude private securities and are net of credit provisions.
100 Major debtors¹
1. In relation to consolidated loan portfolio.
Quality of Credit Portfolio - Wholesale
7,6%6,1% 5,6%
Mar/19 Jun/19Jun/18
19,6%16,6% 16,1%
Mar/19Jun/18 Jun/19
R$M Part.(%) R$M Part.(%)
Telecom 1,356 8.4% 1,438 9.2%
Sugar and Ethanol 1,601 9.9% 1,360 8.7%
Retail 999 6.2% 1,149 7.4%
Financial Institutions 2,280 14.2% 1,142 7.3%
Automotive/Auto parts/Car Dealers 642 4.0% 881 5.6%
Oil & Gas 503 3.1% 715 4.6%
Car Rental 268 1.7% 664 4.3%
Food and beverages industry 374 2.3% 599 3.8%
Industry 343 2.1% 560 3.6%
Railways 605 3.8% 483 3.1%
Mining 952 5.9% 475 3.0%
Eletricity Generation 263 1.6% 475 3.0%
Cooperatives 215 1.3% 401 2.6%
Government 485 3.0% 400 2.6%
Slaughterhouses 371 2.3% 381 2.4%
Steel 171 1.1% 337 2.2%
Services 330 2.0% 334 2.1%
Agrochemistry 200 1.2% 298 1.9%
Civil Construction - Residential 251 1.6% 295 1.9%
Agribusiness 288 1.8% 269 1.7%
Other 3,596 22.3% 2,949 18.9%
Total¹ 16,092 100.0% 15,607 100.0%
Wholesale Sectorial concentrationJun/18 Jun/19
