ANNUAL REPORT OF THE NATIONAL SYSTEM OF COOPERATIVE CREDIT - SNCC

Transcription

1 ANNUAL REPORT OF THE NATIONAL SYSTEM OF COOPERATIVE CREDIT - SNCC UNDERSTANDING THE NATIONAL SYSTEM OF COOPERATIVE CREDIT (SNCC) 1.1 REGULATION The making of laws in Brazil is set up by the legislative and executive branches. With regard to the credit cooperatives, there are Law n 4,595/1964 (Law of the Financial System), Law n 5,764/1971 (General Law of Cooperatives) and Complementary Law no. 130/2009 (specific to the credit union). As a complement, the National Monetary Council (CMN), which is the highest agency of the financial system in Brazil, has the power to issue general rules for the proper functioning of the system through its resolutions. The main responsible for making sure these rules are met is the Central Bank of Brazil (BC), which has assignment to authorize, regulate and supervise the institutions that make up the SFN through Circulars, Circular Letters, Releases and Manuals. 1.2 COOPERATIVE DIFFERENTIATION Brazilian credit cooperatives can be organized in systems, which provides economies of scale in a pyramidal structure in which the singular cooperatives (first degree) occupy the base, central cooperatives (second degree) occupy the intermediate level and the confederation (third degree) is at the top. The singular has aimed to provide direct services to the associates; the central organize, on a larger scale, affiliated services, facilitating the reciprocal use of services. Finally the confederation defend their interests, promote standardization, supervision and operational, financial, regulatory and technological integration. 1.3 STRUCTURING In Brazil, the SNCC is structured as follows: - Four confederations: National Confederation of Cooperatives of Sicoob (Sicoob); Confederation of Interstate Cooperatives Linked to Sicredi (Sicredi); National Confederation of Central Cooperatives Unicred's (Unicred Brazil) and Confederation of Rural Credit Central Cooperatives with Solidarity Interaction (Confesol); - Five systems organized in headquarters that are not affiliated with a confederation: Central Cooperative Saving and Mutual Credit from the State of Espirito Santo (Cecoopes); Central Urban Credit Cooperatives (Cecred); Central of Mutual Credit Cooperatives of Rio Grande do Sul (Cecrers); Credit Central Cooperative on Brazilian Northwest (Credisis); and Central Interstate Credit Cooperatives (Central Uniprime); 1

2 - Singular credit unions that are not affiliated to the centrals; - Two cooperative banks, Cooperative Bank of Brazil (Bancoob) and Sicredi Cooperative Bank (Sicredi Bank), which has a controlling stake in central credit cooperatives and that provides financial products and services especially for the members of the system. 1.4 OTHER ENTITIES In Brazil, there are still other entities linked to the credit cooperatives, including the Organization of Brazilian Cooperatives (OCB), a private entity responsible for the promotion, development and defense of the cooperative system in all political and institutional levels, integrating all thirteen sector industries and maintaining support services, general guidance and other interest of Cooperatives. Specifically for the credit cooperatives, the OCB constitutes the National Advisory Board of Credit Branch (CECO), an advisory of technical character, whose mission is to propose solutions to provide more dynamic, objective, efficient and effective actions in the OCB for the credit cooperative sector. 2

3 2. SNCC STRUCTURE 2.1 COMPOSITION The SNCC ended 2015 with 2 cooperative banks, 4 confederations (2 for finances and 2 for services), 35 centrals and 1,076 individual credit unions, as shown in Table 2.1. It is noteworthy that there was a reduction of 47 individual credit unions and 3 centrals in relation to the previous year. On the reduction of singular cooperatives, 40 were included, 10 had their operating licenses canceled by the initiative of the BC and 1 for ordinary liquidation. It is highlighted that the CECM of Eletronorte Employees Ltd., based in Belém - PA, affiliated with the Sicoob, incorporated 7 cooperatives simultaneously. Another relevant factor is that the Central Bank in 2015 authorized only 4 of the singulars to work demonstrating the SNCC consolidation behavior. Regarding 3 of the incorporated centrals, one was by Sicoob Central Unicoob (Sicoob of the Central Amazon), the other by the central Sicoob Uni (Unicred Central Western Amazon), both affiliated to Sicoob, and the latter was merged into Unicred Central North/Northeast (Federalred). Also noteworthy is that on August 15th, 2015, a memorandum of understanding was signed aimed at affiliating the Central Unicred North/Northeast to Sicredi. TABLE AMOUNT OF SINGULAR CREDIT COOPERATIVES AMOUNT OF SINGULAR CREDIT COOPERATIVES SEGMENTATION BY TYPE Dec./14 Mar./15 June/15 Sept./15 Dec./15 VARIATION PERIOD Rural Credit Mutual Credit / Professional Activity Mutual Credit / Employees Mutual Credit / Employment bond Mutual Credit / Enterprises - Micro and Small Mutual Credit / Free Admission Mutual Credit / Various Sources Luzzatti TOTAL Source: BCB/December 2015 On August 5 th, Resolution n. 4,434 of the National Monetary Council (CMN) was enacted, establishing a new classification of credit cooperatives, according to the practiced operations: Full, Classic, Capital and Loan. On November 4 th, the previous framework of credit cooperatives was announced, and from that date on, it was given 90 days to request cooperatives to reframe the BC 3

4 if they did not agree with it. According to the Bulletin n. 28,684 of November 4th, 2015 and the n. 29,044 of January 28th, 2016 (not considering the cooperatives in the process of incorporation), cooperatives were classified as shown in Table 2.2. TABLE PREVIOUS FRAMEWORK OF CREDIT COOPERATIVES SINGULAR CREDIT COOPERATIVES BY CATEGORY AND SYSTEMS SYSTEMS FULL* CLASSIC* CAPITAL AND LOAN* TOTAL 3rd LEVEL SICREDI SICOOB UNICRED CONFESOL nd LEVEL CECRED CECRERS CECOOPS UNIPRIME CREDISIS UNICRED N/NW NON-AFFILIATED TO CENTRALS GRAND TOTAL Source: BCB/December 2015 Despite the reduction in the quantity of headquarters, the year of 2015 showed an increase of 4.64% in the PSCs (headquarters + service offices), as shown in Graph 2.1, there was a similar behavior to that in the year of 2014 with a positive variation of 4.87 %. GRAPH 2.1 COOPERATIVE SERVICE UNITS Source: BCB/December

5 On the organizational level, the 3-level systems grew by 235 units (5.21%), the 2-level grew by 17 units (4.79%) and the units that were not affiliated to the central decreased by 9 units (-2.45%), as shown in Table 2.3. TABLE 2.3 COOPERATIVE SERVICE UNITS PER ORGANIZATIONAL LEVELS - December-15 ORGANIZATIONAL LEVEL NUMBER OF SERVICE UNITS (CENTRAL OFFICES + Service Posts (SPs) N. OF SINGULAR COOPS. % OF SINGULAR COOPS. N. OF CENTRAL OFFICES N. OF CREDIT CONF. UNICRED N/NW 28 2,64% ,46% 94 1,72% SING. COOPS NON-AFFILIATED TO CENTRALS ,06% 156 3,46% 358 6,54% GRAND TOTAL ,00% ,00% Source: BCB/December 2015 Notes: 1) The difference in the number of headquarters in comparison to Table 2..1 (1,096) is that the source of data in the Service Units by system does not recognize cooperatives in process of entry. 2) In the Sicredi System, the headquarters do not provide the services directly to the public. It provides it to a service office bound to them. 3) In August 15th 2015, a memorandum of understanding was signed to affiliate the Unicred Central North/Northwest to the Sicredi. The cooperative service units showed opposite changes in the number of bank agencies 1, as shown in Graph 2.2. GRAPH 2.2 COOPERATIVE SERVICE UNITS VARIATIONS N. of SPs % N. of SPs SERVICE UNITS % SERVICE UNITS 3-LEVEL SYSTEMS ,77% ,98% ,67% SICOOB ,85% ,76% ,75% SICREDI 95 8,96% ,27% ,76% UNICRED 44 4,15% ,43% 289 5,28% CONFESOL ,81% ,53% 542 9,89% 2-LEVEL SYSTEMS 76 6,13% ,56% 372 6,79% CREDISIS-RO 11 1,04% ,31% 25 0,46% CECRED 14 1,32% ,28% 162 2,96% CECRERS 10 0,94% ,27% 22 0,40% CECOOPES 4 0,38% 1 0 0,00% 4 0,07% UNIPRIME CENTRAL 9 0,85% ,24% 65 1,19% 4,64% 1,64% 1,19% 0,88% 0,85% -0,15% -0,33% -0,58% -0,77% -1,26% Mar./15 June/15 Sept./15 Dec./15 Var % Period COOPERATIVE SERVICE UNITS BANK AGENCIES Source: BCB/December Reducing the number of bank agencies, which is taking place from April 2015, in large part due to, especially in relation to the Bank of Brazil and Bradesco, the agency in banking service office transformation movement. 5

6 It is also noteworthy that the number of cooperative banking service offices surpassed the amount of bank agencies 2 of the Bank of Brazil, who led in December-14, according to Table 2.4, becoming the country's largest service network. TABLE COOPERATIVE SERVICE OFFICES AND BANK AGENCIES SERVICE UNITS ORDER INSTITUTION Dec./14 Dec./15 VAR % 1 CREDIT COOPERATIVES ,64% 2 BANCO DO BRASIL ,72% 3 BRADESCO ,22% 4 ITAU ,44% 5 CAIXA ,38% Source: BCB/December 2015 According to the BCB, the cooperative service units are present in 2,453 (44%) Brazilian municipalities, concentrated mainly in the South and Southeast regions, as shown in Graph 2.3 GRAPH 2.3 COOPERATIVE SERVICE UNITS PER REGION SOUTH NORTH 189 NORTHEAST 300 SOUTHEAST MID-WEST 469 Fonte: BCB/December This analysis does not include the banking service offices 6

7 2.2 NUMBER OF ASSOCIATES The number of members increased by % over the last 10 years and 10.89% in 2015, reaching the mark of 8.4 million, 824,100 associated with more than in 2014, as shown in Grafh 2.4. A strong correlation is observed between the growths in the number of associates and of banking service offices, once again showing the progress of SNCC. Also noteworthy is that 8.4 million members in 2015 are present in 5,144 municipalities, according to the Central Bank, 91.8% of Brazilian municipalities. Graph 2.4 shows the ratio between the number of members and the Economically Active Population (EAP), which had an annual average growth of 5.27% between the years GRAPH NUMBER OF ASSOCIATES AND THE ECONOMICALLY ACTIVE POPULATION ,8 3,07% 3,51% 3,2 3,83% 3,97% 3,6 3,8 4,22% 4,2 4,96% 4,7 6,61% 6,3 6,86% 6,7 7,54% 7,6 8,4 8,08% 9,00% 8,00% 7,00% 6,00% 5,00% 4,00% 3,00% 2,00% ,00% ,00% NUMBER OF AFFILIATES (In millions) Source: OCB, IPEADATA e BCB Observations: The years 2010 and 2015 were given an estimate based in the growth of previous year. % NUMBER OF AFFILIATES/EAP When stratifying the number of associates by systems (Table 2.5), there was the growth of 26.64% in the three-level system in As for the two-level systems, we could not make a comparative analysis by the absence of broken up data in

8 TABLE NUMBER OF ASSOCIATES PER SYSTEM - December-15 Source: BCB/December 2015 NUMBER OF ASSOCIATES BY SYSTEM ORGANIZATIONAL LEVEL N. OF ASSOCIATES 3-LEVEL SYSTEMS ,10% SICOOB ,82% SICREDI ,54% UNICRED ,56% CONFESOL ,18% 2-LEVEL SYSTEMS ,96% CREDISIS-RO ,16% CECRED ,74% CECRERS ,29% CECOOPES ,04% UNIPRIME CENTRAL ,45% UNICRED N/NW ,28% SING. COOPS NON-AFFILIATED TO CENTRALS ,94% GRAND TOTAL % 8

9 3. VOLUME OF DEPOSITS SFN deposits, excluding interbank deposits, in December-15 reached the amount of 1.9 trillion, billion (12.24%) more than in the previous year. Despite the growth in the volume of deposits, savings deposits had a 2.7 billion decrease (-0.53%), while demand deposits and time deposits increased to billion. The reasons that contributed to this decrease in the volume of savings deposits were inflation and unemployment. SNCC ended the year with a volume of deposits of 90.9 billion, 15.4 billion more than the volume enclosed in December-14, with 4,61% share in the SFN. Unlike commercial banks, the SNCC obtained an increase of million for balance in savings when compared to the volume of the same period last year. Time deposits were the ones that registered the largest increase, reaching the level of 67.6 billion in December-15, 13.5 billion more in 12 months (Table A.2.1 in the Annex). The participation of the negotiating SNCC (SNCC-N) in the banking consolidated plus financial institutions jumped from 3.76% in December-14 to 4.25% in December-15, especially in the South region, where all the states that comprise it surpass the double-digit (Table A.2.2). The percentage variation in the volume of SNCC-N in relation to commercial banking consolidated in the four quarters of 2015 is highlighted, as shown in Graph 3.1. GRAPH VARIATION IN VOLUME OF THE DEPOSIT 21,09% 7,48% 5,49% 6,33% 6,25% 5,68% -1,32% 2,42% -0,87% -0,28% Mar./15 June/15 Sept./15 Dec./15 Período COMMERCIAL BANKING CONSOLIDATION CREDIT SINGULAR COOPERATIVES Source: BCB/December

10 In comparison with December-14, the only region that did not grow in regional participation was the Southeast, remaining stable at 1.42%. The state of Rio Grande do Sul stood out in 2015 by entering the double-digit, when it started with 9.83% in December-14 and went to 11.59% in December-15. The four systems that are organized on three levels raised R$ 72.2 billion (87.19%) for volume of deposits for singular credit cooperatives; organized on two levels and non-affiliated singular cooperatives raised, respectively, R$ 9.1 (11.10%) and R$ 1.4 (1.71%) billion for volume of deposits. Graph 3.2 shows the participation of singular cooperatives in the financial system by region and the respective State with the lead in participation of cooperatives in the State's Financial System. GRAPH DEPOSITS LEADING STATES IN THE REGIONAL FINANCIAL SYSTEM Rondônia 14,52% Mato Grosso 18,92% Santa Catarina 17,72% Paraíba 7,43% EspÍrito Santo 8,24% 12,94% 3,25% 1,70% 1,42% 5,07% North Northeast Southeast Mid-west South Source: BCB/December 2015 All states mentioned above in the chart grew in regional participation of the financial system compared to the year 2014: Rondônia 2.43 p.p; Paraíba 1.46 p.p; Espírito Santo 1.77 p.p; Mato Grosso 1.98 p.p and Santa Catarina 2.33 p.p. 10

11 4. CREDIT OPERATIONS The 2015 credit environment reflected the weakening of the economic scenario, with high interest rates, the increase on unemployment and the drop in confidence in both consumers and entrepreneurs. To address this situation, the banks acted more conservatively in granting credit, renegotiating and restructuring the debts of the borrowers, as well as increasing coverage of provisions for bad debt, while activating tax credits during the second semester 3. Nevertheless, the commercial banking consolidated and the SNCC grew in credit operations, as it will be seen in the next items and in the attached tables. 4.1 VOLUME OF CREDIT OPERATIONS FOR SNCC AND SFN SFN credit operations (excluding financial transfers to the SNCC-N) in December-15 amounted to R$ 3.3 trillion, an increase of 9.08% compared to December-14; in the SNCC, the increase was of 12.47% and totaled in R$ 80.2 billion; since the amount of the SNCC-N was R$ 79.1 billion, there was an increase of 12.53% in the same period. The participation of the SNCC-N, considering only the commercial banking consolidated plus financial institutions, was of 2.67% in December-14 and went to 2.77% in December-15 (Tables A.4.1 and A.4.2). It is noteworthy that the growth presented in Graph 4.1 was not accompanied by the five largest banks, which achieved an average growth of 7.49%. Caixa Econômica Federal presented the highest increase of around 11.76% and the Bank of Brazil a lower growth of 6.08%. 3 Financial Stability Report of the Central Bank of Brazil, Oct-2015 and Apr

12 GRAPH VARIATION OF THE COMMERCIAL BANKING CONSOLIDATED AND THE SNCC-N - FROM DEC./2014 TO DEC./ ,53% 8,53% 3,34% 2,76% 5,56% 3,79% 4,38% 1,08% 0,15% Mar./15 June/15 Sept./15 Dec./15 VARIATION % -0,67% PERIOD COMMERCIAL BANKING CONSOLIDATED NEGOTIATING SNCC Fonte: BCB/IF.Data 4.2 VOLUME OF THE CREDIT OPERATIONS BY ORGANIZATIONAL LEVEL The four systems organized on three levels hold 87.59% of the balance of the credit operations for singular cooperatives, the ones organized on two levels hold 8.73% and the singular cooperatives that are not affiliated to the centrals represent 3.68% of the SNCC, keeping that percentage stable during December-14 (Table A.4.3). In systems organized on two levels, the Cecred is leading with 39.54% in December-14 and 41.15% in December-15. The Credicoamo is the leading non-affiliated to the Central with 33.08%. It is noteworthy that the ten largest unaffiliated represent 62.81% of the total volume of cooperatives unaffiliated to the Central 4. In the three-level system, there is Unicred, which registered a growth of 28.66%; already in participation, the highlight is Sicoob, which ended the year of 2015 with 51.40% in this group. 4.3 VOLUME OF CREDIT OPERATIONS PER TYPE OF PERSON According to the Central Bank's information based on December-2012 and December-2015's census, in relation to the associates with credit operations, the percentage of individuals increased from 34% to 44% and the legal entities grew from 48% to 67%. Regarding the financial volume, the 4 The cooperatives that not collect deposits were not considered in this case. 12

13 participation of individuals in the loan portfolio decreased when it went from 92% in December-12 to 90% in December-15. In the SNCC-N, the credit operations have greater focus on individual, while in the commercial bank consolidated this ratio is more balanced, with a predominance of operations with legal entities, as shown in Graph 3.2. Credit operations with individuals of singular cooperatives concluded the year with the amount of R$ 50.1 billion and a growth of 8.76% compared to December-14. As for the legal entities, the amount was of R$ 25.7 billion and the growth was of 19.58% compared with December-14. In the commercial banking consolidated the sum was of R$ 1.7 trillion for legal entities, with a growth of 6.64% and for individuals it reached the sum of R$ 1.5 trillion, an increase of 8.81% compared with December-14. The behavior of the variation in commercial banking consolidated was close to the SNCC-N for individuals, but in relation to the legal entities growth, it was lower than in the SNCC-N and equal to 8.76%. GRAPH CREDIT OPERATIONS FOR INDIVIDUALS AND LEGAL ENTITIES 67,67% 66,85% 67,01% 66,07% 54,20% 45,80% 53,15% 46,85% 54,10% 45,90% 53,38% 46,62% 32,33% 33,15% 32,99% 33,93% LE - LEGAL ENTITY IE - INDIVIDUAL ENTITY LE - LEGAL ENTITY IE - INDIVIDUAL ENTITY LE - LEGAL ENTITY IE - INDIVIDUAL ENTITY LE - LEGAL ENTITY Mar./15 June/15 Sept./15 Dec./15 IE - INDIVIDUAL ENTITY COMMERCIAL BANKING CONSOLIDATED NEGOTIATING SNCC Fonte: BCB/IF.Data 13

14 4.4 VOLUME OF CREDIT OPERATIONS PER TYPE OF PERSON Individuals In SNCC-N, the modality that leads to participation is the rural and agribusiness credit with 38.10%, in December-14 it was of 37.22%. The volume grew 11.32%. By analyzing only the financial volume in 2015, the modality loans consignment sheet obtained a growth of 11,42%, and the share rose from 9.65% in December-14 to 9.89% in December-15 (Tables A.4.4 and A.4.5). Non-consigned loans was the modality that came in second with 29.32% stake, practically stable in December-14 (29.11%); the financial volume growth was of 9.56%. Operations with credit card was the modality that had the lowest representation, with 1.54% in December-15, in December-14 it was of 1.32%. Despite being the smallest participation in financial volume it is the one with the highest growth with 27.05% when compared with December-14. It is also noted that vehicle financing fell by 9.92% in the year Legal entities The composition of the corporate credit operations portfolio of the SNCC-N, the modality which has the largest share is the working capital with 47.13%, and in December-14 it was of 49.41%, the trading volume has increased in % (Tables A.4.6 and A.4.7). Receivable operations comes in second with a share of 13.91%, when it was 15.11% in December- 14, the financial volume growth was of 10.08%. There is a pattern of behavior in both modalities, reducing participation and increase in trading volume. From the seven main modalities of credit operations, four have reduced participation, one has remained stable and two of them have increased. The rural and agribusiness credit modality had an increase in trading volume of 25.04% in the year, and project financing operations increased by 20.62%. Investment operations, between December- 14 and December-15, obtained an increase of 3.06%, the lowest growth among all modalities and hold 10.84% participation. 4.5 VOLUME OF CREDIT OPERATIONS BY REGION Graph 4.3 shows the share of singular cooperatives in the financial system by regions and the respective State with the leadership in the participation of cooperatives in the State Financial System. 14

15 GRAPH CREDIT OPERATIONS LEADING STATES IN THE REGIONAL FINANCIAL SYSTEM Rondônia 15,06% EspÍrito Santo 11,51% Mato Grosso 12,54% Santa Catarina 12,98% Paraíba 6,56% 9,09% 5,82% 3,36% 1,53% 1,50% NORTH NORTHEAST SOUTHEAST MID-WEST SOUTH Fonte: BCB/ DIORF/DEORF/December 2015 Examining the credit portfolio of individuals for the SNCC-N by region, the South is the leading region with R$ 22.9 billion balance, and in December-14 this amount was of R$ 21.2 billion, a reduction of their participation, but the trading volume increased by 7.93%. The Southeast region increased participation, from 30.63% to 30.85%, in addition to an increase of 9.53%. The Midwest region kept a stable share of around 17%, and a balance of R$ 8.5 billion, as shown in Graph 4.4. GRAPH SNCC-N INDIVIDUALS SOUTHERN REGION; 46,17% NORTHERN REGION; 2,46% NORTHEASTERN REGION; 3,75% SOUTHEASTER N REGION; 30,63% SOUTHERN REGION; 45,81% NORTHERN REGION; 2,71% NORTHEASTERN REGION; 3,62% SOUTHEASTER N REGION; 30,85% MID-WESTERN REGION; 17,00% MID-WESTERN REGION; 17,01% Source: BCB/December 2014 Source: BCB/December 2015 In the legal entity loan portfolio by region, the South leads with a R$ 13.0 billion balance, in December-14 it was of R$ 10.8 billion, an increase of 20.11% in financial volume. In the Southeast the volume was of R$ 6.2 billion, from December-14 to December-15 it was of R$ 7.7 billion, an increase of 25%. The Midwest region grew by 7.32%, with a financial volume of R$ 2.9 billion in December-15, when in December-14 it was of R$ 2.7 billion, as shown in Graph

16 GRAPH SNCC-N LEGAL ENTITY SOUTHERN REGION; 50,34% NORTHERN REGION; 2,87% NORTHEASTERN REGION; 5,05% SOUTHEASTER N REGION; 28,86% SOUTHERN REGION; 50,56% NORTHERN REGION; 2,89% NORTHEASTERN REGION; 4,81% SOUTHEASTER N REGION; 30,17% MID-WESTERN REGION; 12,89% Source: BCB/December 2014 Source: BCB/December 2015 MID-WESTERN REGION; 11,57% 4.6 OPERATIONS BY RISK LEVELS The credit operations for commercial banking consolidated and the SNCC are classified in ascending order of risk (AA, A, B, C, D, E, F, G, H), according to the Resolution 2,682/1999 of the CMN. CLASSIFICATION OF RISK OF THE SNCC CREDIT OPERATIONS in Thousands of Reais Dec./14 Dec./15 VARIATION RISK LEVEL BALANCE % BALANCE % REAIS (R$) % AA, A, B ,14% ,30% ,38% C, D, E ,40% ,47% ,48% F, G, H ,46% ,22% ,90% TOTAL % % ,07% Source: BCB/IF.data Note: The balance includes interbank lending to rural credit. CLASSIFICATION OF RISK OF THE COMMERCIAL BANKING CONSOLIDATED CREDIT in Thousands of Reais OPERATIONS Dec./14 Dec./15 VARIATION RISK LEVEL BALANCE % BALANCE % REAIS (R$) % AA, A, B ,58% ,89% ,55% C, D, E ,66% ,80% ,25% F, G, H ,75% ,31% ,39% TOTAL % % ,64% Source: BCB/IF.data In the SNCC, the operations classified in levels AA, A and B, the level A has the highest financial volume, R$ 43.6 billion and the largest share, with 42.75%. 16

17 While the commercial banking consolidated has 37.49% of the operations classified as AA level of risk and in the SNCC this classification is of 22.01%. For transactions classified as level H, the commercial banking consolidated is of 2.92% and in the SNCC the balance is of 1.97% (Table A.4.10). ANNEXES 17

18 TABLE A DEPOSIT VOLUME WITHOUT INTERBANK DEPOSITS - DECEMBER 2015 VOLUME OF DEPOSITS In Thousands of Reais SEGMENTS Demand deposits Savings deposits Time deposits Other deposits Total deposits 1 Multiple Commercial bank with comm. Portfolio or CEF Multiple banks without commercial port. and Investment Bank Development bank Non-bank Financial Institutions SNCC Cooperative bank Confederation Central Office Singular Cooperative TOTAL SFN WITHOUT NON-BANK INSTITUTIONS AND CAPITAL MARKET ( ) PARTICIPATION OF SNCC IN THE SFN TOTAL NEGOTIATING SNCC ( ) PARTICIPATION NEGOTIATING SNCC IN THE BANKING CONSOLIDATION¹ ( )/( ) PARTICIPATION OF NEGOTIATING SNCC IN THE BANKING CONSOLIDATION PLUS FINANCIAL INSTITUTIONS² ,16% 1,19% 7,24% 3,74% 4,61% ,16% 1,19% 6,49% 6,01% 4,25% 4,16% 1,19% 6,47% 5,87% 4,25% Fonte: BCB/IF.data/December 2015 Note: 1) Resulting value produced by the total of cooperative deposits and the sum of that same value with the total of deposits with the banking consolidation. 2) Resulting value produced by the total of cooperative deposits and the sum of that same value with the total of deposits with the banking consolidation plus financial institutions. TABLE A DEPOSIT VOLUME WITHOUT INTERBANK DEPOSITS - DECEMBER 2014 VOLUME OF DEPOSITS In Thousands of Reais SEGMENTS Demand deposits Savings deposits Time depostits Other deposits Total Deposit 1 Commercial bank, Multiple banks with portfolio or CEF Multiple bank without commercial portfolio and Investment Bank Development Bank Non-bank Financial Institutions SNCC Cooperative Bank Confederation Central Office Singular Cooperative TOTAL SFNs WITHOUT NON-BANK INSTITUTIONS AND CAPITAL MARKET ( ) PARTICIPATION OD SNCC IN THE SFN TOTAL NEGOTIATING SNCC ( ) PARTICIPATION OF NEGOTIATING SNCC IN THE BANKING CONSOLIDATION¹ ( )/( ) PARTICIPATION OF NEGOTIATING SNCC IN THE BANKING CONSOLIDATION PLUS FINANCIAL INSTITUTIONS² ,94% 1,05% 6,00% 4,31% 4,05% ,94% 1,05% 5,39% 8,16% 3,76% 4,94% 1,05% 5,38% 7,92% 3,76% Fonte: BCB/IF.data/December 2014 Note: 1) Resulting value produced by the total of cooperative deposits and the sum of that same value with the total of deposits with the banking consolidation. 2) Resulting value produced by the total of cooperative deposits and the sum of that same value with the total of deposits with the banking consolidation plus financial institutions. 18

19 TABLE A STATEMENT FOR THE PARTICIPATION OF THE SFN CREDIT COOPERATIVES - STATE AND REGION PARTICIPATION OF CREDIT COOPERATIVES IN THE SFN - BY STATE AND REGION in Thousands of Reais SFN CREDIT COOPERATIVES Region Credit Operation Deposit Credit Operation % Deposit % NORTH ,36% ,25% AC ,21% ,77% AM ,80% ,64% AP ,30% ,79% PA ,49% ,23% RO ,06% ,52% RR ,15% ,65% TO ,91% ,25% NORTHEAST ,53% ,70% AL ,38% ,60% BA ,05% ,15% CE ,09% ,23% MA ,55% ,46% PB ,56% ,43% PE ,23% ,17% PI ,24% ,68% RN ,45% ,92% SE ,01% ,02% SOUTHEAST ,50% ,42% ES ,51% ,24% MG ,37% ,02% RJ ,45% ,67% SP ,84% ,68% MID-WEST ,82% ,07% DF ,84% ,50% GO ,76% ,64% MS ,63% ,85% MT ,54% ,92% SOUTH ,09% ,94% PR ,99% ,63% SC ,98% ,72% RS ,19% ,59% BRAZIL TOTAL ,13% ,36% Source: BCB/December

20 TABLE A.4.1 VOLUME OF CREDIT OPERATIONS - DECEMBER 2015 Source: BCB/IF.data/December 2015 VOLUME OF CREDIT OPERATION SEGMENT TABLE A.4.2 VOLUME OF CREDIT OPERATIONS - DECEMBER 2014 VOLUME PROVISION 1 Commercial bank, Multiple banks portfolio or CEF Multiple Banks Without commercial port. and Investment Bank Development Bank Non-bank Financial Institutions SNCC Cooperative Bank (without/ interfiancial transfers) Confederation Central Singular Cooperative TOTAL SFN (without Non-bank Capital Market Institutions) SNCC/SFN TOTAL NEGOTIATING SNCC ( ) NEGOTIATING SNCC/BANKING CONSOLIDATIONS COMMERCIAL/MULTIPLE BANKS AND CEF ( )/( ) NEGOTIATING SNCC/BANKING CONSOLIDATIONS PLUS FINANCIAL INSTITUTIONS in Thousands of Reais 2,40% 2,19% ,79% 2,35% 2,77% 2,29% Source: BCB/IF.data/December 2014 VOLUME OF CREDIT OPERATION SEGMENT VOLUME PROVISION 1 Commercial bank, Multiple banks portfolio or CEF Multiple Banks Without commercial port. and Investment Bank Development Bank Non-bank Financial Institutions SNCC Cooperative Bank (without/ interfinancial transfers) Confederation Central Singular Cooperative TOTAL SFN (without Non-bank Capital Market Institutions) PARTICIPATION SNCC/SFN TOTAL NEGOTIATING SNCC ( ) NEGOTIATING SNCC/BANKING CONSOLIDATIONS COMMERCIAL/MULTIPLE BANKS AND CEF ( )/( ) NEGOTIATING SNCC/BANKING CONSOLIDATIONS PLUS FINANCIAL INSTITUTIONS in Thousands of Reais ,33% 2,08% ,70% 2,21% 2,67% 2,17% 20

21 TABLE A VOLUME OF CREDIT OPERATIONS BY MODALITY SINGULAR CREDIT COOPERATIVES in Thousands of Reais Deposit Credit Operations ORGANIZATIONAL LEVEL REAIS (R$) % REAIS (R$) % 3-LEVEL SYSTEMS ,19% ,59% SICOOB ,86% ,03% SICREDI ,64% ,86% UNICRED ,78% ,82% CONFESOL ,91% ,88% 2-LEVEL SYSTEMS ,10% ,73% CREDISIS-RO ,29% ,37% CECRED ,27% ,59% CECRERS ,35% ,22% CECOOPES ,00% ,02% UNIPRIME CENTRAL ,07% ,39% UNICRED N/NW ,12% ,14% INDEPENDENT ,72% ,68% GRAND TOTAL ,00% ,00% Source: BCB/December 2015 TABLE A MODALITY OF CREDIT OPERATIONS FOR SNCC PF-N - DECEMBER 2015 NEGOTIATING SNCC - INDIVIDUAL ENTITY in Thousands of Reais MODALITY VOLUME % Rural and Agroindustrial ,10% Businesses without balance sheet consignment ,32% Other Credits ,29% Businesses with balance sheet consignment ,89% Vehicles ,86% Credit Card ,54% TOTAL ,00% Source: BCB/IF.data/December 2015 Note: Other loans are made by other credit operations in the country as described in the BC website, with free resources, not intemized in the modalities. 21

22 TABLE A MODALITY OF CREDIT OPERATIONS SNCC PF-N - DECEMBER 2014 NEGOTIATING SNCC - INDIVIDUAL ENTITY in Thousands of Reais MODALITY VOLUME % Rural and Agroindustrial ,22% Businesses without balance sheet consignment ,11% Other Credits ,41% Businesses with balance sheet consignment ,65% Vehicles ,28% Credit Card ,32% TOTAL ,00% Source: BCB/IF.data/December 2014 Note: Other loans are made by other credit operations in the country as described in the BC website, with free resources, not intemized in the modalities. TABLE A MODALITY OF CREDIT OPERATIONS FOR PJ SNCC-N - DECEMBER 2015 NEGOTIATING SNCC - INDIVIDUAL ENTITY in Thousands of Reais MODALITY VOLUME % Working Capital ,13% Operations with Receivables ,91% Revolving Credit ,72% Other Credits ,93% Investment ,84% Rural and Agroindustrial ,99% Project Funding ,47% TOTAL ,00% Source: BCB/IF.data/December 2015 Note: Other loans are made by other credit operations in the country as described in the BC website, with free resources, not intemized in the modalities. TABLE A MODALITY OF CREDIT OPERATIONS FOR PJ SNCC-N - DECEMBER 2014 NEGOTIATING SNCC - INDIVIDUAL ENTITY in Thousands of Reais MODALITY VOLUME % Working Capital ,41% Operations with Receivables ,11% Revolving Credit ,43% Other Credits ,14% Investment ,58% Rural and Agroindustrial ,86% Project Funding ,47% TOTAL ,00% Source: BCB/IF.data/December 2014 Note: Other loans are made by other credit operations in the country as described in the BC website, with free resources, not intemized in the modalities. 22

23 TABLE A RISK CLASSIFICATION OF CREDIT OPERATIONS - DECEMBER 2015 CLASSIFICATION OF RISK OF THE SNCC CREDIT OPERATIONS in Thousands of Reais RISK LEVEL CENTRALS SINGULAR BANKS GRAND TOTAL % GRAND TOTAL % RUNNING TOTAL AA ,01% 22,01% A ,75% 64,75% B ,55% 85,30% C ,28% 92,58% D ,93% 95,51% E ,27% 96,78% F ,84% 97,62% G ,41% 98,03% H ,97% 100,00% TOTAL ,00% Source: BCB/IF.data/December 2015 Note: The balance includes interbank lending to rural credit. TABLE A RISK CLASSIFICATION OF CREDIT OPERATIONS - DECEMBER 2014 CLASSIFICATION OF RISK OF THE SNCC CREDIT OPERATIONS in Thousands of Reais RISK LEVEL CENTRALS SINGULAR BANKS GRAND TOTAL % GRAND TOTAL % RUNNING TOTAL AA ,90% 21,90% A ,29% 60,19% B ,95% 82,14% C ,75% 93,89% D ,80% 96,70% E ,85% 97,54% F ,58% 98,12% G ,32% 98,43% H ,57% 100,00% TOTAL % Source: BCB/IF.data/December 2014 Note: The balance includes interbank lending to rural credit. 23

24 TABLE A.4.10 RISK CLASSIFICATION FOR CONSOLIDATED BANKING CREDIT OPERATIONS CLASSIFICATION OF RISK OF THE BANKING CONSOLIDATION CREDIT OPERATIONS in Thousands of Reais Dec./14 Dec./15 RISK LEVEL REAIS R$ % REAIS R$ % AA ,13% ,49% A ,61% ,61% B ,85% ,80% C ,54% ,94% D ,98% ,58% E ,14% ,28% F ,60% ,75% G ,52% ,64% H ,64% ,92% TOTAL % % Source: BCB/IF.data/December 2014 and December

25 ANNEX 2 - METHODOLOGY, CONCEPTS AND GLOSSARY METHODOLOGY 1. Objective: Evaluating the quarterly evolution of the following: a) Number of cooperative service units (headquarters and service offices) in relation to the banking sector; b) Volume of deposits and credit operations for cooperative banks and singular credit cooperatives in relation to the commercial and financial banking sector; c) Volume of deposits and credit operations by region of the country; d) Classification of risk levels of credit operations. 2. In the evaluation of deposits and credit operations, IF data are taken into account - Selected Information by Supervised Institutions, available on BCB's website: The IF data considers the following macro segments comprising the SFN: Data from June to December are released 90 days after the end of the reference month; the data for March and September, 60 days. 3. For competitive effect, the competition for allocation of public funds in demand deposits, time deposits and savings between the singular credit cooperatives (b3) more cooperative banks versus commercial banking segments (b1) plus the financial segments (n1) and the supply of credit by the same institutions are evaluated. In this sense, SFN institutions operating non-directly with the public are not taken into account: multiple bank without a commercial portfolio and investment banking 25

26 (b2) and the development bank (b4) and the interbank deposits and rural credit transfers are not taken into account so as to avoid double counting. 4. TABLE 2.1 AMOUNT OF SINGULAR CREDIT COOPERATIVES, extracted from the Central Bank website, considers the cooperatives operating on the base date; in 2.2 and 2.3 tables, based on spreadsheet prepared by the BC/Diorf/Department of Financial System Organization - Deorf disregarding cooperatives in the merger process, whose accounting data have been consolidated in the joint general assembly date, in the form of Circular n. 3,017, from December 6th, This same criterion is used in the participation of singular cooperatives by State and Region (Table A.3.3) 5. When assessing the participation of singular credit cooperatives, in the volume of deposits and loans by state/region, a spreadsheet prepared by BCB/Diorf/Department of Financial System Organization - Deorf is used, which considers the following criteria: a) Deposits and banking system credit operations by agencies; b) Deposits and credit operations of singular cooperatives by headquarters (there is no information for each PAC- Cooperative service office); c) In credit operations all the institutions of SFN are considered and they are reduced by the amount of "Other Credits"; d) In the deposits all SFN institutions are considered except for balances of repurchase agreements. CONCEPTS NATIONAL SYSTEM OF COOPERATIVE CREDIT (SNCC): concept brought by the Amendment of the Complementary Law n. 130 of April 17 th, 2009, which "offers on the National System of Cooperative Credit." The SNCC is comprised of confederations, centrals, by cooperative systems 5, singular cooperatives that are not affiliated to the centrals, by financial institutions controlled by credit cooperatives and other entities referred to in art. 54 Resolution n. 4,434, of August 5 th, For 5 Circular n. 3771, 2015: For the purposes of this Circular, it is considered: I the central confederation: a cooperative society established by the central credit cooperatives, for the provision of services and the ones affiliated to it, being referred to specifically as "credit confederation" when authorized by the Central Bank of Brazil (BCB) to operate as a financial institution; II - cooperative system: the set of organized credit cooperatives on three levels, consisting of the central confederation, the central credit cooperatives affiliated to it and by singular credit cooperatives affiliated to the Central, in addition to other entities referred to in art. 54 Resolution n. 4,434, from August 5 th, Sole paragraph. In the absence of the confederation, it is also considered as a cooperative system the set of credit cooperatives organized on two levels, consisting of central credit cooperatives and singular credit cooperatives and the ones affiliated to it, in addition to other entities referred to in art. 54 Resolution n. 4434, from Resolution n. 4434, art. 54. Subject to the laws and regulations in force, the credit cooperative can only participate in the capital: I - central credit cooperative or confederation of the Central constituted respectively by singular cooperatives or central cooperatives; II - controlled financial institutions for credit cooperatives, according to specific rules; III - cooperatives or companies controlled by the Central or cooperative confederation that are active. Mainly in the provision of services and supply of goods to institutions of the cooperative credit sector as long as necessary for their operation or complementary services and products offered to associates; and IV - Institutional representation of entities, technical cooperation or educational purposes. 26

27 the purposes of this study, it is considered as SNCC the credit confederations, the credit centrals, singular credit cooperatives and cooperative banks. NEGOTIATING SNCC (SNCC-N): singular credit cooperatives and cooperative banks, which compete with the commercial banking sector and financial operations in raising public resources - demand deposits, time deposits, savings and credit supply. COMMERCIAL BANKING SEGMENT: commercial banks, universal banks with commercial bank portfolio, Savings and Loans. AGENCY: dependence on commercial banks and Saving and Loans intended for customers service and the general public (Resolution No /2012) SERVICE OFFICE: dependency, under the agency or the headquarters of the institution, for service to the public in the exercise of one or more of its activities (Resolution No /2012) BANKING SERVICE OFFICE: Service Office of Commercial Bank. Although this terminology is no longer used in the regulations, it is still used to distinguish the service offices of banks that attend a restricted public. COOPERATIVE SERVICE OFFICE: credit cooperatives service office. Although this terminology is no longer used in the regulations, it is still used to distinguish the service offices of credit cooperatives (equivalent, in service, to the bank agencies) of banking service offices in commercial banks HEADQUARTERS: unit in which the administration of the institution is installed. In the case of credit cooperatives, the headquarters is also the banking service office to associates, except in Sicredi system whose service is done by a service office linked to the headquarters, in the same address GLOSSARY b1 - SFN Macro segment composed of commercial bank, Universal bank with bank portifolio, Savings and Loans b2 - SFN Macro segment composed of universal bank without commercial bank portfolio and investment bank b3 - SFN Macro segment composed of credit cooperatives b4 Macro segment SFN composed of development banks n1 - SFN Macro segment composed of non banking credit companies n2 - SFN Macro segment composed of non banking capital markets companies 27

28 BCB - Central Bank of Brazil CMN - National Monetary Council DO - Official Gazette DT - Total Deposit IF data Selected Information on Supervised Institutions, available at the BCB website: OC - Credit Operation OCB Organization of Brazilian Cooperatives PA Service Office (agency s name in the case of cooperatives) PAC Cooperative service office SFN - National Financial System SNCC - National System of Cooperative Credit UA Service Units (considered the headquarters providing service to the public and cooperative service offices) 28