Banco Votorantim S.A. Earnings Presentation. 4 th Quarter, 2012

Transcription

1 Banco Votorantim S.A. Earnings Presentation 4 th Quarter, 2012

2 Disclaimer Disclaimer Certain statements made in this presentation may not be based on historical information or facts. This presentation therefore contains, or may be deemed to contain, forward looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), including those relating to the general business plans and strategy, future financial condition and results and growth prospects of Banco Votorantim S.A. ( Banco Votorantim or the Company ), and future developments in its industry and its competitive and regulatory environment. By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and are based on assumptions, data or methods which, although considered reasonable by the company at the time, may turn out to be incorrect or imprecise, or may not be possible to realize. Accordingly, actual results may differ materially from these forward looking statements due to a number of factors, including future changes or developments in the Company s business, its competitive environment, technology developments and political, economic, legal and social conditions in Brazil. Forward looking information is not merely based on historical fact but also reflects management s objectives and expectations. The Company can give no assurance that expectations disclosed in this presentation will be confirmed. The words estimate, believe, "anticipate", wish", "expect", foresee", intend", "plan, "predict", forecast", aim" and similar words, written and/or spoken, are intended to identify affirmations which, necessarily, involve known and unknown risks. Known risks include uncertainties which include, but are not limited to, interest rates, product competition, market acceptance of products, the actions of competitors, regulatory approval, currency type and fluctuations, monetary policy, among others. This presentation is based on events up to December 31 st, The Company or any of its affiliates take no responsibility or liability to update the contents of this presentation in the light of new information and/or future events. Banco Votorantim and/or any of its affiliates do not accept and take no responsibility, whatsoever, direct or indirect, for transactions or investment decisions made on the basis of information contained in this presentation. Banco Votorantim may alter, modify or otherwise change in any manner the contents of this presentation, without the obligation to notify any person of such revision or changes. This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. Recipients of this presentation are not to construe the contents of this summary as legal, tax or investment advice and recipients should consult their own advisors in this regard. The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research, publicly available information and industry publications. Although the Company has no reason to believe that any of this information or these reports are inaccurate in any material respect, the Company has not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications and therefore does not make any representation as to the accuracy of such information. This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without the Company s prior written consent. 1

3 Executive summary Message from the CEO Success in implementing the Change Agenda indicates that 2013 will have substantially better results 4Q12 results once again confirmed concrete advances in the implementation of the Change Agenda Excellent quality of Consumer Finance production after Sept/11, which allowed us to gradually increase origination volumes, regaining market leadership in the used auto finance market in 4Q12 Consistent drop in delinquency¹(npl) in Cons. Finance s light vehicles loan portfolio (: 7.7%; : 9.1%) New reduction in allowance for loan losses (ALL) expenses. Reduction of 34% (or R$397 million) in Consumer Finance s ALL expenses in 4Q12 vs. 3Q12 third consecutive quarterly reduction Continuous governance improvement and efficiency gains These important achievements in our Change Agenda were also accompanied by significant advances in all of the main businesses in 2012 Consumer Finance, Wholesale and Wealth Management The combination of this strong operating performance of business areas and the significant reduction in ALL expenses allowed Banco Votorantim back to reporting positive Net Financial Margin in 4Q12 However, as previously disclosed to the market, our 4Q12 results were still impacted by: (i) delinquency of auto finance portfolios originated between July/10 and Sept/11; (ii) entry into force of Bacen s Resolution 3,533; (iii) 45% reduction in the volume originated by Consumer Finance; and (iv) increase of the Coverage ratio² Even in view of these factors, consolidated results showed new improvement in relation to the previous quarter (R$- 358M in 4Q12; R$-497M in 3Q12), confirming the trend of progressive improvement in the results Additionally, we continued to strengthen the quality of our credit risk, adopting conservative policies in Liquidity, Funding and Capital management In 2013, we will continue advancing in all fronts of our Change Agenda in order to complete the structural adjustment process and resume growth with profitability in a sustainable way. The success already show in implementing the Change Agenda during 2012 indicates that 2013 will be a year of substantially better results 1. Operations past due over 90 days; 2. Ratio between ALL balance and balance of operations past due over 90 days 2

4 Agenda Banco Votorantim and the implications of the economic-regulatory context Businesses and Change Agenda advances Annexes Financial highlights 3

5 Banco Votorantim Overview Banco Votorantim is one of the leading players in Brazil... 3 rd largest privately-held Brazilian bank in total assets and loan portfolio Banco Votorantim is the 3 rd largest privatelyheld Brazilian bank in total assets......and is well-positioned to consolidate itself as one of the largest banks in Brazil Banco do Brasil Itaú Unibanco Bradesco CEF Santander HSBC Votorantim Safra BTG Pactual Citibank Largest Financial Institutions - Assets (R$B)¹ State-owned Foreign National privately-held...and also in terms of loan portfolio... Shareholder 50% total Diversified business portfolio Wholesale Banking Top 5 in credit for large enterprises Consumer Finance Among the leaders in used auto finance 6 th largest player in payroll loans³ ~ 5.6 million customers Wealth Management 9 th largest asset manager by Anbima s managers ranking: R$47.3B in AuM Largest Financial Institutions Loan Portfolio (R$B)¹ Banco do Brasil CEF Itaú Unibanco Bradesco Santander Votorantim² HSBC Safra Banrisul Volkswagen State-owned Foreign 448 National privately-held Strategic partnership with Banco do Brasil, the largest financial institution in Latin America Strong and committed shareholder base Banco do Brasil and Votorantim Group Low fixed-cost business model Extensive third-party distribution network in Consumer Finance (vs. branches) + 1. Excluding BNDES (state-owned development bank); figures as of, except for Banco Votorantim (); 2. Considers BV s own portfolio (excluding securitization); 3. Includes credit assignments with recourse Source: Banco Votorantim; Bacen; Anbima 4

6 Banco Votorantim Corporate strategy...and has a diversified business portfolio, internally divided into Wholesale and Consumer Finance R$78.8B Wholesale R$41.3B Cons. Finance² R$37.4B Corporate & IB (CIB) Middle Market Wealth Management Auto Finance Other businesses Pillars Position CIB as a relevant partner, by building agile and long-term relationships, as well as offering integrated financial solutions (IB, derivatives, structured products and distribution), suitable for each client Continue to grow with quality in this segment of mid-sized companies, gaining scale and efficiency Focus on relationships and operational agility Enhance product offering 9 th largest asset manager, with innovative products Private Bank focused on estate planning, offering customized solutions, with an open architecture Continuously expand synergies with BB Among the top players in the market, enhancing partnership with BB Focus on used auto finance (multi-brand dealers) Partner with BB in new auto finance (new car dealers) Increase profitability in individual loans, with focus on INSS payroll loans Continue to grow in credit cards Expand insurance brokerage revenues (e.g. Auto) Shareholders Banco do Brasil + Votorantim Group X Expanded¹ loan portfolio 1. Expanded loan portfolio: includes guarantees provided and private securities; 2.Consumer Finance s own loan portfolio totaled R$37.4B in, besides R$11.4B in credit assignments ((including R$9.0B with recourse and R$2.4B in FIDCs of which Banco Votorantim owns 100% of subordinated shares) 5

7 Banco Votorantim Corporate Governance Shared governance between the shareholders Board of Directors Chairman position alternates annually between shareholders Governance Structure Board of Directors Statutory Name Position Shareholder Fiscal Council Audit Committee Compensation & HR ALM, Risks & Capital Board of Directors Executive Committee Finance Products & Marketing Operating Committees Communication José Ermírio de Moraes Neto Chairman Votorantim Finanças Aldemir Bendine Vice-Chairman Banco do Brasil Ivan de Souza Monteiro Director Banco do Brasil Marcus de Camargo Arruda¹ Director Votorantim Finanças Paulo Rogério Caffarelli Director Banco do Brasil Wang Wei Chang Director Votorantim Finanças Equal representation of each shareholder 2-year term of office, and annual Chairman/Vice-Chairman rotation between the two shareholders Decisions are made by absolute majority, with no casting vote Internal Controls Credit Executive Committee Expenses (CAAD) Business Ombudsman Products Projects Human Resources Sustainability Technologies Tax Equal representation of each shareholder Name Position João Roberto Gonçalves Teixeira CEO Alvaro Jorge Fontes de Azevedo Executive Officer Elcio Jorge dos Santos Executive Officer Marcos L. Monteiro Executive Officer Gestão profissional com executivos experientes Pedro Mollo Neto Executive Officer Ricardo Arruda Executive Officer Robert John van Djik Executive Officer 1. Deceased in August/12; new member will be elected in the Annual General Shareholder s Meeting to be held in April/13 6

8 Economic-regulatory changes In 2012, the financial industry faced relevant changes in the economic-regulatory context Examples of economic-regulatory changes Deceleration of economic activity Moderation in the pace of credit expansion Rise in delinquency (Indiv. and Entities) Auto finance: 6.1% in May/12, all-time record Reduction in interest rates, spreads and tariffs Individual s average interest rate dropped ~920 bps in 2012 (: 34.6%; : 43.8%) Effectiveness of Res. 3,533 since Jan/12 Changed the rules for recording credit assignments with recourse Impacted the securitization market and operations of banks acting on it Dec/10 90-day delinquency (%) Bacen BV initiates its restructuring process June/ Off balance credit assigments¹ bybanco Votorantim (R$B) Dec/ Dec/10 Gross² results from credit assignments (R$M) 2, Total Individuals Auto finance Legal Entities FIDC assign. FI assign. 1. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs ( Fundos de Investimento em Direitos Creditórios ) of which Banco Votorantim owns 100% of the subordinated shares; 2. Before early settlement and allowance for loan losses expenses 7

9 Agenda Banco Votorantim and the implications of the economic-regulatory context Businesses and Change Agenda advances Annexes Financial highlights 8

10 Consumer finance Production Consumer Finance originated record quality operations Excellent quality of recent vintages allowed gradual increase in production Light vehicles 1 Origination by channel (R$B) and first installment delinquency 2 (%) New car dealers (R$B) Multi-brand dealers (R$B) 1st installment delinquency ("Inad 30") Vintages indicating lower quality Record quality vintages June/09 Dec/09 June/10 Dec/10 June/11 Dez/11 Multi-brand dealers/total 64% 71% 78% BV Financeira ended as the #1 used auto finance player, with ~20% of market share Focus on multi-brand dealers 1. Includes CDC vehicles and vans (excludes leasing); 2. % of each month s production with first installments past due over 30 days 9

11 Consumer finance Quality of production Quality of recent vintages is due to the strict criteria adopted for credit concession NPL 90 days by vintage, 4 months after concession Auto finance (%) Auto production average interest rate (%p.y.) 2.7 BV Financeira Market¹ Higher than the SFN: 19.9% in D 09 M 10 J S D 10 M J S D J F M A Auto production tenor and down payment M J J 0.3 A Month of concession Dec/10 Auto finance origination by payment plan Down payment % Average tenor (months) 60 months, no down payment Other plans % 16% 32% 38% 41% 41% 44% 42% 84% 84% 100% 100% 100% 100% 4Q10 4Q11 1Q12 2Q12 3Q12 4Q12 4Q10 4Q11 1Q12 2Q12 3Q12 4Q12 1. Data published semiannually in Bacen s Economic Stability Report ( Relatório de Estabilidade Econômica ); updated data was not available by the preparation of this presentation Source: BVF, Bacen 10

12 Consumer finance production Vintages of better quality already represent 38% of the loan portfolio, helping reduce auto finance delinquency Vintages of better quality already represent 38% of the auto finance loan portfolio... Auto finance loan porfolio¹ by vintage (%)...and have contributed to the reduction of auto finance delinquency 90-day NPL² - managed¹ light vehicle loan portfolio (%) 100% After Sept/11 8% 15% 21% 29% 38% 7.4% 8.9% 9.5% 9.1% 7.7% July/10- Sept/11 62% 59% 57% 52% 47% E-H NPL³ managed¹ auto finance loan portfolio (%) Until June/10 30% 26% 22% 19% 15% 5.9% 7.8% 8.7% 8.7% 7.7% Note: Banco Votorantim reports quality indicators for its managed loan portfolio because it is responsible for the risk of off balance credit assignments with recourse and for FIDCs 1. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs ( Fundos de Investimento em Direitos Creditórios ) of which Banco Votorantim owns 100% of the subordinated shares; 2. Operations past due over 90 days; 3. According to Bacen s Res. 2,682 criteria 11

13 ALL and Coverage ratio Cons. Finance s ALL expenses reduced 34% in 4Q12 QoQ Despite the ALL reduction, there was a new increase in the consolidated coverage ratio ALL expenses dropped for the third consecutive quarter The consolidated coverage ratio reached 100% in (80% in ) Allowance for loan losses (ALL) expenses (R$M) Consolidated coverage ratio¹ (%) Wholesale 1, , , , Q12/ 3Q % 84.1% 87.4% 93.1% 99.9% % 182 Consumer Finance 1,147 1,332 1,279 1, % 4Q11 1Q12 2Q12 3Q12 4Q12 2,854-22% 2,238 Note: from 3Q12, the income from the recovery of write-offs to loss started to be allocated as part of ALL Expenses, adjusting both ALL and Total Revenues previous figures 1. Ratio between ALL balance and balance of operations past due over 90 days 12

14 Non-interest expenses Efficiency: important restructuring and cost reduction initiatives impacted non-interest expenses in the short-term Adopted initiatives shall lead to a reduced cost base in 2013 YoY Excluding contingencies, non-interest expenses increased only 2.7% in 2012 YoY Examples of initiatives for cost reduction and greater efficiency implemented in 2012 Adequacy of organizational structures to the new level of origination in Consumer Finance Integration of corporate areas Legal, Risks, Finance, HR, Operations and Technology, that used to act in a separate way in the past Adjustment in the commissions paid to distribution channels (auto finance and payroll loans) Implementation of a new compensation policy Rationalization of rent expenses, e.g.: Space reduction on the sites Rochaverá, Berrini and Paulista Revision of expenses with advisory, telephony, media, events, travel and sponsorships, etc Others¹ Contingencies² Personnel Admin. Level of non-interest expenses in 2013 shall be lower than in 2012 Non-interest expenses 3,346 2, , , % Non-interest expenses excluding contingencies Others¹ Personnel Admin. 2,582 2, , , % 1. Other operating and other tax (Federal, state and local taxes (excludes ISS, PIS and Cofins)); 2. Expenses with provisions for civil and labor contingencies 13

15 Wholesale Wholesale businesses also maintained their good performance in 2012, with consistent income generation In 2012, Wholesale s net income grew 12% YoY......and fee income generation increased 10% Banco Votorantim continues well positioned in Local Fixed Income Net interest income (R$M) Fee income² (R$M) Local Fixed Income operations 4Q12 +12% +10% ALL expenses¹ 1, , Debentures 12-year R$ 750,000,000 Coordinator Dec/2012 CRA 4-year R$ 50,000,000 Leading Coordinator Nov/2012 Debentures 5 and 7-year R$ 293,985,000 Leading Coordinator Nov/2012 Debentures 5-year Promissory Note 60-day Promissory Note 180-day Net margin R$ 130,000,000 Coordinator Nov/2012 R$ 36,000,000 Leading Coordinator Nov/2012 R$ 100,000,000 Leading Coordinator Sept/ Banco Votorantim s distribution rankings³ in 2012: 6 th place Local Fixed Income 2 nd place FIDC and Securitization 4 th place CRI Wholesale shall keep reporting good results in all its businesses in 2013 Note: the first series of CART debentures was the first major long-term infrastructure debenture issue under Law /11 1. Net of credit recovery; 2. Includes banking fee income; 3. Anbima s ranking (Associação Brasileira das Entidades dos Mercados Financeiros e de Capitais) Source: Anbima 14

16 Wholesale CIB and Middle Market CIB and Middle Market have reinforced their focus on profitability, and kept conservatism in credit provisions Middle Market Corporate (CIB) Wholesale: expanded¹ loan portfolio reached R$41.3B in Wholesale expanded¹ loan portfolio (R$B) / % 5.4% 5.5% Corporate & IB (CIB) highlights More disciplined capital allocation (focus on profitability) Focus on clients with annual revenues exceeding R$600M Improved relevance to customers, through strengthening of the product platform highlights: Derivatives (hedge): Top 10 in CETIP s ranking Investment Bank: 42 Fixed Income (R$27.0B) ; 3 Equities (R$1.4B), and the announcement of 7 M& A operations (R$4.4B) Solid performance in Project Finance and Corporate Finance One-stop-shop Project Structuring factory Middle Market highlights Coverage ratio² 185% Focus on profitability (vs. growth) Cautious loan portfolio expansion Delinquency³ levels below market average (3.1% in ) and on clients with annual revenues above R$50M Focus on opportunities related to infrastructure investments and the growth of capital markets 1. Includes guarantees provided and private securities; 2. Ratio between ALL balance and balance of operations past due over 90 days; 3. Operations past due over 90 days 15

17 Wholesale Wealth Management VWM&S reached R$47.3B in assets under management Partnership with BB was enhanced and consistent performance was recognized Wealth Management expanded 10% in 12 months and VAM established itself as 9 th largest Asset¹ VWM&S assets under management²(r$b) % 47.3 Asset Management highlights Brazil s 9 th largest asset manager Anbima s managers ranking Enhanced synergies with BB: assets from funds structured in partnership reach R$3.3B³ Demand for BB Progressivo II, a R$1.6B real estate fund, exceeded R$20B VAM s consistency of performance was highlighted in major 2012 rankings Guia Exame de Investimentos Pessoais 2012 (Personal investments) Star Ranking da Valor Investe / S&P Private Bank highlights 11% growth in assets under management (AuM) Anbima¹ ranking th th ISO 9001:2008 Certificate for the scope of Relationship, Wealth Management and Advisory Focus on estate planning via customized solutions, with an open architecture concept VWM&S aims at being one of the best in structuring and managing high value-added products 1 Votorantim Asset Management s(vam) position in Anbima s managers ranking ; 2. Includes Treasury, Brokerage and offshore products; 3. Total assets by the end of Source: Banco Votorantim; Anbima 16

18 Change Agenda Summarizing, great progress was made in the Change Agenda during 2012, with full support from Shareholders Change Agenda Production Quality Handling of the Stock Efficiency and Governance Credit: improvement of credit policies, processes and models Incorporation of new variables into credit models (e.g.: BB s internal ratings; Serasa Experian) Implementation phase of the new credit motor (FICO Blaze Advisor ) will allow increase in automated credit decisions and expansion in the capacity of risk discrimination Profitability: adaptation of origination volumes and commissions paid to distribution channels Operating model: Progress made in the Change Agenda during 2012 examples Origination to Banco Votorantim: intensified focus on multi-brand dealers (used auto finance); Origination to BB: in 2013, implementation of the model for direct origination to BB ( BV Originadora ) Credit collection: revision and intensification of collection processes, with more segmented action New collection platform was acquired (named Cyber Financial) Coverage ratio¹: gradual increase of the Consumer Finance indicator (90% in vs. 70% in ) Structure: integration of corporate areas and adaptation of structures to the new level of origination Compensation: revision of the internal compensation model and of incentives to distribution channels Talents: attraction of market experienced professionals and appreciation of internal talent Processes and controls: strengthening of internal controls and improvement in policies and processes (e.g.: downgrading initial ratings for auto finance) In 2013, Banco Votorantim will complete its process of structural adjustment, started in 4Q11 1. Ratio between ALL balance and balance of operations past due over 90 days 17

19 Change Agenda Even with all the improvements, results in 2012 were impacted by four main factors 1 e 2 Delinquency and Coverage 3 Resolution 3,533 4 Consumer finance origination Auto finance delinquency¹ (%) Cons. Finance² Cov. Ratio % 78% 90% Effective since Jan/12 Changed the rules for recording credit assignments with recourse Revenues cannot be recognized by the time of the assignment BVF keeps responsible for expenses with the early settlement of credits assigned until (2012: R$394M) (R$B) 27,3 6,2 21,1-45% 15,0 3,6 11,4 Others Auto finance Reduced origination Focus on both quality and profitability of new vintages Adaptation of organizational structures to the new origination levels Dez/ ALL expenses Cons. Fin. Gross results from credit assignments³ Fee income - Cons. Finance Expenses with contingencies 4 (R$M) (R$M) (R$M) +47% -31% 4,548 2, , (R$M) +124% Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs ( Fundos de Investimento em Direitos Creditórios ) of which Banco Votorantim owns 100% of the subordinated shares; 2. Ratio between ALL balance and balance of operations past due over 90 days; 3. Impact on the Net interest income before early settlement expenses and credit provisions; 4. Provisions for civil and labor contingencies 18

20 Consolidated results 4Q12 results kept trajectory of gradual improvement With a significant 34% reduction in Consumer Finance s ALL expenses and positive Net margin Total revenues (Net interest income, Fee income and Other revenues) R$ million Allowance for loan losses (ALL) expenses 1,168 1,365 1,354 1,403 1,563 Wholesale Consumer Finance 1, ,147 1, ,332 1, ,279 1, , Q12/ 3Q12-26% -34% 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Non-interest expenses (Personnel, Administrative, Operating and Other tax¹) 2,854-22% 2,238 Net income and Net financial margin Others Contingencies² Personnel Administrative Net income (R$M) ³ -597 Net financial margin Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Note: from 3Q12, income from the recovery of write-offs to loss started being allocated as part of ALL expenses, therefore both ALL and Total revenues previous figures were adjusted 1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies; 4. 4Q11 changed according to accounting reclassification 19

21 Banco Votorantim credit risk quality In this context, Banco Votorantim kept on strengthening the quality of its credit risk Strengthening of Banco Votorantim s credit risk quality examples Liquidity Free cash continues at conservative levels above historic average ~R$7B stand-by credit facility from Banco do Brasil, which has never been tapped Funding Coverage Ratio¹ After successfully extending the average funding tenor, with reduction of the maturity mismatch between assets and liabilities, moderation in the loan portfolio s growth substantially reduced the need for additional funding Favorable context allows greater focus on the reduction of funding costs Wholesale: Coverage Ratio maintained at higher levels (: 185%) Consumer Finance: gradual Coverage Ratio increase in 2012 (: 90%; : 70%) Capital Basel Ratio of 14.3% in (14.1% in ), with a 9.3% Tier I ratio Maintenance of the capital structure at adequate levels, as set out in the Shareholders Agreement Success in the implementation of the Change Agenda during 2012 indicates a year of 2013 with substantially better results 1. Ratio between ALL balance and balance of operations past due over 90 days 20

22 Agenda Banco Votorantim and the implications of the economic-regulatory context Businesses and Change Agenda advances Annexes Financial highlights 21

23 Financial highlights Financial highlights Reduced allowance for loan losses in 4Q12 contributed to positive Net Financial Margin (+R$205M) Total revenues (Net interest income, Fee Income and Other Operating Income) Allowance for loan losses expenses R$ million 1,168 1,365 1,354 1, % 1,563 Wholesale Consumer Finance 1, ,147 1, ,332 1, ,279-26% 1, , Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Non-interest expenses (Personnel, Administrative, Operating and Other Tax¹) Net income and Net financial margin , Others Contingencies² Personnel Administrative Net income (R$M) ³ -597 Net financial margin Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Note: from 3Q12, the income from the recovery of write-offs to loss started to be allocated as part of ALL Expenses, adjusting both ALL and Total Revenues previous figures 1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies; 3. 4Q11 amended according to accounting reclassification 22

24 Financial highlights Financial highlights Net Interest Margin NIM (% p.y.) Efficiency ratio 1 (%) last 12 months ER impacted by the reduction in Income from credit assignments Q11 1Q12 2Q12 3Q12 4Q12 Note: criteria for calculating the efficiency ratio was revised in, and is reflected in the graph s history 1.Ratio between (a) the sum of Personnel and Other administrative expenses and (b) the sum of Net interest income, Fee income, Other operating income/expenses 23

25 Financial highlights Financial highlights Off balance credit assignments with risk retention tend to zero because of Bacen s Res. 3,533 R$ billion Total assets Assets under management % % Loan portfolio Expanded¹ managed² loan portfolio % 57.0 Off balance securitization % Expanded¹ loan portfolio Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs ( Fundos de Investimento em Direitos Creditórios ) of which Banco Votorantim owns 100% of the subordinated shares 24

26 Financial highlights Expanded managed loan portfolio by segment R$ billion Expanded loan portfolio (Includes guarantees provided and private securities) Expanded managed² loan portfolio (Expanded loan portfolio, plus credit assignments and FIDCs) Others¹ % Dec12 /Sept12 3.1% % Dec12 /Sept12-1.8% Auto finance % % Middle market Corporate % % Credit assignments³ with recourse (R$B) Credit assignments³ for FIDCs (R$B) Payroll loans, CDC, credit cards and individual loans; 2. Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs ( Fundos de Investimento em Direitos Creditórios ) of which Banco Votorantim owns 100% of the subordinated shares; 3. Refers to off balance resources 25

27 Financial highlights Credit indicators Improvement in coverage and asset quality indicators 90-day NPL/ Managed loan portfolio¹(%) E-H NPL²/ Managed loan portfolio (%) Consumer Finance Total Wholesale Consumer Finance Total Wholesale 9.6% 8.9% 9.4% 8.0% 8.1% 8.3% 7.1% 7.4% 5.5% 7.0% 7.5% 7.4% 6.3% 6.5% 6.6% 5.8% 5.8% 4.5% 7.4% 6.0% 1.4% 1.8% 2.0% 2.4% 2.4% 1.7% 2.0% 2.1% 2.5% 2.5% Allowance for loan losses balance³ (R$M) Coverage ratio 4 (%) ALL balance ALL balance/managed loan portfolio 6.9% 5.9% 4.6% 6.9% 6.6% 80.0% 84.1% 87.4% 93.1% 99.9% 3,675 4,536 5,091 4,914 4, Includes credit assignments with recourse for other financial institutions (FI) and credit assignments for FIDCs ( Fundos de Investimento em Direitos Creditórios ) of which Banco Votorantim owns 100% of the subordinated shares; 2. According to Bacen s Res. 2,682 criteria; 3. Refers to the managed loan portfolio; 4. Ratio between ALL balance and balance of operations past due over 90 days 26

28 Financial highlights Funding sources Financing bills and debentures gained importance in the Bank s funding composition Funding evolution (R$B) 85.8 Issuances and Others¹ 13.5 Subordinated debt 7.4 Loans and Onlendings 11.5 Financing bills² Dec12 /Sept12-1.1% 13.4% -13.1% 0.5% 11.5% Deposits % Debentures³ % (Financing bills 4 + Debentures³)/Total 32% 27 38% 40% Securitization 5 (R$B) Additionally, Banco Votorantim has a stand-by credit facility of ~R$7B from BB, which has never been tapped 1. Includes Eurobonds, Debentures, LCA, Option box and NCE repo; 2. Does not include Subordinated financing bills; 3. Linked to repo operations; 4. Includes Subordinated financing bills; 5. Includes both on and off balance assets Note: International funding is 100% swapped for BRL; the above graph does not consider sources from credit assignments

29 Financial highlights Basel Ratio and Shareholders Equity Basel Ratio Shareholders Equity (R$M) R$2B capital increase in Tier II 14.1% 4.7% 13.0% 4.4% 15.5% 5.3% 15.2% 5.3% 14.3% 5.0% 7,824 7,566 9,304 8,829 8,210 Tier I 9.5% 8.7% 10.2% 9.9% 9.3% 28

30 Ratings Banco Votorantim s main ratings RATING AGENCIES International National Long-Term Short-Term Long-Term Short-Term Long-Term Short-Term Fitch Ratings Local Currency Foreign Currency Nacional BBB- F3 BBB- F3 AA+(bra) F1+(bra) Moody s Local Currency Deposits Foreign Currency Deposits Nacional Baa2 P-2 Baa2 P-2 Aaa.Br BR-1 Standard & Poor's Local Currency Foreign Currency Nacional BBB- A-3 BBB- A-3 braaa bra-1 Banco Votorantim is an Investment Grade bank by Fitch, Moody s and S&P 29

31 Managerial x Accounting results Conciliation between 4Q12 Managerial and Accounting results INCOME STATEMENT SUMMARY (R$ Million) Accounting 4Q12 Hedge¹ ALL Credit Assignm ents² Managerial 4Q12 Incom e from Financial Interm ediation (2) (114) Loans (114) Derivative Financial Instruments (405) (2) - (406) Expenses from Financial Interm ediation (2.079) - - (2.079) Net Interest Incom e (2) (114) Allow ance for Loan Losses (1.066) (951) Net Financial Margin 207 (2) Other Operating Incom e/expenses (679) (2) - (712) Fee Income Personnel and Administrative Expenses (721) - - (721) Tax Expenses (129) 0 - (128) Other Operating Income/Expenses (168) (2) - (171) Operating Incom e (503) (4) - (507) Non-operating Incom e (24) - - (24) Incom e before Taxation and Profit Sharing (527) (4) - (530) Provision for Income Tax and Social Contribution Net Income (Loss) (358) - - (358) 1. Foreign exhange variation of overseas investments, accounted in Other Operating Income (Expenses), as w ell as fiscal and tax effects from the foreign investments hedge strategy, accounted in Tax Espenses (PIS/Cofins) and IT/SC, w ere relocated to Income from Derivative Financial Instruments; 2. Expenses w ith allow ance for loan losses related to credit assignments w ith recourse, and Income from the recovery of w riteoffs to loss, both accounted in Loans and relocated to Allow ance for Loan Losses. 30