Earnings Release 3Q17

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Leo Harris
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1 Earnings Release 3Q17

Disclaimer This presentation may include references and statements, planned synergies, estimates, projections of results, and future strategy for Banco do Brasil, its Associated and Affiliated

2 Disclaimer This presentation may include references and statements, planned synergies, estimates, projections of results, and future strategy for Banco do Brasil, its Associated and Affiliated Companies, and Subsidiaries. Although these references and statements reflect the management s belief, they also involve estimates and unforeseen risks. Consequently, results may differ from those anticipated and discussed here. These expectations are highly dependent on market conditions, on Brazil s economic and banking system performances, as well as on international market conditions. Banco do Brasil is not responsible for updating any estimate in this presentation.

3 Index Strategic Guidelines 4 Net Income 5 Earnings Breakdown 6 Market Ratios 7 Commercial Funding 8 Loan Portfolio 9 Gross Disbursements 10 Individuals Portfolio 11 Loans to Companies 12 Agribusiness 13 Delinquency Ratios (+90 days) 14 Delinquency Ratio by Segment 15 ALL Balance and Coverage Ratio 16 Coverage Ratio by Segment 17 Average Risk and Loan Portfolio by Risk Level 18 Provision Expenses Flow / Loan Portfolio 19 NPL Formation 20 NPL Formation by Segment 21 Renegotiated Overdue Loan Portfolio 22 Net Interest Income 23 Spread by Portfolio 24 Net Interest Margin 25 Fee Income 26 Administrative Expenses 27 BIS Ratio 28 Full Application of Basel III Rules 29 Guidance Save the date 31 Appendix 32

4 Strategic Guidelines Highlights 9M17 / 9M16 Profitability, efficiency, control of delinquency and capital Fee Income 9.9% growth. Customer Experience Administrative Expenses Under control, 2.7% decline. Digital Transformation Cost to income ratio¹ Reached 38.5%. (1) Cost to Income Ratio: Administrative Expenses / Operating Revenues accumulated in 12 months. Data from the Income Statement with Reallocations. 4

5 Net Income +45.1% +11.8% R$ billion M16 9M17 9M16 9M17 Adjusted Net Income 3Q Adjusted Net Income 1H Net Income 3Q Net Income 1H Profitability Ratios 3Q16 2Q17 3Q17 9M16 9M17 Shareholders ROE % Market ROE %

6 Earnings Breakdown R$ billion Personnel Expenses (4.68) 3Q17 (6.26) (3.24) (7.92) (3.93) Personnel Expenses (14.17) 9M17 (19.63) (9.38) (23.55) (11.48) NII ALL Fee Income Administrative Expenses Other Adjusted Net Income One-Off Items Net Income 6

7 Market Ratios Earnings per Share Dividend Yield² (%) Q16 4Q16 1Q17 2Q17 3Q E¹ 2018E¹ 3Q16 4Q16 1Q17 2Q17 3Q E¹ 2018E¹ Earnings per Share - R$ Adjusted Earnings per Share - R$ Price/Earnings 12 months Price/Book Value Q16 4Q16 1Q17 2Q17 3Q E¹ 2018E¹ Source: Economatica. 3Q16 4Q16 1Q17 2Q17 3Q E¹ 2018E¹ Source: Economatica. (1) Bloomberg estimative on November, 08, 2017 based on analysts projections average. Banco do Brasil is not responsible for this information. (2) Dividends and Interest on Capital 12 months / Market Capitalization. Source: Economatica. 7

8 Commercial Funding % R$ billion Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Time Deposits Savings Deposits Agribusiness Let. Credit + Mortgage Bonds¹ Demand Deposits Rep. Agreement with Private Securities² Interbank Deposits Adjusted Net Loan Portfolio / Commercial Funding (1) Includes the balance of CRI (Certificates of Real Estate Receivables). (2) Includes part of the balances of the Private Securities shown on Notes to the Consolidated Financial Statements. 8

9 Loan Portfolio Expanded View¹ R$ billion % % Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Foreign Branches and Subsidiaries Agribusiness Individuals Companies Growth in 12 months (%) (1) It includes private securities and guarantees provided. 9

10 Disbursements quarterly average¹ (1Q16 base 100) Brazil Individuals Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Agribusiness Companies Q16 2Q16 3Q16 4Q16 (1) Does not include revolving lines of credit and overdraft. 1Q17 2Q17 3Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 10

11 Individuals Portfolio¹: Lower risk lines of credit Mortgages Payroll R$ billion Individuals Market Share 7.8% % Chg. (%) on Sep/16 6.1% % 3.0% 88.5% +4.4% % 2.6% 87.8% % 2.6% 87.7% Market Share 21.6% Sep/16 Jun/17 Sep/17 Sep/16 Jun/17 Sep/17 Mortgage -Companies Mortgage - Individuals Individuals Mortgage NPL 90 (%)² Private Sector Employees INSS s Retirees and Pensioners Civil Servants NPL +90 days (%)² NPL +90 days (%)² 2.78 Salary Loans Auto Loans NPL +90 days (%)² -2.0% % Sep/16 Jun/17 Sep/17 Sep/16 Jun/17 Sep/17 (1) BB Organic Portfolio. (2) BB Classified Loan Portfolio. 11

12 Loans to Companies Expanded View¹ R$ billion % -3.4% Chg. (%) on Sep/16 Chg. (%) on Jun/ % -9.9% -10.7% -1.8% Sep/16 Jun/17 Very Small and Small Companies² Sep/17 Middle Market, Corporates and Government (1) It includes private securities and guarantees provided. (2) Companies with annual revenues up to R$ 25 million. 12

13 Agribusiness¹ R$ billion +0.6% -4.0% Disbursements in the 3 rd Quarter (R$ billion) +24.1% Chg. (%) on Sep/ % +5.0% Chg. (%) on Jun/ % -1.1% % 26.9% 54.3% % 19.6% 64.9% Sep/16 Jun/17 Sep/17 Crop 16/17 Crop 17/18 Agroindustrial Rural 60.1 % Market Share² Medium Size Producers - Pronamp Small Producers - Pronaf Companies (1) It includes Rural Product Bills and guarantees provided. (2) Source: Brazilian Central Bank Sep/

14 Delinquency Ratio (+90 days)¹ Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 BB Banking Industry (1) BB Classified Loan Portfolio. 14

15 Delinquency Ratio¹ by Segment NPL Ratio +90 days (%) NPL Ratio +15 days (%) Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Individuals Companies Agribusiness (1) BB Classified Loan Portfolio. 15

16 ALL Balance and Coverage Ratio % ,514 36,070 36,414 37,881 1,535 1,686 1,851 37,806 2,130 34,535 34,728 36,030 35,675 R$ million Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Required Provision Minimum Provision Supplementary Provision BB +90 days BI +90 days¹ (1) Banking Industry: Ratio created through Average Risk Index available at SGS (Time Series Management System) of the Brazilian Central Bank. 16

17 Coverage Ratio by Segment % Q16 4Q16 1Q17 2Q17 3Q17 Individuals Companies Agribusiness Foreign 17

18 Average Risk and Loan Portfolio by Risk Level Average Risk¹ (%) Loan Portfolio by Risk Level % 20.9% 9.0% 49.5% 91.0% of the transactions are concentrated in levels AA to C 10.5% Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Banco do Brasil Banking Industry AA A B C D-H (1) Required Provision / BB Classified Loan Portfolio. Source: SGS (Brazilian Central Bank). 18

19 Provision Expenses Flow / Loan Portfolio (%) Foreign 2.21 Total Companies Individuals Agribusiness Agribusiness Foreign Companies 6, ,370 7, ,517 ALL by Segment (R$ million)¹ 6, ,370 6, ,979 6, ,526 Individuals 1, ,207 1,677 1,743 1,627 3Q16 4Q16 1Q17 2Q17 3Q17 (1) Quartely ALL expenses including the write-off recovery. 19

20 NPL Formation Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Including the past due renegotiated loan portfolio³ % of the total contracts in 3Q17 were 90 days past due transactions Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 New NPL (R$ billion)¹ Quarterly ALL/New NPL (%) New NPL / Loan Portfolio (%)² (1) Quarterly change in the balance of transactions over 90 days past due + current quarter write-off. (2) It considers the Classified Loan Portfolio of the previous quarter. (3) Flow of transactions over 90 days past due in the renegotiated loan portfolio. 20

21 Companies Individuals Agribusiness NPL Formation by Segment Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 New NPL (R$ billion)¹ Quarterly ALL/New NPL (%) New NPL / Loan Portfolio (%)² (1) Quarterly change in the balance of transactions over 90 days past due + current quarter write-off. (2) It considers the Classified Loan Portfolio of the previous quarter. 21

22 Renegotiated Overdue Loan Portfolio 3Q16 2Q17 3Q17 Credits Renegotiated When Past Due - Changes Initial Balance 25,050 26,618 27,042 Contracts 2,758 3,622 1,870 Amortization Net of Interest¹ (744) (1,211) (773) Write-Off (1,370) (1,986) (2,273) Past due Renegotiated Loan Portfolio (A) 25,694 27,042 25,867 ALL Balance (B) 10,784 12,924 12,415 NPL + 90 days (C) 6,370 7,094 6,360 Indicators - % ALL / Loan Portfolio (B/A) NPL + 90 days / Loan Portfolio (C/A) ALL Balance/NPL + 90 days (B/C) Credits Renegotiated/Classified Loan Portfolio NPL Formation Credits Renegotiated Contracts % 0 to 14 days Past due to 90 days Past due Over 90 days Past due Writen-Off Recovery Total 1, R$ million Q16 4Q16 1Q17 2Q17 3Q17 New NPL (R$ billion)² New NPL / Loan Portfolio (%)³ (1) Principal and interest payments net of interest accrued in the period. (2) Quarterly change in the balance of over 90 days past due transactions + current quarter write-off. (3) It considers the Classified Loan Portfolio of the previous quarter. 22

23 Net Interest Income R$ million 3Q16 2Q17 3Q17 Chg. (%) on Chg. (%) on 9M16 9M17 3Q16 2Q17 9M16 Net Interest Incom e 15,099 14,606 14,247 (5.6) (2.5) 44,008 43,330 (1.5) Net Interest Incom e W/O Recovery 14,131 13,212 13,153 (6.9) (0.4) 40,796 39,886 (2.2) Loan Operations 26,117 21,786 21,412 (18.0) (1.7) 76,506 66,809 (12.7) Funding Expenses (11,366) (8,404) (7,814) (31.3) (7.0) (33,330) (25,972) (22.1) Financial Expense for Institutional Funding¹ ³ (3,524) (3,040) (3,197) (9.3) 5.2 (10,358) (9,603) (7.3) Treasury² ³ 2,904 2,870 2,753 (5.2) (4.1) 7,978 8, Recovery of Write-offs 968 1,394 1, (21.6) 3,212 3, (1) It includes senior bonds, subordinated debt, and Hybrid Instruments in Brazil and abroad. (2) It includes the result from interest, tax hedging, derivatives, and other financial instruments that offset the effects of the exchange rate variation in the result. (3) Series revised (Funding Expense for Institutional Funding and Treasury). Impact in all tables with those lines. 23

24 Spread by Portfolio % Q16 4Q16 1Q17 2Q17 3Q17 Individuals Loan Operations Companies¹ Agribusiness (1) Government loans not included. 24

25 Net Interest Margin¹ % T16 4T16 1T17 2T17 3T17 Spread Global Spread Ajustado pelo risco (1) Net interest income / average balance of earnings assets, annualized. 25

26 Fee Income R$ million 3Q16 2Q17 3Q17 Chg. (%) on Chg. (%) on 9M16 9M17 3Q16 2Q17 9M16 Fee Income 5,972 6,432 6, ,476 19, Checking Account Fees 1,600 1,712 1, ,569 5, Asset Management Fees 1,119 1,336 1, ,198 4, Insurance, Pension and Premium Bonds ,283 2,237 (2.0) Credit / Debit Cards¹ ,342 1, Loan Fees (26.8) 1,179 1, Collections (16.3) (4.8) 1,264 1,109 (12.2) Billings Capital Market Consortium National Treasury and Manag. of Official Funds Interbank (18.6) (7.5) (12.6) Other (7.3) (7.3) 1,424 1,377 (3.3) (1) Series revised in 3Q17 in accordance with Bacen Circular Letter No. 3,828/

Administrative Expenses and Cost to Income Ratio¹ 39.7 38.9 38.5 39.7-2.7% 38.

0% 8,419 7,864 7,915 3,137 3,047 3,236 5,283 4,817 4,679 9,173 15,028 9,380 14,173 Traditional Branches 5,192 4,561 4,511-13.1-1.1 Digital Service 238 324 360 51.

9 3Q16 2Q17 3Q17 9M16 9M17 Points of Service 1,736 2,117 2,062 18.8-2.

27 Administrative Expenses and Cost to Income Ratio¹ % 38.5 Employees Sep/16 Jun/17 Sep/17 109,159 99,603 99,305 Sep/17 (%) on Sep/16 on Jun/ ,201 23,553 Branches 5,430 4,885 4, % 8,419 7,864 7,915 3,137 3,047 3,236 5,283 4,817 4,679 9,173 15,028 9,380 14,173 Traditional Branches 5,192 4,561 4, Digital Service Estilo Branch Estilo Office Exclusivo Office MPE² Office Q16 2Q17 3Q17 9M16 9M17 Points of Service 1,736 2,117 2, Personnel Expenses R$ million Other Administrative Expenses Customer Service Points Cost to Income Ratio (12 months) Own Service Network 17,092 16,098 15, (1) Cost to Income Ratio: Administrative Expenses / Operating Revenues. Data from the Income Statement with Reallocations. (2) Very Small and Small Companies. 27

28 BIS Ratio % Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Tier II Tier I Common Equity Tier I 28

29 CET 1 Tier 1 BIS Full Application of Basel III Rules % BIS Ratio Deductions Schedule Anticipation BIS Ratio with full deductions RWA Rules Anticipation BIS Ratio with Fully Loaded Basel III Rules Use of Tax Credits Simulated BIS Ratio under complete Basel III Rules Tier 1 Deductions Schedule Anticipation Tier 1 with full deductions RWA Rules Anticipation Tier 1 with Fully Loaded Basel III Rules Use of Tax Credits Simulated Tier 1 under complete Basel III Rules Common Equity Tier I (CET1) Deductions Schedule Anticipation CET1 with full deductions RWA Rules Anticipation CET1 with Fully Loaded Basel III Rules Use of Tax Credits Simulated CET1 under complete Basel III Rules 29

30 Guidance 2017 Guidance M17 Performance Adjusted Net Income - R$ billion 9.5 to NII (Net of Recovery of Write-offs) - % -4 to Organic Domestic Loan Portfolio - Broad Definition - % -4 to Individuals - % 2 to Companies - % -11 to Rural Loans - % 6 to ALL Expenses net of Recovery of Write-offs - R$ billion to Fee Income - % 6 to Administrative Expenses - % -2.5 to

31 Save the date December, 6 th 2:30 p.m. Apimec Meeting¹ Renaissance Hotel - São Paulo (1)The meeting will be broadcasted live through the Investor Relations website.

32 Guarantees and Provisions 33 Appendix One-Off Items 34 Income Statement with Reallocations Main Lines 35 Earning Assets Breakdown 36

33 Guarantees and Provisions R$ million 18,241 17,957 17,178 15,254 13, Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Guarantees Provided Provisions Provisions/Guarantees 33

34 One-Off Items R$ million Chg. (%) on Chg. (%) on 3Q16 2Q17 3Q17 9M16 9M17 3Q16 2Q17 9M16 Adjusted Net Income 2,337 2,649 2, ,424 7, One-Off Items (91) (30) , (98.1) Economic Plans (323) (64) (280) (13.3) (890) (571) (35.9) Extraordinary Provision for Law suits (93.4) (87.3) Additional Allow ance for Loan Losses , IPO - IRB Neonergia Tax Eff. and Stat. Prof. on One-Off Items (44.5) 66.3 (1,532) Net Income 2,246 2,619 2, ,070 7,

35 Income Statement with Reallocations Main Lines R$ million 3Q16 2Q17 3Q17 Chg. (%) on Chg. (%) on 9M16 9M17 3Q16 2Q17 9M16 Net Interest Income 15,099 14,606 14,247 (5.6) (2.5) 44,008 43,330 (1.5) Allowance for Loan Losses (6,644) (6,658) (6,257) (5.8) (6.0) (24,065) (19,628) (18.4) Net Financial Margin 8,455 7,948 7,990 (5.5) ,943 23, Fee income 5,972 6,432 6, ,476 19, Contribution Margin 13,153 13,149 13, ,630 39, Administrative Expenses (8,419) (7,864) (7,915) (6.0) 0.7 (24,201) (23,553) (2.7) Commercial Income 4,613 5,157 5, ,100 15, Other Operating Income (135) (9) - Income Before Taxes 4,126 4,731 4, (8.5) 7,800 13, Income and Social Contribution Taxes (1,079) (1,334) (799) (26.0) (40.1) (408) (3,128) - Statutory Profit Sharing (303) (354) (362) (734) (1,024) 39.4 Adjusted Net Income 2,337 2,649 2, ,424 7, One-Off Items (91) (30) , (98.1) Net Income 2,246 2,619 2, ,070 7,

36 Earning Assets Breakdown 2Q17 3Q % Retail Operations¹ 33.5% Retail Operations¹ 44.9% 50.4% 32.4% Wholesale Operations² 45.5% 49.5% 33.9% Wholesale Operations² 32.2% Agribusiness 32.6% Agribusiness 4.7% 4.9% Other Secur. + Interbank Invest. w/o Hedge Loans and Leasing Operations (1) Includes loans with individuals, very small and small companies. (2) Includes loans with Government and remaining companies. 36

37 Av. Paulista, th. floor Bela Vista São Paulo/SP - Brasil - CEP ri@bb.com.br +55 (11)

This presentation may include references and statements, planned synergies, estimates, projections of results, and future strategy for Banco do

This presentation may include references and statements, planned synergies, estimates, projections of results, and future strategy for Banco do Brasil, its Associated and Affiliated Companies, and Subsidiaries.