Earnings Presentation. 2 nd Quarter, 2013

Transcription

1 Earnings Presentation 2 nd Quarter, 2013

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 June 30 th, 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 Results continued to show gradual improvement Consistent revenue generation, lower ALL expenses in Consumer Finance, and greater efficiency 2Q13 results once again confirmed concrete advances in the Change Agenda: Maintenance of quality and scale in Auto Finance. Banco Votorantim has been originating quality auto finance portfolios for 18+ months and confirmed its leading position in used auto finance, with a 22.5% market share in Consistent drop in delinquency. Consolidated NPL 90¹ decreased to 5.7% in, vs. 6.2% in Reduced Cons. Finance allowance for loan losses (ALL) expenses. Cons. Finance s ALL expenses reduced 8.8% (or R$64M) vs. 1Q13 fifth consecutive quarterly reduction. If compared to 1H12, there was a 46.3% (or R$ 1.2B) reduction Efficiency gains. Non-interest expenses decreased 13.9% (or R$119M) vs. 1Q13, result of the initiatives for cost reduction and efficiency gains adopted since 2012 These Change Agenda advances were once again accompanied by the consistent performance of our businesses. Total revenues amounted to R$1.4B in 2Q13, practically stable vs. 1Q13 In 2Q13, the combination of (i) consistent revenue generation, (ii) decrease in Consumer Finance s ALL expenses, and (iii) reduction in the cost base (non-interest expenses), contributed to better consolidated results: R$-196M in 2Q13, compared to R$-278M in 1Q13. In 1H13, results totaled R$-474M, vs. R$-1,101M in 1H12 As indicated to the market, 2Q13 results were impacted by the following factors: ALL expenses still high, due to the delinquency of auto finance portfolios originated between July/10 and Sept/11. Specifically, 2Q13 results were also pressed by the R$134M increase in Wholesale ALL expenses, reflecting the economic environment and BVs greater conservatism towards provisions Expenses with the early settlement of portfolios assigned with recourse until Dec/11, which already had their revenues recognized by the time of the assignment In this context of results, we maintained the conservatism regarding liquidity, funding, provisions and capital In 2013, we will conclude the adjustment process in order to resume profitable growth in a sustainable way Success already shown in the implementation of the Change Agenda indicates that 2013 results will be substantially better, mainly in the second semester 1. Managed loan portfolio past due over 90 days 2

4 Banco Votorantim Overview Banco Votorantim is one of the leading players in Brazil... 8 th 6 th Banco Votorantim is one of the largest privately-held Brazilian banks in total assets... Largest Financial Institutions in - Assets (R$B)¹ Shareholder Banco do Brasil 1,111 Itaú Unibanco % total Bradesco 774 CEF 731 Santander 459 HSBC 142 Safra 125 State-owned Votorantim 120 Foreign BTG Pactual 104 Citibank 63 National privately-held Banco do Brasil CEF Itaú Unibanco Bradesco Santander Votorantim² HSBC Safra Banrisul Volkswagen...and also in terms of loan portfolio... Largest Financial Institutions in Loan Portfolio (R$B)¹ State-owned Foreign National privately-held...and is well-positioned to consolidate itself as one of the largest banks in Brazil Diversified business portfolio Wholesale Banking Top 8 in credit for large enterprises Consumer Finance Among the leaders in auto finance 7 th largest player in payroll loans³ ~ 4.9 million customers Wealth Management 9 th largest asset manager by Anbima s managers ranking: R$42.7B in AuM 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); 2. Considers BV s on balance loan portfolio (excluding off balance securitization); 3. Considers credit assignments with recourse to other Financial Institutions Source: Banco Votorantim; Bacen; Anbima 3

5 Banco Votorantim Corporate strategy...and has a diversified business portfolio, internally divided into Wholesale and Consumer Finance Off balance assets R$6.5B R$1.3B Assigned to FI¹ Assigned to FIDC R$77.6B Wholesale R$40.5B Cons. Finance R$37.1B Corporate & IB (CIB) Middle Market Wealth Management Auto Finance Other Businesses Pillars Position itself as a relevant partner by building agile and long-term relationships, as well as offering integrated financial solutions (IB, derivatives, FX, structured products and distribution), always suitable for each client s needs Grow with quality and profitability among mid-sized companies (R$50M-R$600M annual revenues) Increase efficiency and scale gains Focus on relationship and operational agility Strengthen product offering 9 th largest Asset in the market, with innovative products Private focused on estate planning via customized solutions and an open architecture concept Increase synergies with BB Market leader in used auto finance Ensure quality and profitability of new vintages Focus on used vehicles (multi-brand dealers) for own portfolio Partnership with BB in new auto financing (new car dealers) Increase profitability in payroll loans, acting selectively with focus on lucrative agreements Continue to grow in credit cards Expand insurance brokerage revenues (e.g. Auto and Credit) Shareholders Banco do Brasil + Votorantim Group X Expanded² credit portfolio 1. Financial Institutions; 2. Includes guarantees provided and private securities, besides on balance loan portfolio according to Bacen s Res. 2,682 4

6 Economic-regulatory changes Since 2011, the financial industry has faced important changes in the economic-regulatory context Slowdown in credit expansion Systemic increase of delinquency² Total credit annual growth (% YoY) Bacen NPL 90 for credit operations (%) Bacen Total² Auto finance¹ Individuals Auto finance Corporate June/11 Dec/11 June/11 Dec/11 Reduction in interest rates and spreads Spreads and interest rates in the credit market² (% p.y.) Bacen Interest rate Spread Entry into force of Bacen s Res. 3,533 in Jan/12 Banco Votorantim off balance credit assignments with substantial risk retention before Resolution 3,533 (R$B) FIDC Financial Institutions June/11 Dec/11 Dec/09 Dec/10 Dec/11 In this context, Banco Votorantim initiated an adjustment process in Sept/11, led by a Change Agenda 1. Consumer credit and Individuals leasing; 2. Considers non-earmarked resources Sources: BACEN ( Sistema Gerenciador de Séries Temporais ), Banco Votorantim 5

7 Progress in the Change Agenda 2Q13 results confirmed, once again, progress in the implementation of our Change Agenda Agenda Progress Progress in the Change Agenda highlights 1 Auto finance origination with quality and scale Origination of high quality auto finance Vintages from the last 18+ months registered low Inad 30 (1 st installment delinquency) Maintenance of leading market position in used auto finance BVF s core business 2 Delinquency reduction NPL 90 reduction, driven by the increasing participation of post-sept/11 vintages Consolidated NPL 90: 5.7% in (6.2% in ; 7.5% in ) Light vehicles NPL 90: 6.8% in (7.2% in ; 9.5% in ) 3 Reduction in Consumer Finance s ALL 8.8% reduction in Consumer Finance s ALL expenses in 2Q13 vs. 1Q13 Compared to 1H12, Consumer Finance s ALL reduction was of 46% (or R$ 1.2B) Coverage Ratio¹ increased to 111% in (: 106%; : 87%) 4 Efficiency gains Maintenance of strict control over Non-interest expenses... Non-interest expenses reduced 13.9% (or R$119M) in 2Q13 vs. 1Q13 Administrative and personnel expenses reduced 1.3% in 1H13 vs. 1H12 BV will complete the adjustment process in 2013 and resume its growth agenda profitably 1. Ratio between ALL balance and balance of operations past due by over 90 days 6

8 Change Agenda quality of production 1 Banco Votorantim has been originating better quality auto finance portfolios for the past 18+ months Production Light vehicles Origination by channel (R$B) and 1 st installment delinquency¹ (%) Vintages indicating lower quality New car dealers (R$B) Multi-brand dealers (R$B) 1st installment delinquency ("Inad 30") June09- June10 average Vintages with better quality June/09 Month of concess. Dec/09 June/10 Dec/10 June/11 Dec/11 Multi-brand dealers / Total production 64% 71% 79% 1. % of each month s production with first installments past due over 30 days 7

9 Change Agenda quality of production Quality of recent vintages results from continuous improvement in credit policies and processes 1 Production Auto finance vintages from present great quality... Auto finance NPL 90 by vintage 4 months after concession (%) as a result of greater conservatism and the improvement of credit processes Auto finance Down payment¹ (%) and Average tenor (months) Average tenor 26% 30% 35% 37% Down payment NPL 90 similar to the market s, despite focus on used vehicles 4Q10 2Q11 2Q12 2Q13 Auto finance Credit decision up to 15 minutes (%) Dec/09 Dec/ Dec/ Month of concession 50% 28% 74% 57% Manual Automated BV Financeira Market Jan/12 BV Financeira is the first large auto finance player in Brazil to have a top notch credit engine² supplied by a foreign company (FICO ) 1. Down payment (%) calculation was revised in 2Q13, and its history was adjusted accordingly; 2. FICO Blaze Advisor credit engine, which allows greater risk discrimination and speed in credit decision making. Note: since 4Q11, Banco Votorantim stopped originating 60 month, no down payment auto finance portfolios Source: BVF, Bacen 8

10 Change Agenda quality of production Auto finance operations feature scale and attractive rates BVF increased origination by 22% in 1H13 x 1H12, and maintained the charged interest rates 1 Production Banco Votorantim increased by 22% auto finance origination in 1H13 vs. 1H12... Auto finance origination (R$B)...and managed to maintain the charged interest rates in auto finance Auto finance origination interest rate and Selic rate² (% p.y.) Others¹ % H13/ 1H12-6.4% Effective macroprudentials Above market average: 19,5% 23.9 Used light vehicles (74%) 37.0% H12 2H12 1H13 Dec/10 June/11 BVF rate Selic² Banco Votorantim is the market leader in used auto finance (core business), with a 22.5%³ market share in 1. Composed of trucks, motorcycles, vans and new light vehicles ; 2. Market s benchmark interest rate; 3. Source: Valor Econômico newspaper (Cetip and Fenabrave) 9

11 Change Agenda delinquency Increased participation of better quality auto finance vintages has contributed to reduce delinquency 2 Delinquency Better Safras quality com melhor vintages qualidade reached (pós-set/11) 62% of the auto atingiram finance portfolio 44% da carteira... in......contributing to the consistent reduction of delinquency indicators Managed¹ auto finance portfolio by vintage (%) Managed¹ loan portfolio s NPL 90 (%) After Sept/11 21% 29% 38% 44% 52% 100% 9.5% 9.1% Light vehicles Total July/10 to Sept/11 57% 52% 47% 43% 38% 7.5% 7.4% 7.7% 6.6% 7.2% 6.2% Fourth consecutive quarterly reduction -270 bps 6.8% 5.7% Until June/10 22% 19% 15% 13% 11% Sept/12 Sept/12 Light vehicles delinquency decreased to 6.8% in, a 270 bps reduction in 12 months 1. Includes on balance loan portfolio according to Bacen s Res. 2,682, and off balance credits assigned with substantial risk retention until Dec/11, before entry in force of Bacen s Res. 3,533 10

12 Change Agenda ALL and coverage ratio Consumer Finance s ALL reduced 46% in 1H13 vs. 1H12 In Wholesale, ALL increase is a result of the economic environment and greater conservatism 3 ALL and coverage Consumer Finance: ALL expenses reduced 8.8% vs. 1Q13 and 46.3% (or R$1.2B) when comparing 1H13 to 1H12 Coverage: consolidated ratio reached 111% in Allowance for loan losses expenses (R$M) Managed loan portfolio s Coverage Ratio¹ (%) Wholesale Consumer Finance 1, , % Q13/ 1Q % Wholesale Consumer Finance -35.2% 2, , ,608 1H13/ 1H % Consumer Finance Total % 1, % 2Q12 1Q13 2Q13 1H12 1H13 June 12 Sept 12 Dec 12 Mar 13 June Ratio between ALL balance and balance of operations past due over 90 days Note: ALL expenses include expenses related to credit assignments with recourse (both on and off balance), as well as revenues from write-off recovery 11

13 Change Agenda Non-interest expenses Banco Votorantim has also advanced in cost management Non-interest expenses dropped 13.9% in 2Q13 vs. 1Q13 4 Efficiency BV implemented a series of cost initiatives... Cost management initiatives...that have resulted in efficiency gains and in the reduction of the cost base (non-interest expenses) Non-interest expenses (R$M) Staff revision Integration of corporate areas Adjustment in the commissions paid to distribution channels Other Tax¹ Operating² % , , H13/ 1H % Implementation of a new compensation policy Rationalization of expenses with rent, consulting, telephony, travel, media, etc. Personnel Administrative % -2.1% -1.3% 2Q12 1Q13 2Q13 1H13 administrative and personnel expenses reduced 1.3% (or R$16M) in comparison to 1H12 1H12 1H13 Note: personnel expenses increased in 2Q13 vs. 1Q13 mainly due to expenses with labor indemnities and provisions for collective agreement 1. Other operating and other tax (Federal, state and local taxes (excludes ISS, PIS and Cofins)); 2. Includes expenses with provisions for civil and labor contingencies 12

14 Consolidated results Advances in the Change Agenda were accompanied by businesses consistent revenue generation Banco Votorantim s total revenues remained practically stable vs. 2Q12 and 1Q13... Total revenues (R$M)...despite the 11% decrease in the credit portfolio in the last 12 months Expanded¹ managed credit portfolio (R$B) Fees and others 1, % 1,398 1, Off balance securitization % Consumer Finance Net Interest Income 1,099 1,123 1,108 Wholesale¹ Q12 1Q13 2Q13 Financial Institutions² FIDC³ Off balance securitization 1. Includes guarantees provided and private securities; 2. Off balance credit assignments to Financial Institutions; 3. Off balance credit assignments to FIDCs (Fundos de Investimento em Direitos Creditórios) of which Banco Votorantim owns 100% of the subordinated shares 13

15 Consumer Finance Auto finance and payroll loans Consumer finance: BV maintained its focus on used auto finance and INSS payroll loans (retirees and pensioners) Auto finance: R$29.7B on balance portfolio in, practically unchanged vs. Payroll loans: on balance portfolio ended at R$7.0B Managed auto finance loan portfolio (R$B) June13/ 43.0 Mar13 Off balance¹ % % Off balance¹ Managed payroll loan portfolio (R$B) June13/ Mar13-7.3% -15.2% On balance % On balance % Used/Total² 68% 71% BVF is the leading player in the used auto finance market... National coverage through third-party distribution (~20k multibrand and new car dealers) and ~80 own stores...and acts as an extension of Banco do Brasil (BB) in auto finance outside its branch network Model for direct origination to BB under implementation, focused on new car dealers and BB clients Continuous improvement in credit processes Implementation of a new credit engine in 2Q13 57% automated credit decisions in INSS/Total 48% 59% 7 th largest player in the payroll loan market³ Focus on INSS (retirees and pensioners) Presents better risk profile (lower delinquency) Selective positioning towards both private and public sectors Focus on partnerships with attractive profitability Focus on refinancing portfolio s contracts (vs. growth) Note: other Consumer Finance businesses (e.g. credit cards) totaled R$401M by the end of 1. Credits assigned with substantial risk retention until Dec/11 (before Res. 3,533 came into force); 2. Considers only on balance loan portfolio; 3. 14

16 Wholesale CIB and Middle Market Wholesale: CIB and Middle Market kept focus on profitability and conservatism towards credit provisions Middle Market Wholesale: expanded credit portfolio increased 3.1% vs. Wholesale s expanded¹ credit portfolio (R$B) % June13/ Mar13-4.6% CIB Highlights Serves clients with revenues above R$600M/year Disciplined capital allocation (focus on profitability) Increased relevance to its customers, through strengthening the product platform Structured products, derivatives (hedge), FX and IB services, as well as enhancing international distribution (NY and London) 1H13 highlights: ECM: Joint bookrunner in BB Securities IPO (R$11.5B) Project Finance Magazine s Deal of the Year 2012 award CIB % Middle Market Highlights Serves clients with revenues between R$50M-R$600M/year Coverage Ratio² 217% 224% Gradual withdrawal from the <R$50M/year segment Disciplined capital allocation (focus on profitability) Reduction in the cost base (efficiency gains) Conservatism towards credit provisions Focus on exploring 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 15

17 Wholesale Wealth Management VWM&S reached R$42.7B in assets under management Banco Votorantim enhanced its partnership with BB and maintained prominent market position VAM is the 9 th largest asset manager according to Anbima s ranking VWM&S assets under management² (R$B) % 42.7 Asset Management Highlights Focus on high value-added and structured products Structured products: ended 1H13 with R$11.4B in assets under management Achievement of prominent positions in Anbima s managers rankings, such as Real estate funds: 3 rd position (12.7% market share) FIDCs: 4 th position (5.6% market share) Continued expansion of synergies with BB assets from funds structured in partnership reached R$4.1B³ Private Bank Highlights Managers ranking Anbima¹ 9º Focus on integrated estate planning, via customized and differentiated solutions ISO 9001:08 Certificate regarding Relationship, Wealth Management and Advisory activities 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. Shareholders equity by the end of the period Source: Anbima 16

18 Consolidated results Results continued to show gradual improvement... Consistent revenue generation and reduction in both ALL expenses and cost base Total revenues (Net interest income, Fee/Banking fee income and other op. revenues) R$ million Allowance for loan losses expenses ALL 1,378 1, % 1,388 2, % 2,786 Wholesale Consumer Finance 1, , % % 2, , ,608 1,402 2Q12 1Q13 2Q13 1H12 1H13 2Q12 1Q13 2Q13 1H12 1H13 Non-interest expenses Net income and Net financial margin -13.9% % 1,528 1, Other tax¹ Operating² Personnel Administrative Net income Net financial margin (after provisions) ,101 2Q12 1Q13 2Q13 1H12 1H13 2Q12 1Q13 2Q13 1H12 1H13 1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Includes expenses with provisions for civil and labor contingencies 17

19 Consolidated results...but were still impacted by expenses with ALL and with early settlement of contracts assigned with recourse 1 ALL expenses 2 Early settlement expenses (R$M) 1, ,124 2, ,968 2, ,608 2, ,937 Despite reduction, still high ALL 1, ,402 Wholesale Consumer Finance Quarterly average (R$B) H11 2H11 1H12 2H12 1H H13 Delinquency and Coverage ratio Off balance credit assignments³ % 7.5% 6.6% 5.8% 5.7% 4.2% 70% 80% 87% 100% 111% NPL 90¹ Coverage ratio² (R$B) to FIDC to FI June/11 Dec/11 Dec/10 Dec/11 1. Refers to the managed loan portfolio; 2. Ratio between ALL balance and balance of operations past due by over 90 days; 3. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533) 18

20 Credit risk quality In this context, Banco Votorantim kept its conservatism regarding Liquidity, Provisions, Funding and Capital Liquidity Free cash remains at highly conservative levels Above historic average R$~7B stand-by credit facility from Banco do Brasil Important liquidity reserve Has never been tapped Funding Slight contraction of the loan portfolio reduced the need for additional funding BV has successfully acted on improving its funding profile Increasing the participation of long-term instruments......and reducing deposits (CDBs) Capital Basel Ratio of 13.9% in Shareholders increased the Bank s capital by R$2 billion in......and keep committed to maintain an adequate capital structure As set out in the Shareholders Agreement Total Funding (R$B) Basel Ratio Coverage Ratio ALL balance / NPL % % 28% CDBs Others¹ Tier II 15.5% 13.9% Min. 11% 87% 111% 34% 8% 15% 20% 14% 10% 18% 21% Securitiz.² Private Securities Financing Bills 3 Debentures 4 Tier I 10.2% 9.5% 1. Includes other deposits, other issuances (LCA, LCI and Debentures), borrowings, subordinated debt (CDs and subordinated notes); 2. Credits assigned with substantial risk retention under Resolution 3,533 (i.e. does not include off balance credit assignments); 3. Includes Subordinated Financing Bills; 4. Linked to repo operations 19

21 20 Annex financial highlights

22 Financial highlights Managerial Income Statement INCOME STATEMENT (R$ Million) 2Q12 1Q13 2Q13 1H12 2Q13/1Q13 Variation 1H13/1H12 Variation R$ % R$ % Net Interest Income (a) 1,099 1,123 1,108 2,235 2,231 (14) -1% (3) 0% Allowance for Loan Losses (b) (1,398) (889) (959) (2,854) (1,848) (70) 8% 1,005-35% Consumer Finance (1,277) (733) (669) (2,608) (1,402) 64-9% 1,206-46% Wholesale (121) (156) (290) (246) (446) (134) 86% (201) 82% Net Financial Margin (a+b) (299) (619) 383 (84) -36% 1, % Fee Income/Banking Fees Income % (1) 0% Non-Interest Expenses (744) (857) (738) (1,528) (1,595) % (68) 4% Personnel (244) (228) (250) (479) (478) (22) 10% 1 0% Administrative (372) (367) (351) (734) (718) 16-4% 16-2% Other Operating¹ (101) (229) (110) (254) (340) % (85) 34% Other Tax² (28) (33) (26) (61) (59) 6-19% 1-2% Other Operating Income/Expenses (80) (48) (57) (150) (105) (8) 17% 45-30% Tax Expenses³ (83) (92) (106) (164) (198) (15) 16% (34) 20% Other Operating Income (10) -27% 7 13% Equity in Income of Subsidiaries (5) -19% 14 46% Non-Operating Income 4 (44) (18) 3 (72) (15) % 57-79% Income Tax and Social Contribution (2) -1% (478) -53% Profit Sharing (93) (62) (18) (207) (80) 43-70% % Net Income (505) (278) (196) (1,101) (474) 82-30% % 1H13 1. Includes expenses with provisions for civil and labor contingencies; 2.Federal, state and local taxes; 3. Includes ISS, PIS and Cofins; 4. Especially results from the disposal of Non-operating assets - Vehicles and the like 21

23 Financial highlights Financial highlights Total revenues (Net interest income, Fee income and Other operating income) R$ million Allowance for loan losses expenses ALL 1, % -0.7% 1,552 1,410 1,398 1,388 Wholesale Consumer Finance 1, ,277 1, , % +7.9% Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 Non-interest expenses Net income and Net financial margin -0.8% -13.9% 1, Other tax¹ Operating² Personnel Administrative Net income Net financil margin (after provisions) Q12 3Q12 4Q12 1Q13 2Q13 1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Includes expenses with provisions for civil and labor contingencies Note: in 2Q13, we revised the managerial reallocation of hedge effects over investments abroad, impacting the history of both Total revenues and Non-interest expenses 22 2Q12 3Q12 4Q12 1Q13 2Q13

24 Financial highlights Financial highlights Net Interest Margin NIM (% p.y.) Efficiency Ratio ER (%) months Quarterly Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 NIM = Net Interest Income Average Interest Earning Assets (Interbank Funds Applied, Securities, Loan Portfolio and Bacen s Compulsory Reserves) ER = Administrative and Personnel Expenses Net Int. Income, Fee/Banking Fee Income, Equity in Income from Subsidiaries, and Other Operating Income/Expenses 23

25 Financial highlights Financial highlights Off balance credit assignments with risk retention tend to zero due to Bacen s Res. 3,533 R$ billion Total assets Assets under management Sept/12 Sept/12 On balance loan portfolio Expanded¹ managed² credit portfolio % 55.7 Off balance securitization² % Expanded credit portfolio¹ Sept/12 Sept/12 1. Includes guarantees provided and private securities; 2. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533) 24

26 Financial highlights Credit portfolio by segment R$ billion Expanded credit portfolio (Includes guarantees provided and private securities) Expanded managed² credit portfolio (Expanded credit portfolio plus off balance securitization) Others¹ % June13 /Mar13-3.4% % June13 /Mar13-6.0% Auto finance % % Middle Market % % Corporate % % Sept/12 Sept/12 On balance securitization Off balance securitization FI³ FIDC 1. Payroll loans, credit cards and individual loans; 2. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533); 3. Financial Institutions 25

27 Financial highlights Credit indicators Improvement in asset quality and loan portfolio coverage indicators NPL 90 / Managed¹ loan portfolio (%) NPL 90 / On balance loan portfolio (%) Consumer Finance Total Wholesale Consumer Finance Total Wholesale 9.6% 7.5% 9.4% 7.4% 8.3% 6.6% 7.7% 6.2% 7.1% 5.7% 11.8% 8.4% 11.0% 8.0% 9.4% 7.0% 8.5% 6.4% 7.6% 5.9% 2.0% 2.4% 2.4% 2.3% 2.4% 2.0% 2.4% 2.4% 2.3% 2.4% Sept/12 Sept/12 ALL balance² (R$M) Coverage ratio 3 (%) ALL balance (R$M) 6.5% 6.9% ALL balance/managed loan portfolio¹ 6.6% 6.5% 6.3% 87.4% 93.1% 99.9% 106.4% 110.5% 4,842 4,914 4,518 4,313 3,996 Sept/12 Sept/12 1. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533); 2. Refers to managed loan portfolio; 3. Ratio between ALL balance and balance of operations past due over 90 days 26

28 Financial highlights Funding sources Increased participation of long-term funding instruments (e.g. Financing Bills, Securitization) Funding evolution (R$B) Others On balance securitization¹ Issuances Subordinated debt Loans and onlendings Financing bills Deposits % % June13 /Mar13 5.7% 6.2% 4.8% -12.3% % Debentures² % Sept/12 Additionally, Banco Votorantim has a stand-by credit facility of ~R$7B from BB, which has never been tapped 1. Balance of credits assigned with substantial risk retention to FIDCs e to other FI, under Res. 3,533 (i.e. does not include off balance credit assignments); 2. Linked to repo operations Note: International funding is 100% swapped for BRL 27

29 Financial highlights Basel Ratio and Capital Basel Ratio Capital (R$M) Tier II 15.5% 5.3% 15.2% 5.3% 14.3% 5.0% 13.6% 4.6% 13.9% 4.3% 13,624 13,002 12,111 11,430 10,769 Tier I 10.2% 9.9% 9.3% 9.0% 9.5% Shareholders Equity 9,117 8,829 8,210 7,671 7,130 Sept/12 Sept/12 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 National BBB- F3 BBB- F3 AA+(bra) F1+(bra) Moody s Local Currency Deposits Foreign Currency Deposits National Baa2 P-2 Baa2 P-2 Aaa.Br BR-1 Standard & Poor's Local Currency Foreign Currency National BBB- A-3 BBB- A-3 braaa bra-1 Banco Votorantim is an Investment Grade bank by Fitch, Moody s and S&P 29