Earnings Presentation. 1 st Quarter, 2013

Transcription

1 Earnings Presentation 1 st 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 March 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 The successful implementation of the Change Agenda indicates a 2013 with substantially better results The results once again confirmed concrete advances in the Change Agenda Maintenance of excellent quality in Consumer Finance production. BV Financeira has been originating high quality auto finance for over 15 months and, in, strengthened its position as the market leader in used vehicles Consistent drop in delinquency¹. Consolidated NPL 90¹ decreased to 6.2% in, vs. 6.6% in New reduction in credit provision expenses. Consolidated credit provision expenses reduced 6.5% (or R$ 62M) vs. fourth consecutive quarterly reduction Reduced cost base. Non-interest expenses dropped 14.4% (or R$ 144M) vs. 4T12, reflecting the effectiveness of the initiatives for cost reduction and operating efficiency gains These important achievements in our Change Agenda were once again accompanied by the solid performance of both business divisions Consumer Finance and Wholesale The combination of consistent revenue generation by the business areas and the new reduction in credit provision expenses led to Net Financial Margin of R$ 234M in, 14.0% growth over The results were still impacted by: Still high credit provisions expenses due to delinquency of auto finance portfolios originated between July/10 and Sept/11 Expenses with the early settlement of credits assigned with recourse until Dec/11 (before Res. 3,533) Expenses with provisions for contingencies, mainly related to the restructuring process Nevertheless, results maintained their trajectory of gradual improvement (: R$-278M, : R$-358M) In 2013 we will conclude the adjustment process in order to resume profitable growth in a sustainable way In the short-term, results will still be impacted by the same factors that affected The success already shown in the implementation of the Change Agenda indicates that 2013 will be a year of substantially better results, mainly in the second semester 1. Operations past due over 90 days 2

4 Banco Votorantim overview Results and recent Change Agenda advances Appendix financial highlights 3

5 Banco Votorantim Overview Banco Votorantim is one of the leading players in Brazil... Banco Votorantim is one of the largest privately-held Brazilian banks in total assets... Largest Financial Institutions in - Assets (R$B)¹ Shareholder Banco do Brasil 1,087 50% total Itaú Unibanco 951 Bradesco 755 CEF 703 Santander 458 HSBC 127 Votorantim 121 State-owned Safra 112 Foreign BTG Pactual 88 Citibank 61 National privately-held...and also in terms of loan portfolio... Largest Financial Institutions in Loan Portfolio (R$B)¹ Banco do Brasil CEF Itaú Unibanco Bradesco Santander Votorantim² HSBC Safra Banrisul Volkswagen State-owned Foreign 491 National privately-held...and is well-positioned to consolidate itself as one of the largest banks in Brazil Diversified business portfolio Wholesale Banking Top 5 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$41.1B 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 Source: Banco Votorantim; Bacen; Anbima 4

6 Banco Votorantim Corporate strategy...and has a diversified business portfolio, internally divided into Wholesale and Consumer Finance Off balance assets R$7.7B R$1.7B Assigned to FI¹ Assigned to FIDC R$76.9B Wholesale R$39.3B Cons. Finance R$37.7B 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, 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 Continuous growth of 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 5

7 Banco Votorantim Corporate governance Shared governance between the shareholders Board of Directors Chairman position is annually alternated between the shareholders Governance structure Board of Directors Statutory Fiscal Council Audit Committee Compensation & HR Committee ALM, Risks & Capital Board of Directors Executive Committee Finance Committee Products & Marketing Committee Operating Committees MLP¹ Equal Representation of each shareholder Name Position Shareholder 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 Arruda² 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, with Chairman and Vice-Chairman positions annually alternated between shareholders Decisions are made by absolute majority, with no casting vote Businesses Communication Executive Committee Credit Expenses (CAAD) Name Position Human Resources Investment Bank (IB) Internal Controls Ombudsman João Roberto Gonçalves Teixeira Alvaro Jorge Fontes de Azevedo Elcio Jorge dos Santos CEO Executive Director Executive Director Products Sustainability Projects Technology Marcos Lima Monteiro Executive Director Gestão profissional com executivos experientes Pedro Paulo Mollo Neto Executive Director Ricardo Ramos de Arruda Executive Director Tax Robert John van Djik Executive Director 1. Money Laundering Prevention; 2. Deceased in August/12; new member, elected in the Ordinary General Shareholders Meeting held on April/13, is subject to approval by the Brazilian Central Bank 6

8 Banco Votorantim overview Results and recent Change Agenda advances Appendix financial highlights 7

9 Progress in the Change Agenda The results confirm, once again, the consistent progress made in the Change Agenda Agenda Progress Progress made in the Change Agenda during highlights 1 Origination with quality Maintenance of solid quality in auto finance origination Vintages from last 15+ months registered low Inad 30 (1 st installment delinquency) Increased origination in, strengthening leadership position in used vehicles 2 Delinquency reduction NPL 90 for light vehicles decreased to 7.2% in (7.7% in ) Driven by the increased participation in the portfolio of better quality vintages (after Sept/11) Consolidated NPL 90 decreased to 6.2% in (6.6% in ) 3 Credit provision reduction Allowance for loan losses expenses (ALL) reduced 6.5% in QoQ... R$889M in vs. R$951M in fourth consecutive quarterly reduction...simultaneously to the increase in the Coverage Ratio¹ (: 106%; : 84%) 4 Cost base reduction Non-interest expenses showed a 14.4% reduction in the QoQ R$857M in vs. R$1,001M in R$144 million reduction Reflects the initiatives for greater operating efficiency The progress in the Change Agenda creates the conditions for the Bank to resume profitable growth in a sustainable way 1. Ratio between ALL balance and balance of operations past due by over 90 days 8

10 Change Agenda Consumer Finance production Banco Votorantim has been originating auto finance portfolios with solid quality for more than 15 months Production Light vehicles 1 Origination by channel (R$B) and first installment delinquency 2 (%) Vintages indicating lower quality New car dealers (R$B) Multi-brand dealers (R$B) 1st installment delinquency ("Inad 30") Record quality vintages June/09 Dec/09 June/10 Multi-brand dealers/ Total production Dec/10 June/11 Dec/11 64% 71% 78% 80% In, the Bank reinforced its focus on multi-brand dealers and strengthened its position as leader in used vehicles 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 Production quality Quality of vintages originated after Sept/11 is partly due to greater conservatism towards credit concession Production NPL 90 by vintage, 4 months after concession Auto finance (%) Auto production average interest rate (%p.y.) 2.7 BV Financeira Market¹ D 09 J 10 D 10 J D 11 M 12 J 12 S Month of concession D 12 Dec/10 Auto production tenor and down payment Auto finance origination by payment option Down payment% Average tenor (months) 60 month, no down payment Other options % 32% 41% 41% 44% 42% 44% 84% 100% 100% 100% 100% 100% 4Q10 2Q12 3Q12 4Q10 2Q12 3Q12 Banco Votorantim also has been continuously improving its credit policies, processes and models 1. Data published semiannually in Bacen s Financial Stability Report ( Relatório de Estabilidade Financeira ) Source: BVF, Bacen 10

12 Change Agenda Delinquency Increased participation of better quality auto finance vintages has contributed to delinquency reduction Delinquency Vintages with better quality (after Sept/11) reached 44% of the portfolio......contributing to consistently reduce delinquency Managed auto finance portfolio¹ by vintage (%) NPL 90 managed loan portfolio (%) After Sept/11 15% 21% 29% 38% 44% 100% 8.9% 9.5% 9.1% Light vehicles Total 7.7% 7.2% July/10 to Sept/11 59% 57% 52% 47% 43% 7.0% 7.5% 7.4% 6.6% 6.2% Until June/10 26% 22% 19% 15% 13% Total delinquency decreased to 6.2% in, third consecutive quarterly reduction Note: managed portfolio 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 11

13 Change Agenda ALL and Coverage ALL expenses dropped 6.5% in vs. Even with reduced provisions, there was a new increase in the consolidated Coverage Ratio ALL Credit provision expenses reduced for the fourth consecutive quarter Consolidated Coverage Ratio reached 106% in, vs. 84% in Allowance for loan losses expenses ALL (R$M) Managed loan portfolio s Coverage Ratio¹ (%) Wholesale Consumer Finance 1, ,331 1, ,277 1, , % / -14% Consumer Finance Total 84.1% 87.4% 75.4% 78.3% 93.1% 84.1% 99.9% 90.2% 106.4% 93.3% % 2Q12 3Q12 1. Ratio between ALL balance and balance of operations past due by 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 12

14 Change Agenda Non-interest expenses The Bank has also advanced in cost reduction Non-interest expenses decreased 14% in vs., especially Administrative and Personnel Expenses Important initiatives were adopted regarding cost reduction and efficiency gains... Examples of initiatives for cost reduction...and resulted in -14% non-interest expenses in vs., despite contingencies Non-interest expenses (R$M) Adequacy of organizational structures to the new level of origination in Consumer Finance 1,001 / / Integration of corporate areas Legal, Risks, Finance, HR, Operations and Technology, that used to work separately in the past Adjustment in the commissions paid to distribution channels (auto finance and payroll loans) Others¹ Contingencies² % 75% -14% -15% Implementation of a new compensation policy Personnel % -18% Rationalization of rental expenses, e.g.: Space reduction at the Rochaverá, Berrini and Paulista sites Review of expenses with consulting, telephony, media, events, travel and sponsorships, etc Administrative % -17% Increasing operating efficiency is one of Banco Votorantim s main focuses for 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 Consolidated results Change Agenda advances were accompanied by the good performance of businesses in Total revenues slightly increased in vs.... Total revenues (R$M)...despite 4% decrease in the expanded credit portfolio in the period Expanded¹ credit portfolio (R$B) 1,365 +1% 1, Fees and others % Consumer Finance 1,136 1,123 Net Interest Income (NII) Wholesale Financial Institutions² FIDC³ Off balance portfolio 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 14

16 Consumer Finance Auto finance and payroll loans Consumer Finance: the Bank maintained its focus on used vehicles and INSS payroll loans (retirees and pensioners) Auto finance Payroll loans Managed loan portfolio Operating strategy Managed auto finance loan portfolio (R$B) , Off balance¹ On balance BV Financeira acts as an extension of Banco do Brasil (BB) in auto finance outside branch network Banco Votorantim is one of the leading players in the auto finance market Market leader in used auto finance Extensive network of third-party distribution Used/ Total² Mar/11 70% 67% 70% Stable vs. Model for direct origination (BVO) to BB under implementation Focus on new car dealers (new vehicles) and BB clients The Bank will be commissioned by the originated volume Managed payroll loan portfolio (R$B) Off balance¹ Payroll loan operations focused on INSS (retirees and pensioners) Presents better risk profile Represents ~64% of the managed payroll loan portfolio On balance Selective position towards both private and public sectors Focus on partnerships with attractive profitability Mar/11 Greater focus on refinancing contracts INSS/ Total³ 56% 60% 64% 1. Credits assigned with substantial risk retention until Dec/11 (before Res. 3,533 came into force); 2. Only on balance loan portfolio; 3. On and off balance loan portfolios 15

17 Wholesale CIB and Middle Market Wholesale: CIB and Middle Market kept focus on profitability and conservatism towards credit provisions Contraction of expanded credit portfolio reflects greater discipline towards capital allocation Middle Market Expanded¹ Wholesale credit portfolio (R$B) % Mar13/ Mar % CIB Operating strategy Focus on 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), IB services highlights: ECM: Leading Coordinator of Senior Solution s IPO Fixed income: 5 concluded operations (~R$2.2B) CIB % Middle Market Operating strategy Mar/11 Coverage Ratio² 204% 217% Focus on clients with revenues between R$50M and R$600M/year Disciplined capital allocation 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 16

18 Wholesale Wealth Management VWM&S reached R$41.1B in assets under management Partnership with BB was enhanced and consistent performance was recognized VAM is the 9 th largest asset manager according to Anbima s managers ranking VWM&S assets under management² (R$B) Asset Management Operating strategy Focus on high-value added structured products % Enhanced synergies with BB: assets from funds structured in partnership reached R$3.7B³ E.g. the BB Progressivo II real estate fund VAM s consistent performance has been highlighted in many rankings, e.g. Guia Exame de Investimentos Pessoais 2012 (personal investments) Star Ranking da Valor Investe / S&P Private Bank Operating strategy Anbima¹ ranking Mar/11 10º 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. Total assets by the end of the period Source: Banco Votorantim; Anbima 17

19 Other businesses BVEP The Bank has been increasing real estate investments Through BVEP BV Empreendimentos e Participações (enterprises and participations) Operating sectors Portfolio of more than 20 projects examples Commercial Class A properties in major urban centers Rio de Janeiro/RJ Commercial highlights Rio de Janeiro/RJ Residential Average and above average income public Offices VGV: R$250M Offices VGV: R$130M Residential highlights Logistics Class A logistics warehouses, in sites with logistical potential Osasco/SP São Paulo/SP Shopping Malls Shopping malls and power centers focused on cities less served by the sector Development: Lindencorp / EZTec Launch: Oct/12 VGV: R$1.5B Development: Tecnisa / PDG 1 st phase: VGV: R$804M BVEP focuses on originating, structuring and managing real estate investments Note: BVEP is a real estate investment company controlled by Banco Votorantim 18

20 Consolidated results results maintained trajectory of gradual improvement... Driven by solid performance of businesses and reduction of ALL and Non-interest expenses Total revenues (Net interest income, Fee/Banking fee income and Other revenues) R$ million Allowance for loan losses expenses ALL 1,365 1,354 1,403 1,563 1,378 Wholesale Consumer Finance 1, ,331 1, ,277 1, , % Q12 3Q12 2Q12 3Q12 Non-interest expenses (Personnel, Administrative, Operating and Other tax¹) Net income and Net financial margin -14.4% 1, Others Contingencies² Personnel Administrative Net income (R$M) Net financial margin (R$M) T12 2Q12 3Q12 1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies 19 2Q12 3Q12 Successful implementation of the Change Agenda indicates that the results in 2013 will be substantially better

21 Consolidated results...but were still impacted by three main factors Expenses with ALL, early settlement of assigned portfolios and contingencies 1 ALL expenses 2 Expenses with early settlements 3 Expenses with contingencies³ quarterly average (R$B) ,273 Despite reduction, still high ALL 889 quarterly average (R$B) quarterly average (R$B) Delinquency and Coverage Off balance credit assignments 4 Auto finance origination Consolidated Cov. Ratio¹ Total NPL 90² 5.8% 6.6% 6.2% 2.6% 73% 80% 100% 106% (R$B) to FIDC to FI quarterly average (R$B) New origination levels demanded the adaptation of organizational structures Dec/10 Dec/11 Dec/10 Dec/ Ratio between ALL balance and balance of operations past due by over 90 days; 2. Refers to the managed loan portfolio; 3. Provisions for civil and labor contingencies; 4. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533) 20

22 Credit risk quality In this context, the Bank kept its conservatism towards the management of Liquidity, Provisions, Funding and Capital Liquidity Free cash continues 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 The Bank has successfully acted on improving its funding profile Increasing the participation of long-term instruments......and reducing deposits (CDs) Capital Basel Ratio of 13.6% 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 90 balance % % 27% Time Deposits Others¹ 13.0% 13.6% Min. 11% 84.1% 106.4% 32% 7% 12% 24% 12% 8% 17% 25% Securit.² Private Securities Financing Bills 3 Debentures 4 Tier I 8.7% 9.0% 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 21

23 Banco Votorantim overview Results and recent Change Agenda advances Appendix financial highlights 22

24 Financial highlights Financial highlights Total revenues (Net Interest Income, Fee Income and Other Operating Income) R$ million Allowance for loan losses expenses ALL +0.9% -11.8% -38.9% -6.5% 1,365 1,354 1,403 1,563 1,378 Wholesale Consumer Finance 1, ,331 1, ,277 1, , Q12 3Q12 2Q12 3Q12 Non-interest expenses (Personnel, Administrative, Operating and Other Tax¹) Net income and Net financial margin +15.5% -14.4% 1, Others Contingencies² Personnel Administrative Net Income (R$M) Net financial margin Q12 3Q12 2Q12 3Q12 1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies 23

25 Financial highlights Financial highlights Net Interest Margin¹ NIM (% p.y.) Efficiency ratio (%) 12 months 12 months (excluding contingencies) Quarterly Q12 3Q12 2Q12 3Q12 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 1. Annualized indicator Note: criteria for calculating the Efficiency Ratio was refined in the, when it started to consider Equity in Income from Subsidiaries in the denominator; this change was reflected in the graph s history 24

26 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 On balance loan portfolio Expanded¹ managed² credit portfolio % 56.5 Off balance securitization² % Expanded credit portfolio¹ Includes guarantees provided and private securities; 2. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533) 25

27 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 % Mar13 /Dec12 3.9% % Mar13 /Dec12-0.9% Auto Finance % Middle Market % % Corporate % % Off balance securitization FI³ FIDC 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 26

28 Financial highlights Credit Indicators Improvement in asset quality and coverage indicators NPL 90/ Managed loan portfolio¹ (%) NPL 60/ Managed loan portfolio (%) 8.9% 7.0% Cons. Finance 9.6% 7.5% 9.4% 7.4% Total Wholesale 8.3% 7.7% 6.6% 6.2% 10.2% 8.8% On balance 10.2% 9.4% 9.2% 8.8% Managed¹ 8.6% 8.2% 8.0% 7.7% 1.8% 2.0% 2.4% 2.4% 2.3% ALL balance² (R$M) Coverage ratio³ (%) ALL balance (R$M) 5.9% 6.9% ALL balance/managed loan portfolio¹ 6.9% 6.6% 6.5% 84.1% 87.4% 93.1% 99.9% 106.4% 4,535 4,842 4,914 4,518 4, 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 by over 90 days 27

29 Financial highlights Credit indicators Write-off (R$M) Write-off (net of Recovery) (R$M) Write-off / Managed loan portfolio¹ (% p.y.) Recovery Write-off recovery (R$M) Recovery / Managed loan portfolio² (% p.y.) 8.1% 0.5% 0.5% 6.9% 6.6% 0.4% 5.7% 0.2% 0.3% 3.4% 650 1,027 1,205 1,341 1, Q12 3Q12 2Q12 3Q12 1. Ratio between the quarter s accumulated write-off and the managed loan portfolio by the end of the quarter; 2. Ratio between the quarter s accumulated income from write-off recovery and the managed loan portfolio by the end of the quarter Note: Annualized indicators 28

30 Financial highlights Funding Sources Increased participation of long-term funding instruments (e.g. Financing Bills, Securitization) Funding evolution (R$B) Others¹ On balance securitization² Issuances Subordinated Debt Loans and Onlendings Financing Bills Deposits % Mar13 /Dec % -8.4% -4.2% -5.3% 6.7% -19.2% Debentures % Off balance 4 securitization (R$B) Includes Option box and NCE repo; 2. Balance of credits assigned with substantial risk retention under Res. 3,533 (i.e. does not include off balance credit assignments); 3. Linked to repo operations; 4. Credits assigned to other financial institutions and to FIDCs with substantial risk retention until Dec/11 (before Res. 3,533) Note: International funding is 100% swapped for BRL 29

31 Financial highlights Basel Ratio and Capital Basel ratio Capital (R$M) Tier II 13.0% 4.4% 15.5% 5.3% 15.2% 5.3% 14.3% 5.0% 13.6% 4.6% 11,282 13,624 13,002 12,111 11,430 Tier I 8.7% 10.2% 9.9% 9.3% 9.0% Shareholders Equity 7,349 9,304 8,829 8,210 7,671 Additionally, Banco Votorantim has a stand-by credit facility of ~R$7B from BB, which has never been tapped 30

32 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 31

33 Managerial x Accounting results Conciliation between Managerial and Accounting results INCOME STATEMENT SUMMARY (R$ Million) Accounting Hedge¹ Write-off Recovery² ALL Credit Assignm ents³ Managerial Net Interest Incom e (25) (90) (25) Allow ance for Loan Losses (1.004) (889) Net Financial Margin 259 (25) Other Operating Incom e/expenses (682) (669) Fee Income Personnel and Administrative Expenses (595) (595) Tax Expenses (126) (124) Equity in Income of Subsidiaries Other Operating Income/Expenses (224) (213) Operating Incom e (423) (12) - - (435) Non-operating Incom e (18) (18) Incom e before Taxation and Profit Sharing (441) (12) - - (453) Provision for Income Tax and Social Contribution Profit Sharing (42) (42) Net Income (Loss) (278) (278) 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. Income from the recovery of w rite-offs to loss accounted in Income from Loans and relocated to Allow ance for Loan Losses; 3. Expenses w ith credit provisions related to credit assignments w ith recourse accounted in Income from Loans and relocated to Allow ance for Loan Losses. 32