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

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Rudolf Franklin
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2 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. 2

3 4 Earnings Highlights 11 Agribusiness 5 Market Ratios 12 Net Interest Margin 6 Earnings Breakdown 13 Spread by Portfolio 7 Earnings 14 BIS Ratio 8 Loan Portfolio 15 Guidance 9 Loans to Individuals 16 Appendix 10 Loans to Companies

Earnings Highlights Adjusted Net Income Growth (R$) 3.0 BI +20.3% (/) -5.1% (/) 6.5 BI NPL +90 3.65% ALLL¹ 4.2 BI 7.8 BI Fee Income Growth +5.4% (/) -2.

4 Earnings Highlights Adjusted Net Income Growth (R$) 3.0 BI +20.3% (/) -5.1% (/) 6.5 BI NPL % ALLL¹ 4.2 BI 7.8 BI Fee Income Growth +5.4% (/) -2.8% (/) Continuous Credit Quality Improvement -25 bps (/) -10 bps (/) -26.3% (/) +8.6% (/) Administrative Expenses Reduction -0.2% (/) -5.8% (/) Credit Risk 5.4 BI -18.8% (/) -3.3% (/) BB Foundations Human Factor Profitability Efficiency Credit and Capital Management Services Quality Digital Transformation (1) Allowance for Loan and Lease Losses Expenses Net of Recovery of Write-offs. 4

5 Market Ratios Earnings per Share Dividend Yield² (%) Q17 3Q E¹ 2019E¹ 2Q17 3Q E¹ 2019E¹ Earnings per Share - R$ Adjusted Earnings per Share - R$ Price/Earnings 12 months Price/Book Value Q17 3Q E¹ 2019E¹ 2Q17 3Q E¹ 2019E¹ Source: Economatica. Source: Economatica. (1) Bloomberg estimative on May, 10, 2018 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. 5

6 Earnings Breakdown R$ billion 12.0 (4.2) 6.5 (7.8) (3.5) 3.0 NII ¹ ALLL Fee Income Administrative Expenses Other Adjusted Net Income Profitabilty Ratios² Net Income (R$ Billion) Adjusted Net Income (R$ Billio Shareholders ROE % Market ROE % (1) NII net of recovery of write-offs. (2) Shareholders ROE: it does not include the core capital eligible instrument; Market ROE: it reflects the metric that the main market analysts use to project results, including the core capital eligible instrument. 6

7 Earnings Fee Income +5.4% R$ billion % -6.7% Net Interest Income Administrative Expenses -0.2% Checking Account +9.1% (/) Asset Management + 9.7% (/) Decrease of 1,983 employees in 12 months Cost to Income Ratio of 38.5% Personnel Expenses Loan Operations Treasury² ³ Other Administrative Expenses ALLL Expenses Funding Expenses Financial Expense for Institutional Funding¹ ³ % Asset Quality Improvement in the Companies Portfolio ALLL Expenses Recovery of Write-offs (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). 7

8 Loan Portfolio R$ billion -1.9% -0.8% % 6.5% 6.2% 3.90 NPL Ratio +90 days (%) NPL Formation % 26.9% 26.7% 27.5% 27.3% 27.5% Mar/ Jun/ Sep/ Dec/ Mar/ Q17 3Q17 New NPL / Loan Portfolio (%)¹ BB BB ex-specific case Banking Industry Quarterly ALLL/New NPL (%) New NPL (R$ billion) ² Coverage Ratio Cost of Risk 40.8% 39.3% 39.0% Mar/17 Individuals Dec/17 Mar/18 Foreign Branches and Subsidiaries Agribusiness Companies 36.4 Mar/ Jun/17 Coverage ratio (%) Q17 3Q17 ALLL (LTM)/ Loan Portfolio³ (1) It considers the Classified Loan Portfolio of the previous quarter. (2) Quarterly change in the balance of transactions over 90 days past due + current quarter write-offs. (3) ALLL expenses accumulated in 12 months / 12 months Average Loan Portfolio. (4) Allowance for Loan and Lease Losses Expenses gross of Recovery of Write-offs Sep/ Dec/17 Mar/18 Total Provision (R$ Bi) 5.6 ALLL⁴ 5.4 8

9 Loans to Individuals¹ R$ billion % +0.1% NPL Ratio +90 days (%) NPL Formation % Mar/17 Jun/17 Sep/17 Coverage Ratio Dec/17 Mar/18 2Q17 3Q17 New NPL / Loan Portfolio (%) ² Quarterly ALL/New NPL (%) New NPL (R$ billion) ³ ALLL Expenses⁴ 41.5 Mar/ Dec/17 Payroll Loan Mortgage Salary Loan 40.7 Mar/18 Auto Loan Other Q17 3Q Q Q Coverage Ratio (%) Balance of Provision (R$ Bi) (1) It considers the organic Loan Portfolio. (2) It considers the Classified Loan Portfolio of the previous quarter. (3) Quarterly change in the balance of transactions over 90 days past due + current quarter write-off. (4) Allowance for Loan and Lease Losses Expenses gross of Recovery of Write-offs. 9

10 Loans to Companies Expanded View¹ R$ billion NPL Ratio +90 days (%) NPL Formation -6.3% -1.6% Chg. (%) on Mar/ Mar/17 Jun/17 Sep/17 Dec/17 Mar/18 2Q17 3Q17 New NPL / Loan Portfolio (%) ³ Companies Companies ex-specific case Coverage Ratio Quarterly ALL/New NPL (%) New NPL (R$ billion) ⁴ ALLL Expenses⁵ Mar/17 Dec/17 Mar/ Saldo Very Small and Small Companies² Middle Market, Corporates and Government 2Q17 3Q17 2Q17 3Q17 Coverage Ratio (%) Balance of Provision (R$ Bi) (1) It includes private securities and guarantees provided. (2) Companies with annual revenues up to R$25 million. (3) It considers the Classified Loan Portfolio of the previous quarter. (4) Quarterly change in the balance of transactions over 90 days past due + current quarter write-off. (5) Allowance for Loan and Lease Losses Expenses gross of Recovery of Write-offs. 10

11 Agribusiness¹ R$ billion % +1.5% Chg. (%) on Mar/ NPL Ratio +90 days (%) NPL Formation Mar/17 Jun/17 Sep/17 Dec/17 Mar/18 2Q17 3Q17 New NPL / Loan Portfolio (%) ² Coverage Ratio Quarterly ALL/New NPL (%) New NPL (R$ billion) ³ ALLL Expenses⁴ Mar/17 Dec/17 Mar/ Saldo Agroindustrial Rural 2Q17 3Q17 2Q17 3Q17 Coverage Ratio (%) Balance of Provision (R$ Bi) (1) It includes Rural Product Bills and guarantees provided. (2) It considers the Classified Loan Portfolio of the previous quarter. (3) Quarterly change in the balance of transactions over 90 days past due + current quarter write-off. (4) Allowance for Loan and Lease Losses Expenses gross of Recovery of Write-offs. 11

12 Net Interest Margin¹ % Q17 3Q17 Net Interest Margin (NIM) Risk Adjusted NIM NIM with Recovered Credits NIM Mix Composition NIM ex-mix Calendar days Specific Case NIM ex-all effects (1) Net interest income / average balance of earnings assets, annualized. It does not include recovery of write-offs 12

13 Spread by Portfolio % Q17 3Q17 Individuals Loan Operations Companies¹ Agribusiness (1) Government loans not included. 13

14 BIS Ratio % Mar/17 Jun/17 Sep/17 Dec/17 Mar/18 Tier II Tier I Common Equity Tier I New target: minimum of 11% in January/

15 Guidance Guidance 2018 Performance Adjusted Net Income - R$ billion 11.5 to NII (Net of Recovery of Write-offs) - % -5 to Organic Domestic Loan Portfolio - Expanded View - % 1 to Individuals - % 4 to Companies - % -3 to Rural Loans - % 4 to ALLL Expenses net of Recovery of Write-offs - R$ billion -19 to Fee Income - % 4 to Administrative Expenses - % 1 to

16 17 Income Statement with Reallocations 23 Disbursements 18 Net Interest Income 24 Organic Individuals Classified Loan Portfolio 19 Fee Income 25 Loan Portfolio by Risk Level 20 Earnings Assets Breakdown 26 Renegotiated Overdue Loan Portfolio 21 Administrative Expenses 27 Individuals Portfolio Delinquency by Lines 22 Commercial Funding 28 One-Off Items

17 Income Statement with Reallocations Main Lines R$ million Chg. (%) on Net Interest Income 13,521 12,820 11,962 (11.5) (6.7) Allowance for Loan Losses (5,757) (3,909) (4,244) (26.3) 8.6 Credit Risk (6,713) (5,637) (5,449) (18.8) (3.3) Credit Recovery 956 1,728 1, (30.3) Net Financial Margin 7,764 8,911 7,718 (0.6) (13.4) Fee income 6,213 6,735 6, (2.8) Contribution Margin 12,715 14,395 13, (9.0) Administrative Expenses (7,772) (8,236) (7,759) (0.2) (5.8) Commercial Income 4,825 6,031 5, (13.5) Other Operating Income Income Before Taxes 4,214 5,475 4, (12.8) Income and Social Contribution Taxes (995) (1,476) (1,004) 0.9 (32.0) Statutory Profit Sharing (307) (412) (388) 26.3 (5.8) Adjusted Net Income 2,515 3,188 3, (5.1) One-Off Items (72) (80) (277) - - Net Income 2,443 3,108 2, (11.6) 17

18 Net Interest Income R$ million Chg. (%) on Net Interest Incom e 13,521 12,820 11,962 (11.5) (6.7) Loan Operations 23,611 19,532 18,360 (22.2) (6.0) Funding Expenses (9,755) (6,469) (6,000) (38.5) (7.2) Financial Expense for Institutional Funding¹ ³ (3,365) (2,823) (2,815) (16.3) (0.3) Treasury² ³ 3,029 2,580 2,418 (20.2) (6.3) (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). 18

19 Fee Income R$ million Chg. (%) on Fee Income 6,213 6,735 6, (2.8) Checking Account Fees 1,597 1,870 1, (6.8) Asset Management Fees 1,295 1,347 1, Insurance, Pension and Premium Bonds (4.9) Loan Fees (10.2) Credit / Debit Cards¹ (5.1) 9.9 Collections (12.8) (1.5) Billings (1.0) (1.5) Capital Market Consortium National Treasury and Manag. of Official Funds (13.9) (17.0) Interbank (13.4) (3.3) Other (0.8) (9.9) (1) Series revised in 3Q17 in accordance with Bacen Circular Letter No. 3,828/

20 Earnings Assets Breakdown 34.6% Retail Operations¹ 34.5% Retail Operations¹ 43.4% 51.3% 33.1% Wholesale Operations² 45.7% 49.2% 32.8% Wholesale Operations² 32.3% Agribusiness 32.7% Agribusiness 5.3% 5.2% Other Secur. + Interbank Invest. w/o Hedge Loans and Leasing Operations (1) It includes loans with individuals, very small and small companies. (2) It includes loans with Government and remaining companies. 20

21 Administrative Expenses and Cost to Income ratio¹ % Mar/17: 99,964 employees Mar/18: 97,981 employees Decrease of 1,983 employees -2.0% % 7.8 R$ billion Mar/17: 4,429 Traditional branches 448 Digital and Specialized branches² Mar/18: 4,159 Traditional branches 588 Digital and Specialized branches² 2Q17 3Q17 Administrative expenses Cost to Income Ratio (12 months) Mar/17: 4,963 employees at the digital model Mar/18: 9,428 employees at the digital model Migration of 4,465 employees +90% (1) Administrative Expenses / Operating Revenues. Data from the Income Statement with Reallocations. (2) It includes Estilo, Empresa, Governo and Agribusiness branches and Private Banking, and also Exclusivo, Estilo and Very Small and Small Companies Offices. 21

22 Commercial Funding % +0.9% R$ billion Mar/17 Jun/17 Sep/17 Dec/17 Mar/18 Time Deposits Savings Deposits Agribusiness Let. Credit + Mortgage Bonds¹ Demand Deposits Rep. Agreement with Private Securities² Interbank Deposits Adjusted Net Loan Portfolio³ / Commercial Funding (1) It includes the balance of CRI (Certificates of Real Estate Receivables). (2) It includes part of the balances of the Private Securities shown on Notes to the Consolidated Financial Statements. (3) It does not include the domestic onlending loans. 22

23 Disbursements quarterly average¹ (1Q16 base 100) Brazil Individuals % % % % Q16 2Q16 3Q16 4Q16 2Q17 3Q17 1Q16 2Q16 3Q16 4Q16 2Q17 3Q17 Agribusiness Companies % % % % Q16 2Q16 3Q16 4Q16 2Q17 3Q17 1Q16 2Q16 3Q16 4Q16 2Q17 3Q17 (1) It does not include revolving lines of credit and overdraft. 23

24 Organic Individuals Classified Loan Portfolio R$ million Chg. % on Mar/17 Dec/17 Mar/18 Mar/17 Dec/17 Payroll Loan 62,442 67,108 67, Mortgage 75.9% 42, % 44, % 45, Salary Loan 19,716 18,793 18,793 (4.7) 0.0 Auto Loan 5,769 4,875 4,603 (20.2) (5.6) Credit Card 23,776 25,655 24, (4.4) Renegotiated Loan 8,049 8,436 8, Consumer Finance 5,841 4,720 4,583 (21.5) (2.9) Overdraft Account 2,580 1,951 2,071 (19.7) 6.2 Microcredit (36.8) (10.8) Other (12.7) 7.4 Total 172, , ,

Loan Portfolio by Risk Level¹ R$ million Mar/17 Dec/17 Mar/18 Balance Provision Provision Provision Share % Balance Share % Balance Minimum Supplementary Required Minimum Supplementary Required

25 Loan Portfolio by Risk Level¹ R$ million Mar/17 Dec/17 Mar/18 Balance Provision Provision Provision Share % Balance Share % Balance Minimum Supplementary Required Minimum Supplementary Required Minimum Supplementary Required Share % AA 307, , , A 92, , , B 108,754 1, , ,631 1, , ,827 1, , C 68,783 2,063 1,096 3, ,252 1,838 1,058 2, ,147 1,714 1,031 2, D 16,477 1, , ,194 1, , ,117 1, , E 14,175 4,253-4, ,645 3, , ,051 3, , F 6,559 3,279-3, ,261 2, , ,985 2, , G 6,493 4,545-4, ,939 4, , ,387 4, , H 17,391 17,391-17, ,485 19, , ,049 18,049-18, Total 638,336 34,728 1,686 36, ,443 34,612 2,075 36, ,490 33,014 1,975 34, AA-C 577,241 3,612 1,440 5, ,920 3,526 1,588 5, ,900 3,375 1,566 4, D-H 61,095 31, , ,523 31, , ,590 29, , (1) BB Classified Loan Portfolio. 25

26 Renegotiated Overdue Loan Portfolio Credits Renegotiated When Past Due - Changes Initial Balance 27,086 25,867 25,297 Contracts 2,332 3,101 2,031 Amortization Net of Interest¹ (864) (1,467) (874) Write-Off (1,936) (2,204) (2,825) Past due Renegotiated Loan Portfolio (A) 26,618 25,297 23,630 ALL Balance (B) 12,314 12,440 11,046 NPL + 90 days (C) 7,410 5,918 4,953 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 R$ million Credits Renegotiated Contracts % 0 to 14 days Past due to 90 days Past due Over 90 days Past due Writen-Off Recovery Total 2, NPL Formation Q17 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. 26

27 Individuals Portfolio Delinquency by Lines % Mar/17 Dec/17 Mar/18 NPL Share % NPL Share % NPL Share % Individuals Payroll Loan Mortgage Credit Card Salary Loan Auto Loans

28 One-Off Items R$ million Chg. (%) on Adjusted Net Income 2,515 3,188 3, (5.1) One-Off Item s (72) (80) (277) Economic Plans (227) (294) (539) Extraordinary Provision for Law suits (96.8) 11.4 Proagro BB Seguridade - (58) Tax Eff. and Stat. Prof. on One-Off Items Net Incom e 2,443 3,108 2, (11.6) 28

29 Av. Paulista, th. floor Bela Vista São Paulo/SP - Brasil - CEP (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.