3Q10 Conference Call Presentation (Only in Portuguese)
2 Agenda Key Figures Page 3 Funding Page 4 Daycred DCC Retailers Asset Management Page 14 Page 15 Foreign Currency Funding Page 6 Quality of Loan Portfolio Page 16 Liquidity Page 7 Efficiency Ratio Page 20 Distribution Page 8 Profitability Page 21 Loan Portfolio Page 9 Net Income Page 22 Middle Market Page 10 Capital Structure Page 23 Daycred Payroll Daycred Auto Loans Page 12 Page 13 3Q10 Highlights Page 24
Key Figures (R$ MM) September 2010 Total Assets R$ 9,329.2 million Loan Portfolio R$ 5,546.2 million Funding R$ 5,075.2 million Net Income (quarter) R$ 85.0 million Shareholders Equity R$ 1,735.6 million ROAE (quarter) 21.4% ROAA (quarter) 3.8% NIM-A (1) (quarter) 14.8% Efficiency Ratio 20.4% BIS Index 21.2% (1) New methodology excluding repurchase agreements tri-party repos outstanding 3
Funding : the balance of the funding is aligned with the credit portfolio (*) Funding R$ Million 42.3 % 4,725 4,172 3,567 3,509 18% 26% 18% 21% 22% 15% 17% 11% 65% 68% 60% 59% 7.4 % 5,076 23% 13% 64% Lengthening of maturities Maintaining the diversification of funding sources Maintenance of funding costs 3T09 4T09 1T10 2T10 3T10 Total Deposits Borrowing and Onlending Foreign Issuances Banknotes new source of funding (*) Exclude assignments and avals and sureties, which are sources that do not require funding 4
Funding: Total Deposits increased 17.0% during the quarter Total Deposits Breakdown R$ 3,247.9 Million Breakdown of Funding 8.1% 1.1% Corporates + Demand Deposits 25.0% 18.2% 47.6% Individuals Investment Funds Institutional Financial Institutions Funding (R$ MM) 3Q10 2Q10 Chg. % Total Deposits 3,247.9 2,775.0 17.0% Demand Deposits + Other Depostis 334.0 164.8 102.7% Time Deposits 2,885.6 2,552.4 13.1% Interbank Deposits 28.3 57.8-51.0% Banknotes 1.0 - n.a. Foreign Issuances 656.0 712.1-7.9% Borrowing and Onlending 1,170.9 1,238.4-5.5% Total 5,075.8 4,725.5 7.4% 5
Foreign Currency Funding: we have no significant maturities of external issues coming due in the short-term Date of Transaction Maturity Amount (US$ MM) Eurobonds June/2008 July/2011 100 International Finance Corporation (IFC) December/2007 January/2013 (due date of last tranche) 115 Syndicated Loan (IFC) June/2010 June/2014 (due date of last tranche) 165 Eurobonds March/2010 March/2015 300 Foreign Issuances and Borrowing and Onlending - R$ Million 519.7 645.4 23.3% 66.7% 76.7% 33.3% 1,515.9 48.2% 51.8% 1,127.0 66.9% 33.1% 1,950.5 1,666.2 1,826.9 45.8% 63.5% 64.1% 54.2% 36.5% 35.9% 2006 2007 2008 2009 1T10 2T10 3T10 Foreign Issuances Borrowing and Onlending 6
Liquidity: high capitalization and positive gap in duration between credit andfunding operations Cash Evolution R$ Million 1,708.7 1,372.1 1,833.3 1,581.2 1,286.0 3Q09 4Q09 1Q10 2Q10 3Q10 % Loan Portfolio Outstanding Operations 3Q10 % Funding Outstanding Operations 3Q10 0.8% 1.0% 6.6% 7.2% 25.2% 35.4% Average Term of Loan Portfolio: 401 days 21.5% 15.8% Average Term of Funding Portfolio: 524 days 31.4% 27.2% 27.8% Up to 3 months From 3 to 12 months From 1 to 3 years From 3 to 5 years Over 5 years No maturity Up to 3 months From 3 to 12 months From 1 to 3 years From 3 to 5 years Over 5 years 7
Distribution and New Service Outlets National Presence Recently opened two exchange on Avenida Paulista, Brazil s major business hub. Seven Daypag offices in major cities of São Paulo State: Osasco, Barueri, Guarulhos, Atibaia, Campinas, Ribeirão Preto, Mogi Guaçu, and Detran São Paulo 29 Branches São Paulo SP - HQ 761 employees Alphaville Bom Retiro Faria Lima Brás Aracaju - SE Belém - PA Belo Horizonte - MG Brasília - DF Campinas - SP Campo Grande - MS Caxias do Sul - RS Cuiabá - MT Curitiba - PR Florianópolis - SC Fortaleza - CE Goiânia - GO Guarulhos - SP Londrina - PR Maceió - AL Manaus - AM Natal - RN Porto Alegre - RS Recife - PE Ribeirão Preto - SP Rio de Janeiro - RJ Salvador - BA São Bernardo - SP Vitória - ES 8
Loan Portfolio: robust growth, reaching 46.7% in past 12 months Loan Portfolio R$ Million 46.7 % 14.5 % 4,787 4,282 80 3,774 4,033 130 104 163 4,178 4,707 3,611 3,903 5,546 61 5,485 Middle Market Payroll Auto Loans Focus and expected share gain along next year Participate in the market expansion Mantaining the loan portfolio size 3Q09 4Q10 1Q10 2Q10 3Q10 Loan Portfolio (includes Avals and Sureties + Receivables purchase) Credit assignments DCC Grow portfolio 9
Middle Market: growth of 18.7% compared with 2Q10, and 73.0% in past 12 months Middle Market + Trade Finance R$ Million Guarantees Breakdown 3Q10 2,349 2,096 185 189 2,160 1,911 73.0 % 2,588 218 2,370 18.7 % 3,627 3,055 292 282 3,335 2,773 5.0% 5.8% Receivables 10.4% 4.7% 57.9% 16.2% Vehicles / Real Estate Agricultural Products Financial Investments Equipments / Foreign goods Other 3Q09 4Q09 1Q10 2Q10 3Q10 Middle Market+Avals and Sureties+ Receivables purchase Trade Finance Sectors Breakdown Middle Market 3Q10 18% 7% 32% 43% Industry Services Commerce Other Geographic Distribution Middle Market 3Q10 14% Southeast 6% 13% 54% South Northeast 13% Mid-West North 10
Middle Market currently represents 65.4% of the total credit portfolio Breakdown Loan Portfolio (*) 3Q09 R$ Million Breakdown Loan Portfolio (*) 3Q10 R$ Million 0.6% 9.0% 0.7% 18.6% 25.3% 55.5% Middle Market + Trade Finance + Avals and Sureties + Receivables purchase Payroll Auto Loans 24.9% 65.4% Middle Market + Trade Finance + Avals and Sureties + Receivables purchase Payroll Auto Loans DCC DCC Breakdown Portfolio Middle Market 3Q10 Breakdown Portfolio Middle Market 3Q10 September 2010 Middle Market R$ 2,782.9 million Trade Finance R$ 292.2 million Avals and Sureties R$ 170.1 million Receivables purchase R$ 129.2 million BNDES R$ 252,3 million Total Portfolio Middle Market R$ 3,626.7 million 3.6% 7.0% Middle Market 4.6% Trade Finance 8.1% 76.7% Avals and Sureties Receivables purchase BNDES (*) Includes credit assignments + Avals and Sureties + Receivables purchase 11
Daycred Payroll: INSS and Army continue to drive growth Total Loan Portfolio (*) - R$ Million Total Loan Portfolio 2Q10 R$ 1,383 MM- % 957 1,052 44.5% 1,126 1,238 11.7 % 1,383 9.0% 5.9% 2.8% 0.6% INSS 13.4% 37.1% Army State Government Law Courts and Legislative Bodies Municipalities 3Q09 4Q09 1Q10 2Q10 3Q10 (*) Includes credit assignments in all of the quarters (R$ 30.6 million in 3Q10) 31.2% Other Private Total Origination R$ Million Total Origination 3Q10 R$ 416 MM - % 416 301 203 215 158 3Q09 4Q90 1Q10 2Q10 3Q10 2.8%0.9% INSS 9.8% 10.4% 43.4% 32.7% Army State Government Law Courts and Legislative Bodies Municipalities Private + Other 12
Daycred Auto Loans: reverse contraction in this portfolio Total Loan Portfolio (*) R$ Million Total Origination - R$ Million -29.0 % 706 637 575-4.4 % 524 501 18 26 28 37 59 3Q09 4Q09 1Q10 2Q10 3Q10 (*) Includes credit assignments in all of the quarters (R$ 30.3 million in 3Q10) 3Q09 4Q09 1Q10 2Q10 3Q10 Liquidity of Auto Loans Portfolio 3Q10 R$ Million Liquidity Receiving Paid Past due more than 90 days Ratio Loan Portfolio 1,226 1,101 125 10.1% Old Loan 1,149 1,030 119 10.4% New Loan 64 61 3 4.5% 13
Direct Credit to Consumers (DCC): product that complements the Bank s operations for individuals Direct Credit to Consumers Financing of goods and services through partnerships with a number of retailers, such as home furnishings, appliances, etc Payment guaranteed by pre-dated checks at rates and terms that are competitive with the market Partnerships with many shops, seeking to increase sales, offering the end consumer greater purchasing facilities Total Loan Portfolio - R$ Million 64.2% 21.5 24.0 25.3 27.1 30.3% 35.3 3Q09 4Q09 1Q10 2Q10 3Q10 14
Asset Management: strong growth Daycoval Asset Management Created in 2004 for the Bank s clients who were seeking sophisticated products customized for their own profile, the system is supported by a specialized team of staff members with deep understanding of the market. Currently with total equity of approximately R$ 964 million and has been launching new funds and differentiated products, such as portfolio management. Assets Under Management R$ MM 964 643 241 238 36 91 138 2004 2005 2006 2007 2008 2009 9M10 15
Quality of Loan Portfolio (*) : significant decrease in ratio of LLP to total credit portfolio, down 4.2 p.p year over year Total Provisions 3Q10 Risk Level 3Q10 Total Loan Portfolio (excludes FIDCs) 3Q10 Portfolio R$ MM % Provision R$ MM Total Provision / Loan 4.4% Middle Market 3,327.4 65.5% 95.3 2.9% Payroll 1,352.4 26.7% 28.6 2.1% Auto Loans 297.8 5.9% 33.9 11.4% DCC Retailers 35.3 0.7% 2.1 5.9% Subtotal 5,012.9 98.8% 159.9 3.2% Credit Assignments 60.9 1.2% 0.5 0.8% Total 5,073.8 100.0% 160.4 3.2% 95.6% AA-C D-H Total Provision / Loan Portfolio 3Q10 7.4% 5.4% 4.5% 3.4% 3.2% 3Q09 4Q09 1Q10 2Q10 3Q10 (*) Unconsolidated: excludes FIDCs, Credit assignments and Avals and Sureties and Receivables purchase 16
Quality of Loan Portfolio (*) Establishment of Provision - R$ MM 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10 Middle Market + Trade Finance 36.8 (4.1) 17.2 12.2 37.1 116.5 66.5 Payroll 6.0 8.5 7.1 7.5 8.6 20.1 23.2 Auto Loans 24.9 12.0 12.8 9.1 5.8 84.6 27.6 Direct Credit to Consumers 0.5 0.6 0.7 0.7 0.6 1.4 2.1 Total 68.2 17.0 37.8 29.5 52.1 222.6 119.4 Balance and Establishment of Provision - R$ Million 258 258 203 176 153 160 223 160 68 17 38 30 52 119 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10 Balance of Provision Establishment of Provision (*) Unconsolidated: excludes FIDCs, Credit assignments and Avals and Sureties and Receivables purchase 17
Quality of Loan Portfolio (*) : past-due loans continue decreasing, demonstrating the improvement of quality loan LLP / Past due operations > 14 days - % 132% 196 168% 184% 91 87 Past due operations > 14 days - R$MM 3Q09 3 T 0 2Q10 3Q10 Past due > 14 days / Loan (%) Middle Market + Trade Finance 148.9 57.8 58.5 1.8 Payroll 9.5 9.3 8.7 0.6 Auto Loans 36.8 22.4 17.9 6.0 DCC 1.0 1.7 1.9 5.4 3Q09 2Q10 3Q10 Past due Operations LLP / Past Due operations LLP / Past due operations > 60 days - % 166% 155 255% 310% 60 52 3Q09 2Q10 3Q10 Past due operations LLP / Past due operations Total 196.2 91.2 87.0 1.7 Past due operations > 60 days - R$MM 3Q09 3 T 0 2Q10 3Q10 Past due > 60 days /Loan (%) Middle Market + Trade Finance 123.1 38.3 33.1 1.0 Payroll 6.2 6.6 6.1 0.5 Auto Loans 25.3 14.0 10.9 3.7 DCC 0.6 1.3 1.5 4.2 Total 155.2 60.2 51.6 1.0 (*) Unconsolidated: excludes FIDCs, Credit assignments and Avals and Sureties and Receivables purchase 18
Quality of Loan Portfolio (*) : recover debts obtained R$ 6.8 million during this quarter Loan D-H - R$ MM 3 3Q09 2Q10 3Q10 (%) T Middle Market + Trade Finance 220.5 126.2 133.1 4.0 Payroll 25.3 28.8 31.9 2.4 Auto 119.1 68.6 54.6 18.3 DCC 1.7 2.6 2.7 7.6 Total 366.6 226.2 222.3 4.4% Loan D-H / Total Loan Portfolio (%) 11.0% 5.1% Write-offs - R$ MM 3Q09 2Q10 3Q10 (%) Middle Market + Trade Finance (29.8) (26.1) (23.9) 0.7 Retail (29.6) (25.7) (21.6) 1.3 Total (59.4) (51.8) (45.5) 0.9 Write-offs / Total Loan Portfolio (%) 1.8 1.2 Recovered Loans - R$ MM 3Q09 2Q10 3Q10 (%) Total 12.6 13.0 6.8 0.1 (*) Unconsolidated: excludes FIDCs, Credit assignments and Avals and Sureties and Receivables purchase 19
Efficiency Ratio: Decrease of 3,7 p.p in this quarter, demonstrating adequate management of operating costs 3Q10 2Q10 Chg. % 3Q09 Chg. % 9M10 9M09 Chg. % Personnel Expenses (22.7) (21.8) 4.1% (15.5) 46.5% (66.0) (46.2) 42.9% Other Administrative Expenses (23.0) (18.3) 25.7% (15.7) 46.5% (58.7) (49.5) 18.6% Subtotal (45.7) (40.1) 14.0% (31.2) 46.5% (124.7) (95.7) 30.3% Payroll (4.2) (3.6) 16.7% (6.1) -31.1% (12.7) (18.6) -31.7% Auto Loan (2.3) (2.5) -8.0% (4.5) -48.9% (7.6) (14.8) -48.6% DCC (0.6) (0.4) 50.0% (0.4) 50.0% (1.2) (0.9) 33.3% Comission Expenses (total) (1) (7.1) (6.5) 9.2% (11.0) -35.5% (21.5) (34.3) -37.3% Total (52.8) (46.6) 13.3% (42.2) 25.1% (146.2) (130.0) 12.5% Efficiency Ratio (%) 20.4 24.1-3,7 p.p 23.2-2,8 p.p 23.5 22.7 0,8 p.p Efficiency Ratio (considering Profit Sharing) (%) 23.3 27.1-3,8 p.p 24.7-1,4 p.p 26.7 24.1 2,6 p.p Efficiency Ratio - % 25.8 24.2 23.2 24.1 23.3 20.4 22.7 23.5 3Q09 2Q10 3Q10 9M09 9M10 Quartely Last 12 months 20
Capital Structure: leverage remains low despite fall in Basel ratio Shareholders Equity R$ Million Basel Index - % 1,646.3 1,692.7 1,723.6 1,668.0 1,735.6 29.3 28.6 27.2 22.3 21.2 3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 Loan Portfolio (*) / Shareholders Equity - times 2.0 2.1 2.2 2.6 2.9 3Q09 4Q09 1Q10 2Q10 3Q10 (*) Unconsolidated: excludes FIDCs, Credit assignments and Avals and Sureties and Receivables purchase 21
Net Income: R$ 85 million in 3Q10, significant growth of 32.4% over the previous quarter 203.8 128.6 42.0 82.5 54.6 64.2 85.0 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10 22
Profitability: ROAE at 21.4%, rising 5.4 pp compared to the previous quarter Return on Average Equity (ROAE) - % Return on Average Assets (ROAA) - % 10.7 21.4 13.6 16.0 21.4 10.6 16.3 2.8 5.3 3.3 3.2 3.8 2.7 3.4 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10 Net Interest Margin (NIM-A) (1) - % Net Interest Margin (NIM) - % 12.4 13.9 11.3 11.7 14.8 13.0 12.0 12.2 13.0 10.6 10.1 12.2 12.2 10.7 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10 (1) New methodology excluding repurchase agreements tri-party repos outstanding. 3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10 23
24 3Q10 Highlights Net Income of R$ 85 million in 3Q10, significant growth of 32.4% over the previous quarter Return on Average Equity (ROAE) at 21.4%, rising 5.4 pp compared to the previous quarter Net Adjusted Financial Margin (NIM-A) (1) up to 14.8% in 3Q10, increasing 3.1 pp over the previous quarter Credit Portfolio (2) increasing 14.5% to a balance of R$ 5,546.2 million in the past three months, representing 46.7% growth over the past 12 months Middle Market rising 18.7% compared to the previous quarter, thereby further increasing its share of the mix, reaching 65.4% of the total credit portfolio Efficiency Ratio remaining at an appropriate level, at 20.4%, demonstrating adequate management of operating costs Basel Ratio at 21.2%, a 1.1 pp reduction during the quarter, remaining at a high level (1) New methodology excluding repurchase agreements tri-party repos outstanding (2) Includes assignments, sureties and avals granted and Receivables purchase
3Q10 Results Conference Call Investor Relations Phone: +55 (11) 3138.1024/1025/1039 ri@daycoval.com.br This report may include estimates and forward-looking statements. These estimates and forward-looking statements are to a large extent based on current expectations and projections about future events and financial trends that affect or may come to affect our business. Many important factors may adversely affect the results of Banco Daycoval as described in our estimates and forward-looking statements. These factors include, but are not limited to, the following: the Brazilian and international economic conjunctures, fiscal, foreign-exchange and monetary policies, higher competition in the middle-market segment, the ability of Banco Daycoval to obtain funding for its operations, and amendments to Central Bank regulations. The words believe, may, could, seek, estimate, continued, anticipate, plan, expect and other similar words have the objective of identifying estimates and projections. The considerations involving estimates and forward-looking statements include information related to results and projections, strategies, competitive positioning, the environment in the industry, growth opportunities, the effects of future regulations, and the impacts from competitors. Said estimates and projections refer only to the date on which they were expressed, and we do not assume any obligation to publicly update or revise any of these estimates arising from the occurrence of new information, future events, or any other factors. In view of the risks and uncertainties described above, the estimates and forward-looking statements contained herein may not materialize. Given these limitations, shareholders and investors should not make any decisions based on the estimates, projections and forward-looking statements contained in this report. 25