earnings presentation - bancobv.com.brthe 1q13 results once again confirmed concrete advances in the...

Earnings Presentation

1st Quarter, 2013

1

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 31st, 2013. 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.”

2

The successful implementation of the Change Agenda

indicates a 2013 with substantially better results

Executive summary – Message from the CEO

The 1Q13 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 1Q13, strengthened its position as the market leader in used vehicles

• Consistent drop in delinquency¹. Consolidated NPL 90¹ decreased to 6.2% in Mar/13, vs. 6.6% in Dec/12

• New reduction in credit provision expenses. Consolidated credit provision expenses reduced 6.5% (or R$ 62M) vs.

4Q12 – 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 1Q13, 14.0% growth over 4Q12

The 1Q13 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 (1Q13: R$-278M, 4Q12: R$-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 1Q13

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

3

Banco Votorantim overview

Results and recent Change Agenda advances

Appendix – financial highlights

4

Banco Votorantim is one of the leading players in Brazil...

Banco Votorantim is one of the largest

privately-held Brazilian banks in total assets...

...and is well-positioned to consolidate itself

as one of the largest banks in Brazil

Banco Votorantim – Overview

...and also in terms of loan portfolio...

6188

112

121127

458

703

755

951

Citibank BTG Pactual

Safra Votorantim

HSBC Santander

CEF

Bradesco Itaú Unibanco

Banco do Brasil 1,087

State-owned

Foreign

National privately-held

22

23

42

47

57185

260

312

354

491

Volkswagen

Banrisul

Safra

HSBC Votorantim²

Santander

Bradesco

Itaú Unibanco

CEF

Banco do Brasil

Foreign

State-owned

National privately-held

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

Diversified business portfolio

• Wholesale Banking

– “Top 5” in credit for large enterprises

• Consumer Finance

– Among the leaders in auto finance

– 7th largest player in payroll loans³

– ~ 4.9 million customers

• Wealth Management

– 9th 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)

+

Shareholder

50% total

Largest Financial Institutions in Dec/12 - Assets (R$B)¹

Largest Financial Institutions in Dec/12 – Loan Portfolio (R$B)¹

5

...and has a diversified business portfolio, internally

divided into Wholesale and Consumer Finance

Banco Votorantim – Corporate strategy

Shareholders

Pillars

1. Financial Institutions; 2. Includes guarantees provided and private securities, besides on balance loan portfolio according to Bacen‟s Res. 2,682

Cons. Finance Wholesale

Auto

Finance

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)

Other

Businesses

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)

Corporate &

IB (CIB)

Wealth

Management

Middle

Market

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

Banco do Brasil Votorantim Group

9th 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

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

+

R$37.7B R$39.3B

R$76.9B

X Expanded² credit portfolio

Off balance assets

R$7.7B

R$1.7B

Assigned to FI¹

Assigned to FIDC

6

Shared governance between the shareholders Board of Directors‟ Chairman position is annually alternated between the shareholders

• 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”

• Gestão profissional com executivos experientes

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

Name Position

João Roberto Gonçalves Teixeira CEO

Alvaro Jorge Fontes de Azevedo Executive Director

Elcio Jorge dos Santos Executive Director

Marcos Lima Monteiro Executive Director

Pedro Paulo Mollo Neto Executive Director

Ricardo Ramos de Arruda Executive Director

Robert John van Djik Executive Director

Governance structure

Banco Votorantim – Corporate governance

Board of Directors

Executive Committee

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

Board of

Directors

Operating Committees

Executive

Committee

Fiscal Council

Audit

Committee

Compensation

& HR

Committee

Statutory

Products &

Marketing

Committee

Finance

Committee

Equal

Representation of

each shareholder

MLP¹

Communication

Expenses (CAAD)

Internal Controls

Ombudsman

Projects

Technology Sustainability

Products

ALM, Risks & Capital

Businesses

Human Resources

Credit

Investment Bank (IB)

Tax

7




8

1. Ratio between ALL balance and balance of operations past due by over 90 days

The 1Q13 results confirm, once again, the consistent

progress made in the Change Agenda

Progress in the Change Agenda

Progress made in the Change Agenda during 1Q13 – highlights

Agenda

Progress

Delinquency

reduction

NPL 90 for light vehicles decreased to 7.2% in Mar/13 (7.7% in Dec/12)

• Driven by the increased participation in the portfolio of better quality vintages (after Sept/11)

Consolidated NPL 90 decreased to 6.2% in Mar/13 (6.6% in Dec/12)

Cost base

reduction

Non-interest expenses showed a 14.4% reduction in the 1Q13 QoQ

• R$857M in 1Q13 vs. R$1,001M in 4Q12 – R$144 million reduction

• Reflects the initiatives for greater operating efficiency

Credit provision

reduction

Allowance for loan losses expenses (ALL) reduced 6.5% in 1Q13 QoQ...

• R$889M in 1Q13 vs. R$951M in 4Q12 – fourth consecutive quarterly reduction

...simultaneously to the increase in the Coverage Ratio¹ (Mar/13: 106%; Mar/12: 84%)

2

3

4

Origination

with quality 1

Maintenance of solid quality in auto finance origination

• Vintages from last 15+ months registered low “Inad 30” (1st installment delinquency)

Increased origination in 1Q13, strengthening leadership position in used vehicles

The progress in the Change Agenda creates the conditions for

the Bank to resume profitable growth in a sustainable way

9

Production Banco Votorantim has been originating auto finance

portfolios with solid quality for more than 15 months

Change Agenda – Consumer Finance production

Mar/13

1.0

Dec/12

1.1

June/12 Dec/11

1.0

June/11 Dec/10

2.1

June/10 Dec/09

1.5

June/09

1.1

Light vehicles1 – Origination by channel (R$B) and first installment delinquency2 (%)

Vintages indicating lower quality

64% 71% Multi-brand dealers/

Total production

1st installment delinquency ("Inad 30")

Multi-brand dealers (R$B)

New car dealers (R$B)

Record quality

vintages

80% 78%

In 1Q13, 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

10

Mar/13

24.4

Dec/12

23.5

Sept/12

24.1

June/12

24.5

Mar/12

26.8

Dec/10

24.6

Quality of vintages originated after Sept/11 is partly due

to greater conservatism towards credit concession

NPL 90 by vintage, 4 months after

concession – Auto finance (%) Auto production average interest rate (%p.y.)

Auto production – tenor and down payment Auto finance origination – by payment option

1. Data published semiannually in Bacen‟s Financial Stability Report (“Relatório de Estabilidade Financeira”) Source: BVF, Bacen

84%100% 100% 100% 100% 100%

16%

1Q13 4Q12 3Q12 2Q12 1Q12 4Q10

Other options 60 month, no down payment

32%41% 41% 42% 44%44%

444444464652

1Q13 4Q12 3Q12 2Q12 1Q12 4Q10

Average tenor (months) Down payment%

0.5 Month of

concession D

12

S

12

J

12

M

12

D

11

0.6

J

11

2.7

D

10

J

10

D

09

0.6

Market¹

BV Financeira

Consumer Finance – Production quality

Production

Banco Votorantim also has been continuously improving

its credit policies, processes and models

11

Delinquency Increased participation of better quality auto finance

vintages has contributed to delinquency reduction

Vintages with better quality (after Sept/11)

reached 44% of the portfolio...

26% 22% 19% 15% 13%

59%57%

52%

47%43%

15%21%

29%38%

44%

100%

Until

June/10

July/10 to

Sept/11

After

Sept/11

Mar/13 Dec/12 Sept/12 June/12 Mar/12

...contributing to consistently

reduce delinquency

Managed auto finance portfolio¹ by vintage (%)

Mar/13

6.2%

7.2%

Dec/12

6.6%

7.7%

Sept/12

7.4%

9.1%

June/12

7.5%

9.5%

Mar/12

7.0%

8.9%

NPL 90 – managed loan portfolio (%)

Total

Light vehicles

Change Agenda – Delinquency

Total delinquency decreased to 6.2% in Mar/13, 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

12

ALL

ALL expenses dropped 6.5% in 1Q13 vs. 4Q12 Even with reduced provisions, there was a new increase in the consolidated Coverage Ratio

Credit provision expenses reduced

for the fourth consecutive quarter

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

Consolidated Coverage Ratio reached

106% in Mar/13, vs. 84% in Mar/12

770 733

125121

119

181156

4Q12

951

1,167

3Q12 2Q12

1,398

1,286

-6.5%

Consumer

Finance

Wholesale

1Q13

889

1,277

1Q12

1,456

1,331

∆ 1Q13/

4Q12

-5%

-14%

Allowance for loan losses expenses – ALL (R$M) Managed loan portfolio‟s Coverage Ratio¹ (%)

93.3%

93.1%

84.1%

June/12 Dec/12

87.4%

78.3%

Mar/12

99.9%

84.1%

75.4%

90.2%

Sept/12

106.4%

Mar/13

Total

Consumer Finance

Change Agenda – ALL and Coverage

13

Expenses

Non-interest expenses (R$M)

The Bank has also advanced in cost reduction Non-interest expenses decreased 14% in 1Q13 vs. 4Q12, especially Administrative and Personnel

362443

367

235

279

228

122

250

212

Administrative

Personnel

Contingencies²

Others¹

1Q13

857

4Q12

1,001

1Q12

742

Important initiatives were adopted regarding

cost reduction and efficiency gains...

...and resulted in -14% non-interest expenses

in 1Q13 vs. 4Q12, despite contingencies

• Adequacy of organizational structures to the new

level of origination in Consumer Finance

• 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)

• Implementation of a new compensation policy

• 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

∆ 1Q13/

1Q12

15%

75%

-3%

2%

∆ 1Q13/

4Q12

-14%

-15%

-18%

-17%

Examples of initiatives for cost reduction

Change Agenda – Non-interest expenses

Increasing operating efficiency is one of Banco

Votorantim’s main focuses for 2013

1. Other operating and other tax (Federal, state and local taxes (excludes ISS, PIS and Cofins)); 2. Expenses with provisions for civil and labor contingencies

14

...despite 4% decrease in the expanded credit

portfolio in the period

Change Agenda advances were accompanied by the good

performance of businesses in 1Q13

Consolidated results

229 255

1,123

+1%

Net Interest

Income (NII)

Fees and others

1Q12 1Q13

1,378 1,365

1,136

-4%

Wholesale

Consumer

Finance

Mar/13

37.7

Mar/12

76.9

39.3

79.9

41.5

38.5

13.6 7.7 Financial Institutions²

4.3 1.7 FIDC³

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

Total revenues slightly increased

in 1Q13 vs. 1Q12...

Off balance

portfolio

Total revenues (R$M) Expanded¹ credit portfolio (R$B)

15

Managed loan portfolio Operating strategy

Consumer Finance: the Bank maintained its focus on used

vehicles and INSS payroll loans (retirees and pensioners)

Consumer Finance – Auto finance and payroll loans

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

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

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

Au

to f

ina

nc

e

Pa

yro

ll l

oa

ns

Payroll loan operations focused on INSS (retirees and

pensioners)

• Presents better risk profile

• Represents ~64% of the managed payroll loan portfolio

Selective position towards both private and public sectors

• Focus on partnerships with attractive profitability

Greater focus on refinancing contracts

On balance

Off balance¹

Mar/13

37.2

29.9

7.3

Mar/12

45,6

31.4

14.2

Mar/11

43.5

33.0

10.5

Managed auto finance loan portfolio (R$B)

Managed payroll loan portfolio (R$B)

Used/

Total² 70% 67% 70%

INSS/

Total³ 64% 60% 56%

On balance

Off balance¹

Mar/13

9.5

7.4

2.1

Mar/12

10.5

6.7

3.8

Mar/11

9.5

5.2

4.3

Stable

vs. Dec/12

16

29.9

39.3

Mar/13

Middle

Market

CIB

-5.4%

9.4

Mar/12

41.5

32.4

9.1

Mar/11

38.5

31.8

6.8

Contraction of expanded credit portfolio reflects

greater discipline towards capital allocation CIB – Operating strategy

1. Includes guarantees provided and private securities; 2. Ratio between ALL balance and balance of operations past due over 90 days

Wholesale – CIB and Middle Market

Expanded¹ Wholesale credit portfolio (R$B)

Middle Market – Operating strategy

Wholesale: CIB and Middle Market kept focus on

profitability and conservatism towards credit provisions

∆ Mar13/

Mar12

+3.1%

-7.7%

Coverage Ratio² 204%

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

1Q13 highlights:

• ECM: Leading Coordinator of Senior Solution‟s IPO

• Fixed income: 5 concluded operations (~R$2.2B)

Focus on clients with revenues between R$50M and

R$600M/year

Disciplined capital allocation

Conservatism towards credit provisions 217%

Focus on exploring opportunities related to infrastructure

investments and the growth of capital markets

17

Private Bank – Operating strategy

VAM is the 9th largest asset manager according

to Anbima’s managers’ ranking Asset Management – Operating strategy

Wholesale – Wealth Management

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”

Focus on integrated estate planning, via customized and

differentiated solutions

ISO 9001:08 Certificate regarding Relationship, Wealth

Management and Advisory activities

VWM&S reached R$41.1B in assets under management Partnership with BB was enhanced and consistent performance was recognized

+15.1%

Mar/13

41.1

Mar/12

44.6

Mar/11

35.7

VWM&S assets under management² (R$B)

10º Anbima¹

ranking 9º

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

18

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

Offices

VGV: R$130M

Rio de Janeiro/RJ Rio de Janeiro/RJ

Offices

VGV: R$250M

Osasco/SP

Development:

Lindencorp / EZTec

Launch: Oct/12

VGV: R$1.5B

São Paulo/SP

Development:

Tecnisa / PDG

1st phase: Mar/13

VGV: R$804M

Commercial

Shopping

Malls

Residential

Logistics

Class A properties in major

urban centers

Average and above average

income public

Class A logistics warehouses, in

sites with logistical potential

Shopping malls and power

centers focused on cities less

served by the sector

Commercial highlights

Residential highlights

Other businesses – BVEP

BVEP focuses on originating, structuring and

managing real estate investments

Note: BVEP is a real estate investment company controlled by Banco Votorantim

19

1Q13 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) Allowance for loan losses expenses – ALL

Non-interest expenses (Personnel, Administrative, Operating and Other tax¹) Net income and Net financial margin

R$ million

770 733

-6.5%

Consumer

Finance

Wholesale

1Q13

889 156

4Q12

951 181

3Q12

1,286

1,167

119

2Q12

1,398

1,277

121

1Q12

1,456

1,331

125

-278-358

-497-536-596

234205

-299-320

1Q13 4Q12 3Q12

-166

2Q12 1Q12

1Q13

1,378

4Q12

1,563

3Q12

1,403

2Q12

1,354

1Q12

1,365

362 372 395 443 367

235 244 221279

228

139 183250

212

-14.4%

Administrative

Personnel

Contingencies²

Others

1Q13

857

4Q12

1,001

3Q12

829

2Q12

773

1T12

742

122

Net financial margin (R$M) Net income (R$M)

1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies


Successful implementation of the Change Agenda

indicates that the results in 2013 will be substantially better

20

quarterly average

(R$B)

2010

6.5

1Q13

3.3

2012

2.9

2011

5.3

8098

182

151

1Q13 2012 2011 2010

889877

263

1Q13 2012

1,273

2011 2010

...but were still impacted by three main factors Expenses with ALL, early settlement of assigned portfolios and contingencies

ALL expenses Expenses with early settlements

Delinquency and Coverage Off balance credit assignments4 Auto finance origination

2

Expenses with contingencies³

3

80% 100% 106%73%

Mar/13

6.2%

Dec/12

6.6%

Dec/11

5.8%

Dec/10

2.6%

Total NPL 90²

Consolidated Cov. Ratio¹

1. 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)

212

174

78

19

1Q13 2012 2011 2010

Mar/13

9.4

7.7

1.7

Dec/12

11.4

9.1

2.4

Dec/11

20.5

15.4

5.2

Dec/10

13.5

11.1

2.4

to FI to FIDC (R$B)


1

quarterly average

(R$B)

quarterly average

(R$B)

quarterly average

(R$B) Despite reduction,

still high ALL

New origination levels

demanded the adaptation of

organizational structures

21

9.0%

Mar/12

13.0%

8.7% Tier I

13.6%

Mar/13

Liquidity

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

In this context, the Bank kept its conservatism towards the

management of Liquidity, Provisions, Funding and Capital

Credit risk quality

Funding Capital

Basel Ratio Total Funding (R$B)

• 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

• 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)

• Basel Ratio of 13.6% in Mar/13

• Shareholders increased the Bank‟s

capital by R$2 billion in June/12...

• ...and keep committed to maintain

an adequate capital structure

– As set out in the Shareholders‟

Agreement

8%

Time

Deposits

25%

12%

82.5

17%

Mar/13

25%

32%

24%

Mar/12

86.7

12%

27%

7%

11%

Debentures4

Financing

Bills3

Private

Securities

Securit.²

Others¹

Min. 11%

Coverage Ratio

Mar/13

106.4%

Mar/12

84.1%

ALL balance / NPL 90 balance

22




23

Financial highlights

Total revenues (Net Interest Income, Fee Income and Other Operating Income) Allowance for loan losses expenses – ALL


Non-interest expenses (Personnel, Administrative, Operating and Other Tax¹) Net income and Net financial margin

R$ million

770 733

-38.9% -6.5%

Consumer

Finance

Wholesale

1Q13

889 156

4Q12

951 181

3Q12

1,286

1,167

119

2Q12

1,398

1,277

121

1Q12

1,456

1,331

125

-278-358

-497-536-596

234205

-299-320

1Q13 4Q12 3Q12

-166

2Q12 1Q12

+0.9% -11.8%

1Q13

1,378

4Q12

1,563

3Q12

1,403

2Q12

1,354

1Q12

1,365

362 372 395 443

235 244 221279

228

250

212

367

183139

+15.5% -14.4%

Administrative

Personnel

Contingencies²

Others

1Q13

857 50

4Q12

1,001 30

3Q12

829 30

2Q12

773 18

1Q12

742

122 23

Net financial margin Net Income (R$M)

1. Federal, state and local taxes (excludes ISS, PIS and Cofins); 2. Expenses with provisions for civil and labor contingencies

24


Efficiency ratio (%)


1Q13

4.2

4Q12 2Q12 3Q12

4.2 4.4 4.4 4.3

1Q12

Net Interest Margin¹ – NIM (% p.y.)

1Q13 4Q12 3Q12 1Q12 2Q12

50.7 54.4

44.2

51.2

45.8 44.3

50.3 48.6

49.9

51.8

49.6

44.3

47.2

40.6

43.5

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 1Q13, when it started to consider Equity in Income from Subsidiaries in the

denominator; this change was reflected in the graph‟s history

Quarterly

NIM =

Net Interest Income

Average Interest Earning Assets (Interbank Funds Applied,

Securities, Loan Portfolio and Bacen‟s Compulsory Reserves)

12 months 12 months (excluding contingencies)

25

Mar/13

41.1

Dec/12

47.3

Sept/12

45.6

June/12

43.2

Mar/12

44.6

Expanded¹ managed² credit portfolio

Total assets Assets under management

On balance loan portfolio

Mar/13

119.7

Dec/12

121.0

Sept/12

111.6

June/12

113.6

Mar/12

112.8

1. Includes guarantees provided and private securities; 2. Includes credits assigned with substantial risk retention until Dec/11 (before Res. 3,533)

Financial highlights Off balance credit assignments with risk retention tend to zero because of Bacen‟s Res. 3,533

-4.2%

Expanded

credit portfolio¹

Off balance

securitization²

Mar/13

86.3

76.9

9.4

Dec/12

90.1

78.6

11.4

Sept/12

92.6

79.2

13.4

June/12

95.7

80.3

15.4

Mar/12

97.6

79.6

18.0

-0.7%

Mar/13

56.5

Dec/12

57.0

Sept/12

58.1

June/12

58.8

Mar/12

58.8


R$ billion

26

Credit portfolio by segment

Expanded credit portfolio (Includes guarantees provided and private securities)

Expanded managed² credit portfolio (Expanded credit portfolio plus off balance securitization)

R$ billion

6.7

-2.3%

Corporate

Middle

Market

Auto

Finance

Others¹

Mar/13

76.9

29.9

9.4

29.9

7.7

Dec/12

78.6

31.8

9.5

29.9

7.4

Sept/12

79.2

32.2

9.5

30.3

7.2

June/12

80.3

32.7

9.6

30.9

7.0

Mar/12

79.6

32.4

9.1

31.4

86.3

29.9

37.2

-4.2%

9.4

Mar/13

31.8

9.5

Dec/12

90.1

40.8

10.1

June/12

95.7

32.7

9.6

43.0

10.4

Mar/12

97.6

32.4

9.1

45.6

10.5

9.5

38.8

Sept/12

9.9 9.8

92.6

32.2

-0.9%

-4.2%

-1.6%

-6.0%

∆Mar13

/Dec12

3.9%

-

-1.6%

-6.0%

∆Mar13

/Dec12

7.7 13.6 FI³ 9.1


1.7 4.3 FIDC 2.4

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

Off balance

securitization

27

Mar/13

6.5%

4,313

Dec/12

6.6%

4,518

Sept/12

6.9%

4,914

June/12

6.9%

4,842

Mar/12

5.9%

4,535

Mar/13

106.4%

Dec/12

99.9%

Sept/12

93.1%

June/12

87.4%

Mar/12

84.1%

ALL balance² (R$M) Coverage ratio³ (%)

NPL 90/

Managed loan portfolio¹ (%)

NPL 60/

Managed loan portfolio (%)

ALL balance/Managed loan portfolio¹ ALL balance (R$M)

Credit Indicators Improvement in asset quality and coverage indicators


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 by over 90 days

Mar/13

2.3%

6.2%

7.7%

Dec/12

2.4%

6.6%

8.3%

Sept/12

2.4%

7.4%

9.4%

June/12

2.0%

7.5%

9.6%

Mar/12

1.8%

7.0%

8.9%

Wholesale Total Cons. Finance

Mar/13

7.7%

8.0%

Dec/12

8.2%

8.6%

Sept/12

8.8%

9.4%

June/12

9.2%

10.2%

Mar/12

8.8%

10.2%

On balance Managed¹

28

Write-off (R$M) Write-off recovery (R$M)

Credit indicators


650

5.7%

3.4%

1Q12

1,027

1,341

6.9%

2Q12

1,205

3Q12

1,061

6.6%

4Q12

8.1%

1Q13

Write-off / Managed loan portfolio¹ (% p.y.)

Write-off (net of Recovery) (R$M)

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

46 49

69

89 88

0.2%

1Q12 4Q12

0.5% 0.5%

3Q12

0.4%

1Q13 2Q12

0.3%

Recovery / Managed loan portfolio² (% p.y.)

Recovery

29

Funding Sources Increased participation of long-term funding instruments (e.g. Financing Bills, Securitization)

9.7

82.5

11.7

12.5

20.3

Deposits

Financing Bills

Loans and Onlendings

On balance securitization²

Others¹

+2.1%

Issuances

Debentures3

Mar/13

Subordinated Debt

6.7

10.9

9.7

Dec/12

80.7

20.2

15.5

11.0

10.2

7.0

11.9

3.5

Sept/12

79.0

19.8

18.4

9.8

10.2

8.0

10.3

0.9

June/12

81.1

16.2

23.0

10.1

11.0

7.8

11.3

0.1

Mar/12

86.7

20.7

25.6

8.4

10.9

7.5

10.7 0.1

1. 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

Funding evolution (R$B)

∆Mar13

/Dec12


-8.4%

-5.3%

-4.2%

-19.2%

0.8%

6.7%

175.4%

19.9 Off balance4

securitization

(R$B) 10.8 12.8

30

Basel Ratio and Capital

9.3%

5.0%

Sept/12

15.2%

9.9%

5.3%

June/12

15.5%

10.2%

5.3%

Mar/12

13.0%

8.7%

4.4%

Tier I

Tier II

Mar/13

13.6%

9.0%

4.6%

Dec/12

14.3%

Basel ratio

Shareholders‟

Equity

Mar/13

11,430

7,671

Dec/12

12,111

8,210

Sept/12

13,002

8,829

June/12

13,624

9,304

Mar/12

11,282

7,349

Capital (R$M)


Additionally, Banco Votorantim has a stand-by credit

facility of ~R$7B from BB, which has never been tapped

31

Banco Votorantim’s main ratings

Ratings

Banco Votorantim is an Investment Grade bank by Fitch, Moody’s and S&P

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

32

Conciliation between 1Q13 Managerial and Accounting results

Managerial x Accounting results

Net Interest Income 1.263 (25) (90) (25) 1.123

Allow ance for Loan Losses (1.004) - 90 25 (889)

Net Financial Margin 259 (25) - - 234

Other Operating Income/Expenses (682) 12 - - (669)

Fee Income 239 - - - 239

Personnel and Administrative Expenses (595) - - - (595)

Tax Expenses (126) 2 - - (124)

Equity in Income of Subsidiaries 24 - - - 24

Other Operating Income/Expenses (224) 11 - - (213)

Operating Income (423) (12) - - (435)

Non-operating Income (18) - - - (18)

Income before Taxation and Profit Sharing (441) (12) - - (453)

Provision for Income Tax and Social Contribution 205 12 - - 217

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 f iscal 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.

INCOME STATEMENT SUMMARY

(R$ Million)

Accounting

1Q13Hedge¹

Write-off

Recovery²

Managerial

1Q13

ALL Credit

Assignments³

earnings presentation - bancobv.com.brthe 1q13 results once again confirmed concrete advances in the...

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