institutional presentation - banco...
TRANSCRIPT
InstitutionalPresentation1Q19
Agenda
2
History
Corporate Governance
Products
Funding
Ratings
History
3
FoundationPayroll Loan
BMG Card
• Beginning of the payroll credit card business
• Pioneer and benchmark in payroll loan in Brazil
PayrollLoan
Acquisitions
• Acquisition of 100% of Banco GE and Banco BCV
• Creation of Joint Venture with Itaúdedicated to Payroll Loans
JV with Itaú
Payroll Credit Card
Exclusive Margin
• Exclusive margin to operate payrollcredit cardin INSS
Help /Insurance
• Launch of the franchise network “help!”
Digital Payments
1930 90s-00s 20112005 20152012 20182016
• TheGuimarãesFamily creates the Banco de Minas Gerais, focused on individual and corporate credit
• Partnership with Generali
• Launch of the Full Digital Bank
• Acquisition of Granito -acquiring company
• Sale of BMG participation in the JV to Itaú
Corporate Governance
Corporate Structure
Ownership Breakdown Board of Directors
IM: Independent Member
4
Shareholders % ON % PN % Total
Flávio Pentagna Guimarães 0.0% 55.0% 11.0%
BMG Participações S.A 38.6% - 30.9%
Ângela Annes Guimarães 12.9% 9.0% 12.1%
Regina Annes Guimarães 12.9% 9.0% 12.1%
Ricardo Annes Guimarães 12.9% 9.0% 12.1%
João Annes Guimarães 12.9% 9.0% 12.1%
Antônio Mourão Guimarães Neto 4.7% 9.0% 5.6%
Other 5.1% 0.0% 4.7%
Total number of shares (million) 400 100 500
Board of Directors Position
Flavio Pentagna Guimarães Honorary Chairperson
Ana Karina Bortoni Chairperson (IM)
Ângela Guimarães Member
Antônio Mourão Guimarães Neto Member
José Eduardo Dominicale Member
Olga Colpo Member (IM)
Regina Guimarães Member
Ricardo Guimarães Member
Temporarily vacant Member (IM)
Banco Cifra
BMG Leasing
Banco BCV
99.99% 100.00% 100.00%
BMG Bank Cayman
100.00%
CB Intermediações
100.00%
BMG Participações em Negócios
BMG SegurosME
Promotora
BMG Soluções
Eletrônicas
94.50%
CMG Corretora de
Seguros
Cifra Financeira
80.00%
99.99%
99.74% 100.00%99.00%
Help Franchising
99.98%
65.00%
Granito
Corporate Governance
5
Management and control
Audit Committee
Asset and Liability Committee
Transparency and quality of information
Disclosure Committee
Credit analysis
Credit Committee
Definition of policies and actions to prevent
money laundering
Money LaunderingPreventionCommittee
Organizational culture
Remuneration, People and Governance Committee
Initiatives to improve protection, technology
and innovation
Information Security
Committee
Evaluates and addresses market, credit,
operational and liquidity risks and manages
capital
Risk and Capital Management
Committee
3 Monthly 3 Weekly 5 Quarterly 3 Weekly
3 Monthly 5 Quarterly 9 Weekly 3 Weekly
# of permanent members
Main Committees
DeliberativeCommittee
Full DigitalBanking
6
Client-centricityOne-Stop Shop and Client Lifecycle
Tech-enabled
Direct debitLoan
Insurance Investments
Payroll CreditCard
CheckingAccount
Full BiometricProfile
DataAnalytics
ArtificialIntelligence
Omnichannel
3.6 mm Clients
+2.0k Third-party bankcorrespondents
+58 NPS
539Stores
(1) Average in 2018 (considers business days)
InvestorSaver
Consumer &Precautionary
No-choice borrower
Traditional borrower
Partnerships
Customers with different needs impact the channel strategy and define the products
Banco BMG
CreditCard
DudaVirtual
specialist
62%73%
75% 75%
1%
3%
5% 5%
1%
2%
3%4%
18%
15%
13%13%
18%7%
3%3%
8,486 8,633
9,5139,853
2016 2017 2018 1Q19
Payroll Credit Card Direct Debit Loan BMG Money Wholesale Portfolio Run off Total
Credit Portfolio
7
Retail63%
Retail
Retail83%
1 Payroll loan, lendico, home equity and vehicles
1
PAYROLL CREDITCARD
TRADICIONALCARD
Credit bureau No Yes
Annuity / sign-up fee No Yes
Interest rate 3% - 5% p.m. ~11% p.m.
Maximum number of installments
Up to 96 months Up to 12 months
Delinquency (NPL) 3% 35%
Target - retirees, pensioners and public employees1
Endorsement of 5% to 10%2 of salary
Minimum installment directly discounted from
payroll
Important mean of payment
Stable and predictable default rate
Main features
FAVORABLE REGULATORYENVIRONMENT
New Central Bank measures to
reduce bank spread strengthen
payroll credit card
8
1990
Law 8.112:Payroll loan
Law 10.820/03:Payroll loan for CLT employees, Social
Security retirees and pensioners
2003 2005
INSS/DC 121: Payroll credit cardfor Social security
(INSS)
2015
Law 13.172/15 : Exclusive margin of 5% onthe payroll credit card for
Social Security retirees and pensioners and
government employees
2For municipal and states employees, the consignable margin of the card may vary, reaching up to 10%
Payroll Credit Card
Competitive Advantages
ROBUST LEGISLATION
1Market can also operate with private company
3.73.9
4.1 4.2 4.3
1Q18 2Q18 3Q18 4Q18 1Q19
Federal Government
risk1
7,316
6,5206,805
6,9287,120
1Q18 2Q18 3Q18 4Q18 1Q19
Payroll Credit Card
Number of cards
9
Frequency the card is used for purchases2
81.7%
Million
94.5% 94.7% 94.9% 94.7% 94.1%
1Q18 2Q18 3Q18 4Q18 1Q19
Portfolio Quality – E-H
R$ Million
3.7% 3.9%3.3% 3.1% 3.0%
1Q18 2Q18 3Q18 4Q18 1Q19
Portfolio
1Social Security (INSS) + federal government employees2Frequency in which customers used the payroll credit card for purchases in the last 12 months
51% of the origination
comes from clients who receive the INSS benefit
at BMG
38% of the portfolio
comes from clients who receive the INSS benefit
at BMG
Direct Debit Loan
Portfolio
R$ Million / p.m.
10
BMG is payer of Social Security (INSS) benefit
Higher efficiency when collecting installments
Lower default rates
Better credit appraisal
Higher cross-selling potencial
Greater bargaining power on agreements
Direct Debit Loan features
Portfolio Quality
Personal credit with direct debit from the customer checking account aiming financial reintegration;
Maximum term12 months
303 358
400 447
532
21.3% 21.1% 20.9% 20.7% 20.5%
-19,0%
-14,0%
-9,0%
-4,0%
1,0%
6,0%
11,0%
16,0%
21,0%
-
100
200
300
400
500
600
1Q18 2Q18 3Q18 4Q18 1Q19
Portfolio Interest rate
29.8% 28.5% 31.1% 32.9% 30.0%
18.3% 17.1% 17.1%20.3% 19.3%
1Q18 2Q18 3Q18 4Q18 1Q19
E-H portfolio Overdue installments over 90 days
74% of Direct Debit clients have BMG Payroll CreditCard.
158
216266
299
358
48 56 66 7792
0
20
40
60
80
100
120
140
160
180
200
0
50
100
150
200
250
300
350
400
1Q18 2Q18 3Q18 4Q18 1Q19
BMG Money (R$) BMG Money (US$)
Other Portfolios
Credit Portfolio
BMG Money
BMG Money is an independent company that operates inthe United States with focus on payroll loan for the publicsector employees throughout 27 states;
The transaction is reflected in Banco BMG throughparticipation agreements entered into between BMGMoney and BMG Bank (Cayman).
R$ Million
11
Run-off Portfolio
Credit PortfolioR$ Million
Portfolio Quality
5.5% 5.8% 5.6%6.7% 6.8%
1Q18 2Q18 3Q18 4Q18 1Q19
E-H Portfolio
Portfolio Quality
Banco BMG has the following run-off portfolios: payrollloan, Lendico, home equity and vehicle financing;
Represents 3.4% of total portfolio.
566520 479
432333
1Q18 2Q18 3Q18 4Q18 1Q19
12.4% 12.8% 15.1% 15.9%19.2%
2.9% 3.1% 3.6% 3.9% 4.7%
1Q18 2Q18 3Q18 4Q18 1Q19
E-H Portfolio Overdue installments past 90
12
R$ Million
Partnership with Generali
BMG CardCredit InsuranceAverage Ticket: R$ 100
Direct DebitCredit InsuranceAverage Ticket: R$ 92
September 2016, BMG and Generalisigned a 20-year exclusivity agreement for the sale of retail insurance products
in BMG’s distribution network
Mass Insurance
29
4944
48 47
1Q18 2Q18 3Q18 4Q18 1Q19
R$ 6 million in service revenue net of
commission expense in 1Q19;
Profit share (R$ 12 million in 2018);
Earnout after 2021;
Reduction of provision expense.
79% of penetration in the
Direct Debit portfolio
27% of penetration in the Payroll Credit Card
portfolio
Sources of income:
Life InsuranceAverage Ticket: R$ 31
Loss and TheftAverage Ticket: R$ 4
Partnership with high cross-selland up-sell potencial
Portfolio Penetration Issued Premiums Evolution
*Insurance is sold through CMG Corretora - BMG's indirect subsidiary
13
Means of Payment
Acquiring company focused on small business establishments located near help! stores and bank
correspondents
Microregionhelp!
Ecossystem
Bar
Beauty shopLocal shop
Gas station
Newstand Bakery
Construction store
In 2018, the Bank acquired 65% of Granito, with the purpose of bolstering its
product portfolio and increasing its capillarity with BMG's existing
distribution channels.
Complete retail ecosystem in Brazil: in addition to payment solutions, the Bank aims to offer complete banking
services for each establishment and their employees.
Complete Biometric
Profile
Asset Light Omnichannel
Third-Party Bank Correspondents
+2KCorrespondents
14KConsultants
539stores
One-Stop Shop
Digital Bank
User-friendly
Any time, anywhere, any device
+300Kdigital accounts
opened
14
Long history of partnership with BMG
+210Ktraditional cards
Points of SaleWhite Label
partnership with soccer clubs
Franchises network with culture of being fair with customers
1.1 new store per dayin 1Q19
641 537 507 469 439
-
200
400
600
800
1.000
1Q18 2Q18 3Q18 4Q18 1Q19
637 658 686 747
875
1Q18 2Q18 3Q18 4Q18 1Q19
Wholesale Portfolio
CompaniesStructured Operations
Portfolio Quality
15
R$ Million R$ Million
30.9%37.0% 35.2% 32.8%
25.5%
11.0%18.1% 17.9% 14.8%
9.3%
1Q18 2Q18 3Q18 4Q18 1Q19
E-H Portfolio Overdue Installments over 90
1.8% 1.5%1.0%
1.5%
2.3%
0.2% 0.1% 0.1% 0.1% 0.2%
1Q18 2Q18 3Q18 4Q18 1Q19
E-H Portfolio Overdue Installments over 90
The portfolio consists of structured operations for bankingcorrespondents and soccer clubs, with collateral thatmitigates the issuers' risks.
The Companies portfolio is composed of financing and ofstructured financial services for medium and largecompanies.
Credit Portfolio Credit Portfolio
Portfolio Quality
BMG Seguros
Created in July 2016, BMG Seguros is an insurance company focused exclusively on the Surety Bond
Segment.
Company belongs to Banco BMG;
Target Audience: Corporate & Large-
Corporate;
Main modalities: Bid Bond, Performance
Bond, Judicial Guarantee, Guarantee of
Payment.
Written Premiums 1Q19: R$ 72 million
Retained Premiums 1Q19: R$ 34 million
Net Income 1Q19: R$ 0.2 million
Financial HighlightsBMG Seguros
16
4th largest insurer in the country in theSurety Bond segment1
1Source: Susep – February 2019
Board Members Position
Temporarily Vacant Chairperson (IM)
Leonardo André Paixão Member (IM)
Marcelo Maziero Member (IM)
Board of Directors
IM: Independent Member
Diversified Funding
17
55%
70%76% 77%
24%
14%
13% 13%
12%
8%6% 6%
6%
5%3% 2%
4%
2%1% 1%
10,215
11,93912,354 12,234
2016 2017 2018 1Q19
Deposits External Funding Credit Assignment + Securitization Financial Bills Other Total
Time deposits
43%
Time deposits
77%
+135k direct and indirect retail
investors
+50brokers anddistributors$
1. Considers CDB with the Market2. Funding started in April 2019, therefore not reflected in the 1Q19 financial statements
1 1
+R$ 87 millionPerpetual and Subordinated
Financial Bills2
13.2%
15.7%
19.0%
22.7%
5.6%
9.7%
12.9%14.8%
2016 2017 2018 1Q19
NIM NIM adjusted to cost of credit
+9.5 p.p.
+9.2 p.p.
% per year
18
Profitability
Margin Evolution
1) Methodology: interest margin + Income from services rendered / average interest-earning assets.
2
2) Methodology: interest margin after loan provision expenses net of recovery and agents commission + Income from services rendered / average interest-earning assets.
1
Main Indicators
19
Financial Highlights (R$ Million) 1Q19 4Q18 3Q18 2Q18 1Q18
Net Income - Recurring1 99 61 77 67 53
Net Income 77 40 55 45 31
ROAE - Recurring1 17.2% 10.4% 13.1% 11.7% 9.5%
ROAE 12.1% 6.0% 8.3% 6.9% 4.9%
ROAA 1.8% 0.9% 1.3% 1.1% 0.8%
Basel Index 12.4% 12.4% 13.1% 13.9% 14.1%
Net Interest Margin 22.7% 22.6% 20.2% 19.8% 18.9%
Efficiency Ratio 50.6% 45.6% 54.3% 52.3% 52.8%
NPL2 – E-H Portfolio 6.0% 6.6% 6.7% 7.2% 7.0%
NPL3 – Overdue installments 3.6% 3.9% 3.9% 4.5% 4.0%
Balance Sheet (R$ Million) 1Q19 4Q18 3Q18 2Q18 1Q18
Total Credit Portfolio 9,853 9,513 9,265 9,096 8,824
Retail Portfolio4 8,206 7,866 7,593 7,380 6,980
Wholesale Portfolio5 1,314 1,215 1,193 1,196 1,278
Run-off Portfolio 6 333 432 479 520 566
Total Assets 16,830 16,938 16,959 16,170 16,148
Shareholders’ Equity 2,673 2,640 2,757 2,701 2,635
Total Funding 12,234 12,354 12,489 11,852 11,822
1) Recurring Net Income and ROAE, excluding the effects of goodwill, see "Net Income and Profitability“ in the Earnings Release.2) Methodology: Portfolio classified by E-H/Total Portfolio, including overdue plus falling due installments.3) Methodology: Installments overdue more than 90 days/Total Portfolio. 4) The retail portfolio includes Payroll Credit Card and Personal Credit.5) Wholesale portfolio includes structured operations and companies6) The run off portfolio includes the payroll loan, Lendico, vehicles and home equity loan.
Ratings
20
Agency Date Rating Perspective
FITCH January 2019
Local currency A- (bra)
Stable
Foreign currency B+
Moody‘s March 2019
Local currency Baa2.br
Stable
Foreign currency B1
RISKbank May 2019 9.85Low Risk Medium
Term 2
21
Contact & Disclaimer
INVESTOR RELATIONS TEAM
Tel.: +55 11 3067-2048
www.bancobmg.com.br/IR
We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of ourmanagement. and on information currently available to us. Forward-looking statements include statements regarding our intent. belief or currentexpectations or that of our directors or executive officer.Forward-looking statements also include information concerning our possible or assumed future results of operations. as well as statements preceded by.followed by. or that include the words ''believes'' ''may'' ''will'' ''continues'' ''expects'' ''anticipates'' ''intends'' ''plans'' ''estimates'' or similar expressions.Forward-looking statements are not guarantees of performance. They involve risks. uncertainties and assumptions because they relate to future eventsand therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressedin or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control orpredict.