4Q13 Earnings Release - BB · – Fourth Quarter 2013 Earnings 4 Earnings Highlights (1) It...

1

1

4Q13 Earnings

Release

2 Banco do Brasil S.A. – Fourth Quarter 2013 Earnings 2

Disclaimer

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.


Highlights

Loan Portfolio - Broad Concept¹ grew 19.3% in last twelve months

(1) It includes private securities and guarantees.

(2) Up to November/13. Considers insurance, pensions plans and premium bonds.

NPL 90 Ratio (1.98%) remains below the Banking Industry (3.0%)

Net income reached R$ 15.8 billion in 2013

Cards turnover grew by 22.4% YoY and BB Seguridade reached 24.3%

market share.²


Earnings Highlights

(1) It includes Other Operating Revenues net of Other Operating Expenses, Equity Earnings of Subsidiaries and Affiliates and Insurance, Pension Plans and Premium Bonds.

R$ million

On 4Q12 On 3Q13 On 2012

Operating Revenues 17,556 17,111 18,180 66,611 68,680 3.6 6.2 3.1

Net Interest Income 12,033 11,742 11,961 45,729 46,413 (0.6) 1.9 1.5

Fee Income 5,484 5,819 6,177 21,071 23,301 12.6 6.2 10.6

Previ 287 112 112 1,355 598 (61.0) 0.0 (55.9)

Other Items¹ (248) (561) (70) (1,545) (1,632) (72.0) (87.6) 5.6

Operating Expenses (12,510) (12,952) (14,112) (48,834) (52,135) 12.8 9.0 6.8

Administrative Expenses (7,499) (7,399) (8,432) (28,194) (30,222) 12.4 14.0 7.2

Allowance for Loan Losses (3,636) (3,915) (4,188) (14,651) (15,600) 15.2 7.0 6.5

Tax Expenses (1,156) (1,216) (1,273) (4,451) (4,830) 10.1 4.7 8.5

Legal Risk (219) (422) (220) (1,539) (1,483) 0.3 (48.0) (3.6)

Non Operating Result (4) 45 37 107 167 (967.8) (17.9) 56.5

Income Taxes, Statutory Profit Sharing and (1,861) (1,595) (1,681) (6,356) (6,359) (9.7) 5.4 0.1

Adjusted Net Income 3,180 2,610 2,424 11,528 10,353 (23.8) (7.1) (10.2)

Adjusted ROE 21.2 15.7 14.2 18.7 15.0 (32.9) (9.1) (19.5)

Net Income 3,967 2,704 3,025 12,205 15,758 (23.7) 11.9 29.1

ROE 27.0 16.3 18.0 19.8 22.9 (33.3) 10.6 15.8

Chg. %4T12 3T13 4T13 2012 2013


One-Off Items

R$ million

Adjusted Net Income 3,180 2,610 2,424 11,528 10,353

(+) One-Off Items 787 94 602 678 5,405

Economic Plans (167) (295) (56) (968) (683)

Tax Efficiency - - - 244 142

Additional Allowance for Loan Losses - Semi-annual revision 476 - (267) 699 (229)

BV Extraordinary Provision - - (166) - (166)

Sale of Real Estate 1,103 - - 1,103 -

Provision for Agreement Committee - - - - (186)

Lawsuits Reconciliation - - - - 303

BB Seguridade Shares Disposal (IPO) - - - - 9,820

Expenses of BB Seguridade Shares Disposal (IPO) - - - - (172)

Itapebi Sale of Stake - - 188 - 188

Refis 2013 - - 587 - 587

Extraordinary Provision for Lawsuits - 462 401 - (404)

Tax Eff. and Stat. Profit Sharing on One-Off Items (625) (73) (86) (401) (3,796)

Net Income 3,967 2,704 3,025 12,205 15,758

4Q12 3Q13 4Q13 2012 2013


Sources and Uses

(1) It includes Foreign Lending/Onlending, securities abroad, Subordinated Debt issued Abroad and Hybrid Capital Instruments issued abroad. (2) Since 4Q13, segregated from the subordinated debt instruments, according to Bacen Circular 3.624/2013. (3) It includes Financial Letters and Debentures.

Dec/12 Sep/13 Dec/13 Chg. %

R$ billion Balance Share % Balance Share % Balance Share % On Dec/12 On Sep/13

Sources 610.3 100.0 691.5 100.0 740.6 100.0 21.3 7.1

Commercial Funding 515.7 84.5 566.7 81.9 607.2 82.0 17.7 7.2

Total Deposits 472.1 77.4 470.9 68.1 491.0 66.3 4.0 4.3

Agrib. LC + Real Estate LC 34.1 5.6 70.1 10.1 82.6 11.2 142.5 17.9

Repos w/ Corporate Bonds 9.6 1.6 25.6 3.7 33.6 4.5 251.3 30.9

Domestic Onlending 63.5 10.4 82.0 11.9 87.1 11.8 37.1 6.2

Foreign Borrowing¹ 55.4 9.1 67.1 9.7 61.1 8.3 10.4 (8.9)

Debt Instruments eligible for capital² - 0.0 - 0.0 27.0 3.6 0.0 0.0

Subordinated Debt 32.7 5.4 40.9 5.9 23.4 3.2 (28.4) (42.7)

Others Commercial Papers³ 9.9 1.6 9.2 1.3 9.5 1.3 (3.3) 3.8

Domestic Hybrid Debt Capital Instr. 8.2 1.3 8.2 1.2 8.3 1.1 1.3 1.4

Financial and Development Funds 5.1 0.8 6.0 0.9 7.7 1.0 50.6 27.7

Compulsory Deposits (80.1) (13.1) (88.5) (12.8) (90.7) (12.3) 13.3 2.6

Uses 610.3 100.0 691.5 100.0 740.6 100.0 21.3 7.1

Net Loan Portfolio (a) = (b) + (c) + (d) 539.5 88.4 607.3 87.8 644.8 87.1 19.5 6.2

Loan Portfolio (b) 525.7 86.1 585.0 84.6 623.4 84.2 18.6 6.6

Private Securities (c) 35.0 5.7 44.4 6.4 45.0 6.1 28.6 1.5

Allowance for Loan Losses (d) (21.2) (3.5) (22.1) (3.2) (23.7) (3.2) 11.6 7.0

Available Funds 70.8 11.6 84.2 12.2 95.8 12.9 35.3 13.8

Adjusted Net Loan Portfolio (a) - (e) 446.1 73.1 493.1 71.3 523.2 70.6 17.3 6.1

Onlending in the Country (e) 93.4 15.3 114.3 16.5 121.6 16.4 30.2 6.4

Ratio - %

Net Loan Portfolio / Total Deposits 114.3 129.0 131.3

Net Loan Portfolio / Commercial Funding 104.6 107.2 106.2

Adj. Net Loan Portfolio / Comm. Funding 86.5 87.0 86.2

Net Loan Portfolio / Sources 88.4 87.8 87.1

7

Spread by Segment (%)¹ Global Spread (%)¹

Banco do Brasil S.A. – Fourth Quarter 2013 Earnings 7

Net Interest Income and Net Interest Margin

(1) Annualized data.

4Q13

4.6

4.8

7.0

13.2

3Q13

4.6

4.8

7.1

13.2

2Q13

4.6

5.1

7.4

13.6

1Q13

4.6

5.2

7.6

13.9

4Q12

5.8

4.8

8.1

14.8

Agribusiness NIM

Companies NIM

Loan Operations NIM

Individuals NIM

On 4Q12 On 3Q13 On 2012

Net Interest Income 12,033 11,742 11,961 45,729 46,413 (0.6) 1.9 1.5

Loan Operations Income 16,323 17,888 18,689 65,171 69,997 14.5 4.5 7.4

Funding Expenses (6,934) (8,477) (9,442) (30,496) (32,518) 36.2 11.4 6.6

Institutional Funding Expenses (1,258) (1,521) (1,694) (4,917) (6,058) 34.6 11.4 23.2

Treasury Income 2,638 2,999 3,478 11,777 11,094 31.8 16.0 (5.8)

Recovery of Write-offs Loans 1,076 836 719 3,748 3,430 (33.2) (14.0) (8.5)

Other 189 15 210 447 468 11.4 1,269.2 4.7

4Q12

R$ million

Chg. %2012 20134Q133Q13

4Q12 1Q13 2Q13 3Q13 4Q13

4.4 4.4

3.5 3.1

5.0

4.5 4.6

2.9 2.8 2.9

NIM Risk Adjusted NIM


Loan Portfolio – Broad Concept¹

R$ billion

110.5

48.4

Dec/12

580.8

270.6

152.0

108.0

50.2

Dec/13

692.9

323.2

168.1

144.8

56.8

Sep/13

652.3

304.3

164.0

130.1

54.0

Jun/13

638.6

297.4

161.5

127.1

52.7

Mar/13

592.7

277.6

156.3

Companies Individuals Agribusiness Offshore

46.7%

24.3%

20.9%

8.2%

46.6%

26.2%

18.6%

8.7%

21.1 20.7 20.8 20.4 20.3

Market Share²

19.3% in twelve months

(1) It includes private securities and guarantees provided.

(2) It considers the Classified Concept.

9

On Dec/12 On Sep/13

Payroll 47.3 40.9 51.4 39.6 52.3 39.0 10.6 1.8

Salary Loans 17.1 14.8 18.3 14.1 17.7 13.1 3.2 (3.7)

Mortgage 10.2 8.8 15.6 12.0 18.2 13.5 78.0 16.1

Auto Loans 11.0 9.5 12.0 9.2 11.9 8.8 7.6 (1.0)

Credit Cards 15.8 13.6 17.8 13.7 19.7 14.6 24.7 10.4

Consumer Finance 5.9 5.1 6.0 4.6 5.9 4.4 (1.0) (1.7)

Overdraft 2.5 2.1 2.9 2.2 2.5 1.8 (0.3) (15.8)

Other 5.8 5.0 5.9 4.6 6.3 4.7 9.1 6.7

Individuals Loan Portfolio 115.6 100.0 130.0 100.0 134.3 100.0 16.2 3.3

Chg. %Dec/12 Sep/13 Dec/13Share % Share % Share %


Organic Individuals Loan Portfolio¹ ²

R$ billion

(1) Classified Concept.

(2) Does not include BV operations and acquired portfolios.

74.1% 74.5%

10 Banco do Brasil S.A. – Fourth Quarter 2013 Earnings

Growth in lower risk lines

Mortgages (R$ billion) Auto Loans – Organic Portfolio (R$ billion)

Payroll (R$ billion)

Dec/13

24.1

18.2

5.9

Sep/13

20.1

15.6

4.5

Jun/13

17.3

13.7

3.6

Mar/13

14.3

11.4

3.0

Dec/12

12.9

10.2

2.7

Mortgages with Individuals Mortgages with Companies

Dec/12

13.7

22.6 26.8

62.0

Dec/12

13.5 13.6 20.8

58.6

Peer 3 Peer 2 Peer 1 Banco do Brasil

Organic Portfolio • 87.6% Civil Servants

• 8.3% INSS’s Retirees and Pensioners

• 4.2% Private Sector Employees

27.9% Market Share

Dec/13

11.9

Sep/13

12.0

Dec/12

11.0

Up to 5 years From 5 to 10 years Account Time - Over 10 years

61.2%

In twelve months

+87.2%

+78.0%

+122.6%

18.3%

20.5%

61.9%

19.3%

18.8%

63.4%

17.9%

18.7%


Loans to Companies – Broad Concept¹

R$ billion


On Dec/12 On Sep/13

Working Capital 153.3 56.7 164.4 54.0 175.0 54.1 14.1 6.4

Investiments 44.7 16.5 51.6 17.0 56.4 17.4 26.3 9.2

Corporate Bonds & Notes 31.2 11.5 40.7 13.4 41.5 12.9 33.1 2.0

Guarantees 17.6 6.5 19.2 6.3 20.1 6.2 14.5 4.8

Trade Finance 15.4 5.7 15.5 5.1 15.5 4.8 0.6 0.1

Other 8.4 3.1 12.8 4.2 14.7 4.6 74.9 14.9

Companies Loan Portfolio 270.6 100.0 304.3 100.0 323.2 100.0 19.5 6.2

Chg. %Dec/12 Share % Sep/13 Share % Dec/13 Share %

12

SME - Operations Guarantee Fund (FGO)


Loans to Companies – Broad Concept¹

Corporate Portfolio by Size

R$ billion

(1) It includes private securities and guarantees provided. (2) Companies with annual revenues up to R$ 25 million.

+31.5%

Dec/13

18.3

Sep/13

16.8

Dec/12

13.9

+19.5%

Dec/13

323.2

223.4

99.9

Sep/13

304.3

209.8

94.4

Dec/12

270.6

181.6

88.9

Medium and Large Companies Micro and Small Enterprises²

Dec/13

99.9

Sep/13

94.4

Dec/12

88.9

More than 10 years

From 5 to 10 years

From 2 to 5 years

Up to 2 year

SME – Time of Relationship (% of credit concession)

26,5%

29,5%

36,7%

24,5

31,2%

37,0%

25,2%

29,2%

38,6%

7,2% 7,3% 6,9%

13

Agribusiness Loan Portfolio1 (R$ billion)


Agribusiness

(1) It includes Rural Product Bills and guarantees provided.

Dec/13

144.8

96.3

48.5

Sep/13

130.1

87.6

42.5

Jun/13

127.1

86.5

40.6

Mar/13

110.5

77.5

33.0

Dec/12

108.0

74.7

33.3

Individuals Companies

Mitigators Use (Working Capital for Input Purchase)

R$ billion

34.9%

65.1%

47.0% 53.0%

Not Insured

Insured

Not Insured

Insured

Safra 13/14 (Dez.13)

Safra 12/13 (Dez.12)

14

Coverage Ratio +90 days (%)

NPL Ratio +90 days (%)

14

Delinquency and Coverage Ratios

Dec/13

1.98

3.00

Dec/12

2.05

3.70

Dec/11

2.16

3.60

Dec/10

2.28

3.18

Dec/09

3.25

4.43

Banco do Brasil Banking Industry

Dec/13

191.65

165.59

Dec/12

196.46

148.74

Dec/11

207.64

157.25

Dec/10

212.09

174.39

Dec/09

190.30

156.13

Banco do Brasil Banking Industry

Banco do Brasil S.A. – Fourth Quarter 2013 Earnings

15

Asset Quality

Write-off Ratio³ (%) Recovery Ratio4 (%)

Average Risk¹ (%)

31.80

Sep/12

22.68

32.00

Jun/12

24.93

34.79

Mar/12

27.15

34.41

Dec/11

31.14

35.79

Dec/13

22.83

25.34

Sep/13

20.85

27.62

Jun/13

19.50

28.77

Mar/13

20.08

31.24

Dec/12

20.19

Peers Average² Banco do Brasil

Dec/13

5.22

2.33

Sep/13

5.63

2.47

Jun/13

5.67

2.47

Mar/13

5.47

2.36

Dec/12

5.53

2.49

Sep/12

5.20

2.45

Jun/12

4.96

2.48

Mar/12

4.72

2.51

Dec/11

4.36

2.59

Peers Average² Banco do Brasil

(1) Required Provision / Classified Loan Portfolio. (2) It considers the data reported by the three largest Brazilian private banks. (3) Accumulated write-off in 12 months / Loan portfolio

average in 12 months. (4) Recoveries / Accumulated write-off in 12 months.

Dec/13

4.97

5.26

Dec/08

5.31

5.37

3.56

Dec/12

5.50

3.81

Dec/11

5.66

4.08

Dec/10

5.55

4.34

Dec/09

6.92

BI Average Risk BB Average Risk



Delinquency per Segment¹

Ind

ivid

ual

s C

om

pan

ies

Agr

ibu

sin

ess

(1) It does not include Banco Votorantim operations.

%

2.56

4.14

2.50

4.43

2.40

4.14

2.38

4.31

2.60

4.20

3.46

2.18

3.16

2.28

3.34

2.24

3.55

2.14

3.06

2.20

Dec/13

0.78

1.16

Sep/13

0.68

1.11

Jun/13

0.48

0.78

Mar/13

0.64

1.00

Dec/12

0.63

0.96

92.6 92.8 92.5 92.4 92.2

95.8 95.6 95.1 95.1 95.2

96.2 96.1 95.8 95.2 95.2

AA - C Risk NPL 90 NPL 15

17

New NPL¹ , Write Off and NPL Formation Rate

New NPL¹ , Write Off and NPL Formation Rate - Adjusted

NPL Formation

(1) Quaterly change in the balance of past-due for over 90 days operations + current quarter write-off. (2) It considers the classified loan portfolio of the previous quarter.


4Q13

3.06 3.89

3Q13

3.45 4.23

2Q13

3.97 3.99

1Q13

3.06 2.98

4Q12

3.23 3.52

3Q12

2.82 3.26

2Q12

2.71 3.20

1Q12

3.03 3.44

4Q11

2.46 3.13

Write Off (R$ billion) New NPL (R$ billion)

0.66 0.74 0.74

0.57

0.73 0.71 0.74 0.81 0.78

New NPL /Loan Portfolio²

3.51 3.43

4Q12

3.23 3.52

3Q12

2.82 3.26

2Q12

2.71 3.20

1Q12

3.03 3.44

4Q11

2.46 3.13

4Q13

3.06 3.89

3Q13

3.45 4.23

2Q13

3.52 3.54

1Q13

Write Off (R$ billion) New NPL (R$ billion)

0.66 0.74

0.66 0.65 0.73 0.71 0.74

0.81 0.78

New NPL / Loan Portfolio²(%)

18

Allowance for Loan Losses (ALL) and Loan Portfolio

ALL (12 months) / Loan Portfolio

Classified Loan Portfolio – Growth by Risk Level

1.4 0.7 1.1 3.6

(4.7)

95.6

525.7

623.4

Dec/12 Dec/13 AA-C D E F G H

3.19 2.78 2.80 2.91 2.96

ALL / Loan Portfolio (%) ²

(1) Average classified loan portfolio (2) ALL accumulated in 12 months / 12 months Average Loan Portfolio (3) Quarterly ALL / 12 months Average Loan Portfolio. (4) Quaterly ALL / 3 months Average Loan Portfolio.

ALL (quarterly) / Loan Portfolio

2Q13

4.2

3Q13

3.6

4Q13

595.7

4.2 3.9

508.4 579.4 555.9

1Q13

3.3

528.6

4Q12

Loan Portfolio Allowance for Loan Losses

R$ billion

4Q12 1Q13 3Q13

561.9

15.6

484.4

4Q13

14.4 15.0

538.3

2Q13

14.9

511.4

14.7

459.9

Allowance for Loan Losses Loan Portfolio

+18.6% in

twelve months

0.70 0.72 0.76 0.68 0.62

ALL / Loan Portfolio (%) ⁴


19

BV – Net Income

R$ million

(159)

(196)

(278)

121

(428)

4Q13 3Q13 2Q13 1Q13 4Q12

20

BV – Lightweight Vehicles¹ : Production per Business Channel and Delinquency

(1) Comprised of CDC veículos (Autos Consumer Credit) and vans.

Consecutive Reduction of the delinquency

0.6

Au

g/1

2

8.99

0.2

0.7

Jul/

12

9.35

0.2

0.7

Jun

/12

9.46

0.2

0.6

May

/12

9.35

0.2

0.7

Ap

r/1

2 9.11

0.1

0.6

Mar

/12

8.94

0.2

0.6

Feb

/12

8.48

0.2

0.5

Jan

/12

7.93

0.3

0.6

Dec

/11

7.36

0.3

0.7

6.53

0.2

0.8

Au

g/1

3

6.64

0.2

0.9

Jul/

13

6.75

0.3

0.9

Jun

/13

6.79

0.2

0.8

May

/13

6.86

0.2

0.8

Ap

r/1

3

6.95

0.2

0.9

Mar

/13

7.24

0.2

0.8

Feb

/13

7.49

0.2

0.7 Ja

n/1

3

7.70

0.2

0.9 D

ec/1

2

7.74

0.2

0.8

No

v/1

2

8.14

0.2

0.8

Oct

/12

8.71

0.2

0.7

Sep

/12

9.05

0.1

- 1.5 p.p.

6.17

Dec

/13

0.2

1.1

No

v/1

3

6.24

0.2

0.9

Oct

/13

6.35

0.2

0.8

Sep

/13

Multi-brand car dealers (R$ billion) Car dealers (R$ billion) NPL 90 - Managerial Loan Portfolio (%)

21

Banco Votorantim – Asset Quality

Vintage of the Managerial Auto Loan Portfolio Coverage x Delinquency (Managerial)- %

147

119111106100

Dec/13

5.1

Sep/13

5.5

Jun/13

5.7

Mar/13

6.2

Dec/12

6.6

NPL +90 days Coverage (+90 days)

950

3Q13 2Q13

1,065

1Q13

1,004

4Q12

1,066

4Q13

1,435

580742779841880

Classificada Varejo

735 749 657 589414

Veículos

47% 43% 38% 33% 27%

38% 44% 52% 59% 67%82%

11%13%15% 2%17%

Jun/13

6%

Dec/13 Mar/13 Dec/12 Dec/14

8%

Sep/13

up to Jun/10 after Sep/11 from Jul/10 to Sep/11

Estimated

(1) On the 4Q13 there was a revision on the classification from provisions for guarantees not honored to allowance for loan losses, adjusted since 3Q13.

Allowance for Loan Losses – Classified Concept – R$ million

Classified Retail Vehicles


Fee Income

R$ million

Chg. %

On 4Q12 On 3Q13 On 2012

Fee Income 5,484 5,819 6,177 21,071 100.0 23,301 100.0 12.6 6.2 10.6

Credit / Debit Cards 1,279 1,433 1,625 4,739 22.5 5,689 24.4 27.1 13.4 20.1

Account Fees 1,068 1,024 1,030 4,356 20.7 4,120 17.7 (3.5) 0.6 (5.4)

Asset Management Fees 883 1,040 1,015 3,582 17.0 4,025 17.3 14.9 (2.4) 12.4

Loan Fees 610 601 673 2,141 10.2 2,458 10.5 10.3 12.0 14.8

Collections 336 362 358 1,316 6.2 1,411 6.1 6.5 (1.0) 7.2

Insurance, Pension and Premium Bonds 276 267 319 988 4.7 1,199 5.1 15.6 19.6 21.4

Billings 215 219 239 832 3.9 891 3.8 11.1 9.2 7.2

Interbank 180 184 188 697 3.3 726 3.1 4.5 2.5 4.1

Capital Market 112 115 133 454 2.2 560 2.4 18.7 15.6 23.5

Other 523 574 596 1,967 9.3 2,222 9.5 13.9 3.8 13.0

Share %2012 20134Q12 3Q13 4Q13 Share %

23

Cards – Total Turnover

R$ million

+22.4%

+23.9%

2013

205,935

84,193

121,742

2012

168,216

68,857

99,359

4Q13

59,690

25,086

34,604

3Q13

52,403

21,517

30,887

4Q12

48,190

19,356

28,834

Debit Cards Credit Cards

Banco do Brasil S.A. – Fourth Quarter 2013 Earnings Market Share¹: 23.2% 24.3% (1) Source: Abecs and BB.

24

Cards¹

R$ million

Chg. %

BB

Emissor²Cielo CBSS

Elo

ServiçosTotal

BB

Emissor²Cielo CBSS

Elo

ServiçosTotal On 2012

Total Operating Income 3,325 1,900 512 3 5,740 3,821 2,288 682 21 6,812 18.7

Issuance 3,036-

52-

3,088 3,540-

62-

3,602 16.6

Acquiring-

1,545 334-

1,879-

1,781 403-

2,184 16.2

Other Revenues 289 355 126 3 773 281 507 217 21 1,026 32.7

Total Operating Expenses (2,605) (895) (314) (7) (3,821) (2,798) (1,072) (457) (23) (4,350) 13.8

Issuance (2,444)-

(40)-

(2,484) (2,744)-

(49)-

(2,794) 12.5

Acquiring-

(872) (205)-

(1,077)-

(1,006) (253)-

(1,259) 16.9

Other Expenses (161) (23) (69) (7) (260) (54) (66) (154) (23) (298) 14.4

Cards Services Income 720 1,005 198 (4) 1,919 1,023 1,216 225 (2) 2,462 28.3

Income and Social Contrib. Taxes (288) (340) (67) - (695) (409) (408) (77) - (894) 28.5

Cards Services Income After Tax 432 665 131 (4) 1,224 614 808 149 (2) 1,568 28.2

2012 2013

(1) It does not consider revolving credit lines.

(2) It considers BB Administradora de Cartões.



Administrative Expenses

R$ million

Chg. %

On 4Q12 On 3Q13 On 2012

Personnel Expenses (4,211) (4,166) (4,673) (15,777) (17,124) 11.0 12.2 8.5

Other Administrative Expenses (3,288) (3,233) (3,758) (12,417) (13,098) 14.3 16.3 5.5

Expenses with Outsourced Services (671) (689) (750) (2,436) (2,744) 11.8 8.8 12.6

Telecommunications and Data Processing (574) (574) (609) (2,224) (2,301) 6.1 6.1 3.5

Expenses with Premises and Equipment (517) (541) (576) (1,896) (2,181) 11.4 6.5 15.0

Security, Guard, and Transport Services (536) (500) (622) (2,056) (2,043) 15.9 24.4 (0.6)

Amortization and Depreciation (232) (274) (291) (1,271) (1,085) 25.8 6.4 (14.6)

Marketing and Public Relations (239) (196) (269) (724) (754) 12.7 37.5 4.2

Other Administrative Expenses (520) (460) (641) (1,811) (1,990) 23.5 39.6 9.9

Administrative Expenses (7,499) (7,399) (8,432) (28,194) (30,222) 12.4 14.0 7.2

2012 20134Q12 3Q13 4Q13

26 26

Cost to Income Ratio (12 months)¹

(1) Administrative Expenses / Operating Revenues. Data from the Income Statement with Reallocations.

%

Dec/13

44.4

Sep/13

43.5

Jun/13

43.7

Mar/13

43.6

Dec/12

43.2


27 27

BIS Ratio¹ ²

%

Dec/13

14.53

4.02

10.51

4.45

15.13

Dec/12

10.68

Tier II

Tier I

Considering the full implementation of the adjustments for Basel III, measured over December/2013³, the estimated BIS Ratio would reach 12.6% and the Tier I, 8.5%.

(1) Financial Consolidated.

(2) Methodology used since Oct. 01st., 2013, according to CMN Resolution 4.192/2013.

(3) These numbers are based on information available at the time of the simulations, which involve limitations and risks hard to foreseen and hence may present different results

from those reported. Banco do Brasil’s future performance is subject to external factors, including interest rates, exchange rates and its securities portfolio market value, as well as

the performance of the domestic and foreign economic and the domestic and international’s financial systems.

28 28

Guidance

(1) Adjusted ROAE for 2013 and 2014, uses estimate of adjusted shareholders equity, ex effects of actuarial assets and liabilities update, due to CVM deliberation 695.

(2) Commercial Funding includes Total Deposits, Agribusiness Letter of Credit, Real Estate Letters of Credit and Repos with Corporate Bonds.


(4) Allowance for Loan Losses expenses of the last twelve months / Average Classified loan portfolio for the same period.


X

X

Adjusted Return on Equity¹ 15.0 14 - 17 12 - 15

Net Interest Income 1.5 2 - 5 3 - 7

Commercial Funding² 17.7 12 - 16 14 - 18

Domestic Loan Portfolio³ - Broad Concept 19.9 17 - 21 14 - 18

Individuals 10.6 14 - 18 12 - 16

Companies 19.5 18 - 22 14 - 18

Agribusiness 34.1 24 - 28 18 - 22

Allowance for Loan Losses⁴ 2.8 2.7 - 3.0 2.7 - 3.1

Fee Income 10.6 10 - 14 9 - 12

Administrative Expenses 7.2 5 - 8 5 - 8

2014 Guidance (%)2013 Performance (%) 2013 Guidance (%)

29

Investor Relations Unit

SBS - Quadra 1 - Bloco C - Ed. Sede III – 7th floor

70073-901 - Brasília (DF)

Telephone: +55 (61) 3102 1124

Fax: +55 (61) 3102 1435

bb.com.br/ir

[email protected]


Contacts


Appendix

31. Funding

32. Foreign Borrowing

33. Loans to Individuals – Broad Concept

34. Individuals Loan Portfolio

35. Individuals Loan Portfolio – Average Rates/Tenor

36. Banco Votorantim – Auto Loans Portfolio

37. Banco Votorantim – Asset Quality

38. Loans to Companies - SME

39. Agribusiness Portfolio by Purpose

40. Agribusiness

41. Total Loan Portfolio - Risk Level

42. Loans to Individuals – Risk Level

43. Loans to Companies – Risk Level

44. Agribusiness – Risk Level

45. Renegotiated Loan Portfolio

46. Actuarial Assets (Previ) - CVM 695/12

47. Actuarial Liabilities (Cassi) - CVM 695/12

48. Amounts recognized in equity because of the adoption of CPC 33

49. Actuarial Assets – Funds

50. Distribution Network


R$ billion

Funding

On Dec/12On Sep/13

Time Deposits 263.0 35.5 246.5 31.2 247.3 30.2 (6.0) 0.3

Judicial Deposits 86.3 11.6 97.4 12.3 100.1 12.2 15.9 2.8

Saving Deposits 117.7 15.9 134.2 17.0 140.7 17.2 19.5 4.9

Demand Deposits 74.8 10.1 69.2 8.7 75.8 9.3 1.4 9.6

Interbank Deposits 16.6 2.2 21.0 2.7 27.2 3.3 63.9 29.2

Money Market Borrowing 225.8 30.4 243.9 30.8 239.5 29.2 6.1 (1.8)

Agribusiness Letters of Credit 34.0 4.6 67.2 8.5 79.2 9.7 132.8 17.9

Other Comercial Papers 9.9 1.3 9.2 1.2 9.5 1.2 (3.3) 3.8

Total 741.7 100.0 791.2 100.0 819.2 100.0 10.4 3.5



Foreign Borrowing

US$ billion

+13.7%

Dec/13

51.2

2.4 3.2

10.1

15.3

20.1

Sep/13

49.4

2.1 3.2

10.5

12.9

20.7

Dec/12

45.0

2.2 3.2

11.2

10.9

17.5

Repo + Other Individuals Companies Interbanking Fixed Income and Deposit Certificates

33

On Dec/12 On Sep/13

Payroll 58.6 38.5 61.6 37.6 62.0 36.9 5.8 0.5

Auto Loans 35.9 23.6 35.3 21.5 35.5 21.1 (1.1) 0.5

Salary Loans 17.1 11.3 18.3 11.2 17.7 10.5 3.2 (3.7)

Mortgage 10.2 6.7 15.6 9.5 18.2 10.8 78.0 16.1

Credit Cards 15.9 10.5 18.0 11.0 19.8 11.8 24.7 10.3

Consumer Finance 5.9 3.9 6.0 3.6 5.9 3.5 (0.9) (1.7)

Overdraft 2.5 1.6 2.9 1.8 2.5 1.5 (0.3) (15.8)

Other 5.9 3.9 6.2 3.8 6.7 4.0 11.9 7.4

Individuals Loan Portfolio 152.0 100.0 164.0 100.0 168.1 100.0 10.6 2.5



Loans to Individuals – Broad Concept¹

R$ billion

(1) It includes Guarantees provided.

80% 79%


Individuals Loan Portfolio

R$ billion Acquired Portfolios

Market Share

Payroll Loan (Organic Portfolio)

(1) It includes acquired loan portfolio with co obligation, according to CMN Resolution 3.533/08.

On Dec/12On Sep/13

Auto loans 9.8 55.9 10.8 57.1 12.3 61.7 26.2 13.8

Payroll loans 7.7 44.1 8.1 42.9 7.7 38.3 (0.4) (5.8)

Total 17.4 100.0 18.9 100.0 20.0 100.0 14.5 5.4


Dec/12 Sep/13 Dec/13

BB¹ Industry Share % BB¹ Industry Share % BB¹ Industry Share %

Payroll Loans 58.6 188.9 31.0 61.6 216.8 28.4 62.0 221.8 27.9

Auto loans 35.9 210.9 17.0 35.3 202.7 17.4 35.5 200.5 17.7

Mortgage 10.2 255.4 4.0 15.6 319.4 4.9 18.2 341.5 5.3

On Dec/12 On Sep/13

Civil Servants 40.9 86.4 44.8 87.2 45.8 87.6 12.2 2.2

INSS's Retirees and Pensioners 4.1 8.8 4.3 8.4 4.3 8.3 4.9 0.5

Private Sector Employees 2.3 4.9 2.3 4.4 2.2 4.2 (6.3) (4.6)



Individuals Loan Portfolio – Average Rates/Tenor


Banco do Brasil

Auto loans

Average rate - % p.m 1.26 1.26 1.28

Average term - months 36 34 33

Mortgage

Average contracted amount - R$ thousand 163.9 127.7 136.5

Average Rate - % p.y. 8.7 8.4 8.1


Payroll loans

Average rate - % p.m 1.90 1.82 1.79


BV - Auto Loans

Average rate - % p.m 1.78 1.87 1.99


36

Banco Votorantim – Asset Quality – Managerial Portfolio

Delinquency and Risk (%)

New NPL¹, Write off and NPL Formation (R$ billion)

4Q13

0.87 0.58

3Q13

0.90 0.66

2Q13

1.34

0.90

1Q13

1.15

0.68

4Q12

1.43

0.68

3Q12

1.27 1.01

2Q12

1.08 1.23

Write-off New NPL¹

4Q13

11.1

88.9

3Q13

9.9

90.1

2Q13

10.0

90.0

1Q13

10.3

89.7

4Q12

9.9

90.1

3Q12

10.3

89.7

2Q12

10.1

89.9

D-H Levels AA-C Levels

5.1 5.5 5.7 6.2 6.6 7.4 7.5

NPL + 90 days

(1) Quaterly change in the balance of past-due for over 90 days operations + current quarter write-off. (2) Considers the Classified loan portfolio of the previous quarter.

0.94 1.04 1.36 1.00 0.95

1.36 1.60

New NPL / Loan Portfolio² (%)


37

Average Tenor and Average Down-payment (origination)

Auto Loans Origination (R$ billion)

Banco Votorantim – Auto Loan Portfolio

4545444444

4Q13

38%

3Q13

37%

2Q13

37%

1Q13

36%

4Q12

36%

Average Tenor (months) Average Down-payment

21% -35%

2013

13.8

3.6

10.2

2012

11.4

3.7

7.8

2011

21.1

9.8

11.4

Other Vehicles Used Light Vehicles


Loans to Companies - SME

R$ billion

Loans per Segment

Products

On Dec/12 On Sep/13

Commerce 35.9 40.3 39.2 41.5 41.3 41.4 15.2 5.6

Manufacturing Industries 32.2 36.2 29.5 31.3 30.2 30.3 (6.1) 2.4

Services Segment 20.8 23.4 25.7 27.3 28.3 28.3 35.8 9.9

Total 88.9 100.0 94.4 100.0 99.9 100.0 12.3 5.8

Dec/12Chg. %

Share % Sep/13 Share % Dec/13 Share %

On Dec/12 On Sep/13

Working Capital 61.0 68.6 60.4 64.0 65.3 65.4 7.1 8.1

Investment 25.9 29.1 31.8 33.6 32.4 32.4 25.2 2.0

Foreign Trade 2.0 2.3 2.3 2.4 2.1 2.1 5.4 (5.7)

Total 88.9 100.0 94.4 100.0 99.9 100.0 12.3 5.8



Agribusiness Portfolio by Purpose

R$ billion

On Dec/12 On Sep/13

Investment 42.8 39.7 52.5 40.4 57.9 40.0 35.2 10.2

Work. Cap. for Input Purchase 35.8 33.1 40.0 30.8 43.5 30.0 21.4 8.6

Agroindustry 21.5 19.9 30.5 23.5 34.6 23.9 60.9 13.4

Crop Trading 5.0 4.6 4.5 3.5 6.0 4.2 21.0 34.3

Other 1.8 1.7 1.8 1.4 2.1 1.4 11.5 17.1

Classified Loan Portfolio 107.0 99.1 129.4 99.5 144.1 99.5 34.7 11.4

Rural Product Bills and Guarantees 1.0 0.9 0.7 0.5 0.7 0.5 (28.3) (0.1)

Loan Portfolio - Broad Concept 108.0 100.0 130.1 100.0 144.8 100.0 34.1 11.3



Agribusiness

R$ billion Loan Portfolio per Customer Size¹

Insurance for Working Capital for Input Purchase (December)²

(1) Loan portfolio – broad concept

(2) Classified loan portfolio.

(3) It includes income insurance.

Operation Contracted

Crop 12/13 Share % Crop 13/14 Share %

Working Capital for Input Purchase 12.7 100.0 14.0 100.0

Total Insured 6.8 53.0 9.1 65.1

With Proagro 3.9 30.2 3.8 27.4

With Insurance 2.7 20.8 5.0 36.0

Price Hedge³ 0.2 1.9 0.2 1.7

Without Insurance 6.0 47.0 4.9 34.9

Segment Dec/12 Share % Sep/13 Share % Dec/13 Share %

Medium and Large Sized 46.1 42.7 56.0 43.1 62.8 43.4

Businesses 26.6 24.7 36.1 27.8 41.7 28.8

Small 27.9 25.8 30.9 23.7 32.8 22.6

Cooperatives 6.3 5.8 6.4 4.9 6.7 4.7

Rural Prod. Bills and guarantees 1.0 0.9 0.7 0.5 0.7 0.5

Total 108.0 100.0 130.1 100.0 144.8 100.0


Total Loan Portfolio¹ - Risk Level

((1) Classified loan portfolio does not consider Banco Votorantim operations.

R$ million

Balance Provision Share Balance Provision Share Balance Provision Share BI

AA 168,535 - 32.1 315,210 - 53.9 346,718 - 55.6 30.4

A 125,622 628 23.9 98,490 492 16.8 102,077 510 16.4 39.0

B 167,407 1,674 31.8 117,836 1,178 20.1 118,150 1,182 19.0 15.7

C 35,295 1,059 6.7 24,181 725 4.1 25,538 766 4.1 8.1

D 8,709 871 1.7 4,343 434 0.7 4,006 401 0.6 1.7

E 3,918 1,175 0.7 7,107 2,132 1.2 7,541 2,262 1.2 1.0

F 1,788 894 0.3 2,524 1,262 0.4 2,899 1,450 0.5 0.6

G 2,149 1,505 0.4 2,276 1,593 0.4 2,873 2,011 0.5 0.5

H 12,248 12,248 2.3 13,080 13,080 2.2 13,614 13,614 2.2 2.8

Total 525,672 20,054 100.0 585,046 20,897 100.0 623,417 22,196 100.0 100.0

AA-C 496,859 3,361 94.5 555,717 2,396 95.0 592,483 2,458 95.0 93.3

D-H 28,813 16,693 5.5 29,329 18,501 5.0 30,934 19,738 5.0 6.7



Loans to Individuals¹ – Risk Level

R$ million

(1) Classified loan portfolio does not consider Banco Votorantim operations.

Balance Provision Share Balance Provision Share Balance Provision Share

AA 25,274 - 19.0 45,149 - 30.3 47,764 - 31.0

A 26,807 134 20.1 29,967 150 20.1 29,653 148 19.2

B 48,190 482 36.2 49,245 492 33.1 50,591 506 32.8

C 22,373 671 16.8 13,836 415 9.3 14,953 449 9.7

D 2,796 280 2.1 1,656 166 1.1 1,762 176 1.1

E 1,155 346 0.9 2,120 636 1.4 2,407 722 1.6

F 545 272 0.4 962 481 0.6 1,067 534 0.7

G 628 439 0.5 718 502 0.5 793 555 0.5

H 5,288 5,288 4.0 5,289 5,289 3.6 5,312 5,312 3.4

Total 133,056 7,913 100.0 148,941 8,131 100.0 154,303 8,402 100.0

AA-C 122,645 1,287 92.2 138,196 1,057 92.8 142,960 1,103 92.6

D-H 10,412 6,626 7.8 10,744 7,074 7.2 11,342 7,300 7.4



Loans to Companies¹ – Risk Level

R$ million



AA 93,414 - 44.0 167,128 - 71.0 180,506 - 71.5

A 49,541 248 23.4 29,223 146 12.4 32,618 163 12.9

B 55,466 555 26.1 25,188 252 10.7 24,999 250 9.9

C 3,602 108 1.7 3,452 104 1.5 3,763 113 1.5

D 2,574 257 1.2 1,252 125 0.5 1,008 101 0.4

E 1,528 458 0.7 2,111 633 0.9 2,111 633 0.8

F 748 374 0.4 991 495 0.4 1,135 568 0.4

G 1,000 700 0.5 1,051 736 0.4 1,123 786 0.4

H 4,237 4,237 2.0 5,049 5,049 2.1 5,304 5,304 2.1

Total 212,109 6,938 100.0 235,444 7,540 100.0 252,569 7,918 100.0

AA-C 202,022 911 95.2 224,991 502 95.6 241,887 526 95.8

D-H 10,087 6,027 4.8 10,453 7,038 4.4 10,682 7,392 4.2



Agribusiness¹ – Risk Level

R$ million



AA 19,857 - 18.6 68,793 - 53.2 81,579 - 56.6

A 22,812 114 21.3 19,826 99 15.3 21,841 109 15.2

B 52,900 529 49.4 33,453 335 25.9 32,866 329 22.8

C 6,322 190 5.9 2,229 67 1.7 2,312 69 1.6

D 2,563 256 2.4 708 71 0.5 527 53 0.4

E 721 216 0.7 2,232 670 1.7 2,574 772 1.8

F 247 123 0.2 320 160 0.2 336 168 0.2

G 242 169 0.2 255 179 0.2 293 205 0.2

H 1,320 1,320 1.2 1,552 1,552 1.2 1,771 1,771 1.2

Total 106,984 2,918 100.0 129,368 3,132 100.0 144,100 3,477 100.0

AA-C 101,891 833 95.2 124,301 501 96.1 138,599 507 96.2

D-H 5,092 2,085 4.8 5,067 2,631 3.9 5,502 2,970 3.8



Renegotiated Loan Portfolio

R$ million

BB Consolidated

4Q12 3Q13 4Q13

Credits Renegotiated 8,432 9,600 9,609

Renegotiated overdue Loans 733 692 683

Renovated 7,699 8,908 8,926

Credits Renegotiated by Delay - Changes

Initial Balance 6,862 8,226 8,389

Contracts 733 692 683

Interest Received and Appopriated 66 (125) (360)

Write-Off (395) (405) (520)

Overdue Renegotiated Loan Portfolio 7,266 8,389 8,192

Allowance for Loan Losses Balance 4,553 5,054 4,934

NPL + 90 days 1,114 1,430 1,408

Indicators - %

All. for Loan Losses / Loan Portfolio 62.7 60.3 60.2

NPL + 90 days / Loan Portfolio 15.3 17.0 17.2

All. for Loan Losses Balance/NPL + 90 days 408.6 353.4 350.3


Actuarial Assets (Previ – Plano I) - CVM 695/12

R$ million

2Q13 3Q13 4Q13

(a) Fair Value of the Plan's Assets 134,982 134,982 144,421

(b) Present Value of Actuarial Liabilities (122,121) (122,121) (113,523)

(c) Surplus BB = [(a) + (b)] x 50% 6,430 6,430 15,449

(d) Actuarial Assets (Initial Period) 12,352 6,430 6,655

(e) Anticipated Financial Results - Monthly 187 112 112

(f) Amounts from Previ' surplus funds (Plano 1) 130 113 763

(g) Reversal of Contribuição and Destinação Funds - - 819

(h) Half-year Adjustment on Shareholders Equity (6,238) - 7,100

(i) Actuarial Assets (Period End) = (d) + (e) + (f) + (g) + (h) 6,430 6,655 15,449


Actuarial Liabilities (Cassi) - CVM 695/12

R$ million

2Q13 3Q13 4Q13

(a) Fair Value of the Plan's Assets - - -

(b) Present Value of Actuarial Liabilities (7,255) (7,255) (6,334)

(c) Deficit BB = [(a) + (b)] (7,255) (7,255) (6,334)

(d) Acturial Liabilities (Initial Period) (7,801) (7,255) (7,360)

(e) Amounts recognized in statement of income (194) (230) (230)

(f) BB - Amount paid 128 125 167

(g) Amount Recognized in Half-Yearly Adjust-Shareholders' Eq. 612 - 1,090

(h) Actuarial liabilities (Period End) = [(d) + (e) + (f) + (g)] (7,255) (7,360) (6,334)


Amounts recognized in equity – CVM 695/2012 R$ million

Jun/13 Previ Plano 1Previ - Plano

InformalCassi Others Plans Total

Valuation adjustments (6,238) 48 612 339 (5,239)

Tax effects 2,669 (19) (245) (137) 2,268

Efects on shareholders equity (3,569) 29 367 202 (2,970)

Dec/13 Previ Plano 1Previ - Plano


Valuation adjustments 7,100 (10) 1,090 269 8,449

Tax effects (3,038) 4 (436) (108) (3,578)

Efects on shareholders equity 4,062 (6) 654 161 4,870

2013 Changes Previ Plano 1Previ - Plano


Valuation adjustments 862 38 1,702 608 3,210

Tax effects (369) (15) (681) (245) (1,310)

Efects on shareholders equity 493 23 1,021 363 1,900


Actuarial Assets – Funds

R$ million

Fundo Destinação ("Destination Fund") 4Q12 1Q13 2Q13 3Q13 4Q13

Initial Balance 2,853 2,374 1,917 1,378 1,101

Restatement 82 68 38 18 24

Transfers to Fundo de Utiliz. and Contr. (562) (282) (597) (295) (597)

Adj. Balance - Contrato 97 - (244) 20 - -

Amounts reverted to Plano 1 - - - - (528)

Closing Balance 2,374 1,917 1,378 1,101 -

Fundo de Contribuição ("Contribution Fund") 4Q12 1Q13 2Q13 3Q13 4Q13

Initial Balance 849 727 636 537 431


Contributions to the Plano 1 (148) (113) (114) (113) (151)

Amounts reverted to Plano 1 - - - - (291)

Closing Balance 727 636 537 431 -

Fundo de Utilização ("Utilization Fund") 4Q12 1Q13 2Q13 3Q13 4Q13

Initial Balance 4,634 5,358 5,822 6,570 6,968

Constitution 562 282 597 295 597

Restatement 162 182 151 104 229

Closing Balance 5,358 5,822 6,570 6,968 7,794

Fundo Paridade ("Parity Fund") 4Q12 1Q13 2Q13 3Q13 4Q13

Initial Balance 1,715 741 765 748 760

Contributions to the Plano 1 – Contract 97 (17) 0 (33) (0) (571)


Contributions - Especial Group (1,014) - (3) - (41)

Closing Balance 741 765 748 760 172


Service Network

(1) Caixa Econômica Federal – Lottery Stores, Banco 24h, ATMs from Banco Regional de Brasília and Caixa Econômica Federal.

Total Service Network Dec/13

Shared Service Network¹ 32,046

Automated Points of Service 11,947

Banking Agents 10,251

Banco Postal 6,189

Branches 5,450

Points of Service 1,746

Total 67,629

4Q13 Earnings Release - BB · – Fourth Quarter 2013 Earnings 4 Earnings Highlights (1) It...

Documents

Transcript of 4Q13 Earnings Release - BB · – Fourth Quarter 2013 Earnings 4 Earnings Highlights (1) It...