INSTITUTIONAL PRESENTATION - Banco...

InstitutionalPresentation3Q18

2

Agenda

• Historic

• Corporate Governance

• Products

• Funding

• Rating

History

2012

• BMG and ItaúUnibanco form a joint venture to create a new bank focused on Payroll Loan (JV)

1998

• Beginning of Payroll Loan operations– BMG starts to focus on payroll loan for public employees

2011

• Banco BMG acquires 100% of Banco GE Money shares in Brazil (current Banco Cifra) and of Banco Schahin(current BCV)

1980’s

• BMG Leasing positioned as the market leader in the vehicle leasing segment

1930

• GuimarãesFamily created the Banco de Minas Gerais, focused on individual and corporate credit

2005

• BMG started operating in the Payroll Credit Card business

2015

• BMG started operating the Payroll Credit Card in the INSS (Social Security)

2016

• Jan - Launch of a new distribution channel, “help! loja de crédito”, a franchise network

• Jun - Creation of BMG Seguros, focused on surety bond market

• Oct – BMG and Generali sign a 20-year partnership for exclusive distribution of insurance products

• Dec – BMG concludes the sale of its participation in the JV to Itaú

2002

• BMG is the first bank to structure a fully distributed ABS fund

2017

• Apr – Mr. Bernard Mencier is the new chairman of Banco BMG's Board of Directors

• Sep - Launch of the fixed income platform, BMG Invest Digital

• Sep - Marco Antunes takes over as Managing Director and Flavio Guimarães Neto as CFO

3

2018

• Jul - Largest urban mobility partnership with Autopass

• Set - BMG acquires 65% of Granito –Acquiring company

• Out - Launch of the Full Digital Bank

4

Corporate Structure

Ownership Breakdown Board of Directors

Shareholders # shares %Flávio Pentagna Guimarães 9,801 38.9%

BMG Participações S/A 7,774 30.9%

Regina Annes Guimarães 1,641 6.5%

Ricardo Annes Guimarães 1,641 6.5%

João Annes Guimarães 1,641 6.5%

Ângela Annes Guimarães 1,641 6.5%

Outros 1,030 4.2%

Total 25,169 100.0%

Board of Directors PositionBernard Mencier President (IM)Ângela Guimarães CounselorFlavio Guimarães Neto CounselorJosé Eduardo Dominicale CounselorJoão Guimarães CounselorOlga Colpo Counselor (IM)Regina Guimarães CounselorRoberto Faldini Counselor (IM)

*IM: Independent Member

Monthly meetings of the Board of Directors.99.6% owned by Pentagna Guimarães Family.

Main Committees

♦ Executive Committee and the Officers Meeting: strategicand tactical meetings on a weekly basis;

♦ Audit Committee: composed entirely of independentdirectors, the committee meets monthly;

♦ ALCO – Assets and Liabilities Committee: decision-making character committee, for best practices meetsweekly;

♦ Disclosure Committee: aiming to ensure transparencyand quality of information, the committee meets at leastquarterly;

♦ BMG also has six other internal committees that assist theExecutive Board in its activities.

Corporate Governance

5

Banco BMG

Total Assets: R$ 16,959 million

Shareholders’ Equity: R$ 2,757 million

Net Income 9M18: R$ 131 million

Recurring Net Income 9M18: R$ 196 million

ROAE 9M18: 6.6% p.a.

Recurring ROAE 9M18: 11.2% p.a.

Net Interest Margin 9M18: 18.6% p.a.

Basel Ratio: 13.1%

♦ With 88 years of solid presence in the financialmarket, BMG is a retail bank focused on consumerfinancing and offers its customers through physical anddigital channels the following products:

♦ Retail - payroll credit card (BMG Card). Direct DebtLoan. both exclusive to Social Security (INSS) retireesand pensioners and public servants. and digitalpersonal credit (Lendico), and mass insurance throughpartnership.

09/30/2018

% of TotalPortfolio

BalanceR$ Million

R$/US$ 4.0039 as of September 30, 2018

Payroll CreditCard

StructuredOperations

Direct Debt Loan

Run Off

6,928

686

400

9.265

7,760

312

BMG Money

Lendico

CompaniesR

eta

il

266

166

Wh

ole

sale

507

74.8%

7.4%

4.3%

83.8%

3.4%

2.9%

1.8%

5.5%

6

Payroll Credit Card

Credit Portfolio

R$ Million

Characteristics

Regulated by Law 13.172 which allows the exclusivemargin of 5% for the Social Security and federal servers;

International card with the benefits of the traditionalcard and attractive rates. will remain as an exclusiveproduct of BMG and has a great growth potential;

Minimum monthly payment discounted directly from thepayroll;

Average Interest Rate: 46.8% p.a. (origination) /49.2%p.a. (portfolio);

80.3% is concentrated on Social Security (INSS) retireesand pensioners.

Credit Card x Loan

Credit Card1 Loan2

Strategy: growth perspective of the portfolio at BMG

3Q18

49.2% 25.0%

3.3% 2.3%

(1) BMG’s Payroll Credit Card portfolio/ (2) Payroll Loan outstanding in the market – Source: BACEN.

Portfolio Quality

interest rate (% p.a.)

NPL over 90

commission

funding cost

net interest margin

+14.1%

+1.8%

6,073 6,321 6,5206,805 6,928

3Q17 4Q17 1Q18 2Q18 3Q18

3.6% 3.7% 3.7% 3.9%3.3%

3Q17 4Q17 1Q18 2Q18 3Q18

E-H Portfolio

7

Personal Credit

BMG MoneyDirect Debt Loan

Launched on Jan/16. is a personal credit. direct debt loanaiming in financial reinclusion;

Exclusive for Social Security (INSS) retirees andpensioners and public employees;

Maximum Term: 12 months.

Credit PortfolioCredit Portfolio R$ Million/ % p.m. R$ Million

Since 2009, the shareholders of Banco BMG hold themajority stake of BMG Money, a fully licensed consumerfinance company with a focus on payroll loans to publicsector employees, with presence in 17 American states;

This operation is reflected in BMG through participationagreements celebrated with BMG Bank (Cayman).

211250

303358

400

21.7% 21.2% 20.7% 20.5% 20.9%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

0

100

200

300

400

500

600

3Q17 4Q17 1Q18 2Q18 3Q18

credit portfolio interest rate

32.0% 32.9% 29.8% 28.5% 31.1%

19.0% 20.2% 18.3% 17.1% 17.1%

3Q17 4Q17 1Q18 2Q18 3Q18

E-H Portfolio Overdue Installments over90

126 140158

216

266

3Q17 4Q17 1Q18 2Q18 3Q18

4.5%5.8% 5.5% 5.8% 5.6%

3Q17 4Q17 1Q18 2Q18 3Q18

E-H Portfolio


8

Mass Insurance

In September 2016, BMG and Generali signed a 20-yearexclusive partnership for the distribution of massinsurance through BMG’s channels;

Mainly targeted to social security retirees, pensioners andcivil servants;

Main cross selling opportunity for retail clients, increasingnon-credit income and profitability over capital employed;

Revenue streams: (i) initial payment of €45MM(R$164MM), (ii) earn-out formula, starting in 2019, (iii)profit sharing corresponding to 40% of the result, (iv)commission, and (v) lower provision expenses.

Acummulated Insurance Sales

Products and Average Ticket

%

Life Insurance: also includes assistance and benefits planfor INSS retirees;

Credit Life Insurance (BMG Card): settle the balance duein case of death or total permanent disability due toaccident;

Credit Life Insurance (Direct Debt): settle the balance duein case of death or total permanent disability due toaccident;

Loss Insurance: covers losses resulting from the loss ortheft of the payroll credit card.

R$ Million

Generali’s Partnership Sales Penetration

R$ 35 R$ 102 R$ 84 R$ 4Averageticket

63.8

72.8

24.0 21.0

Life Insurance BMG CardInsurance

Direct DebtLoan Insurance

Loss InsuranceCredit Life Insurance

(BMG Card)

Credit Life Insurance

(Direct Debt)


25% 25%34%

40% 44%

78% 82%87% 90% 92%

3Q17 4Q17 1Q18 2Q18 3Q18

Prestamista BMG Card Direct Debt Loan Insurance

9

Distribution Channel

Distribution Channel franchise network

FormalizationMultibanks Third-party Correspondents

~2,800 BMG agreed correspondents throughout Brazil;

Multibank stores, without exclusivity with BMG;

Main channel for origination of consignment products.

Network of credit franchise, focused on the retailsegments of Social Security (INSS) retirees andpensioners and public employees;

Designed to be a multi-services solution (one stopshop);

Offer greater security for the operation and allowscloser relationship with the client;

393 stores strategically located at points of easyaccess and high circulation of target customers.

Formalization through the complete biometric profile,integrated to the operating system:

Fingerprint reader

Facial biometry

Electronic signature

padPinpad Scanner

Voice recorder

Bar code reader

+800

+1,200

+250

+250

+300

BMGBranches

Full Digital Bank

Points ofsale

Third-partycorrespondents

help! stores

828756

641537 507

21.0% 21.3% 20.1%24.7% 25.3%

3Q17 4Q17 1Q18 2Q18 3Q18

Credit Portfolio Provision/ Portfolio

465537

637 658 686

3Q17 4Q17 1Q18 2Q18 3Q18

BMG Empresas

10

Companies – Portfolio R$ MillionStructured Operations – Portfolio R$ Million

Companies – NPL %Structured Operations – NPL %

+4.3%

+47.7%

-38.7% -5.7%

3.1%

2.5%

1.8%1.5%

1.0%

0.5% 0.4% 0.2% 0.1% 0.1%

3Q17 4Q17 1Q18 2Q18 3Q18

E-H Portfolio Overdue Installments over 90

29.8% 30.6% 30.9%37.0% 35.2%

8.7% 8.2%11.0%

18.1%17.9%

20.8%20.9% 25.4%

26.5%22.5%

3Q17 4Q17 1Q18 2Q18 3Q18

E-H Portfolio

Overdue Installments over 90

E-H Portfolio (ex-100% provisioned)R$/US$ 4.0039 as of September 30, 2018

11

BMG Seguros

Created in July 2016. the insurance company focusesexclusively on the surety bond segment.

Company owned by Banco BMG;

Highly experienced market professionals;

Target audience: Corporate & Large-Corporate;

Same credit police of Banco BMG;

Main modalities: Bid Bond. Performance Bond.

Judicial Guarantee. Payment Guarantee.

September 2018

Accumulated Insured Amount: R$ 9,590 million

Accumulated Written Premiums: R$ 265 million

Written Premiums 9M18: R$ 130 million

Net Income 9M18: R$ 0.8 million

Financial Highlights

BMG Seguros

Accumulated Insured Amount

Quarterly Written Premiums

R$ Million

R$ Million

4,2025,017

7,0977,813

9,590

41 50 62 58 70

3Q17 4Q17 1Q18 2Q18 3Q18Insured Amount Insured Amount Retained

25 22 29

11

90

7 5 7 3

47

3Q17 4Q17 1Q18 2Q18 3Q18

Written Premiuns Retained Premiuns


2.457

1.368

776 457 386 327 284

1Q15 4Q15 4Q16 4Q17 1Q18 2Q18 3Q18

45

38

27 25 24 22

4Q15 4Q16 4Q17 1Q18 2Q18 3Q18

1.108

678

21 14 10 6

1Q16 4Q16 4Q17 1Q18 2Q18 3Q18

12

Run Off Portfolio

Vehicles Portfolio R$ MillionPayroll Loan Portfolio R$ Million

Run Off Portfolio Evolution % Total PortfolioHome Equity Loan Portfolio R$ Million

Tru

e s

ale

ass

ign

me

nt

Ru

no

ffp

ayro

ll lo

an

Ru

no

ffve

hic

les

Veh

icle

s tr

ue

sale

-88.4%

-99.5%

-13.2%-37.0%

-51.5% -27.8 p.p.

-6.8%


31.1% 30.2%17.6%

5.8% 4.8% 4.0% 3.4%

1Q15 4Q15 4Q16 4Q17 1Q18 2Q18 3Q18

Run off Porfolio

13

Portfolio Quality

Methodology :Overdue Installments: Installments overdue more than 90 days /Total Portfolio.E-H Portfolio: Portfolio classified by E-H/Total Portfolio, including overdue plus falling due installments.

NPL 3Q18 2Q183Q/2Q

(%)3Q17

3Q/3Q

(%)

E-H Portfolio 226 266 -14.8% 216 4.6%

Total Portfolio 6,928 6,805 1.8% 6,073 14.1%

Payroll Credit Card 3.3% 3.9% -0.6 p.p 3.6% -0.3 p.p

E-H Portfolio 163 136 20.0% 82 99.9%

Total Portfolio 831 735 13.2% 442 88.2%

Personal Credit 19.7% 18.5% 1.2 p.p 18.5% 1.2 p.p

E-H Portfolio 186 209 -11.1% 261 -28.8%

Total Portfolio 1,193 1,196 -0.2% 1,292 -7.6%

BMG Empresas 15.6% 17.5% -1.9 p.p 20.2% -4.6 p.p

E-H Portfolio 47 46 1.8% 86 -45.4%

Total Portfolio 313 360 -13.3% 584 -46.5%

Run off 15.1% 12.8% 2.3 p.p 14.8% 0.3 p.p

E-H Portfolio 623 657 -5.3% 646 -3.6%

Total Portfolio 9,265 9,096 1.9% 8,391 10.4%

Total Portfolio NPL 6.7% 7.2% -0.5 p.p 7.7% -1.0 p.p

NPL – E-H Portfolio

NPL – Overdue Installments NPL – E-H Portfolio

7.7% 7.6% 7.0% 7.2% 6.7%

3Q17 4Q17 1Q18 2Q18 3Q18

Total Portfolio

4.1% 4.0% 4.0%4.5%

3.9%

3Q17 4Q17 1Q18 2Q18 3Q18

Total Portfolio


14

09/30/2018

% TotalFunding

BalanceR$ Million

Diversified Funding

External Funding

Deposits

Securitization

LetrasFinanceiras

Other

Time Deposit

DPGE

Interbank Deposit

Credit Assignment

13.8%

74.8%

4.0%

3.4%

1,697

9,339

504

428

9,235103

1

1.6%181

12,489

2.7%340


number of funding clients increased 45.6% in the last twelve months.

.

BMG Invest - BMG Invest, a fixed income platform geared towards individuals and

companies, helping broaden the number of clients in the Bank's funding base.

At BMG Invest Digital is possible to open accounts 100% digitally via the website or

app.

50 brokers, distributors and

privates.

The level II Reference Equity is zero in view of the fact that, by choice, BMG chose to fully

deduct the subordinated debt maturing in October 2019 and August 2020 issued under the

former rules of subordinations.

15

External Funding

External Funding

(USD Milhões) TypeNotional

IssuedYield (p.a.) Principal Payment Final Maturity

Outstanding3Q18

BMG 14 Senior 300 6.5% Bullet 03/14/2014 -BMG 16 Senior 300 9.15% Amortizing 01/15/2016 -BCV 16 Subordinated 50 8.68% Bullet 11/21/2016 -BMG 17 Senior 150 9.625% Bullet 03/27/2017 -BMG 18 Senior 300 8.00% Amortizing 04/15/2018 -BMG 19 Subordinated 300 9.95% Bullet 11/05/2019 245BMG 20 Subordinated 250 8.875% Bullet 08/05/2020 165 Total 1.650 410

Price Evolution

Maturities: For the next twelve months no principal amounts will mature.

Graph updated until 10/18/2018

50

60

70

80

90

100

110

BMG19 BMG20

9.5%

13.2%

15.3%16.1%

19.3%

16.2%

18.9%19.8% 20.2%

3.3%

5.6%

8.6%

9.1%

12.4%

10.4%

12.3% 12.6%13.8%

2015 2016 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

NIM NIM ajusted to cost of credit

16

ProfitabilityFinancial Margin Evolution

% per year+10.7 p.p.

+10.5 p.p.


17

Ratings

Agencies Date Rating Perspective

FITCH

RatingsMay 2018

Local Currency A-

(bra)Negative

Foreign Currency B+

Moody‘s July 2018

Local Currency

Baa3.brNegative

Foreign Currency B1

RISKbank July 2018 9.79Low Risk for Short

Term 1

18

Contact & Disclaimer

INVESTOR RELATIONS TEAM

Tel.: +55 11 3067- 2048

[email protected]

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.

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