1
Investor Presentation3Q2010
2
. Who we are
. Business Segments
. Competition
. Financial Highlights
3
IPO
1989 1991 1997 2005 2006 20102007
History in Brazil
Arab Banking
Corporation and local
management acquire
Roberto Marinho
Group´s shares
Current
management starts
running the bank
The bank´s name
changes to
Banco ABC Brasil
S.A.
The bank
structures its
Middle Market
operations
Arab Bank Corporation and
Roberto Marinho Group jointly
initiate Banco ABC Roma SA,
acting in the segments of
corporate lending, trade finance
and treasury
3
4
Focus on Companies
• Expertise in corporate credit risk analysis with remarkablylow historical losses.
• Wide range of products.
• Winning combination of a strong controlling shareholderand an independent local Management team.
4
ABC Brasil strongly focuses on providing loans and structured products to mid-sized and large companies.
Middle Market
Other
Corporate
29.9%
100%94.0%
88.5%
86.3% 2,011
2,6052,911
4,992
6,485
84.3%
6.0%11.0%
11.8%
12.5%
8,509
Credit PortfolioIncluding Guarantees Issued.
BRL Million.
84.1%
14.6% 31.2%
26.0%
10,725
13.1%
86.9%
0.5%
1.9%
3.2%
1.3%
2004 2005 2006 2007 2008 2009 3Q10Sep10
5
ROAC
AM
RR
PA
AP
MA
PI
CE
BA
MGES
RJ
SP
PR
SC
RS
MS
MT
GO
DF
RN
PB
PE
ALSE
Geographical presence
5
•Banco ABC Brasil has businessplatforms in seven states thatare responsible for 70% of theBrazilian GDP.
•From these business platformsother states are covered.
TO
BUSINESS PLATFORMS
CORPORATE MIDDLE
SP Capital 3 3
SP Countryside 1 1
South 1 3
RJ 1 1
MG - 1
GO - 1
TOTAL 6 10
ABC Brasil offices
6
Ownership Structure
Local Management
14.4%
ABC85.6%
Voting Capital
ABC
56.5%Local
Management
9.5%
Associates
1.0%Free float33.0%
Total Capital
6
Support of a strong international controlling shareholder.
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Controlling Shareholder
International bank headquartered in Bahrain
Listed in the Bahrain stock exchange
Present in 21 countries
Main Shareholders
Central Bank of Libya 41.6%
Kuwait Investment Authority 29.7%
Abu Dhabi Investment Authority 17.7%
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Arab Banking Corporation
Total Assets: US$ 26.8 Bn
Shareholders’ Equity: US$ 3.4 Bn
Ratings:
BBB+ A3BBB+
3Q10
8
Ratings
Strong controlling shareholder Access to attractive funding
Independent management Agile decision making process
Successful track record Outstanding performance in corporate credit
Local Global
Aa1.Br Baa3
AA- BB+
Our high rating is a consequence of the combination of independent management, successful track record and a strong controlling shareholder.
8
Investment grade
9
Corporate Governance
ABC Brasil is listed at Bovespa Nivel 2 and has always followed strict CorporateGovernance practices, with shareholders represented in the Board of Directors.
Members
• 3 representing ABC
• CEO
• 2 independent members
Main responsibilities
Overall business guidelines, including its long-term
strategy and performance control and monitoring.
Election and removal of the members of the Executive
Board and monitoring the performance of their duties.
Board of Directors
Board Risk Committee
Audit ABC Brasil’s management, review the Bank’s
financial statements and report their conclusions to
the Bank’s shareholders.
Fiscal Council
• 4 members of the Board
of Directors
• 2 representing ABC
• 1 representing minority
shareholders
Delegate Credit Limits to Credit Committees.
Approval of specific transactions that exceeds the
delegated limits.
Risk Management Guidelines.
9
Review financial statements
Assess the effectiveness of internal and independent
audits
Audit Comitee
• 2 independent members
of the Board of Directors
• 1 accounting specialist
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Corporate Governance
10
ABC Brasil’s decision process is based on committees and no one has theauthority to individually approve a transaction or a product.
Main committees:
Credit CorporateCommittee
ProductsCommittee
TechnologyCommittee
Credit MiddleCommittee
ComplianceCommittee
ALCO
ResultsCommittee
Executive DirectorsMeeting
11
Successful Track Record
11
371727 640
1,0951,619
2,4522,061
1,7492,011
2,6052,911
4,992
6,485
8,509
0.0%0.7% 0.0%
0.6%0.0% 0.1% 0.1%
0.8%1.4%
0.0% 0.0% 0.2% 0.2% 0.6%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Credit Portfolio Losses / Credit PortfolioBRL million
Mexican
Crisis
Asian
Crisis
Russian
Crisis
Devaluation
of BRL
“Apagão”
September
11th
Argentinean
Crisis
Presidential
Elections of
Lula
Banco Santos
Bankruptcy
Subprime
Growth with low losses despite adverse economic conditions.
Losses / Loan Portfolio
12
. Who we are
. Business Segments
. Competition
. Financial Highlights
13
CorporateCompanies with annual revenues over BRL 250 million
13
CREDIT PORTFOLIO (BRL million)GEOGRAPHICAL DISTRIBUTION
Focus, agility and expertise in credit analysis are key differentiating features.
6.1%
6,305.0 7,157.2 8,079.8 8,790.8 9,323.9
3.858,6 4.410,4 4.950,3 5.426,1 5.784,0
2.446,4 2.746,8
3.129,4 3.364,7
3.539,9
3Q09 4Q09 1Q10 2Q10 3Q10
Guarantees issued
Loans
São Paulo -Capital; 57%
São Paulo -Countryside;
21%
Rio de Janeiro; 14%
South; 8%
3Q09 2Q10 3Q10
Average Ticket (BRL million) 11.5 12.9 13.7
Duration (days) 322 360 376
Groups 549 679 682
14
Middle MarketCompanies with annual revenues from BRL 30 to 250 million
14
CREDIT PORTFOLIO (BRL million)GEOGRAPHICAL DISTRIBUTION
Besides expertise in credit analysis, state of the art collateral controls are essential.
Sep 10Sep 09
São Paulo - Capital; 45%
São Paulo -Countryside; 10%
Rio de Janeiro; 10%
South; 30%
BH; 6%
3Q09 2Q10 3Q10
Average Ticket (BRL million) 1.8 2.0 2.0
Duration (days) 241 261 257
Groups 547 695 717
1.0%
984.4 1,242.0 1,314.3 1,388.0 1,401.8
932,5 1.173,7 1.252,2 1.346,1 1.365,3
51,9
68,3 62,1
41,9 36,4
3Q09 4Q09 1Q10 2Q10 3Q10
Guarantees issued
Loans
55,8% 44,7%
44,2% 55,3% Other
SP Capital
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Other Activities
Treasury
Investment Banking
Pricing & Asset Liability Management
Proprietary Trading
Hedge & Derivatives
15
FIDC
Debentures
Promissory Notes
Capital Markets
M&A
ABC Brasil is prepared to meet the growing demand of companies for sophisticated financial products in a developing capital markets scenario in Brazil.
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. Who we are
. Business Segments
. Competition
. Financial Highlights
17
Brazilian Banking SectorCompetitive advantages in corporate segment
Big retailbanks
17
Mid-sizedinternational banks
Mid-sized familyowned banks
Scale
Funding
Products
Agility
Focus
18
Larg
e
Corp
orate
Corp
orate
Mid
dle
Market
Revenues Range (BRL Mi)
2,000+
250-2,000
30-250
Individuals and small companies
Reta
il
Main Competitors
Big retail banks
Middle-sized international banks
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Big retail banks
Middle-sized international banks
Big retail banks
Middle-sized family owned banks
Big retail banks
Middle-sized international banks
Middle-sized family owned banks
NUMBER OF CLIENTS
ABC Brasil focuses on the Corporate and Middle Market segments.
Brazilian Banking Sector
19
. Who we are
. Business Segments
. Competition
. Financial Highlights
20
Credit Portfolio Quality
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Ratings according to Brazilian Central Bank resolution nº 2.682. Percentage
of portfolio.
Segments
Loan
Portfolio *
(BRL million)
Write Off
(BRL million)
Write Off /
Loan Portfolio
LLR **
(BRL million)
LLR ** /
Loan Portfolio
Past Due >
90 days
(BRL million)
Past Due >
90 days /
Loan Portfolio
Corporate 5,784.0 4.3 0.07% 67.5 1.17% 5.2 0.09%
Middle Market 1,365.3 6.2 0.46% 49.6 3.63% 9.7 0.71%
Total - 3Q10 7,149.4 10.6 0.15% 117.0 1.64% 14.9 0.21%
D-H 2.4%
AA-C 97.6%
* Excluding guarantees issued.** Loan Loss Reserves.
20022003
20042005
20062007
20082009
0.1%
0.7%
1.2%
0.0%0.0% 0.2%
0.2%0.6%
1.8%
2.7%
1.6%
1.2% 1.4%
1.0%
2.2% 2.3%
Losses Loan loss reserves
Percentage of portfolio.
21
Credit Portfolio Quality
20
1,03% 0,99% 0,98% 1,05%
2,23%
2,81%2,98%
2,64%
2,25%
1,92%1,78%
1,64%
0,21% 0,25% 0,28% 0,34%
0,64%
1,18%
0,95%
0,65% 0,57%
0,33%0,23% 0,21%
0,17% 0,11% 0,04%
0,05% 0,04%0,16%
0,17%0,28% 0,09%
0,32%0,12% 0,15%
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Loan Loss Reserves
NPL (over 91 days)
Write Off
0.87%0.71% 0.68% 0.74%
1.80%
2.30% 2.31%2.16%
1.83%
1.52%
1,29%1,17%
0.14%0.05%
0.15% 0.10%
0.38%
0.98%
0.61%
0.38%0.51%
0.23%0,12% 0,09%
0.04% 0.08%0.01% 0.03% 0.00% 0.00%
0.13% 0.15%0.04%
0.27%
0,00%0,07%
2.30% 2.39% 2.33% 2.24%
4.03%
5.23%5.54%
4.39%
3.65%3.33%
3,64% 3,63%
0.66%
1.27%0.95%
1.39%
1.84%
2.22% 2.28%
1.06%0.69% 0.65% 0,60% 0,71%
0.08%0.26% 0.20% 0.15% 0.13%
0.75%
0.13%
0.69%
0.21%0.37% 0,50% 0,46%
CORPORATE MIDDLE MARKET
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09
22
Funding
22
Strong funding supply with attractive prices in both local and international markets.
BRL million
23
Shareholder’s equity and Basel index
23
An offshore issuance of Subordinated Notes was concluded on April 8th in the amount of USD300 million,raising the bank´s capital and its ability to leverage.
410 405422
439459
483
1.083 1.0861.107
1.1321.159 1.162 1.175
1.1591.182
1.2181.247
1.2791.312
14,0%
13,4%
14,0% 13,9%
13,2%13,6%
26,7%
23,1%
20,7%
19,2%
16,7%
18,0% 18,1%17,9%
15,4%
14,6%
13,3%
17,8%
16,9%
12,0%
14,0%
16,0%
18,0%
20,0%
22,0%
24,0%
26,0%
28,0%
-
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Shareholder's equity (BRL M) Basel Index
IPO
Sub.
Debt
24
Revenues
24
MANAGERIAL NET INTEREST INCOME
INCOME FROM SERVICES RENDERED
* Treasury result with managerial adjustments
NIM (p.a.)
NII (BRL million) 3Q10 2Q10 Chg.(%) 3Q09 Chg.(%) 9M10 9M09 Chg.(%)
Financial Margin with Clients 109.7 104.7 4.8 86.0 27.6 308.2 260.4 18.4
Treasury * 7.2 8.6 7.8 30.5 16.9
Net Interest Income before Loan-Loss Provisions (LLP) 116.9 113.3 3.2 93.8 24.6 338.7 277.2 22.2
LLP (8.9) (9.0) (1.1) (8.6) 3.5 (31.7) (49.1) (35.4)
LLP (Brazilian Central Bank resolution nº 2,682) (9.4) (11.6) (19.0) (17.0) (44.7) (34.8) (52.4) (33.6)
Additional LLP 0.5 2.6 8.4 3.1 3.4
Total 108.0 104.3 3.5 85.2 26.8 307.0 228.2 34.5
Income from services rendered (BRL million) 3Q10 2Q10 Chg.(%) 3Q09 Chg.(%) 9M10 9M09 Chg.(%)
Guarantees issued 17.4 16.5 5.7 12.4 41.1 48.8 29.7 64.7
Underwriting Fees and M&A 0.5 1.6 0.0 4.5 0.8
Banking Fees 4.8 8.1 (40.3) 3.7 29.8 20.1 9.4 113.8
Total 22.7 26.2 (13.2) 16.1 41.1 73.4 39.9 84.1
3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10
5,6% 5,5% 5,7%5,3% 5,1%
5,6% 5,3%
25
Expenses
25
PERSONNEL, ADMINISTRATIVE AND PROFIT-SHARING EXPENSES
EFFICIENCY RATIO(including profit sharing)
Expenses (BRL million) 3Q10 2Q10 Chg.(%) 3Q09 Chg.(%) 9M10 9M09 Chg.(%)
Personnel (23.1) (22.4) 3.2 (19.5) 18.4 (66.4) (57.6) 15.3
Other administrative expenses (13.7) (13.5) 1.8 (14.1) (2.5) (40.6) (39.6) 2.5
Profit Sharing (15.0) (15.4) (11.8) 27.1 (45.8) (28.5) 60.7
Total (51.8) (51.3) 1.1 (45.4) 14.2 (152.8) (125.7) 21.6
41,6% 41,7%38,0% 37,6% 37,0%
39,9%37,3%
3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10
26
Profitability
26
NET INCOMEBRL million
ROAE(p.a.)
* Excluding extraordinary effects of divestment of participation in CETIP and adhesion to the Federal Government´s program for settlement of tax debits.
*
*38,1
44,5 46,9 50,2 51,1
97,4
148,2
3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10
13,0%
14,8% 15,2%15,9% 15,8%
11,1%
15,7%
3Q09 4Q09 1Q10 2Q10 3Q10 9M09 9M10
27
High Rating with Strong Sponsor &
Independent Management
High Level of Corporate
Governance
Expertise in Corporate Credit Risk Assessment
Agile Decision Making &
Experienced Management
Sophisticated and
Diversified Products
Strong Business
Origination Capacity
Compelling investment case
27
28
Investor Relations
Sergio Lulia Jacob Director Vice-President and IRO
Alexandre Sinzato, CFA Head of Investor Relations
Web Site: www.abcbrasil.com.br/irEmail: [email protected]: +55 (11) 3170-2186
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29
Credit Middle Market
Credit Corporate
Deputy CEOAnis Chacur Neto
Auditing Committee
InformationTechnology
Financial Control
Group Audit / Credit Group
Bahrein
Internal Auditing
Board
Commercial Corporate VPJose Eduardo C. Laloni
Legal
Risk
Compliance
Capital Markets
Investment Banking
CFO / COOSergio R. Borejo
Treasury & IR VPSergio Lulia Jacob
Commercial Middle VPGustavo A. Lanhoso
CommercialMiddle Market
Back Office
Human Resources
CEOTito Enrique da Silva Neto
CommercialCorporate
International / FI
Treasury
Investor Relations
Products
Appendix – Corporate Structure
29
Business Intelligence