1
Banco do Brasil
Banco do Brasil
VII Credit Suisse Banks
VII Credit Suisse Banks
Field Trip
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This presentation contains references and statements, planned synergies,
increasing estimates, projections of results and future strategy for Banco do
Brasil, it’s Associated and Affiliated Companies and Subsidiaries. Although these
references and statements reflect the management’s belief, they also involve
imprecision and high difficult risks to be foreseen, consequently, they may
conduct to a different result than the one anticipated here. These expectations are
highly dependent on market conditions, on Brazil’s economic and banking system
performances, as well as on international market one. Banco do Brasil is not
responsible for bringing up to date any estimate in this presentation.
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The financial crisis impact in Brazil
The financial crisis impact in Brazil
Liquidity crunch
International funding dries up
Sectors that suffered the most
Banking, Foreign Trade, Agribusiness & Automobile
Government support
International reserves
Reduction on Reserve requirements
Tax exemption
The outlook for 2009
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Funding
Funding
Volume Cost Volume Cost Volume Cost
Deposits 172.2 54.8% 195.5 49.2% 230.1 61.0%
Core Deposits¹ 128.4 44.0% 140.9 42.7% 144.7 44.1%
Money Market Borrowing 74.8 91.9% 93.3 91.3% 85.6 92.0%
Total Funding 247.0 66.3% 288.8 63.3% 315.7 69.7%
3Q07 2Q08 3Q08
R$ billion
Funding Cost - % of Selic
CDB2 - Balance CDB - Inflow
(1) Demand, Saving, Judicial and Especial Deposits (2) Time Deposit
R$ billion 49.0 Aug/08 55.1 Sep/08 65.8 Oct/08 68.0 Nov/08 Dec/08 69.2 R$ billion 13.5 Aug/08 24.0 Sep/08 35.3 Oct/08 27.9 Nov/08 28.6 Dec/08
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Reserve Requirements
Reserve Requirements
(1) November’s amounts are estimates.
(2) Reserve requirement potential release as long as the requirements are fulfilled.
Month Regulation Amount
(R$ million) Description September/08 Circular 3.405, of 09/24/08 200 Circular 3.408, of 10/08/08 400 Circular 3.408, of 10/08/08 3,050 Circular 3.410, of 10/13/08 700 Circular 3.410, of 10/13/08 1,300 Circular 3.413, of 10/14/08 1,200 Circular 3.416, of 10/24/08 1,080 6,964 Total 14,894
Reserve Requirements Release - Impacts on BB
October/08
November/08¹
Circular 3.417 of 10/30/08²
Additional Reserve Requirement deductible amount decrease from R$ 100 million to R$ 300 million.
Time Deposits Reserve Requirement deductible amount increase from R$ 300 million to R$ 700 million.
Time and Demand Deposits Additional Reserve Requirement rate decrease from 8% to 5%.
Additional Reserve Requirement deductible amount increase from R$ 300 million to R$ 1 billion.
Time Deposits Additional Reserve Requirement deductible amount increase from R$ 700 million to R$ 2 billion.
Demand Deposits Reserve Requirement rate decrease from 45% to 42%
Deduction of Demand Deposits Reserve Requirement relating to the advance of FGC contributions - Circular 3.416 of 10.24.2008.
Deduction of Time Deposits Reserve Requirement to back Interbank loan portfolios purchase and interbank operations.
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Loan Portfolio Purchase
Loan Portfolio Purchase
44% 29% 27% Payroll Vehicle Middle Market
Since October, out of R$ 17.1 billion
credit operations analyzed by BB, 40%
were approved.
In October, R$ 5.9 billion of credit were
purchased, including payroll, vehicle
and middle market loan portfolios.
Loan Portfolio Purchase - Breakdown
Until November, R$ 8.2 billion in loan portfolios were purchased by BB,
including payroll, vehicle and middle market loan portfolios.
(October Transactions)
The transactions include loan portfolio purchase and interbank operations with
loan portfolio collateral.
7 156.1 21.9 Jul/08 147.6 20.8 Aug/08 162.2 23.9 Sep/08 157.8 23.6 Oct/08 142.4 21.4 Nov/08 24.9 Dec/08 14.2 7.7 Jul/08 13.3 7.5 Aug/08 16.4 7.5 Sep/08 15.9 7.7 Oct/08 14.6 6.8 Nov/08 17.8 7.1 Dec/08 Businesses Individuals BFS* BB
Flow of New Operations
Flow of New Operations
11(*) Brazilian Financial System (1) Referential Credit to Tax Rate
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Businesses - Working Capital
3,758 1,290 1,455 1,367 1,227 2,896
Jul/08 Aug/08 Sep/08 Oct08 Nov/08 Dec/08
Businesses - ACC 2,393 2,722 2,856 1,820 2,167 2,449
Individuals - Car Loans
357
276 244
178 127 112
Individuals - Payroll Loans
752 893 901 941 857 898
Jul/08 Aug/08 Sep/08 Oct08 Nov/08 Dec/08
Jul/08 Aug/08 Sep/08 Oct08 Nov/08 Dec/08 Jul/08 Aug/08 Sep/08 Oct08 Nov/08 Dec/08
BB
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Credit Risk
Credit Risk
Inadimplência Pessoa Jurídica
2.9 3.0 3.0 2.9 3.1 3.0 3.2 3.3 3.3 3.2 3.5 3.6 3.7 2.6 2.6 2.6 2.5 2.8 3.3 3.1 3.2 3.1 2.9 3.1 3.1 3.2 2.3 2.3 2.2 2.0 2.0 2.0 1.8 1.8 1.8 1.7 1.7 1.7 1.6 2.1 2.1 2.1 2.0 2.0 2.0 1.8 1.8 1.9 1.7 1.7 1.6 1.6
Sep/07 Oct/07 Nov/07 Dec/07 Jan/08 Feb/08Mar/08 Apr/08 May/08 Jun/08 Jul/08 Aug/08 Sep/08
Past Due 15 SFN Past Due 15 BB Past Due 90 SFN Past Due 90 BB
Businesses Delinquency¹
Inadimplência Pessoa Física
13.5 13.7 13.7 13.4 14.1 13.8 13.7 13.4 13.3 13.0 13.4 13.5 13.3 9.4 10.2 9.9 9.7 10.4 10.4 10.4 10.7 10.8 9.6 10.8 10.9 10.9 7.1 7.0 7.1 7.0 7.1 7.1 6.9 7.1 7.4 7.0 7.3 7.5 7.3 6.0 6.1 6.1 6.3 6.2 6.0 5.6 5.6 5.8 5.8 5.8 5.8 5.9
Sep/07 Oct/07 Nov/07Dec/07Jan/08 Feb/08Mar/08 Apr/08May/08 Jun/08 Jul/08Aug/08 Sep/08
Past Due15 SFN Past Due15 BB Past Due90 SFN Past Due90 BB
Individuals Delinquency¹ Agribusiness Delinquency
6.7 6.7 6.7 7.0 7.9 8.1 7.7 7.6 7.5 7.4 7.3 7.1 7.0 1.7 1.6 1.9 1.9 2.5 2.3 2.5 2.4 2.4 2.6 1.9 1.5 1.4 Sep/07Oct/07Nov/07Dec/07Jan/08Feb/08Mar/08Abr/08May/08Jun/08Jul/08Aug/08Sep/08
Past Due90 BB Required Provision/Loan Portfolio
(1) Loan as Reference for Interest Rate *SFN= Brazilian Banking System
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(1) Individual Loan Operations except overdraft account, credit cards and vehicle loans
Individual Delinquency - Vintage¹
Annual Vintage Analysis (since 2005) Client Risk: A,B,C,D and E
Delinquency: 90 days D e li n q u e n c y + 9 0 d a y s Months Vintage
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Credit Risk
Credit Risk
3Q07 4Q07 1Q08 2Q08 3Q08 3.4 3.3 2.8 2.8 2.6 5.5 5.9 6.2 6.4 6.4 5.2 5.4 5.6 5.4 5.4Past Due Loans + 60 days/Loan Portfolio - %
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Expenses for Loan Losses - R$ million Expenses for Loan Losses/Loan Portfolio¹ - %
Credit Risk
Credit Risk
3Q07 4Q07 1Q08 2Q08 3Q08 3.3 3.6 3.6 3.7 3.7 1,216 1,497 1,534 1,687 1,33915 80 100 120 140 160 180 200 220 240 11/06/2002 11/06/2005 11/06/2008 Fonte: Bloomberg . ÍM a r/ 0 2 = 1 0 0 80 100 120 140 160 180 200 220 240 ÍM a r/ 0 2 = 1 0 0
CRB Index Soft Commodities in US$ Í CRB Index Soft Commodities in R$(*)
Soft Commodities Price R$ / US$
Agribusiness Loan Portfolio
Agribusiness Loan Portfolio
Agribusiness Loan Portfolio by Region Agribusiness Loan Portfolio by Financed Items
Product R$ million Share
Livestock 7,466 12.3% Soybeans 3,976 6.6% Sugar Cane 3,493 5.8% Corn 3,591 5.9% Coffee 1,892 3.1% Poultry 1,425 2.4% Orange 1,393 2.3%
Machinery and Equipment 1,306 2.2%
Others 35,982 59.5%
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Basel
Basel
¹
¹
Basel II Implementation
Capital Release
- Seven Levels of Risk Weighting – FPR
- 75% FPR to retail credit operations
- Risk mitigators taken into consideration in capital requirement
Capital Requirement
- Capital requirement for preapproved
credit lines
- From 50% to 100% FPR for ACC
(FX operations)
- Operational Risk capital allocation
Level II Level I
(1) Since 3Q08
* BIS Ratio estimated for dec/08 considering change in the impacts of tax credits and the acquisition of Nossa Caixa and Banco Votorantin.
10.5 5.2 3Q07 15.7 10.7 4.9 4Q07 15.6 10.6 4.7 1Q08 15.3 8.7 4.4 2Q08 13.1 9.0 4.5 3Q08 13.6 8.3 4.2 4Q08* 12.5
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Guidance
Guidance
Reported Guidance 9M08* 2008 Sustained Administrative Expenses 9.3% 7% - 10% ROE 26.7% 23% - 27%Credit Cards 23.7 million 25 million
NIM 7.1%
Fee Income** 7.5% 5% - 8.0%
Loan Portfolio – Domestic 37.1% 30% - 35%
Individuals 45.4% 40% - 45% Businesses 42.9% 35% - 40% Agribusiness 24.9% Reviewed 20% Total Deposits 33.6% 25% - 30% Tax Rate 23.4% 23% - 25%
Allowance for Loan Losses 3.3% 3.5% - 3.8% Average Portfolio (**) If the 4Q08 result remains as the 3Q08, the growth will be of 6.3%
7% - 7.5%
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Acquisition of
Control of
21 Businesses Agribusiness - Businesses Individuals Abroad
Loan Portfolio
Loan Portfolio
R$ billion Δ Δ Δ Δ % over 3Q07 2Q08 34.6 6.4 2.7 32.8 42.7 8.8 45.4 5.9 72.4 (3.0) Market Share¹ - %(1) Domestic Loan Portfolio
Agribusiness - Individuals 12.0 (1.2) 4Q07 160.7 2Q08 3Q08 1Q08 3Q07 150.2 12.6 16.5 16.9 16.3 16.0 16.1 59.7 65.5 29.5 32.0 38.1 40.2 10.4 11.7 12.6 11.4 172.8 69.1 36.6 40.7 15.8 10.5 190.1 78.3 40.5 43.2 18.4 9.7 202.2 85.1 42.9 42.6 17.9 12.9 0.7
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Source: Brazilian Central Bank – figures as of June 2008.
The combination of BB and Nossa Caixa will create the
largest branch network in the State of São Paulo
Branches Consolidation
Consolidation
Branches Located in the State of São Paulo
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The synergies with Nossa Caixa credit growth can be
captured even with an average spread of 4%
1 Data from Banco do Brasil as of September 30, 2008. 2 Data from Nossa Caixa as of September 30, 2008.
3 Additional credit calculated based on the difference between the loan to deposits ratio of Banco do Brasil and Nossa Caixa. 4 Consolidated spread of Banco do Brasil as of September 30, 2008.
5 Average spread for individuals of Banco do Brasil as of September 30, 2008. 6 Conservative spread.
Under different scenarios, even considering conservative assumptions, suggests gains after taxes in excess of R$440 million per year, in a recurring basis
1 1 2 2 3 4 5 6 Loan Portfolio BB 202,201 202,201 202,201 Total Deposits BB 230,050 230,050 230,050 Loan / Deposits 87.9% 87.9% 87.9% Loan Portfolio NC 11,489 11,489 11,489 Total Deposits NC 33,960 33,960 33,960 Loan / Deposits 33.8% 33.8% 33.8% Additional Credit NC 18,360 18,360 18,360
Spread 7.1% Spread 11.0% Spread 4.0%
Gains before Taxes 1,303.5 2,019.6 734,4
IR + CSLL 40% 40% 40%
Gains after Taxes 782.1 1,211.7 440.6
Scenario 1 - Spread BB 9M08 Scenario 2 - Spread for Payroll Loans Scenario 3 - Conservative Spread
1
R$ million 4 5 6 Loan Portfolio BB Total Deposits BB Loan / Deposits Loan Portfolio NC Total Deposits NC Loan / Deposits Additional Credit NCGains before Taxes IR + CSLL
Gains after Taxes
Loan Portfolio BB Total Deposits BB Loan / Deposits Loan Portfolio NC Total Deposits NC Loan / Deposits Additional Credit NC
Gains before Taxes IR + CSLL
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Synergies with credit expansion are possible even
considering a reduction in growth expected for 2009
A v e ra g e b a la n c e o f a d d it io n a l c re d it – R $ m il li o n BB – São Paulo 44,662 11,489
Loan Portfolio – R$ million
5.9 5.7 7,570 2,016 3.8 x # of Clients - million Loan / Clients – R$ Loan / Clients BB / Nossa Caixa
Figures relative to September 30, 2008.
1 Net gains calculated considering spread net of taxes (40% tax rate of IR + CSLL).
2 EPS of 2.65 forecasted for 2009 (Bloomberg consensus) was considered as the break-even point.
1 2 Spread – 4.1% 7.0% 11.0% 1,000 24.84 42.00 66.00 2,000 49.68 84.00 132.00 3,000 74.52 126.00 198.00 4,000 99.36 168.00 264.00 5,000 124.20 210.00 330.00 6,000 149.04 252.00 396.00 1,000 2.62 2.63 2.63 2,000 2.63 2.64 2.66 3,000 2.64 2.66 2.69 4,000 2.65 2.67 2.71 5,000 2.66 2.69 2.74 6,000 2.67 2.71 2.76
Net Gains - R$ million
25 -0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 J a n -0 7 M a r-0 7 M a y -0 7 J u l-0 7 S e p -0 7 N o v -0 7 J a n -0 8 M a r-0 8 M a y -0 8 J u l-0 8 S e p -0 8 N o v -0 8
Why acquiring Nossa Caixa now?
1 Price to book value based on Banco do Brasil’s common shares (ON). Based on closing market prices and on the last available published shareholders’ equity. Source: Economática, Companies' reports and Brazilian Central Bank.
Timing Considerations Banco do Brasil’s Historical P / BV 1
Favorable regulation
– MP no443
Scenario of increasing consolidation within the
Brazilian banking sector
Complementary operations with focus in the State
of São Paulo and strong potential to capture synergies
Price paid reflects strategic value of Nossa Caixa to
BB and is in line with BB’s historical trading multiple and recent transactions in the sector
Precedent Transaction Multiples
Date Buyer Target P/BV
Nov-08 Itaú Unibanco 2.0x
Sep-07 BB BESC 1.7x
May-07 Santander Real 3.6x
Feb-07 Societe Generale Cacique 2.6x
Jan-07 Bradesco BMC 2.8x
May-06 Itaú Bank Boston 2.1x
Dec-05 Bradesco BEC 1.9x
Feb-04 Bradesco BEM 2.3x
Average 2.4x
Average = 2.7x
Average 2008 = 2.4x
1.2x
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27 Dividend Distribution to VF
Partnership Structuring
Shareholders’ Equity Book Value of Banco Votorantim (R$ bn) Stake in BV Stake in BV (%) (%) 100.0% 0.0% 55.0% 45.0% 50.0% 50.0% 45% stake acquisition on Banco Votorantim for R$ 3.0 billionCapital increase of R$ 1.2 billion, reaching a 50% stake in Banco Votorantim’ total capital
1 1 2 2 3333 3333 3.00 3.003.00 3.00 55% 50% 45% (0.75) 1.20 50%
Initial status Dividend distribution of BV to VF Post Dividend distribution Post stake acquisition (secondary) Capital increase from BB at BV
Final status after capital increase
6.42
5.67 5.67
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Banco Votorantim Assets Evolution
Brazilian largest financial institutions (ranked by total assets – R$bn)Source: Austin Asis
1 Data from sep/08: considering the merger of Itaú-Unibanco and the acquisition of Nossa Caixa by BB (pro-forma) 1994 1994 1. BANCO DO BRASIL 2 CAIXA 3. BANESPA 4. BRADESCO 5. BAMERINDUS) 6. NACIONAL 7. UNIBANCO 8. REAL 9. SAFRA 10. ECONOMICO 11. NOSSA CAIXA 12. BANRISUL 13. BNB 14. LLOYDS TSB BANK 15. SANTANDER NOROESTE 16. APLICAP (LIQ EXT) 17. ITAU HOLDING FIN 18. SANTANDER (BOZANO) 19. MULTIPLIC 20. BANERJ EX JUD) 21. CITIBANK, N.A. 22. BBM 23. BANORTE 24. SANTANDER BANESPA 25. ABN - AMRO BANK 26. BANKBOSTON, N.A. 27. IBM 28. ITAMARATI 29. UBS PACTUAL 30. BMB 34.VOTORANTIM 0.8 bn 1. BANCO DO BRASIL 2. CAIXA 3. BRADESCO 4. ITAÚ 5. UNIBANCO 6. BANESPA 7. REAL 8. SAFRA 9. HSBC BANK BRASIL 10. NOSSA CAIXA 11. SANTANDER BANESPA 12. SANTANDER BRASIL 13. ABN - AMRO BANK 14. SANTANDER NOROESTE 15. SANTANDER (BOZANO) 16. BNB
17.VOTORANTIM 4.8 bn
18. ITAU HOLDING FIN 19. BICBANCO 20. BANKBOSTON, N.A. 21. BARCLAYS 22. JP MORGAN (CHASE) 23. ALFA 24. BBM 25. LLOYDS TSB BANK 26. BESC 27. RURAL 28. UBS PACTUAL 29. BMB 30. ICATU 1. BANCO DO BRASIL 2. BRADESCO 3. CAIXA
4. ITAU HOLDING FIN 5. UNIBANCO
6. SANTANDER BRASIL 7. ABN - AMRO BANK 8. BANESPA 9. NOSSA CAIXA 10. CITIBANK 11. SAFRA 12. HSBC BANK BRASIL 13. VOTORANTIM 19bn 14. BANRISUL 15. BNB 16. SANTANDER (BOZANO) 17. JP MORGAN (CHASE) 18. BANKBOSTON, N.A. 19. LLOYDS TSB BANK 20. SANTOS (LIQ) 21. BNP PARIBAS 22. RURAL 23. ALFA 24. BASA 25. UBS PACTUAL 26. BMB 27. WESTLB 28. FIBRA 29. ABC BRASIL 30. VOLKSWAGEN 1. BANCO DO BRASIL 2. BRADESCO 3. ITAU HOLDING FIN 4. SANTANDER + ABN 5. CAIXA 6. UNIBANCO 7. HSBC BANK BRASIL 8.VOTORANTIM 64bn 9. SAFRA 10. NOSSA CAIXA 11. CITIBANK 12. UBS PACTUAL 13. BANRISUL 14. BBM 15. BNP PARIBAS 16. DEUTSCHE BANK 17. BNB 18. FIBRA 19. BICBANCO 20. JP MORGAN 21. BMB 22. BANESTES 23. PANAMERICANO 24. VOLKSWAGEN 25. BMG 26. DAYCOVAL 27. ING 28. BASA 29. GMAC 30. BANCO IBI 1. ITAÚ + UNIBANCO 2. BANCO DO BRASIL + NC 3. BRADESCO 4. SANTANDER + ABN 5. CAIXA 6. HSBC BANK BRASIL 7.VOTORANTIM 82 bn 8. SAFRA 9. CITIBANK 10. BANRISUL 11. BNP PARIBAS 12. UBS PACTUAL 13. FIBRA 14. BNB 15. ALFA 16. BBM 17. DEUTSCHE BANK 18. JP MORGAN 19. BICBANCO 20. VOLKSWAGEN 21. BANESTES 22. PANAMERICANO 23. SICREDI 24. BMB 25. DAYCOVAL 26. BMG 27. GMAC 28. BASA 29. ABC BRASIL 30. BESC 1998 1998 20022002 20072007 TodayToday11
29 Instituição Crédito PF (R$ bi) % Crédito Total Veículos 1 (R$ bi) % Crédito PF 51.5 24.1% 5.6 10.9% 21.7 56.8% 16.8 77.6% 73.2 29.1% 22.4 30.6% 95.2 39.9% 47.1 50.9% 63.7 39.7% 31.2 49.0% 57.3 43.9% 23.7 41.4%
Strategic reasons behind the partnership
Consumer Finance Portfolio Breakdown of Major Banks
Source: Quarterly company information, Central Bank Banco do Brasil is the only retail bank that does not have a consumer finance arm
Rationale of BV Financeira to Banco do Brasil
Consumer
Finance Arm Controller Retail Funding
Funding Generation + Assets
The strategic partnership will foster BB’s vehicle financing growth off-branches, what today represents R$ 1.9 billion, 34% of vehicle loan portfolio
1 Considers CDC Auto and Leasing +
30
4%
12%
1 2
Banco do Brasil and Banco Votorantim Combination
Source: Central Bank; Austin Asis; banks financial statements; press
Note: Considering the merger of Itaú + Unibanco (pro-forma), sep/08 data for vehicle financing, jun/08 data for payroll deductible loans and dec/07 data for Corporate/Large loans
Vehicle Financing Payroll Loans Corporate and Large Corporate Credit 4
4thth place in rankingplace in rankingplace in rankingplace in ranking
(16%) (16%)(16%) (16%) 11stst place in ranking place in ranking place in ranking place in ranking (22%) (22%)(22%) (22%) 22ndnd place in ranking place in ranking place in ranking place in ranking (21%) (21%) (21%) (21%)
Market Share (%) Market Share (%) Market Share (%)
14% 7% 1 2 19% 3% 1 2
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BB-BV Partnership Fit into
Nossa Caixa acquisition
Credit and Funding FitDiversified Individuals Product Portfolio Huge Client Base
(Individuals and Corporate) Low Cost Funding
National Presence
Diversified Individuals Product Portfolio Huge Client Base
(Individuals and Corporate) Low Cost Funding
National Presence
Low Cost Funding Low Leverage Resources Availability
State of SP Payroll
Low Cost Funding Low Leverage Resources Availability
State of SP Payroll
High Quality Asset Generation Diversified Corporate Product Portfolio
Outsourced Distribution Brokerage House
High Quality Asset Generation Diversified Corporate Product Portfolio
Outsourced Distribution Brokerage House
32 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
Nov-06 May-07 Nov-07 May-08 Nov-08
Evolution of vehicle financing in the last 12 months
Final Balance (R$ bn)
Although there was a small spike in delinquency rates, recent evolution of vehicle financing demonstrates spread increases and average maturity reductions
Spread (p.p.)
Average Maturity (days) Delinquency (%)
1 1 1 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
Nov-06 May-07 Nov-07 May-08 Nov-08 Market
1
1 Estimated data for Spt/08, Oct/08 and Nov/08 1 Estimated data for Spt/08, Oct/08 and Nov/08
1 Estimated data for Spt/08, Oct/08 and Nov/08 1 Estimated data for Spt/08, Oct/08 and Nov/08
16.5 18.6 16.4 16.4 18.4 18.7 18.4 22.2 18.8 16.3 17.2 18.8 14 17 20 23 Dec-0 8 Jan-0 7 Feb-0 8 Mar-0 8 Apr/0 8 May/0 8 Jun-0 8 Jul-0 8 Aug/0 8 Sep/0 8 Oct/0 8 Nov-0 8 112 114 117 120 123 126 129 133 135 138 138 137 Dec-0 8 Jan-0 7 Feb-0 8 Mar-0 8 Apr/0 8 May/0 8 Jun-0 8 Jul-0 8 Aug/0 8 Sep/0 8 Oct/0 8 Nov-0 8 590 594 592 595 583 573 586 587 591 592 593 594 565 570 575 580 585 590 595 600 Dec-0 8 Jan-0 7 Feb-0 8 Mar-0 8 Apr/0 8 Mai/0 8 Jun-0 8 Jul-0 8 Agug 08 Sep/0 8 Oct/0 8 Nov-0 8
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Investor Relations Unit
SBS - Quadra 1 - Bloco C - Ed. Sede III – 5th floor
70073-901 - Brasília (DF)
Phone: 55 (61) 3310 3990
Fax: 55 (61) 3310 3735
bb.com.br
ri@bb.com.br
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Net Income – R$ million Return on Equity - %
Recurring Return on Equity - %
Net Income
Net Income
31.0 24.0 26.7 28.9 9M07 9M08 1Q08 2,347 1,559 2Q08 1,644 1,463 5,859 5,059 4,590 3,841 3Q08 2,037 1,867 4Q07 1,290 1,217 3Q07 1,642 1,364 43.5 27.9 30.5 27.6 24.6 33.6 26.3 22.2 23.6 32.335
Net Interest Income
Net Interest Income
Agribusinesses
Individuals Businesses
Annualized Selic Rate - %
Annualized¹
NIM - %
Annualized NIM by Loan Portfolio - %
3Q07 4Q07 1Q08 2Q08 3Q08 6.6 5.8 5.0 4.9 5.2 7.2 6.9 6.9 6.5 6.6 27.7 26.6 24.1 23.4 22.0 3Q07 4Q07 1Q08 2Q08 3Q08 7.2 7.3 7.2 7.8 7.5 11.7 11.0 10.8 11.5 13.5
36
A stronger and more competitive Banco do Brasil
+
Improve capacity of assets origination in the competitive consumer finance industry; Access to well developed alternative distribution channels - auto dealers, partners
and BV Financeira stores;
Successful sales promotion model with nationwide presence in the vehicle financing
industry;
Strength positioning of BB in capital markets;
37
•
Net Income
•
Net Interest Income
•
Loan and Funding
• Loan Portfolio
Consumer Finance
Businesses
Foreign Trade
•
Derivatives
• Agribusiness
Contracts by Risk Levels
New Contracts and Payments of 2008
Risk Mitigators
•
Vintage
•
Fee Income
•
Administrative Expenses
• Ratios
Structure
Productivity
Other Informations
Other Informations
38
Net Income
Net Income
R$ million (1) Net of Taxes2Q08 Net Income
1,644
2Q08
3Q08 Net Income
1,867
202
348
Net Interest Income Growth
Allowance for Loan Losses Reduction
103
Administrative Expenses Growth
Other Effects
54
One-off Items¹
170
39
Other Interest Revenues Loan Revenues
Interest Expenses Net Interest Income
Net Interest Income
Net Interest Income
R$ billion 5.9 5.7 5.5 5.5 5.2 17.2 15.4 9M07 9M08 20.6 23.5 14.4 37.8 14.6 18.7 11.3 30.0 3Q08 9.8 9.0 6.8 15.8 2Q08 5.2 7.2 3.8 11.0 1Q08 5.5 7.2 3.8 11.0 4Q07 4.6 6.6 3.5 10.1 3Q07 5.1 6.5 3.7 10.2
40
Loan and Funding
Loan and Funding
Quarterly Flow
R$ million Sept/07 Jun/08 Sept/08 Sept/07 Jun/08
Total Funding 172,272 194,084 223,821 29.9 15.3
Total Deposits 172,180 195,475 230,050 33.6 17.7
Domestic Onlending - Official Institutions 16,528 19,255 19,640 18.8 2.0
Financial and Development Funds 1,847 2,251 2,277 23.3 1.1
FCO (Subordinated Debt) 9,829 10,774 11,232 14.3 4.2
Foreign Borrowings 5,530 5,750 6,515 17.8 13.3
Reserve Requirement (33,641) (39,421) (45,892) 36.4 16.4
Net Loan Portfolio 140,521 178,917 191,014 35.9 6.8
Loan Portfolio 150,184 190,082 202,201 34.6 6.4
Allowance for Loan Losses
Ratio - %
Net Loan Portfolio / Total Funding 81.6 92.2 85.3
Available Funding / Total Funding 18.4 7.8 14.7
Available Funding 31,751 15,167 32,807 3.3 116.3
Net Loan Portfolio / Total Deposits 81.6 91.5 83.0
9,663 11,165 11,187 15.8 0.2
Δ ΔΔ
41
Consumer Finance
Consumer Finance
Other Payroll Loans Car LoanCredit Card Overdraft Account
R$ billion 42.9 3Q08 40.5 2Q08 29.5 3Q07 32.0 4Q07 36.6 1Q08 Δ ΔΔ Δ % over 3Q07 2Q08 151.7 19.3 9.9 0.8 103.4 1.6 17.9 6.2 32.0 3.7 62.2 7.7
Consumer Finance Backed by Direct Deposits 45.4 5.9 11.0 11.9 12.8 14.0 14.5 8.2 8.3 8.6 9.1 9.7 3.2 3.8 5.9 6.5 6.6 2.5 2.3 2.7 2.7 2.7 2.2 3.0 3.5 4.7 5.6 2.3 2.7 3.1 3.5 3.7
42
SME Middle and Large Companies
R$ billion
Loan Portfolio
Loan Portfolio
-
-
Businesses
Businesses
3Q07 4Q07 1Q08 2Q08 3Q08 Δ Δ Δ Δ % over 3Q07 2Q08 42.7 8.8 42.3 8.4 43.4 8.8 37.4 40.9 43.4 49.0 53.2 22.3 24.6 25.7 29.2 32.0 59.7 65.5 69.1 78.3 85.2
43
Foreign Trade
Foreign Trade
ACC/ACE - Average Portfolio
US$ billion 3.8 3.9 4.1 4.6 4.6 1.2 Jun/08 1.4 Jul/08 1.2 Aug/08 1.4 Sep/08 1.4 Oct/08 1.8 1.8 1.8 2.1 1.4
Contracted Amount (US$ billion) Quantity of Contracts (million)
ACC/ACE - Contracts
44
Derivatives
Derivatives
Currency Swap and Forward Contracts - Major Clients
(R$ million)Client
Contract
BB Creditor
1
Swap
104.63
2
Forward
74.76
3
Forward
60.38
4
Forward
34.18
5
Forward
31.10
6
Forward
27.30
7
Forward
26.44
8
Forward
23.85
9
Forward
19.85
10
Forward
19.61
Others¹
-
399.54
Total
-
821.64
Client
Contract
BB Debtor
1
Swap
(43.42)
2
Swap
(38.94)
3
Forward
(9.06)
4
Forward
(5.37)
5
Forward
(4.40)
6
Swap
(2.73)
7
Swap
(1.97)
8
Swap
(1.75)
9
Forward
(1.60)
10
Swap
(1.59)
Others¹
-
(18.36)
Total
-
(129.19)
(1) Include 899 clients and an average exposure of R$ 6.9 million.
(1) Include 331 clients and an average exposure of R$ 5.8 million.
45
R$ million
Amount
Risk¹
Provision Amount
Risk¹
Provision
TOTAL
5,808.1
55.67
6,632.2
47,98
Contract
Risk
July to September/2008
July to September/2007
Contracted Amount - R$ billion - Change %
5.8 6.6 14.2% 5.0 5.5 6.0 6.5 7.0 3Q07 3Q08
Credit Provisions Inflow - R$ million - Change %
55.67 47.98 -13.8% 40.0 45.0 50.0 55.0 60.0 3Q07 3Q08
Agribusiness – Contracts by Risk Levels
07/08 Harvest vs. 08/09 Harvest
Agribusiness Loan Portfolio
Agribusiness Loan Portfolio
1.0%
0,7%
46
Agribusiness Loan Portfolio
Agribusiness Loan Portfolio
R$ 21.1 bi Amount Paid
6.1% Average Risk – Payments
R$ 25.3 bi Contracted Amount
1.6% Average Risk – Contracts
Agribusiness – New Contracts and Payments of 2008
Contracts and Payments – Average Risk
-1.0 2.0 3.0 4.0 5.0
Jan Feb Mar Apr May Jun Jul Aug Sept
0% 2% 4% 6% 8% 10%
New Contracts Payments AR New Contracts AR Payments
47
Agribusiness Loan Portfolio
Agribusiness Loan Portfolio
New Contracts 08/09 Harvest – Risk Mitigators
Agricultural Costs Working Capital Investment
Agro Industrial Loan Marketing 08/09 Harvest 25,8% 74,2% 11,7% 7,5% 70,4% 9,2% 1,2% 07/08 Harvest 50,0% 50,0% 25.8% 74.2%
Agricultural Costs with Mitigation Agricultural Costs without Mitigation
11.7% 7.5% 70.4% 9.2% 1.2% 50.0%
48 1Q08 3Q08 2Q08 4Q07 3Q07 2Q07 1Q07 D e li n q u e n c y + 9 0 d a y s Months
Individual Delinquency - Vintage¹
(1) Individual Loan Operations except overdraft account, credit cards and vehicle loans Quarterly Vintage Analysis (2007-2008)
Client Risk: A,B,C,D and E Delinquency: 90 days
49
Fee Income
Fee Income
R$ million3Q07
2Q08
3Q08
3Q07
2Q08
Fee Income
2,498
2,633
2,660
6.5
1.0
Account Fees 727 775 782 7.6 1.0 Loan Fees 240 229 192 -19.9 -16.0Credit Card Fees 208 274 305 46.5 11.3
Investment Fund Management 443 521 516 16.7 -0.8
Billings 243 257 266 9.6 3.3
Interbank 180 133 120 -33.5 -10.1
Collection 106 103 112 5.7 9.0
Services Rendered to Affiliated 72 74 76 6.9 3.7
Official Services Fee 35 14 16 -52.5 15.5
Others 246 253 274 11.3 8.1
50
Administrative Expenses
Administrative Expenses
¹
R$ million Δ ΔΔ Δ % over 3Q07 2Q08 10.2 2.8 11.8 1.8 8.4 4.1 3Q07 3,331 1,759 1,572 4Q07 3,665 1,936 1,729 1Q08 3,357 1,768 1,590 2Q08 3,569 1,933 1,636 3Q08 3,671 1,967 1,704(1) Legal risk and one-off items are not included
51
Structure
Structure
Accounts - thousand Others BranchesPoints of Service - thousand
3Q07 15.2 11.2 4.0 4Q07 15.3 11.3 4.0 1Q08 15.3 11.3 4.0 2Q08 15.4 11.3 4.1 3Q08 15.9 11.4 4.1 0.2 0.2 3Q07 80.0 4Q07 81.9 1Q08 83.4 2Q08 84.3 3Q08 88.7 3.3 85.4 Employees - thousand 3Q07 26.6 4Q07 27.4 1Q08 27.9 2Q08 28.8 3Q08 30.1 0.7
52
Productivity Ratio
Productivity Ratio
¹
3Q07 4Q07 1Q08 2Q08 3Q08 Efficiency Ratio - % Coverage Ratio - % 107.2 108.1 124.8 128.9 135.2 118.6 121.8 130.9 50.8 51.4 46.5 45.1 45.0 43.6 48.4 46.7 44.1 41.4Efficiency Ratio discounted One-Off Items - % Coverage Ratio discounted One-Off Items - %
53
Corporate Structure
Votorantim Finanças S.A. Votorantim Asset Management DTVM Ltda. BV Empreendimentos e Participações Ltda. Votorantim CTVM Ltda. BV Sistemas Ltda. Votorantim Bank Limited BV Leasing Arrendamento Mercantil S.A.Banco do Brasil S.A.
100% 100% 100% 100% 100% 100% BV Trading S.A. Agência Banco Votorantim Nassau Banco Votorantim Securities Inc. 100% 100% BV Corretora de Seguros 100% CP Promotora de Vendas Ltda. BV Financeira S.A. 100% 100% 49.99% (ON) 50.01% (PN) 50% Total 50% Total 50.01% (ON) 49.99% (PN)
54
+
The transaction complements
Banco do Brasil’s growth strategy
R$ billion Banco do Brasil1 Banco Votorantim BB + Votorantim (50%) Growth
Total Assets 512.4 81.9 553.3 8%
Loan Portfolio 213.7 38.2 232.8 9%
Individuals 51.5 21.7 62.6 21%
Corporations 88.1 16.5 96.4 9%
Total Deposits 264.0 23.4 275.7 4%
Net Income (nine months) 6.5 0.8 6.8 6%
BIS Ratio 2 13.5% 13.6% 12.5% 100 bps
Figures relative to September 30th, 2008.
1 Considers BB + Nossa Caixa + BESC + Bescri.