BI&P- Indusval - 3Q14 Results Presentation
1 like854 views
This document provides a summary of BI&P's results for the third quarter of 2014. Some key highlights include: - The expanded credit portfolio totaled R$4.0 billion, a 1.8% increase over the quarter and 19% increase over September 2013. - 99% of new loans in the quarter were rated between AA and B, reflecting a focus on credit quality. - Fee income from investment banking operations totaled R$5.4 million in the quarter. - The quarterly result was R$1.7 million, though full revenue potential has not yet been achieved due to the need for scale and a negative contribution from the investment branch.
BI&P- Indusval - 3Q14 Results Presentation
- 2. Disclaimer This presentation may contain references and statements representing future expectations, plans of growth and future strategies of BI&P. These references and statements are based on the Bank’s assumptions and analysis and reflect the management’s beliefs, according to their experience, to the economic environment, and to predictable market conditions. As there may be various factors out of the Bank’s control, there may be significant differences between the real results and the expectations and declarations herewith eventually anticipated. Those risks and uncertainties include, but are not limited to, our ability to perceive the dimension of the Brazilian and global economic aspect, banking development, financial market conditions, and competitive, government and technological aspects that may influence both the operations of BI&P as the market and its products. Therefore, we recommend the reading of the documents and financial statements available at the CVM website (www.cvm.gov.br) and at our Investor Relations page in the internet (www.bip.b.br/ir) and the making of your own appraisal. 2
- 3. Highlights 3 Expanded Credit Portfolio totaled R$4.0 billion, +1.8% in the quarter and +19.0% in relation to September 2013. Loans originated in 3Q14 totaled R$1.5 billion, proof of the tremendous asset generation capacity of the commercial area. Loans rated between AA and B corresponded to 91% of the expanded credit portfolio, compared to 85% in September 2013. Of the loans granted in the quarter, 99% were rated between AA and B, reflecting the Bank’s focus on preserving the quality of its credit portfolio. The Corporate and Emerging Companies segments corresponded to 62% and 38%, respectively, of the expanded credit portfolio, compared to 50% and 49%, respectively, in September 2013. Funding totaled R$4.2 billion, +1.2% in the quarter and +35.8% in twelve months. We are continuing to diversify our funding mix, especially through the issue of agro notes (LCA) and a greater fragmentation of the depositor base, which reached an all- time high of over 9,000 depositors at the end of the quarter (compared to 2,500 in September 2013), through alliances with more than 40 brokers and distributors, which has also positively impacted our funding costs. Free Cash totaled R$717.3 million at the end of 3Q14. Income from services rendered and tariffs totaled R$15.3 million in 3Q14 and R$42.1 million in 9M14, growing 79.2% from 3Q13 and 101.7% from 9M13, chiefly driven by revenue from investment banking operations, whose fee revenue totaled R$5.4 million in 3Q14 and R$16.2 million in 9M14. Reflecting the continuous cost control measures taken by the Bank, personnel expenses decreased 8.6% in the quarter and 3.0% from 3Q13, while administrative expenses increased 2.4% in the quarter and 5.6% from 3Q13, with the year-on-year increase resulting from the investments made to upgrade our technological infrastructure. The quarterly Result was R$1.7 million. In recent years, we have shifted the Bank's focus to corporate and investment banking, which provide opportunities for higher growth at a lower risk. Though the entire structure is in full operation, we have not yet attained our revenue generation potential because: (i) of the need for economies of scale, considering our appetite for risk and its direct impact on the spread in loan transactions, and (ii) the still negative contribution from Guide Investimentos on account of the recent investments made in it.
- 4. 3,355 3,867 3,926 3,920 3,992 Sept 13* Dec 13 Mar 14 Jun 14 Sept 14 R$million Loans and Financing in BRL Trade Finance Guarantees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA and CDCA) Private Credit Bonds (Debentures) Expanded Credit Portfolio 4 Growth of 19% in twelve months * Including credits from Banco BI&P which were assigned to Banco Intercap in 3Q13. ** Other Credits include Non-Operating Asset Sales Financing, Consumer Credit Vehicles, and Acquired Loans. Average Exposure per Client R$ million Sept 2013 Jun 2014 Sept 2014 Corporate 9.2 11.2 10.9 Emerging Companies 3.2 3.0 3.0 50.2% 61.6% 49.0% 38.0% 0.8% 0.5% Sept 13 Sept 14 Corporate Emerging Companies Other**
- 5. Expanded Credit Portfolio Development 5 Continuously focusing on higher quality assets 685 817 794 818 732 391 514 381 606 776 1,076 1,331 1,174 1,424 1,508 3Q13 4Q13 1Q14 2Q14 3Q14 R$million Credit Origination New Transactions Renewed Transactions 3,920 3,9921,508(1.356) (68) (12) Jun 14 Amortized Credits Credit Exits Write offs Credit Origination Sept 14 R$million 99% of the new transactions in the last 12 months are classified between AA and B
- 6. Expanded Credit Portfolio 6 * Starting from March 2014, export credit notes (NCE) and export notes (CCE) originated by Banco Intercap are included in Loans & Financing in BRL, as well as NCE and CCE originated by Banco BI&P are classified. Loans & Financing in BRL* 49% Trade Finance* 12% BNDES Onlendings 10% Guarantees Issued 6% Agricultural Bonds 21% Private Credit Bonds 1% Other 1% September 2013 11.7% 13.4% 12.5% 28.6% 27.5% 27.2% 26.0% 26.2% 26.9% 33.7% 33.0% 33.4% Sept 13 Jun 14 Sept 14 Client Concentration top 10 11 - 60 largest 61 - 160 largest Other Loans & Financing in BRL* 52% Trade Finance* 13% BNDES Onlendings 5% Guarantees Issued 5% Agricultural Bonds 23% Private Credit Bonds 2% September 2014
- 7. Expanded Credit Portfolio 7 Relevant exposure in agriculture 13.1% 1.5% 1.6% 1.7% 2.2% 2.3% 2.5% 2.6% 3.5% 3.9% 4.0% 4.4% 5.0% 7.0% 11.2% 11.2% 22.3% Other Industries (% lower than 1.4%) Raw Materials Metal Industry Financial Activities Power Generation & Distribution Textile, Leather and Confection Chemical & Pharmaceutical International Commerce Infrastructure Commerce - Retail & Wholesale Transport and Logistics Automotive Livestock Food & Beverage Real Estate Oil, Biofuel & Sugar Agriculture September 2014 11.1% 1.6% 1.8% 2.3% 2.4% 2.6% 2.6% 2.7% 3.4% 3.7% 3.7% 4.3% 4.4% 5.5% 7.5% 7.9% 8.7% 23.6% Other Industries (% lower than 1.4%) International Commerce Financial Activities Metal Industry Education Raw Materials Chemical & Pharmaceutical Textile, Leather and Confection Power Generation & Distribution Transport and Logistics Commerce - Retail & Wholesale Livestock Infrastructure Automotive Oil, Biofuel & Sugar Food & Beverage Real Estate Agriculture September 2013
- 8. Agricultural Franchise 8 Specialization in the agricultural segment with low levels of loss CPR & CDA/WA 69% Loans 19% Trade Finance 11% BNDES Onlending 1% Guarantees Issued 0% Products Midwest 47% Southeast 20% South 17% Northeast (State of Bahia) 10%North 6% Brazilian Regions Agricultural Portfolio by Cultivation Amount R$ thousand % Soybean 600,306 67.58% Corn 92,972 10.47% Cotton 91,677 10.32% Coffee 51,969 5.85% Orange 16,143 1.82% Fertilizers 13,418 1.51% Other 21,755 2.45% Total 888,241 100.00% More than R$3.2 billion in assets have been generated over the past three years, with a loss of 0.03% (annualized). Position as of September 30, 2014
- 9. Net Interest Margin (NIM) 9 4.08% 3.99% 3.94% 4.43% 4.12% 3Q13 4Q13 1Q14 2Q14 3Q14 Managerial NIM with Clients Managerial Net Interest Margin with Clients was 4.12% in 3Q14, compared to 4.43% in 2Q14, impacted by the increased share of the Corporate segment in the Bank’s loan portfolio.
- 10. Fees, Client Desk, IB and Brokerage Revenues 10 10.3 9.1 12.0 17.9 15.9 24.8 45.8 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14 R$million Comercial Fee Client Desk IB Guide Investimentos During the quarter, we carried out M&A and fixed income operations amounting to R$1.1 billion, and the number of asset management proposals/mandates has increased constantly; we currently have 42 ongoing mandates. 85%
- 11. Real Estate Debenture 476 R$ 175 million Investment Banking 11 Major IB deals in 9M14 Education M&A Buy Side R$ 676 million Real Estate CRI R$ 31 million Financial Advisory R$ 300 million Telecom Advisory Retail, Publishing & Services Advisory Real Estate M&A Sell Side Food M&A Sell Side Food* M&A Sell Side R$ 250 million 2ª Fase 1,487 16,224 9M13 9M14 R$thousand Fees IB * Pending approval from the Brazil's Council for Economic Defence (Cade).
- 12. * New Credit Policy: adopted since April 2011 Expanded Credit Portfolio Quality 12 99% of loans granted in the quarter were rated from AA to B Credits rated between D and H totaled R$207.7 million at the end of 3Q14: R$147.5 million (71% of the expanded credit portfolio between D-H) in normal payment course; Only R$60.2 million overdue +60 days. Additional ALL not allocated balance = R$18.5 million2% 2% 2% 48% 57% 56% 35% 32% 33% 6% 4% 4% 9% 5% 5% Sept 13 Jun 14 Sept 14 AA A B C D - H 90.8% 90.9% 85.0% AA 2% AA 1% AA 6% A 56% A 60% A 5% B 33% B 34% B 21% C 4% C 2% C 23% D - H 5% D - H 2% D - H 46% New Credit Policy* Clients Previous Credit Policy ClientsSeptember 2014
- 13. Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 Clients from Previous Credit Policy Total Clientes fro New Credit Policy* Credit Portfolio Quality * New Credit Policy: adopted since April 2011. 1 Managerial ALL Expense = ALL expenses + Discounts granted upon settlement of loans – Revenues from recovery of loans written off. The last 12-month Managerial ALL Expense of Sept/13 and Dec/13 were highly influenced by the additional provision made in 2013. 12.4% 8.1% 15.0% 7.5% 5.3% 2.6% 1.9% 2.6% 1.8% 1.5% 0.6% 0.3% 0.4% 1.0% 1.1% Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 NPL 90 days / Credit Portfolio 14.0% 10.3% 15.2% 7.9% 6.4% 2.9% 2.3% 2.6% 2.0% 2.0% 0.6% 0.3% 0.5% 1.2% 1.5% Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 NPL 60 days / Credit Portfolio 13 0.80% 0.97% 1.10% 0.66% 1.45% Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 Quarterly Managerial ALL Expense 1 (annualized) 0.99% 0.87% 1.05% Mar 14 Jun 14 Sept 14 Last 12-month Managerial ALL Expense 1 1,07% for credits from new portfolio 0,62% for credits from new portfolio
- 14. Time Deposits (CDB) 23% DPGE I 30% LCA 19% LF & LCI 3% Interbank & Demand Deposits 2% Onlendings 11% Foreign Borrowings 12% September 2013 3,082 3,893 3,930 4,135 4,186 Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 R$million in Local Currency in Foreign Currency Funding 14 Product mix helps with cost reduction Time Deposits (CDB) 20% DPGE I 22% DPGE II 10% LCA 33% LF & LCI 3% Interbank & Demand Deposits 2% Onlendings 5% Foreign Borrowings 5% September 2014 LCA and LCI account for 36% of funding volume
- 15. Guide Investimentos 15 Important alliances established by Guide in 2014: AUM: R$500 million 14 independent investment advisors 1,320 Active Clients AUM: R$300 million 8 independent investment advisors 702 Active Clients AUM: R$600 million 43 independent investment advisors 1,080 Active Clients In migration process 1.0 1.5 2.3 Jun 14 Sept 14 Dec 14 E*R$billion Assets under Management (AUM) Since the end of 2Q14, Guide Investimentos has risen 10 positions in the Bovespa ranking in terms of volume, and in October entered the list of the 25 largest brokerages in equity trading volume on the Bovespa * Concluded the process of migration of client portfolio of the alliances established in 2014.
- 16. 21.5 27.1 24.5 22.8 20.8 10.6 14.2 11.8 11.0 11.2 373 374 381 349 332 0 50 100 150 200 250 300 350 400 450 - 10.00 20.00 30.00 40.00 50.00 60.00 3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14 R$million Personnel and Administrative Expenses * Personnel Expenses Administrative Expenses Headcount Efficiency Ratio 16 • Personnel Expense: Headcount 5% lower in the quarter and 11% lower when compared to 3Q13. • Administrative Expense: +2.4% in the quarter and +5.6 when compared to 3Q13, with the year-on- year increase resulting from the investments made to upgrade our technological infrastructure. 79.3% 98.3% 100.5% 72.6% 88.2% 3Q13 4Q13 1Q14 2Q14 3Q14 Efficiency Ratio * * Information based on the managerial income statement of the financial conglomerate without Guide Investimentos.
- 17. Profitability 17 2.0 -10.0 -9.9 1.1 1.7 3Q13 4Q13 1Q14 2Q14 3Q14 R$million Net Result In recent years, we have shifted the Bank's focus to corporate and investment banking, which provide opportunities for higher growth at a lower risk. Though the entire structure is in full operation, we have not yet attained our revenue generation potential because: • of the need for economies of scale, considering our appetite for risk and its direct impact on the spread in loan transactions, and • the negative contribution from Guide Investimentos on account of the recent investments made in it. On the positive side, this quarter we had the non-recurring effect of the divestment of a fixed asset.
- 18. 574.5 674.2 667.1 671.4 672.8 Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 R$million Shareholders’ Equity 14.5% 14.8% 13.7% 13.3% 13.2% Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 Basel Index (Tier I) 5.7x 5.7x 5.9x 5.8x 5.9x Sept 13 Dec 13 Mar 14 Jun 14 Sept 14 Leverage Expanded Credit Portfolio / Equity Capital Structure and Ratings 18 Agency Rating Last Report Standard & Poor’s Global: BB-/Negative/B National: brA /Negative/brA-2 Aug 2014 Moody’s Global: B1/Stable/Not Prime National: Baa2.br/Stable/BR-3 Sept 2014 Fitch Ratings National: BBB-/Stable/F3 Sept 2014 RiskBank Index RiskBank: 9.83 Low Risk Short Term Disclosure: Excellent Oct 2014