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2Q11 Results Presentation
2
DisclaimerThis 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, 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.indusval.com.br/ir) and the making of your own appraisal.
New Stage in our 43-year history
• 1967 – Brokerage firm foundation
• 1991 – Authorized to operate as a Bank
• 2003 – Merger with Banco Multistock
• 2004 – Sale of Consumer Credit operation
• 2006 – Opening of the first 4 branches
• 2007 – IPO and opening of 6 new branches
• 2010 – Strategic review
• 2011 – Banco Indusval & Partners
The New Bank• R$ 201 million Tier I capital increase
• New Partners: Warburg Pincus & Controllers of Sertrading
• Management team strenghthening
• Acquisition of a 17.7% stake in Sertrading
• Acquisition of Serglobal Cereais
• 5-year Operating Agreement with Sertrading with right of first refusal on the acquisition of receivables
• Credit line from JP Morgan and the possibility of a future minority stake in our capital
Well-capitalized Bank, Structured for a new growth cycle
VisionTo be an innovative bank with excellence in corporate credit and deep understanding of our clients’ businesses and industries they operate, becoming also one of the leading players of the high-growth Brazilian corporate bond market.
ManagementBoard of Directors: well-known professionals in their areas of expertise, 4 independent members.Executive Board: one of the best management teams in the market.
Goals & Action Plans
Goals and action plans were defined in a participative way, involving more than 150 people from all areas, aiming at a quality leap and the development of new products and services to serve as the basis for our growth and profitability in the medium and long run.
ProductsDevelopment of new products and services to expand client offer, also creating franchise value in certain productive chains, adding-up recurring fee income.
Values Ethics, Credibility, Partnership, Excellence, Innovation, Teamwork, and Result oriented.
2Q11 Results
2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
9601,059
1,329
1,519
1,794
2,080
1,7941,736 1,728 1,684 1,699 1,719 1,763 1,769
1,9401,994
2,109
Trade Finance Garantees Agricultural Notes (CPRs)
Credit Portfolio resumes growth
CAGR
+17% per quarte
r / +88% p.a.
CAGR: + 5% per quarter / +21% p.a.
+6% / +26% p.a.
Loans & Discounts
67%
BNDES Onlendings
7%Other
1%
Trade Finance20%
Guarantees and L/Cs
3%
Agribusiness Notes (CPRs)
2%
Expanded Credit Portfolio:– Loans, financings and onlendings in Real;
– Trade Finance;
– Guarantees and L/Cs issued;
– Agricultural Notes (CPR) from March 2011 with the acquisition of Serglobal.
Growth of 6% in the quarter and 20% in 12 months.
Expanded Credit Portfolio Breakdown
Expanded Credit Portfolio
1,763 1,994 2,109
2Q10 1Q11 2Q11
R$
mili
on
10 largest20%
11 - 6033%
61 - 16024%
Other23%
up to 90 days36%
91 to 18021%
181 to 360 13%
+360 days30%
Credit Portfolio Loans, Financing and Trade Finance
By Customer Concentration
By Economic Activity By Type of Customer
By Maturity
Industry56%
Trade10%
Financial Interm.
5%
Other22%
Individual7%
Middle Market80%
Corporate16%
Other4%
18%
16%
11%
7%
5%
4%
4%
3%
3%
3%
3%3%
2% 2% 2% 2% 2%
9%Food & BeverageAgribusinessCivil ConstructionFinancial InstitutionsAutomotiveTextile, Apparel and LeatherTransportation & LogisticsEducationMetal IndustryPower Generation & DistributionChemical & PharmaceuticalOil and BiofuelPulp & PaperIndividualsFinancial ServicesWood & FurnitureRetail & WholesaleOther Industries
Credit Portfolio Significant presence of Agribusiness related activities
Asset QualityIncreased Default Index within the expected
Allowance for Loan Losses NPL(*) / Total Loans (%)
Provisioning Coverage = 9.8% of Loan Portfolio and 156% of NPL 90 days
2.6
6.16.8
2Q10 1Q11 2Q11
107.8
212.6 196.6
2Q10 1Q11 2Q11
Receivables47%
Pledge/ Lien5%
Monitored Pledge
7%
Securities3%
Real State8%
Vehicles3%
Aval PN25%
Other2%
Collaterals
R$
mill
ion
7.2% - Normal Payments
6.8% - NPL 60 days
AA4.2% A
31.5%
B28.2%
C22.1%
D-H14.1%
Risk Category
(*) Total outstanding amount of contracts with any installment overdue above 60 days
868 836
1,040
1,233
1,488
1,789
1,600 1,556
1,772 1,7321,793
1,881 1,881 1,903
2,031
2,247 2,230
2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
In Local Currency (Real) in Foreign Currency
R$
mill
ion
FundingHigh liquidity, Stable funding volume
CAGR: +16% per q
uarter /
+72% p.a.
CAGR: + 6% per quarter / +27% p.a.
Funding sources diversification for cost reduction
Funding kept stable due to cash surplus;
Replacement of sources and broader depositor base to reduce cost of local funding;
Average deposit tenors increased by 39 days to 571 days to mature (DPGE, CDs, Interbank, ALCs and BNs).
Total Funding Funding Breakdown
CD and DPGEs represent 62% of funding from 67% in March/2011.
Foreign loans grew 18% in the quarter and increased share in total funding from 16% to 19%:– Increased correspondent bank lines to finance
foreign trade;
– Disbursement of J. P. Morgan´s credit line.
Time Deposits
30%
DPGE(*)32%
ALC & BN(*)
6%
Demand Deposits
3%
Interbank Deposits
3%
Foreign Borrowings
19%
Local Onlendings
7%
(*) DPGE – Time Deposits bearing Special Insurance from FGC; ALC – Agribusiness Letters of Credit; BN – Bank Notes
1,8812,247 2,230
2Q10 1Q11 2Q11
R$
mill
ion
696
1,027923
2Q10 1Q11 2Q11
Free Cash (Cash + Liquid Fin. Assets + Securities + Derivatives) (-) (Open Market Funds + Derivatives) = 56% of Total Deposits 163% of Shareholders’ Equity
Basel index of 21.6% allows healthy
and selective credit portfolio growth,
adjusting the cash surplus .
R$
mill
ion
Free CashLiquidity being adjusted with loan portfolio growth
110 118 127
225245
2Q10 1Q11 2Q11 1H10 1H11
Financial Intermediation IncomeSlight increase
R$
mill
ion
• As expected, aging of default loans in the portfolio impacts credit operations revenues.
• Increased income from tradable securities has equivalent impact in intermediation expenses for higher average volumes and the Selic interest rate.
DFI: Derivative Financial Instruments
Credit44%
FX5%Tradable Sec.
46%
IFD5%
2Q11
Credit51%
FX6%
Tradable Sec.43%
1H11
77
180
91
156
270
2Q10 1Q11 2Q11 1H10 1H11
Financial Intermediation ExpensesInfluenced by higher average funding balances and ALL
Loan Loss Allowances
Loan Loss Allowances booked in the 1Q11 cover the forecasted increase in NPL by the aging of delayed payment portfolio.
Open Market94%
Borrow, Assign, Onlend
4%
Loan Loss Allow
2%
2Q11
R$
mill
ion
Open Market38%
Borrow, Assign, Onlend
4%
Loan Loss Allow58%
1H11
4Q10 1Q11 2Q11 1H10 1H11
33
-61
36
68
-25
6.8% 7.0%6.5%
4.6%3.8%
8.5% 8.5%7.9%
5.9%5.2%
2Q10 3Q10 4Q10 1Q11 2Q11
NIM NIM(a)
Gross Result & Interest MarginReflect excess cash carry-over and non-performing loans
Financial Margin reflects the cash surplus carry-over and the impact of default on revenues from credit operations.
The credit portfolio growth resumption, with consequent decline in surplus cash, will have a positive effect on margins by increasing revenues from credit operations and reducing the surplus carry-over costs.
NIM(a) net interest margin adjusted by FX effects on financial assets and by deducting the balance of repos from the average interest-bearing assets.
R$
mill
ion
4Q10 1Q11 2Q11 1H10 1H11
29.435.1 34.9
59.9
70.0
4Q10 1Q11 2Q11 1H10 1H11
57.5%
72.3% 75.9%
58.8%
74.1%
Recurring Efficiency Ratio
In %
Recurring Operating Expenses
Stable Operating Expenses in the last 4 quarters
Compared to the previous year, operating expenses were raised basically by:
– BRL appreciation on investments abroad; and
– administrative expenses, primarily related to IT and notary, collection, law firms and consultancy expenses, not related to the reorganization project.
Non-recurring expenses = R$ 1.2 million in 2Q11 and R$ 3.9 million in the semester, related to the reorganization of the company.
Efficiency ratio reflects the lower financial intermediation result.
R$
mill
ion
S&
P M
odel
2Q10 1Q11 2Q11 1H10 1H11
8.3
-54.5
5.1
15.6
-49.4
Net Profit (Loss)
ProfitabilityReflecting Loan Loss Allowance and conservative liquidity strategies
• Strengthening in provisions for Loan Loss Allowances with expenses of R$ 103.6 million in the semester.
• Free Cash close to R$ 1 billion.
• Non-recurring expenses of approx. R$ 4 million, resulting from the Bank’s reorganization to foster the growth cycle.
R$
mill
ion
Controlling Group32%
Management6%
Treasury1%
Families13%
Institutional Investors
14%
Foreign Investors
30%
Corporate1%
Individuals3%
Capital Distribution and Free Float
Capital Distribution on June 30. 2011
Class # of Shares Controlling Group Management Treasury Free Float %
Shares
Common 27.000.000 17.215.278 2.395.619 - 7.389.103 27.4%
Preferred 14.212.984 497.578 116.448 746.853 12.852.105 90.4%
SUB-TOTAL 41.212.984 17.712.856 2.512.067 746.853 20.241.208 49.1%
Receipt
Common 9.945.649 2.282.607 961.956 - 6.701.086 -
Preferred 11.947.060 27.811 211.937 - 11.707.312 -
SUB-TOTAL 21.892.709 2.310.418 1.173.893 - 18.408.398 -
TOTAL 63.105.693 20.023.274 3.685.960 746.853 38.649.606 -
Share PerformanceIDVL4 X IBOV - 2011
Source: Enfoque
Performance 2Q11 1H11
IDVL4 1.22% 14.84%
IDVL4 (adjusted to earnings) 2.81% 17.86%
IBOV -9.01% -9.96%
IGC -6.04% -7.08%
ITAG -5.90% -6.98%
80
90
100
110
120
130
IBOVESPA IDVL4
Indusval & Partners has maintained the practice of paying quarterly Interest on Equity in anticipation for the annual dividend
Shareholder Remuneration
2.8 2.36.0 6.8 6.3
4.22.7 2.3
6.66.9 6.3
5.32.4 5.1
6.56.6
6.3
2.2
6.1
6.46.7
6.2
10.2
15.9
24.527.0
25.1
9.5
2006 2007 2008 2009 2010 2011
Remuneration per shareR$ 0.3424 R$ 0.4164 R$ 0.5945 R$ 0.6370 R$ 0.6098 R$ 0.2357
R$
mill
ion
Investor Relations Contact Information
Katia Moroni
IRO
Phone: (55 11) 3315-6923
E-mail: [email protected]
Maria Angela R. Valente
Head of IR
Phone: (55 11) 3315-6821
E-mail: [email protected]
Banco Indusval S/ARua Boa Vista. 356 – 7º andar01014-000- São Paulo – SPBrasil
IR website: www.indusval.com.br/ri