Earnings Presentation 4 th Quarter, 2013 Disclaimer: This presentation may include references and statements on expectations, planned synergies, growth estimates, projections of results, and future strategies for Banco Votorantim, it’s associated and affiliated companies, and subsidiaries. Although these references and statements reflect the management’s belief, they also involve imprecision and risks that are highly difficult to be foreseen. Consequently, they may conduct to different results from those anticipated and discussed here. These expectations are highly dependent on market conditions, on Brazil’s economic and banking system performances, as well as on international market conditions. Banco Votorantim is not responsible for bringing up to date any estimate in this presentation.
Executive summary Banco Votorantim recorded positive results in 4Q13 Progress in the restructuring process allows resumption of profitable growth in a sustainable way 4Q13 Highlights Return to R$ 121M Net Income in 4Q13 profitability • 2013: net income of R$-512M, mainly impacted by Allowance for Loan Losses expenses Consistent Net Interest Income (NII) increased 2.3% vs. 2012, reaching R$ 4.6B, driven by focus on profitability and improvement in asset quality revenue • 4.4% p.y. Net Interest Margin¹ (NIM) in 2013, an improvement of 0.2 bps vs. 2012 generation NPL 90 reduced to 5.1% in Dec/13 – improvement of 0.4 bps in the quarter and 1.5 bps in 12M Improved • Light vehicles NPL 90 reduced to 6.2% in Dec/13 – sixth consecutive quarterly reduction asset quality • Better quality vintages reached 73% of the auto finance managed loan portfolio (53% in Dec/12) Expenses with credit provisions reduced 23.9% vs. 2012, totaling R$ 3.9B ALL • In Consumer Finance, this reduction reached 47.6% (R$ 2.2B) reduction² 90-day Coverage Ratio reached 147% in Dec/13 (Dec/12: 100%; Sept/11: 78%) Personnel and Administrative expenses reduced 2.2% in 2013 (vs. IPCA 5.91%) Cost base • Excluding expenses with labor claims (restructuring process), the reduction would have been under control of 6.9% in the period 1. Ratio between Net Interest Income and Average Interest-Earning Assets; 2. Net of income from recovery of written-off loans; includes ALL expenses of the portfolios assigned with recourse 2
Banco Votorantim – Overview Banco Votorantim is one of the leading banks in Brazil “Top 10” in total assets, with a diversified business portfolio and robust shareholder base Banco Votorantim is one of the largest Ownership Structure privately- held Brazilian banks in total assets… Grupo Votorantim Banco do Brasil Total: 50.00% 10 largest banks in Sept/13 – Total Assets (R$B)¹ Total: 50.00% Common: 50.01% Common: 49.99% Shareholder Preferred: 49.99% Preferred: 50.01% Banco do Brasil 1,179 50% Total Itaú 1,011 CEF 859 Bradesco 779 BNDES 725 Santander 475 163 HSBC State-owned 131 Safra Foreign BTG Pactual 120 Governance Structure National privately-held 111 10 th Votorantim Equal representation Statutory ...and also in terms of loan portfolio... of each Fiscal Council shareholder Board of 10 largest banks in Sept/13 – Loan Portfolio² (R$B)¹ Directors Audit Finance 548 Banco do Brasil Committee Committee CEF 455 334 Itaú Compensation Products & 281 Bradesco & HR Marketing 268 BNDES Committee Committee Executive Santander 193 Committee 7 th 55 State-owned Votorantim HSBC 53 Foreign Operating Committes & 43 Safra Commissions National privately-held Banrisul 25 1. Dec/13 information unavailable by the preparation of this presentation; 2. On-balance portfolio according to Bacen’s Res. 2,682 3
Corporate strategy Diversified portfolio of Wholesale and Consumer businesses Focus on profitability of current businesses, while deepening synergies with Banco do Brasil Off-balance¹ risk portfolio R$ 4.4B Assigned to FI R$ 0.7B Assigned to FIDC R$ 71.8B Wholesale Consumer Finance R$ 35.1B R$ 36.6B Corporate & Middle Wealth Auto Other IB (CIB) Market Management Finance Businesses Position itself as a Grow among Asset: 10 th largest Origination with Act selectively in relevant partner via: companies with player, with quality, scale and payroll loans, focused annual revenues innovative products profitability • Agile and long-term on INSS (retirees and between R$ 200M and relationships Private: focus on Focus on used pensioners) Pillars R$600M • Integrated financial estate planning vehicles (multi-brand Expand synergic solutions (credit, Strengthen offer of via customized dealers) businesses (credit derivatives, products and services solutions Advance in new auto cards, insurance sales) (derivatives, FX, IB) IB, FX, structured finance along with BB Increase synergies Explore new products and (new car dealers) Increase operating with BB opportunities distribution) efficiency (real estate, “ Mais BB” ) R$ 27.5B R$ 7.6 B R$ 39.4B R$ 29.9B R$ 6.7B + Shareholders Banco do Brasil Votorantim Group Expanded credit portfolio² Assets under Management 1. Securitization with substantial risk retention before entry in force of Bacen’s Res. 3,533; 2. Includes guarantees provided and private securities 4
Consolidated results Banco Votorantim recorded Net Income of R$121M in 4Q13 2013 / 2012: greater NII, along with reduction in ALL and administrative expenses Managerial Income Statement Var. 4Q13/3Q13 Var. 2013/2012 (R$ Million) 3Q13 4Q13 2012 2013 R$M % R$M % Net Interest Income (A) 1,154 1,226 73 6.3% 4,512 4,615 103 2.3% ALL expenses¹ (B) (761) (1,266) (505) 66.4% (5,092) (3,875) 1,216 -23.9% Net Financial Margin (A+B) 393 (40) (432) -110.1% (580) 740 1,320 -227.5% Operating Income/Expenses (627) (58) 569 -90.7% (2,505) (1,883) 622 -24.8% Fee/Banking Fee Income 257 282 25 9.8% 1,035 1,030 (5) -0.5% Personnel Expenses (241) (292) (52) 21.4% (978) (1,011) (33) 3.4% Other Administrative Expenses (363) (400) (38) 10.3% (1,572) (1,482) 90 -5.7% Other Operating Income/Expenses² (280) 352 633 -225.7% (990) (420) 570 -57.6% Operating Income (Loss) (235) (98) 137 -58.3% (3,085) (1,144) 1,941 -62.9% Non-Operating Income (Loss) (14) (8) 6 -45.6% (139) (37) 103 -73.8% Taxation and Profit Sharing 89 227 137 153.5% 1,237 668 (568) -46.0% Net Income (Loss) (159) 121 280 -176.2% (1,988) (512) 1,476 -74.2% Results have confirmed, once again, the progress in Banco Votorantim’s restructuring process 1 include expenses related to credit assignments with recourse (both on and off-balance), as well as revenues from write-off recovery; 2. Includes Tax Expenses, Other Operating Income/Expenses and Equity in Income of Associated Companies and Subsidiaries 5
Net Interest Income (NII) Consistent Net Interest Income (NII) expansion Net Interest Margin (NIM) reached 5.0% in 4Q13 NII increased 6.3% compared to 3Q13 and Fee Income increased 9.8% Net Interest Margin reached 5.0% over 3Q13, amounting to R$282M Net Interest Income (R$M) and NIM¹ (% p.y.) Fee and Banking Fee Income (R$M) 5.0% -0.5% 4.6% 4.4% 4.2% 4.4% 1,035 1,030 +2.3% +9.8% 4,615 +6.3% 4,512 286 282 1,226 257 1,156 1,154 4Q12 3Q13 4Q13 2012 2013 4Q12 3Q13 4Q13 2012 2013 NII increase reflects better portfolio quality, as well as focus on profitability (vs. growth) 1. Ratio between Net Interest Income (before ALL) and Average Interest Earning Assets 6
Credit portfolio by segment Banco Votorantim kept its conservative position in credit Credit portfolio retraction associated with the focus on business profitability (vs. growth) R$ Billion Expanded portfolio (interest earning) reduced Reduction in off-balance securitization 1.8% vs. Sept/13 and 4.7% vs. Dec/12 explains greater drop in managed portfolio Expanded credit portfolio Expanded managed credit portfolio (incl. guarantees provided, private securities, and on-balance securitization) (includes off-balance securitization with substantial risk retention) -11.4% -3.3% ∆Dec13 ∆Dec13 -4.7% -1.8% 86.7 /Sept13 /Sept13 79.5 10.0 76.9 75.3 73.1 71.8 8.6 8.0 -6.6% Others¹ 7.5 7.1 -4.5% 6.7 38.8 Auto 34.7 29.9 33.7 29.8 -2.7% 29.9 0.2% Finance Middle 9.3 9.3 8.1 8.1 7.6 -5.9% 7.6 -5.9% Market CIB 28.6 28.6 28.1 27.5 28.1 27.5 -2.2% -2.2% Dec/12 Sept/13 Dec/13 Dec/12 Sept/13 Dec/13 On-balance Off-balance 3.0 8.6 11.0 11.4 6.4 5.1 securitization securitization Greater Net Interest Income in the period, despite reduction in the credit portfolio 1. Payroll loans, credit cards and individual loans 7
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