Earnings Presentation 4 th Quarter, 2014 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 Net income of R$ 502M in 2014 and R$ 75M in 4Q14 Banco Votorantim completed its restructuring process and consolidated the return to profitability Highlights of BV’s results Profit of Net income totaled R$ 502M in 2014 R$ 502M • Net income of R$ 75M in 4Q14, fifth consecutive quarter of positive results in 2014 Net Interest Income (NII) remained flat in 2014/2013, despite the reduction of 5.8% (R$4.3B) in the Consistent average expanded credit portfolio revenue Net Interest Margin¹ (NIM) of 5.0% p.y. in the 2014 – improvement of 0.6 p.p. vs. 2013 , , reflecting the generation focus on profitability (vs. growth) Drop in 90-day delinquency dropped to 5.7% in Dec/14, improvement of 0.2 p.p. vs. Sept/14 delinquency • Consumer Finance: 90-day NPL at 5.5% in Dec/14 (Sept/14: 6.1%), lowest level since June/11 (5.3%) ALL expenses² reduced 43.4% (or R$ 1.68B) in 2014/2013 Reduction in credit provisions 90-day Coverage Ratio reached 130% in Dec/14 (Sept/14: 126%; Sept/11³: 78%) Personnel and administrative expenses decreased 4.9% in the 2014/2013 comparison Cost base 12-month Efficiency Ratio (ER) reached 36.9% (Dec/13: 40.5%) reduction • Improvement of the ER is a result of the cost base reduction 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; 3. Beginning of the restructuring process 2
Agenda Banco Votorantim – Overview 4Q14 Results Appendix 3
Banco Votorantim – Overview Banco Votorantim is one of the leading banks in Brazil “Top 10” in total assets, with strong shareholders and shared governance Banco Votorantim is one of the largest Ownership Structure privately-held Brazilian banks in total assets... Votorantim Group Banco do Brasil Total: 50.00% Total: 50.00% 10 largest banks in Sep/14¹ - Total Assets (R$B) Voting: 50.01% Voting: 49.99% Shareholder Non-voting: 49.99% Non-voting: 50.01% Banco do Brasil 1,327 50% Total Itaú 1,070 CEF 1,019 Bradesco 849 BNDES 824 Santander 524 HSBC 150 State-owned BTG Pactual 139 Foreign Safra 136 Corporate Governance Structure National privately-held 10 th Votorantim 99 Equal representation ...and also in terms of loan portfolio Statutory of each shareholder Fiscal 10 largest banks in Sep/14¹ – Loan Portfolio² (R$B) Board of Council Directors Banco do Brasil 623 Audit Finance CEF 569 Committee Committee 372 Itaú Compensation Products & 310 BNDES & HR Marketing 304 Bradesco Committee Committee 202 Santander Executive board HSBC 56 State-owned 8 th Votorantim 53 Foreign Safra 45 National privately-held Banrisul 28 1.Dec/14 Central Bank (“Bacen”) data unavailable by the preparation of this presentation; 2. On -balance loan portfolio accordin g to Bacen’s Res. 2,682 4
Strategy Diversified business portfolio Focus on increasing business profitability, operating efficiency and synergies with BB Off-balance portfolio² R$ 1.6B Assigned to BB R$ 0.2B Assigned to FIDCs R$ 68.7B Wholesale R$ 32.7B Consumer Finance Wealth Mgmt. R$ 36.0B Corporate & Auto Other Wealth IB (CIB) Finance Businesses Mgmt. & BVEP To be the best wholesale bank To originate portfolios with Asset: 10 th largest in the Payroll loans: focus on INSS to our target clients, focused on: quality, scale and profitability market, with innovative (portfolio refinancing) and products and growing Private (growth) • Long-term relationships To focus on used auto finance synergies with BB (multi-brand dealers), where Pillars • Capturing synergies in the Credit cards, insurance, BV has a history of leadership R$ 40.6B AuM¹ origination and structuring of individual loans and CrediCasa and expertise financial solutions (home equity): leverage the Private: focus on estate existing client base • Efficient capital management management through taylor- made solutions Other synergies with BB: BV Promotora, mortgage, etc. BVEP: investment in real estate projects R$ 29.4B R$ 6.6B + Banco do Brasil Votorantim Group Shareholders Expanded³ credit portfolio 1. Assets under management 2. Securitization with substantial risk retention before entry in force of Bacen’s Res. 3,533; 3. Includes guarantees provided and private securities 5
Wholesale businesses Wholesale: continued focus on improving return on capital and on strengthening the product portfolio Wholesale Businesses Corporate & Investment Bank (CIB) Highlights Expanded¹ credit portfolio (R$B) Disciplined approach to capital usage • Credit selectivity • Focus on products with low capital consumption (FX, IB) ∆Dec14 • Active management of the credit portfolio /Sept14 35.1 • Reduced exposure to the “lower middle market” 32.7 +1.5% 32.3 – Focus on companies with annual revenues > R$200M Mid-sized 7.6 companies 5.7 -4.8% 6.0 Increased relevance of BV to its target clients • Strengthening of the product portfolio • Enhancing international distribution (NY and London) Large Focus on capturing synergies in the origination and 27.5 27.0 +2.9% 26.2 companies structuring of Credit, Capital Markets, Derivatives and FX operations Local Fixed Income Distribution Ranking² 4 th Dec/13 Sept/14 Dec/14 7 th Guarantees Distributed 3.8 11.1 9.8 9.9 amount (R$B) provided 1.3 18.2 17.3 17.5 Loans 2013 2014 1. Includes on- balance portfolio (loans), guarantees provided (sureties and endorsements) and private securities; 2. “Ranking An bima de Distribuição – Renda Fixa Consolidado” (Dec/14) Note: Medium companies are those with annual revenues up to R$600M 6
Consumer Finance businesses Consumer Finance: increased focus on used auto finance and INSS payroll loans (retirees and pensioners) Consumer Finance Businesses Auto Finance Payroll Loans Managed loan portfolio (R$B) Managed loan portfolio (R$B) ∆Dec14 ∆Dec14 /Sept14 /Sept14 33.7 7.6 31.1 -1.4% 30.6 3.8 Off- Off- 1.3 6.2 1.7 1.2 5.9 -5.1% -29.1% balance balance 0.7 0.5 -22.9% On- On- 29.9 29.4 29.3 +0.2% 6.3 balance 5.5 5.4 -2.9% balance Dez/13 Sept/14 Dec/14 Dez/13 Sept/14 Dec/14 Used/ INSS/ 75% 81% 62% 66% Total¹ Total¹ Among market leaders in auto financing Focus on refinancing the INSS payroll loan portfolio (retirees and pensioners)… Operates as an extension of Banco do Brasil in auto financing (outside BB ´ s branch network) ...and on increasing the private payroll loan portfolio Continuous improvement of credit processes Continuous improvement of credit processes • 78%² automated credit decisions in Dec/14 (Dec/13: 65%; Dec/12: 45%; Jan/12: 28%) 1. Only on-balance portfolio; 2. Refers to light vehicles 7
Consumer Finance – auto finance Auto finance: used car financing grew 11% in 2014 Greater focus on used light vehicles and maintenance of tight credit standards Auto finance: financing of used cars Continued focus on quality and profitability grew by 11% on 2014/2013, to R$11.4B of the new auto finance vintages Auto finance origination (R$B) Down payment (%) and average term (months) 52 +2.7% Average term 44 44 ∆2014/ 14.2 2013 13.8 40% 40% 26% 2.8 Down payment -21.5% 11.4 3.6 4Q10 3Q14 4Q14 Other 3.7 vehicles¹ Auto finance interest rate x Selic² rate (% p.y.) 11.4 +11.1% 10.2 (80%) 26.7 26.1 BV Financeira 24.6 (74%) 7.8 Used cars (vehicles) (68%) 11.75 10.75 11.0 Selic 2012 2013 2014 Dec/10 Sept/14 Dec/14 Banco Votorantim is one of the leading players in the auto financing market 1. New light vehicles, trucks and motorcycles; 2. Market’s benchmark interest rate (Bacen) 8
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