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Banco do Banco do BrasilBrasil
BBAS3
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This presentation may include 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 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 one. Banco do Brasil is not
responsible for bringing up to date any estimate in this presentation.
DisclaimerDisclaimer
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3
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1 Brazilian Banking Industry Environment
Operational Performance
Prospects and Opportunities
4
Middle and Low Income
Classes¹ (% Households)
Compelling Demographic Dynamics - %
Brazilian Banking Industry EnvironmentBrazilian Banking Industry Environment
Source: IBGE, Central Bank of Brazil, FGV and Ipeadata.(1) Data as of June of each year. Income classes classified according to income by household. Low income class: households with incomes up to R$ 1,063 per month. Middle income class: between R$ 1,064 and R$ 4,590 per month.
Total Payroll Index²
(2) Base 100, Dec/2005Source: IBGE
Unemployment Index³ - %
(3) 12 months average Source: IBGE
106.5 111.6 119.1 121.7133.4
2006 2007 2008 2009 sep/10
10.0 9.37.9 8.1
7.1
2006 2007 2008 2009 sep/10
40%
50%
60%
70%
80%
90%
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Economic Active Population = 15-64 years
Dependency ratio
Demographic
bonus
42% 46% 48% 50% 53%52%44%46% 46% 41% 38% 37% 33% 31%
8.67.97.77.67.3
8.3 8.5
2003 2004 2005 2006 2007 2008 2009
Middle Income Class Low Income Class GDP per Capita (US$ 1,000)
5
Mortgage Payroll LoanVehicles Loan
77.4111.6 139.1 157.1 166.535.7
45.863.3
91.9125.2
48.1
64.7
78.9
106.2
131.8
2006 2007 2008 2009 sep/10
Brazilian Banking Industry IndividualsBusinesses
Credit to Individuals and Businesses
733
936
1,227
1,414
1,612
Brazilian Banking Industry EnvironmentBrazilian Banking Industry Environment
Credit to Individuals²
(1) Loan as Reference for Interest Rate(2) Source: Central Bank of Brazil – sep/10 – preliminary data
Credit / GDP - % Credit / GDP – Businesses¹ - %
Credit / GDP – Individuals¹ - %
Credit / GDP
Interest - % per year Average term - days
2002 2003 2004 2005 2006 2007 2008 2009 Sep/10
72.9
39.6315.5
541.0Credit to Individuals² - Interest vs. Term
30.234.2
40.845.0 46.7
8.6 10.012.8 13.7 13.9
15.314.913.1
11.69.8
2006 2007 2008 2009 sep/10
R$ billion
425.4 532.3 636.0
510.6
695.0778.4
884.0
238.0
728.0207.8
2006¹ 2007 2008 2009 sep/10
6
Scale and LeadershipsScale and Leaderships
R$ billion
As of 09/30/2010
(1) Market Share: Central Bank of Brazil – Top 50 banks: Total Banking - Consolidated I + II (as of Jun/10)
(2) Market Share: Central Bank of Brazil – Domestic Portfolio Informations. Balance of BB portfolio includes guarantees and private securities.(3) ANBIMA Ranking (assets managed by Banco do Brasil + 50% of the assets managed by Banco Votorantim)
21,2%
78,8%
796.8
Assets¹
78.8%
21.2%
22,1%
77,9%
362.5
Asset Management³
77.9%
22.1%
73,7%
26,3%
348.3
Deposits¹
73.7%
26.3%
80,0%
20,0%365.1
Loan Portfolio²
80.0%
20.0%
7
Net Income
Recurring Net
Income
Recurring ROAE - %
ROAE - %
Net Income and ProfitabilityNet Income and Profitability
Growing and consistent income reflect the value creation of the strategies adopted.
R$ million
32.1 30.7
25.9 25.1
19.5
26.1
24.725.8
21.622.6
32.5
22.5
3,665
5,8806,685
8,506
5,014
6,960
5,0586,044
8,803
10,148
5,992
7,701
2006 2007 2008 2009 9M09 9M10
8
Return to ShareholdersReturn to Shareholders
The payment of Interest on Own Capital and dividends in the first nine months of 2010 surpassed, by 28%, the amount paid in 2006.
Interest on Own Capital
Dividends
R$ billion
1.0 0.7
2.0 2.2
1.01.4
1.41.3
1.51.9
1.4
1.7
2.42.0
3.5
4.1
2.4
3.1
2006 2007 2008 2009 9M09 9M10
9
Interest Expense
Other Interest Income
Loan Income
(1) Before Allowance for Loan Losses
18.120.8
24.5
33.1 = 21.9% = 21.9%
23.8
29.0
Net Interest IncomeNet Interest Income
NII¹
2006 2007 2008 2009 9M09 9M10
21.6
15.1
18.625.3
14.7
19.2
34.5
23.9
33.941.7
23.7
32.329.7
17.7
23.6
39.8
19.7
30.5
= 34.0% = 34.0%
R$ billion
10
Cumulative Selic²
(1) Net Interest Income over Earning Assets(2) Annualized(3) Net Financial Margim over Earning Assets(4) Up to September/2010 - annualized
Risk Adjusted NIM³
Net Interest MarginNet Interest Margin
28.7
25.4
21.018.7
5.5 6.35.1 5.3 5.6
16.6
8.16.9 6.7 7.2 6.3
10.9 10.3 9.3 9.8 9.4
2006 2007 2008 2009 20104
NIM¹
2006 2007 2008 2009 20104
NIM by product - % NIM - %
Emphasis on expansion of lower risk products in Individuals Loan Portfolio ensures Net Interest Margin maintenance.
Agribusiness
Individuals Businesses
Loan Operations
15.1
11.9 12.59.9
5.6 5.6 5.0 4.3 4.5
9.5
6.46.77.07.68.1
11(1) Demand, deposits savings, judicial and special deposits.(2) Including 50% of BV managed resources
(3) Source: ANBIMA Ranking
FundingFunding
BB Funding is characterized by low costs, diversification and stability.
Total Deposits
158.8188.3
270.8
337.6 348.3
2006 2007 2008 2009 Sep/10
Core Deposits1
119.1144.2
155.8
202.9218.4
2006 2007 2008 2009 Sep/10
Assets under Management2
182.7220.1
246.3
316.2
362.5
2006 2007 2008 2009 Sep/10
R$ billion
83.8 85.4 83.089.1
97.6
Loan Portfolio / Deposits - %
21.421.120.7
18.319.1
Market Share - %
Foreign Borrowing – US$ billion
2.3 3.36.2 7.42.6
3.4
2.6 1.7
1.72.2
4.66.9
3.8
6.8
6.3
6.1
2.0
2.0
2.0
2.0
12.4
17.6
21.7
24.1
2007 2008 2009 Sep/10
Individuals
Businesses
Issuances
Repo
Interbanking
12
= 19.0% = 19.0%
Market Share¹ - %
(1) Central Bank of Brazil – Press Releases – BB Domestic Loan Portfolio.
339.8
20.016.016.5 17.1
20.1 20.1
9.1%
33.8%
18.0%
39.0%51.9 65.597.2
125.3 117.0140.524.0
32.0
48.8
91.885.7
107.4
8.511.7
18.5
19.220.5
26.0
36.640.2
45.2
47.347.6
48.0
12.2
11.4
15.1
17.314.8
18.0
133.2
160.7
224.8
300.8285.5
2006 2007 2008 2009 Sep/09 Sep/10
6.0%
21.5%
31.0%
41.5%
5.3%
21.8%
31.6%
41.3%
Loan PortfolioLoan Portfolio
BB Loan Portfolio reaches a market share of 20% due to credit diversification with growing of Individuals Loan Portfolio.
CAGR = 28.4%CAGR = 28.4%
R$ billion
Businesses
Individuals
Offshore
AgribusinessIndividuals
AgribusinessBusinesses
13
Δ% overSep/09
29.2
24.2
25.3Market Share¹ - %
(1) Source: Central Bank of Brazil – Press Releases - Loan as Reference for Interest Rate.
Other
Payroll Loan
Vehicle Finance
Credit Card
Mortgage
CAGR = 49.1%CAGR = 49.1%
31.4
22.7
10.8 11.614.5
22.9 22.3
8.3 11.9 17.6
36.5 34.042.2
12.013.3
16.8
23.6 23.1
27.0
2.83.8
7.6
9.48.1
10.4
0.9
3.0
6.7
20.719.3
25.3
0.1
1.51.3
2.5
24.0
32.0
48.8
91.885.7
107.4
2006 2007 2008 2009 Sep/09 Sep/10
Individuals Loan PortfolioIndividuals Loan Portfolio
Banco Votorantim, payroll loan, vehicle finance and mortgage are the main strategies to consumer finance expansion.
R$ billion
14
Total Loan PortfolioNPL - BV - %
Market Share¹ - BV - %
BV - Retail Credit Production
(1) Source: ABEL
4,579
5,762 6,0436,636
7,540
9,178
2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
3.1 3.4 3.2 3.4 3.0 2.7
18.617.517.313.4
22.5 22.6
Retail Credit – BVRetail Credit – BV
+
R$ million
15
Small and Micro Enterprises
Medium and Large Enterprises
Δ% over Sep/09
20.1
21.3
17.8
Market Share¹ - %
(1) Source: Central Bank of Brazil – Press Releases: Loan as Reference for Interest Rate
33.6 40.9
62.380.4 75.8
92.018.3
24.6
34.9
44.941.2
48.5
51.9
65.5
97.2
125.3117.0
140.5
2006 2007 2008 2009 Sep/09 Sep/10
21.4
15.6 14.4 16.7
21.1 20.5
Business Loan PortfolioBusiness Loan Portfolio
Credit to Businesses gains market and grows more than 20% in the last 12 months.
CAGR = 30,4%CAGR = 30,4%
R$ billion
16
Investment
Working Capital
Foreign Trade
Other
Δ % over Sep/09
34.0
21.8
4.7%
9.3%
21.9%
64.1%
30.139.1
59.8
81.690.1
9.6
13.4
19.2
25.2
22.9
30.712.6
14.1
13.16.0
6.0
6.6
51.9
65.5
97.2
125.3117.0
140.5
74.010.1
15.5
10.9
2.7
2.2
2.1
2006 2007 2008 2009 Sep/09 Sep/10
4.1%19.5%
18.4%
58.1%
Business Loan Portfolio BreakdownBusiness Loan Portfolio Breakdown
The increase in the relative share of credit for investment reflects the improving economy and indicates a promising scenario for next year.
R$ billion
17
Business Loan Portfolio - FGOBusiness Loan Portfolio - FGO
Thousand Operations
Operations BalanceR$ million
380
Sep/09
2,404
Dec/09
3,469
Mar/10
5,104
Jun/10
5,643
Sep/10
212.4
255.4
140.5
81.9
11.4
= 134.7% = 134.7%
= 10.6% = 10.6%
SME credit prioritized risk mitigators mechanisms to expand the leverage capacity of businesses and to hedge BB loan portfolio.
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Investment
Costs
Marketing
Other
Δ % over Sep/09
8.7
12.0
12.9
4.4
Market Share - %
59.6 57.7 60.7 58.2 61.5 61.9
0.9%
16.4%
41.2%
41.5%
2.6%
26.5%
33.5%
37.4%18.7 19.9 24.3 27.5 24.5 27.6
18.6 20.120.1
22.022.1
24.77.410.9
17.514.4 18.8
19.62.6 2.7
1.9
45.1
51.9
63.766.4 68.0
74.0
0.4
1.0
1.8
2006 2007 2008 2009 Sep/09 Sep/10
Agribusiness Loan PortfolioAgribusiness Loan Portfolio
BB is the main partner of brazilian agribusiness, ensuring support to all stages of production process.
CAGR = 14.1%CAGR = 14.1%
R$ billion
19
73,8%
58.4%
66.6%
54.7%
35.7%
74.2%
Without Mitigators¹ - % With Mitigators ¹ - %
Working Capital (R$ billion)Crop Insurance Breakdown
61.6 62.067.3
38.0 32.7
11.6 15.9 14.9 7.0
50.0
38.450.0
Crop 07/08 Crop 08/09 Crop 09/10 Crop 10/112
Agribusiness – Risk MitigatorsAgribusiness – Risk Mitigators
Costs³ Rural Insurance Hedge PriceSoybean 3,580 66.4% 7.0%Corn 1,223 71.2% 10.1%Rice 765 72.0% -Wheat 16 87.3% -Other 1,438 37.4% -Total 7,022 62.0% 5.3%
% Mitigated
(1) Agricultural insurance, Proagro or Hedge Price(2) Up to September 2010(3) Crop 2010/2011 – R$ million
20 (1) Loan as Reference for Interest Rate.(2) Source: Central Bank of Brazil – Press Releases
Delinquency RatioDelinquency Ratio
Reduction of delinquency ratio shows the success of BB strategy to emphasize collateralized segments.
2
7.6 7.08.0 7.8
8.2
6.0
3.8
6.3 6.35.8
4.85.2
2006 2007 2008 2009 Sep/09 Sep/10
Individuals Loan Portfolio NPL Ratio1 - %
2.72.0 1.8
3.8 4.03.5
2.4 2.0 1.7
2.9 3.12.2
2006 2007 2008 2009 Sep/09 Sep/10
Businesses Loan Portfolio NPL Ratio1 - %
Loan Portfolio NPL Ratio - %
3.73.2 3.0
4.4 4.43.4
2.5 2.43.3 3.6
2.72.7
2006 2007 2008 2009 Sep/09 Sep/10
21
Allowance for Loan Losses Expenses - R$ million
Allowance for Loan Losses / Loan Portfolio¹ - %
Coverage Ratio² - %
Credit Risk and Allowance for Loan LossesCredit Risk and Allowance for Loan Losses
Allowance for Loan Losses Expenses / Average Portfolio (%)
170 168 176156 162 171
205214228
162 156
182
2006 2007 2008 2009 Sep/09 Sep/10
2006 2007 2008 2009 9M09 9M10
3.85.0
3.7 3.64.6 4.7
5,743 5,380
6,800
11,629
8,679 8,536
(1) Annual Allowance for Loan Losses Expenses over 12 months
Average Portfolio .
(2) Required allowance for loan losses / Past Due Loans + 90 days
22(1) Inssuance, Pension Plan and Saving Bonds.
NII
Other CommercialIncome
Commercial Revenues¹Commercial Revenues¹
Business diversification ensures sustainability in revenue creation.
18.1 20.8 24.533.1 23.8
29.09.5
10.612.7
15.1
11.1
13.027.6
31.437.2
48.1
34.9
42.0
2006 2007 2008 2009 9M09 9M10
CAGR = 20.4%CAGR = 20.4% = 20.6% = 20.6%
R$ billion
23
Market Share -%
Cards Revenues
38.6
50.5
66.2
88.6
64.5
77.8
15.8 16.819.2 20.3 20.6 20.5
2006 2007 2008 2009 9M09 9M10
= 23.7%= 23.7%
Cards and InsuranceCards and Insurance
Business with Cards and Insurance follow the favorable dynamic of economy.
(1) Brokerage Net Revenue + Fee Income + Equity in the Earnings. After taxes.
(2) Insurance Income / Recurring Income
Insurance Income¹
Insurance Index -%2
617.6 671.9758.5
992.2
752.0
943.6
16.8
11.4 11.3
14.6 15.013.6
2006 2007 2008 2009 9M09 9M10
= 25.5% = 25.5%
R$ billion
24 (1) Does not include civi and labor claims(2) Pro forma considering BNC and BV expenses.
Other AdministrativeExpenses
Personnel Expenses
Administrative ExpensesAdministrative Expenses11
BB shows austerity in the administrative expenses management, even considering BNC branch network integration and acquisition of 50% of Banco Votorantim.
7.3 7.1 8.110.3 8.0 9.0
5.6 6.27.3
8.9
7.07.5
12.9 13,3
15,4
19.2
15.016,5
2006 2007 2008 2009² 9M092 9M10
= 10.0% = 10.0%
R$ billion
25
Structure DataStructure Data
Employees - thousand
82.7 81.989.0
104.0108.5
2006 2007 2008 2009 Sep/10
Points of Service - thousand
11.1 11.3 11.6 13.0 13.2
4.0 4.0 4.34.9 5.1
15.1 15.3 16.0
17.9 18.3
2006 2007 2008 2009 Sep/10
Other Points of Service Branches
ATM - thousand
39.7 39.3 39.7
45.444.2
2006 2007 2008 2009 Sep/10
Transactions in Automated Channels - %
90.0 91.3 91.1 92.0 91.8
2006 2007 2008 2009 Sep/10
26
Productivity ratiosProductivity ratios
Deposits per Branch - R$ million
40.0
47.0
62.4
68.9 68.9
2006 2007 2008 2009 Sep/10
Assets per Employee– R$ million
3.23.9
5.2
6.26.7
2006 2007 2008 2009 Sep/10
Checking Accounts per Employee
278301 313 307 301
2006 2007 2008 2009 Sep/10
Credit Portfolio per Branch – R$ million-
33.540.1
51.8
61.467.2
2006 2007 2008 2009 Sep/10
27(1) Without one-off Items(2) Cost-to-Income Ratio = Administrative Expenses / Operating Revenues(3) Accumulated up to September/2010
Productivity RatiosProductivity Ratios
Recent acquisitions present opportunity to recover previous productivity levels.
Fee Income / Personnel Expenses - %(1)
119.8112.9127.7
136.2128.2
2006 2007 2008 2009 20103
Cost-to-Income Ratio - %(1) (2)
47.5
2006
46.2
2007
45.6
2008
40.7
2009
44.0
20103
28
Tier II - %
Tier I - %
(1) Pro forma – Added subordinated debt issued in the amount of US$ 650 million.
BIS RatioBIS Ratio
Current BIS Ratio level allows BB Loan Portfolio to keep growing.
Pro forma1
11.7 10.7 10.99.7 10.2
5.64.9 4.3
4.0 4.0
17.3
15.6 15.213.7 14.2
2006 2007 2008 2009 sep/10
10.2
4.2
14.4
oct/10
29
59,2
10,4
17,0
13,413.4
17.0
10.4
59.2
Ownership StructureOwnership Structure
Ownership Structure
Foreign InvestorsFederal Government
PREVI Other
Free Float - %
7.210.0 11.3 11.8
17.07.6
11.7 10.2 10.0
13.4
14.8
21.7 21.5 21.8
30.4
2006 2007 2008 2009 Sep/10
After 2006, 2007 and 2010 public offerings BB surpasses 30% of free float and meets all commitments with Bovespa’s Novo Mercado¹.
Free float: 30.4%
(1) Special listing segment of BM&F Bovespa wich comprises companies with the best corporate governance practices.
30
Banco do Brasil Bradesco Itaú Unibanco Ibovespa Santander¹
(1) Change since 10/07/2009, date of first Unit SANB11 negotiation.
Stock PerformanceStock Performance
206.9%
128.1%
110.0%
12.4%
107.5%
12/31/2005 09/30/2010
Market recognizes the historical operating performance and the favorable prospects.
31
Prospects and Opportunities
32
Business DiversificationBusiness Diversification
Insurance Businesses
Credit Cards
Payment methods
National Brand
Mortgage
Long term relationship
Capital Market Operations
Income Class upgrade, long term funding and improving loyalty of customer base are opportunities to Brazilian Banking Industry
Ranking Position After Corporate Reorganization
Vida33oo 55oo 11oo
Part. de Mercado: 19,3%Aliança do Brasil
Não-Vida77oo 22oo 22oo
Part. de Mercado: 12,5%Aliança do Brasil
Veículos66oo 55oo 22oo
Part. de Mercado: 15,6%BrasilVeículos
Capitalização11oo 77oo 11oo
Part. de Mercado: 30,0%BrasilCap
Previdência22oo 22oo
22oo
Part. de Mercado: 19,9%BrasilPrev
Life33oo33ord 55oo55oth 11oo11ost
Market Share: 19.3%Aliança do Brasil
Non-life77oo77oth 22oo22ond 22oo22ond
Market Share: 12.5%Aliança do Brasil
íVehicles66oo66oth 55oo55oth 22oo22ond
Market Share: 15.6%BrasilVeículos
Saving Bonds¹11oo11ost 77oo77oth 11oo11ost
Market Share: 30.0%BrasilCap
Pension Fund22oo22ond 22oo22ond
22oo22ond
Market Share: 19.9%BrasilPrev
(1) A financial product in Brazil which allows the customer to invest with specifc
conditions of term and rate, and to apply for prizes
33
InternationalizationInternationalization
Follow the internationalization movement of Brazilian Companies
Assist Brazilian communities abroad
Follow international trade flow
1999 2003 2009
l.......................l......................l
1999 2003 2009
l.......................l......................l
1999 2003 2009
l.......................l......................l 1999 2003 2009 l......................l.........................l1999 2003 2009 l......................l.........................l1999 2003 2009 l......................l.........................l
Patagonia
Financial Holding Company
Africa
Reorganization in Europe
The greater relevance of Brazil in the global economy demands proactivity of Banks.
34
Better Customer Services and Operational EfficiencyBetter Customer Services and Operational Efficiency
To have a quarter of Brazilians as customers imposes the challenge of strenghten the relationship, improve service and operational efficiency gains.
Review the customer portfolios
Increase the sales team
New business platform
New branches layout
Commercial Revenues¹ / Customer- R$
2006 2007 2008 2009 2010
(1) Quarterly Flow – Includes Fee and Insurance Income
349.2 346.7 348.0381.5 396.6
35
For further information access bb.com.br/ir
Investor Relations UnitSBS - Quadra 1 - Bloco C - Ed. Sede III – 5th floor
70073-901 - Brasília (DF)Phone: 55 (61) 3310 3980
Fax: 55 (61) 3310 3735
BBAS3
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