presentation institutional 2q17 - bb · institutional presentation 2q17. this presentation may...
TRANSCRIPT
Institutional
Presentation 2Q17
This presentation may include references and statements,
planned synergies, estimates, projections of results, and future
strategy for Banco do Brasil, its Associated and Affiliated
Companies, and Subsidiaries. Although these references and
statements reflect the management’s belief, they also involve
estimates and unforeseen risks. Consequently, results may
differ 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 do Brasil is not
responsible for updating any estimate in this presentation.
Disclaimer
Agenda 6
COMPANY PROFILE 7
Profile 8
Business diversification 9
Highlights 10
Ownership Structure 11
Presence in Brazil 12
Global Presence 13
Assets 14
Loan Portfolio 15
Total Loan Portfolio - Risk Level 16
Loan Portfolio (by closing date of the loan) 17
Gross Disbursement 18
Loans to Individuals 19
Individuals Portfolio: Lower risk lines 20
Loans to Companies 21
Companies Portfolio by Macro-sector 22
Guarantees provided and Provisions 23
Agribusiness 24
Commercial Funding 25
Sources 26
Sources 27
Current Debt Issues Abroad 28
Uses 29
Ratings 30
Leaderships 31
Corporate Governance 32
Governance Timeline 33
Customer Segmentation 34
Digital Bank 35
Digital Channels 36
Digital Strategy 37
Index
High income customers 38
Small companies specialized service 39
Conta Fácil 40
Credit Card / Digital Solutions 41
Auto loans transactions - mobile 42
EARNINGS HIGHLIGHTS 43
Strategic Guidelines 44
Net Income 45
Earnings Breakdown 46
Market Ratios 47
Net Interest Income 48
Spread by Portfolio 49
Net Interest Margin 50
Earning Assets Breakdown 51
Assets and Liabilities Breakdown 52
BB’s Consolidated Net Position 53
Fee Income 54
Administrative Expenses 55
Delinquency Ratios (+90 days) 56
Delinquency Ratio by Segment 57
NPL Formation 58
NPL Formation by Segment 59
Vintages 60
ALL Balance and Coverage Ratio 61
Coverage Ratio by Segment 62
ALL Balance – Transactions 63
Provision Expenses Flow / Loan Portfolio 64
Average Risk and Loan Portfolio 65
Average Risk by Segment 66
Cost of Risk 67
Write-off 68
Renegotiated Overdue Loan Portfolio 69
Index
Renegotiated Loan Portfolio 70
BIS Ratio 71
Full Application of Basel III Rules 72
BIS III – Implementation Schedule 73
Guidance 2017 74
Banco Votorantim 75
MACROECONOMIC INFORMATION 76
Inflation and Selic Rate 77
Demographics: Population Pyramid 78
Population: Dependency Ratio 79
Social Security Deficit – RGPS 80
Main Pillars of Brazilian Growth 81
Sustainable Growth 82
Brazilian Agribusiness: Overview 83
PPPs in Brazil 84
Brazilian Foreign Trade Balance Evolution 85
Summary Table 86
Summary Table 87
SUSTAINABILITY 88
Socio-environmental (SER) Policy 89
SER Governance 90
SER Strategy – Agenda 30 BB 91
SER Strategy – Agenda 30 BB 92
Socio-environmental Risk Management 93
Promotion of gender equity 94
Pacts and Voluntary Commitments 95
Market Indexes and Awards 96
Index
Agenda01 COMPANY
PROFILE
EARNINGS HIGHLIGHTS
SUSTAINABILITY
MACROECONOMIC INFORMATION
02
03
04
01COMPANY PROFILE
Founded in 1808
53.9% controlled by the Federal Government
1st company listed on the stock exchange in Brazil
Access to a broad spectrum of clients
8
Profile
Large, diversified and stable funding base
Business diversification including:
Banking
ServicesInsurance
Capital
Markets
Methods of
Payment
International
Franchise
Asset
Management
9
More than 200 years of solid performance
Market
Leaderships
Solid
Financial
Performance
Focus on
Services
Stable and
Diversified
Funding
1 2 3 4
Highlights
10
11
Free Float 43.2%
21.91%
21.33%
2.81%
53.95%
Local CapitalForeign CapitalShares Owned by the CompanyFederal Government
Ownership Structure
11
Total Shares
2,865,417,020
Jun/17
Federal Government:
National Treasure 50.7%
Sovereign Fund 3.2%
Free Float Breakdown (%)
20.6
Sep/16
22.4
20.4
Jun/16
23.0
19.8
Jun/17
21.9
21.3
Mar/17
21.5
21.3
Dec/16
22.2
Presence in BrazilBB at a Glance
Distribution Network
66,072
Branches
4,885
Customers
65,566 thousand
Employees
99,603
Market Share – 21.8%(Number of branches)
North 26.7%
Midwest 25.2%
Northeast 29.6%
Southeast 18.0%
South 22.8%
(1) Banking Agents and Postal Bank branches.
(2) Shared Service Network: lotteries (CEF), Banco 24h e ATM (BRB+CEF).
$
Own Service Network
16,098
MaisBB Network¹
13,486Shared Service Network²
36,488
12
Jun/17
Points of Service
2,117$
Banco do Brasil in the World
Branches
Sub-branches
Representative Offices
Subsidiaries, Affiliates and
Capital Markets Units
Shared Services Units
Global Presence
11
3
7
11
2
BB operates in 24
countries through a
network of 34 units. BB
also maintains
relationship with 880
correspondent banks in
105 countries.
13
R$ billion
Mar/17
1,445.6
Jun/17Dec/16
1,402.4
Jun/16
1,448.2
Sep/16
1,401.41,445.1
19.720.320.2
19.6
Market Share (%)Assets
2.2%
38.5%
9.3%
37.1%
12.9%
Assets
14
• Loans
• Available Funds, Short-Term
Interbank Investments, Interbank
and Intrabank Accounts
• Securities and Financial
Derivatives
• Other
• Permanent Assets
Loan Portfolio – Broad Concept¹R$ billion
Jun/17
696.1
277.2
185.9
188.2
44.9
Mar/17
688.7
280.8
185.1
180.1
42.7
Dec/16
708.1
294.7
187.8
735.4
316.8
187.6
179.6
51.5
Jun/16
753.0
327.6
189.7
184.5
51.2
+1.1%
45.7
Sep/16
179.8
CompaniesIndividualsAgribusinessForeign Branches and Subsidiaries
-7.6-11.4-11.3
-6.9-1.2
Growth in 12 months (%)
6.4%
27.0%
26.7%
39.8%
6.8%
24.5%
25.2%
43.5%
(1) It includes private securities and guarantees provided. 15
R$ million
Total Loan Portfolio - Risk Level¹
16(1) BB Classified Loan Portfolio.
Minimum Supplementary Required Minimum Supplementary Required
AA 343,702 - 49.6 307,437 - - - 48.2 297,661 - - - 46.3
A 132,192 661 19.2 92,266 461 41 502 14.5 91,552 458 46 504 14.2
B 120,082 1,201 17.4 108,754 1,088 304 1,391 17.0 133,109 1,331 493 1,824 20.7
C 39,567 1,187 5.7 68,783 2,063 1,096 3,159 10.8 63,470 1,904 1,160 3,064 9.9
D 8,465 847 1.2 16,477 1,648 246 1,894 2.6 11,911 1,191 152 1,343 1.9
E 15,443 4,633 2.2 14,175 4,253 - 4,253 2.2 12,624 3,787 - 3,787 2.0
F 5,161 2,580 0.7 6,559 3,279 - 3,279 1.0 5,943 2,971 - 2,971 0.9
G 4,537 3,176 0.7 6,493 4,545 - 4,545 1.0 7,293 5,105 - 5,105 1.1
H 22,684 22,684 3.3 17,391 17,391 - 17,391 2.7 19,283 19,283 - 19,283 3.0
Total 691,832 36,968 100.0 638,336 34,728 1,686 36,414 100.0 642,846 36,030 1,851 37,881 100.0
AA-C 635,543 3,049 91.9 577,241 3,612 1,440 5,052 90.4 585,793 3,693 1,699 5,392 91.1
D-H 56,289 33,919 8.1 61,095 31,116 246 31,362 9.6 57,053 32,338 152 32,489 8.9
Jun/16 Mar/17 Jun/17
Balance Provision Share % Balance Share % BalanceProvision
Share %Provision
3.4
4.7
4.4
5.2
4.5
7.4
5.9
8.4
6.0
Dec/16
12.4
8.9
15.5
15.6
3.6
5.1
4.9
5.8
5.8
8.2
6.4
8.0
Sep/16
13.2
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
Jun/17
10.9
8.1
13.3
13.5
3.14.2
4.0
4.6
3.8
5.3
5.1
7.3
6.0
10.8
Mar/17
11.8
8.59.3
16.3
16.6
3.8
5.4
5.5
8.2
6.4
15.1
6.3
Jun/16
13.8
9.5
16.6
17.5
4.1
5.8
7.8
9.07.1
8.8
Up to 2011
2012
2013
2014
1Q15
2Q15
14.7
9.2
Loan Portfolio (by closing date of the loan)¹
17(1) BB Classified Loan Portfolio.
2016
21.5%
2015
15.9%
54.2%
168
12312091
117100
3Q162Q161Q16 2Q171Q174Q16
Brazil
216184
139
97106100
2Q16 4Q16 1Q17 2Q171Q16 3Q16
171
86
140
91
157
100
3Q161Q16 2Q16 1Q17 2Q174Q16
15712111199107100
2Q171Q172Q16 3Q16 4Q161Q16
Disbursements – quarterly average¹ (1Q16 base 100)
Agribusiness
Individuals
Companies
(1) Does not include revolving lines of credit and overdraft. 18
R$ million
Loans to Individuals¹
19(1) It considers the organic Loan Portfolio.
Jun/16 Mar/17 Jun/17
Payroll Loan 62,959 62,442 64,219
Mortgage 39,706 75.8% 42,635 75.9% 43,049 76.2%
Salary Loan 20,482 19,716 19,850
Auto Loan 7,333 5,769 5,432
Credit Card 22,906 23,776 23,627
Consumer Finance 7,392 5,841 6,110
Overdraft Account 2,775 2,580 2,425
Microcredit 700 602 538
Renegotiated Loan 6,876 8,049 8,139
Other 926 643 584
Total 172,054 172,054 173,972
+3.9%
Jun/17Mar/17
53.7
42.6
11.0
Jun/16
51.6
39.7
11.9
43.0
10.5
53.6
Mortgage - IndividualsMortgage -Companies
2.091.29
2.15
Individuals Mortgage NPL 90 (%)²
+2.0%
Jun/17Mar/17
62.4
88.0%
9.3% 2.7%
Jun/16
63.0
88.5%
8.4% 3.0%
87.8%
64.2
9.6% 2.6%
Civil ServantsINSS´s Retirees and PensionersPrivate Sector Employees
1.451.25 1.82
NPL +90 days (%)²
-3.1%
Jun/17Mar/17
19.7
Jun/16
20.5 19.8-25.9%
Jun/17Mar/17
5.8
Jun/16
7.3
5.4
3.542.614.94
NPL +90 days (%)²
1.200.88
1.29
NPL +90 days (%)²
R$ billion
Individuals Portfolio¹: Lower risk lines of credit
Individuals
Market
Share
7.8%
Market
Share
21.6%
(1) BB Organic Portfolio. (2) BB Classified Loan Portfolio.
PayrollMortgages
Auto LoansSalary Loans
20
8.4%
Chg. (%)
on Jun/16
Loans to Companies – Broad Concept¹
-1.3%-15.4%
Jun/17
277.2
219.8
57.4
Mar/17
280.8
219.4
61.4
Jun/16
327.6
246.4
81.2
Middle Market, Corporates and GovernmentVery Small and Small Companies²
-29.2%
-10.8%
21
-6.5%
+0.2%
(1) It includes private securities and guarantees provided. (2) Companies with annual revenues up to R$ 25 million.
Chg. (%) on Jun/16 Chg. (%) on Mar/17
R$ billion
Companies Portfolio by Macro-sector¹
22
R$ million
(1) It includes Companies and Agro Companies Portfolio.
R$ million
Macro-Sector¹ Jun/16 Share % Mar/17 Share % Jun/17 Share % Jun/16 Mar/17
Public Administration 37,997 9.0 38,303 10.7 39,225 10.9 3.2 2.4
Oil and Gas 42,595 10.1 38,436 10.8 38,660 10.8 (9.2) 0.6
Metalworking and Steel 38,732 9.2 33,938 9.5 32,264 9.0 (16.7) (4.9)
Food products of Vegetable Origin 33,532 8.0 27,913 7.8 30,129 8.4 (10.1) 7.9
Eletric Utilities 38,274 9.1 30,391 8.5 29,416 8.2 (23.1) (3.2)
Transportation 27,080 6.4 25,281 7.1 25,099 7.0 (7.3) (0.7)
Services 21,525 5.1 22,099 6.2 20,729 5.8 (3.7) (6.2)
Housing 20,778 4.9 18,668 5.2 17,640 4.9 (15.1) (5.5)
Automobiles and Components 23,041 5.5 16,404 4.6 15,944 4.4 (30.8) (2.8)
Food products of Animal Origin 16,427 3.9 14,892 4.2 15,538 4.3 (5.4) 4.3
Financials 16,439 3.9 9,709 2.7 12,187 3.4 (25.9) 25.5
Retail 17,194 4.1 12,267 3.4 11,828 3.3 (31.2) (3.6)
Construction Materials 13,821 3.3 11,508 3.2 11,190 3.1 (19.0) (2.8)
Agricultural inputs 10,191 2.4 7,399 2.1 8,038 2.2 (21.1) 8.6
Telecommunication Services 5,894 1.4 5,933 1.7 7,548 2.1 28.1 27.2
Textiles 10,116 2.4 7,282 2.0 7,242 2.0 (28.4) (0.5)
Electrical and Electronic Goods 8,048 1.9 6,624 1.9 6,792 1.9 (15.6) 2.5
Pulp and Paper 8,765 2.1 6,345 1.8 6,045 1.7 (31.0) (4.7)
Chemicals 7,065 1.7 5,742 1.6 5,586 1.6 (20.9) (2.7)
Heavy Construction 7,067 1.7 4,927 1.4 4,859 1.4 (31.2) (1.4)
Wholesale and Other Industries 6,945 1.6 4,697 1.3 4,720 1.3 (32.0) 0.5
Furniture and Forest products 5,576 1.3 4,887 1.4 4,639 1.3 (16.8) (5.1)
Leather and Shoes 2,631 0.6 2,122 0.6 2,066 0.6 (21.5) (2.6)
Beverages 1,598 0.4 1,258 0.4 1,279 0.4 (20.0) 1.7
Other Activities 45 0.0 12 0.0 15 0.0 (67.5) 22.2
Total 421,374 100 357,038 100 358,679 100 (14.9) 0.5
Balance Chg. (%) on
Guarantees provided and Provisions
15,254
Jun/17
356
Mar/17
379
17,178
Dec/16
431
17,957
Sep/16
491
18,241
Jun/16
430
19,326
ProvisionsGuarantees Provided
2.32.22.42.72.2
Provisions/Guarantees
R$ million
23
%
59.8 % Market Share²
+2.0%
Jun/17
188.2
158.2
30.0
Mar/17
180.1
152.2
27.9
Jun/16
184.5
152.6
31.9
+4.5%
RuralAgroindustrial
Agribusiness¹R$ billion
(1) It includes Rural Product Bills and guarantees provided. (2) Source: Brazilian Central Bank – Jun/2017. 24
R$ 103 billion for the
17/18 Harvest
11.5
91.5
Companies of the Agribusiness Value Chain
Rural producers and cooperatives
+3.7%
-6.0%
Chg. (%) on Jun/16
+7.5%
+3.9%
Chg. (%) on Mar/17
(1) Includes the balance of CRI (Certificates of Real Estate Receivables). (2) Includes part of the balances of the Private Securities shown on Notes to the Consolidated Financial Statements number 17.
(3) It refers to Deposits + Agribusiness Letters of Credit and Mortgage Bonds quarterly cost.
+0.7%
Jun/17
588.5
19.0 24.962.4
120.8
151.0
210.5
Mar/17
584.4
18.3 20.164.0
133.7
148.9
199.4
Dec/16
613.6
20.725.6
69.3
142.0
151.8
204.2
Sep/16
619.9
23.931.6
61.6
150.6
148.7
203.5
Jun/16
624.8
27.530.4
62.5
153.5
148.4
202.5
Interbank DepositsRep. Agreement with Private Securities²Demand DepositsAgribusiness Let. Credit + Mortgage Bonds¹Savings DepositsTime Deposits
Commercial Funding
R$ billion
25
13.8
66.5
12.9
64.063.763.4
14.014.214.1
61.8
Funding Expenses % Selic³ Accumulated Selic (% YTD in 12 months)
86.889.791.6 87.2 87.5
Adjusted Net Loan Portfolio / Commercial Funding
%
Sources
26
R$ million
(1) Includes part of the balances of Private Securities on Notes to the Consolidated Financial Statements number 17.
(2) Includes Foreign Borrowing, Foreign Securities, Foreign Onlending and Subordinated Debt Abroad.
(3) Includes Financial Bonds and Debentures.
Dec/15 Mar/16 Jun/16 Sep/16 Dec/16 Mar/17 Jun/17
Commercial Funding¹ 669,506 638,611 624,778 619,944 613,611 584,445 588,506
Domestic Onlending 90,065 88,082 86,603 85,078 83,083 81,431 79,453
Subordinated Debt 59,936 58,049 58,648 60,027 61,976 61,123 62,306
Foreign Borrowing² 74,696 58,463 50,911 52,578 50,471 47,581 51,499
Hybrid Capital Instruments 37,342 34,806 31,068 31,825 31,466 31,206 31,753
Financial and Development Funds 15,003 14,781 13,741 14,620 14,791 14,817 14,837
Commercial Paper³ 2,243 2,309 2,393 2,673 2,734 2,812 3,088
Compulsory Deposits (60,811) (62,613) (65,404) (63,637) (63,451) (61,619) (64,659)
Total 887,979 832,489 802,737 803,107 794,680 761,795 766,782
Sources
27
Commercial Funding
Foreign
R$ million
(1) Includes part of the balances of the Private Securities shown on Notes to the Consolidated Financial Statements number 17. (2) Includes the balance of CRI (Certificates of Real Estate Receivables)
Dec/15 Mar/16 Jun/16 Sep/16 Dec/16 Mar/17 Jun/17
Foreign Securities 33,500 22,885 18,631 20,274 20,393 20,540 21,937
Foreign Borrowing 29,617 25,178 22,763 22,812 20,409 17,769 19,741
Foreign Onlending 10 0 0 0 0 0 0
Subordinated Debt Abroad 11,569 10,400 9,517 9,491 9,668 9,271 9,821
Total 74,696 58,463 50,911 52,578 50,471 47,581 51,499
Cost Dec/15 Mar/16 Jun/16 Sep/16 Dec/16 Mar/17 Jun/17
Savings DepositsTR + (0.5% if Selic> 8.5%, or
70% of Selic)151,845 151,919 148,368 148,681 151,763 148,910 150,982
Agribusiness Letters of Credits % of CDI 134,823 135,420 135,418 133,098 124,965 112,720 100,665
Judicial Deposits As Savings Deposits 113,652 114,140 116,655 119,281 121,969 121,931 130,514
Time Deposits % of CDI 90,890 88,463 85,834 84,199 82,234 77,511 79,969
Demand Deposits - 66,550 62,631 62,550 61,623 69,349 63,960 62,385
Rep. Agreement with Private Securities¹ % of CDI 52,142 30,471 30,415 31,621 25,591 20,135 24,898
Interbank Deposits % of CDI 41,483 36,885 27,473 23,919 20,665 18,265 18,962
Mortgage Bonds² % of CDI 18,121 18,681 18,066 17,521 17,074 21,012 20,132
Total 669,506 638,611 624,778 619,944 613,611 584,445 588,506
Current Debt Issues Abroad
28(1) - A: annual; S: semiannual; Q: quarterly.
Issue Date Call Date Coupon (%)¹Term in
YearsMaturity
Volume
(US$ thousand)Currency
Rating
S&P/Moody's/FitchStructure
Outstanding
amount (US$
thousands)
07/18/2007 9.750 S 10 07/18/2017 187,198 BRL SR / Ba2 / SR GMTN 105,817
04/29/2008 5.250 Q 10 06/15/2018 150,000 USD BBB / Ba1 / SR MT 100 24,000
10/20/2009 10/20/2020 8.500 S Perpetual Perpetual 1,500,000 USD SR / B2 / SR Stand Alone 1,498,500
01/22/2010 6.000 S 10 01/22/2020 500,000 USD BB / Ba2 / BB GMTN 500,000
10/05/2010 5.375 S 10 01/15/2021 660,000 USD SR / Ba3 / SR Stand Alone 660,000
05/26/2011 5.875 S 11 01/26/2022 1,500,000 USD SR / Ba3 / SR Stand Alone 1,500,000
01/20/2012 04/15/2023 9.250 S Perpetual Perpetual 1,000,000 USD B- / SR / SR Stand Alone 648,727
03/05/2012 04/15/2023 9.250 S Perpetual Perpetual 750,000 USD B- / SR / SR Stand Alone 750,000
06/19/2012 5.875 S 11 01/19/2023 750,000 USD B / Ba3 / SR Stand Alone 750,000
10/10/2012 3.875 S 10 10/10/2022 1,925,000 USD BB / Ba2 / BB Stand Alone 1,809,700
01/31/2013 04/15/2024 6.250 S Perpetual Perpetual 2,000,000 USD B- / SR / SR Stand Alone 1,988,000
07/25/2013 3.750 A 5 07/25/2018 929,775 EUR BB / Ba2 / BB GMTN 820,020
12/20/2013 2.500 A 6 06/20/2019 306,988 CHF BB / Ba2 / BB GMTN 286,937
03/26/2014 3.750 A 4 07/25/2018 417,210 EUR BB / Ba2 / BB GMTN 320,880
06/18/2014 06/18/2024 9.000 S Perpetual Perpetual 2,500,000 USD B- / B2 / SR Stand Alone 2,169,700
Uses
29
Dec/15 Mar/16 Jun/16 Sep/16 Dec/16 Mar/17 Jun/17
Available Funds 153,343 116,384 106,054 122,741 139,059 130,150 130,936
Net Loan Portfolio (a) 734,636 716,105 696,683 680,366 655,621 631,645 635,846
Classified Loan Portfolio 719,568 703,878 691,832 672,638 653,591 638,336 642,846
Private Securities 48,645 47,625 41,819 45,242 38,100 29,724 30,882
Allowance for Loan Losses (33,577) (35,398) (36,968) (37,514) (36,070) (36,414) (37,881)
Adjusted Net Loan Portfolio (a) - (b) 606,317 589,982 572,451 556,270 532,435 509,431 514,920
Domestic Onlending Loans (b) 128,319 126,122 124,232 124,096 123,186 122,215 120,926
Total 887,979 832,489 802,737 803,107 794,680 761,795 766,782
R$ million
Banco do Brasil: Ratings
30
Jun/13 Jun/14 Jun/15 Jun/16 Jun/17
Standard & Poor's
Long-Term - Local Currency BBB BBB- BBB- BB BB
Long-Term - Foreign Currency BBB BBB- BBB- BB BB
Moody's
Long-Term Debt - Foreign Currency Baa1 Baa2 Baa3 Ba2 Ba2
Long-Term Deposits - Foreign Currency Baa2 Baa2 Baa3 Ba3 Ba3
Long-Term Deposits - Local Currency A3 Baa2 Baa3 Ba2 Ba2
Fitch Ratings
Long-Term - Local Currency BBB BBB BBB BB BB
Long-Term - Foreign Currency BBB BBB BBB BB+ BB
DepositsLoan PortfolioAssets under
Management²
(1) Comparison with the two largest Brazilian private banks.
(2) It does not include Banco Votorantim. (3) Source: Anbima - Jun/17. (4) Source: Banco Central do Brasil - Jun/17. (5) Source: Banco Central do Brasil - Mar/17. (6) Source: SUSEP – May/17.
587.3
493.6
Bank A Bank BBB
696.1
260.1
Bank ABB
442.8
352.3
Bank B
816.4
Bank A
556.5
625.5
BB Bank B
19.7%
Market Share⁴
21.3%
Market Share⁵
23.1%
Market Share³
31
BB Seguridade6
Rural
Pension Plan
Life
Premium Bonds
Vehicle
Leaderships¹R$ billion
Corporate Governance
Decisions at any level of the Company are made in
Committees, involving several executives in the
definition of strategies and in the approval of
transactions and operations for the different
businesses lines of Banco do Brasil.
Customer Service and
Experience Executive
Committee
Credit Transactions
Committee
Human Resources
Appealing Committee
Information
Technology Committee
Risk, Asset and Liabilities, Liquidity and Capital Management Superior Committee
1 Superior Committee¹
14 Executive Committees¹
32(1) Base date: June 30, 2017.
Profitability and
Performance Executive
Committee
Investor Relations
Executive Committee
Strategic Portfolio
Management Executive
Committee
Risck Management and
Internal Controls
Executive Committee
Asset and Liabilities,
Liquidity and Capital
Management Executive
Committee
Ethics and Discipline
Executive Committee
Prevention of Finan. and
Foreign Exch. Ilicit
transactions and Information
Security Exec. Committee
Products and Services
Executive Committee
Credit Transactions
Executive Committee
Human Resources
Executive Committee
Credit Limit Executive
Committee
Subsidiries and Affiliated Companies
Governance Executive Committee
Administrative and Operational
Executive Committee
Audit Commitee, Risk and Capital Committee, Compensation and Eligibility
Committee
3 Advisory Committees for the Board of Directors
The Only Brazilian Bank listed since 2006 in the
Novo Mercado segment which is comprised of
companies that voluntarily adopt the best
practices in corporate governance.
Other Committees
The Program for State-owned companies with
distinguished corporate governance was created by
B3 with the objective of encouraging state-owned
companies to improve their governance practices
and structures.
Governance Timeline
1st Brazilian
company listed on
the stock
exchange
BB Shares enter the
IBRX-50 portfolio
Bonus A
subscription
BB Shares enter
the B3 ITAG
portfolio
BB Shares enter the
ISE portfolio
Banco do Brasil
joined “Novo
Mercado” (B3)
BB Shares enter Dow Jones
Sustainability Index (DJSI) of
NY stock exchange
BB Seguridade IPO
ADR Level I
Follow on
(secondary shares)
The Board of Directors of BB
approved the upgrade of its
program of American Depositary
Receipt-ADR from level I to
level II
Inclusion of 100%
Tag Along clause
in the Bylaws.
Conversion of the
preferred shares to
common shares
Capitalization
and Restructuring
Plan
BB Shares enter the
IBrX portfolio
Private
placement of
common shares
linked to a public
offering for the
acquisition of
subscription
bonus
Follow on
(primary shares)
1995
1996
2002
1906
1998
20012003
2005
2006
2004
2009
2012
2013
2007
2010
2014
33
B3 S.A. Certification in
the Programa Destaque
em Governança de
Estatais
2017
Customer Segmentation
34
Companies¹ Individuals
IndustrialCommerce and
Services
> R$ 1.5bn > R$ 2bn
> R$ 400mm
≤ R$ 1.5bn
> R$ 600mm
≤ R$ 2bn
> R$ 120mm
≤ R$ 400mm
> R$ 25mm
≤ R$ 120mm
> R$ 200mm
≤ R$ 600mm
> R$ 25mm
≤ R$ 200mm
Corporate
Empresarial Upper Middle
Empresarial Middle
> R$ 5mm ≤ R$ 25mm
> R$ 1mm ≤ R$ 5mm
≤ R$ 1mm
Empresa
Pequena Empresa
Microempresa
Large CorporatePrivate
Estilo / Estilo Digital²
Personalizado /
Exclusivo²
Varejo
Annual Income ≥ R$ 10mm
Investments ≥ R$ 2mm
Monthly Income ≥ R$ 10k
Investments > R$ 150k ≤ R$ 2mm
Monthly Income ≥ R$ 4k < R$ 10k
Investments > R$ 80k ≤ R$ 150k
Monthly Income ≥ R$ 2k < R$ 4k
Investments > R$ 5k ≤ R$ 80k
Mercado EmergenteMonthly Income < R$ 2k
Investments ≤ R$ 5k
(1) Based on Companies annual revenues. (2) Digital Service only.
Digital
Bank
Digital Channels
Internet
Mobile
ATM
In Branches¹
Other2
22.8%
48.8%
13.2%
3.1%
12.1%
Transactions
(1) Branch teller. (2) POS, Banking Agents and others. 36
Jun/17
71.6%
#MaisQueDigital
12.2 millionmobile users
6.3 billionmobile transactions in 1H17,
growth of 29.0% over 1H16.
Target for 201715 million mobile users
Digital Strategy – Improving customer experience
Branch
Relationship Manager
DIGITAL RELATIONSHIP
Manager
Specialized
Advisory
Human Solutions Digital Solutions
Telephone
Chat / messages
Videoconference
Documents Electronic Exchange
Double Confirmation
From 10am to 4pm From 8am to 6pm
From 10am to 4pmFrom 8am to 10pm
Ind
ivid
ua
lsC
om
pa
nie
s
37
ESTILO DIGITAL³
EXCLUSIVO4
Digital service units
ESTILO DIGITAL³
EXCLUSIVO4
143 branches
552 thousand customers
6 offices
52 thousand customers
Digital service units
250 branches
3 offices
1.15 MM customers
39 offices
643 thousand customers
2017 target: 3.3 million high income customers in the digital models38
Digital Strategy Evolution
(1) Refers to the customers in the Estilo, Exclusivo e Personalizado segments. (2) Refers to the customers in the Estilo e Exclusivo segments.(3) Since Jul/17, clients with monthly income ≥ R $ 10 thousand or investments > R$ 150 thousand ≤ R$ 2 million. (4) Since Jul/17, clients with monthly income ≥ R$ 4 thousand < R$ 10 thousand or investments > R$ 80 thousand ≤ R$ 150 thousand..
4.3 MM customers
High income customers in the portfolio¹
H.I. customers in the digital model²
604 thousand customersJu
n/1
6
4.5 MM customers
High income customers in the portfolio¹
H.I. customers in the digital model²
1.8 MM customersJu
n/1
7
Small companies specialized service
93 Empresa Branch ²
+ 215 thousandclients benefited
32 Offices for small
companies¹
Distribution
in Brazil
(1) Customers with gross annual sales ≥ R$ 120 thousand ≤ R$ 1 million. (2) Customers with gross annual revenues > R$ 1 million.
AMPA
MT
ROAC
RR AP
MA
MS
GO
DF
TO
MG
SP
PR
SC
RS
BA
PI
CE
ALPE
SEPB
RN
ES
RJ
Until Dec/17
55 Offices for
small companies
120 Empresa
Branch
Jun/17
39
Conta Fácil represents 1/3 of the accounts opened in BB¹
Conta Fácil Common current account
856 thousand
1.7 million
Opening of
Full Account
through the
App
1 million Contas Fácil opened until
August 09, 2017
(1) Since the launch of the Conta Fácil (November 01, 2016 to June 30, 2017). 40
Credit Card / Digital Solutions
Payment with Livelo Points
APP Ourocard
Samsung Pay
Ourocard Bracelet (Launch in May 2017)
Ourocard-e
Since launch
• More than 1 million
downloads
• About 330 thousand
active customers
• Launched in March / 2017, it uses NFC technology - mobile
payment.
• First bank to introduce the concept of "loyalty wallet" in Brazil.
• Payments with NFC or MST technology.
• It complements BB's solutions and strengthens the expansion of
digital services.
• First wearable mean of payment lauched by BB.
• Can be used in Credit and Debit Functions.
• Uses NFC technology - payment by proximity.
• 2Q17 cards turnover of R$ 97 million, up 17.8% from 1Q17.
• More than 525 thousand Ourocard-e generated since launch.
41
Auto loans transactions exceed R$ 512 million
R$ 512 million¹
in loans
55% of transactions carried out outside the
banking hours²
1 in 3 operations are madethroughmobile
(1) Total disbursement since launch in 2015.
(2) Banking hours: business days, from 10:00 a.m. to 3:00 p.m., Brasília time.
BB was the first to
finance auto loans
through mobile in
2015
Expected
disbursement of
R$ 1 billion in 2017
From your cell
phone to your
garage
42
02EARNINGSHIGHLIGHTS
Profitability,
efficiency, control of
delinquency and
capital
Customer
Experience
Digital
Transformation
Str
ate
gic
Gu
ide
lin
esHighlights 1H17 / 1H16
Fee Income
10.0% growth.
Net interest Income¹
Stable, growing 0.3%.
Administrative Expenses
Under control, 0.9% decline.
Cost to income ratio²
Reached 38.9%.
(1) Net of write-off recovery. (2) Cost to Income Ratio: Administrative Expenses / Operating Revenues accumulated in 12 months. Data from the
Income Statement with Reallocations.
Net Income
+67.3%
1H171H16
3.087
1.801
2.649
1.286
5.164
2.515
Adjusted Net Income 1QAdjusted Net Income 2Q
+4.9%
1H171H16
4.824
2.465
2.443
5.062
2.619
2.359
Net Income 1QNet Income 2Q
45
2Q16 1Q17 2Q17 1H16 1H17
Shareholders ROE % 10.3 13.7 14.1 8.8 13.7
Market ROE % 9.2 12.4 12.8 7.9 12.4
Profitability Ratios
R$ billion
Earnings Breakdown
46
(3.05)
(4.82)
6.32
(6.66)
14.61
2.62
(0.03)
2.65
(3.75)
(7.86)
Personnel
Expenses
(6.14)
(9.49)
Fee Income
12.41
ALL
(13.37)
NII
29.08
Net Income
5.06
One-Off Items
(0.10)
Adjusted
Net Income
5.16
Other
(7.32)
Administrative
Expenses
(15.64)
2Q17
1H17
R$ billion
Personnel
Expenses
Market RatiosDividend Yield² (%)Earnings per Share
Price/Book ValuePrice/Earnings 12 months
(1) Bloomberg estimative in August 08, 2017 based on analysts’ projections average. Banco do Brasil is not responsible for this information. (2) Dividends and Interest on Capital 12 months / Market Capitalization. Source: Economatica.
Source: Economatica.
11.59
4Q16
9.74
3Q16
6.63
2Q16
4.60
6.89
2018E¹2017E¹
8.00
2Q17
9.02
1Q17 2018E¹
0.88
2017E¹
0.97
2Q17
0.82
1Q17
1.05
4Q16
0.90
3Q16
0.74
2Q16
0.57
2017E¹
3.23
2Q17
3.26
1Q17
2.57
4Q16
3.01
3Q16
4.86
2Q16
7.62
2018E¹
3.81
2Q17
0.950.94
1Q17
0.900.86
4Q16
0.63
0.34
3Q16
0.840.80
2Q16
0.65
0.88
Adjusted Earnings per Share - R$Earnings per Share - R$
5.05
2.57
3.96
2016 2017E¹
3.914.124.55 4.54
2018E¹2015
2.84
Source: Economatica.
47
Net Interest Income
(1) It includes senior bonds, subordinated debt, and Hybrid Instruments in Brazil and abroad.
(2) It includes the result from interest, tax hedging, derivatives, and other financial instruments that offset the effects of the exchange rate variation on result.
(3) Series revised (Funding Expense for Institutional Funding to Treasury). Impact in all tables with those lines.
R$ million
48
Chg. (%) on
2Q16 1Q17 1H16
Net Interest Income 14,633 14,476 14,606 (0.2) 0.9 28,909 29,083 0.6
Net Interest Income W/O Recovery 13,249 13,521 13,212 (0.3) (2.3) 26,665 26,733 0.3
Loan Operations 25,311 23,611 21,786 (13.9) (7.7) 50,390 45,398 (9.9)
Funding Expenses (11,034) (9,755) (8,404) (23.8) (13.9) (21,965) (18,159) (17.3)
Financial Expense for Institutional Funding¹ ³ (3,785) (3,470) (3,146) (16.9) (9.4) (7,518) (6,616) (12.0)
Treasury² ³ 2,758 3,135 2,975 7.9 (5.1) 5,758 6,110 6.1
Recovery of Write-offs 1,384 956 1,394 0.8 45.9 2,245 2,350 4.7
1H16 1H172Q16 1Q17 2Q17Chg. (%) on
Spread by Portfolio
(1) Government loans not included.
2Q17
4.72
5.01
7.34
16.12
1Q17
4.83
6.05
7.67
16.11
4Q16
5.00
6.34
7.98
16.60
3Q16
4.97
6.10
7.86
16.48
2Q16
4.93
5.89
7.71
16.31
AgribusinessCompanies¹Loan OperationsIndividuals
49
%
Net Interest Margin¹
50
NIM ex all effects
4.96
Revolving Credit
Card Revenues
0.08
NIM ex Mix
4.88
Mix Composition
0.13
NIM
4.75
2Q17
2.56
4.75
1Q17
2.56
4.82
4Q16
2.57
5.06
3Q16
2.72
4.90
2Q16
2.10
4.89
%
Risk Adjusted NIMNet Interest Margin (NIM)
(1) Net interest income / average balance of earnings assets, annualized.
Impacts of the Quarter - Net Interest Margin
Earning Assets Breakdown
51
51.3%43.8%
4.9%
Other Loans and Leasing OperationsSecur. + Interbank Invest. w/o Hedge
49.8%45.4%
4.8%
36.0%
32.6%
Agribusiness
Wholesale Operations²
Retail Operations¹
31.4%
35.3%
32.4%
32.2% Agribusiness
Retail Operations¹
Wholesale Operations²
2Q171Q17
(1) Includes loans with individuals, very small and small companies. (2) Includes loans with Government and remaining companies.
Assets and Liabilities Breakdown
52
R$ billion
Liabilities
10.3%
0.3% 2.4%
19.0%
16.4%
24.0%
27.7%
Assets
4.9%1.0% 1.6%
10.1%
15.9%
15.2%
51.3%
US$ / Gold
CDI / TMS / FACP
IRP/TBF/TR
Price Index
W/O Index
TJLP
Fixed
Jun/17
1,610
BB’s Consolidated Net Position
53
R$ billion
-7,369
11,498
379,992
-144,286-140,910
-86,947
-11,979
IRP/TBF/TRCDI / TMS / FACPW/O IndexTJLPUS$ / GoldPrice IndexFixed
Jun/17
R$ million
Fee Income
54
Chg. (%) on
2Q16 1Q17 1H16
Fee Income 5,886 6,096 6,316 7.3 3.6 11,285 12,411 10.0
Checking Account Fees 1,534 1,597 1,712 11.6 7.2 2,969 3,309 11.5
Asset Management Fees 1,077 1,295 1,336 24.0 3.1 2,080 2,631 26.5
Insurance, Pension and Premium Bonds 835 763 665 (20.3) (12.9) 1,532 1,429 (6.8)
Loan Fees 444 412 550 23.8 33.5 804 963 19.7
Collections 421 383 372 (11.7) (2.7) 840 755 (10.1)
Credit / Debit Cards 337 370 370 9.9 0.1 663 740 11.6
Billings 257 273 270 4.9 (1.1) 517 543 4.9
Capital Market 192 170 180 (6.5) 5.6 320 350 9.3
National Treasury and Manag. of Official Funds 150 167 171 13.9 2.2 282 338 19.9
Consortium 123 161 175 42.6 8.6 238 336 41.0
Interbank 46 41 39 (14.7) (4.5) 89 81 (9.5)
Other 469 463 475 1.2 2.6 950 937 (1.3)
2Q16 1Q17 2Q17 1H16 1H17Chg. (%) on
38.939.9
Cost to Income Ratio (12 months)
15,638
1H17
6,144
1H16
9,494
-0.9%
15,781
9,745
6,036
Personnel Expenses Other Administrative Expenses
R$ million
Administrative Expenses and Cost to Income Ratio¹
55
Jun/16 Jun/17
Points of Service
Employees
Branches
109,615 99,603
5,428 4,885
1,738 2,117
Own Service Network 17,181 16,098
7,774
3,096
2Q16
4,677
7,864
3,047
1Q17
4,817
2Q17
7,973
3,017
4,956
39.9 39.3 38.9
(1) Cost to Income Ratio: Administrative Expenses / Operating Revenues. Data from the Income Statement with Reallocations.
The institutional reorganization brought an impact of
R$ 144 million in administrative expenses in 1H17.
Excluding this effect, the decline would have been
1.8% over 1H16, against 0.9% printed.
3.473.29
3.50
Jun/17
4.11
Mar/17Dec/16Sep/16
3.06
Jun/16
2.85
3.26
3.70
3.89
BB BB ex-specific cases
56
3.70
3.90
3.70
3.50
3.70
Banking Industry
Delinquency Ratios (+90 days)¹
(1) BB Classified Loan Portfolio.
Jun/17
6.98
8.26
2.24
9.41
6.46
Mar/17
9.97
2.30
11.09
6.94
Dec/16
8.25
1.81
9.29
5.26
Sep/16
8.47
1.79
8.47
5.97
Jun/16
1.45
7.09
4.55
5.83
Jun/17
6.08
6.21
1.39
7.35
3.34
Mar/17
5.70
1.28
6.83
3.09
Dec/16
0.99
2.67
Sep/16
0.96
5.26
2.56
Jun/16
0.95
4.82
2.37
NPL Ratio +90 days (%) NPL Ratio +15 days (%)
Simulation considering Mar/17 loan portfolio, ex-specific caseSimulation ex-specific caseAgribusinessCompaniesIndividuals
Delinquency Ratio¹ by Segment
57(1) BB Classified Loan Portfolio.
NPL Formation
1Q17
9.75
4Q16
6.97
3Q16
7.12
2Q16
9.73
1Q16
7.39
4Q15
6.22
3Q15
5.59
2Q15
4.91
2Q17
6.84
1.071.49
1.041.031.38
1.030.870.810.72
0.98 1.08
94.93
68.82
107.4393.32120.55
85.05
123.80112.32 97.40104.30105.68 97.40
1Q17
10.10
4Q16
7.63
3Q16
7.55
2Q16
10.48
1Q16
7.93
4Q15
7.13
3Q15
6.16
2Q15
5.45
2Q17
8.44
New NPL (R$ billion)¹
44.35% of the total
contracts in 2Q17were 90
days past due transactions.
Including the past
due renegotiated
loan portfolio³
58
86.43
66.47
98.1488.03108.26
78.94
115.3498.1094.7095.31
78.87
Quarterly ALL/New NPL - ex-specific cases
Quarterly ALL/New NPL (%)
1.19
1.551.131.09
1.09
1.491.101.000.890.80
1.32
New NPL / Loan Portfolio - ex-specific cases
New NPL / Loan Portfolio (%)²
(1) Quarterly change in the balance of over 90 days past due transactions + current quarter write-off. (2) It considers the Classified Loan Portfolio of the previous quarter.
(3) Flow of the Renegotiated loan portfolio contracts of over 90 days past due transactions.
NPL Formation by Segment
1Q17
1.87
4Q16
1.57
3Q16
1.61
2Q16
1.28
1Q16
1.70
4Q15
1.17
3Q15
1.16
2Q15
1.12
2Q17
1.76
1.000.840.850.680.930.650.650.65 0.95
89.78140.20
87.75100.3482.97113.12105.4660.72 99.12
Ind
ivid
ua
ls
Ag
rib
us
ine
ss
1Q17
6.41
4Q16
4.55
3Q16
4.63
2Q16
5.02
1Q16
4.71
4Q15
4.15
3Q15
3.61
2Q15
3.37
2Q17
4.11
New NPL (R$ billion)¹
117.12
68.14
121.2094.34
115.35100.94103.98106.13113.19 96.86
Quarterly ALL/New NPL (%) - ex-specific case
Quarterly ALL/New NPL (%)
1.50
2.571.731.691.751.581.431.261.17
1.721.72
59
Co
mp
an
ies
0.72
3Q16
0.70
2Q16
0.37
1Q16
0.98
4Q15
0.84
3Q15
0.70
2Q17
0.87
2Q15
0.40
4Q16
1.02
1Q17
59.35-46.61
104.44105.72106.18113.2876.26 86.40140.20
0.570.400.380.210.560.490.420.24
0.48
New NPL ex-specific case
New NPL / Loan Portfolio (%)²
(1) Quarterly change in the balance of over 90 days past due transactions + current quarter write-off. (2) It considers the Classified Loan Portfolio of the previous quarter.
Vintages
60
Annual Vintage – Individuals Loan Portfolio
0 10 20 30
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Delin
quency
90 d
ays
Months
40 50 0
0%
Months
5%
10%
15%
20%
10 20 30 40 50
Annual Vintage – Very Small and Small Companies
Loan Portfolio
Delin
quency
90 d
ays
Vintage: 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A Vintage: 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A
143.3
164.2159.5
146.5
167.7
167.8
159.4
173.2
163.9
180.0186.5
174.4178.4175.7
ALL Balance and Coverage Ratio
R$ million
(1) Banking Industry: Ratio created through Average Risk Index available at SGS (Time Series Management System) of the Brazilian Central Bank. 61
37,8811,851
36,030
Mar/17
36,4141,686
34,728
Dec/16
36,0701,535
34,535
Sep/16
37,514
Jun/16
36,968
Jun/17
Supplementary ProvisionMinimum ProvisionRequired Provision
(%)
BB +90 days BB ex-specific cases BI +90 days¹
Coverage Ratio by Segment
1Q17
153.5
181.7
128.3
183.9
4Q16
228.9
145.8
199.6
3Q16
295.6
141.0
190.9
2Q16
290.0
144.9
201.3
2Q17
177.1
126.0
167.0
149.3
153.1
435.0
349.4
118.9
367.2
119.4
206.4
Foreign Branches and Subsidiaries ex-specific caseForeign
Companies ex-specific caseAgribusinessCompaniesIndividuals
62
%
ALL Balance – Regular and Past Due Transactions
63
Jun/17
19.58
16.45
37.88
Mar/17
19.38
15.34
36.41
Dec/16
18.51
16.03
36.07
Sep/16
21.65
15.87
37.51
Jun/16
20.66
16.31
36.97
R$ billion
Regular (Generic) Past Due (Specific)Total ALL
Provision Expenses Flow / Loan Portfolio (%)
0.700.270.450.41
1.67
0.99
0.41
0.91
0.46
1.041.05
1.83
0.55
2.21
1.150.75
1.66
0.68
2.11
1.70
0.94
0.55
-0.24
1.181.20
5,794
1,411
4,370
396
730804
2Q16
132
8,277
1,282
2Q17
6,658
1,743
3,979
188
6,644 6,713
3Q16
748
-3362,207
5,517
1,677
4Q16
60
98
7,486
606
4,370
1Q17
Individuals
Companies
Foreign
Agribusiness
ALL by Segment (R$ million)¹
Agribusiness
Individuals
Companies
Total
Foreign
64(1) Quartely ALL expenses gross of write-off recovery.
Average Risk and Loan Portfolio by Risk Level
Loan Portfolio by Risk Level
91.1% of the
transactions are
concentrated in
levels AA to C
(1) Required Provision / BB Classified Loan Portfolio. Source: SGS (Brazilian Central Bank). 65
8.9%
9.9%
20.7%
14.2%
46.3%
D-HCBAAA
Mar/17
6.80
5.70
Dec/16
6.60
5.52
Sep/16
6.50
5.58
Jun/16
6.30
5.34
Jun/17
5.89
6.90
Banco do Brasil Banking Industry
Average Risk¹ (%)
2Q17
5.89
2.33
9.27
5.92
1Q17
5.70
2.32
8.76
5.69
4Q16
5.52
2.27
8.50
5.33
3Q16
5.58
2.82
7.42
4.89
2Q16
5.34
2.75
6.98
4.78
Classified Loan PortfolioAgribusinessCompaniesIndividuals
Average Risk by Segment¹
66(1) Required Provision / BB Classified Loan Portfolio.
12 months Quarterly
4.24.34.64.44.3
ALL / Loan Portfolio¹
2Q17
6.7
638.2
1Q17
6.7
644.4
4Q16
7.5
662.8
3Q16
6.6
682.0
2Q16
8.3
698.6
Allowance for Loan LossesLoan Portfolio
704.0
2Q17
27.5
657.3
1Q17
29.1
671.8
4Q16
31.6
688.8
3Q16
31.1
700.8
2Q16
30.2
Allowance for Loan LossesLoan Portfolio
1.01.01.11.0
1.2
ALL / Loan Portfolio²
(1) ALL expenses accumulated in 12 months / 12 months Average Loan Portfolio. (2) Quarterly ALL Expenses / 3 months Average Loan Portfolio.
Cost of Risk
67
R$ billion
%
Mar/17
5.5
4.1
Dec/16
5.2
3.8
Sep/16
4.8
3.1
Jun/16
4.5
2.7
Jun/17
4.1
5.8
Peers Average²Banco do Brasil
Write-off – % of the Classified Loan Portfolio¹
68(1) Write-offs accumulated in 12 months / Classified loan Portfolio (12 months). (2) It corresponds to the three largest Brazilian private banks.
Renegotiated Overdue Loan Portfolio
69
2Q16 1Q17 2Q17
Credits Renegotiated When Past Due - Changes
Initial Balance 22,038 27,086 26,618
Contracts 5,026 2,332 3,622
Amortization Net of Interest¹ (979) (864) (1,211)
Write-Off (1,036) (1,936) (1,986)
Past due Renegotiated Loan Portfolio (A) 25,050 26,618 27,042
ALL Balance (B) 10,369 12,314 12,924
NPL + 90 days (C) 5,642 7,410 7,094
Indicators - %
ALL / Loan Portfolio (B/A) 41.4 46.3 47.8
NPL + 90 days / Loan Portfolio (C/A) 22.5 27.8 26.2
ALL Balance/NPL + 90 days (B/C) 183.8 166.2 182.2
Credits Renegotiated/Classified Loan Portfolio 3.6 4.2 4.2
1Q17
1.97
4Q16
2.37
3Q16
2.10
2Q16
2.38
2Q17
1.67
New NPL (R$ billion)²
7.289.248.3710.786.27
New NPL / Loan Portfolio (%)³
NPL Formation
R$ million
(1) Principal and interest payments net of interest accrued in the period.
(2) Quarterly change in the balance of over 90 days past due transactions + current quarter write-off. (3) It considers the Classified Loan Portfolio of the previous quarter.
Credits Renegotiated Contracts %
0 to 14 days Past due 830 22.92
15 to 90 days Past due 811 22.40
Over 90 days Past due 1,606 44.35
Writen-Off Recovery 374 10.32
Total 3,622 100
2 transactions represent 20% of 2Q17 contracts.
Renegotiated Loan Portfolio
70
12,292 12,924
Jun/17Dec/16
12,31410,952
Sep/16
11,92510,734
Jun/16
10,7849,760
Mar/16
10,3698,563
BB - ALL BalancePeers Average - ALL Balance
26.2
22.4
27.8
24.5
27.2
26.8
24.8
23.5
22.5
24.0
BB - Renegotiated Portfolio NPL +90 days (%)Peers Average - Renegotiated Portfolio NPL +90 days (%)
BB x Peers¹R$ million
(1) It corresponds to the two large Brazilian private banks.
Renegotiated Loan
4.2
5.2
Renegotiated Loan Portfolio/Classified Loan Portfolio (%)
2Q17
27,04222,291
BB
Peers Average¹
%
BIS Ratio
71
16.4517.59
18.48 18.15 18.01
11.3412.18
12.79 12.41 12.42
8.42 9.07 9.59 9.20 9.18
Jun/16 Sep/16 Dec/16 Mar/17 Jun/17
Tier II Tier I Common Equity Tier I
Simulated BIS Ratio
under complete
Basel III Rules
17.94
Use of Tax Credits
0.75
BIS Ratio with Fully
Loaded Basel III Rules
17.19
RWA Rules Anticipation
-0.28
BIS Ratio with
full deductions
17.47
Deductions Schedule
Anticipation
-0.54
BIS Ratio
18.01
Use of Tax Credits
0.71
Tier 1 with Fully
Loaded Basel III Rules
11.64
Simulated Tier 1
under complete
Basel III Rules
12.35
-0.19
Tier 1 with full
deductions
11.83
Deductions Schedule
Anticipation
-0.60
Tier 1
12.42
RWA Rules Anticipation
BIS
Full Application of Basel III Rules
Simulated CET1
under complete
Basel III Rules
9.11
Use of Tax Credits
0.69
CET1 with Fully
Loaded Basel III Rules
8.41
RWA Rules Anticipation
-0.13
CET1 with full
deductions
8.55
Deductions Schedule
Anticipation
-0.63
Common Equity
Tier I (CET1)
9.18
Tie
r1
CE
T 1
%
72
BIS III – Implementation Schedule
(1) Additional CET1 Countercyclical Buffer not activated by the Brazilian Central Bank in 2017.
%
73
2017 2018 2019
Common Equity Tier I (CET1) 4.500 4.500 4.500
Tier 1 6.000 6.000 6.000
Brazilian BIS Ratio 9.250 8.625 8.000
Capital Conservation Buffer 1.250 1.875 2.500
Additional CET1 Countercyclical Buffer (superior limit) 1.250¹ 1.875 2.500
Additional CET1 Systemic (D-SIB) Buffer 0.250 0.500 1.000
CET1 + Buffers 6.000¹ 8.750 10.500
Tier 1 + Buffers 7.500¹ 10.250 12.000
Brazilian BIS Ratio + Buffers 10.750¹ 12.875 14.000
Guidance 2017
74
Guidance
2017
1H17
Performance
Revised
Guidance
Adjusted Net Income - R$ billion 9.5 to 12.5 5.2 Unchanged
NII (Net of Recovery of Write-offs) - % 0 to 4 0.3 -4 to 0
Organic Domestic Loan Portfolio - Broad Definition - % 1 to 4 -6.6 -4 to -1
Individuals - % 4 to 7 1.0 2 to 5
Companies - % -4 to -1 -14.5 -11 to -8
Rural Loans - % 6 to 9 3.7 Unchanged
ALL Expenses net of Recovery of Write-offs - R$ billion -23.5 to -20.5 -11.0 Unchanged
Fee Income - % 6 to 9 10.0 Unchanged
Administrative Expenses - % 1.5 to 4.5 -0.9 -2.5 to 0.5
Net Income (R$ million)
Delinquency and Risk (%)
Banco Votorantim
108.2
2Q17
145.1
1Q17
127.4
4Q16
119.3
3Q16
112.1
2Q16
+34.1%
Jun/17
88.9
9.8 11.7
Sep/16
90.2
9.8
Jun/16
90.2 88.3 89.2
Mar/17Dec/16
10.8 11.1
D-H AA-C
5.5
4.54.6
5.5
4.4
NPL +90 days / Loan Portfolio
75
03MACROECONOMIC INFORMATION
Inflation and Selic Rate
77
2012 2013 2014 2015 2016
7.28
8.49
2.172.50
5.84 5.91
8.21
10.67
6.41
10.91
13.28
4.23
14.03
2.36
6.29
Accumulated Selic (% YTD in 12 months) IPCA (acum. 12 months % a.a.) Real Interest Rate²
7.50
3.50
3.86
2017¹
7.50
4.20
3.17
2018¹
14.11
3.00
8.84
4.84
Jun/16
12.89
9.61
Jun/17
(1) Source: Banco Central do Brasil and IBGE. Projection for 2017 and 2018, according to Boletim Focus as of August 11, 2017. (2) Real Interest Rate = Selic / IPCA
Demographics: Population Pyramid
0 to 4
5 to 9
10 to 14
15 to 19
20 to 24
25 to 29
30 to 34
35 to 39
40 to 44
45 to 49
50 to 54
55 to 59
60 to 64
65 to 69
70 to 74
75 to 79
+80
0 to 4
5 to 9
10 to 14
15 to 19
20 to 24
25 to 29
30 to 34
35 to 39
40 to 44
45 to 49
50 to 54
55 to 59
60 to 64
65 to 69
70 to 74
75 to 79
+80
0 to 4
5 to 9
10 to 14
15 to 19
20 to 24
25 to 29
30 to 34
35 to 39
40 to 44
45 to 49
50 to 54
55 to 59
60 to 64
65 to 69
70 to 74
75 to 79
+80
Demographics: Population Pyramid
206020151980
Subtitle: Men Women
20
15
20
60261% increase in the elder population
78
Ag
e i
n y
ears
Ag
e i
n y
ears
Ag
e i
n y
ears
Population: Dependency Ratio¹
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
55%
66.0%
40%
45%
50%
55%
60%
65%
70%
(1) Dependency ratio measures the relative participation of the potentially non-working population (under 14 years old and above 65 years old) to be sustained by the portion of the potentially employed population (between 14 years old and 65 years old).
Fonte: IBGE Development: BB
Last moment
of
demographic
bonus.
79
43.3%
Social Security Deficit – RGPS¹ (R$ billion)
The growing gap between the contributions and payment of social security benefits has driven the exponential
increase of the social security deficit over the last years.
Social Security Deficit – General Regime
(R$ billion - prices as of Oct/16)
(1) Social Security General Regime. Source: STN - Development: BB - * Balance accumulated in12 months .
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
No
v/2
016*
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
No
v/2
016*
120
170
220
270
320
370
420
470
520
9.3 2
3.2 29.4
34.7
29.1 4
2.3
57.5 65.4 72.0
77.6
79.9
61.1 69.0
65.9
51.2
55.8 64.2
68.3
94.5
141.7
Revenues and Social Security Benefits – General
Regime (R$ billion - prices as of Oct/16)
80
Social Security Benefits Social Security Revenue
Main Pillars of Brazilian Growth
Agriculture InfrastructureForeign
Trade
81
82
Sustainable Growth
Brazil
USAChina
India Russia
Argentina
Kasakhstan
Australia Canada
Germany
UKFrance
Korea
Italy
Spain
Japan
Mexico
Indonesia
Planting Area
> 140 million há¹GDP > US$ 1 trillion¹
Brazil has the ideal conditions for sustainable growth.
Only a few countries have the same potential.
Urban Population
> 80 million people¹
Source: World Bank and FAO.(1) 2011.
Brazilian Agribusiness: Overview
Area
8.5 milllion Km²
Overview
Population (2016)
206 million
GDP (1Q17)
+1.0%¹
Agricultural GDP (1Q17)
+13.4%¹
Source: Ministério da Agricultura and IBGE.(1) Change in Quarterly flow. 83
Production
Brazil: World Commodities Ranking
Exports
Coffee
Orange Juice
Sugar
Soybean
Poultry
Beef
Corn
Source: USDA – PSD online.
Jun/17
PPPs in Brazil can reach R$ 1.3 trillion (USD 452 billion CAPEX) over
the next years
R$ 324.8 billion in Logistics and Urban Mobility
Toll Roads
R$ 14.7billion
Toll Roads
R$ 12.1billion
Logistics: R$ 61.6 billion
Railroads
R$ 39.0billion
São Paulo Segue em Frente: R$ 13.4 billion
Bus Service
R$ 6.0billion
Ports
R$ 1.5billion
Metro Line
R$ 11.0billion
Airports
R$ 6.4billion
Regional
Airports
R$ 0.1 billion
BNDES – Expectation of investments in Urban Mobility: R$ 234 billion
R$ 688.1 billion in Water and Waste, Urbanization & Street Lighting
Water
R$ 158.7 billion
Plansab – National Plan for Sanitation: R$ 660.4 billion expected up to 2033
Street Lighting: R$ 27.8 billion
Sewage
R$ 236.2billion
Waste
R$ 30.3 billion
Drainage
R$ 89.2billion
Managment*
R$ 145.9billion
* Actions related to increase efficiency in the management and provision of services, to technical qualification of employees and to
implementation of educational campaigns, among others actions.
R$ 31.9 billion in Power Sector
Generation R$ 7.6 billion
Transmission Lines R$
24.3 billion (lot Out/16 +
2017 auctions)
R$ 251 billion* in Oil & Gas
Oil US$ 80 billion*
According to the Energy Ministry
Source: MPDG, MME, MCidades, MMA and SP Government.
Produced by: BB. ** USD = R$ 3.14 as of July 31, 2017.
84
36% 100%
50%
100%
92%
100%
85
Brazilian Foreign Trade Balance Evolution
47.7
19.7
-4.0
Trade Balance (US$ billion – year accumulated)
2016
137.6
185.3171.5
2015
191.1
2014
229.1225.1
Exports (US$ billion – year accumulated) Imports (US$ billion – year accumulated)
2Q16
90.3
66.671.5
2Q17
107.7
23.7
36.3
Source: Ministério do Desenvolvimento, Indústria e Comércio Exterior.
Summary Table
86All indicators were obtained from official sources such as Banco Central do Brasil, FGV (Fundação Getulio Vargas), IBGE etc.
2014 2015 2016 2Q16 1Q17 2Q17
Economic Activity
Nominal GDP in 4 Quarters (R$ in currents billion) 5,779 6,001 6,267 6,120 6,363 N/A
GDP (real % YTD in 12 months) 0.5 (3.8) (3.6) (4.8) (2.3) N/A
Family Consumption 2.3 (3.9) (4.2) (5.5) (3.3) N/A
Government Consumption 0.8 (1.1) (0.6) (1.1) (0.7) N/A
Gross Fixed Capital Formation (4.2) (13.9) (10.2) (15.0) (6.7) N/A
Exports (1.1) 6.3 1.9 7.2 (0.4) N/A
Imports (1.9) (14.1) (10.3) (18.0) (2.7) N/A
Retail Trade Sales (% YTD in 12 months) 0.9 (4.3) (6.3) (6.7) (5.2) N/A
Businessman confidence (rate - period average) 91.3 77.8 82.2 80.2 87.7 91.4
Consumer confidence (rate - period average) 93.2 72.4 74.4 68.5 83.2 81.9
Industrial Production (% YTD in 12 months) (3.0) (8.2) (6.4) (9.7) (3.5) (1.9)
Unemployment rate (% of employed population - period average) 6.8 8.3 11.3 11.2 13.2 13.3
Summary Table
87All indicators were obtained from official sources such as Banco Central do Brasil, FGV (Fundação Getulio Vargas), IBGE etc.
2014 2015 2016 2Q16 1Q17 2Q17
External Sector
Current Transactions (% GDP in 12 months) (4.3) (3.3) (1.3) (1.7) (1.1) (0.8)
Direct Foreign Investment (US$ billion - year accumulated) 96.9 74.7 78.2 33.8 23.8 36.3
Trade Balance (US$ billion – year accumulated) (4.0) 19.7 47.7 23.7 14.4 36.3
Exports (US$ billion – year accumulated) 225.1 191.1 185.3 90.3 50.5 107.7
Basic 109.6 87.2 79.2 41.2 24.2 52.5
Manufactured 80.2 72.8 73.9 34.2 17.9 37.7
Semi-manufactured 29.1 26.5 28.0 12.8 7.2 15.1
Special Operations 6.3 4.7 4.2 2.0 1.2 2.5
Imports (US$ billion – year accumulated) 229.1 171.5 137.6 66.6 36.0 71.5
Capital Goods 29.5 23.3 18.4 10.0 3.7 7.3
Intermediary Goods 126.9 99.5 84.9 39.8 22.8 45.0
Consumer Products 33.1 26.8 21.7 10.4 5.5 11.0
Fuels 39.5 21.7 12.4 6.3 4.0 8.2
Other 0.2 0.2 0.1 0.1 0.1 0.1
International Reserves (US$ billion – end of period) 375.8 361.2 367.5 362.2 367.7 374.9
Sovereign Risk (basis points – end of period) 259 523 328 350 270 289
CDS 10Y (In base points - end of period) 259 558 360 394 319 346
Exchange Rate (R$/US$ - end of period) 2.66 3.90 3.26 3.21 3.17 3.31
Public Finance
PSGD (% GDP) 56.3 65.5 69.9 67.5 71.2 73.1
Nominal Result (R$ billion - in 12 months) (343.9) (613.0) (562.8) (600.5) (580.0) (607.5)
Nominal Result (% GDP - in 12 months) (6.0) (10.2) (9.0) (9.8) (9.1) (9.5)
Monetary Ratios
Selic (end of period %) 11.75 14.25 13.75 14.25 12.25 10.25
Accumulated Selic (% YTD in 12 months) 10.91 13.28 14.03 14.11 13.79 12.89
04 SUSTAINABILITY
Socio-environmental (SER) Policy
Development of
responsible socio-
environmental
businesses and
Private Social
Investment
SER Governance
and socio-
environmental risk
management
Natural
resources
conscious
consumption
For us in Banco do Brasil, socio-
environmental responsibility
means: “to have Ethics as our
commitment and Respect as our
attitude in our interactions
with employees, stakeholders,
suppliers, partners,
customers, creditors,
shareholders, competitors,
community, government and the
environment”.
89
Board of Directors
Annually: monitor BB’s socio-environmental performance
and the initiatives in progress.
On demand: approve, within its competence, proposals to
improve of BB’s socio-environmental performance.
Board of Officers
Biannually: approve BB’s Sustainability Plan.
Semiannually: track the execution of BB’s Sustainability
Plan.
On demand: approve, within its competence, proposals to
improve of BB’s socio-environmental performance.
Strategic Committees
On demand: discuss, propose and approve, within its
competence and level of authority actions related to
sustainability.
Biannually: assess BB’s socio-
environmental performance and
present demands for
enhancement to support the
preparation of BB’s Sustainability
Plan.
Quarterly: support process of
incorporation, alignment and
dissemination of BB’s sustainability
precepts and practices; Track socio-
environmental initiatives and
implementation of the BB’s
Sustainability Plan.
Stakeholders’
Panel
Sustainability Forum / Executive
Committee
Sustainability
Development
Workshop
Teleconferences
Biannually: assess trends and
demands related to the
sustainability and propose actions
for BB’s Sustainability Plan.
On demand: alignment of procedures to
support the Business Units on the
execution of socio-environmental
actions.
SER Governance
90
SER Strategy – Agenda 30 BB
PROSPECTION
AND CONSULT REPORTS AND
TRANSPARENCY
FEEDBACK
SOCIO-ENVIRONMENTAL PERFORMANCE
Inductor Instruments
Legislation
Specific and General Policies
Internal rules
Board of Directors
Corporate Strategy and BB’s Sustainability Plan
Performance Evaluation
Instruments: Master Plan, Balance Scorecard,
Manager Radar
Metrics: Socio-environmental indexes,
Capital Markets indexes, such as DJSI and
ISE
Annual Report
Management
Report
Intranet/Internet
Campaigns
Market Trends and
Demands / Society
Stakeholders
Panel
Capital Markets
Indexes
Sustainability
Rankings
91
Updated every 2 years based on market and society demands
394 actions between 2005 and 2017 (5 editions)
Sixth version (2017-2019) – 82 actions
Inspired on UN Sustainable Development Goals
Followed by Sustainability Forum, Board of Officers and Board of Directors
Results presented in Annual Report
Capital Market awards: DJSI, ISE, ICO2
SER Strategy – Agenda 30 BB
Planet
Structured in 5 pillars:
Prosperity
Partnership
People
Peace
92
Socio-environmental Risk Management
Socio-environmental Risk
Potential Losses coming from social and / or environmental impacts generated by the
institution's activities, directly or indirectly.
The procedures to manage socio-environmental risk encompass exposures on credit,
investments, insurance, operational risks, strategy risk, reputation risk and administrative
activities.
Business
Management
93
1969
First public
contest
available for
women
1979
First woman
signed for a
lead position
in a branch
Promotion of gender equity
2006
BB signs the
“Programa
Pró-Equidade
de Gênero”
from the
Federal
Government
1987
First women
signed for a
lead position
abroad
1996
First three
woman in the
executive
manager
position
2003
First female
Senior
Director
(statutory
position)
2010
Signing up of
the UN
Women's
Empowerment
Principles
2017 Increase of gender
affirmative actions in the
programs of professional
ascent.
Extension to transgenders
of the exclusive Internal
Ombudsman channel for
women.
All executives sign up to
for the HeForShe
movement (from UN
Women).
94
Business Letter for
the Human Rights
and for Promotion of
Decent LaborPrinciples of
Equator
1995 1997 2003
BB Letter of Socio-environmental
Responsibility Principles
2004
AGENDA
21
2005 2006 2007 2008 2009 2010 2011 2012
Business Pact
for Integrity and
Against
Corruption
2013
Sustainable Animal
Husbandry
Working Group
2014
OECD Guidelines
for Multinational
Companies
20151991 2017
Green Protocol
Pacts and Voluntary Commitments
CORPORATE SUSTAINABILITY INDEX (ISE) – BM&F BOVESPA - 2017
12 CONSECUTIVE LISTING YEARS SINCE THE FIRST PORTFOLIO IN 2005
DOW JONES SUSTAINABILITY INDEX (DJSI) NEW YORK STOCK EXCHANGE – 2016, LISTED FOR
5 CONSECUTIVE YEARS.
BB IS A GLOBAL BENCHMARKING IN THE THEMES "CUSTOMER RELATIONSHIP MANAGEMENT",
"FINANCIAL STABILITY / SYSTEMIC RISK", "ANTICRIME POLICY & MEASURES“ "CORPORATE CITIZENSHIP
AND PHILANTHROPY", "FINANCIAL INCLUSION“ AND "CONTROVERSIAL ISSUES, DILEMMAS IN LENDING &
FINANCING."
CARBON EFFICIENT INDEX (ICO2) – BM&FBOVESPA - 2016
Market Indexes and Awards
96
Av. Paulista, 1230
18th. floor – Bela Vista
São Paulo/SP - Brasil - CEP 01310-100
www.bb.com.br/ir [email protected] +55 (11) 4298-8000