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4Q12 Earnings Release Report
1. Results
4Q12
Feb. 25, 2013
Growth of 2.6% in the Expanded Credit Portfolio in 4Q12 and 21.1% in 2012
Maintained quality of the credit portfolio: 99% of new loans rated between AA and B
Joint venture with a company of Ceagro Agrícola Ltda group and Acquisition of Voga Empreendimentos e
Participações Ltda are important steps towards the creation of competitive advantages
Highlights
Expanded Credit Portfolio came to R$3.1 billion, 2.6% up in the quarter
and 21.1% up in the year.
At the end of 2012, the Corporate segment accounted for 59.3% of the
Expanded Credit Portfolio, in line with our strategy of focusing on higher
IDVL4: R$7.85 per share
quality with shorter term assets. In a more favorable scenario, expected for
Closing: February 25, 2013
2013, we will refocus on the Middle Market segment in order to reach the
50% Corporate and 50% Middle Market strategic balance.
Outstanding Shares: 62,371,178
The share of loans rated between AA and B in the Expanded Credit
Market Cap: R$489.6 million
Portfolio remains high, increasing from 78.4% in September 2012 to 79.1%
Price/Book Value: 0.83 in December 2012. Note that 99.2% of the loans granted in the quarter
were rated between AA and B.
Conference Calls / Webcasts
The percentage of operations overdue by more than 60 days was 1.5% at
February 26, 2013 the end of 4Q12, with a significant reduction of 1.5 p.p. in the quarter and
3.5 p.p. in the year, with coverage by provisions of 3.7% in December 2012
In English (4.1% in September 2012 and 6.3% in December 2011).
9h00 (US EST) / 12h00 (Brasília)
Connections Revenue from Services, which includes structuring fees, climbed by 32.3%
Brazil: +55 11 4688-6361 in 2012, totaling R$26.4 million.
USA: +1 786 924-6977 Net Profit totaled R$3.6 million in 4Q12 (15.8% up on 3Q12) and R$14.2
Code: BI&P million in 2012.
In Portuguese Keeping focused on creating structures that generate competitive
8:00 (US EST) / 11:00 (Brasília) advantages, in December 2012 we entered into an association with
Number: +55 11 4688-6361 Lifegrain Holding de Participações Ltda, a company of the Ceagro Agrícola
Code: BI&P Ltda group, through the creation of the joint venture C&BI Agro Partners,
aiming to boost the origination of agribusiness bonds. In February 2013, we
signed a Purchase Commitment to acquire Voga Empreendimentos e
Participações Ltda, a financial and strategic advisory company, in line with
the strategy of increasing our revenue from fees and leveraging investment
Website: www.bip.b.br/ir
banking operations in our growing client base, especially mergers and
acquisitions and fixed income securities.
1/18
2. Summary
Message from the Management ................................................................................................................ 3
Macroeconomic Environment .................................................................................................................... 4
Key Indicators.............................................................................................................................................. 5
Operating Performance .............................................................................................................................. 6
Credit Portfolio............................................................................................................................................ 9
Funding ..................................................................................................................................................... 12
Free Cash ................................................................................................................................................... 13
Capital Adequacy ...................................................................................................................................... 13
Risk Ratings ............................................................................................................................................... 13
Capital Markets ......................................................................................................................................... 14
Balance Sheet ............................................................................................................................................ 16
Income Statement .................................................................................................................................... 18
2/18
3. Message from Management
2012 was a challenging year for the Brazilian economy, in which GDP growth was less than 1%, much lower than the
projections. However, in 2013, the Brazilian economy is expected to gain momentum due to government incentives, and
we project growth of approximately 2.5-3%.
Our Expanded Credit Portfolio grew to R$3.1 billion in 2012, led by operations in the Corporate segment (companies with
annual revenue of between R$400 million and R$2.0 billion). Considering the uncertainties in the economy, we decided to
maintain our strategy of focusing on higher quality and shorter term assets, despite the lower spreads generated by this
segment. As a result, the portfolio was allocated as follows: 59.3% to the Corporate segment and 39.1% to the Middle
Market segment. In a more favorable scenario, expected for 2013, we will refocus on the Middle Market segment in
order to reach the 50% Corporate and 50% Middle Market strategic balance.
The main reflection of the improved quality of our portfolio was the decrease in default rates: operations overdue by more
than 60 days went down 1.5 p.p. in the quarter and 3.5 p.p. in relation to 2011 (3.0% in September 2012 and 5.0% in
December 2011).
In line with the growth of our Credit Portfolio, our ability to raise funds remains high. Funding stood at R$3.0 billion at the
end of 2012, 2.1% up on September 2012 and 18.4% more than in December 2011.
We had many achievements in 2012, which shows that we are committed to our long-term Vision. We remain focused on
creating value by expanding our client base, improving processes and internal controls, as well as by attracting and training
professionals, which are our most valuable asset. Some important achievements were:
Consolidation of the sales team after renewal, reinforcement of the derivative trading desk and increase in revenue
from structured operations services.
Migration to the Level 2 Corporate Governance listing segment;
Affirmation of our risk rating by Standard & Poor’s and Fitch Ratings, despite the adverse scenario for small and
medium banks. Note that Moody’s also affirmed our ratings in February 2013;
Hiring of XP Investimentos Corretora de Câmbio, Títulos e Valores Mobiliários to act as market maker for the
Company’s preferred shares;
Creation of the joint venture C&BI Agro Partners, as a result of the association between BI&P and Lifegrain Holding de
Participações LTDA, a company of the Ceagro Agrícola Ltda. group. This strategic association will allow us to increase
our share in the Brazilian agricultural market by granting loans to farmers;
Approval at an Extraordinary Shareholders’ Meeting of the Company’s conversion into a Multiple Bank, allowing us to
operate an investment portfolio, after approval by the Central Bank of Brazil. As a result, we will be able to expand our
activities and operate actively in the fixed income securities market; and
In February 2013, we signed a Purchase Commitment to acquire 100% of Voga Empreendimentos e Participações
Ltda, a financial and strategic advisory firm with vast experience in the area. Since the acquisition is subject to approval
by the Brazilian Central Bank, we also signed an operational agreement to enable joint origination and execution as
from that date. This acquisition will allow us to increase our focus on the provision of financial and strategic advisory
services related to mergers and acquisitions, corporate restructurings, and long-term funding operations, as well as to
expand our capacity for the origination, structuring and distribution of fixed income products, in line with our strategy
of being one of the leaders in the growing market for corporate fixed income securities in Brazil.
In 2013, we will continue our work to solidify our bases, aiming to reach our Vision: To 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.
3/18
4. Macroeconomic Environment
Despite all fiscal incentives offered by the government, at the end of 2012 economic growth unfortunately disappointed
yet again. With lower-than-expected GDP growth in the third quarter, and the weak industrial output in the fourth, Brazil’s
economic growth is headed to levels below 1% in 2012. The good news is that, after a long period of rises, industrial
inventory levels are now falling to close to the historical average. Furthermore, the unemployment rate remains at a
historically low level and the default rates, although still high, show a downward trend. These factors should contribute to
an economic growth closer to the potential in 2013. There are still doubts, however, over private investment plans in a
scenario of international uncertainty, which could hamper more robust growth in the next year.
On the foreign exchange market there was a considerable rise in volatility, and the Central Bank intervened again in foreign
exchange derivatives, aiming to minimize the impact of a higher exchange rate on the economic agents' planning. At the
beginning of December, the dollar reached R$2.14, but then fell to R$2.04 at the close of the quarter, a clear
demonstration on the part of the government that it will not tolerate a strong rise in the rate.
The Central Bank’s Monetary Policy Committee continued the process of cutting interest rates, lowering the benchmark
interest rate (Selic) to 7.25% in October, the lowest level since the creation of Plano Real. It also made clear that the rate
will be maintained at this level for a long period, although the inflation rate remains high, both according to current data
and 2013 projections.
The credit in the national financial system, currently at R$2.4 trillion, rose 5.4% in the last quarter, according to the Central
Bank, thus accumulating an increase of 16.2% in 2012 (below the 19% recorded in 2011). The credit/GDP ratio continued
rising, surpassing 53.4%. Household default stabilized at the high level of 7.9%, but operations overdue by between 15 and
90 days fell substantially to 5.9%, after reaching 6.9% at the beginning of 2012, indicating an improvement in the official
default rate in the coming quarters. Default on corporate loans continued remained flat at around 4%.
Macroeconomic Data 4Q12 3Q12 4Q11 2012e 2013e
Real GBP Growth (Q/Previous Q) 0.8% 0.6% 0.1% 0.9% 3.0%
Inflation (IPCA - IBGE) – quarterly change 1.77% 1.07% 1.43% 5.80% 5.97%
Inflation (IPCA - IBGE) – annual change 5.80% 5.28% 6.50% 5.80% 5.97%
FX (US$/R$) – quarterly change 0.64% 0.46% 1.15% 8.94% 5.50%
Interest Rate (Selic) 7.25% 7.50% 11.00% 7.25% 8.50%
e = expectation
4/18
5. Key Indicators
The financial and operating information presented in this report are based on consolidated financials prepared in millions of Real (local
currency), according to Brazilian GAAP (BRGAAP), except were otherwise stated.
Results 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11 2012 2011 2012/2011
Result from Financial Int. before ALL 48.5 48.4 0.2% 49.3 -1.6% 207.4 170.6 21.6%
1
ALL Expenses (7.9) (11.9) -33.9% (1.1) 584.2% (56.7) (118.1) -52.0%
Result from Financial Intermediation 40.7 36.5 11.4% 48.2 -15.6% 150.6 52.5 187.0%
Net Operating Expenses (33.8) (27.0) 25.1% (30.1) 12.6% (118.7) (107.4) 10.5%
Recurring Operating Result 6.9 9.5 -27.8% 18.1 -62.2% 31.9 (55.0) 158.1%
Non-Recurring Operating Expenses 0.0 0.0 n.m. (0.2) -100.0% (0.3) (4.1) -93.4%
Operating Result 6.9 9.5 -27.8% 17.9 -61.7% 31.7 (59.1) 153.6%
Net Profit (Loss) 3.6 3.1 15.8% 10.3 -64.9% 14.2 (31.7) 144.8%
Assets & Liabilities 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11
Loan Portfolio 2,624.3 2,548.4 3.0% 2,269.6 15.6%
2
Expanded Loan Portfolio 3,067.9 2,990.9 2.6% 2,534.4 21.1%
3
Cash & Short Term Investments 447.8 955.1 -53.1% 351.3 27.5%
Securities and Derivatives 731.3 613.1 19.3% 1,443.1 -49.3%
4
Securities excl. Agro Sec. & Private Credit Bonds 445.9 338.1 31.9% 1,318.2 -66.2%
Total Assets 4,022.0 4,337.1 -7.3% 4,278.3 -6.0%
Total Deposits 2,274.6 2,194.5 3.7% 1,851.2 22.9%
Open Market 241.9 597.2 -59.5% 867.9 -72.1%
Foreign Borrowings 388.6 432.0 -10.0% 463.8 -16.2%
Domestic On-lending 335.5 309.3 8.5% 218.2 53.7%
Shareholders’ Equity 587.2 587.6 -0.1% 577.1 1.7%
Performance 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11 2012 2011 2012/2011
Free Cash 571.1 621.8 -8.2% 762.3 -25.1%
NPL 60 days/ Loan portfolio 1.5% 3.0% -1.5 p.p. 5.0% -3.5 p.p.
NPL 90 days/ Loan portfolio 1.2% 1.8% -0.6 p.p. 4.7% -3.5 p.p.
4
Basel Index 14.9% 15.8% -0.9 p.p. 18.2% -3.3 p.p.
ROAE 2.5% 2.2% 0.3 p.p. 7.3% -4.9 p.p. 2.4% -6.3% 8.8 p.p.
Adjusted Net Interest Margin (NIMa) 5.9% 6.1% -0.3 p.p. 6.7% -0.8 p.p. 6.4% 5.9% 0.4 p.p.
Efficiency Ratio 78.4% 69.7% 8.7 p.p. 74.2% 4.2 p.p. 68.7% 74.4% -5.7 p.p.
Other Information 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11
Number of Corporate Clients 851 774 9,9% 734 15,9%
Number of Employees 436 423 3,1% 421 3,6%
Details in the respective sessions of this report:.
1 Additional Allowance for Loan Losses (ALL) included.
2 Including Guarantees issued, Private Credit Bonds (PNs and Debentures) and agro securities (CDCAs, CDA/WAs and CPRs).
3 Reduction impacted by the decrease of repos. More details on the section Profitability of this report.
4 Excluding Agro Securities (CPRs and CDA/WA) and Private Credit Bonds (PNs and debentures).
BI&P - Banco Indusval & Partners is a commercial bank listed at Level 2 Corporate Governance of the BM&FBOVESPA, with
45 years of experience in the financial market, focusing on local and foreign currency corporate loan products. BI&P relies
on a network of 11 branches strategically located in economically relevant Brazilian regions, including an offshore branch in
Cayman Islands, its brokerage firm operating at the São Paulo Stock, Commodities and Futures Exchange - BM&FBOVESPA
and Serglobal Cereais, acquired in April 2011, which originates agricultural bonds.
5/18
7. In 4Q12, the Result from Financial Intermediation before Expenses with the Allowance for Loan Losses totaled R$48.5
million, remaining virtually stable quarter on quarter and decreasing by 21.6% over 4Q11. In 2012, this figure moved up by
21.6%.
Revenue from Loan Operations remained flat in relation to 3Q12, despite the cuts in the Selic rate and the effects of the
foreign and domestic scenario on the Brazilian economy. The growth in the credit portfolio, both in the quarter-on-quarter
and year-on-year comparison, was substantial in the Corporate segment, where credits usually have higher quality.
However, the lower spreads negatively impacting revenue. It is important to point out that there was an increase of 38.5%
in the quarter and 99.6% in the year in revenues from credit recovery, totaling R$7.9 million and R$22.8 million,
respectively.
Income from Securities, which includes the results from the treasury’s directional portfolio and CPR, CDA/WA and
debenture operations, is offset by funding expenses. This result was impacted not only by the period reduction in the
benchmark interest rate (Selic), but also by the lower balance of securities subject to repurchase agreements, which
dropped from R$220.2 million in 3Q12 to R$37.2 million in 4Q12, and from R$733.4 million in 2011 to R$407.9 million in
2012. This decline also led to a reduction in open market funding expenses, from R$874.3 million in 3Q12 to R$505.2
million in 4Q12, and from R$1,029.2 million in 2011 to R$850.6 million in 2012. The combination of lower volume and the
cut in the interest rate resulted in a 63.1% decline in expenses with repo operations.
The Result from Derivative Financial Instruments includes results from operations involving swaps, forwards, futures and
options used to hedge against exchange and interest rate exposure for funding operations indexed to the IPCA and IGPM,
as well as foreign borrowings (non-trade related), to hedge coffee prices resulting from CPR operations and indexers of
federal government bonds held in the securities portfolio, in addition to the directional portfolio. Thus, the result from
derivative financial instruments has offsets in both revenue and expenses from financial intermediation resulting from
operations in local and foreign currency, commodities and indexes.
The Result from Foreign Exchange Operations, as well as Expenses with Foreign Borrowings, was impacted by the
devaluation of the real against the U.S. dollar, in both the quarterly and annual comparisons.
The 7.3% increase in Expenses with Time Deposits reflects the 7.4% upturn in the average balance of bank deposit
certificates (CDBs) and time deposits with special guarantees (DPGEs) in the period. In 2012, these expenses fell by 9.6%,
despite the 13.2% increase in the average volume of time deposits in the period, as there was a reduction in deposits costs,
due to the cut in the benchmark interest rate in the period and the increased share of agribusiness letters of credit (LCAs)
and real estate letters of credit (LCIs) in the funding mix.
As a reflection of the better quality of our credit portfolio, expenses with allowance for loan losses decreased by 33.9% in
4Q12 (R$7.9 million in December 2012 and R$11.9 million in September 2012), and 52.0% in 2012 (R$56.7 million in 2012
and R$118.1 million in 2011). This reduction had a direct impact on the Result from Financial Intermediation, which came
to R$40.7 million in the quarter, 11.4% up on 3Q12, and R$150.6 million in the year, a 187.0% increase over 2011.
Net Interest Margin
Adjusted net interest margin stood at 5.9% in 4Q12, 0.3 p.p. down quarter on quarter, and widened by 0.5 p.p. between
2011 and 2012, from 5.9% to 6.4%.
Net Interest Margin 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11 2012 2011 2012/2011
A. Result from Financial Interm. before ALL 48.5 48.4 0.2% 49.3 -1.6% 207.4 170.6 21.6%
B. Average Interest bearing Assets 3,891.0 4,106.5 -5.2% 4,192.4 -7.2% 4,106.4 3,958.4 3.7%
1
Adjustment for non-remunerated avg assets (505.2) (874.3) -42.2% (1,155.8) -56.3% (851.5) (1,078.4) -21.0%
B.a Adj. Average Interest bearing Assets 3,385.8 3,232.2 4.8% 3,036.6 11.5% 3,254.9 2,879.9 13.0%
Net Interest Margin (NIM) (A/B) 5.1% 4.8% 0.3 p.p. 4.8% 0.3 p.p. 5.0% 4.3% 0.7 p.p.
Adj. Net Interest Margin (NIMa) (Aa/Ba) 5.9% 6.1% -0.3 p.p. 6.7% -0.8 p.p. 6.4% 5.9% 0.4 p.p.
1. Repos with equivalent volumes, tenors and rates both in assets and liabilities.
7/18
8. Eficiência
Efficiency Ratio 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11 2012 2011 2012/2011
Personnel Expenses 23.7 21.4 10.5% 21.4 10.9% 89.8 71.7 25.3%
Contributions and Profit-sharing 1.8 3.0 -38.4% 3.6 -49.6% 9.2 8.5 8.1%
Administrative Expenses 13.3 13.0 2.2% 14.2 -6.0% 53.1 50.4 5.4%
Taxes 4.3 2.3 92.1% 3.1 40.7% 12.6 13.2 -4.3%
A- Total Operating Expenses 43.2 39.7 8.8% 42.3 2.2% 164.8 143.8 14.6%
Gross Income Fin. Interm. (w/o ALL) 48.5 48.4 0.2% 49.3 -1.6% 207.4 170.6 21.6%
Income from Services Rendered 6.7 7.7 -11.9% 6.9 -2.1% 26.4 19.9 32.3%
Income from Banking Tariffs 0.2 0.2 4.3% 0.2 9.0% 0.7 0.9 -14.0%
Other Net Operating Income (*) (0.4) 0.7 -157.6% 0.6 -172.8% 5.4 1.9 176.8%
B- Total Operating Income 55.1 57.0 -3.3% 57.0 -3.3% 239.8 193.3 24.1%
Efficiency Ratio (A/B) 78.4% 69.7% 8.7 p.p. 74.2% 4.2 p.p. 68.7% 74.4% -5.7 p.p.
(*) Net of other Operating Expenses to offset the cost of acquisition and income on sale of commodities in the activity of Serglobal Cereais.
In 2012, the efficiency ratio stood at 68.7% in 2012, a significant improvement of 5.7 p.p. In 4Q12, the efficiency ratio
climbed by 8.7 p.p., closing the quarter at 78.4%, due to the substantial increase in operating expenses, especially (i)
personnel expenses, in view of the 7.5% pay rise following the collective bargaining agreement effective as of September
2012, and (ii) tax expenses, which increased mainly because of taxes levied on the conversion of operations performed by
the arbitration board in the quarter.
We believe there is still room for improvement in our efficiency ratio, especially with the expansion of our credit portfolio,
increased share of revenue from fees, and optimization of operating expenses, which reflect our focus on the continuous
review of processes and pursuit of excellence in all areas.
Net Profit
The operating income of R$6.9 million in 4Q12, after (i) the non-operating loss from the sale of properties and idle assets,
(ii) taxes and contributions, and (iii) profit sharing, resulted in a net profit of R$3.6 million, 15.8% up in the quarter, mainly
due to the substantial decrease in the allowance for loan losses. Net profit amounted to R$14.2 million in 2012, versus a
loss of R$31.7 million in 2011.
8/18
9. Credit Portfolio
Expanded Credit Portfolio
At the end of December 2012, the Expanded Credit Portfolio totaled R$3.1 billion, 2.6% up on the end of the previous
quarter and 21.1% more than in December 2011. The Expanded Credit Portfolio includes loan and financing operations in
Real and trade finance operations, detailed in note 6(a) to the financial statements, as well as: (i) guarantees issued
(sureties, guarantees and letters of credit), (ii) agribusiness bonds originated from the absorption of the operations of
Serglobal Cereais (CPR and CDA/WA); and (iii) private credit bonds (promissory notes and debentures). Both (ii) and (ii)
were booked under Securities as per the Central Bank regulations.
Expanded Credit Portfolio by Product Group 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11
Loans & Financing in Real 2,080.6 1,974.4 5.4% 1,776.5 17.1%
Trade Finance (ACC/ACE/IMPFIN) 426.0 463.0 -8.0% 457.6 -6.9%
Guarantees Issued (LGs & L/Cs) 158.2 167.5 -5.6% 139.8 13.1%
Agro Bonds (Securities: CPRs & CDA/WA; Credit: CDCAs) 327.1 306.7 6.6% 129.4 152.9%
Private Credit Bonds (Securities: PNs & Debentures) 40.1 41.1 -2.6% 10.4 283.8%
Other 35.9 38.1 -5.9% 20.6 74.2%
TOTAL 3,067.9 2,990.9 2.6% 2,534.4 21.1%
Loans and financing operations in Real, which include loans, discounted bills, acquisition of client receivables and BNDES
onlendings, represented 67.8% of the Expanded Credit Portfolio. This group was led by loans and BNDES onlendings, which
climbed by 7.6% and 11.4%, respectively, in the quarter and 11.2% and 62.0% in 12 months.
Trade finance operations, which accounted for 13.9% of the Expanded Credit Portfolio, include import financing (R$111.9
million) and export financing (ACC/ACE in the amount of R$314.1 million).
The guarantees issued (sureties, guarantees and import letters of credit) represented 5.2% of the Expanded Credit
Portfolio, 5.6% down in the quarter and 13.1% up in the year.
Though agribusiness bonds and private credit bonds represent credit exposure, they are classified under marketable
securities in the balance sheet, in accordance with Brazilian Central Bank regulations due to their tradability. These bonds
jointly represented 9.3% of the Expanded Credit Portfolio, a 3.8% increase in the quarter and 128.4% up in 12 months.
Our Expanded Credit Portfolio breakdown is as follows:
By Economic Activity By Region By Customer Segment
Financial
Institution
South Others
1%
18% 2%
Other Midwest
Services 20%
Middle
Industry 21%
Market
47% Northeast 39%
5%
Individuals Corporate
6% North
Southeast 1% 59%
56%
Commerce
25%
9/18
10. By Economic Sector By Product
Agribusiness 22,1%
Food & Beverage 14,0%
Construction 12,6% Trade
Automotive 6,5% Finance Agro Bonds Guarantees
Transportation & Logistics 4,1% 14% 11% Issued
Electronics 4,0%
Metal Industry 3,9%
5%
Chemical & Pharmaceutical 3,9% Debentures
Textile, apparel & Leather 3,2%
Pulp & Paper 3,2% BNDES 1%
Commerce - Retail & Wholesale 2,5% 11% Other
Education 2,4% 1%
Oil & Biofuel 2,1%
Power Generation & Distribution 1,7% Loans &
Machinery and Equipments 1,6%
Financial Institutions 1,5%
Discounts
Advertising & Publishing 1,2% 57%
Mining 1,1%
Financial institutions 1,1%
Other Industries (%lower than 1%) 7,2%
As shown in the table below, agribusiness bonds activities, which began in the first quarter of 2011, continue to expand
their share of the Expanded Credit Portfolio:
Agro Bonds Portfolio 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11
Booked under Securities 245.3 233.9 4.9% 114.5 114.2%
Warrants - CDA/WA 8.0 7.7 2.9% 0.0 n.m.
Agro Product Certificate - CPR 237.4 226.1 5.0% 114.5 107.3%
Booked under Credit Portfolio - Loans & Financing 81.8 72.9 12.2% 14.9 450.5%
Agro Credit Rights Certificate - CDCA 81.8 72.9 12.2% 14.9 450.5%
TOTAL AGRO BONDS 327.1 306.7 6.6% 129.4 152.9%
Credit Portfolio
The “classic” credit portfolio, which excludes off-balance sheet items (guarantees issued) and credits classified under
marketable securities, totaled R$2.6 billion, 3.0% up in the quarter and a 15.6% upturn in 12 months, R$2.2 billion of which
in operations in Real and R$426.0 million in trade finance operations.
As the previous quarters indicated, our Corporate portfolio continued to follow its upward trend, in view of our strategy of
focusing our growth on higher quality and shorter term assets. At the end of December 2012, the Corporate segment
represented 56.4% of the portfolio (53.9% in September 2012) and the middle market segment, 42.0% (44.3% in
September 2012). The remaining 1.6% (1.8% in September 2012) classified as Others includes the remaining balance of the
direct consumer credit - used vehicles (CDC) portfolio, portfolios acquired from other banks and financing of non-operating assets.
Credit Portfolio By Client Segment 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11
Middle Market 1,101.9 1,127.7 -2.3% 1,571.8 -29.9%
Local Currency - Real 882.0 880.2 0.2% 1,292.5 -31.8%
Loans & Discounted Receivables 737.4 743.7 -0.8% 1,136.9 -35.1%
Financing 0.0 0.0 n.m. 0.4 n.m.
BNDES / FINAME 144.7 136.6 5.9% 155.2 -6.8%
Foreign Currency 219.9 247.5 -11.2% 279.3 -21.3%
Corporate 1,479.8 1,373.6 7.7% 641.3 130.8%
Local Currency – Real 1,273.7 1,158.2 10.0% 463.0 175.1%
Loans & Discounted Receivables 1,083.0 942.2 14.9% 411.2 163.4%
BNDES / FINAME 190.7 164.5 16.0% 51.8 268.4%
Acquired Receivables 0.0 51.6 n.m. 0.0 n.m.
Foreign Currency 206.1 215.5 -4.3% 178.3 15.6%
Other 42.6 47.0 -9.3% 56.5 -24.6%
Consumer Credit – used vehicles 0.6 1.1 -48.1% 4.3 -86.9%
Acquired Loans & Financing 6.7 8.9 -24.1% 35.9 -81.3%
Non-Operating Asset Sales Financing 35.3 37.0 -4.6% 16.3 117.0%
CREDIT PORTFOLIO 2,624.3 2,548.4 3.0% 2,269.6 15.6%
10/18
11. By Collateral By Customer Concentration By Customer Concentration
Pledge /
91 to 180 181 to 360
Lien 11 - 60
Receivables days days
10% 31%
25% Property 10 largest 16% 17%
8% 14%
Monitored
Pledge
6%
Vehicles
Up 90 days +360 days
3% Other
Aval PN Securities 61 - 180 38% 29%
27%
47% 1% 28%
Quality of Credit Portfolio
Rating AA A B C D E F G H ALL/
Comp. TOTAL Loan
Required Provision % 0% 0.5% 1% 3% 10% 30% 50% 70% 100% Port. %
O/S Loans 53.4 1.103.2 919.8 344.7 65.0 82.2 27.1 8.5 20.4 - 2,624.3
4Q12
3.7%
Allowance for Loan Losses 0.0 5.5 9.2 10.3 6.5 24.7 13.6 6.0 20.4 0.0 96.1
O/S Loans 158.2 948.3 892.4 349.2 45.8 103.5 12.4 3.9 34.8 - 2,548.4
3Q12
4.1%
Allowance for Loan Losses 0.0 4.7 8.9 10.5 4.6 31.1 6.2 2.7 34.8 0.0 103.5
O/S Loans 48.3 901.5 636.5 450.1 54.1 77.9 14.7 14.0 72.4 - 2,269.6
4Q11
6.3%
Allowance for Loan Losses 0.0 4.5 6.4 13.5 5.4 23.4 7.4 9.8 72.4 0.0 142.8
Operations rated in the top risk bands (AA to B) climbed to 79.1% of the total credit operations in the quarter (78.4% in
September 2012 and 69.9% in December 2011). It is important to note that the percentage of loans rated between AA and
B granted in 4Q12 remained high at 99.2%, thus consolidating the improvement in portfolio quality, as shown in the chart
below:
Operations rated between D and H, which amounted to R$203.2 million (R$200.4 million in September 2012 and R$233.2
million in December 2011), include R$163.5 million that are not overdue, equivalent to 80% of such operations (61% in
September 2012 and 51% in December 2011). The remaining 20%, shown below, are made up of delinquent operations:
> 60 days > 90 days
Default by segment 4Q12 3Q12
4Q12 3Q12 4Q12 3Q12
Credit Portfolio NPL %T NPL %T NPL %T NPL %T
Middle Market 1,448.9 1,127.7 37.9 2.6% 76.6 6.8% 30.9 2.1% 44.0 3.9%
Corporate 1,132.9 1,373.6 1.5 0.1% - 0.0% - 0.0% - 0.0%
Other 42.6 47.0 0.3 0.6% 1.0 2.2% 0.3 0.6% 0.6 1.3%
TOTAL 2,624.3 2,548.4 39.7 1.5% 77.6 3.0% 31.1 1.2% 44.6 1.8%
Allowance Loan Losses (ALL) 96.1 103.5
ALL / NPL - 242.3% 133.3% 308.6% 231.9%
ALL / Loan Portfolio 3.7% 4.1% - - - -
The default rates on loans overdue by more than 60 days (NPL 60 days) recorded a significant reduction of 1.5 p.p. quarter
on quarter and 3.5 p.p. in 12 months, reflecting the better quality of our credit portfolio. The default rates on loans
11/18
12. overdue by more than 90 days (NPL 90 days) fell by 0.6 p.p. in the quarter and 3.5 p.p. in 12 months. The potential default
rate (ratio of installments overdue by between 15 and 60 days to the total credit portfolio) stood at 0.8% in December
2012, 0.5 p.p. up in the quarter and 0.2 p.p. down on December 2011.
In 2012, the default rates improved substantially mainly as a result of (i) the strategy adopted in 2011 of enhancing our
credit portfolio with better quality operations and (ii) the strategic decision, in view of the uncertainties in the
macroeconomic scenario, of increasing the share of the Corporate segment in our credit portfolio.
During the quarter, R$15.5 million (R$103.5 million in 2012) in loan operations, already fully provisioned in previous
quarters, were written off as losses. The allowance for loan losses, amounting to R$96.1 million, provides coverage to
242.3% of the loans overdue by more than 60 days and 308.6% of the loans overdue by more than 90 days.
Funding
Funding totaled R$3.0 billion, 2.1% up in the quarter and an 18.4% increase in 12 months. In 2012, the highlight was
funding through agribusiness letters of credit (LCA), which recorded a 10.9% upturn in the quarter and 72.8% growth in the
year, and real estate letters of credit (LCI), which began in the last quarter, as they contributed to more balanced funding
costs, and allowed greater diversification in products made available to our clients. However, time deposits via the issue of
Bank Deposit Certificates (CDB) and Time Deposits with Special Guarantee (DPGE I) still account for the bulk of the funding
operations, with 23.6% (22.6% in September 2012 and 29.3% in December 2011) and 33.6% (34.7% in September 2012 and
29.5% in December 2011), respectively.
Funding in foreign currency is specially allocated to trade finance operations and its balance is impacted by foreign
exchange variations.
Total Funding 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11
Total Deposits 2,274.6 2,194.5 3.7% 1,851.2 22.9%
Time Deposits 707.0 664.6 6.4% 743.0 -4.8%
Insured Time Deposits (DPGE) 1,007.4 1,019.0 -1.1% 748.1 34.7%
Agro Notes (LCA) 364.4 328.8 10.9% 210.9 72.8%
Bank Notes (LF) 29.5 36.4 -19.0% 7.4 301.4%
Real State Notes (LCI) 12.1 5.3 130.3% 0.0 n.m.
Interbank Deposits 98.0 92.1 6.4% 88.5 10.7%
Demand Deposits and Other 56.1 48.3 16.2% 53.4 5.1%
Domestic Onlending 335.5 309.3 8.5% 218.2 53.7%
Foreign Borrowings 388.6 432.0 -10.0% 463.8 -16.2%
Trade Finance 337.4 381.1 -11.5% 417.1 -19.1%
Other Foreign Borrowings 51.2 50.8 0.8% 46.7 9.6%
TOTAL 2,998.7 2,935.8 2.1% 2,533.2 18.4%
By Type By Investor By Maturity
Insured
Time Dep. Brokers Other 90 to 180
(DPGE) Corporates days
3% 4%
34% 11% 18%
BNDES up 90 days
Demand Individuals
11% 29%
2% 7%
Time
Interbank Foreign 180 to 360
3% Deposit
National Banks days
Foreign 24%
Banks 13% 9%
Loans Demand
7%
2% 2%
Trade Agro Bonds
Finance Bank and 12%
Institutional
Investors +360 days
11% Onlendings Real State
44% 42%
11% Notes
1%
12/18
13. The average term of deposits stood at 800 days from issuance (849 days in September 2012) and 430 days from maturity
(476 days in September 2012).
Average Term in days
1
Type of Deposit from issuance to maturity
Time Deposits 487 294
Interbank 179 77
Time Deposits Special Guarantee (DPGE) 1.315 683
Agro Notes (LCA) 129 69
Bank Notes (LF) 795 567
Real State Letters of Credit (LCI) 165 108
2
Portfolio of Deposits 800 430
1
From December 31, 2012.
2
Volume weighted average.
Free Cash
On December 31, 2012, the free cash position totaled R$571.1 million, equivalent to 762
622 571
25.1% of total deposits and 1.0x shareholders’ equity. The calculation considers cash,
R$ million
short-term interbank investments and securities less funds raised in the open market
and debt securities classified under marketable securities, comprising rural product
certificates (CPRs), agribusiness deposit certificates and warrants (CDAs/WAs), 4Q11 3Q12 4Q12
debentures and promissory notes (NPs).
Capital Adequacy
The Basel Accord requires banks to maintain a minimum percentage of the capital weighted by the risk in their operations. In
this context, the Central Bank of Brazil has stipulated that banks operating in the country should maintain a minimum
percentage of 11%, calculated according to the Basel II Accord regulations, which provides greater security to Brazil’s financial
system against oscillations in economic conditions.
The following table shows BI&P’s position in relation to the Central Bank’s minimum capital requirements:
Basel Index 4Q12 3Q12 4Q12/3Q12 4Q11 4Q12/4Q11
Total Capital 583.3 585.2 -0.3% 574.7 1.5%
Tier I 584.3 586.2 -0.3% 569.1 2.7%
Tier II 1.3 1.4 -0.9% 8.0 -83.3%
Deductions (2.3) (2.4) -4.8% (2.4) -4.8%
Required Capital 430.3 407.0 5.7% 347.5 23.8%
Credit Risk allocation 372.9 350.7 6.3% 303.9 22.7%
Market Risk Allocation 38.2 36.6 4.4% 34.3 11.5%
Operating Risk Allocation 19.7 19.7 0.0% 9.3 112.1%
Excess over Required Capital 153.1 178.2 -14.1% 227.3 -32.7%
Basel Index 14.9% 15.8% -0.9 p.p. 18.2% -3.3 p.p.
Classificação de Risco – Ratings
Last Financial
Agency Classification Observation
Report Data
BB/ Stable /B Global Scale
Standard & Poor’s Aug. 06, 2012 Mar. 31, 2012
brA+/ Stable /brA-1 Local Scale - Brazil
Ba3/ Stable /Not Prime Global Scale
Moody's Feb. 07, 2013 Sept. 30, 2012
A2.br/ Stable /BR-2 Local Scale - Brazil
FitchRatings BBB/ Stable /F3 Local Scale - Brazil Nov. 12, 2012 Sept. 30, 2012
10.68 Riskbank Index
RiskBank Jan. 10, 2013 Sept. 30, 2012
Ranking: 28 Low Risk Short Term
13/18
14. Capital Market
Total Shares and Free Float
Number of shares as of December 31, 2012
Corporate Controlling
Type Management Treasury Free Float %
Capital Group
Common 36,945,649 20,743,333 277,307 - 15,925,009 43.1%
Preferred 26,160,044 609,226 60,125 734,515 24,756,178 94.6%
TOTAL 63,105,693 21,352,559 337,432 734,515 40,681,187 64.5%
Share Buyback Program
The 5th Share Buyback Program, involving the acquisition of up to 1,720,734 preferred shares, was approved by the Board
of Directors on October 19, 2011, and was effective until October 18, 2012. No shares were repurchased under the
program.
Stock Option Plan
The following Stock Options Plans, approved to be extended to the Company’s executive officers and managers, as well as
individuals who provide services to the Company or its subsidiaries, present the following balances as of December 31,
2012:
Quantity
Stock Option Date of Term for
Grace Period Granted Exercised Extinct Not Exercised
Plan Approval Exercise
I 03.26.2008 Three years Five years 2,039,944 37,938 215,967 1,786,039
II 04.29.2011 Three years Five years 1,840,584 - 294,494 1,546,090
III 04.29.2011 Five years Seven years 1,850,786 - - 1,850,786
IV 04.24.2012 Up to five years Five years 355,840 - 3,511 352,329
6,087,154 37,938 513,972 5,535,244
The aforementioned Stock Options Plans are filed with the Brazilian Securities Commission (CVM) and are also available in
the Company’s IR website.
Remuneration to Shareholder
Interest on Own Equity of R$7.5 million, equivalent to R$0.12024 per share, was declared on December 17, 2012, related
to fiscal year 2012. The payment was made in advance for fiscal year 2012 and will be submitted to approval of the Annual
Shareholders’ Meeting to be held in April 2013.
Share Performance
BI&P’s preferred shares (IDVL4), listed under Level 2 Corporate Governance at BM&FBOVESPA, closed 4Q12 at R$7.95, for
market cap of R$495.9 million, considering existing shares as of December 31, 2012 and excluding treasury stock. The price
of IDVL4 shares increased 20.6% (22.4% adjusted for earnings) in 4Q12 and 17.8% (19.5% adjusted for earnings) in the 12-
month period ended in December 2012. The Bovespa Index (Ibovespa) rose 3.0% in 4Q12 and 7.4% when compared to
4Q11. At the end of the quarter, the price/book value (P/BV) was 0.84.
14/18
15. Share Price Evolution in the last 12 months
140
130
120
110
100
90
80
70
IBOVESPA IDVL4 IDVL4 adjusted for earnings
60
Liquidity and Trading Volume
BI&P’s preferred shares (IDVL4) were traded in 84.7% of the sessions in 4Q12 and 92.7% of the 246 sessions in 2012. In
4Q12, a total of 1.4 million IDVL4 shares were traded in 361 transactions on the spot market, for total volume of R$9.4
million. In the 12 months ended December 2012, the financial volume traded on the spot market stood at R$33.7 million,
totaling around 4.8 million preferred shares in 2,936 trades.
Shareholder Base
Position as of December 31, 2012
Qtt Type of Shareholder IDVL3 % IDVL4 % TOTAL %
5 Controlling Group 20,743,333 56.15% 609,226 2.33% 21,352,559 33.84%
6 Management 277,307 0.75% 60,125 0.23% 337,432 0.53%
- Treasury - 0.00% 734,515,00 2.81% 734,515 1.16%
40 National Investors 1,201,090 3.25% 8,425,179 32.21% 9,626,269 15.25%
13 Foreign Investors 4,891,304 13.24% 13,976,144 53.43% 18,867,448 29.90%
8 Corporate - 0.00% 16,512 0.06% 16,512 0.03%
296 Individuals 9,832,615 26.61% 2,338,343 8.94% 12,170,958 19.29%
368 TOTAL 36,945,649 100.00% 26,160,044 100.00% 63,105,693 100.00%
15/18
16. Balance Sheet
Consolidated R$ thousand
Assets 12/31/11 09/30/12 12/31/12
Current 3,226,561 3,433,129 3,063,804
Cash 45,455 6,324 18,250
Short-term interbank investments 305,833 941,951 429,535
Open market investments 229,694 921,810 377,495
Interbank deposits 76,139 20,141 52,040
Securities and derivative financial instruments 1,111,272 568,460 671,587
Own portfolio 364,656 364,271 473,468
Subject to repurchase agreements 544,740 9,056 26,654
Linked to guarantees 184,866 172,429 150,415
Subject to the Central Bank - - -
Derivative financial instruments 17,010 22,704 21,050
Interbank accounts 1,600 2,680 938
Loans 1,234,820 1,366,002 1,495,533
Loans - private sector 1,255,136 1,384,176 1,515,490
Loans - public sector - - -
(-) Allowance for loan losses (20,316) (18,174) (19,957)
Other receivables 464,465 498,874 390,712
Foreign exchange portfolio 442,822 415,595 363,445
Income receivables 45 52 67
Negotiation and intermediation of securities 20,238 21,341 14,356
Sundry 8,200 66,379 17,300
(-) Allowance for loan losses (6,840) (4,493) (4,456)
Other assets 63,116 48,838 57,249
Other assets 66,049 48,911 59,695
(-) Provision for losses (4,748) (2,757) (4,277)
Prepaid expenses 1,815 2,684 1,831
Long term 999,609 852,124 906,467
Short-term interbank investments - 6,824 -
Open market investments - - -
Interbank deposits - 6,824 -
Marketable securities and derivative financial instruments 331,872 44,626 59,737
Own portfolio 97,396 41 42
Subject to repurchase agreements 212,240 - -
Linked to guarantees - - -
Derivative financial instruments 22,236 44,585 59,695
Interbank Accounts 5,564 4,202 4,083
Loans 533,949 651,963 693,561
Loans - private sector 649,164 726,648 756,459
Loans - public sector - - -
(-) Allowance for loan losses (115,215) (74,685) (62,898)
Other receivables 127,636 144,171 148,536
Credit guarantees honored - 778 778
Trading and Intermediation of Securities 504 518 524
Sundry 127,514 148,986 156,024
(-) Allowance for loan losses (382) (6,111) (8,790)
Other rights 588 338 550
Permanent Assets 52,107 51,895 51,711
Investments 24,528 23,968 24,980
Subsidiaries and Affiliates 22,842 22,282 23,294
Other investments 1,842 1,842 1,842
(-) Loss Allowances (156) (156) (156)
Property and equipment 13,071 14,401 13,648
Property and equipment in use 1,210 1,210 1,210
Revaluation of property in use 2,634 2,634 2,634
Other property and equipment 17,333 19,965 19,660
(-) Accumulated depreciation (8,106) (9,408) (9,856)
Intangible 14,508 13,526 13,083
Goodwill 2,391 2,391 2,276
Other intangible assets 13,100 13,100 13,100
(-) Accumulated amortization (983) (1,965) (2,293)
TOTAL ASSETS 4,278,277 4,337,148 4,021,982
16/18
17. Consolidated R$ thousand
Liabilities 12/31/11 09/30/12 12/31/12
Current 2,665,276 2,496,098 2,123,097
Deposits 791,158 808,109 839,973
Cash deposits 53,435 48,334 56,145
Interbank deposits 85,675 91,878 97,867
Time deposits 652,048 667,897 685,961
Other - - -
Funds obtained in the open market 867,896 597,214 241,904
Own portfolio 747,830 9,302 26,745
Third party portfolio - 240,045 106,200
Unrestricted Portfolio 120,066 347,867 108,959
Funds from securities issued or accepted 218,217 341,511 376,325
Agribusiness Letters of Credit, Real State Notes & Bank Notes 218,217 341,511 376,325
Interbank accounts - 185 -
Receipts and payment pending settlement - 185 -
Interdepartamental accounts 24,963 8,312 9,168
Third party funds in transit 24,963 8,312 9,168
Borrowings 417,275 431,964 388,626
Foreign borrowings 417,275 431,964 388,626
Onlendings 81,411 128,029 119,575
BNDES 46,221 82,609 77,426
FINAME 35,190 45,420 42,149
Other liabilities 264,356 180,774 147,526
Collection and payment of taxes and similar charges 244 820 509
Foreign exchange portfolio 61,744 54,286 46,177
Taxes and social security contributions 4,895 2,864 4,682
Social and statutory liabilities 15,038 2,000 10,320
Negotiation and intermediation securities 150,978 95,942 70,082
Derivative financial instruments 24,611 13,576 7,604
Sundry 6,846 11,286 8,152
Long Term 1,034,363 1,252,501 1,310,648
Deposits 841,794 1,015,931 1,028,553
Interbank Deposits 2,804 195 110
Time deposits 838,990 1,015,736 1,028,443
Funds from securities issued or accepted - 28,943 29,751
Agribusiness Letters of Credit, Real State Notes & Bank Notes - 28,943 29,751
Loan obligations 46,504 - -
Foreign loans 46,504 - -
Onlending operations - Governmental Bureaus 136,816 181,267 215,876
Federal Treasure 10,766 8,733 8,407
BNDES 57,320 85,132 118,477
FINAME 66,785 86,985 88,780
Other Institutions 1,945 417 212
Other liabilities 9,249 26,360 36,468
Taxes and social security contributions 7,663 22,099 29,598
Derivative financial instrument 15 1,203 2,620
Sundry 1,571 3,058 4,250
Future results 1,503 990 1,036
Shareholders' Equity 577,135 587,559 587,201
Capital 572,396 572,396 572,396
Capital Reserve 5,899 12,331 14,886
Revaluation reserve 1,389 1,352 1,340
Profit reserve - 7,339 3,512
(-) Treasury stock (5,958) (5,859) (5,859)
Asset valuation Adjustment 6,642 - -
(3,233) - -
Accumulated Profit / (Loss) - - 926
TOTAL LIABILITIES 4,278,277 4,337,148 4,021,982
17/18
18. Income Statement
Consolidated R$ thousand
4Q11 3Q12 4Q12 2011 2012
Income from Financial Intermediation 175,836 131,684 123,742 631,658 640,033
Loan operations 80,692 62,885 62,343 283,461 258,285
Income from securities 57,719 53,436 28,626 258,182 265,057
Income from derivative financial instruments (6,309) 4,730 15,554 (38,246) 22,087
Income from foreign exchange transactions 43,734 10,633 17,219 128,261 94,604
Expenses from Financial Intermediaton 127,652 95,145 83,055 579,181 489,413
Money market funding 79,167 69,220 56,444 324,069 330,328
Loans, assignments and onlendings 47,337 14,043 18,756 137,007 102,353
Allowance for loan losses 1,148 11,882 7,855 118,105 56,732
Gross Profit from Financial Instruments 48,184 36,539 40,687 52,477 150,620
Other Operating Income (Expense) (30,286) (27,046) (33,835) (111,573) (118,958)
Income from services rendered 6,891 7,656 6,747 19,927 26,357
Income from tariffs 177 185 193 851 732
Personnel expenses (21,377) (21,441) (23,700) (71,694) (89,818)
Other administrative expenses (14,179) (13,042) (13,331) (50,394) (53,118)
Taxes (3,074) (2,252) (4,326) (13,191) (12,625)
Result from affiliated companies 714 1,138 991 989 4,146
Other operating income 9,146 6,053 5,473 17,397 20,236
Other operating expense (8,584) (5,343) (5,882) (15,458) (14,868)
Operating Profit 17,898 9,493 6,852 (59,096) 31,662
Non-Operating Profit (2,610) (1,230) (1,616) (2,977) (1,115)
Earnings before taxes ad profit-sharing 15,288 8,263 5,236 (62,073) 30,547
Income tax and social contribution (1,331) (2,160) 220 38,829 (7,136)
Income tax 629 (1,970) (4,553) (804) (12,631)
Social contribution 353 (1,170) (2,722) (507) (7,504)
Deferred fiscal assets (2,313) 980 7,495 40,140 12,999
Statutory Contributions & Profit Sharing (3,635) (2,972) (1,831) (8,501) (9,192)
Net Profit for the Period 10,322 3,131 3,625 (31,745) 14,219
18/18
