Download pdf - BI&P- Indusval- 1Q14 Earnings Release

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EARNINGS RELEASE

1st QUARTER 2014

BI&P - Banco Indusval & Partners is a commercial bank with more than 45 years of experience in the financial market, focusing on local and foreign currency, fixed

income and corporate finance for companies. BI&P relies on a network of 7 branches and 2 banking service posts strategically located in economically relevant Brazilian

regions, besides an offshore branch in Cayman Islands, its brokerage house Guide Investimentos operating at the São Paulo Stock, Commodities and Futures Exchange -

BM&FBOVESPA and Serglobal Cereais, acquired in April 2011, which originates agricultural bonds.

Highlights

Expanded Credit Portfolio totaled R$3.9 billion, up 1.5% in the quarter

and 28.8% in relation to March 2013.

Loans rated between AA and B corresponded to 90% of the expanded

credit portfolio, compared to 81% in March 2013. Of the loans granted

in the quarter, 99% were rated between AA and B, reflecting the

quality of the credit portfolio being built since April 2011.

The Emerging companies and Corporate segments accounted for 43%

and 56%, respectively, of the expanded credit portfolio.

The managerial expense with allowance for loan losses (ALL)

annualized in 1Q14 was 1.10% of the expanded credit portfolio

(0.95% in 4Q13), in line with the conservative lending policy adopted

by the Bank. Additional allowance remained at R$23.7 million, not yet

allocated.

Funding totaled R$3.9 billion and Free Cash totaled R$743.2 million

at the end of 1Q14, in line with the strategy of loan portfolio growth.

Income from services rendered and tariffs totaled R$12.9 million in

the quarter, an increase of 29.7% from the previous quarter and

94.1% from 1Q13.

The quarterly Result was a loss of R$9.9 million, mainly due to the

following: (i) the effect of discontinuance of the designation of hedge

accounting, adopted in 2Q12, of operations to protect the cash flow,

which continue to be protected by hedge operations, without any cash

effect, and (ii) the fact that the investments we made during the

restructuring period have still not reached equilibrium point since,

given the conservative risk adopted by us, we have still not attained

the required scale through growth of the credit portfolio and income

from services rendered.

IDVL4: R$3.58 per share

Closing: May 13, 2014

Outstanding Shares: 88,991,729

Market Cap: R$318.6 million

Price/Book Value: 0.48

Conference Call / Webcasts

May 14, 2014

In English

10 a.m. (US EST) / 11 a.m. (Brasília)

Connections

Brasil: +55 11 3193-1001

+55 11 2820-4001

EUA: +1 786 924-6977

Code: Banco BI&P

In Portuguese

9 a.m. (US EST) / 10 a.m. (Brasília)

Number: +55 11 3193-1001

+55 11 2820-4001

Code: Banco BI&P

Website

www.bip.b.br/ir

Expanded Credit Portfolio totaled R$3.9 billion, up 1.5% in the quarter and 29% in twelve months

Income from services rendered and tariffs totaled R$12.9 million, up 30% in the quarter and 94% in twelve months

Managerial expense with allowance for loan losses (ALL) annualized in 1Q14 was 1.10% of the expanded credit

portfolio, in line with Banco BI&P’s conservative lending policy

http://www.bip.b.br/ir

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EARNINGS RELEASE

1st Quarter 2014

Summary

Macroeconomic Scenario ....................................................................................................................................................... 3

Key Indicators .......................................................................................................................................................................... 4

Operating Performance ........................................................................................................................................................... 5

Expanded Credit Portfolio ....................................................................................................................................................... 7

Funding .................................................................................................................................................................................... 9

Free Cash .............................................................................................................................................................................. 10

Capital Adequacy .................................................................................................................................................................. 10

Credit Ratings ....................................................................................................................................................................... 10

Capital Markets .................................................................................................................................................................... 11

Balance Sheet ...................................................................................................................................................................... 13

Income Statement ................................................................................................................................................................ 15

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EARNINGS RELEASE

1st Quarter 2014

Macroeconomic Scenario

The beginning of the year was marked by high temperatures and scarce rainfall, which affected both the energy sector

and some plantations across the country. In the Southeast and Midwest Brazil, water reservoirs reached alarmingly low

levels, raising the possibility of energy rationing in the country. With the government actioning the thermal power plants

to meet the energy demand, spot market energy prices rose sharply, forcing the government to announce a rescue plan

for energy distribution companies. To prevent the country’s public accounts from getting affected, the major portion of

the aid will come from the loan contracted by the Electric Energy Trading Chamber (CCEE), a private entity.

Despite the government’s announcement to cut federal spending by R$44 billion this year and its commitment to

achieve a primary surplus of R$99 billion, or 1.9% of GDP, worries about the status of public accounts persist. Initial

fiscal results from early this year have raised doubts about the government’s ability to meet the target set by it. In this

scenario, the rating agency Standard & Poor’s downgraded the country’s sovereign rating from BBB to BBB-, the lowest

level still considered investment grade, based on the argument that Brazil’s public accounts and economic activity are

deteriorating.

Note that the drought did not affect the electricity system alone. Several plantations were damaged by inclement

weather, pushing up the prices of fresh food items. The consumer price index (IPCA) in March rose higher than

economists’ expectations, and food prices should continue to exert pressure on inflation in the coming months.

Expectations regarding inflation have worsened, with a few economists even predicting the IPCA index to end 2014 at

above the inflation target of 6.5%. In this scenario, the Central Bank of Brazil continued its monetary tightening policy,

raising by one more percentage point the basic interest rate (Selic), which reached 11% p.a. at the end of March.

On the positive side, indicators of economic activity at the start of the year positively surprised economists. Industrial

production and retail sales registered growth and the Central Bank’s business activity index signaled economic growth

in the beginning of the year. Despite these positive developments, the market maintained its forecast of a slowdown in

economic activity over the coming months, with GDP growth in 2014 going below 2%.

The foreign exchange market remained highly volatile at the start of the year. In January, the negative exchange flows,

combined with the apathy of international markets towards emerging economies, resulted in a stronger U.S. dollar,

which went past the R$2.40 mark. In the succeeding months, the inflow of funds into the country, mainly reflecting

heightened tensions between Russia and Ukraine and the increase in foreign funding by Brazilian companies, pushed

up the Brazilian real, which closed the first quarter at R$2.25.

Credit volume in Brazil’s national financial system grew 13.7% in the first quarter of 2014 to reach R$2.758 trillion.

Average term of loans increased from 85.9 months in March 2013 to 103.6 months in December 2014. Credit as a

percentage of GDP ended the first quarter at 55.9%, lower than 56.1% at the end of last year, though still remaining

above 50%.

Default in the individuals segment dropped from 7.6% in the first quarter of 2013 to 6.5%, while corporate default

declined from 3.6% to 3.3%. These marginal improvements in default rates are the result of a more selective approach

to credit adopted by Brazilian banks.

Macroeconomic Data 1Q14 4Q13 1Q13 2013 2014(e)

Real GBP Growth (Q/Previous Q) 0.40%(e) 0.70% 0.00% 2.3% 1.80%

Inflation (IPCA - IBGE) – quarterly change 2.18% 2.04% 1.94% 2.04% 1.80%

Inflation (IPCA - IBGE) – annual change 6.15% 5.91% 6.59% 5.91% 6.50%

FX (US$/R$) – quarterly change -4.47% 6.54% -1.26% 15.36% 1.6%

Interest Rate (Selic) 11.00% 10.00% 7.25% 10.00% 11.25%

e= expected

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EARNINGS RELEASE

1st Quarter 2014

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 Central Bank rules, except were otherwise stated.

Results 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Loan Operations & Agro Bonds (CPR) adjusted 1 108.8 110.7 -1.7% 60.7 79.2%

Effect of recoveries and discounts (0.1) (0.5) -80.7% (2.2) -95.8%

Revenues from Securities (w/o agro bonds), Derivatives & FX 28.3 46.5 -39.0% 44.6 -36.5%

Effect of discontinuance of hedge accounting (4.0) (3.6) 12.5% (15.6) -74.2%

Financial Intermediation Expenses (w/o ALL) (105.0) (111.4) -5.8% (64.8) 61.9%

Result from Financial Int. before ALL 28.1 41.7 -32.6% 22.7 23.6%

ALL Expenses 2 (13.4) (16.0) -16.4% (133.4) -90.0%

ALL Expenses - Banco BI&P (9.2) (7.0) 30.0% (133.4) -93.1%

ALL Expenses - Banco Intercap 3 (4.2) (9.0) -52.9% 0.0 n.c.

Result from Financial Intermediation 14.7 25.7 -42.7% (110.6) 113.3%

Net Operating Expenses (26.0) (38.3) -32.2% (33.9) -23.4%

Recurring Operating Result (11.2) (12.6) -10.7% (144.5) -92.2%

Non-Recurring Operating Expenses 0.0 0.0 n.c. 0.0 n.c.

Operating Result (11.2) (12.6) -10.7% (144.5) -92.2%

Net Profit (Loss) (9.9) (10.0) -0.8% (91.4) -89.2%

Assets & Liabilities 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Loan Portfolio 3,014.6 3,025.2 -0.4% 2,522.7 19.5%

Expanded Loan Portfolio 4 3,926.1 3,867.1 1.5% 3,047.5 28.8%

Cash & Short Term Investments 211.4 241.0 -12.3% 611.3 -65.4%

Securities and Derivatives 1,402.5 1,347.7 4.1% 769.7 82.2%

Securities excl. Agro Sec. & Private Credit Bonds 5 702.1 684.8 2.5% 417.4 68.2%

Total Assets 5,032.4 4,936.8 1.9% 4,259.1 18.2%

Total Deposits 3,308.3 3,219.0 2.8% 2,451.3 35.0%

Open Market 95.6 85.9 11.3% 193.2 -50.5%

Foreign Borrowings 348.2 364.3 -4.4% 396.4 -12.1%

Domestic Onlendings 273.4 310.0 -11.8% 322.1 -15.1%

Shareholders’ Equity 667.1 674.2 -1.0% 498.4 33.8%

Performance 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Free Cash 743.2 758.0 -1.9% 760.1 -2.2%

NPL 60 days/ Loan portfolio 2.6% 2.3% 0.3 p.p. 2.3% 0.3 p.p.

NPL 90 days/ Loan portfolio 2.6% 1.9% 0.7 p.p. 2.2% 0.4 p.p.

Basel Index 13.7% 14.8% -1.1 p.p. 14.2% -0.4 p.p.

ROAE -5.8% -6.2% 0.5 p.p. -52.2% 46.4 p.p.

Adjusted Net Interest Margin (NIMa) 6 3.2% 5.0% -1.7 p.p. 5.4% -2.2 p.p.

Efficiency Ratio 105.6% 101.0% 4.5 p.p. 155.2% -49.7 p.p.

Other Information 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Number of Corporate Clients 1,128 1,063 6.1% 811 39.1%

Number of Employees 453 443 2.3% 449 0.9%

Banco BI&P employees 379 372 1.9% 397 -4.5%

Brokerage house and Serglobal employees 74 71 4.2% 52 42.3%

n.c. = not comparable (percentage above 300% or below -300%, or number divided by zero).

Details in the respective sections of this report: 1 Excluding (i) revenues from recovery of loans written off, and (ii) discounts granted upon settlement of operations in the period. More details in the

Profitability section of this report. 2 Including additional provisions. 3 The allowance for loan losses on loans originated at Banco Intercap and absorbed by Banco BI&P will be fully reimbursed by the former controlling

shareholders of Banco Intercap since it has already exceeded the contractual ceiling of R$6.0 million for the first year after the merger (06/30/2013

to 06/30/2014). 4 Including Guarantees issued, Private Credit Bonds (PNs and Debentures) and Agro Securities (CDA/WA and CPR). 5 Excluding Agro Securities (CPRs and CDA/WA) and Private Credit Bonds (PNs and debentures) for trading. 6 Excluding (i) repos with equivalent volumes, tenors and rates both in assets, and (ii) effects of the discontinuance of the treatment of hedge

accounting, and also discounts granted in operations settled in the period.

5/15

EARNINGS RELEASE

1st Quarter 2014

Operating Performance

The quarterly result was a loss of R$9.9 million, mainly due to the following: (i) the effect of discontinuance of the

designation of hedge accounting, adopted in 2Q12, of operations to protect the cash flow, which continue to be

protected by hedge operations, without any cash effect, and (ii) the fact that the investments we made during the

restructuring period have still not reached equilibrium point since, given the conservative risk policy adopted by us, we

have still not attained the required scale.

Though loan origination by our commercial area continues to be a positive highlight, the expected profitability will come

with the gains in scale, that is, through growth of the loan portfolio and income from services rendered.

Financial Intermediation Result

before Allowance for Loan Losses Net Result

Profitability

Financial Intermediation 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Financial Intermediation Revenues 133.1 153.1 -13.1% 87.6 51.9%

Loan Operations and Agro Bonds adjusted ** 108.8 110.7 -1.7% 60.7 79.2%

Effects recoveries and discounts (0.1) (0.5) -80.7% (2.2) -95.8%

Loan Operations and Agro Bonds 108.7 110.2 -1.3% 58.6 85.7%

Loans, Discount Receivables and Agro bonds (CPR) 91.2 99.0 -7.9% 47.4 92.4%

Financing 16.7 9.5 75.4% 6.8 143.8%

Other 0.8 1.7 -50.4% 4.3 -80.4%

Securities (w/o Agro bonds) 21.7 26.4 -17.7% 17.0 27.4%

Derivatives (8.8) (6.5) 36.2% 2.0 n.c.

FX Operations Result 11.4 23.0 -50.3% 10.0 14.1%

Financial Intermediation Expenses (105.0) (111.4) -5.8% (64.8) 61.9%

Money Market Funding (90.1) (82.5) 9.2% (53.2) 69.4%

Time Deposits (64.2) (59.2) 8.4% (40.8) 57.3%

Repurchase Transactions (2.3) (4.8) -52.7% (4.6) -50.2%

Interbank Deposits (0.4) (0.4) 9.6% (1.3) -65.7%

Agro Bonds (LCA), Real Estate Notes (LCI) & Bank Notes (LF) (23.2) (18.1) 28.6% (6.5) 255.4%

Loans, Assignments & Onlending (14.8) (28.4) -47.8% (11.6) 27.3%

Foreign Borrowings (10.1) (22.6) -55.2% (6.9) 47.6%

Domestic Borrowings & Onlending (3.4) (4.7) -26.2% (4.8) -27.9%

Sales operations/transfer of financial assets 0.0 (0.5) n.c. 0.0 n.c.

Gross Result from Financial Intermediation before ALL 28.1 41.7 -32.6% 22.7 23.6%

Allowance for Loan Losses (ALL) (13.4) (16.0) -16.4% (133.4) -90.0%

ALL Expenses - Credits from Banco BI&P (9.2) (7.0) 30.0% (133.4) -93.1%

ALL Expenses - Credits from Banco Intercap (4.2) (9.0) -52.9% 0.0 n.c.

Gross Result from Financial Intermediation 14.7 25.7 -42.7% (110.6) 113.3%

* Excluding the effects of (i) discounts granted upon settlement of loans in the peri, and (ii) by the discontinuance of the designation of hedge accounting,

more details in the Profitability section of this report.

** Excluding the effects of (i) recoveries from operations written off, and (ii) discounts granted upon settlement of loans in the period.

22.8

2.4

46.0 41.7

28.1

44.8

26.9

47,7 47.5

33.1

1Q13 2Q13 3Q13 4Q13 1Q14

R$

millio

n

Financial Intermediation Result before ALL

Financial Intermediation Result before ALL adjusted *

2.0

-10.0 -9.9

1Q13 2Q13 3Q13 4Q13 1Q14

R$

millio

n

-20.6

-91.4

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EARNINGS RELEASE

1st Quarter 2014

Net Interest Margin (NIM)

Net Interest Margin adjusted was 3.2% in the quarter as against 5.0% in 4Q13. The Managerial NIM with clients was

3.94% due to the increase participation of the Corporate segment.

Margem Financeira Líquida 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

A. Result from Finan. Int. before ALL adjusted1 33.1 47.5 -30.4% 44.8 -26.2%

B. Average Interest bearing Assets 4,237.6 4,018.5 5.5% 3,603.6 17.6%

Adjustm. for non-remunerated average assets 2 (98.3) (116.4) -15.5% (229.2) -57.1%

B.a. Adjusted Average Interest bearing Assets 4,139.3 3,902.1 6.1% 3,374.4 22.7%

Net Interest Margin (Aa/Ba) 1 3.2% 5.0% -1.7 p.p. 5.4% -2.2 p.p.

Managerial NIM with Clients 3.94% 3.99% 0.05 p.p. 4.05% -0.11p.p.

1 Excluding (i) effects of the discontinuance of the treatment of hedge accounting, adopted in 2Q12, for booking hedges of cash flows, which

continue to be protected by hedge, and (ii) discounts granted in operations settled in the period.

2 Repos with equivalent volumes, tenors and rates both in assets and liabilities.

Efficiency

Efficiency ratio stood at 105.6% in 1Q14, compared to 101.0% no 4Q13. Though personnel and administrative

expenses decreased significantly in the quarter, due to (i) the strict control over expenses and (ii) the seasonality of

personnel expenses that is typical of the fourth quarter, which was further impacted by the drop in financial

intermediation income caused by the factors mentioned earlier.

Efficiency Ratio 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Personnel Expenses 27.5 29.8 -7.7% 26.4 4.3%

Contributions and Profit-sharing 2.4 1.8 32.1% 5.4 -55.6%

Administrative Expenses 20.6 21.6 -4.6% 13.4 53.8%

Taxes 3.5 3.8 -8.5% 3.6 -3.3%

A. Total Operating Expenses 54.0 57.0 -5.3% 48.8 10.7%

Gross Income Financial Intermediation (w/o ALL) 28.1 41.7 -32.6% 22.7 23.6%

Income from Services Rendered 12.6 9.6 31.1% 6.5 96.0%

Income from Banking Tariffs 0.2 0.3 -20.9% 0.2 20.9%

Other Net Operating Income * 10.2 4.8 112.4% 2.0 n.c.

B. Total Operating Income 51.1 56.4 -9.4% 31.4 62.8%

Efficiency Ratio (A/B) 105.6% 101.0% 4.5 p.p. 155.2% -49.7 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.

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EARNINGS RELEASE

1st Quarter 2014

Expanded Credit Portfolio

In March 2014, the credit portfolio totaled R$3.0 billion, stable in the quarter and +19.5% in twelve months. The

expanded credit portfolio reached R$3.9 billion, +1.5% in the quarter and +28.8% in twelve months.

Expanded Credit Portfolio by Product Group 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Loans & Financing in Real 2,344.2 2,315.5 1.2% 1,676.9 39.8%

Assignment of Receivables Originated by our Customers 222.0 308.9 -28.1% 402.6 -44.9%

Trade Finance (ACC/ACE/IMPFIN)1 420.0 372.2 12.8% 415.4 1.1%

Other2 28.3 28.7 -1.2% 27.8 2.0%

Expanded Credit Portfolio 3,014.6 3,025.2 -0.4% 2,522.7 19.5%

Guarantees Issued (LGs & L/Cs) 211.2 179.0 18.0% 172.5 22.4%

Agro Bonds (Securities: CPRs & CDA/WA; Credit: CDCAs) 615.2 637.8 -3.5% 311.2 97.7%

Private Credit Bonds (Securities: PNs & Debentures) 85.1 25.2 238.5% 41.1 107.2%

Expanded Credit Portfolio 3,926.1 3,867.1 1.5% 3,047.5 28.8%

1 Starting from March 2014, export credit notes (NCE) and export notes (CCE) originated by Banco Intercap are included in Loans & Financing in

BRL, as well as NCE and CCE originated by Banco BI&P are classified. 2 The Other segment basically consists of Consumer Credit operations for Used Vehicles and financing of non-operating assets.

The Emerging Companies segment consists of companies with annual revenue between R$80 million and R$400

million, this segment reached 43% of the Expanded Credit Portfolio while the Corporate segment which includes

companies with annual revenue between R$400 million and R$2 billion reached 56%.


by Segment

Expanded Credit Portfolio by

Client Concentration

* The Other segment basically consists of Consumer Credit operations for Used Vehicles and financing of non-operating assets.

** Including R$97,2 million of loans assigned to Banco Intercap.

The agro bonds portfolio totaled R$747.1 million in 1Q14, down 1.5% in the quarter but up 101.4% in 12 months. The

growth in 12 months is due to our joint ventures and alliances, while the slight decline in the quarter is the result of the

typical seasonality of certain agricultural commodities.

Agricultural Bonds Porfolio 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Booked under Securities 615.2 637.8 -3.5% 311.2 97.7%

Warrants - CDA/WA 35.5 15.6 127.3% 7.1 n.c.

Agro Product Certificate - CPR 579.8 622.2 -6.8% 304.1 90.7%

Booked under Credit Portfolio - Loans & Financing 131.9 121.0 9.0% 59.7 120.8%

Agro Credit Rights Certificate - CDCA 131.9 121.0 9.0% 59.7 120.8%

Agricultural Bonds 747.1 758.8 -1.5% 370.9 101.4%

The agricultural and Real Estate sector has increased their participation in the expanded credit portfolio due to our joint

ventures and alliances in these segments.

47% 48% 49% 47% 43%

51% 51% 50% 52% 56%

1% 1% 1% 1% 1%

Mar13 Jun13 Sep13** Dec13 Mar14

Emerging Companies Corporate Others*

13%

10%

12%

29%

26%

26%

27%

24%

25%

31%

39%

36%

Mar13

Dec13

Mar14

Top 10 11 - 60 largest 61 - 160 largest Other

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EARNINGS RELEASE

1st Quarter 2014


by Region Expanded Credit Portfolio

by Economic Sector

Quality of the Expanded Credit Portfolio

In 1Q14, we maintained our focus on lending to customers with better credit standing, which is evident from the high

percentage of loans rated between AA and B, which represented 99% of total lending. The balance of loans classified in

the low risk categories (AA to B) ended the quarter at 89.8% of total loans (compared to 87.1% and 81.3% at the end of

4Q13 and 1Q13, respectively), as the following chart shows.

Expanded Credit Portfolio by Rating Coverage Ratio

The reduction in the share of loans rated between D and H in March 2014 is due to the write-off of a few loans that had

already been fully provisioned for. Of the R$271.1 million rated in this range, R$192.9 million, or 71%, consisted of

loans whose payments are regular.

The default rate on loans overdue more than 60 days (NPL 60 days) increased 0.3 p.p. in the quarter and 12 months.

Loans overdue more than 90 days (NPL 90 days) increased 0.7 p.p. in the quarter and +0.4 p.p. in relation to March

2013.

Default by segment Mar 14 Dec 13

> 60 days > 90 days

Mar 14 Dec 13 Mar 14 Dec 13

Credit Portfolio NPL % NPL % NPL % NPL %

Emerging Companies 1,252.4 1,357,9 61.1 4.9% 51.9 3.8% 60.0 4.8% 38.5 2.8%

Corporate 1,727.6 1,636,5 9.9 0.6% 11.0 0.7% 9.9 0.6% 10.5 0.6%

Other 34.5 30,8 7.3 21.0% 7.3 23.8% 7.3 21.0% 7.3 23.7%

TOTAL 3,014.6 3,025.2 78.3 2.6% 70.3 2.3% 77.2 2.6% 56.3 1.9%

Allowance for Loan Losses (ALL) 150.1 220.4

The managerial expense with allowance for loan losses (ALL), including Banco Intercap’s portfolio, corresponded to

1.10% of the expanded credit portfolio, in line with the conservative credit policy adopted by the Bank. There were no

fresh provisions for the balance of loans granted prior to April 2011 and we still have an additional allowance (not

allocated) of R$23.7 million.

North

1%

Northeast

6%

Midwest

19%

Southeast

58%

South

16%

14,2%

1,9%

1,9%

2,1%

2,1%

2,7%

3,2%

3,9%

3,9%

3,9%

4,0%

5,0%

6,8%

8,7%

13,7%

22,3%

Other Sectors (less than 1.4%)

Financial Activities

Raw Materials

Chemical & Pharmaceutical

Textile, Leather and Confection

Metal Industry

Commerce - Retail & Wholesale

Infrastructure

Transport and Logistics

Livestock

Power Generation & Distribution

Automotive

Food & Beverage

Oil, Biofuel & Sugar

Real Estate

Agriculture

9/15

EARNINGS RELEASE

1st Quarter 2014

Funding

Funding totaled R$3.9 billion in March 2014, remaining practically stable in the quarter and increasing 24.0% in 12

months. The main funding sources were time deposits (CDB and DPGE) and agribusiness letters of credit (LCA), which

jointly accounted for 78% of total funding.

Note that LCAs, which bring tax advantages for individual investors, are backed by agribusiness operations, in which

Banco BI&P has operational expertise.

Funding 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Total Deposits 3,308.3 3,219.0 2.8% 2,451.3 35.0%

Time Deposits 807.7 1,004.2 -19.6% 818.1 -1.3%

Insured Time Deposits (DPGE) 1,307.1 1,227.5 6.5% 931.8 40.3%

Insured Time Deposits – DPGE I 1,023.8 1,153.9 -11.3% 931.8 9.9%

Insured Time Deposits – DPGE II 283.3 73.5 285.2% 0.0 n.c.

Agro Notes (LCA) 964.0 751.7 28.2% 473.7 103.5%

Real Estate Notes (LCI) 119.3 110.7 7.8% 23.9 n.c.

Bank Notes (LF) 57.1 55.6 2.7% 33.1 72.8%

Interbank Deposits 15.9 25.6 -37.8% 91.4 -82.6%

Demand Deposits and Other 37.1 43.9 -15.4% 79.3 -53.2%

Domestic Onlending 273.4 310.0 -11.8% 322.1 -15.1%

Foreign Borrowings 348.2 364.3 -4.4% 396.4 -12.1%

Trade Finance 314.6 329.1 -4.4% 345.9 -9.0%

Other Foreign Borrowings 33.6 35.2 -4.5% 50.5 -33.4%

TOTAL 3,930.0 3,893.3 0.9% 3,169.7 24.0%

By Type By Investor By Maturity

* Insured time deposits are represented by DPGE. DPGE I and II are two types of time deposits insured by FGC and differ in cost and framework.

The average term of deposits stood at 690 days from issuance (775 days in December 2013) and 335 days from

maturity (393 days in December 2013).

Type of Deposit Average Term in days

from issuance to maturity 1

Interbank 347 163

Time Deposits 674 504

Time Deposits with Special Guarantee (DPGE) 1.072 389

Agro Notes (LCA) 237 163

Real Estate Letters of Credit (LCI) 241 134

Bank Notes (LF) 834 192

Portfolio of Deposits 2 690 335

1 From March 30, 2014. | 2 Volume weighted average.

Time

Deposits

21%

DPGE I *

26%

DPGE II *

7%

Agro

Bonds

25%

Bank &

Real

Estate

Notes

4%

BNDES

Onlendings

7%

Trade

Finance

8%

Foreign

Loans

1%

Demand

1%

Institutional

Investors

32%

Enterprises

13%

National

Banks

9% Brokers

10%

Individuals

18%

Other

2%

BNDES

Onlending

7% Foreign

Banks

9%

Demand

1%

Up to 90

days

28%

91 to

180 days

19%

181 to

360 days

18%

+360

days

34%

10/15

EARNINGS RELEASE

1st Quarter 2014

Free Cash

On March 30, 2014, the free cash position totaled R$743.2 million, equivalent

to 22.5% of total deposits and 1.1x shareholders’ equity. The calculation

considers cash, 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), 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 and Basel III 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 1Q14 4Q13 1Q14/4Q13 1Q13 1Q14/1Q13

Total Capital 605.5 643.1 -5.8% 485.3 24.8%

Tier I 605.5 643.1 -5.8% 486.3 24.5%

Tier II 0.0 0.0 n.c. 1.3 n.c.

Deductions 0.0 0.0 n.c. (2.3) n.c.

Required Capital 485.1 476.9 1.7% 376.8 28.7%

Credit Risk allocation 454.5 444.0 2.4% 329.0 38.1%

Market Risk Allocation 14.7 17.0 -13.6% 29.9 -51.0%

Operating Risk Allocation 16.0 15.9 0.4% 17.9 -10.9%

Excess over Required Capital 120.4 166.2 -27.6% 108.5 11.0%

Basel Index 13.7% 14.8% -1.1 p.p. 14.2% -0.4 p.p.

Risk Ratings

Agency Classification Observation Last

Report

Standard & Poor’s BB- / Stable / B

brA / Stable / brA-2

Global Scale

Local Scale - Brazil April 14, 2014

Moody's Ba3 / Negative / Not Prime

A2.br / Negative / BR-1

Global Scale

Local Scale - Brazil July 04, 2013

FitchRatings BBB / Stable / F3 Local Scale - Brazil September 05, 2013

RiskBank 9,65

Ranking: 56

RiskBank Index

Low Risk Short Term April 17, 2014

760 758 743

1Q13 4Q13 1Q14

R$

millio

n

11/15

EARNINGS RELEASE

1st Quarter 2014

Capital Market

Total Shares and Free Float

Number of shares as of March 31, 2014

Type Corporate Capital Controlling Group Management Treasury Free Float %

Common 58,513,218 32,564,340 57,876 - 25,891,002 44.2%

Preferred 31,021,907 833,223 279,489 543,396 29,365,799 94.7%

TOTAL 89,535,125 33,397,563 337,365 543,396 55,256,801 61.7%

Share Buyback Program

The following Stock Option Plans, approved for the Company’s executive officers and managers, as well as individuals

who provide services to the Company or its subsidiaries, had the following balances on March 31, 2014:

Quantity Stock Option

Plan

Date of

Approval Grace Period

Term for

Exercise Granted Exercised Extinct Not Exercised

I 03.26.2008 Three years Five years 2,039,944 229,057 449,123 1,361,764

II 04.29.2011 Three years Five years 1,840,584 - 367,243 1,473,341

III 04.29.2011 Five years Seven years 1,850,786 - - 1,850,786

IV 04.24.2012 Up to five years Five years 867,425 - 37,852 829,573

Total 6,598,739 229,057 854,218 5,515,464

The aforementioned Stock Options Plans are filed in the IPE system of the Securities and Exchange Commission of

Brazil (CVM) and are also available in the Company’s IR website.

Remuneration to Shareholder

During 3M14 the Bank neither provisioned nor paid interest on equity, calculated based on the Long-Term Interest

Rate (TJLP) and towards the minimum dividend for fiscal year 2014. The Board of Directors will, by the end of the year,

study the possibility of early payment of interest on equity after considering the results and the tax efficiency of such

payment.

Share Performance

The preferred shares of BI&P (IDVL4), listed in the Level 2 Corporate Governance segment of BM&FBOVESPA, closed

March 31, 2014 at R$4.00, for a market cap of R$356 million, including the shares existing on March 31, 2014 and

excluding treasury stock. The price of IDVL4 shares decreased 33.2% in the quarter and 46.6% % in the 12 months

ended March 2014. In comparison, the Bovespa Index (Ibovespa) dropped 2.1% in the quarter and 10.5% in relation to

the closing of March 2013. At the end of 1Q14, the price/book value (P/BV) was 0.53.

12/15

EARNINGS RELEASE

1st Quarter 2014

Share Price evolution in the last 12 months

Liquidity and Trading Volume

The preferred shares of BI&P (IDVL4) were traded in 98.4% of the sessions in the quarter and 95.2% of the 250

sessions in the past 12 months. The volume traded on the spot market in the quarter was R$15.9 million, involving 3.2

million IDVL4 shares in 1,102 trades. In the 12 months ended in March 2014, the volume traded on the spot market

was R$43.7 million, involving around 7.6 million preferred shares in 2,937 trades.

Shareholder Base

Position as of March 30,2014

# TYPE OF SHAREHOLDER IDVL3 % IDVL4 % TOTAL %

8 Controlling Group 32,564,340 55.7% 833,223 2.7% 33,397,563 37.3%

5 Management 57,876 0.1% 279,489 0.9% 337,365 0.4%

- Treasury - 0.0% 543,396 1.8% 543,396 0.6%

19 National Investors 1,201,090 2.0% 7,784,181 25.1% 8,985,271 10.0%

11 Foreign Investors 10,681,337 18.3% 17,526,152 56.5% 28,207,489 31.5%

8 Corporate - 0.0% 598,613 1.9% 598,613 0.7%

271 Individuals 14,008,575 23.9% 3,456,853 11.1% 17,465,428 19.5%

322 TOTAL 58,513,218 100.0% 31,021,907 100.0% 89,535,125 100.0%

40

50

60

70

80

90

100

110

IBOVESPA IDVL4

13/15

EARNINGS RELEASE

1st Quarter 2014

Balance Sheet

CONSOLIDATED R$ thousand

ASSETS 3/31/2013 12/31/2013 3/31/2014

Current 3,295,573 3,759,360 3,864,643

Cash 64,521 38,446 37,068

Short-term interbank investments 546,759 202,571 174,298

Open market investments 518,490 177,500 144,999

Interbank deposits 28,269 25,071 29,299

Securities and derivative financial instruments 718,515 1,314,212 1,369,422

Own portfolio 515,238 972,249 1,097,481

Subject to repurchase agreements 51,598 14,039 26,233

Linked to guarantees 127,461 169,468 186,969

Subject to the Central Bank - 109,250 3,022

Derivative financial instruments 24,218 49,206 55,717

Interbank accounts 11,996 4,412 3,105

Loans 1,354,555 1,725,250 1,573,308

Loans - private sector 1,451,470 1,807,228 1,618,575

Loans - public sector - - -

(-) Allowance for loan losses (96,915) (81,978) (45,267)

Other receivables 545,482 391,013 607,637

Credit guarantees honored - 507 -

Foreign exchange portfolio 508,913 292,330 316,949

Income receivables 43 433 537

Negotiation and intermediation of securities 27,444 72,992 38,148

Sundry 13,909 33,157 257,407


Other assets 53,745 83,456 99,805

Long term 907,312 1,085,304 1,070,663

Short-term interbank investments - - -

Marketable securities and derivative financial instruments 51,163 33,518 33,064

Own portfolio 42 839 14,110


Interbank Accounts - 2,966 3,038

Loans 625,129 738,156 710,730

Loans - private sector 737,581 863,993 798,753

Loans - public sector - - -


Other receivables 199,332 309,720 323,109

Credit guarantees honored - - 507

Trading and Intermediation of Securities 517 523 540

Foreign exchange portfolio - 1,171 4,656

Sundry 204,788 312,231 328,791


Other assets 31,688 944 722

Permanent Assets 56,236 92,141 97,106

Investments 29,403 33,460 34,361

Subsidiaries and Affiliates 27,717 31,767 32,668

Other investments 1,842 1,849 1,849

(-) Loss Allowances (156) (156) (156)

Property and equipment 14,077 13,937 13,088

Property and equipment in use 1,210 1,152 1,152

Revaluation of property in use 2,634 2,634 2,634

Other property and equipment 20,481 24,657 24,575

(-) Accumulated depreciation (10,248) (14,506) (15,273)

Intangible 12,756 44,744 49,657

Goodwill 2,276 25,368 27,868

Other intangible assets 13,100 23,788 27,031

(-) Accumulated amortization (2,620) (4,412) (5,242)

TOTAL ASSETS 4,259,121 4,936,805 5,032,412

14/15

EARNINGS RELEASE

1st Quarter 2014


LIABILITIES 3/31/2013 12/31/2013 3/31/2014

Current 2,512,472 2,680,745 2,988,178

Deposits 928,651 1,036,371 1,118,475

Cash deposits 79,284 43,854 37,095

Interbank deposits 91,336 25,564 15,897

Time deposits 758,031 966,953 1,065,483

Funds obtained in the open market 193,228 85,905 95,601

Own portfolio 51,699 14,005 26,199

Third party portfolio 53,211 71,900 69,402

Unrestricted Portfolio 88,318 - -

Funds from securities issued or accepted 497,095 868,884 1,060,943

Agribusiness Letters of Credit, Real Estate Notes & Bank Notes 497,095 868,884 1,060,943

Interbank accounts 180 - 565

Interdepartamental accounts 15,741 8,191 4,083

Borrowings 396,399 329,479 314,592

Foreign borrowings 396,399 329,479 314,592

Onlendings 125,570 122,022 109,752

BNDES 83,659 71,769 61,557

FINAME 41,911 50,253 48,195

Other l iabil ities 355,608 229,893 284,167

Collection and payment of taxes and similar charges 287 487 1,225

Foreign exchange portfolio 206,208 5,941 38,676

Taxes and social security contributions 4,156 14,646 16,022

Social and statutory liabilities 2,500 3,606 1,352

Negotiation and intermediation securities 74,364 159,262 189,391


Sundry 14,581 23,660 22,375

Long Term 1,247,172 1,579,460 1,372,811

Deposits 992,003 1,264,708 1,049,373

Interbank Deposits 58 - -

Time deposits 991,945 1,264,708 1,049,373

Funds from securities issued or accepted 33,503 49,068 79,499

Agribusiness Letters of Credit, Real Estate Notes & Bank Notes 33,503 49,068 79,499

Loan obligations - 34,800 33,645

Foreign loans - 34,800 33,645

Onlending operations - Governmental Bureaus 196,525 187,959 163,694

Federal Treasure 7,702 6,893 6,747

BNDES 101,588 89,102 75,975

FINAME 87,017 91,769 80,753

Other Institutions 218 195 219

Other l iabil ities 25,141 42,925 46,600

Taxes and social security contributions 18,468 30,883 31,977

Derivative financial instrument 2,420 6,189 7,358

Sundry 4,253 5,853 7,265

Future results 1,031 2,439 4,289

Shareholders' Equity 498,446 674,161 667,134

Capital 572,396 769,843 769,843

Capital Reserve 17,565 23,468 24,159

Revaluation reserve 1,327 1,290 1,278

Profit reserve - - -

(-) Treasury stock (5,859) (5,859) (4,283)

Asset valuation Adjustment - (124) (169)

Accumulated Profit / (Loss) (87,860) (115,272) (124,462)

Minority Interest 877 815 768

TOTAL LIABILITIES 4,259,121 4,936,805 5,032,412

15/15

EARNINGS RELEASE

1st Quarter 2014

Income Statement


INCOME STATEMENT 1Q13 4Q13 1Q14

Income from Financial Intermediation 87,588 153,099 133,063

Loan operations 55,972 89,624 85,787

Income from securities 19,626 46,958 44,671

Income from derivative financial instruments 1,960 (6,491) (8,839)

Income from foreign exchange transactions 10,030 23,008 11,444

Expenses from Financial Intermediaton 198,223 127,375 118,335

Money market funding 53,208 82,536 90,147

Loans, assignments and onlendings 11,631 28,361 14,807

Sales operations/transfer of financial assets - 469 -

Allowance for loan losses 133,384 16,009 13,381

Gross Prof it f rom Financial Instruments (110,635) 25,724 14,728

Other Operating Income (Expense) (33,887) (38,304) (25,958)

Income from services rendered 6,451 9,646 12,645

Income from tariffs 172 263 208

Personnel expenses (26,373) (29,815) (27,515)

Other administrative expenses (13,371) (21,558) (20,569)

Taxes (3,600) (3,804) (3,480)

Result from affiliated companies 787 2,175 2,580

Other operating income 3,204 20,267 17,175

Other operating expense (1,157) (15,478) (7,002)

Operating Prof it (144,522) (12,580) (11,230)

Non-Operating Prof it (669) (1,285) (1,681)

Earnings before taxes ad prof it -sharing (145,191) (13,865) (12,911)

Income tax and social contribution 59,189 5,741 5,450

Income tax 6,632 1,243 (488)

Social contribution 4,057 757 (437)

Deferred fiscal assets 48,500 3,741 6,375

Statutory Contributions & Prof it Sharing (5,431) (1,826) (2,412)

Net Prof it for the Period (91,433) (9,950) (9,873)