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Institutional PresentationInstitutional Presentation 2Q15
2/28Investor Relations | 2Q15 |
Profile and History
Pine
History
Business Strategy
Competitive Landscape
Focus Always on the Client
Corporate Credit
FICC
Pine Investimentos
Highlights and Results
Corporate Governance
Corporate Governance
Committees
Social Investment and Responsibility
Summary
Profile and History
4/28Investor Relations | 2Q15 |
Over R$2 billion39%
R$500 million to R$2 billion
34%
Up to R$500 million
27%
PineSpecialized in providing financial solutions for corporate clients…
Credit Portfolio by Annual Client Revenues
Profile
Focused on establishing long-term relationships
Profound knowledge and product penetration
Business is structured along three primary business lines:
• Corporate Credit: credit and financing products
• FICC: instruments for hedging and risk management
• Pine Investimentos: Capital Markets, Financial Advisory, Project & Structured Finance and Research
June 30th, 2015
5/28Investor Relations | 2Q15 |
184 222 341 521 620 755 663 761 1.214
2.854 3.105 4.192
5.763 6.963
7.912
9.920 9.826 8.621
62 121 126 140 136 152 171
209
335
801 827 825
867
1.015
1.220 1.272 1.256 1.208
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
jun/
05
Corporate Credit Portfolio (R$ Million)
Shareholders' Equity (R$ Million)
...with extensive knowledge of Brazil’s corporate credit cycle.
History
1997Noberto and
Nelson Pinheiro sell their stake in BMC and found
Pine
1939Pinheiro Family
foundsBanco Central do
Nordeste
1975Noberto Pinheiro becomes one of
BMC’s controlling shareholders
Devaluationof the real
Nasdaq Sept. 11 Brazilian Elections
(Lula)
SubprimeAsian Crisis
Russian Crisis
European Community
End of 2007Focus on expanding the Corporate Banking franchise
Discontinuation of the payroll-deductible loan business
May, 2007Creation of Pine Investimentos products line and
opening of the Cayman branch
2005Noberto Pinheiro becomes Pine’s sole
shareholder
October, 2007Beginning of the FICC Business
October, 2011Subscription of Pine’s capital by DEG
August, 2012 Subscription of Pine’s capital by DEG, Proparco, Controlling Shareholder and Management
November, 2012Opening of the broker dealer in New York, Pine Securities USA LLC
March, 2007IPO
May, 201518
years
Business Strategy
7/28Investor Relations | 2Q15 |
Competitive LandscapePine serves a niche market of companies with few options for banks.
100% focused on providing complete service to companies, offering
customized products
Corporate & SME
SME & Retail
Retail
100% Corporate
Large Multi-Services banks
Market
Consolidation of the banking sector has decreased the supply of credit lines and financial instruments for corporate
Foreign banks are in a deleveraging process
PINE
Full service Bank – Credit, Hedging, and Investment Bank products – with room for growth
~15 clients per officer
Competitive Advantages: Focus Fast response: Strong relationship with
clients, with the credit committee meeting twice a week and response times to clients of no more than one week
Specialized services Tailor-made solutions Product diversity
Foreign and Investment
Banks
8/28Investor Relations | 2Q15 |
Focus Always on the ClientProducts tailored to meet the needs of each individual client.
In additionto the
headquarterslocatedin the
city ofSão Paulo, Pine has10
branchesthroughoutBrazil, in
theStates ofCeará, Mato
Grosso, Minas Gerais, Paraná,
Pernambuco, Rio de Janeiro,
Rio Grande do Sul, and
São Paulo. The origination
network also counts with a
Cayman Branch and a broker
dealerin New York (USA).
9/28Investor Relations | 2Q15 |
Corporate Credit
Actions Credit Committee
Strong track record and solid credit origination and approval process.
Credit Approval: Electronic Process
Origination Officers
Credit origination Credit analysis, visit to clients, data updates, interaction with
internal research team
Credit AnalystsRegional Heads of
Origination and Credit Analysis
Presentation to the Credit Committee
CRO, Executive Directors and
Analysts of Credit
Centralized and unanimous decision making process
CREDIT COMMITTEE
Meets once a week – reviewing 20 proposals on average
Minimum quorum: 4 members - attendance of CEO or Chairman is mandatory
Members:Chairman of the BoardCEOChief Risk OfficerChief Financial Officer
Participants:FICC Executive Director Credit Analysts TeamOther members of the Corporate Banking origination team
Personalized and agile service, working closely with clients and keeping a low client to account officer ratio: each officer handles ~15 economic groups
Geographic coverage of clients, providing the bank with local and extremely up-to-date credit intelligence and information
Established long term relationships with more than 600 economic groups
Origination network is comprised of 10 branches divided into 14 origination platforms in Brazil’s major economic centers
Pine has approximentely 25 professionals in the credit analysis area, assuring that analysis is fundamentally driven and based on industry-specific intelligence
Efficient loan and collateral processes, documentation, and controls, which has resulted in a low NPL track record
Discussion on sizing, collateral, structure etc.
10/28Investor Relations | 2Q15 |
Commodities10%
Fixed Income7%
Currencies83%
14,382 8,376 7,703 7,482 7,948
354 288
221
349 366
(532)
(47)
(365)
(103)
33
J un-14 Sept-14 Dec-14 Mar-15 J un-15
Notional Amount
MtM
Stressed MtM
June 30th, 2015
Scenario on June 30th,2015:
Duration: 153 days
Mark-to-Market: R$366 million
Stress Scenario (Dollar: +31% and Commodities Prices: -30%):
Stressed MtM : R$33 million
R$ million
FICCProven trackrecord: 4rd in commodity derivatives1.
Client Notional Derivatives by Market
Market Segments
Notional Value and MtM
Portfolio Profile
1Source: Cetip Report, June 2015
FixedIncome: Fixed, Floating, Inflation, Libor
Currencies: Dollar, Euro, Yen, Pound, Canadian Dollar,Australian Dollar
Commodities: Sugar, Soybean (Grain, Meal and Oil), Corn,Cotton, Metals, Energy
11/28Investor Relations | 2Q15 |
3 2
1Q15 2Q15
6 6
1H14 1H15
August, 2014
Export Prepayment Finance
Structuring Agent
August, 2014
Long Term Loan
Financial Advisor
US$58,000,000US$25,000,000
September, 2014
Debentures
R$50,000,000
Lead Coordinator
R$45,200,000
November, 2014
Debentures
Lead Coordinator
December, 2014
BNDES Onlending
R$630,000,000
Coordinator
J uly, 2014
February, 2015March, 2015
Project Finance
R$391,459,000
Financial Advisor
Project Finance
R$30,000,000
Lead Coordinator
Structuring CRP
R$24,000,000
Lead Coordinator
R$20,000,000
J une, 2015
CRI
Lead Coordinator
R$ million
Pine Investimentos
Fee Generation
Selected Transactions
Capital Markets: Structuring and Distribution of
Fixed Income Transactions.
Financial Advisory: Project & Structured Finance,
M&A, and hybrid capital transactions.
Research: Macro and Commodities.
Highlights and Results
13/28Investor Relations | 2Q15 |
2Q15 Events and Highlights
1.Sound positive liquidity gap in the past years, with 385 days for loan portfolio versus 501 days for funding.
2.Liquid balance sheet, with a cash position of R$1.2 billion, equivalent to 47% of time deposits.
3.Active and constant liability management generates benefits both in cost and terms of funding.
4.Loan portfolio coverage ratio above 4% as a result of a preemptive increase in provisions in the last twelve months.
5.Further reduction of personnel and administrative expenses, as a result of the diligence and anticipation of an adverse
market in 2015.
6.16tth largest bank in derivative transactions and the 4th largest in commodity derivatives according to CETIP – OTC
Clearing House.
14/28Investor Relations | 2Q15 |
1,244 1,208
Mar-15 J un-15
Shareholders' Equity
-2.9%
9,657 8,621
Mar-15 J un-15
Total Loan Portfolio1
-10.7%
8,367 7,564
Mar-15 J un-15
Total Funding
-9.6%
2Q15 Financial Highlights
1 Includes Stand by LCs, Bank Guarantees, Credit Securities to be Received and Securities (bonds, CRIs, eurobonds and fund shares)
R$ million
The main performance indicators were within expectations in the period.
3.3% 3.3%
1Q15 2Q15
ROAE
4.0%3.3%
1Q15 2Q15
NIM Evolution
-70 bps
10 10
1Q15 2Q15
Net Income
15/28Investor Relations | 2Q15 |
Net Interest Margin
NIM Evolution Main Impacts
NIM Breakdown
Lower transactions in FICC business;
No revenue generation in Treasury;
Smaller proportion of the loan portfolio over total
assets;
Prudential adjustments (Resolution 4277); and
Marginal increase in spreads.
4.0%3.3%
1Q15 2Q15
NIM Evolution
-70 bps
R$ million
2Q15 1Q15 2Q14 1H15 1H14
Financial Margin
Income from financial intermediation 80 54 96 134 205
Overhedge effect (10) 34 (3) 24 (6)
Income from financial intermediation ex overhedge 70 88 93 158 199
16/28Investor Relations | 2Q15 |
R$ million
2Q15 1Q15 2Q14 1H15 1H14
Operating expenses1 48 45 45 93 97
(-) Non-recurring expenses (4) (1) (1) (5) (5)
Recurring Operating Expenses (A) 44 43 43 87 92
Recurring Revenues2 (B) 98 110 116 208 238
Recurring Efficiency Ratio (A/B) 44.9% 39.1% 37.1% 41.8% 38.7%
1 Other administrative expenses + tax expenses + personnel expenses2 Gross Income from financial intermediation - provision for loan losses + fee income + overhedge effect - hedge impact - prudential adjustment according to Resolution 4277.
22 23 2220
1817
37.1% 39.1%44.9%
- 1 0 0 . 0 %
- 8 0 . 0 %
- 6 0 . 0 %
- 4 0 . 0 %
- 2 0 . 0 %
0 . 0 %
2 0 . 0 %
4 0 . 0 %
6 0 . 0 %
0
5
1 0
1 5
2 0
2 5
3 0
3 5
4 0
4 5
5 0
2Q14 1Q15 2Q15
46 4446
35
38.7% 41.8%
- 1 0 0 . 0 %
- 8 0 . 0 %
- 6 0 . 0 %
- 4 0 . 0 %
- 2 0 . 0 %
0 . 0 %
2 0 . 0 %
4 0 . 0 %
6 0 . 0 %
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
1H14 1H15
Personnel Expenses
Other administrative expenses
Recurring Efficiency Ratio (%)
Expenses and Efficiency Ratio
Expenses
Efficiency Ratio
Rigorous cost control.
17/28Investor Relations | 2Q15 |
4,284 4,509 5,050 5,093 4,904 4,731 4,730 4,440
4,066
844 990
1,068 1,103 1,071 1,248 1,302
1,118 1,074
2,807
3,073
2,909 2,905 2,941 2,896 2,969
3,191
2,896
1,059
965
903 989 1,116 924 826 909
585
J un-13 Sept-13 Dec-13 Mar-14 J un-14 Sept-14 Dec-14 Mar-15 J un-15
Trade finance: 6.8%
Bank Guarantees: 33.6%
BNDES Onlending : 12.5%
Working Capital: 47.2%
9,657
8,6218,994
9,5379,930
10,090 10,0329,800 9,826
1 Includes Stand by LC2 Includes debentures, CRIs, Hedge Fund Shares, Eurobonds, Credit Portfolio acquired from financial institutions with recourse and Individuals
R$ million
Loan PortfolioThe portfolio amounted to R$8.6 billion...
-14.1
%
-10.7%
1
2
18/28Investor Relations | 2Q15 |
38.2%38%40%44%42%
6.7%7%5%5%5%
8.5%8%8%7%8%
9.7%10%10%7%8%
12.2%13%12%14%20%
12.3%12%13%12%9%
12.4%12%12%11%8%
Jun-15Mar-15Jun-14Jun-13Mar-12
Energy
Real Estate
Sugar and Ethanol
Agriculture
Engineering
Transportation and Logistics
Others
Energy12%
Real Estate12%
Sugar and Ethanol12%
Agriculture10%
Engineering9%
Transportation and Logistics
7%
Chemicals5%
Foreign Trade4%
Telecom4%
Specialized Services
4%
Metallurgy3%
Vehicles and Parts3%
Retail3%
Meatpacking2%
Construction Material
2% Food Industry1%
Other7%
Continuous Loan Portfolio Management
Sectors Rebalance
...with improved sector diversification.
The composition of the portfolio of the 20 largest clients changed by over 20% in the past twelve months;
The share of wallet of the 20 largest clients remained below 30%, in line with market peers.
19/28Investor Relations | 2Q15 |
Residential37%
Residential Lots35%
Warehouse15%
Mall7%
Commercial6%
Working Capital55%
Guarantees26%
BNDES Onlending
11%Trade
Finance9%
SP73%
MG19%
PR7%
GO2%
Working Capital77%
Guarantees23%
Main SectorsEnergy| Real Estate | Agriculture
Energy (12.4%) Real Estate (12.3%)
Sugar and Ethanol (12.2%)
Exposure by Product Exposure by Segment Exposure by Product Exposure by Segment
Exposure by Product Exposure by State
Guarantees74%
Working Capital17%
BNDES Onlending
9%
Wind Energy57%
UTE14%
Distributors10%
Transmitting9%
Equipment Supplier
6%
SHPs UHEs3%
20/28Investor Relations | 2Q15 |
MT31%
SP37%
PR10%
BA11%
MS3%
Others8%
Working Capital
84%
Guarantees12%
BNDES Onlending
4%
Working Capital
71%
BNDES Onlending
17%
Trade Finance
12%
Guarantees1%
Concession35% Transportation
32%
Industrial24%
Oil and Gas9%
Energy1%
Main SectorsAgriculture| Engineering
Agriculture (9.7%) Engineering (8.5%)
Exposure by Product Exposure by Product
Exposure by Segment
Exposure by State
21/28Investor Relations | 2Q15 |
5.0%
6.4% 6.6%
2.9%4.1% 4.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%
10.0%
Dec-14 Mar-15 J un-15
D-H Portfolio Coverage of Total Portfolio Coverage of D-H Overdue Portfolio
162% 161% 172%
50%
250%
450%
650%
1.1% 0.7%0.1%
0.7% 0.3% 0.3%1.1%
2.1% 1.8%
J un-13 Sep-13 Dec-13 Mar-14 J un-14 Sep-14 Dec-14 Mar-15 J un-15AA-A38.1%
B38.3%
C17.0%
D-E4.0%
F-H2.6%
Products Pledge39%
Receivables20%
Properties Pledge39%
Investments3%
June 30th, 2015
Contracts Overdue: total amount of the contracts overdue for more than 90 days / Loan Portfolio excluding Bank Guarantees and Stand-by Letters of Credit.
1D-H Portfolio: D-H Portfolio / Loan Portfolio Res. 2,6822Coverage of Total Portfolio: Provisions / Loan Portfolio Res. 2,682 3Coverage D-H Overdue Portfolio: Provisions / D-H Overdue Portfolio
Loan Portfolio Quality93.4% of loan portfolio classified between AA-C ratings.
Loan Portfolio Quality – Res. 2,682
Credit Coverage
Non Performing Loans > 90 days (Total Contract)
Collaterals
1 2 3
22/28Investor Relations | 2Q15 |
2,185 1,944 2,175 2,314 2,271 1,905 1,720
1,209 951
1,013 1,048
1,112 1,022 761
731 545
361 291
254 372 475 659
908 920
1,122
1,273 1,322
110 93 90
76 80 98
69
157 197
19 20 23
27 41 30
27 24 18
862 1,099 1,141
1,174 1,086 1,292
1,333
1,161 1,091
286 649
632 582 594 709
635
509 476
689
762
792 833
508 892 747
796 787
435
437
459 434
427 323
347
338 272
80
69
113 364
346 388
687
837
819 181
429
500
478
473 531 430
773
735 997
973
871
834 1,064
819 839 929
605
8,367
7,564
7,111
7,8948,383
8,7978,559 8,638 8,500
J un-13 Sept-13 Dec-13 Mar-14 J un-14 Sept-14 Dec-14 Mar-15 J un-15
Trade Finance: 8%
Private Placements: 9.7%
Multilateral Lines: 10.8%
International Capital Markets: 3.6%
Financial Letter : 10.4%
Local Capital Markets: 6.3%
Onlending: 14.4%
Demand Deposits: 0.2%
Interbank Time Deposits: 2.6%
High Net Worth Individual Time Deposits: 17.5%
Corporate Time Deposits: 3.8%
Institutional Time Deposits: 12.6%
R$ million
FundingDiversified sources of funding...
58%
48%
48%
44%
41%
39%
41%
35%
47%
Cash over Deposits
-9.6%
-11.6%
8.0%
23/28Investor Relations | 2Q15 |
7.9x 7.7x 7.8x 7.8x7.1x
5.6x 5.4x 5.4x 5.2x4.7x
-
1 . 0
2 . 0
3 . 0
4 . 0
5 . 0
6 . 0
7 . 0
8 . 0
9 . 0
1 0 . 0
J un-14 Sept-14 Dec-14 Mar-15 J un-15
Expanded loan Porfolio
Loan Portfolio excluding Bank Guarantees 83%
80% 80%77% 76%
Jun-14 Sept-14 Dec-14 Mar-15 Jun-15
47% 43% 41% 36% 37%
53% 57% 59% 64% 63%
J un-14 Sept-14 Dec-14 Mar-15 J un-15
Total Deposits Others
Leverage: Expanded Loan Portfolio / Shareholders’ Equity Expanded Loan Portfolio excluding Bank Guarantees and Stand-by Letters of Credit / Shareholders’ Equity
Credit over Funding ratio: Loan Portfolio excluding Bank Guarantees and Stand-by Letters ofCredit / Total Funding
Asset & Liability Management... keeping a positive gap between credit and funding.
Leverage
ALM – Average Maturity
Credit over Funding Ratio
Total Deposits over Total FundingR$ milliondays
8,638 8,367 7,5648,559 8,500
GAP: +116 days
488 472 498 514 501
410 398
371 362
385
J un-14 Sept-14 Dec-14 Mar-15 J un-15
Funding
Credit
24/28Investor Relations | 2Q15 |
14.7% 13.7%12.0% 12.2% 12.2% 12.4% 12.4% 12.2% 12.3%
2.3%2.2%
2.1% 1.5% 1.5% 1.4% 1.4% 0.8% 0.8%13.0% 13.1%
17.0%15.9%
14.1% 13.7% 13.7% 13.8% 13.9%
J un-13 Sept-13 Dec-13 Mar-14 J un-14 Sept-14 Dec-14 Mar-15 J un-15
Tier II Tier I
Minimum Regulatory Capital (11%)
Capital Adequacy Ratio (BIS), Basel III BIS ratio reached 13.1%
R$ Milion BIS Ratio (%)
Tier I 1,174 12.3%
Tier II 75 0.8%
Total 1,248 13.1%
Corporate Governance
26/28Investor Relations | 2Q15 |
Corporate GovernancePine is committed to best corporate governance practices…
One Independent Member and Two External Members on the Board of DirectorsMailson Ferreira da Nóbrega: Brazil’s Finance Minister from 1988 to 1990Gustavo Junqueira: Former Head of Pine Investimentos, Member of the Board of Directors at EZTEC, Financial Advisor at Arsenal Investimentos and CFO at Gradiente Eletrônica Harumi Susana Ueta Waldeck: Former CFO of Pine, with over 17 years of experience at the company. She brings the day-to-day experience to the Board.
São Paulo Stock Exchange (BM&FBOVESPA) Level 2 Corporate Governance
Audit and Compensation Committee reporting directly to the Board of Directors
100% tag along rights for all shareholders, including non-voting shares
Arbitration procedures for fast settlement of litigation cases
27/28Investor Relations | 2Q15 |
Social Investment and ResponsibilityFocus on the short, medium and long term.
Social Investment Recognition
Partnerships
Most Green Bank
Recognized by the International Finance Corporation (IFC), private agency programs of the World Bank as the most "green" bank as a result of its transactions under the Global Trade Finance Program (GTFP) and its onlending to companies focused on renewable energy and ethanol
Efficiency Energy
Recognition by World Bank for support in the Energy Efficiency sector.
Responsible Credit
“Lists of Exceptions”: the Bank does not finance projects or those organizations that damage the environment, are involved in illegal labor practices or produce, sell or use products, substances or activities considered prejudicial to society.
System of environmental monitoring, financed by the IADB and coordinated by FGV, and internally-produced sustainability reports for corporate loans
Protocolo Verde – “Green Protocol”, an agreement between FEBRABAN and the Ministry of the Environment to support development that does not compromise future generations.
Exhibition and sponsorship of Brazilian artists, for instance Paulo von
Poser and Miguel Rio Branco, in addition to sponsoring and supporting
films and documentaries such as Quebrando o Tabu (Fernando
Henrique Cardoso on the drug war), O Brasil deu certo, e agora?
(idealized by Mailson da Nóbrega), Além da Estrada (Charly Braun) and
others.
Sustainability Annual Report
Sixth consecutive year disclosing the Sustainability Report in the GRI standard. The 2014 report, with its high level of clarity, transparency and quality was recognized with the second place in the Abrasca Annual Report Award, considering its category of companies with net income to R$3 billion.
28/28Investor Relations | 2Q15 |
This report may contain forward-looking statements concerning the business prospects, projections of operating and financial results and growth outlook of PINE. These are merely projections and as such are based solely on management’s expectations regarding the future of the business. These statements depend substantially on market conditions, the performance of the sector and the Brazilian economy (political and economic changes, volatility in interest and exchange rates, technological changes, inflation, financial disintermediation, competitive pressures on products and prices and changes in tax legislation) and therefore are subject to change without prior notice.
Noberto N. Pinheiro Junior
CEO/IRO
João BritoCFO
Raquel Varela BastosHead of Investor Relations, Marketing & Press
Luiz MaximoInvestor Relations Specialist
Ana LopesInvestor Relations Analyst
Gabriel NettoInvestor Relations Analyst
Phone: (55 11) 3372-5343
Investor Relations