11/05/2013 - 3Q13 Earnings Conference Call

3Q13 Earnings Release Conference Call

November 05, 2013

Agenda

3Q13 Events and Highlights 3Q g g

3Q13 Financial Highlights 4

Product and Revenue Diversification 5

N t I t t M i 6Net Interest Margin 6

Expenses and Efficiency Ratio 7

Loan Portfolio 8

Continuous Loan Portfolio Management 9

Loan Portfolio Quality 10

FICC 11

PINE Investimentos 12

Funding 13

Asset & Liability Management 14Asset & Liability Management 14

Capital Adequacy Ratio (BIS) 15

PINE4 16

2/17Investor Relations | 3Q13 |

Recurring results.

3Q13 Events and Highlights

On September 13, Moody's upgraded PINE’s ratings. The Bank is now only one notch from Global Investment Gradeby the three international agencies: Moody’s, Fitch and S&P.

1

Positive revenue contributions from all business lines in 9M13: 63.3% from Corporate Credit, 29.2% from FICC,6.3% from PINE Investimentos, and 1.2% from Treasury.

2

Maintenance of the positive liquidity gap for over 3 years.

Liquid balance sheet, with cash position of R$1.3 billion, equivalent to 39% of time deposits.

3

4

PINE raised R$571.4 million through a FIDC structure, with a five-year term. PINE also concluded a syndicatedloan in the amount of US$100 million and a two-year term, at the end of September.

5

PINE moved up four positions and was ranked among the 12 largest players in derivative transactions for clientsand remained the second largest player in commodity derivatives, according to the ranking compiled by Cetip.

6

PINE is among the 15 largest banks offering credit to large corporates and the sixth Brazilian controlled privateowned bank, according to the Melhores e Maiores ranking compiled by Exame magazine.

Al di t E i PINE t 5 iti i th ki f l t b k b it d t d

7

8


Also according to Exame magazine, PINE went up 5 positions in the ranking of largest banks by equity and todayholds the thirtieth place, being the thirteenth among Brazilian controlled private owned banks.

8

3Q13 Financial HighlightsThe main performance indicators presented adequate performance in the period...

R$ million

Total Loan Portfolio1

+6.0%

Total Funding

+11.0%

Shareholders' Equity

+0.4%6.0%

8,994 9,537 7,111

7,894 1,259 1,264

Jun-13 Sept-13 Jun-13 Sept-13 Jun -13 Sept -13

Net Income ROAEFee Income

+2.6% +50 bps+10.0%

39 40 12.9% 13.4%30

33


1 Includes Stand-by Letters of Credit, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, CRIs, eurobonds and fund shares)2Q13 3Q13 2Q13 3Q132Q13 3Q13

Product and Revenue Diversification... with contributions from all business lines, fruit of the strategy of complete service to clients.

Revenue Mix

9M12 9M13

Corporate Credit 60.2%

Treasury 11.2%

Corporate Credit 63.3%

Treasury 1.2%

FICC 17.6%

FICC 29.2%

Penetration Ratio – Clients with more than one productClients with more than one product

PINE Investimentos

11.0%

PINE Investimentos

6.3%

More than 1 product 1 product

40% 37%47%

More than 1 product 1 product

2.9 2.83.0

60% 63%53%


Sept-11 Sept-12 Sept-13 Sept-11 Sept-12 Sept-13

Net Interest MarginNIM is within the guidance range.

NIM Evolution Impacts in the Period

+80 bps

Higher average balance of the loan portfolio

Marginal improvement of spreads across all business lines

5 7%Credit recoveries

4.9%5.7%

NIM Composition

2Q13 3Q13

R$ million

3Q13 2Q13 3Q12 9M13 9M12

Income from financial intermediation 108 83 112 292 368

Overhedge effect (1) 6 (0) 3 4

Income from financial intermediation desconsidering overhedge (A) 107 89 112 295 372

Provision for loan losses (34) (29) (24) (77) (65)

Income from financial intermediation after provision (B) 73 60 88 218 307


Expenses and Efficiency RatioRigorous management and control of expenses.

Expenses

35.7% 38.1% 35.7%40.0%

30

35

22 22 23

26

2124

-20.0%

0.0%

20.0%

20

25Personnel Expenses

Other administrative expenses

-80.0%

-60.0%

-40.0%

5

10

15p

Efficiency Ratio (%)

Efficiency Ratio

-100.0%03Q12 2Q13 3Q13

R$ million

3Q13 2Q13 3Q12 9M13 9M12

Operating expenses 1 51 47 53 147 149

(-) Non-recurring expenses 1 2 3 4 6 ( ) g p

Recurring Operating Expenses (A) 50 45 50 143 143

Revenues 2 (B) 140 118 140 387 462

Ratio (A/B) 35.7% 38.1% 35.7% 37.0% 31.0%1 Other administrative expenses + tax expenses + personnel expenses


2 Gross Income from financial intermediation - provision for loan losses + fee income + overhedge effect

Loan Portfolio1

The portfolio maintained its growth to reach R$9.5 billion in September...

R$ million

13 Individuals: 0.1% 8 994 9,537

3 073 1 154 781

832 1,059

965

102 81 65 47

36 26

18 13 Individuals: 0.1%

Trade finance: 10.1%

Bank Guarantees: 32 2%

7,065 7,426 7,642 7,444

7,948 8,405

8,994

6,875

884 821 800 853 826 844

990 1,534 1,687 1,684 1,599 1,699 2,114 2,501 2,807

3,073

756 782 1,021 1,154 942 124 102 Bank Guarantees: 32.2%

BNDES Onlending: 10.4%

3 550 3 717 3 935

251 322 367 670 683 787 670 549 561 881 883 884

821 800

Private Securities +

ki C i l 2% 3,329 3,289 3,389 3,332 3,274 3,377 3,550 3,717 3,935

Sept-11 Dec-11 Mar -12 Jun-12 Sept-12 Dec-12 Mar -13 Jun-13 Sept-13

Working Capital: 47.2%


1 Includes Stand-by Letters of Credit, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, CRIs, eurobonds and fund shares)

Continuous Loan Portfolio Management...with sector diversification...

Construction Material

Retail2% Meatpacking

2% Other6%

Sept -13

Financial Institutions

2%

Construction Material

2%

Other9%

Sept -12

Sugar and Ethanol14%

ConstructionVehicles and Parts

3%

Food Industry2%

Beverages and Tobacco

2%

2%6%

Sugar and Ethanol16%

B d

Food Industry3%

Telecom2%

Chemicals2%

Construction14%

l dTelecom

Chemicals4%

Foreign Trade4%

3%Construction

12%

Metallurgy4%

Vehicles and Parts4%

Beverages and Tobacco

3%

Electric and Renewable Energy

9%

Infrastructure9%

AgricultureTransportation and

LogisticsSpecialized Services

5%

Metallurgy5%

Telecom4% Electric and

Renewable Energy10%

Agriculture9%

InfrastructureTransportation and

Logistics6%

Foreign Trade6%

Specialized Services4%

4%

The portfolio of the 20 largest clients reshuffled by over 20%;

8%g5%

5%6%6%

20 largest clients continue to represent less than 30% of the total loan portfolio.


Loan Portfolio Quality... quality, collaterals, and adequate credit coverage.

September 30, 2013

Loan Portfolio Quality Non Performing Loans > 90 days

B 1.2% 1.2%

Contracts overdue

Installments overdue

B35.9%

0.8%

1.1%

0.7%

0.4%

0.6% 0.6% 0.6%

Contracts Overdue: total amount of the contracts overdue for more than 90 days / Loan Portfolioexcluding Bank Guarantees and Stand-by Letters of Credit.

AA-A50.6%

C7.3%

D-E3 7%

0.1%

Sept-12 Dec-12 Mar-13 Jun-13 Sept-13

Installents Overdue: total amount of installments overdue for more than 90 days / Loan Portfolioexcluding Bank Guarantees and Stand-by Letters of Credit.

Credit Coverage Collaterals

3.7%F-H

2.5%

3.5%3.3% 3.4% 3.4%

3.0%

Products Pledge

34%Investments

3%

Guarantees1%

Receivables


Credit Coverage: Provision / Loan Portfolio excluding Bank Guarantees and Stand-by Letters ofCredit.


ece vables24%

Properties Pledge

38%

FICCProven trackrecord: 2nd in commodity derivatives1.

September 30, 2013 R$ million

Client MtM Derivatives by Market Notional Value and MtM

Notional value

MtM

Stressed MtMCurrencies

73%

530

629

498

298 298

4 875 5 036 5 180 5 891 11 090

238 197 174 248

(195)

Commodities

Rates21%

Scenario on September 30:

Mark to Market, by Sector Portfolio Profile

4,875 5,036 5,180 5,891 11,090


Electric and Renewable Energy

Other2%

Commodities6%

Scenario on September, 30:

Duration: 119 days

Mark-to-Market : R$530 million

Pulp and Paper24%

Foreign Trade5%

Metallurgy4%

Infrastructure3%

Energy2%

2%

Stress Scenario (Dollar: +31% and Commodities Prices: -30%):

Stressed MtM: - R$195 million

Agriculture13%

M t ki

Food Industry9%

Transportationand Logistics

7%


1Source: Cetip Report, September 2013

Meatpacking11%

Construction11%

Sugar and Ethanol9%

PINE InvestimentosConsolidation, result of the focused effort through the years in the franchise.

Capital Markets: Structuring and Distribution of Fixed

Transactions

US$250,000,000R$800,000,000 R$50,000,000 US$400,000,000

Income Transactions.

Financial Advisory: Project & Structured Finance, M&A,

and hybrid capital transactions

Senior Notes DebenturesDebentures Senior Notes

and hybrid capital transactions.

Research: Macro, Commodities, and Corporate.

April, 2013

Bookrunner

January, 2013

Coordinator Coordinator

June, 2013

Co-Manager

September, 2013

R$ million

Volume of Underwriting Transactions RevenuesR$ million

1,689 52

880 24


9M12 9M13 9M12 9M13

FundingDiversified sources of funding...

R$ million

41% 41% 34% 38% 42%41% 50% 44% 39% Cash over Deposits

69 429

1,011 1 073

808 997

973

Trade Finance: 12.3%

Private Placements: 5.5%

M ltil t l Li 0 9%

6,258

7,111 6,575 6,443

6,972 6,804 7,062

6,589

7,894

934 938 890 903

266 312 314 593

640 901

796 975 1,411

237 246 233 295

260 409

402 435

437

310 353 276

234 156

152 78

80

69

86 250 125

118 180

173 171

181 757 686 771

1,011 1,073 752 Multilateral Lines: 0.9%

International Capital Markets: 5.5%

Local Capital Markets: 17.9%

1,253 1,196 1,186 1,228 1,177 1,174 972 1,013 1,048

228 250 281 223 213 146 126 119 113

165 106 161 194 176 121

110 110 93 66 112 31 33

33 30 126 19 20

924 934 938 890 840 903 870 862 1,099 Onlending: 13.9%

Demand Deposits: 0.2%

Interbank Time Deposits: 1.2%

1,965 2,130 2,128 2,153 2,056 2,245 2,186 2,320 2,203

High Net Worth Individual Time Deposits: 1.4%

Corporate Time Deposits: 13.3%


Sept-11 Dec-11 Mar-12 Jun-12 Sept-12 Dec-12 Mar-13 Jun-13 Sept-13Institutional Time Deposits: 27.9%

Asset & Liability Management... keeping a positive gap between credit and funding.

Leverage Credit over Funding Ratio

6 1x6.5x 6.7x

7.1x7.5x

83% 82%87% 85% 81%

6.1x

Sept-12 Dec-12 Mar-13 Jun-13 Sept-13 Sept-12 Dec-12 Mar-13 Jun-13 Sept-13

Total Deposits OthersR$ million

ALM – Average Maturity Total Deposits over Total Funding

Leverage: Total Loan Portfolio / Shareholders’ Equity Credit over Funding ratio: Loan Portfolio excluding Bank Guarantees and Stand-by Letters ofCredit / Total Funding

months

p p

46% 47% 47% 50% 56%

Total Deposits Others

7,894 7,111 6,589 7,062 6,804 16

17 17

15

18

16

54% 53% 53% 50% 44%

50% 56%14 13

14 14

Funding

Loan Portfolio


44%

Sept-12 Dec-12 Mar-13 Jun-13 Sept-13Sept-12 Dec-12 Mar-13 Jun-13 Sept-13

Capital Adequacy Ratio (BIS)BIS ratio reached 15.9%.

Tier I Tier II

Minimum Regulatory

4.5%4.2%

3 0% 2.1% 2.3%

19.6%18.5%

16.4% 15.9%17.0%

16.2%17.1% 17.0%

15.9%

Minimum Regulatory Capital (11%)

15 1% 14 3% 14 0% 15 0% 14 7%

3.1% 3.3%3.0% 2.8%

2.3%2.2%

15.1% 14.3% 13.3% 12.6% 14.0% 13.4% 15.0% 14.7% 13.7%

Sept-11 Dec-11 Mar-12 Jun-12 Sept-12 Dec-12 Mar-13 Jun-13 Sept-13

R$ million BIS Ratio (%)

Tier I 1,276 13.7 Tier II 200 2.2

Reference Equity 1,476 15.9%


PINE4Increased ADTV and yields above average

246

Volume (R$ million) and Number of Trades (quantity) – Daily Average

84 111 195 182

220 137

246

Hiring of Market Maker

Number of Trades

634 762

935 1,000 1,023 932 1,093

Volume

Apr/13 May/13 Jun/13 Jul/13 Aug/13 Sept/13 Oct/13

Multiples Dividend Yield

10.9%

PINE4 | As of September 30th

Price (R$) 10.00

P/BV 0 9

7.1%7.8%

8.5%

P/BV 0.9x

P/E(1) 7.2x


Dividend Yield: Average daily closing prices of the stocks in 3Q13 / Dividends and Interest on OwnCapital of the last twelve months

(1) Considers the market consensus for the 2013 net income; source: Bloomberg4Q12 1Q13 2Q13 3Q13

Investor Relations

Noberto N. Pinheiro Junior

CEO

Susana Waldeck Norberto Zaiet Junior

CFO/IRO COO

Raquel Varela

Head of Investor Relations

Alejandra Hidalgo

Investor Relations Manager

Luiz Máximo

Investor Relations Analyst

Ana Lopes

Investor Relations Analyst

Fone: +55 (11) 3372-5343

www.pine.com/ir

[email protected]


This report may contain forward-looking statements concerning the business prospects, projections of operating and financial results and growth outlook of PINE. These are merelyprojections and as such are based solely on management’s expectations regarding the future of the business. These statements depend substantially on market conditions, theperformance of the sector and the Brazilian economy (political and economic changes, volatility in interest and exchange rates, technological changes, inflation, financialdisintermediation, competitive pressures on products and prices and changes in tax legislation) and therefore are subject to change without prior notice..

11/05/2013 - 3Q13 Earnings Conference Call

Economy & Finance

Transcript of 11/05/2013 - 3Q13 Earnings Conference Call