EMIS Insight - Brazil Banking Sector Report

- 1 - Any redistribution of this information is strictly prohibited.

Copyright © 2014 EMIS, all rights reserved.

Produced by:

Any redistribution of this information is strictly prohibited.


Banking Sector Brazil

March 2014



Table of Contents

I. Overview

1. Sector Highlights

2. Key Indicators

3. Market Share Public vs. Private Banks

4. Evolution of Bank Institutions

5. Financial Performance

6. Forecast

7. Liquidity and Funding

8. Loan Portfolio Evolution

9. Credit Distribution

10. Non Performing Loans

11. Spread and Delinquency Evolution

12. Corporate Credits Key Indicators

13. Lending Rate/Corporate Credits

14. Credit to Individuals Key Indicators

15. Lending Rate/Individuals

16. Deposits

17. Bank Cards

18. Government Policy

II. Public Banks

1. Subsector Highlights

2. Public Banks’ Loan Portfolio

3. Profitability of Public Banks

4. Efficiency and Expenses

III. Private Banks

1. Subsector Highlights

2. Private Banks’ Loan Portfolio

3. Profitability of Private Banks

4. Financial Performance and Market Share

5. Efficiency and Expenses

IV. Main Players

1. BNDES

2. BNDES (cont’d)

3. Banco do Brasil

4. Banco do Brasil (cont’d)

5. Itaú Unibanco Holding S.A.

6. Itaú Unibanco Holding S.A. (cont’d)

7. Caixa Econômica Federal

8. Caixa Econômica Federal (cont’d)

9. Banco Bradesco S.A.

10. Banco Bradesco S.A. (cont’d)

11. Banco Bradesco S.A. (cont’d)

V. Appendix

1. Abbreviations



I. Sector Overview



Sector Highlights

The Brazilian government has lately been accused of lack of control over public spending due to the sharp increase in lending by state banks,

funded predominantly by public money. Analysts note that if public banks reduce their credit portfolios they will not need contributions from the

National Treasury, which will improve control over public spending. As a consequence of uncontrolled lending by state-run financial institutions,

Standard & Poor's has cut Brazil's credit rating to BBB-, citing fiscal deficit, fragile economic growth and the galloping rise in public banks' loan

portfolio as the main reasons for the downgrade.

In 2013, Brazil participated in the Regulatory Consistency Assessment Program (RCAP), an assessment program of the Basel Committee on

Banking Supervision (BCBS), that evaluates the degree of adherence of prudential regulation of a country to the minimum standards approved by

BCBS and endorsed by the Group of 20 leading economies. Brazil received the highest score for capital regulation of the financial system. Out of

the 14 components evaluated, 11 were considered as "Compliant". The other components of the evaluation were considered "Largely Compliant”.

The RCAP, in conjunction with the Financial Sector Assessment Program (FSAP) conducted in 2012 by the World Bank and the IMF, confirmed that

the Brazilian financial system was sound and resilient.

The Brazilian banking system is highly consolidated as a result of significant M&A activity. The six leading banks in the country account for 80% of

the overall bank assets. Federal public banks (Banco do Brazil and Caixa Economica Federal) have maintained a solid position among the four

largest banks in terms of assets over the past years, despite the emergence of large private conglomerates. The largest private banks, Bradesco

and Itaú, have made considerable gains through an accelerated growth and the acquisition of foreign and domestic institutions (BBV by Bradesco,

Bank Boston by Itaú).

Overview

Financial Stability

Credit Rating



Source:

Key Indicators

Key Indicators

Bacen, Itau Unibanco, Bradesco

2009 2010 2011 2012 2013

GDP per Capita (USD) 8,469 11,068 12,689 11,611 11,210

GDP (%) -0.3% 7.5% 2.7% 1.0% 2.3%

Credit (% of GDP) 43.7% 45.2% 49.0% 53.8% 56.5%

Total Free Credit (BRL bn) 905 1,058 1,232 1,399 1,504

Credit Growth (%) 15.1% 20.6% 18.8% 16.4% 14.7%

Mortgage Evolution/GDP (%) 3.1% 4.1% 5.3% 6.8% 8.2%

Delinquency Rate > 90 days (%) 5.4% 4.4% 5.6% 5.8% 4.9%

Long Term Interest Rate (TJLP) 6.0% 6.0% 6.0% 5.5% 5.0%

Average SELIC (%) 9.9% 10.0% 11.7% 8.5% 8.3%

Consumer Price Index % (IPCA) 4.3% 5.9% 6.5% 5.8% 5.9%



Source:

Market Share Public vs. Private Banks

Market Share (%)

Public and Private Banks Performance Dec 2013 (%)

Bank Agencies by Origin of Capital (%)

Bacen, Itau Unibanco

42.0% 40.1% 41.9% 43.4%

40.4% 42.9% 41.4% 40.1%

17.6% 17.0% 16.6% 16.4%

Dec 2010 Dec 2011 Dec 2012 Dec 2013

Public Banks National Private Banks Foreign Banks

Domestic Private Banks

33.2%

Foreign Private Banks

15.5%

State Owned Banks 51.2%

39.7% 51.7% 46.2%

60.3% 48.3% 53.8%

Total Assets Deposits Credit Operations

Public Private



Source:

Evolution of Bank Institutions

Distribution of Bank Agencies by Region Dec 2013

Bank Concentration 2013 (%)

Evolution of Bank Institutions

Bacen, Falke Information

Type of

Institution Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

Multiple Banks 139 137 139 137 132

Domestic without

foreign

participation

86 72 69 66 62

Domestic with

foreign

participation

0 12 16 15 15

Under foreign

control 53 53 54 56 55

Commercial

Banks 18 19 20 22 22

Domestic without

foreign

participation

11 12 11 12 11

Domestic with

foreign

participation

- - 1 1 1

Under foreign

control 1 1 2 3 4

Foreign Banks

full branches 6 6 6 6 6

Northeast 3 609 North 1,106

Central West 1 820

Southeast 12 024

South 4,359

87.5% 87.1%

12.5% 12.9%

Total Assets Deposits

10 Major Banks Others



Source:

Financial Performance

Evolution of Banks' Net Profit* (BRL bn) Top 10 Banks in Terms of Revenue 2013 (USD bn)

Bacen, Falke Information, * - Accumulated in the last 12 months ended

41.

6

38.

3

37.

0

43.

2

46.

0

48.

6

52.

2

53.

9

55.

5

58.

3

61.

2

59.

7

58.

9

56.

7

53.

7

54.

9

54.

7 5

9.6

61.

1

60.

6

Mar

200

9

Jun

2009

Sep

200

9

Dec

200

9

Mar

201

0

Jun

2010

Sep

201

0

Dec

201

0

Mar

201

1

Jun

2011

Sep

201

1

Dec

201

1

Mar

201

2

Jun

2012

Sep

201

2

Dec

201

2

Mar

201

3

Jun

2013

Sep

201

3

Dec

201

3

Net Profit Net Revenue ROA (%)

Banco do Brasil 8.9 50.6 1.5%

Itau Unibanco 7 41.8 1.4%

Caixa Econômica Federal 3.7 34.3 0.9%

Bradesco 5.7 42.2 1.5%

Santander 2.7 25.2 1.2%

HSBC 0.5 7.3 0.6%

Safra 0.6 5.1 0.9%

BTG Pactual 1.3 1.7 2.2%

Votorantim -0.4 6.4 -0.7%

Citibank 0.2 2.9 0.8%



Source:

Financial Performance cont’d

Revenues from Services & Operating Income* (BRL bn)

Annual Return on Equity * (%)

Bacen, * - Accumulated in the last 12 months ended

20.47 21.37 21.83 21.85 22.05 22.04 22.56 22.84

12.97 13.82 14.69 15.40 15.95 16.53 17.17 17.63

49.3 49.3 49.9 51.3 52.7 54.4 55.7 56.1

223.94 226.18 225.10 228.34 230.03 232.01 238.30 233.28

Apr2012

Jul2012

Oct2012

Jan2013

Apr2013

Jul2013

Oct2013

Bank Tariffs Revenues (Indiv. & Corp.) Credit Cards Revenues Other Services Operating profit (before administrative expenses)

-5

0

5

10

15

20

Jan 2010 Jul 2010 Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013 Dec 2013

Annual Roe Equity Growth Rate Growth Rate of Gross Income from Loans



Source:

Sector Forecast

Financial Services Output, value-added index

Interest Rate (% yoy)

Credit Evolution (%)

Comments

Oxford Economics, Parallaxis Economic Research

Crediting is expected to witness a moderate expansion in Brazil in the

coming years due to a slower pace of economic growth. The lending

will be pushed up mainly by real estate financing. Considering the

expansion of credit supply, the diversification in the activities of

national banks and banks' policies to focus on the main, more secure,

credit lines, the expectation is that the industry will continue to

maintain good levels of growth and profitability. In addition, there are

some important events for the country's economy in the near future

such as the start of exploration of the pre-salt area of Brazil, the FIFA

World Cup 2014 and the Olympics in 2016, that are expected to

stimulate employment and personal income levels. These factors will

contribute to the positive development of local banking services.

190.67 201.57

212.65 223.63

234.75

2014 2015 2016 2017 2018

13.8% 10.2%

17.1%

61.5% 63.9% 69.5%

2014 2015 2016

Credit Growth Credit as % of GDP

10.8% 12.5%

10.5%

3.7% 6.0% 6.0%

1.0%

7.6% 7.2%

2014 2015 2016

Selic rate target - end of year

Real Interest Rate (IPCA deflated)

Interest Rate over Exchange Rate



Comments

Source:

Liquidity and Funding

Brazil's banking system is characterised by low liquidity risk, despite its small increase in the second half of 2013. According to the Central Bank, the

liquidity index of the system is 1.52, down from 1.63, due to the decrease in net assets, which coincided with an increase of stressed cash flow. The latter's

growth is explained by the rising trend of the Selic rate in last few months.

Other factors which contributed to the slight rise in liquidity risk were the growth of demand deposits and repurchase agreements, which increased the

banks' liabilities. In 2013, Brazilian banks joined the REFIS, a government tax debt installment programme, which was followed by capital disbursement

and drop in assets and also helped to increase the liquidity risk.

Liquidity (BRL bn) Profile of Attracted Funds (BRL bn)

Bacen

524.1 532.4 574.0

622.0 625.9 587.8

543.3 541.7 529.3

321.7 325.4 343.4 323.5 335.7 323.9 339.6 323.1 347.3

Jan

2012

Apr

201

2

Jul 2

012

Oct

201

2

Jan

2013

Apr

201

3

Jul 2

013

Oct

201

3

Dec

201

3Net Assets Stressed Cash Flow

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jun2009

Dec2009

Jun2010

Dec2010

Jun2011

Dec2011

Jun2012

Dec2012

Jun2013

Dec2013

Others

IHCD + LFS

LCA + LCI + LF + DPGE

Commitments (withprivate securities)

Loans andTransfers

Deposits



Comments

Source:

Loan Portfolio Evolution

In 2013, the Brazilian banks' loan portfolio saw an increase of 14.6% compared to 2012. The Central Banks expects that in 2014 crediting activity will

register a more moderate expansion of about 13%. Notably, the credit growth rate started to slow down in the second half of last year and caused a

negative effect on the profitability of the system. Individual real estate financing is expected to grow by 15% in 2014 to BRL 126bn. Although this rise is

higher than the forecast for the total loan portfolio, it is less than half of the 32% growth in 2013. Last year's results were due to a 41% increase in

individual financing. As of November 2013, mortgage lending accounted for 8.1% of the GDP.

Outstanding Loans by Sector (BRL mn) Annual Growth of the Loan Portfolio (BRL bn)

CEIC, Bacen, Abecip

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Jan 2011 Jan 2012 Jan 2013 Jan 2014

Public Sector Industry Real Estate

Rural Commerce Households

Other Services

0

1,000

2,000

3,000

4,000

5,000

6,000

Dec2009

Jun2010

Dec2010

Jun2011

Dec2011

Jun2012

Dec2012

Jun2013

Dec2013

Nonearmarked Earmarked Total



Source:

Credit Distribution

Total Credit Distribution (March 2013)

Non-earmarked Credit Distribution (March 2013)

Loans as % of GDP

CEIC, Bacen

24.5

%

24.8

%

26.9

%

29.4

%

30.5

%

19.4

%

20.6

%

22.2

%

24.5

%

26.0

%

43.9

%

45.4

%

49.1

% 53

.9%

56.5

%

Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013

Corporate Loans as % of GDP Households Loans as % of GDP

Loans: % of GDP

Nonearmarked Credit 58%

BNDES 20%

Agricultural 6%

Housing 13%

Others 3%

Individuals 50%

Corporate Entities 50%



Source:

Non Performing Loans

Evolution of Non Performing Loans (%)

NPL per Financial Institution (%)

CEIC

2.1

2.2

2.2

2.3

2.2

2.2

2.2

2.3

2.2 2.4

2.3

2.2

2.2

2.2

2.2

2.3

2.3

2.1

2 2 2 2 1.9

1.8

1.8

5.9

5.9

5.8

5.9

6.0

5.9

5.9

5.9

5.9

5.8

5.7

5.6

5.5

5.4

5.4

5.3

5.3

5.0

5.0

4.8

4.8

4.6

4.5

4.4

4.4

Jan2012

Feb2012

Mar2012

Apr2012

May2012

Jun2012

Jul2012

Aug2012

Sep2012

Oct2012

Nov2012

Dec2012

Jan2013

Feb2013

Mar2013

Apr2013

May2013

Jun2013

Jul2013

Aug2013

Sep2013

Oct2013

Nov2013

Dec2013

Jan2014

Corporate Entities Households

3.8 3.8 3.8 3.9 3.9 3.8 3.8 3.9 3.8 3.9 3.8 3.7 3.7 3.6 3.6 3.6 3.6 3.4 3.3 3.2 3.3 3.2 3.1 3.0 3.0

1.9 1.9 1.9 2.0 1.9 1.8 1.8 1.9 1.9 2.0 1.9 1.8 1.8 1.9 1.9 2.0 2.0 1.9 1.9 1.9 2.0 1.9 1.9 1.8 1.8

5.2 5.4 5.3 5.4 5.6 5.6 5.6 5.6 5.5 5.6 5.5 5.3 5.3 5.2 5.0 5.0 5.0 4.7 4.7 4.6 4.6 4.5 4.3 4.3 4.3 5.2 5.3 5.2 5.2 5.2 5.2 5.3 5.5 5.4 5.7 5.5 5.6 5.8 5.7 5.6 5.5 5.5 5.2 5.1 4.9 4.6 4.3 4.3 4.1 4.2

Jan2012

Feb2012

Mar2012

Apr2012

May2012

Jun2012

Jul2012

Aug2012

Sep2012

Oct2012

Nov2012

Dec2012

Jan2013

Feb2013

Mar2013

Apr2013

May2013

Jun2013

Jul2013

Aug2013

Sep2013

Oct2013

Nov2013

Dec2013

Jan2014

NPL NPL Public Financial Institutions NPL: National Private Financial Institutions NPL: Foreign Financial Institutions



Source:

Spread and Delinquency Evolution

Overall Spread and Delinquency (%)

Individual Spread and Delinquency (%)

Corporate Spread and Delinquency (%)

Comments

Itau Unibanco

The overall spread of the Brazilian economy remains very high

compared to global averages. In Argentina, Chile, Mexico, South

Africa, China, Russia, for example, spreads lie between 3 and 4

percentage points per year, compared to 11.1 pp in Brazil.

Individual real estate financing has the lowest delinquency rate of the

overall banking system (1.8%). Overdraft has the highest delinquency

rate of 8.1%. In terms of corporate loans, the crediting of SMEs is

characterised by higher delinquency rate than the loans to large

corporations. In 2013, the corporate non-performing loans grew by

2.5% in comparison to 2012.

3.9% 3.9% 3.7% 3.6% 3.3% 3.0%

9.0% 7.5% 7.3% 8.0%

9.0% 10.0%

14.8%

12.7% 11.6% 11.7% 11.3%

11.1%

Feb2012

Apr2012

Jun2012

Aug2012

Oct2012

Dec2012

Feb2013

Apr2013

Jun2013

Aug2013

Oct2013

Dec2013

NPL 90 days SELIC Total Spread

10.3% 10.0%

8.3% 7.5% 7.0%

7.6% 6.7% 7.1% 7.2% 7.1% 7.1% 7.0%

2.2% 2.3% 2.2% 2.3% 2.4% 2.2% 2.1% 2.0% 2.0% 2.0% 1.9% 1.8%

Feb2012

Apr2012

Jun2012

Aug2012

Oct2012

Dec2012

Feb2013

Apr2013

Jun2013

Aug2013

Oct2013

Dec2013

Corporate Spread NPL 90 days

21.0% 22.5%

21.1% 18.7% 18.6% 17.7% 17.9% 17.3% 16.3% 16.6% 17.0% 16.4%

5.7% 5.9% 5.9% 5.8% 5.6% 5.4% 5.0% 5.3% 4.8% 4.6% 4.5% 4.4%

Feb2012

Apr2012

Jun2012

Aug2012

Oct2012

Dec2012

Feb2013

Apr2013

Jun2013

Aug2013

Oct2013

Dec2013

Individual Spread NPL 90 days



Source:

Corporate Credits Key Indicators

Delinquency of Corporate Loans (%)

Comments

Distribution of Lending for Corporate Entities (%)

Bacen

28.3%

7.9%

19.5%

15.0%

3.8%

3.3%

Nonearmarked2012

Earmarked 2012

Working Capital Foreign Trade BNDES direct

BNDES indirect Rural Real Estate Financing

26.5%

8.3%

19.2%

16.0%

4.6%

3.7%

Nonearmarked 2013 Earmarked 2013

0

2

4

6

8

Dec2012

Mar2013

Jun2013

Sep2013

Dec2013

Delinqunecy SMEs Delinquency Large Corp.

Average Provision/SMEs Average Provision/Large Corp.

In 2013, corporate lending accounted for 63.1% of the overall companies

financing, compared to 66% in 2012. In December 2013, the corporate

credit portfolio reached BRL 1.46 trillion, up by 13.3% from the end of

2012. Rural credit and real estate financing increased the most during

2013 (by 37.6% and 25.2% respectively.) Despite government intentions

to decrease the share of public lending, the BNDES financing continued

to receive the highest share in earmarked credit. Free loans to

corporations reached BRL 763.2bn in 2013, up by 8% from 2012. The

moderate expansion is mainly explained by the slowdown in working

capital credit, which represents more than half of this portfolio and grew

by only 5.9% during the year.



Source:

Lending Rate/Corporate Credits

Average Lending Rate for Corporate Entities, Earmarked (% pa)

Average Lending Rate for Corporate Entities, Nonearmarked (% pa)

CEIC

7.7 8.1

8.1

7.8 8.0 8.0 9.0

8.8 9.0

9.2

9.2 9.9 9.8

10.0 10.0 10.3 9.8 10.1 10.1 10.8 10.2 10.3

11.4 10.8 10.7 11.1

9.0 8.2 7.9

8.0 8.1 8.6 8.9 10.0

9.0 9.9

8.8 9.7

13.0

7.3 7.3 7.3 6.7 6.4 6.9 6.6 6.6 6.7 6.6 6.8 6.8 7.0

6.6 5.5

6.5 5.6 5.8 6.0 5.6 5.6

6.4 6.0 5.8 6.0 5.8

Jan 2013 Feb 2013 Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 Sep 2013 Oct 2013 Nov 2013 Dec 2013 Jan 2014

Rural Credit Real Estate Financing BNDES Funds: Working Capital BNDES Funds: Fixed Capital Investment BNDES Funds: Agroindustry

16.5 16.2 15.7 16.4 15.8 17.3 18.0 18.9 19.2 18.7 19.8 19.9 21.3

36.7 36.7 36.8 37.3 36.8 36.5 37.3 37.5 37.7 38.0 37.5 37.2 38.8

15.7 15.5 16.0 16.2 16.2 16.4 16.3 17.0

17.3 17.5 17.3 17.3

18.3

7.8 9.3 9.5 10.1 11.6 11.8 11.0 11.8 9.6 11.4 12.5 12.3 13.4

10.7 9.6 10.7 12.3 10.1

11.6 11.9 11.9 12.4 13.2 13.2 13.8 13.8

Jan 2013 Feb 2013 Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 Sep 2013 Oct 2013 Nov 2013 Dec 2013 Jan 2014

Working Capital Guaranteed Overdraft Accounts Vehicles Financing Imports Financing Exports Financing



Source:

Credit to Individuals Key Indicators

Delinquency of Individual Credits by Modality (%)

Comments

Distribution of Lending to Individuals (%)

Bacen

13.4% 16.9%

20.6% 23.7% 27.3%

17.1% 17.6%

17.3% 17.6%

17.7%

25.4% 22.2%

20.9% 19.0%

16.7%

9.3% 7.9% 7.9%

8.4% 9.2%

8.6% 9.1% 8.8%

8.6% 8.7%

16.0% 15.7% 15.8% 15.3%

14.0%

10.1% 10.7% 8.7% 7.5% 6.4%


Real Estate Payroll Vehicles Rural No Interest Card High Risk Others

0

2

4

6

8

10

Mar 2011Jun 2011Sep 2011Dec 2011Mar 2012Jun 2012Sep 2012Dec 2012Mar 2013Jun 2013Sep 2013Dec 2013

Free Credit Assignment PayrollVehicles RuralReal Estate

Domestic credit to individuals increased by 16.3% in 2013 compared to

2012 and reached BRL 1.25 trillion in December 2013.

Mortgage loans had the highest share in individual lending, followed by

rural credits and payroll.

Having in mind that mortgage loans are characterised by high security,

their highest share in the household credit portfolio explains the fall of

delinquency rates in the last months of 2013.

Rural credit to individuals increased by 27.2% in 2013. This rise was

driven by the growing needs of the fast-developing agricultural sector in

Brazil as well as by the increase in rural savings deposits and the

demand deposits to be applied for agriculture financing.



Source:

Lending Rate/Individuals

Average Lending Rate for Individuals, Earmarked (% pa)

Average Lending Rate for Individuals, Non-earmarked (% pa)

CEIC

5.4

5.9 5.5 5.1 4.5

4.9 4.9

4.8 4.5

10.0 9.0 8.1

8.1 8.0 7.9 8.0 8.7 9.6 7.8 7.9 7.1 6.3

4.2 4.1 4.5

4.7 4.6

5.9 5.9 6.0 4.9

3.8 3.7 4.0 3.5 3.8

14.8 15.3 14.3 12.2 11.9 11.9

9.6 9.2 9.3

Jan2012

Apr2012

Jul2012

Oct2012

Jan2013

Apr2013

Jul2013

Oct2013

Jan2014

Rural Credit Real Estate Financing BNDES Funds: Fixed Capital Investment BNDES Funds: Agroindustry Microcredit

169.5 163.2

144.2 140.0 138.5 136.3 138.9 146.4 154.0

44.8 41.4 38.6 37.8 37.3 36.8 39.8 42.2 43.0

25.5 24.8 20.7 20.5 20.5 19.9 20.3 20.8 22.7

75.4 72.0 66.8 69.0 70.6 68.3 67.5 71.2 74.1

Jan2012

Apr2012

Jul2012

Oct2012

Jan2013

Apr2013

Jul2013

Oct2013

Jan2014

Overdraft Personal Credit Vehicles Financing Other Goods Financing



Source:

Deposits

Average Monthly Saving Deposits by Region (BRL bn)

Saving Deposits (BRL mn)

Saving Deposits Rate (% per month)

CEIC, * - by June 2013

381,

241

382,

643

384,

897

385,

375

386,

152

388,

728

397,

085

401,

764

408,

442

411,

878

414,

169

420,

009

422,

399

424,

333

428,

998

433,

321

441,

722

449,

041

459,

442

465,

135

473,

262

478,

665

484,

922

496,

302

500,

836

505,

603

513,

829

518,

726

526,

649

538,

446

550,

217

557,

481

566,

883

574,

251

583,

729

597,

943

602,

795

Jan 2011 Jan 2012 Jan 2013 Jan 2014

9.7

11.2

13.1

14.9

46.5

54.1

62.8

71.3

207.

1

236.

4

268.

4

304.

9

63

71.4

82.9

94.4

20.4

23.8

27.6

31.9

2010 2011 2012 2013*

North Northeast Southeast South Central West

0.59 0.61

0.52 0.50 0.51 0.50 0.50 0.50

0.52

0.50

0.59

0.52

0.55

0.61

Jan 2012 Jan 2013 Jan 2014

Savings Deposits Rate



Source:

Bank Cards

Number Of Cards (mn)

Despite the overall slowdown of Brazilian economy, the

bank cards are expanding both in terms of number of

cards issued and terminals installed as well as in

transactions value.

Bank cards are becoming more popular as payment

method compared to cash and cheques.

Credit cards are expanding their share among corporate

customers as well. Notably, only in February 2014,

Brazilian companies spent BRL 5.95bn through credit

cards, an increase of 2.6% compared to the same period

of 2013. Almost 99% of the total amount was accumulated

by payments from micro and small companies. The

increase of the share of credit cards for corporate entities

was driven most by the BNDES card and its low interest

rates. The card offers a pre-approved revolving credit line

for small business owners for up to BRL 1mn and is

offered by the following banks: Banco do Brasil, Caixa

Economica Federal, Banrisul, Bradesco, BRDE, Itaú and

Sicoob. 41% of all BNDES disbursements in 2013 were

dedicated to this type of financing.

The main card issuers in 2013 were domestic banks

Banco Bradesco, Banco do Brasil, and Caixa Econômica

Federal. Itau Unibanco is expected to become a leader on

the Brazilian credit cards market after it received

regulatory approval for its acquisition of Credicard at the

end of 2013.

Number of ATMs (thou)

Abecs, Falke Information

136 153 173 196 222

233 249 266 285 305 196

225 247

270 292 565

627 686

751 819

2009 2010 2011 2012 2013

Credit Cards Debit Cards Private Label

41.5 45

48 51.8

55.7

2009 2010 2011 2012 2013



Source:

Bank Cards (cont'd)

Number of Transactions (mn)

Transactions by Type of Used Credit/Individuals (BRL bn)

Value of Transaction (BRL bn)

Card Spending by Region 2Q 2013 (%)

Abecs

15%

3%

62%

12% 7%

11%

4%

61%

15% 9%

North Northeast Southeast South Central West

Credit Cards Debit Cards

54.1 70.9 81.0 92.4

108.6 19.6

22.3 24.1

24.3

25.5

6.1

6.9 8.9

9.8

10.6


Full Payment (no interest) Revolving Credit Installment Credit

2,684 3,150

3,624

4,041 4,509

2,430 2,905

3,522

4,109

4,783

2009 2010 2011 2012 2013


271 337 411 480 553 638 130 161

203 245

300 362

401 498

614 725

853

1,000

2009 2010 2011 2012 2013 2014f




Source:

Government Policy

SCR

The Credit Information System (SCR) of the Brazilian Central Bank is an instrument for registration and information about the loans,

sureties, guarantees and credit limits granted by financial institutions to individuals and corporations in the country. It was established

by the National Monetary Council (CMN) and is administered by the Central Bank, which has to store the information, regulate the

correction process and update the information delivered by the participating financial institutions. This is the main tool for bank

supervision and monitoring of the loan portfolios of the financial institutions.

Currently, the financial institutions are obliged to declare all customer operations with full liability equal to or greater than BRL 1,000,

and values related to sureties and guarantees provided by financial institutions to their customers. The legal base of the system is the

Complementary Law 105/01 and Resolution 3,658 of 17/12/2008.

The Credit Information System is not a restrictive registry, as it contains both positive and negative information. To be in the system is

not a negative fact in itself and does not prevent the client to request a credit, and may also contribute positively in the institution's

decision to grant a credit.

The system is regulated by the Consumer Protection Code and contain records for up to five years.

SELIC

The Sistema Especial de Liquidação e de Custódia (Special Clearance and Escrow System) is an index used for the calculation of

interest rates in Brazil. It is also a reference for the monetary policy of the country. There are even several investments that use the

index directly in the calculation of income.

The overnight rate of the Selic, expressed on an annual basis, is the weighted average rate for the volume of financing operations for a

day, backed by federal government bonds. The Selic rate is set by the Monetary Policy Committee (Copom), a committee formed by

the eight members of the board of the Central Bank of Brazil and led by its President.

In the beginning of 2012, in an attempt to reduce the interest rates in Brazil and to stimulate the stagnant economy, the Brazilian

government started to gradually decrease the Selic index. It reached its lowest level ever in October 2012 at 7.25%, and was kept at

that level until April 2013. Thus, the banks' interest rates also fell although the effect on the private banks rates was limited.

However, since April 2013, the Copom is gradually increasing the Selic rate, which currently stands at 11%, in accordance with

government's policy to suppress inflation. Analysts expect that this will be the last increase of Selic, as there are rising concerns by

investors that the government is abusing the monetary policy to keep prices in the country on hold.

Bacen



II. Public Banks



Subsector Highlights

Overview

In the last few years, crediting by public banks was the main instrument used by the Brazilian government to stimulate the local

industry and households and avoid a sharper slowdown of the economy.

The loan portfolio of public banks in the country is double that of the private banks. State-owned banks in Brazil operate in

segments of more credits like consumer credit, vehicle financing and credit to small businesses, which are avoided by private

banks in an attempt to prevent a rise in their delinquency rates.

Recently, the government has urged the three main public banks to decrease their loan portfolios in order to stimulate the

competition from private banks. The assessment is that public banks should prioritise the credit lines of little interest to private

players – the individuals real estate financing (Caixa Economica Federal), agribusiness (Banco do Brasil) and heavy

infrastructure (BNDES). According to the government's strategy, the Caixa and BNDES have to limit their financing of large

corporations.

Market Shares

In 2013, more than 50% of the credit stock in Brazil was offered by public banks. The overall growth of the credit market during

the year was 14%, but the increase in lending by private banks was much lower – around 6%.

Notably, Banco do Brasil alone accounted for 21% of the overall credit market in Brazil. The expectations are that the bank will

focus predominantly on credits to companies in the infrastructure and agriculture businesses, sectors in which private banks

are less interested in.

At the end of 2013, BNDES announced that it will decrease the stimuli to the Brazilian economy due to the global economical

recovery. Since 2009, BNDES has extended loans for about BRL 300bn.



Source:

Public Banks Loan Portfolio

Annual Growth Rate of Public Banks Loans (%)


Loans by Type (BRL bn)

Bacen

210

.5

85.

0

89.

4

15.

3

74.

4

150

.0

76.

3

325

.8

89.

0

282

.4

112

.8

111

.0

19.

1

89.

8

177

.4

95.

3

376

.9

123

.3

Dec 2012 Dec 2013

39.2 40.3

32.2

24.8 21.1 19.8

23.6 27.7 28.4 28.6

22.6

Jan2009

Jul2009

Jan2010

Jul2010

Jan2011

Jul2011

Jan2012

Jul2012

Jan2013

Jul2013

Dec2013

2.83% 3.03%

0.14% 0.13%

Dec 2012 Dec 2013

SMEs Large



Source:

Profitability of Public Banks

Profitability of the Loan Portfolio and Funding Costs* (%) Margin of Provisions (%)


9.2%

8.4%

7.3%

7.0%

5.6%

5.6%

6.1%

4.9%

4.9%

3.6%


Gross Margin Net Margin

16.7

%

16.1

%

16.0

%

14.0

%

12.4

%

7.5%

7.7%

8.7%

7.0%

6.8%


Gross Profitability of the Loan Portfolio Funding Cost



Source:

Efficiency and Expenses

Efficiency Index Adjusted to Risk* (%)

Personnel and Administrative Expenses* (BRL bn)


32.9

2

34.0

3

35.0

4

36.0

4

37.8

8

38.8

7

40.0

0

40.4

7

22.3

3

23.1

7

24.2

4

24.3

0

24.2

6

24.2

1

24.2

6

25.3

0

77.8

2

79.5

2

80.4

6

81.5

9

82.8

5

81.7

9

84.0

2

83.9

4

Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 Dec 2013

Personnel Other Administrative Expenses Operating Income

73.07

69.19

67.34 66.79

69.37 68.94 68.19 68.59 69.24 70.42

71.72 72.93 73.36 73.73

76.78 76.00

78.36

Dec 2009 Mar 2010 Jun 2010 Sep 2010 Dec 2010 Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013



III. Private Banks



Subsector Highlights

Overview

In 2013, private banks in Brazil focused on offering more secure credit lines, in order to avoid growth of their non-performing

loans.

The drop in delinquency rates has helped the banks to increase their profits despite the lower income from safer loans. During

the year, private banks concentrated their operations predominantly on household mortgage financing, payroll deductable

loans, and earmarked credits to companies.

In the real estate financing segment, the growth of private banks (31.5%) was very close to the increase of this type of credit

from public banks (34.2%).

Market Share

There are signs that the private banks in Brazil are preparing to return on the credit market and to compete against the public

banks. Analysts note that a signal for such move is the fact that Itau Unibanco has cut its default expenses to BRL 5.6bn and

Bradesco has increased its total reserves to BRL 388mn. In comparison, state-run Banco do Brasil has raised its default

reserves by 6.5% in 2013, or an increase of BRL 949mn since December 2012. In addition, lately, the government has often

declared its intentions to reduce lending by state banks (Banco do Brasil, Caixa Economica Federal and BNDES) in response

to criticism from rating agencies.

Fitch Ratings has already affirmed that the expected slowdown in public bank lending should help the private sector regain

market share. On the other hand, the rating agency, together with Moody's Investor Service, have classified the government

strategy as doubtful as the decrease in financing by state banks could hamper support for the ruling party in the presidential

elections to be held in October 2014.

The prospect for growth of private banks has already had a positive effect on the share price of the two largest private banks in

the country – Itau Unibanco and Bradesco.



Source:

Private Banks’ Loan Portfolio

Annual Growth Rate of Private Banks Loans (%)


Loans by Type (BRL bn)

Bacen

44.

9

42.

7

99.

5

197

.3

217

.8

216

.4

262

.9

120

.9

50.

4

59.

1

51.

7

110

.8

181

.4

233

.1

210

.7

279

.6

137

.6

63.

1

Dec 2012 Dec 2013

24.6

9.5 6.5

14.3

19.4 19.5

14.5

10.6

7.0 5.5

7.3

Jan2009

Jul2009

Jan2010

Jul2010

Jan2011

Jul2011

Jan2012

Jul2012

Jan2013

Jul2013

Dec2013

4.36%

3.54%

0.62% 0.69%

Dec 2012 Dec 2013

SMEs Large



Source:

Profitability of Private Banks

Profitability of the Loan Portfolio and Funding Costs* (%) Margin of Provisions (%)


20.9

%

20.3

%

20.5

%

18.5

%

17.2

%

9.0%

8.7%

9.9%

7.7%

7.2%


Gross Profitability of the Loan Portfolio Funding Cost

11.9

%

11.7

%

10.6

%

10.8

%

10.0

%

6.0%

8.1%

6.0%

5.6%

5.7%


Gross Margin Net Margin



Source:

Financial Performance and Market Share

Performance of National Private Banks 2013 (USD bn)

Performance of Foreign Private Banks 2013 (USD bn)

Share of Foreign Private Banks (%)

Falke Information

41.8

42.2

5.1 8.

7

8.6

0.8

7 5.7

0.6

Itaú Unibanco Bradesco Safra

Revenues Operating Profit Net Profit

25.2

7.3

2.9

2.8

0.6

0.3 2.

7

0.5

0.2

Santander HSBC Citibank

Revenues Operating Profit Net Profit

30.5

%

29.8

%

25.8

%

24.8

% 27

.9%

18.2

%

18.6

%

18.0

%

16.6

% 18

.8%

17.8

%

16.9

%

15.7

%

14.9

%

14.8

%

2009 2010 2011 2012 2013

Equity Assets Deposits



Source:

Efficiency and Expenses

Efficiency Index Adjusted to Risk* (%)

Personnel and Administrative Expenses* (BRL bn)


72.94

69.64

67.07

64.01 63.92 64.45 65.71 65.04

67.59 68.94 69.60

71.89 71.70 71.76 71.31 70.10

72.23

Dec

200

9

Mar

201

0

Jun

2010

Sep

201

0

Dec

201

0

Mar

201

1

Jun

2011

Sep

201

1

Dec

201

1

Mar

201

2

Jun

2012

Sep

201

2

Dec

201

2

Mar

201

3

Jun

2013

Sep

201

3

Dec

201

3

44.2

6

45.7

4

45.9

3

47.5

4

47.6

3

47.9

2

48.6

7

48.8

3

56.0

5

56.5

4

56.4

2

57.1

5

57.6

0

58.4

1

59.3

0

59.0

4

145.

35

145.

73

143.

71

145.

93

146.

50

149.

71

154.

03

149.

34

Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 Dec 2013

Personnel Other Administrative Expenses Operating Income



IV. Main Players



Source:

BNDES

Financial Indicators (BRL mn)

Funding (BRL mn)

Performance (%)

Comments

Company data, Wall Street Journal, FAT – Workers Support Fund

BNDES is a Brazilian federal public development bank. The bank is

the most important long-term credit provider for the Brazilian business

due to its rates, which are lower than the overall market ones.

Infrastructure and technological projects, as well as large and

medium-sized companies are a priority for BNDES.

Despite its plans to reduce its credit operations in 2013 in order to

increase the competitiveness of private banks, BNDES's lending

surged by 20% during the past year, reaching BRL 190bn – this

amount is more than double the money disbursed by the World Bank

each year. In 2013, BNDES accounted for 7% of the country's gross

debt.

6,73

5

9,91

3

9,04

8

8,12

6

8,15

0

5,82

1

7,03

9

6,48

8

11,9

08

11,6

88

3,99

0 6,15

9

6,96

2

2,64

4

2,45

2

2009 2010 2011 2012 2013

Net Profit Income of Financial Operations Equity Earnings

25.5%

31.0%

23.1%

18.8% 16.9%

2.0% 2.2% 1.6% 1.3% 1.1%

0.20% 0.15% 0.14% 0.06% 0.01%

2009 2010 2011 2012 2013

Return on Net Equity Return on Assets Delinquency Rate

10,127 12,230 15,434 17,042 15,441

105,000 107,052

50,246 55,000

41,000

2009 2010 2011 2012 2013

FAT National Treasury



Source:

BNDES (cont'd)

Loan Portfolio (BRL mn)

Loan Portfolio by Type of Company 2013 (%)

Loan Portfolio by Sector 2013 (%)

Loan Portfolio by Region (%)

Company data

283,671

361,575

425,518

492,148

565,243


Agribusiness 9.8%

Infrastructure 32.7%

Industry 30.5%

Commerce & Services 27.0%

Large Corporation

61.0%

Medium to Large 5.6%

Medium 6.5%

Micro/Small 24.9%

Northeast 13.5%

North 7.2%

Southeast 45.7%

South 22.6%

Central West 11.0%



Comments

Source:

Banco do Brasil

Banco do Brasil is a state bank and the largest bank in terms of assets in Latin America. The loan portfolio of the bank amounts at almost USD 300bn,

accounting for about 20% of the overall financial system in Brazil. Banco do Brasil has the largest distribution network of banking services in the country,

with 19,143 service points and 5,450 bank agencies, accounting for 23.8% of the total number of bank agencies in Brazil.

In recent years, Banco do Brasil started to expand its operations abroad - in 2010 it acquired Argentina's fourth largest bank, Banco Patagonia SA, followed

by the acquisition of Florida-based Eurobank in 2012. The overseas operations of the bank accounted for about 10% of its total revenue for 2013. In

addition, the bank offers services in more than 20 countries around the world.

Financial Performance (BRL mn) Equity (BRL bn)

Company data

10,1

48

11,7

03

12,1

26

12,2

05

15,7

58

13,5

11

16,1

25

18,2

42

21,0

71

23,3

01

992

1,35

4

2,26

5

2,34

9

3,23

0

2009 2010 2011 2012 2013

Net Profit

Fee Income

Income from Insurance, Pension Plans e Savings Bonds

300.

8 388.

2 465.

1

581

693

498.

4

519

637.

6

472

492


Loan Portfolio Deposits



Source:

Banco do Brasil (cont'd)

Loan Portfolio Evolution (BRL bn)

Loan Portfolio by Risk Level (%)

Loan Portfolio Segmentation Dec 2013 (%)

Comments

Company data

In the beginning of 2014, Banco do Brasil announced plans to expand

on the investment banking market with the aim of diversifying its

portfolio. Analysts note that the creation of a capital market arm of the

bank is due to a slowdown in the overall retail banking in Brazil.

In March 2014, Banco do Brasil raised its first syndicated loan with a

group of 22 banks, amounting to USD 1bn. The loan will be used for

the diversification of the funding structure of the bank.

91.8 113.1 130.6 152.0 168.1

144.0 176.4

210.2 270.6

323.2

67.1 75.7

89.4

108.0

144.8

18.4 23.0

35.0

50.2

56.8

321.4 388.2

465.1

580.8

692.9


Individuals Corporate Entities Agribusiness Outside Brazil

Oil 10% Metallurgy 10%

Civil Construction

10%

Foods 12%

Electric Energy 7%

Services 6%

Transport & Automobiles

12%

Others 33%

91.6% 93.7% 93.9% 94.5% 95.0%

8.4% 6.3% 6.1% 5.5% 5.0%


AA-C D-H



Comments

Source:

Itaú Unibanco Holding S.A.

Itau Unibanco is the largest private bank in Brazil and the 13th largest bank in the world by market capitalisation. At the beginning of 2014, in a move to

fortify its presence in the region, the bank announced a USD 3bn acquisition of a controlling stake in CorpBanca - the fourth largest bank in Chile and the

fifth largest in Colombia. The deal is yet to receive a regulatory approval. The bank has operations in 20 countries in the Americas, Asia and Europe. In

Brazil, the bank operates around 5,000 full-service branches.

In 2013, the bank was named the most valuable Brazilian brand by Interbrand's research, for the 10th consecutive year, with a brand value estimated at

BRL 19.3bn.

Financial Performance (BRL mn) Funding (BRL bn)

Company data, Financial Times

73,3

68

78,4

74

78,4

75

16,7

16

18,1

39

22,1

48

14,6

41

14,0

43

15,8

36

2011 2012 2013

Operating Revenues

Banking Service Fee & Income from Banking Charges

Net Income

131.6 154.4 192.1

293.3 284 271.3

449.7

562

628.3

Dec 2011 Dec 2012 Dec 2013

Demand Deposits & Saving Deposits & Onlending

Time Deposits & Debentures

Assets under Management



Comments

Source:

Itaú Unibanco Holding S.A. (cont'd)

Itau Unibanco's income increased by 12.8% in 2013, mainly due to growth of lower risk products and decrease in non-performing loans. The bank is likely

to become the strongest player in Brazil's card industry, after it acquired the Credicard unit from Citigroup for BRL 2.77bn in 2013. Itau Unibanco also owns

the second-largest card payment company in the country Redecard. Through these two companies, Itau controls 40% of the bank cards market in Brazil.

To meet the rising processing needs, the bank plans to invest BRL 11.1bn by 2015 in technology, most of the funds are dedicated to the construction of a

new data centre, scheduled to be completed in Q1 2014, that will increase the data processing capacity of the bank by ten times.

Loans Portfolio Breakdown 2013 (%) Delinquency Ratio > 90 days (%)

Company data

Corporate 36.6%

SMEs 16.3%

Vehicles 8.3% Personal Loans

5.7% Credit Cards 11.2%

International 8.1%

Mortgage 9.1%

Payroll 4.7%

7.4%

5.8%

6.6% 6.9%

5.8%

4.0%

2.9% 3.5%

3.2%

2.0%

5.6%

4.2%

4.9% 4.8%

3.7%

Individuals Corporate Total



Source:

Caixa Econômica Federal

Financial Indicators (BRL mn)

Performance (%)

Fee Income (BRL mn)

Comments

Company data, Reuters

Caixa Economica Federal is a state-controlled financial institution,

which focuses on providing credits to individuals, families and small

businesses. Today, it is the largest mortgage lender in Brazil, thanks

to the low rates it offers to its customers.

In 2013, the credit portfolio of the bank grew by 37% compared to

2012. However, the expectations for 2014 are for a slower expansion.

The loans granted by Caixa in 2013 were about 19% of the overall

banking system crediting for the year.

1.01% 1.14% 0.93% 0.86%

26.3% 29.6%

25.9% 26.2%

66.1% 59.0% 61.2% 60.4%

2010 2011 2012 2013

Return on Assets Return on Equity Operating Efficiency Ratio

6,811

1,376

5,881

212

8,093

1,603

6,439

216

Banking Fees Asset Management GovernmentServices

Others

2012 2013

14,2

27

58,1

47

73,0

49

27,9

67

34,3

91

46,4

94

4,60

3

4,32

5

5,19

5

5,18

3

5,64

0

6,72

3

2011 2012 2013

Income from Financial Intermediation Loans Operation Income

Operating Income Net Profit



Source:

Caixa Econômica Federal (cont'd)

Market Share (%)

Delinquency Ratio > 90 days (%)

Amplified Loan Portfolio Dec 2013 (%)

Comments

Company data

In 2012, Caixa Economica announced plans to create an investment

banking arm, which was forecast to provide 20% of the bank's

revenue within a period of five years.

However, analysts estimate that the bank would probably abandon

the expansion into investment banking as the government has

decided to stop providing more capital to the state-run bank and

recommended that Caixa should focus on services for individuals and

small companies.

7.3%

69.1

%

35.5

%

15.7

% 42

.6%

10.3

%

7.5%

15.2

%

9.6%

68.5

%

35.1

%

14.0

%

52.8

%

11.2

%

8.7%

18.1

%

2012 2013

2.0% 2.1% 2.0% 2.0% 2.1% 2.3% 2.3% 2.4% 2.3%

3.6% 3.8% 3.8% 3.8% 3.7% 3.6%

3.4% 3.3% 3.0%

Dec2011

Mar2012

Jun2012

Sep2012

Dec2012

Mar2013

Jun2013

Sep2013

Dec2013

Caixa Market

Government 3% Large

Corporations 5% SMEs 11%

Payroll Deductable Loans 9%

Personal Loans 1%

Home Equity 1%

Housing 55%

Infrastructure & Development

8%

Others 7%



Source:

Banco Bradesco S.A.

Financial Performance (BRL mn)

Fee Income 2013 (%)

Net Income Breakdown 2013 (%)

Comments

Company data

Bradesco operates in two main business segments – financial

services and insurance, pension plans and capitalization, which

account respectively for 69% and 31% of its total income for 2013.

It is the largest insurance group in Brazil, in terms of both revenue

and technical provisions.

By the end of 2013, Bradesco had 59,307 service points. In terms of

presence, the bank holds a market share of 20.7% in Brazil.

11,6

16

13,3

72

15,2

23

17,5

12

19,7

86

10,0

66

14,2

88

16,2

89

17,5

52

18,8

84

7,58

6

9,80

4

11,1

98

11,5

23

12,2

02

2009 2010 2011 2012 2013

Fee Income Operating Income Net IncomeFees 28%

Loans 28%

Securities 6% Funding 7%

Insurance 31%

Cards 36%

Checking Accounts 18%

Credit Operation 11%

Asset Management

12%

Collection 7%

Tax Payments 2%

Consortium 4%

Custody/Brokerage 3%

Others 7%



Source:

Banco Bradesco S.A. (cont'd)

Market Share 2013 (%)

Comments

Funding (BRL bn)

Company data, Wall Street Journal

10.7%

17.1% 13.4%

18.1%

24.2% 21.9%

30.3% 34.6%

26.3%

32.7%

Loan Portfolio DemandDeposits

SavingDepaosits

AssetManagement

Insurance,Private Pension

Plans andSavings Bonds

PremiumsBanking System Private Banks

35.7 37.5 33.1 38.4 40.6

44.2 53.4 59.7 69.0 80.7

90.5 102.2

124.1 104.0 95.8

36.9

46.0

49.8 59.8 64.4

27.3

38.2

53.2 44.2 56.1

7.5

17.7

41.5 51.4

57.7

23.1

26.3

26.9 34.9

35.9

265.2

321.1

388.4 401.7

431.1


Demand Deposits Saving DepositsTime Deposits DebenturesBorrowing & Onlending Funds from Issuance of SecuritiesSubordinated Debts

At the end of 2013, Bradesco announced that it would raise two

private-equity funds with a total amount of USD 800mn to invest in

infrastructure.

The bank's investment unit, Bradesco Asset Management, is the

third-largest asset manager in Brazil, with USD 130bn of assets under

management.

Since 2013, Bradesco Asset Management is authorised to operate on

the U.S. market. The bank plans to raise funds from North American

investors and invest them into Brazilian and Latin American assets.



Source:

Banco Bradesco S.A. (cont'd)

Loan Portfolio Segmentation/Individuals Dec 2013 (%)

Delinquency Ratio > 90 days (%)

Loan Portfolio Segmentation/Corporate Dec 2013 (%)

Company data

Vehicle 21%

Payroll 20%

Credit Card 18%

Personal 13%

Mortgage 10%

Rural 6%

BNDES Finame 5%

Overdraft 3%

Others 4%

Working Capital 15%

BNDES Finame 11%

Operations Abroad 11%

Mortgage 5%

Export Financing 5%

Credit Card 4%

Overdraft 4%

Vehicles 3% Rural 2% Leasing 2%

Sureties & Guarantees

23%

Commercial Portfolio 11%

Others 4%

6.2% 6.2% 6.2% 6.2% 6.0% 5.5%

5.2% 5.0%

0.4% 0.9%

0.4% 0.3% 0.3% 0.2% 0.4% 0.7%

4.2% 4.2% 4.3% 4.2% 4.2% 4.0% 4.0% 3.7%

4.1% 4.2% 4.1% 4.1% 4.0% 3.7% 3.6% 3.5%

Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013

Individuals Large Corporates SMEs Total



V. Appendix



Source:

Abbreviations

Bacen

DPGE - Term Deposits with Special Guarantee

IHCD - Hybrid Capital and Debt Instruments

LCI -Letras de Credito Imobiliario - Real Estate Credit Bills

LCA - Letras de Credito do Agronegocio - Agribusiness Credit Notes

LF - Letra Financeira - Financial Bill

LFS - Subordinate Financing Bill



Contact:

Corporate Headquarters

Nestor House

Playhouse Yard

London EC4V 5EX

UK

Voice: +44 207 779 8471

Fax: +44 207 779 8224

Americas Headquarters

225 Park Avenue South

New York, New York 10003

US

Voice: +1 212 610 2900

Fax: +1 212 610 2950

Asia Headquarters

Eucharistic Congress Bldg. No.

III

4th Floor, 5 Convent Street

Mumbai 400 001

India

Voice: +91 22 22881123

Fax: +91 22 22881137

Disclaimer:

The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness

of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional

Investor PLC take no responsibility for decisions made on the basis of these opinions.

Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved. A Euromoney Institutional Investor company.

About EMIS Insight

EMIS Insight is a unit of EMIS that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation

and profiles of the leading sector companies provided by locally-based analysts.

About EMIS

Founded in 1994, EMIS (formerly known as ISI Emerging Markets) was acquired by Euromoney Institutional Investor PLC in 1999. EMIS works from over 15 offices

around the world to deliver electronic information products, by subscription, to institutional customers globally. EMIS provides hard-to-get information covering more

than 100 emerging markets. Its flagship products are EMIS Intelligence and EMIS Professional.

EMIS clients include top investment banks, corporations, law firms, consultants, investment and insurance companies, universities and libraries, multilateral

organizations, and others.

EMIS Insight - Brazil Banking Sector Report

Documents

Transcript of EMIS Insight - Brazil Banking Sector Report