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Transcript of Investor Relations | page 1 Unibanco and Unibanco Holdings, S.A. Institutional Presentation March...
Investor Relations | page 1
Unibanco and Unibanco Holdings, S.A.
Institutional Presentation
March 2006
Investor Relations
Investor Relations | page 2
Overview of Unibanco
Investor Relations | page 3
Highlights
Publicly traded at Bovespa (Brazil) and NYSEPublicly traded at Bovespa (Brazil) and NYSE
Level III ADR on the NYSE and a member of IBOVESPA Level III ADR on the NYSE and a member of IBOVESPA
Very liquid stock: R$30.2 mln / US$13.8 mln ADTV* at Bovespa US$68.0 mln ADTV* at NYSE
Very liquid stock: R$30.2 mln / US$13.8 mln ADTV* at Bovespa US$68.0 mln ADTV* at NYSE
Financial statements in US GAAP since 1997Financial statements in US GAAP since 1997
Controlled by the Moreira Salles groupControlled by the Moreira Salles group
Level I Corporate Governance on the BovespaLevel I Corporate Governance on the Bovespa
* For the period Jan 1 - March 31; US$1 = R$2.17
Investor Relations | page 4
A Snapshot of Unibanco
• Serves individuals and SMEs with annual revenues lower than R$150 million.
• Close to 21 million clients
• Leading Consumer Finance franchise
• Hipercard: more than 4.5 million cards issued and over 135 thousand affiliated stores
Retail and Consumer Credit
• Full coverage of more than 2,000 corporations with annual revenues greater than R$150 million, in addition to institutional investors in Brazil and internationally
• Investment Banking: M&A, Capital Markets & Project Finance
• Top 10 Research House, according to Institutional Investor. 1st place in Consumer Goods category and 3rd place in Aerospace, Transportation and Industrials category
Wholesale
As of March 2006
• Offers investment products via Unibanco Asset Management to individuals and institutional investors and covers high net worth individuals, in the private banking segment
• Total assets under management: R$39.9 billion
• #2nd place in Private Banking (Anbid), with more than 10% market share
• “Top Gestão” asset management award - by S&P
Wealth Management
• Joint venture with AIG
• Individuals and corporate: life, auto, assets, disability, pension funds and annuities
• Issuance of the first environmental insurance policy in Brazil
• Strong market share growth with increasing profitability: 7.5% market share in February 2006 from 4.9% in 2000
Insurance & Annuity – Unibanco AIG
• A balanced business mix
• Aggressive expansion in the retail segment
• Benchmark in consumer finance and wholesale business
Investor Relations | page 5
Organizational Structure
Prominent Board Members Independent Audit Committee
Retail
Márcio Schettini
Retail
Márcio Schettini
Wholesale and Wealth Management
Demosthenes Madureira
Wholesale and Wealth Management
Demosthenes Madureira
Insurance and Pensions
José Rudge
Insurance and Pensions
José Rudge
Audit Committee
Gabriel Jorge FerreiraChairman
Members
Audit Committee
Gabriel Jorge FerreiraChairman
Members
Legal, Audit, and Risk
Lucas Melo
Legal, Audit, and Risk
Lucas Melo
Planning, Control, Operations
and IR
Geraldo Travaglia
Planning, Control, Operations
and IR
Geraldo Travaglia
Corporate Communication
and HR
Marcos Caetano
Corporate Communication
and HR
Marcos Caetano
Treasury
Daniel Gleizer
Treasury
Daniel Gleizer
CEOPedro Moreira Salles
CEOPedro Moreira Salles
Board of Directors
Pedro MalanChairman
Pedro Moreira SallesVice-Chairman
Board of Directors
Pedro MalanChairman
Pedro Moreira SallesVice-Chairman
Gabriel J. Ferreira Israel Vainboim Pedro BodinBoard Members
Eduardo A. GuimarãesGuy Almeida Andrade
Armínio Fraga Joaquim F. Castro Neto João Dionisio
Investor Relations | page 6
Over 80 years of history to become one of the leading full service banks in Brazil
Timeline
Investor Relations | page 7
A superior strategy and comprehensive distribution system...
Segmentation and Distribution
Client Focus Nationwide Distribution
…foster cross-selling opportunities across our expanding client base
Investor Relations | page 8
Greater focus on higher margin and faster growing businesses
ConsumerFinance
CreditCards
Autos
Insurance &PensionUAM
BranchNetwork
Private
High
Low
Marg
in
Low HighGrowth
Wholesale
SMEs
Retail
Wholesale & Wealth Management
Insurance
Universal Bank
Investor Relations | page 9
Consumer Finance
Leading Consumer Finance Platform Consumer Finance Loan Portfolio (R$ Million)
• Fininvest: aggressive growth plan
• Leveraging Alliances and Joint Ventures
• Cross Selling focus: Credit Cards, Banking Accounts, Capitalization, Insurance and Extended Warranty
Leading Consumer Finance Platform
21.0%
Mar-05 Mar-06
2,396
2,900
Investor Relations | page 10
Credit Cards
Loan Portfolio (R$ Million)
51.6%
2,630
3,987
Mar-05 Mar-06
• Acquirer, issuer and processor of credit cards• Accepted by more than 135 thousand retailers
• Issues Visa and Mastercard cards• Alliances with retailers
Highlights
Investor Relations | page 11
SMEs (R$ Million) Auto Financing (R$ Million)
SMEs & Auto Financing
• Approximately 530,000 companies
• Leveraging synergies with the group
(Fininvest, Unicard, Hipercard)
• Wide range of banking services
• Significant contribution to core deposits’
growth
21.5%
3,900
4,737
Mar-05 Mar-06
• Fast growing segment
• Operates nationwide through Unibanco
Financeira and in the accredited network of
auto dealers
• Better qualified, trained and remunerated
sales force
• Leader in financing heavy commercial
vehicles
25.1%
5,986
7,488
Mar-05 Mar-06
Investor Relations | page 12
Fundamentals
Investor Relations | page 13
Retail
Wholesale
Mar-06Mar-05Mar-04Dec-99
Loan Portfolio Mix
43%45%
57%55%49%33%
51%67%
Migration to fast growing segments with higher margins
Investor Relations | page 14
Improved Funding Structure
Deposits
Core Deposits Evolution: Comparison
SuperPoupe
R$ millions
1 preliminary data
Main actions
• Development of alternative sources of funding such as SuperPoupe
• Link individual variable compensation at branch level to Core Deposits
• Focus on cash management services, such as Payroll and Collection
30%32%
35%
Mar-04 Mar-05 Mar-06
14.6%
6.3%National Financial System (1)
1Q06 vs 1Q05
403
1,030
1,6251,962
2,3502,628
3,044
3,604
Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06
Investor Relations | page 15
R$ millionsEfficiency Ratio Evolution
Cost Management
Expenses
Revenues
Efficiency Ratio
2,815
1,187
1,355
2,212
1Q05 1Q06
48.1%
53.7%
48.1%49.2%51.3%52.8%
53.7%
59.5%61.2%63.4%
1,960 2,136 2,293 2,212 2,334 2,579 2,745 2,815
1,2421,308
1,3651,187 1,232
1,3231,351 1,355
2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06
1,921
1,143
1Q04
59.5%
Investor Relations | page 16
Financial Performance
Investor Relations | page 17
+29.7%
+16.8%
1Q06 / 1Q051Q06
R$520 million
R$834 million
Performance
24.0%
9.5
1Q06
23.0%
20.1%21.0%
23.3%24.2%
8.1
8.4
4Q04 1Q05
8.7
2Q05 3Q05
9.0
4Q05
9.3
3Q042Q041Q04
7.9
17.8%17.3%
16.1%
7.47.7
Net Income
Operating Income
Annualized ROAE (%) Stockholders’ Equity (R$ Bln)
Investor Relations | page 18
Highlights
Results
Loan Portfolio Growth
Units
Cost Management
30% Net income growth, 1Q06 versus 1Q05
Financial margin (before provisions for loan losses) of R$2,357 million in 1Q06, R$514 million higher or 28% up compared to 1Q05
Individuals: 26% (Credit cards: 52%) SMEs: 25% Corporate: 13%
81% up in the last 12 months
Current weight in the Ibovespa: 1.623%
Efficiency ratio of 48.1%, a 560 b.p. improvement from 1Q05 (53.7%)
Stable Personnel and Administrative expenses, 1Q06 versus 4Q05
Insurance R$92 million net income, 21% up y-o-y
27.7% annualized ROAE
93.7% combined ratio in 1Q06, from 98.6% in 1Q05
Total: 19.6% in 12 months
Investor Relations | page 19
81,64782,731
88,423
91,83193,770
Mar-05 Jun-05 Sep-05 Dec-05 Mar-06
33,176
35,15436,872
39,875 39,684
Mar-05 Jun-05 Sep-05 Dec-05 Mar-06
Financial Indicators
Total Assets (R$ millions) Loan Portfolio (R$ millions)
Financial Margin(before Provision for Loan Losses)
9.8%
10.3%
10.8% 10.8%10.9%
1Q05 2Q05 3Q05 4Q05 1Q06
Earnings per Share (R$)
0.29
0.32
0.34
0.360.37
1Q05 2Q05 3Q05 4Q05 1Q06
Investor Relations | page 20
R$ millions
1T06 4T05 1T051Q06 4Q05 1Q05
1,715 1,606 1,533
863 891 751
(1,355) (1,351) (1,187)
(389) (398) (383)
834 748 714
(3) 5 (6)
(147) (137) (166)
(164) (107) (141)
520 509 401
Profit from Financial Intermediation (+) Fees from Services Rendered
(-) Personnel & Administrative Expenses
(+/-) Other Operating Income / Expenses
(=) Operating Income
(+/-) Non-Operating Income
(+/-) Income Tax and Social Contribution
(Effective Income Tax Rate)
(-) Profit Sharing / Minority Interest
Net Income
Income Statement
20% 20% 27%
Investor Relations | page 21
100
100
100115
100 114
100
128
100
100
207
100
130
Mar-06Mar-05
1Q05 = 100
115
120
Loan Portfolio
Core Deposits
Financial Margin before Provision
Provision for Loan Losses
Fee Income Adm. Expenses Operating Income
Net Income
Performance – 1Q06 versus 1Q05
117
Investor Relations | page 22
19.6%
Dec-05 Mar-06
-0.5%
1.3%
Mar-05
Wholesale
Retail
33,176
14,991
39,875
22,505
17,370
39,684
-2.8%
22,80618,185
16,878
R$ millions
Loan Portfolio Growth
Investor Relations | page 23
Loan Portfolio Growth – Individuals and Corporate
Corporate
Individuals (R$ millions)
(R$ millions)
Mar-05 Dec-05
1.0%
12,19915,170
Mar-06
15,318
25.6%
16.2%
20,977
-1.4%
24,705
Mar-05 Dec-05 Mar-06
24,366
Main Highlights
Branch Network
Credit Cards
SMEs
Large Corporate
Auto Financing
Consumer Finance Companies (1.4)%
2.1%
(0.3)%
2.1%
(2.8)%
2.8%
Quarter
21.0%
12.9%
51.6%
25.1%
12.6%
21.5%
Year
Investor Relations | page 24
109%
112%
113%
Mar-05 Dec-05 Mar-06Mar-05 Dec-05 Mar-06
AA-C
D
E-H
Loan Portfolio, by risk level Allowance for Loan Losses/Loan Portfolio E-H
Loan Portfolio Quality
92.3% 92.0%91.9%
4.6% 4.9%4.7%
3.1% 3.1%3.4%
Investor Relations | page 25
1Q05
16.8%
4Q05
29.0%
1Q06
27.2%
10.9%
9.8%10.8%
7.6%7.9%8.1%
Financial Margin
Post Provision Financial Margin Financial Margin Provision for Loan Losses/Financial Margin
Investor Relations | page 26
1Q05 4Q05
437
230
84
751
R$ millions
1Q06
491
282
90
521
289
81
891
Fees
Personnel and Other Adm. Expenses
Fees / Personnel and Other Adm. Expenses
Fees from Services Rendered
Banking fees
Credit Cards
Assets under management
Total Fees 863
63.3%
1,355
1,187
1,351
751 891 863
63.7%66.0%
1Q05 4Q05 1Q06
Investor Relations | page 27
R$ millions
Personnel and Administrative Expenses
Other Administrative Expenses
Personnel Expenses
741
446
1Q05
813
542
1Q06
871
480
4Q05
1,187
1,3551,351
0.3%
4Q05
Commercial Bank 859
Subsidiaries 492
Total 1,351
1Q05
772
415
1,187
1Q06
888
467
1,355
Investor Relations | page 28
Combined Ratio
93.7%
95.4%
98.6%
1Q05 4Q05 1Q06
4,724 5,376 5,628
1,217
1,4701,676
Mar-05 Dec-05 Mar-06
5,941
7,3047,846
22.9%
Private Pension Plans
Insurance
Technical ReservesR$ millions
Net Income
Extended Combined Ratio
83.7%
85.7%85.1%
1Q05 4Q05 1Q06
7679
92
1Q05 4Q05 1Q06
21.1%
Insurance and Private Pension Plans
Investor Relations | page 29
Stocks
Investor Relations | page 30
Units and GDSs
Unibanco Units gained 81% in the last 12 months
Unit continues to increase its weighting within the Ibovespa. Since its inclusion in the Ibovespa, in May 2005,
its participation increased 65%
ADTV during 1Q06 was R$30.2 million on the Bovespa and US$68.0 million on the NYSE
Units (UBBR11) versus Ibovespa
GDSs (UBB) versus Dow Jones
Brazilian Stock Index
Weight
May 2nd, 2006
Ibovespa 1.623%IBrX-50 3.615%IBrX-100 3.111%IGC Corporate Governance Index 4.523%ISE Susteinability Index 8.745%
I ndex
Investor Relations | page 31
Perspectives 2006
Investor Relations | page 32
Perspectives
2005 2006 (E)
Real GDP Growth (%) 2.3% 3.5%
SELIC (Enf of Year) 18.00% 14.50%
IPCA (Inflation) 5.7% 4.4%
Trade Balance (US$) 44.8 bi 39.0 bi
Macroeconomic Perspectives
Exchange Rate R$/US$ (Enf of Year) 2.34 2.20
Investor Relations | page 33
Annex I
Dividends
Investor Relations | page 34
143
Dividend History
35% 38% 37% 38% 35% 35% 36% 37% 35%
54 82 102 131 152 160 166204
186
8982
108133
171 180 196
244
238
1997 1998 1999 2000 2001 2002 2003 2004 2005
1st Half
2nd Half
164210
264
323 340 362
448
617
CAGR = 20%
R$ Million
• Unibanco has paid semi-annual dividends for more than 3 decades• From 2005 on, Unibanco started paying quarterly dividends
Pay Out Ratio
48
1Q06
Quarterly Dividend
Investor Relations | page 35
Annex II
Ratings
Investor Relations | page 36
Unibanco Ratings
Fitch Ratings
Unibanco
BB-
Foreign Currency
Brazil
Long Term
Short Term
BB-
B
B
BB-
Local Currency
Brazil
Long Term
Short Term
-
Unibanco BB B
Standard and Poor’s
Unibanco
BB
Foreign Currency
Brazil
Long Term
Short Term
BB
B
B
BB+
Local Currency
Brazil
Long Term
Short Term
BUnibanco BB B
Moody’s
Long TermDebt
Long Term Deposits
Short Term Deposits
Financial Strength
Unibanco Ba1 NP C-B1
Brazil Ba3 B1 NP -
Global Scale: Foreign Currency Global Scale: Local Currency
Long Term Deposits
Short Term Deposits
Unibanco P-2A3
Brazil - -
Investor Relations | page 37
Annex III
2005 – A Retrospective
Investor Relations | page 38
Jan Global Public Offering of Units and GDSs
Jan Quarterly Interest on Capital Stock
Mar New Marketing Campaign
2005 Highlights
New logo New Service Model A more transparent and agile bank, working to surpass client
expectations
Quarterly payments of Interest on Capital Stock Related to the year 2005, Unibanco declared R$ 617 million
in Interest on Capital Stock/Dividends, up 38% from 2004
Selling Shareholders: Commerzbank and BNL Offering size: 6.6% of Unibanco’s capital Price: R$15.65 per Unit Financial volume: R$718.3 million Demand: 4.9x Book
Investor Relations | page 39
May Units Included in the Ibovespa
Jul Perpetual Bonds
0.984% weight at the time of inclusion in the Ibovespa index Since their inclusion in the Ibovespa, the Units achieved the largest
weighting gain in the index’s portfolio Units current weight in the Ibovespa is 1.623%
Issuance of Perpetual Bonds in July 2005: US$500 millions 8.70% annual coupon Call Option: subject to redemption, in whole, in Jul-2010 or in any
subsequent interest payment date occurring thereafter
2005 Highlights
Investor Relations | page 40
Sep Global Public Offering of Units and GDSs
Dec Unibanco Units were Ibovespa’s best performers during 2H05
Selling Shareholder: CGD (Caixa Geral de Depósitos) Offering size: 12.3% of Unibanco’s capital Price: R$20.49 per Unit and US$44.00 per GDS Financial Volume: R$1,765 million Demand: 3.0x Book Until February 15, the Units and GDSs appreciated by 70% and
87%, respectively
72% return versus 34% of Ibovespa ADTV1 increased by 340.9%, reaching R$19.4 million in 2005,
from R$4.4 million in 2004 ADTV1 for 4Q05 peaked up to R$21.0 million at Bovespa and
US$43.8 million at NYSE
2005 Highlights
R$ 29.27
R$ 17.10
1 Average daily trading volume
172
UBBR11
Investor Relations | page 41
Dec-05 Units included in the Corporate Sustainability Index - ISE
Feb-06 Moody's upgrades Unibanco's Financial Strength Rating
The index is an initiative of Bovespa, in partnership with IFC
(International Finance Corporation) ISE’s purpose is to measure the return of a theoretical portfolio
comprised by shares of companies committed to social
responsibility and corporate sustainability Units current weight in the ISE index is 9.569%
According to the agency, this upgrade “reflects Unibanco's
consistently robust core earnings and the management's ability to
steer the bank towards higher-yielding businesses, while
maintaining asset quality and controlling costs”.
2005 Highlights
Investor Relations | page 42
Investor Relationsphone: 5511-3097-1980
fax: 5511-3097-1585email: [email protected]
site: www.ir.unibanco.com
This presentation contains forward-looking statements regarding Unibanco. its subsidiaries and affiliates - anticipated synergies. growth plans. projected results and future strategies. Although these forward-looking statements reflect management’s good faith beliefs. they involve known and unknown risks and uncertainties that may cause the Company’s actual results or outcomes to be materially different from those anticipated and discussed herein. These risks and uncertainties include. but are not limited to. our ability to realize the amount of the projected synergies and the timetable projected. as well as economic. competitive. governmental and technological factors affecting Unibanco’s operations. markets. products and prices. and other factors detailed in Unibanco’s filings with the Securities and Exchange Commission which readers are urged to read carefully in assessing the forward-looking statements contained herein. Unibanco undertakes no duty to update any of the projections contained herein.