2. Credit Behavior in Brazil
Loan Portfolio
Funding and Liquidity
Results from Operations
Capital Market
1
3. Total Credit Volume and Segmentation
Volume of Credit Operations
R$ billion
1.612 Credit to individuals supported by payroll
1.410 lending, car loans, but mainly by earmarked
1.227 34%
32% resources for real state financing.
936 29%
29%
In Corporate Credit earmarked resources
from BNDES still stand out, after 24 months,
607 733 66% in September, free credit grew above
71% 71% 68%
earmarked.
2005 2006 2007 2008 2009 Set/10 Public institutions still account for 42% of total
Nonearmarked Resources Earmarked Resources loans in the financial system
Variation % Individuals Corporates
Non Non Total Credit
Earmarked Earmarked
Sep/10 earmarked Total earmarked Total
Resource Resources
Resource Resources
In the month 1.4 2.9 1.8 2.2 1.1 1.7 1.8
In the quarter 4.4 7.6 5.2 4.4 7.5 5.6 5.4
In the year 12.4 20.4 14.5 10.0 19.5 13.6 14.0
In 12 months 16.9 26.0 19.3 13.3 31.2 19.8 19,6
Source: Central Bank of Brazil – Credit Information System - SCR
2
4. Credit Default Ratios
Small retreat in Corporate Credit and steady decline for Individuals
10
9
8
7
6 6.0
% 5 4.7
4
3
3.5
2
Source: BACEN
1 Corporates Individuals Total
0
Dec Dec Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2006 2007 2008 2009 2010
Central Bank Default Rates = loans overdue above 90 days on total loan portfolio
Default Rate on Loans to Individuals: Fast retreat from June 2009
Default Rate on Corporate Loans: Accelerated increase until September 2009, with slow
decline from November 2009 to March 2010, when it
stabilized around 3.6%, retreating to 3.5% in September/10.
3
5. Credit Behavior in Brazil
Loan Portfolio
Funding and Liquidity
Results from Operations
Capital Market
4
6. Loan Portfolio of R$ 1.8 billion*
* Including guarantees issued and L/Cs
Local Currency Loans Trade Finance
R$ Million R$ Million
-0.3%
1,429.7 1,405.4 1,425.0
+35.2%
357.1 344.1
254.5
3Q09 2Q10 3Q10 3Q09 2Q10 3Q10
Local currency loans maintain 80% share in Trade Finance portfolio comprises export (ACC/
total loan portfolio with a 1.4% growth in the ACE) and import (FINIMP) financing.
third quarter The 3.6% drop observed in the figures reported
Working Capital Loans and Discounts in Real for the quarter is due to the BRL
respond for 70% the loan portfolio appreciation in the period.
In foreign currency this portfolio grew by 7% in
Guarantees issued responded for 3.5% of
the quarter and 41% in 12 months:
the loan portfolio being:
• US$ 143.2 million in 3Q09
3.3% in Real
• US$ 189.2 million in 2Q10
0.2% in Foreign Currency
• US$ 201.6 million in 3Q10
Credit Assignment Guarantees issued and L/Cs
5
7. Credit Portfolio Breakdown
By Economic Activity By Segment
Individuals
Financial
8% Upper
Cos
Middle
1%
6%
Other Retail and
Services other
25% Industry 4%
55% Middle
Market
90%
Commerce
11%
By Client Concentration By Maturity
Above 360
Other 10 largest days Up to 90
25% 18% 30% days
35%
11 - 60
32%
61 - 160 181 to 360
25% 15% 91 to 180
21%
6
8. Loan Portfolio breakdown by Industry
FOOD, BEVERAGE AND TOBACCO
AGRIBUSINESS
HEAVY CONSTRUCTION
14% 19% CHEMICAL AND PHARMACEUTICAL
1% AUTOMOTIVE
2%
TRANSPORTATION & LOGISTICS
3%
TEXTILE, CLOTHING & LEATHER
3%
EDUCATION
3%
INDIVIDUALS
3% 17%
3% FINANCIAL SERVICES
4% OIL AND BIOFUEL
4% FINANCIAL INSTITUTIONS
5% 11%
5% 5% METAL INDUSTRY
WHOLESALE AND RETAIL TRADE
PULP & PAPER
OTHER INDUSTRIES
7
9. Loan Portfolio Quality
Asset Quality
Risk Rating Collacteral Structure
D-H Monitored Real State
Pledge Vehicles
14.8% 8%
8% 7%
11.1% Performing A Securities
34.3% 3%
3.7% Non-Performing
+ 60 days Pledge/
Lien
5%
C Aval PN
B Receiv.
23.9% 23%
46%
27.0%
NPL(*) / Total Loan (%) Allowance for Loan Losses
(*) Total outstanding amount of contracts with any installment overdue above 60 days R$ Million
8.1
133.0
107.8 112.2
3.7
2.6
3Q09 2Q10 3Q10 3Q09 2Q10 3Q10
Provisioning Coverage = 6.6% of Loan Portfolio, 44% of loans rated D-H and 179% of NPL 60 days
8
10. Credit Behavior in Brazil
Loan Portfolio
Funding and Liquidity
Results from Operations
Capital Market
9
11. Funding mostly in Local Currency
Total Funding Funding Breakdown
R$ Million BNDES
Onlending
+9.9%
Foreign 6%
1,880.6 1,902.7 Borrowings
1,732.0 17% Time
Deposits
Interbank 39%
Deposits
4%
Demand
DepositsLCA
2% 4%
DPGE(*)
3Q09 2Q10 3Q10 28%
83% of funding in Real and 17% in foreign CDs and DPGEs(*) account for 67% of total funding
currency Average term to maturity for deposits = 526 days
Funding composed by: CDs: R$ 753.1 MM - 361 days
Deposits – 77% DPGEs: R$ 543.1 MM - 853 days
Trade Finance lines– 15% LCAs: R$ 69.6 MM – 167 days
IFC A Loan – 2% Interbank Deposits: R$ 67.7 MM - 74 days
BNDES Onlending – 6%
(*) DPGE – Time Deposits bearing Special Insurance from FGC
10
12. Good Liquidity maintained
Free Cash
R$ Million Management of liquidity, interest
rate, currencies and tenor
mismatch risks is our Treasury’s
707.1 695.5 679.7 main task
Free Cash:
46% of Total Deposits
157% of Shareholder’s Equity
3Q09 2Q10 3Q10
Assets and Liabilities Management
R$ Million
729.9
645.3
Free Cash =
552.7 536.3
(Cash + Liquid Financial Assets + Securities + Derivatives)
372.0
(-) 339.6
227.9 238.5
(Open Market Funds + Derivatives)
90 days 180 days 360 days Above 360 days
Assets Liabilities
11
13. Credit Behavior in Brazil
Loan Portfolio
Funding and Liquidity
Results from Operations
Capital Market
12
14. Evolution in Financial Intermediation Results
Income from Financial Intermediation Gross Profit from Financial intermediation
R$ Million R$ Million
%
+10.8 +60.4
%
348.2 107.4
314.3
.6 %
+510
66.9
+31.0%
123.4 39.1
110.4 33.1
94.3
6.4
3Q09 2Q10 3Q10 9M09 9M10 3Q09 2Q10 3Q10 9M09 9M10
12% evolution in the quarter and 31% in 12 Gross Profit from Financial Intermediation
months in Income from Financial Intermediation went up by 18% in the quarter and
which were composed by corresponds to 32% of Income from Financial
revenues from Loans 58% Intermediation in 3Q10 (30% in 2Q10 and 7%
revenues from Securities 36% in 3Q09).
revenues from Foreign Exchange Operations 5% Reduction of 10% in Loan Loss Provision
The smaller share of revenues from foreign Expenses, also contributed to a better result.
exchange due to the appreciation of Real, also Allowance for Loan Losses maintained at 6.6%
reflected in the decrease of foreign loan expenses
of the loan portfolio.
13
15. Slight increase in Operating Expenses
Net Operating Expenses Efficiency Ratio
R$ Million In %
+2.7% +0.5 p.p
.
p.p.
71.9 +10.2
70.0
60.7 61.2 59.3
55.2
49.1
+17.8%
S&P Model
26.5
22.5 20.9
3Q09 2Q10 3Q10 9M09 9M10 3Q09 2Q10 3Q10 9M09 9M10
Increase derived from: The Efficiency ratio reflects this increase in
Net Operating Expenses related to FX effects,
R$ 1.4 MM net FX variation expenses on
offshore assets and liabilities which are taxes and personnel.
accounted under “other operating expenses and
income” against net revenues of R$ 1.2 MM in
2Q10.
Increased tax charges on deals carried abroad:
Financial Operations Tax (IOF) and COFINS
14
16. Recovering profitability
Net Profit Net Interest Margin (NIM)
R$ Million NIM NIM(a) GIM
.4%
77 23.1
+1
8.5%
7.0%
.3%
+ 196 5.4%
8.3 7.5 8.3
3Q09 2Q10 3Q10 9M09 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
-7.8 GIM= Gross Interest Margin
Net Profit in the quarter was slightly lower than Gross Interest Margin benefited from the
2Q10 for the increased net operating expenses. reduced need for provisioning
9-month accumulated net profit shows good Stable NIM and Adjusted NIM (NIMa)
progress, specially in the recurring results.
NIM(a) is the NIM adjusted by bringing the
exchange rate variation effects accounted as
“other operating expenses and income” to the
financial intermediation results and by
reducing the average balance of repos from
the average interest-bearing assets
15
17. Credit Behavior in Brazil
Loan Portfolio
Funding and Liquidity
Result from Operations
Capital Market
16
18. Capital Distribution and Free Float
Capital Distribution on Oct. 31, 2010
Controlling Free
Class # of Shares Management Treasury Free Float
Group Float
Common 27,000,000 (17,116,173) (2,574,369) - 7,309,458 27.1%
Preferred 14,212,984 (1,026,653) (159,570) (674,998) 12,351,763 86.9%
TOTAL 41,212,984 (18,142,826) (2,733,939) (674,998)* 19,661,221 47.7%
Board +
Officers Treasury
6.6% 1.6%
* 4th Share Buyback Program for up to
Free Float
1,301,536 preferred shares valid until
Controlling Aug. 09, 2011
47.7%
Group
44.0%
17
19. Shareholder Remuneration
BIM’s practice for shareholder remuneration has been
the quarterly anticipated payment of Interest on Equity
27.0
25.5
6.7
6.4
18.9
15.8 6.6
6.5 6.3
11.6 6.1
10.1
2.6 6.9
2.2 6.6 6.3
3.0 2.4 5.1
R$ MM
2.9 2.7 2.3 6.0 6.8 6.3
2.9 2.8 2.3
2005 2006 2007 2008 2009 2010
1Q 2Q 3Q 4Q
Remuneration per share
R$ 0.3657 R$ 0.34235 R$ 0.41635 R$ 0.59451 R$ 0.63704 R$ 0.45544
18
21. In Summary
Business Focus: Corporate lending
Credit Behavior in Brazil
Private Financial Institutions start reacting. After 24 months, corporate free credit growth exceeds
earmarked credit’s in September.
Government Financial Institutions respond for 42% of total credit in the Brazilian financial system.
Loan Portfolio
90% middle market companies and 6% companies with annual sales above R$ 400 million
Our loan portfolio growth in Real is limited by BRL appreciation on the Trade Finance portfolio
and the implementation of the business expansion strategy to larger companies.
Allowance for Loan Loss provide adequate coverage to NPL.
Funding and Liquidity
Funding predominantly in local currency deposits (77%)
Good volume long term funding available.
High liquidity maintained to provide stability
Operating Results
Evolution on Financial Intermediation Results
Taxes and FX expenses increase Other Operating Expenses
Accumulated 9-month net profit reaches R$ 23 MM against R$ 8.3 in 9M09.
20
22. Questions and Answers
Please pose your questions by utilizing the Q&A
button at the right bottom end of the Webcast panel.
Please note that this is the English version of the presentation originally prepared in Portuguese. In case of any discrepancy between those versions,
the Portuguese version shall prevail. Banco Indusval Multistock complete financial statements are available at www.indusval.com.br/ir, under Financial
Information – Financial Statements and they are filed with the CVM – Brazilian Securities and Exchange Commission that disposes them to the market
at www.cvm.gov.br.
Any reference or statement regarding Banco Indusval Multistock - or its subsidiaries and affiliates - anticipated synergies, growth plans, projected
results and future strategies are just estimates. Although 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 in the
timetable projected, as well as economic, competitive, governmental and technological factors affecting Banco Indusval Multistock’s operations,
markets, products and prices, and other factors detailed in Banco Indusval Multistock’s filings with the CVM – Brazilian Securities and Exchange
Commission which, readers are urged to read carefully, in analyzing investment alternatiives.
21
23. Investor Relations – Contact Information
Ziro Murata Jr. Banco Indusval S/A
IRO Rua Boa Vista, 356 – 7º andar
01014-000- São Paulo – SP
Phone: (55 11) 3315-6961
Brasil
E-mail: ziro@indusval.com.br
Maria Angela R. Valente IR Site:
Head of IR www.indusval.com.br/ir
Phone: (55 11) 3315-6821
E-mail: mvalente@indusval.com.br
22
