Professional Documents
Culture Documents
Sector
Brazil
March 2014
Produced by:
-1-
Table of Contents
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
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
V. Appendix
1. Abbreviations
-2-
I. Sector Overview
-3-
Sector Highlights
Overview
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 Ita, have made considerable gains through an accelerated growth and the acquisition of foreign and domestic institutions (BBV by Bradesco,
Bank Boston by Ita).
Financial Stability
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.
Credit Rating
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.
-4-
Key Indicators
Key Indicators
2009
2010
2011
2012
2013
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%
905
1,058
1,232
1,399
1,504
15.1%
20.6%
18.8%
16.4%
14.7%
3.1%
4.1%
5.3%
6.8%
8.2%
5.4%
4.4%
5.6%
5.8%
4.9%
6.0%
6.0%
6.0%
5.5%
5.0%
9.9%
10.0%
11.7%
8.5%
8.3%
4.3%
5.9%
6.5%
5.8%
5.9%
-5-
17.6%
17.0%
16.6%
16.4%
40.4%
42.9%
41.4%
40.1%
State Owned
Banks 51.2%
Foreign
Private Banks
15.5%
Domestic
Private Banks
33.2%
42.0%
40.1%
41.9%
60.3%
43.4%
39.7%
Dec 2010
Dec 2011
Public Banks
Dec 2012
Dec 2013
Total Assets
Foreign Banks
53.8%
51.7%
46.2%
Deposits
Credit Operations
Public
48.3%
-6-
Private
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
Under foreign
control
Commercial
Banks
Domestic without
foreign
participation
Domestic with
foreign
participation
Under foreign
control
Foreign Banks
full branches
Southeast
12 024
South 4,359
12
16
15
15
53
53
54
56
55
18
19
20
22
22
11
12
11
12
Central West
1 820
North 1,106
12.9%
87.5%
87.1%
Total Assets
Deposits
11
10 Major Banks
Northeast
3 609
-7-
Others
Financial Performance
Top 10 Banks in Terms of Revenue 2013 (USD bn)
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
59.6
61.1
60.6
Net Revenue
ROA (%)
8.9
50.6
1.5%
41.8
1.4%
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%
Banco do Brasil
Mar 2009
Jun 2009
Sep 2009
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
Itau Unibanco
Net Profit
-8-
223.94
226.18
225.10
228.34
230.03
232.01
238.30
233.28
49.3
20.47
49.3
21.37
49.9
21.83
51.3
21.85
52.7
22.05
12.97
13.82
14.69
15.40
15.95
54.4
22.04
16.53
55.7
22.56
17.17
56.1
22.84
17.63
Apr
2012
Jul
Oct
2012
2012
Bank Tariffs Revenues (Indiv. & Corp.)
Jan
2013
Credit Cards Revenues
Apr
2013
Other Services
Jul
Oct
2013
2013
Operating profit (before administrative expenses)
Jul 2010
Jan 2011
Annual Roe
Jul 2011
Jan 2012
Jan 2013
Jul 2013
Jul 2012
-9-
Dec 2013
Sector Forecast
Financial Services Output, value-added index
190.67
201.57
212.65
223.63
234.75
61.5%
13.8%
2015
2016
2017
2018
10.8%
3.7%
Credit as % of GDP
12.5%
10.5%
7.6%
7.2%
6.0%
6.0%
2015
2016
2016
Comments
1.0%
2014
2015
Credit Growth
17.1%
10.2%
2014
2014
69.5%
63.9%
- 10 -
524.1
532.4
321.7
325.4
574.0
622.0
625.9
587.8
543.3
Others
3,500
541.7 529.3
IHCD + LFS
3,000
343.4
323.5
335.7
323.9
339.6
2,500
323.1 347.3
LCA + LCI +
LF + DPGE
2,000
1,500
Commitments (with
private securities)
Net Assets
Loans and
Transfers
500
Dec 2013
Oct 2013
Jul 2013
Apr 2013
Jan 2013
Oct 2012
Jul 2012
Apr 2012
Jan 2012
1,000
0
Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec
2009200920102010201120112012201220132013
Deposits
Comments
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.
Source: Bacen
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
- 11 -
3,000
2,000
1,000
Jan 2012
Jan 2013
Industry
Commerce
Jan 2014
0
Dec
2009
Real Estate
Households
Jun
2010
Dec
2010
Jun
2011
Nonearmarked
Dec
2011
Jun
2012
Earmarked
Dec
2012
Jun
2013
Total
Comments
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.
- 12 -
Dec
2013
Credit Distribution
56.5%
Loans as % of GDP
53.9%
49.1%
BNDES 20%
43.9%
45.4%
Agricultural 6%
29.4%
24.5%
26.9%
22.2%
19.4%
24.8%
20.6%
Others 3%
24.5%
Nonearmarked
Credit 58%
30.5%
26.0%
Housing 13%
Corporate
Entities 50%
Dec 2009
Individuals
50%
Dec 2011
Dec 2010
- 13 -
Dec 2012
Dec 2013
4.4
1.8
4.4
1.8
4.5
1.9
4.6
2
4.8
2
4.8
2
5.0
2
2.1
5.0
5.3
2.3
2.3
5.3
5.4
2.2
5.4
2.2
5.5
2.2
5.6
2.2
5.7
2.3
5.8
2.4
5.9
2.2
5.9
2.3
5.9
2.2
5.9
2.2
6.0
2.2
5.9
2.3
5.9
5.8
2.2
2.1
2.2
5.9
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014
Corporate Entities
Households
5.2
5.2
5.2
3.8
3.8
3.8
3.9
3.9
1.9
1.9
1.9
2.0
5.3
5.4
5.6
5.2
5.2
1.9
5.6
5.6
5.6
5.5
5.4
5.6
5.7
5.2
5.3
5.5
5.5
5.5
5.3
5.6
5.3
5.8
5.2
5.7
5.0
5.6
5.0
5.5
5.0
5.5
4.7
5.2
4.7
5.1
4.6
4.9
4.5
3.8
3.9
3.8
4.6
4.6
3.8
3.8
3.9
3.7
3.7
3.6
3.6
3.6
3.6
3.4
3.3
3.2
3.3
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
4.3
4.3
4.3
4.3
4.3
4.1
4.2
3.2
3.1
3.0
3.0
1.9
1.9
1.8
1.8
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014
NPL
Source: CEIC
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
- 14 -
11.6%
11.7%
7.5%
7.3%
8.0%
3.9%
3.7%
3.6%
11.1%
8.3%
11.3%
9.0%
10.0%
3.3%
3.0%
2.2% 2.3% 2.2% 2.3% 2.4% 2.2% 2.1% 2.0% 2.0% 2.0% 1.9% 1.8%
Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec
2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013
Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec
2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013
9.0%
3.9%
NPL 90 days
SELIC
Total Spread
Corporate Spread
22.5%
21.1%
Comments
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.
5.7% 5.9% 5.9% 5.8% 5.6% 5.4% 5.0% 5.3% 4.8% 4.6%
4.5% 4.4%
Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec
2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013
Individual Spread
NPL 90 days
NPL 90 days
- 15 -
3.7%
4.6%
3.3%
3.8%
8.3%
7.9%
16.0%
15.0%
Dec
2012
Mar
2013
Jun
2013
Delinqunecy SMEs
Average Provision/SMEs
19.5%
Nonearmarked
2012
19.2%
Working Capital
Foreign Trade
BNDES direct
BNDES indirect
Rural
Source: Bacen
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
Dec
2013
Comments
26.5%
28.3%
Sep
2013
- 16 -
10.3
9.8
10.1
10.1
8.2
8.1
7.3
8.1
7.9
7.3
8.0
7.8
6.7
8.1
8.0
6.4
8.6
8.0
6.9
8.9
9.0
6.6
5.6
5.8
6.0
5.6
5.6
Apr 2013
May 2013
Jun 2013
Jul 2013
Aug 2013
6.5
5.5
Jan 2013
10.8
10.0
Feb 2013
Rural Credit
Mar 2013
10.2
10.0
8.8
6.6
10.3
11.4
10.8
9.9
10.7
11.1
13.0
9.9
9.7
9.8
6.8
7.0
6.7
6.4
9.2
6.6
8.8 9.2
6.8
6.0
5.8
6.0
5.8
Sep 2013
Oct 2013
Nov 2013
Dec 2013
Jan 2014
9.0
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
16.5
15.7
10.7
15.7
16.0
10.7
16.4
15.8
16.2
10.1
17.3
18.9
17.0
19.2
18.7
17.3
12.4
17.5
13.2
19.8
17.3
9.6
11.4
13.2
12.5
19.9
17.3
13.8
11.6
16.4
11.6
11.8
18.0
16.3
11.9
11.0
21.3
16.2
May 2013
Jun 2013
Jul 2013
Aug 2013
Sep 2013
Oct 2013
Nov 2013
7.8
15.5
9.6
9.3
Jan 2013
Feb 2013
Working Capital
9.5
16.2
12.3
10.1
Mar 2013
Apr 2013
Vehicles Financing
Source: CEIC
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
11.9
11.8
- 17 -
Imports Financing
12.3
18.3
13.8
13.4
Dec 2013
Jan 2014
Exports Financing
10.1%
16.0%
10.7%
15.7%
8.6%
9.1%
9.3%
7.9%
25.4%
17.1%
13.4%
Dec 2009
Real Estate
22.2%
8.7%
7.5%
6.4%
15.8%
15.3%
14.0%
8.6%
8.8%
8.4%
7.9%
19.0%
20.9%
8
6
4
8.7%
9.2%
0
Mar 2011
Jun 2011
Sep 2011
Dec 2011
Mar 2012
Jun 2012
Sep 2012
Dec 2012
Mar 2013
Jun 2013
Sep 2013
Dec 2013
Free Credit Assignment
Vehicles
Real Estate
16.7%
Payroll
Rural
Comments
17.6%
16.9%
Dec 2010
Payroll
Vehicles
17.6%
17.3%
20.6%
23.7%
Dec 2011
Dec 2012
Rural
No Interest Card
17.7%
27.3%
Dec 2013
High Risk
Others
Source: Bacen
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
- 18 -
Lending Rate/Individuals
Average Lending Rate for Individuals, Earmarked (% pa)
15.3
9.0
14.3
8.1
12.2
11.9
11.9
7.1
5.5
6.0
8.1
6.3
5.1
4.9
8.0
4.9
7.9
5.9
7.9
5.9
5.9
4.5
4.2
3.8
4.1
3.7
Jan
2012
Apr
2012
Jul
2012
Oct
2012
Jan
2013
Apr
2013
14.8
10.0
7.8 5.4
Rural Credit
9.6
4.9
8.0
9.6
9.3
4.6
4.5
9.2
8.7
4.7
4.8
4.0
3.5
3.8
Jul
2013
Oct
2013
Jan
2014
4.5
Microcredit
163.2
144.2
140.0
69.0
70.6
68.3
37.8
37.3
20.5
Oct
2012
20.5
Jan
2013
75.4
72.0
44.8
41.4
66.8
38.6
25.5
Jan
2012
24.8
Apr
2012
20.7
Jul
2012
Overdraft
Personal Credit
138.5
- 19 -
154.0
71.2
42.2
74.1
36.8
67.5
39.8
19.9
Apr
2013
20.3
Jul
2013
20.8
Oct
2013
22.7
Jan
2014
Vehicles Financing
Source: CEIC
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
146.4
138.9
136.3
43.0
Deposits
Jan 2011
Jan 2012
Northeast
2012
Southeast
South
0.59 0.61
0.52 0.50 0.51 0.50
0.52
0.50
0.50
602,795
0.55
0.52
94.4
2013*
Jan 2012
Central West
0.59
31.9
71.3
14.9
27.6
82.9
13.1
62.8
71.4
23.8
11.2
54.1
63
20.4
46.5
9.7
North
2011
597,943
0.61
0.50
2010
583,729
574,251
566,883
557,481
550,217
538,446
526,649
513,829
505,603
500,836
518,726
Jan 2014
304.9
268.4
236.4
496,302
Jan 2013
207.1
484,922
478,665
473,262
465,135
459,442
449,041
441,722
433,321
428,998
424,333
422,399
420,009
414,169
411,878
408,442
401,764
397,085
388,728
386,152
385,375
384,897
382,643
381,241
- 20 -
Jan 2013
Savings Deposits Rate
Jan 2014
Bank Cards
Number Of Cards (mn)
565
196
686
627
247
225
751
270
292
249
266
285
305
233
136
153
173
196
222
2009
2010
2011
2012
2013
Credit Cards
Debit Cards
819
Private Label
41.5
2009
45
2010
48
2011
51.8
2012
55.7
2013
- 21 -
2,684
3,624
3,150
3,522
2,430
2009
1,000
4,109
853
4,509
4,041
401
2,905
130
2010
2011
Credit Cards
2012
2013
6.1
19.6
54.1
Dec 2009
6.9
22.3
70.9
81.0
Dec 2010
Dec 2011
161
337
2009
2010
2011
480
553
638
2012
2013
2014f
Debit Cards
62%61%
108.6
92.4
15%
11%
15%
12%
3% 4%
Dec 2012
Revolving Credit
362
10.6
25.5
9.8
24.3
300
245
203
Credit Cards
Dec 2013
North
Northeast
Southeast
Credit Cards
Installment Credit
Source: Abecs
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
498
271
8.9
24.1
614
411
Debit Cards
725
- 22 -
South
Debit Cards
7% 9%
Central West
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 Liquidao e de Custdia (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.
Source: Bacen
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
- 23 -
- 24 -
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.
- 25 -
325.8
39.2
40.3
282.4
32.2
21.1
19.8
23.6
28.6
22.6
3.03%
123.3
15.3
19.1
2.83%
0.13%
Dec 2012
Dec 2013
SMEs
Dec 2013
Source: Bacen
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
28.4
0.14%
Dec 2012
27.7
Jan
Jul
Jan
Jul
Jan
Jul
Jan
Jul
Jan
Jul Dec
2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2013
89.0
76.3
95.3
74.4
89.8
89.4
111.0
85.0
112.8
150.0
177.4
210.5
24.8
- 26 -
Large
9.2%
Dec 2009
Dec 2010
Dec 2011
7.0%
5.6%
3.6%
6.8%
4.9%
4.9%
Dec 2012
Dec 2013
Dec 2009
Funding Cost
Dec 2010
Dec 2011
Gross Margin
6.1%
8.7%
7.0%
7.5%
7.7%
5.6%
12.4%
7.3%
14.0%
8.4%
16.0%
16.1%
16.7%
- 27 -
Dec 2012
Net Margin
Dec 2013
69.19
68.94
66.79
67.34
68.59
68.19
69.24
71.72
70.42
73.36
72.93
78.36
76.00
73.73
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
Jul 2012
Oct 2012
Personnel
Jan 2013
Apr 2013
- 28 -
Jul 2013
Operating Income
Oct 2013
83.94
25.30
40.47
84.02
24.26
40.00
81.79
24.21
38.87
24.26
37.88
81.59
24.30
36.04
80.46
24.24
35.04
79.52
23.17
34.03
77.82
22.33
32.92
Apr 2012
82.85
Dec 2013
- 29 -
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.
- 30 -
19.4
120.9
137.6
Jan
2009
14.5
Jul
2009
10.6
7.0
6.5
Jan
2010
Jul
2010
Jan
2011
Jul
2011
Jan
2012
Jul
2012
Jan
2013
50.4
63.1
99.5
110.8
19.5
14.3
9.5
42.7
51.7
44.9
59.1
24.6
216.4
210.7
217.8
233.1
197.3
181.4
262.9
279.6
4.36%
3.54%
0.69%
0.62%
Dec 2012
Dec 2012
SMEs
Dec 2013
Source: Bacen
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
Dec 2013
- 31 -
Large
5.5
7.3
Jul Dec
2013 2013
Dec 2009
Dec 2010
Dec 2011
10.0%
10.8%
10.6%
Dec 2013
Dec 2009
Funding Cost
Dec 2010
Dec 2011
Gross Margin
5.7%
5.6%
6.0%
6.0%
Dec 2012
7.2%
7.7%
9.9%
8.7%
9.0%
8.1%
17.2%
18.5%
11.7%
11.9%
20.5%
20.3%
20.9%
- 32 -
Dec 2012
Net Margin
Dec 2013
Santander
Revenues
HSBC
Operating Profit
24.8%
14.8%
18.8%
0.2
0.3
2.9
0.5
0.6
2.7
2.8
7.3
25.2
16.6%
14.9%
0.6
0.8
5.1
Net Profit
18.0%
15.7%
Operating Profit
Safra
18.6%
16.9%
Revenues
Bradesco
18.2%
17.8%
Ita Unibanco
5.7
8.6
8.7
25.8%
27.9%
29.8%
30.5%
41.8
42.2
2009
Citibank
Equity
Net Profit
2010
- 33 -
2011
Assets
2012
Deposits
2013
71.89
69.64
67.59
70.10
Dec 2013
Sep 2013
Jun 2013
Mar 2013
Dec 2012
Sep 2012
Jun 2012
Mar 2011
72.23
71.31
65.04
Mar 2012
Dec 2010
65.71
71.76
69.60
68.94
Dec 2011
64.45
Sep 2011
63.92
Jun 2011
64.01
Sep 2010
Jun 2010
Mar 2010
Dec 2009
67.07
71.70
Apr 2012
Jul 2012
Oct 2012
Personnel
Apr 2013
- 34 -
Jul 2013
Operating Income
Oct 2013
59.04
48.83
149.34
154.03
59.30
48.67
149.71
58.41
47.92
146.50
47.63
Jan 2013
57.60
145.93
57.15
47.54
143.71
56.42
45.93
56.54
45.74
56.05
44.26
145.35
145.73
Dec 2013
- 35 -
BNDES
2009
Net Profit
2011
11,688
25.5%
2,452
2012
2013
Equity Earnings
50,246
55,000
1.6%
1.3%
1.1%
0.20%
2009
0.15%
2010
0.14%
2011
0.06%
2012
0.01%
2013
Return on Assets
Delinquency Rate
41,000
10,127
12,230
15,434
17,042
15,441
2009
2010
2011
2012
2013
National Treasury
Source: Company data, Wall Street Journal, FAT Workers Support Fund
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
2.2%
Comments
107,052
FAT
16.9%
2.0%
23.1%
18.8%
2,644
2010
31.0%
8,150
11,908
Performance (%)
8,126
9,048
6,488
6,962
7,039
6,159
6,735
5,821
3,990
9,913
- 36 -
BNDES (cont'd)
Loan Portfolio (BRL mn)
492,148
425,518
361,575
Commerce &
Services
27.0%
283,671
Infrastructure
32.7%
Dec 2009
Dec 2010
Dec 2011
Dec 2012
Agribusiness
9.8%
Dec 2013
Medium 6.5%
South 22.6%
Southeast
45.7%
Central West
11.0%
Micro/Small
24.9%
Large
Corporation
61.0%
North 7.2%
- 37 -
Northeast
13.5%
Banco do Brasil
Financial Performance (BRL mn)
2011
2,349
2012
693
492
472
388.2
465.1
519
498.4
3,230
300.8
2010
2,265
1,354
992
2009
581
637.6
23,301
15,758
21,071
12,205
18,242
12,126
11,703
16,125
10,148
13,511
2013
Dec 2009
Net Profit
Fee Income
Income from Insurance, Pension Plans e Savings Bonds
Dec 2010
Dec 2011
Loan Portfolio
Dec 2012
Dec 2013
Deposits
Comments
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.
Source: Company data
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
- 38 -
321.4
18.4
67.1
144.0
Transport &
Automobiles
12%
Services 6%
Electric Energy
7%
323.2
270.6
210.2
176.4
692.9
56.8
144.8
580.8
50.2
108.0
465.1
35.0
89.4
388.2
23.0
75.7
Others 33%
Foods 12%
91.8
113.1
130.6
152.0
168.1
Dec 2009
Dec 2010
Dec 2011
Dec 2012
Dec 2013
Individuals
Corporate Entities
Agribusiness
Civil
Construction
10%
Outside Brazil
91.6%
Dec 2009
94.5%
93.9%
93.7%
Dec 2010
5.5%
6.1%
6.3%
Dec 2011
AA-C
Dec 2012
Oil 10%
Comments
5.0%
95.0%
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.
Dec 2013
D-H
Metallurgy
10%
- 39 -
2011
78,475
2012
449.7
293.3
15,836
22,148
14,043
18,139
14,641
16,716
73,368
78,474
628.3
562
284
154.4
131.6
2013
Dec 2011
Dec 2012
271.3
192.1
Dec 2013
Operating Revenues
Banking Service Fee & Income from Banking Charges
Net Income
Comments
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.
Source: Company data, Financial Times
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
- 40 -
Personal Loans
5.7%
Credit Cards
11.2%
7.4%
6.6%
5.6%
5.8%
4.0%
4.2%
5.8%
4.9%
International
8.1%
SMEs 16.3%
2.9%
6.9%
3.5%
4.8%
3.7%
3.2%
2.0%
Mortgage 9.1%
Payroll 4.7%
Corporate
36.6%
Individuals
Corporate
Total
Comments
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.
- 41 -
46,494
6,723
6,811
5,195
73,049
4,325
5,640
34,391
5,183
4,603
27,967
14,227
58,147
5,881
6,439
1,376 1,603
212 216
2011
2012
2013
Operating Income
Net Profit
Banking Fees
2012
Performance (%)
66.1%
59.0%
26.3%
1.01%
2010
Return on Assets
29.6%
1.14%
2011
60.4%
25.9%
26.2%
Return on Equity
Others
0.86%
2013
Operating Efficiency Ratio
Government
Services
2013
Comments
61.2%
0.93%
2012
Asset Management
- 42 -
69.1%
68.5%
Housing 55%
15.2%
18.1%
10.3%
11.2%
7.5%
8.7%
42.6%
52.8%
15.7%
14.0%
7.3%
9.6%
35.5%
35.1%
2012
Infrastructure &
Development
8%
Personal
Loans 1%
Home Equity
1%
Payroll
Deductable
Loans 9%
3.8%
3.8%
3.8%
3.7%
2.0%
2.1%
2.0%
2.0%
2.1%
Dec
2011
Mar
2012
Jun
2012
Sep
2012
Dec
2012
Caixa
3.6%
3.4%
SMEs 11%
Government
Large
3%
Corporations
5%
Comments
3.3%
3.0%
2.3%
2.3%
2.4%
2.3%
Mar
2013
Jun
2013
Sep
2013
Dec
2013
Market
Others 7%
- 43 -
2009
2010
2012
Operating Income
Securities 6%
12,202
11,523
2011
Fee Income
17,512
17,552
15,223
16,289
11,198
13,372
14,288
9,804
11,616
10,066
7,586
Checking
Accounts 18%
2013
Fees 28%
Net Income
Comments
Asset
Management
12%
Collection 7%
Tax Payments
2%
Consortium
4%
Custody/Broke
rage 3%
Others 7%
Cards 36%
Source: Company data
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
Insurance 31%
Loans 28%
Funding 7%
- 44 -
30.3%
21.9%
431.1
388.4
26.9
321.1
265.2
23.1
7.5
27.3
26.3
17.7
38.2
41.5
401.7
34.9
10.7%
53.2
44.2
49.8
59.8
Loan Portfolio
56.1
64.4
124.1
104.0
95.8
69.0
80.7
33.1
38.4
40.6
Dec 2011
Dec 2012
Dec 2013
53.4
59.7
35.7
37.5
Dec 2009
Dec 2010
Asset
Insurance,
Management Private Pension
Plans and
Savings Bonds
Premiums
Private Banks
Saving Deposits
Debentures
Funds from Issuance of Securities
Saving
Depaosits
Comments
44.2
Demand Deposits
Time Deposits
Borrowing & Onlending
Subordinated Debts
Demand
Deposits
Banking System
46.0
102.2
13.4%
24.2%
18.1%
57.7
51.4
36.9
90.5
35.9
17.1%
32.7%
26.3%
- 45 -
Personal 13%
Credit Card
18%
Leasing 2%
Sureties &
Guarantees
23%
Overdraft 4%
Credit Card
4%
Mortgage 10%
Rural 6%
Export
Financing 5%
BNDES
Finame 5%
Overdraft 3%
Payroll 20%
Rural 2%
Commercial
Portfolio 11%
Mortgage 5%
Operations
Abroad 11%
Others 4%
Others 4%
Working
Capital 15%
BNDES
Finame 11%
Vehicle 21%
6.2%
6.2%
6.2%
6.0%
4.2%
4.2%
4.3%
4.2%
4.2%
4.1%
4.2%
4.1%
4.1%
4.0%
0.4%
0.3%
Sep 2012
Dec 2012
0.4%
Mar 2012
0.9%
Jun 2012
Individuals
- 46 -
5.2%
4.0%
3.7%
3.6%
0.3%
0.2%
0.4%
Mar 2013
Jun 2013
Sep 2013
Large Corporates
5.5%
4.0%
SMEs
Total
5.0%
3.7%
3.5%
0.7%
Dec 2013
V. Appendix
- 47 -
Abbreviations
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
Source: Bacen
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.
- 48 -
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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.
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- 49 -