Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 /...

37
Earnings Release 3Q17

Transcript of Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 /...

Page 1: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Earnings

Release 3Q17

Page 2: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

This presentation may include references and statements,

planned synergies, estimates, projections of results, and future

strategy for Banco do Brasil, its Associated and Affiliated

Companies, and Subsidiaries. Although these references and

statements reflect the management’s belief, they also involve

estimates and unforeseen risks. Consequently, results may

differ from those anticipated and discussed here. These

expectations are highly dependent on market conditions, on

Brazil’s economic and banking system performances, as well

as on international market conditions. Banco do Brasil is not

responsible for updating any estimate in this presentation.

Disclaimer

Page 3: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Index

Strategic Guidelines 4

Net Income 5

Earnings Breakdown 6

Market Ratios 7

Commercial Funding 8

Loan Portfolio 9

Gross Disbursements 10

Individuals Portfolio 11

Loans to Companies 12

Agribusiness 13

Delinquency Ratios (+90 days) 14

Delinquency Ratio by Segment 15

ALL Balance and Coverage Ratio 16

Coverage Ratio by Segment 17

Average Risk and Loan Portfolio by Risk Level 18

Provision Expenses Flow / Loan Portfolio 19

NPL Formation 20

NPL Formation by Segment 21

Renegotiated Overdue Loan Portfolio 22

Net Interest Income 23

Spread by Portfolio 24

Net Interest Margin 25

Fee Income 26

Administrative Expenses 27

BIS Ratio 28

Full Application of Basel III Rules 29

Guidance 2017 30

Save the date 31

Appendix 32

Page 4: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Profitability,

efficiency, control of

delinquency and

capital

Customer

Experience

Digital

Transformation

Str

ate

gic

Gu

ide

lin

esHighlights 9M17 / 9M16

Fee Income

9.9% growth.

Administrative Expenses

Under control, 2.7% decline.

Cost to income ratio¹

Reached 38.5%.

(1) Cost to Income Ratio: Administrative Expenses / Operating Revenues accumulated in 12 months. Data from the Income Statement with

Reallocations.4

Page 5: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Net Income

+45.1%

9M179M16

5.424

2.337

2.708

3.087

7.872

5.164

Adjusted Net Income 1HAdjusted Net Income 3Q

+11.8%

9M179M16

7.070

2.246

5.062

7.903

2.841

4.824

Net Income 1HNet Income 3Q

5

3Q16 2Q17 3Q17 9M16 9M17

Shareholders ROE % 13.4 14.1 14.1 10.1 13.5

Market ROE % 12.0 12.8 12.8 9.1 12.3

Profitability Ratios

R$ billion

Page 6: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Earnings Breakdown

6

(3.24)

(4.68)

14.25

(6.26)

6.56

(7.92)

(3.93)

2.71 0.13 2.84

Personnel

Expenses

NII ALL

(9.38)

Fee Income

(14.17)

OtherAdministrative

Expenses

Adjusted

Net Income

One-Off Items Net Income

7.87

43.33

(19.63)

19.21

(23.55)

(11.48)

0.03 7.90

3Q17

9M17

R$ billion

Personnel

Expenses

Page 7: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Market RatiosDividend Yield² (%)Earnings per Share

Price/Book ValuePrice/Earnings 12 months

(1) Bloomberg estimative on November, 08, 2017 based on analysts’ projections average. Banco do Brasil is not responsible for this information. (2) Dividends and Interest on Capital 12 months / Market Capitalization. Source: Economatica.

Source: Economatica.

3Q16 4Q16 3Q171Q17 2Q17 2017E¹ 2018E¹

6.63

9.74

7.36

11.59

9.0210.96

8.58

1Q17

0.90

3Q173Q16 4Q16 2Q17 2017E¹ 2018E¹

0.74

1.05

0.820.93

1.04 1.03

3Q16 2Q174Q16

3.26

1Q17 3Q17 2017E¹ 2018E¹

4.86

3.012.57 2.68

3.213.670.84 0.86

2Q17 3Q173Q16 4Q16

0.34

1Q17

0.80

0.63

0.90 0.94 0.95 1.01 0.97

Earnings per Share - R$ Adjusted Earnings per Share - R$

4.50

2015 2016 2017E¹ 2018E¹

2.57

5.05

4.12

2.84

4.00

4.67

3.86

Source: Economatica.

7

Page 8: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

(1) Includes the balance of CRI (Certificates of Real Estate Receivables). (2) Includes part of the balances of the Private Securities shown on Notes to the Consolidated Financial Statements.

204.2

584.4

61.6

Sep/16 Sep/17

23.9

69.3

203.5

148.7

Jun/17

150.6

151.8

31.6

142.0

199.4

25.620.1

20.7

Dec/16

148.9

201.2

120.8133.7

64.0

18.3 19.6

Mar/17

61.8

210.5

151.0

62.424.919.0

154.5

113.0

22.0

619.9 613.6 588.5 572.1

Time Deposits Rep. Agreement with Private Securities²Savings Deposits Agribusiness Let. Credit + Mortgage Bonds¹ Demand Deposits Interbank Deposits

Commercial Funding

R$ billion

8

88.788.189.7 86.8 87.5

Adjusted Net Loan Portfolio / Commercial Funding

%

Page 9: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Loan Portfolio – Expanded View¹R$ billion

Jun/17

696.1

277.2

185.9

188.2

44.9

Mar/17

688.7

280.8

185.1

180.1

42.7

Dec/16

708.1

294.7

187.8

179.8

45.7

Sep/16

735.4

316.8

187.6

179.6

51.5

Sep/17

677.0

267.7

187.5

180.7

41.2

CompaniesIndividualsAgribusinessForeign Branches and Subsidiaries

-11.3 -11.4-7.6-6.9 -7.9

Growth in 12 months (%)

(1) It includes private securities and guarantees provided. 9

43.1

25.5

24.4

7.0

26.7

39.5

27.7

6.1

% %

Page 10: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

136168

12312091

117100

3Q172Q171Q174Q163Q162Q161Q16

195217

184

139

97106100

3Q162Q161Q16 3Q172Q171Q174Q16

126

171

86

140

91

157

100

4Q163Q162Q161Q16 3Q172Q171Q17

123157

12111199107100

3Q172Q171Q174Q163Q162Q161Q16

10

Brazil

Disbursements – quarterly average¹ (1Q16 base 100)

Agribusiness

Individuals

Companies

(1) Does not include revolving lines of credit and overdraft.

Page 11: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

+0.8%

Sep/17Jun/17

53.6

43.0

10.5

Sep/16

53.1

41.2

11.9

43.7

9.9

53.5

Mortgage - IndividualsMortgage -Companies

2.151.42 2.27

Individuals Mortgage NPL 90 (%)²

+4.4%

Sep/17Jun/17

64.2

87.8%

9.6% 2.6%

Sep/16

62.8

88.5%

8.5% 3.0%

87.7%

65.6

9.7% 2.6%

Civil Servants

INSS´s Retirees and Pensioners

Private Sector Employees

1.821.30 1.89

NPL +90 days (%)²

-2.0%

Sep/17Jun/17

19.8

Sep/16

20.3 19.9-25.1%

Sep/17Jun/17

5.4

Sep/16

6.8

5.1

4.942.78

4.86

NPL +90 days (%)²

1.290.97 1.06

NPL +90 days (%)²

R$ billion

Individuals Portfolio¹: Lower risk lines of credit

Individuals

Market

Share

7.8%

Market

Share

21.6%

(1) BB Organic Portfolio. (2) BB Classified Loan Portfolio.

PayrollMortgages

Auto LoansSalary Loans

11

6.1%

Chg. (%)

on Sep/16

Page 12: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Loans to Companies – Expanded View¹

-3.4%-15.5%

Sep/17

267.7

215.9

51.7

Jun/17

277.2

219.8

57.4

Sep/16

316.8

241.9

74.9

Middle Market, Corporates and GovernmentVery Small and Small Companies²

-30.9%

-10.7%

12

-9.9%

-1.8%

(1) It includes private securities and guarantees provided. (2) Companies with annual revenues up to R$ 25 million.

Chg. (%) on Sep/16 Chg. (%) on Jun/17

R$ billion

Page 13: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

60.1 % Market Share²

158.2

Jun/17Sep/16

30.530.0

149.1

24.2

156.5

Sep/17

179.6188.2 180.7

+0.6% -4.0%

Agroindustrial Rural

Agribusiness¹R$ billion

(1) It includes Rural Product Bills and guarantees provided. (2) Source: Brazilian Central Bank – Sep/2017. 13

Disbursements in the 3rd Quarter

(R$ billion)

+5.0%

-20.7%

Chg. (%) on Sep/16

-19.2%

-1.1%

Chg. (%) on Jun/17

Crop 17/18

15.5%

Crop 16/17

18.8%

26.9%

54.3%

64.9%

19.6%

15.6

19.3

+24.1%

Medium Size Producers - Pronamp

Small Producers - Pronaf

Companies

Page 14: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

3.50

Sep/16

4.11

3.29

Dec/16

3.94

Mar/17

3.89

Jun/17 Sep/17

BB

14

3.90

3.703.70 3.70

3.60

Banking Industry

Delinquency Ratio (+90 days)¹

(1) BB Classified Loan Portfolio.

Page 15: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

8.93

5.26

5.97

8.47

Dec/16

6.94

1.811.79

9.29

Sep/16

11.09

2.30

Mar/17

2.59

6.46

9.41

2.24

Jun/17

6.58

Sep/17

6.70

Dec/16

2.56 2.67

0.96

5.26

Mar/17

5.83

1.61

Sep/16

0.99

3.09

Jun/17

6.83

1.28

3.34

7.35

1.39

3.49

Sep/17

NPL Ratio +90 days (%) NPL Ratio +15 days (%)

Individuals AgribusinessCompanies

Delinquency Ratio¹ by Segment

15(1) BB Classified Loan Portfolio.

Page 16: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

159.4

143.3

167.7

146.5

152.3

178.4186.1186.5

175.7 174.4

ALL Balance and Coverage Ratio

R$ million

(1) Banking Industry: Ratio created through Average Risk Index available at SGS (Time Series Management System) of the Brazilian Central Bank. 16

34,535

Sep/16

34,728

1,535

37,806

Sep/17Dec/16

1,686

36,070

Mar/17

36,414

36,030

1,851

Jun/17

35,675

2,13037,514 37,881

Supplementary ProvisionMinimum ProvisionRequired Provision

%

BB +90 days BI +90 days¹

Page 17: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Coverage Ratio by Segment

4Q16

228.9

145.8

199.6

3Q16

295.6

141.0

190.9

3Q17

161.7

137.8

171.2

2Q17

167.0

126.0

177.1

1Q17

181.7

128.3

183.9

153.1

829.7

206.4435.0

118.9

ForeignAgribusinessCompaniesIndividuals

17

%

Page 18: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Average Risk and Loan Portfolio by Risk Level

Loan Portfolio by Risk Level

91.0% of the

transactions are

concentrated in

levels AA to C

(1) Required Provision / BB Classified Loan Portfolio. Source: SGS (Brazilian Central Bank). 18

9.0%

10.1%

20.9%

10.5%

49.5%

D-HCBAAA

Jun/17

6.90

5.89

Mar/17

6.80

5.70

Dec/16

6.60

5.52

Sep/16

6.50

5.58

Sep/17

6.01

6.70

Banking IndustryBanco do Brasil

Average Risk¹ (%)

Page 19: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Provision Expenses Flow / Loan Portfolio (%)0.70

0.270.450.41 0.39

0.55

0.75

1.66

0.99

0.66

0.87

0.55

0.94

1.70

1.04

0.46

0.91

1.83

1.05

-0.24

1.18

2.21

1.15

0.99

1.55

1,627

929

3,526

175

3Q16

6,644

1,411

4,370

132 730

2Q17

6,658

1,743

3,979

188 748

1Q17

6,713

1,677

4,370

60 606

4Q16

7,486

2,207

5,517

98

-336

3Q17

6,257

Individuals

Companies

Foreign

Agribusiness

ALL by Segment (R$ million)¹

(1) Quartely ALL expenses including the write-off recovery.

Agribusiness

Individuals

Companies

Total

Foreign

19

Page 20: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

NPL Formation

6.97

3Q16

7.12

2Q16

9.73

1Q16

7.39

4Q15

6.22

3Q15

5.59

3Q17

4.68

2Q17

6.84

1Q17

9.75

4Q16

0.731.07

1.49

1.041.031.38

1.030.870.81

133.6697.40

68.82107.4393.3285.05

123.80112.32104.30

2Q17

8.44

1Q17

10.10

4Q16

7.63

3Q16

7.55

2Q16

10.48

1Q16

7.93

4Q15

7.13

3Q15

6.16

3Q17

5.13

New NPL (R$ billion)¹

24.16% of the total

contracts in 3Q17 were 90

days past due transactions.

Including the past

due renegotiated

loan portfolio³

20

78.94

121.90

78.8766.4798.1488.03

115.3498.1094.70

0.80

1.321.551.131.09

1.491.101.000.89

New NPL / Loan Portfolio (%)²

(1) Quarterly change in the balance of transactions over 90 days past due + current quarter write-off. (2) It considers the Classified Loan Portfolio of the previous quarter.

(3) Flow of transactions over 90 days past due in the renegotiated loan portfolio.

Quarterly ALL/New NPL (%)

Page 21: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

NPL Formation by Segment

4Q163Q15

1.28

3Q174Q15 1Q16 2Q16 3Q16 1Q17 2Q17

1.16 1.17

1.761.70 1.61 1.571.87 1.75

0.65 0.840.65 0.950.93 0.68 0.85 1.00 0.94

105.46 113.12 140.2082.97 87.75100.34 89.78 99.12 92.98

Ind

ivid

ua

ls

Ag

rib

us

ine

ss

2Q173Q163Q15 4Q15 4Q161Q16 2Q16 1Q17

4.71

3Q17

3.61 4.155.02 4.63 4.55

6.41

4.11

2.22

New NPL (R$ billion)¹

94.34106.13158.52

103.98 100.94 115.35 121.20 96.8668.14

Quarterly ALL/New NPL (%)

1.26 1.43 1.731.58 1.721.750.95

1.69 2.57

21

Co

mp

an

ies

0.98

2Q16

0.87

3Q15 3Q16

0.70

4Q15 1Q16 2Q174Q16 1Q17 3Q17

0.700.84

1.02

0.37

0.720.89

105.7276.26 113.28 106.18 104.44 86.40

-46.6159.35 104.54

0.42 0.480.21

0.49 0.56 0.400.38 0.57 0.47

New NPL / Loan Portfolio (%)²

(1) Quarterly change in the balance of transactions over 90 days past due + current quarter write-off. (2) It considers the Classified Loan Portfolio of the previous quarter.

Page 22: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Renegotiated Overdue Loan Portfolio

22

3Q16 2Q17 3Q17

Credits Renegotiated When Past Due - Changes

Initial Balance 25,050 26,618 27,042

Contracts 2,758 3,622 1,870

Amortization Net of Interest¹ (744) (1,211) (773)

Write-Off (1,370) (1,986) (2,273)

Past due Renegotiated Loan Portfolio (A) 25,694 27,042 25,867

ALL Balance (B) 10,784 12,924 12,415

NPL + 90 days (C) 6,370 7,094 6,360

Indicators - %

ALL / Loan Portfolio (B/A) 42.0 47.8 48.0

NPL + 90 days / Loan Portfolio (C/A) 24.8 26.2 24.6

ALL Balance/NPL + 90 days (B/C) 169.3 182.2 195.2

Credits Renegotiated/Classified Loan Portfolio 3.8 4.2 4.1

2Q17

1.67

1Q17

1.97

4Q16

2.37

3Q16

2.10

3Q17

1.54

New NPL (R$ billion)²

6.277.289.248.37 5.69

New NPL / Loan Portfolio (%)³

NPL Formation

R$ million

(1) Principal and interest payments net of interest accrued in the period. (2) Quarterly change in the balance of over 90 days past due transactions + current quarter write-off. (3) It considers the Classified Loan Portfolio of the previous quarter.

Credits Renegotiated Contracts %

0 to 14 days Past due 621 33.19

15 to 90 days Past due 588 31.43

Over 90 days Past due 452 24.16

Writen-Off Recovery 210 11.22

Total 1,870 100

Page 23: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Net Interest Income

(1) It includes senior bonds, subordinated debt, and Hybrid Instruments in Brazil and abroad.

(2) It includes the result from interest, tax hedging, derivatives, and other financial instruments that offset the effects of the exchange rate variation in the result.

(3) Series revised (Funding Expense for Institutional Funding and Treasury). Impact in all tables with those lines.

R$ million

23

Chg. (%) on

3Q16 2Q17 9M16

Net Interest Income 15,099 14,606 14,247 (5.6) (2.5) 44,008 43,330 (1.5)

Net Interest Income W/O Recovery 14,131 13,212 13,153 (6.9) (0.4) 40,796 39,886 (2.2)

Loan Operations 26,117 21,786 21,412 (18.0) (1.7) 76,506 66,809 (12.7)

Funding Expenses (11,366) (8,404) (7,814) (31.3) (7.0) (33,330) (25,972) (22.1)

Financial Expense for Institutional Funding¹ ³ (3,524) (3,040) (3,197) (9.3) 5.2 (10,358) (9,603) (7.3)

Treasury² ³ 2,904 2,870 2,753 (5.2) (4.1) 7,978 8,652 8.5

Recovery of Write-offs 968 1,394 1,094 13.0 (21.6) 3,212 3,444 7.2

9M16 9M173Q16 2Q17 3Q17Chg. (%) on

Page 24: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Spread by Portfolio

(1) Government loans not included.

2Q17

4.72

5.01

7.34

5.07

4.67

16.32

7.42

3Q17

6.10

7.86

16.48 16.12

1Q17

4.83

6.05

7.67

16.11

4Q16

5.00

6.34

7.98

16.60

3Q16

4.97

AgribusinessCompanies¹Loan OperationsIndividuals

24

%

Page 25: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Net Interest Margin¹

25

3T17

2.54

4.56

2T17

2.54

4.70

1T17

2.54

4.77

4T16

2.54

5.00

3T16

2.69

4.83

%

Spread Ajustado pelo riscoSpread Global

(1) Net interest income / average balance of earnings assets, annualized.

Page 26: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

R$ million

Fee Income

26

Chg. (%) on

3Q16 2Q17 9M16

Fee Income 5,972 6,432 6,562 9.9 2.0 17,476 19,207 9.9

Checking Account Fees 1,600 1,712 1,777 11.1 3.8 4,569 5,087 11.3

Asset Management Fees 1,119 1,336 1,419 26.9 6.2 3,198 4,051 26.6

Insurance, Pension and Premium Bonds 751 665 809 7.7 21.5 2,283 2,237 (2.0)

Credit / Debit Cards¹ 460 486 487 5.9 0.1 1,342 1,460 8.8

Loan Fees 374 550 403 7.5 (26.8) 1,179 1,365 15.8

Collections 424 372 354 (16.3) (4.8) 1,264 1,109 (12.2)

Billings 254 270 270 6.4 0.0 771 813 5.4

Capital Market 165 180 198 20.1 10.4 485 548 13.0

Consortium 156 175 191 22.3 9.3 394 527 33.6

National Treasury and Manag. of Official Funds 151 171 177 17.7 3.8 432 515 19.2

Interbank 45 39 36 (18.6) (7.5) 134 117 (12.6)

Other 475 475 440 (7.3) (7.3) 1,424 1,377 (3.3)

3Q16 2Q17 3Q17 9M16 9M17Chg. (%) on

(1) Series revised in 3Q17 in accordance with Bacen Circular Letter No. 3,828/2017.

Page 27: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

39.738.5

Cost to Income Ratio (12 months)

9M17

9,380

15,028

9M16

9,173

14,173

24,201 23,553

-2.7%

Personnel Expenses Other Administrative Expenses

R$ million

Administrative Expenses and Cost to Income Ratio¹

27

2Q17

5,283

3,137

3Q16

3,236

4,6794,817

3Q17

3,047

8,419 7,864 7,915

-6.0%

38.539.7 38.9

(1) Cost to Income Ratio: Administrative Expenses / Operating Revenues. Data from the Income Statement with Reallocations. (2) Very Small and Small Companies.

Sep/16 Sep/17

Points of Service

Employees

Branches

109,159 99,305

5,430 4,871

1,736 2,062

Own Service Network 17,092 15,085

Exclusivo Office

216 249

Estilo Office - 9

Customer Service

Points326 762

Estilo Branch

11 63

MPE² Office 11 39

-0.3

-0.3

-2.6

-6.3

-0.4

200.0

-5.9

61.5

21.9

5,192 4,511Traditional Branches -1.1

238 360Digital Service 11.1

∆ Sep/17 (%)

on Sep/16 on Jun/17Jun/17

99,603

4,885

2,117

16,098

250

3

810

39

32

4,561

324

-9.0

-10.3

18.8

-11.7

15.3

133.7

472.7

254.5

-13.1

51.3

-

Page 28: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

%

BIS Ratio

28

17.5918.48 18.15 18.01

19.15

12.18 12.79 12.41 12.4213.29

9.07 9.59 9.20 9.18 10.04

Sep/16 Dec/16 Mar/17 Jun/17 Sep/17

Tier II Tier I Common Equity Tier I

Page 29: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Use of Tax Credits

0.4

BIS Ratio with Fully

Loaded Basel III Rules

18.2

RWA Rules Anticipation

-0.3

BIS Ratio with

full deductions

18.519.1

BIS Ratio

-0.6

Deductions Schedule

Anticipation

Simulated BIS Ratio

under complete

Basel III Rules

18.6

0.3

Simulated Tier 1

under complete

Basel III Rules

12.7

Use of Tax CreditsTier 1 with Fully

Loaded Basel III Rules

12.4

RWA Rules Anticipation

-0.2

Tier 1 with full

deductions

12.6

Deductions Schedule

Anticipation

-0.7

Tier 1

13.3

BIS

Full Application of Basel III Rules

9.3

Deductions Schedule

Anticipation

-0.7

Common Equity

Tier I (CET1)

10.0

RWA Rules Anticipation

-0.2

CET1 with full

deductions

Simulated CET1

under complete

Basel III Rules

9.5

Use of Tax Credits

0.3

CET1 with Fully

Loaded Basel III Rules

9.1

Tie

r1

CE

T 1

%

29

Page 30: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Guidance 2017

30

Guidance

2017

9M17

Performance

Adjusted Net Income - R$ billion 9.5 to 12.5 7.9

NII (Net of Recovery of Write-offs) - % -4 to 0 -2.2

Organic Domestic Loan Portfolio - Broad Definition - % -4 to -1 -6.9

Individuals - % 2 to 5 1.1

Companies - % -11 to -8 -16.0

Rural Loans - % 6 to 9 5.0

ALL Expenses net of Recovery of Write-offs - R$ billion -23.5 to -20.5 -16.2

Fee Income - % 6 to 9 9.9

Administrative Expenses - % -2.5 to 0.5 -2.7

Page 31: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

December, 6th – 2:30 p.m.

Apimec Meeting¹

Renaissance Hotel - São Paulo

Save the

date

(1)The meeting will be broadcasted live through the Investor Relations website.

Page 32: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Appendix

Guarantees and Provisions 33

One-Off Items 34

Income Statement with Reallocations – Main Lines 35

Earning Assets Breakdown 36

Page 33: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Guarantees and Provisions

Jun/17

356

15,254

Mar/17

379

17,178

Dec/16

431

17,957

Sep/16

491

18,241

Sep/17

324

13,928

ProvisionsGuarantees Provided

2.32.22.42.7 2.3

Provisions/Guarantees

R$ million

33

Page 34: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

One-Off ItemsR$ million

34

Chg. (%) on

3Q16 2Q17 9M16

Adjusted Net Income 2,337 2,649 2,708 15.9 2.2 5,424 7,872 45.1

One-Off Items (91) (30) 133 - - 1,646 31 (98.1)

Economic Plans (323) (64) (280) (13.3) 336.0 (890) (571) (35.9)

Extraordinary Provision for Law suits 147 6 10 (93.4) 72.2 813 103 (87.3)

Additional Allow ance for Loan Losses - - - - - 3,257 - -

IPO - IRB - - 173 - - - 173 -

Neonergia - - 183 - - - 183 -

Tax Eff. and Stat. Prof. on One-Off Items 85 28 47 (44.5) 66.3 (1,532) 142 -

Net Income 2,246 2,619 2,841 26.5 8.5 7,070 7,903 11.8

Chg. (%) on3Q16 2Q17 3Q17 9M16 9M17

Page 35: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Income Statement with Reallocations – Main LinesR$ million

Chg. (%) on

3Q16 2Q17 9M16

Net Interest Income 15,099 14,606 14,247 (5.6) (2.5) 44,008 43,330 (1.5)

Allowance for Loan Losses (6,644) (6,658) (6,257) (5.8) (6.0) (24,065) (19,628) (18.4)

Net Financial Margin 8,455 7,948 7,990 (5.5) 0.5 19,943 23,702 18.8

Fee income 5,972 6,432 6,562 9.9 2.0 17,476 19,207 9.9

Contribution Margin 13,153 13,149 13,294 1.1 1.1 33,630 39,158 16.4

Administrative Expenses (8,419) (7,864) (7,915) (6.0) 0.7 (24,201) (23,553) (2.7)

Commercial Income 4,613 5,157 5,251 13.8 1.8 9,100 15,231 67.4

Other Operating Income 87 30 (135) - - 536 (9) -

Income Before Taxes 4,126 4,731 4,330 4.9 (8.5) 7,800 13,274 70.2

Income and Social Contribution Taxes (1,079) (1,334) (799) (26.0) (40.1) (408) (3,128) -

Statutory Profit Sharing (303) (354) (362) 19.5 2.1 (734) (1,024) 39.4

Adjusted Net Income 2,337 2,649 2,708 15.9 2.2 5,424 7,872 45.1

One-Off Items (91) (30) 133 - - 1,646 31 (98.1)

Net Income 2,246 2,619 2,841 26.5 8.5 7,070 7,903 11.8

3Q16 2Q17 3Q17Chg. (%) on

9M16 9M17

35

Page 36: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Earning Assets Breakdown

36

4.7%

44.9%50.4%

Other Secur. + Interbank Invest. w/o Hedge Loans and Leasing Operations

4.9%

45.5% 49.5%

Agribusiness32.2%

Retail Operations¹35.3%

32.4% Wholesale Operations²

32.6%

33.9%

33.5% Retail Operations¹

Wholesale Operations²

Agribusiness

3Q172Q17

(1) Includes loans with individuals, very small and small companies. (2) Includes loans with Government and remaining companies.

Page 37: Earnings Release 3Q17 - BB · Experience Digital Transformation gic Guidelines Highlights 9M17 / 9M16 Fee Income 9.9% growth. Administrative Expenses Under control, 2.7% decline.

Av. Paulista, 1230

18th. floor – Bela Vista

São Paulo/SP - Brasil - CEP 01310-100

www.bb.com.br/ir [email protected] +55 (11) 4298-8000