Institutional Presentation 4Q19 - Banco...
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Institutional Presentation 4Q19
Transcript of Institutional Presentation 4Q19 - Banco...
Institutional Presentation4Q19
Agenda
2
Banco BMG
Assets
Liabilities
Corporate Governance
Ratings
Track record of innovation
3
Precursor of third-party correspondent banks
channel
JV with
Payroll Credit Card
Pioneering
Franchising
Distribution channel
Asset Light
Owner’s view
Our Mission
popularizefinancial services
in Brazil
Absolute leader
Payroll Loan
Digital Bank
User friendly
Artificial Intelligence
Growth with profitability
2.73.0
3.5
4.1
2016 2017 2018 2019
138 113
258344
5.7% 5.1%10.8% 12.5%
-50,0%
-40,0%
-30,0%
-20,0%
-10,0%
0,0%
10,0%
20,0%
0
100
200
300
400
500
600
2016 2017 2018 2019
Recurring net income Recurring ROAE(%)
Number of clients
4
Credit portfolio
R$ MillionMillion
13.2%15.7%
19.0%22.5%
5.6%9.7%
12.9% 14.4%
2016 2017 2018 2019
NIM NIM adjusted to the cost of credit
Net interest margin Recurring net income and ROAE
+20%
% p.a. R$ Million e % p.a.
+23%
5,4186,711
7,8669,667
1,5381,293
1,215
1,625
1,531628
432
163
8,487 8,632
9,513
11,455
2016 2017 2018 2019
Retail Wholesale Run off Column1
Banco BMG
1.75Cross-selling Index
Full DigitalBanking
5
Client-centricityOne-Stop Shop and Client Lifecycle
Tech-enabled
Full Biometric Profile
DataAnalytics
ArtificialIntelligence
Phygital
4.1 mm Active clients
2.0k Third-party bank correspondents
802Stores
Partnerships
Customers with different needs impact the channel strategy and define the products
Credit and debit card
Investments
Checking account
InvestorSaver
No-choice borrower
Traditional borrower
Payroll loan
Payroll credit card
Directdebit loan
Insurance
Save for me
Poor and financially uneducated
Average Income
R$ 708/month to R$ 5,400/month 93%
PHYGITAL STRATEGY
6
Client’s PHYGITAL Journey
SCALE GAIN
GREATER LOYALTY
HIGHER CROSS SELL
HIGHER MARGIN
LOWER CAC
PHYGITAL
Physical channel helps the onboarding
of the digital bank
Client goes to the physical channel
Client acquires new products and benefits
Meritocratic alignment
Maintains maximum profitability Optimizes service capacity
Client hires credit
products
Client renews credit
products
PHYSICAL DIGITAL
help!: better than a branch and as
efficient as a digital bank
7
Digital banks
Better time to market
+Traditional banks
Payer of social security
Face-to-face relationship
Owner's View
Payer of social security
Face-to-face relationship
Lean and scalable cost structure
=
Full biometric profile
Pinpad
FacialBiometry
Fingerprint Reader
Voice Recorder
ElectronicSignature Pad
help! stores
Bank branches
Lean and scalable cost structure
Better time to market
Relationship channel
+security for digital
inclusion
paperless
Digital Bank
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White labelPartnership with
soccer clubs
Duda
Bank Transfers
InvestmentsSave for me
Checking Account
Payments
Credit Card
+
834kaccounts
+770k monthly active
users1
Value Proposition
(Credit Products)Onboarding Loyalty
AI helping operationsfrom beginning until
the end
value created profit share
Digital account
1 – considers all BMG apps
Resumption of payroll loan
9
Payroll loan
Securitization Company
DataPrev
serviceAssignment Limit Value
R$ 1.5 bi
Securitization partnership
1
INSS
1 – Credit assignment without retention of risks and benefits
Origination 4Q19
Volume: R$ 391 million
Agreement: INSS
Average Ticket: R$ 5,000
Average Interest: 1.8% p.m.
Term: 72 months
Assignment 4Q19
Volume: R$ 179 million
Result: R$ 2 million
0.29% p.m.
Payroll Credit Card
PAYROLL CREDITCARD
TRADICIONAL CARD
Credit bureau No Yes
Annuity / sign-up fee No Yes
Interest rate 3% - 5% p.m. ~11% p.m.
Maximum number of installments
Up to 96 months Up to 12 months
Delinquency (NPL) 3% 35%
Target - retirees, pensioners and public employees1
Endorsement of 5% to 10%2 of salary
Minimum installment directly discounted from
payroll
Important mean of payment
Stable and. predictable default rate
Main features
FAVORABLE REGULATORYENVIRONMENT
New Central Bank measures to
reduce bank spread strengthen
payroll credit card
10
1990
Law 8.112:Payroll loan for
federal government employees
Law 10.820/03:Payroll loan for CLT employees, Social
Security retirees and pensioners
2003 2005
INSS/DC 121: Payroll credit card for Social security
(INSS)
2015
Law 13.172/15 : Exclusive margin of 5% on the payroll credit card for
Social Security retirees and pensioners and
government employees
Competitive Advantages
ROBUST LEGISLATION
1 - Market can also operate with private company2 - For municipal and states employees, the consignable margin of the card may vary, reaching up to 10%
Payroll Credit Card
Federal Government
risk1
7,7547,993
7,120 7,316 7,553
4Q18 1Q19 2Q19 3Q19 4Q19
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83.2%
Portfolio Quality – E-H (over 90 days)
R$ Million
Portfolio
1 - Social Security (INSS) + federal government employees 2 - Management view without the loss mitigation of the lender insurance3 - Frequency in which customers used the payroll credit card for purchases in the last 12 months
3.1% 3.0% 3.2% 3.1% 3.3%
3.2% 3.2% 3.4% 3.4% 3.6%
4Q18 1Q19 2Q19 3Q19 4Q19
E-H portfolio E-H portfolio without insurance
of the transactions made with the payroll credit card are for purchases3
main merchants where the
card is used
2
93%
Card usage
DIGITAL INCLUSION
growth of interchange fees (19x18)29.5%
of penetration of mass insurancein the portfolio39%
of Payroll Credit Cards4 million
Netflix
UBER 99Taxi
Google Play
Direct Debit Loan
Portfolio
R$ Million / p.m.
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Features
Portfolio Quality
Personal credit with direct debit from the customer checking account aiming financial reintegration;
Maximum term 15 months
447 532
612685
778
20.7% 20.5% 20.4% 20.3% 20.4%
-30,0%
-20,0%
-10,0%
0,0%
10,0%
20,0%
-
100
200
300
400
500
600
700
800
900
4Q18 1Q19 2Q19 3Q19 4Q19
Portfolio Interest rate
32.9% 30.0% 27.4% 28.5% 28.8%
4Q18 1Q19 2Q19 3Q19 4Q19
E-H portfolio
74% of Direct Debit clients have BMG Payroll Credit Card.
BMG is payer of Social Security (INSS) benefit
Higher efficiency when collecting installments
Lower default rates
Higher cross-selling potencial
53% of the portfolio
(vs. 32% in 4Q18)
comes from clients who receive the INSS
benefit at BMG
60% of the origination
Other Portfolios
6.7% 6.8% 7.4% 7.4% 7.5%
4Q18 1Q19 2Q19 3Q19 4Q19
E-H Portfolio
16.3%19.2% 21.5% 23.4% 22.8%
4Q18 1Q19 2Q19 3Q19 4Q19
E-H Portfolio
299358 383
483
595
7792 100
116
147
0
20
40
60
80
100
120
140
160
180
200
0
100
200
300
400
500
600
700
4Q18 1Q19 2Q19 3Q19 4Q19
Balance (R$) Balance (US$)
Credit Portfolio
U.S. Payroll Loan
BMG Money is an independent company that operates inthe United States with focus on payroll loan for the publicsector employees throughout 27 states;
The transaction is reflected in Banco BMG throughparticipation agreements entered into between BMGMoney and BMG Bank (Cayman).
R$ Million
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Run-off Portfolio
Credit PortfolioR$ Million
Portfolio Quality Portfolio Quality
Banco BMG has the following run-off portfolios: payrollloan, Lendico, home equity and. vehicle financing;
Represents 1.4% of total portfolio.
432
333282
209163
4Q18 1Q19 2Q19 3Q19 4Q19
48 47
57 5459
4Q18 1Q19 2Q19 3Q19 4Q19
Mass Insurance
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Partnership with Generali
Issued Premiums Evolution Sources of Income
R$ 82 million in revenue in 2019
(vs. R$ 54 million in 2018)
R$ 37 million in
net service revenue
R$ 20 million in profit
share
R$ 25 million reduction
in provision expenses
+ +
+23.4%
R$ Million
Means of Payment
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Acquiring company focused on small business establishments located near help! stores and bank correspondents, thus forming
a complete retail ecosystem in Brazil
Microregion
Ecosystem
Bar
Beauty shopLocal shop
Gas station
Newstand Bakery
Construction store
In 2018, the Bank acquired 65% of Granito, with the purpose of
bolstering its product portfolio and increasing its capillarity with BMG's
existing distribution channels. Granito stands out for its
differentiated solutions from the market.
TPV (Total Payment Volume) of R$ 1,292 million (+59% vs 2018);
+15,000 active clients;
Take rate: 3.4%
9M19 Highlights
Wholesale Portfolio
Companies
Structured Operations
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structured operations for banking correspondents andsoccer clubs, with collateral that mitigates the issuers' risks.
The portfolio is composed of financing and of structuredfinancial services for medium and large companies.
747875
9721,045 1,101
1.5%2.3% 2.0% 1.9% 1.9%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
0
200
400
600
800
1000
1200
4Q18 1Q19 2Q19 3Q19 4Q19
Portfolio NPL (E-H portfolio)
469 439 458528 524
32.8%25.5%
13.7% 12.4% 12.8%
0,0 %
10, 0%
20, 0%
30, 0%
40, 0%
50, 0%
60, 0%
70, 0%
80, 0%
90, 0%
0
100
200
300
400
500
600
700
800
900
4Q18 1Q19 2Q19 3Q19 4Q19
Portfolio NPL (E-H portfolio)
Created in July 2016, BMG Seguros is an insurance company focused exclusively on the Surety Bond
Segment.
Company belongs to Banco BMG;
Target Audience: Corporate & Large-
Corporate;
Main modalities: Bid Bond, Performance
Bond, Judicial Guarantee, Guarantee of
Payment.
Written Premiums: R$ 203 million
Retained Premiums: R$ 111 million
Net Income: R$ 1,4 million
BMG Seguros
Financial Highlights – 2019
Diversified Funding
76% 76% 77% 76% 82%
13% 13% 13%13%
6%6% 5% 5%
5%
4%3% 4% 4%
4%
5%
1% 2% 2% 1%3%
12,354 12,39512,723 13,246
12,409
4Q18 1Q19 2Q19 3Q19 4Q19
Deposits External funding
Assignment + securitization Financial bills
Others Total
17
R$ Million
Asset & Liability ManagementFunding evolution
Assets Funding
17months
23 months
+6 months DurationPositive Gap
In Nov/19, USD 243 million from BMG19 matured with cost of dollar + 9.95% p.a.
In Ago/20, USD 165 million from BMG20 will mature with cost of dollar + 8.875% p.a.
Throughout 2020, ~R$ 1 billion in fixed-rate deposits will mature.
52% 54% 56% 58%
70%
2,640 2,673 2,700 2,733
4,028
12.4% 12.4% 13.6% 13.8%22.5%
4Q18 1Q19 2Q19 3Q19 4Q19
Main Capital Shareholders' Equity Basel Ratio
Capital
R$ Million
18
Shareholders’ Equity and Basel Ratio
+ 18 p.p.
Capital quality improvement
Corporate Governance
Corporate Structure
Ownership Breakdown
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Banco Cifra
BMG Leasing
Banco BCV
99.99% 100.00% 100.00%
BMG Bank
Cayman
100.00%
CB FácilCorretora
100.00%
BMG Participaçõesem Negócios
BMG SegurosME
Promotora
BMG Soluções
Eletrônicas
94.49%
CMG Corretora de
Seguros
CifraFinanceira
80.00%
99.99%
99.74% 70.00%99.00%
Help Franchising
99.98%
65.00%
Granito
Shareholders % ON % PN % Total
Flávio Pentagna Guimarães - 18.9% 6.4%
BMG Participações S.A 38.6% - 25.6%
Ângela Annes Guimarães 12.9% 4.0% 10.0%
Regina Annes Guimarães 12.9% 4.0% 10.0%
Ricardo Annes Guimarães 12.9% 4.0% 10.0%
João Annes Guimarães 12.9% 4.0% 10.0%
Antônio Mourão Guimarães Neto 4.7% 4.0% 4.6%
Treasury stocks - 1.8% 0.6%
Others 5.1% - 3.4%
Shares traded at B3 - 57.1% 19.3%
Total number of shares (million) 400 203 603
Corporate Governance
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Board of Directors with Complementary Experience & Skill Set
Independent Board Members
José Eduardo Dominicale
Member
Background
Sandoval Martins
Member - Independent member
Background
Background
Antônio M. Guimarães
Member
Olga Stankevicius Colpo
Vice-Chairwoman -Independent member
Background
Background
Ângela Annes Guimarães
Member
Background
Chairman
Regina Annes Guimarães
Member
Background
AuditCommittee
3 Monthly
Since: 2013
8 Quarterly
Since: 2012
Innovation and StrategyCommittee
Bimonthly
Since: 2019
Risk and Capital Management
Committee
8 Monthly
Since: 2018
Corporate Governance Committee
8 Quarterly
Since: 2019
Committees report directly to the Board of Directors
8
People & CompensationCommittee
40 years of experience
30 years of experience
20 years of experience
40 years of experience
30 years of experience
20 years of experience
Ricardo Annes Guimarães
+10 executive forums reporting directly to the Executive Officers
# of fixed members
Eliane Aleixo Lustosa
Member - Independent member
Pending election
Main Indicators
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Financial Highlights (R$ Million) 4Q19 3Q19 2Q19 1Q19 4Q18 2019 2018
Net Income - Recurring1 74 88 84 99 61 344 258
ROAE - Recurring1 9.6% 14.6% 14.1% 17.2% 10.4% 12.5% 10.8%
ROAA - Recurring 1.6% 2.0% 2.0% 2.4% 1.5% 2.0% 1.6%
Basel Index 22.5% 13.8% 13.6% 12.4% 12.4% 22.5% 12.4%
Net Interest Margin - Recurring1 26.6% 25.1% 23.2% 22.8% 22.3% 22.5% 19.0%
Efficiency Ratio - Recurring1 59.5% 53.7% 51.2% 51.7% 47.2% 54.3% 52.1%
NPL4 – E-H Portfolio 5.8% 5.6% 5.6% 6.0% 6.6% 5.8% 6.6%
Coverage Ratio 110.3% 110.6% 115.5% 114.9% 111.0% 110.3% 111.0%
Net Income 163 66 62 77 40 367 171
Balance Sheet (R$ Million) 4Q19 2Q19 1Q19 4Q18 3Q18Total Credit Portfolio 11,455 10,814 10,261 9,853 9,513
Retail Portfolio6 9,667 9,032 8,548 8,206 7,866
Wholesale Portfolio7 1,625 1,573 1,430 1,314 1,215
Run-off Portfolio8 163 209 282 333 432
Total Assets 18,911 18,045 17,331 16,830 16,938
Shareholders’ Equity 4,028 2,733 2,700 2,673 2,640
Total Funding 12,409 13,246 12,723 12,234 12,354
1) Recurring Net Income and ROAE, excluding the effects of goodwill and other non-recurring events, see “Managerial Income Statement”.2) Methodology: Portfolio classified by E-H/Total Portfolio, including overdue plus falling due installments. 3) Methodology: Credit provision balance / operations overdue for more than 90 days (considering overdue installments plus falling due).4) The retail portfolio includes payroll credit card, payroll loan and personal credit.5) The wholesale portfolio includes structured Operations and companies.6) The run off portfolio includes the legacy payroll loan, Lendico, vehicles and home equity loan
Ratings
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Agency Date Rating Perspective
FITCH January 2020
Local currency A (bra)
Positive
Foreign currency B+
Moody‘s March 2019
Local currency Baa2.br
Stable
Foreign currency B1
RISKbank January 2020 9.81Low Risk Medium
Term 1
Contact & Disclaimer
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INVESTOR RELATIONS TEAM
Tel.: +55 11 3067-2048
www.bancobmg.com.br/IR
We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of ourmanagement. and on information currently available to us. Forward-looking statements include statements regarding our intent. belief or currentexpectations or that of our directors or executive officer.Forward-looking statements also include information concerning our possible or assumed future results of operations. as well as statements preceded by.followed by. or that include the words ''believes'' ''may'' ''will'' ''continues'' ''expects'' ''anticipates'' ''intends'' ''plans'' ''estimates'' or similar expressions.Forward-looking statements are not guarantees of performance. They involve risks. uncertainties and assumptions because they relate to future eventsand therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressedin or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control orpredict.
