2013 Annual Report

ECONOMIC/FINANCIAL INFORMATION (BR GAAP) Loans to individuals closed the year at R$ 75,522 million, a 5.9% increase in 12 months. The two products that contributed to the increase in this portfolio were the mortgages and credit cards. The consumer finance portfolio totaled R$ 37,849 million, 2.8% up in the year. The SMEs portfolio closed the year at R$ 33,712 million, 7.6% down in 12 months. The Corporate portfolio came to R$ 80,400 million in december, up by 19.3% in 12 months, positively impacted by the exchange variation. Excluding this effect, growth would have come to 14.2% in 12 months(4). Net interest income Net interest income, including income from financial operations, totaled R$ 29,827 million in 2013, down 7.9% on 2012. INET INTEREST INCOME (R$ Million) 32,380 28,078 29,827 Managerial analysis of results MANAGERIAL INCOME STATEMENT (R$ MILLION) Total funding and assets under management came to R$ 388,218 million at year-end, 10.1% more than in 2012. (4) According to the Anbima criterion. Revenues from loan operations fell by 8.5% (or R$ 2,101 million) in 12 months. The average volume of loan portfolio grew 6.3%. This was chiefly due to the change in the mix caused by the strong increase in the share of products with lower spreads/risks. Revenues from deposits decreased by 0.8% in 12 months. The "Others" line, which includes return on capital, the result of the structural interest rate gap, revenue from clients in treasury activities and others, fell by 6.6% (or R$ 445 million) in the year, primarily due to reduced gains from market activities. 2013 2012 Var. 2013x2012 NET INTEREST INCOME 29,827 32,380 -7.9% Allowance for Loan Losses (11,720) (13,223) -11.4% NET INTEREST INCOME AFTER LOAN LOSSES 18,107 19,158 -5.5% Fee and commission income 10,674 9,680 10.3% General Expenses (16,297) (15,842) 2.9% Personnel Expenses + Profit Sharing (7,241) (7,299) -0.8% Administrative Expenses(2) (9,055) (8,544) 6.0% Tax Expenses (3,124) (3,138) -0.4% Investments in Affiliates and Subsidiaries 20 1 n.a. Other Operating Income/Expenses (3) (3,109) (3,143) -1.1% OPERATING INCOME 6,272 6,716 -6.6% Non Operating Income 238 70 n.a. NET PROFIT BEFORE TAX 6,510 6,785 -4.1% Income Tax and Social Contribution (518) (296) 74.7% Minority Interest (248) (126) 96.3% NET PROFIT 5,744 6,363 -9.7% (1) Excludes 100% of the goodwill amortization expense, the tax hedge effect and others as mentioned on pages 31 and 32. Additionally, the 2012 figures were retrospectively impacted by the CVM Deliberation 695, issued by CVM on December 13th, 2012, which deals with employee benefits, mainly pension plans. The description of such impacts is provided on page 33. (2) Administrative Expenses exclude 100% of the goodwill amortization expense. (3) Includes Net Income from Premiums, Pension Funds and Capitalization. 52 Annual Report 2013 NET INTEREST INCOME (R$ MILLION) NET INTEREST INCOME Loans Average volume Spread (p.a.) Deposits Average volume Spread (p.a.) Other (1) (1) Includes other margins and interest income. Fee and commission income 2011 2012 2013 2013 2012 Var. 2013x2012 29,827 32,380 -7.9% 22,704 24,805 -8.5% 215,350 202,632 6.3% 10.5% 12.2% -1.70 p.p. 843 850 123,116 119,691 -0.8% 2.9% 0.7% 6,280 0.7% 6,726 -0.03 p.p. -6.6% Fee and commission income totaled R$ 10,674 million in 2013, 10.3% (or R$ 994 million) up in 12 months. Credit card commissions amounted to R$ 3,182 million in 2013, 19.6% (or R$ 522 million) more than in 2012. Insurance fees totaled R$ 1,819 million in the year as a whole, 24.5% (or R$ 358 million) up on 2012. The variation being impacted by the new regulation issued by Susep(2) (the insurance sector regulator) in March 2013 which altered the rule for recognizing policies issued but not in force, should be recorded by their issue date and no longer by their period of effectiveness. As a result, policy renewals, which are highly concentrated at the beginning of the year, were now recognized in December 2013. If one excludes this effect, insurance fees would have grown by 15.7% in 12 months, while total fees would have moved up by 8.9%. (2) Circular Susep 464, of March 1st, 2013. 53

View entire presentation