Transcript Itaucred Conference Call of the Results of the 2nd Quarter/2007 August 08, 2007

Itaucred
Conference Call of the Results of the
2nd Quarter/2007
August 08, 2007
1
Highlights
1. Results
•
•
2nd Qtr/07: Recurring Net Income of R$ 1,919 million, a 0.9% increase compared to
Q1/07; annualized ROE of 29.8% (1st Sem/07: Recurring Net Income of R$ 3,820 million
and ROE of 30.5%);
2nd Qtr/07: Net Income of R$ 2,115 million (1st Sem/07: Net Income of R$ 4,016 million
and ROE of 32.1%).
2. The loan portfolio growth 3.7% in the quarter and 40.2% in the last 12
months:
• Personal Loans:
1.8% in the 2nd Qtr/07 and 11.3% in the last 12m;
• Vehicles:
12.4% in the 2nd Qtr/07 and 58.6% in the last 12m;
• Small and Mid-Sized Companies 5.4% in the in the 2nd Qtr/07 and 59.7% in the last 12m;
3. Non-Recurring Events:
• R$ 400 million increase in the excess provision for loan losses in the quarter, reaching the
balance of R$ 2,150 million.
• Selling of 22.3% of interest in Serasa S.A. with an income after taxes of R$ 485 million
(maintaining 10.9% interest on Serasa).
4. Nonperforming Loans Ratio: Nonperforming loans ratio of 5.1%.
5. BIS Ratio: Sustaining of the high level of 17.6%. Considering the new regulatory
guidelines about gold and foreign exchange exposure that will have impact starting on
07/02/2007, the solvency ratio for 06/30/07 would be of 16.0%.
2
Non Recurring Effects1
R$ Million
2nd Q/07
1st Q/07
1st Sem./07
1st Sem./06
Net Income
2,115
1,902
4,016
2,958
Selling of interest on Serasa
(485)
-
(485)
-
264
-
264
152
Loans sold
-
-
-
(122)
Reversal of additional provision for securities
-
-
-
(125)
Revenues and expenses of deposits and
mandatory funds
-
-
-
(99)
82
-
82
-
(75)
-
(75)
-
-
-
-
36
19
-
19
70
-
-
-
5
Total - Non Recurring Effects
(196)
-
(196)
(84)
Recurring Net Income
1,919
1,902
3,820
2,874
Exceeding Provision for Loan Losses
Escrow account Itaú BBA
Selling of BkB building
Hedge of BkB positions
Amortization of goodwill 2
Other
1 For further details, please consult Itaú Holding’s Management Discussion and Analysis report.
2
In the 2nd Quarter/07, effects of BankBoston International and BankBoston Trust acquisition.
3
Highlights
R$ Million
2nd Q/07
1st Q/07
Variance
1st Sem/07
1st Sem/06
Variance
Net Income
2,115
1,902
11.2%
4,016
2,958
35.8%
Recurring Net Income
1,919
1,902
0.9%
3,820
2,874
32.9%
1.60
1.59
0.9%
3.18
2.59
23.1%
Stockholders’ Equity
26,546
24,971
6.3%
26,546
17,555
51.2%
Recurring ROE (Average Equity)
annualized (%)
29.8%
31.3%
-150b.p.
30.5%
34.7%
-420b.p.
103,219
86,277
19.6%
103,219
69,756
48.0%
Solvency Ratio (%)
17.6%
16.5%
110b.p.
17.6%
16.3%
130b.p.
Efficiency Ratio (%)
45.8%
44.1%
170b.p.
44.9%
45.8%
-90b.p.
5.1%
5.0%
10b.p.
5.1%
5.2%
-10b.p.
Recurring Net Income per share (R$)
Market Capitalization
Nonperforming Loans Ratio (%)
4
Itaú Holding Pro Forma
R$ Million
2nd Q/07
1st Q/07
Variance
1st Sem/07
1st Sem/06
Variance
Managerial Financial Margin
5,250
4,984
5.3%
10,234
7,603
34.6%
• Banking Operations
4,417
4,369
1.1%
8,786
6,841
28.4%
• Treasury
571
367
55.6%
939
478
96.3%
• Management of Foreign Exchange Risk
from Investments Abroad
262
248
5.7%
510
283
79.7%
Banking Service Fees
2,550
2,421
5.3%
4,971
4,249
17.0%
Managerial Financial Margin plus
Banking Service Fees
7,800
7,405
5.3%
15,205
11,852
28.3%
Result of Loan Losses
(1,217)
(1,266)
-3.9%
(2,483)
(2,363)
5.1%
Non Interest Expenses
(3,524)
(3,280)
7.5%
(6,804)
(5,489)
24.0%
Recurring Net Income
1,919
1,902
0.9%
3,820
2,874
32.9%
5
Loans by Type of Customer
R$ Million
Jun 30,07
Individuals
Mar 31, 07
Dec 31,06
Jun 30,06
Variance
jun/07mar/07
Variance
jun/07dec/06
Variance
jun/07jun/06
45,035
41,972
40,358
33,896
7.3%
11.6%
32.9%
8,867
8,501
9,188
7,372
4.3%
-3.5%
20.3%
• Personal Credit
13,886
13,641
13,156
12,479
1.8%
5.6%
11.3%
• Vehicles
22,282
19,830
18,014
14,046
12.4%
23.7%
58.6%
Company Loans
46,885
46,631
46,567
35,409
0.5%
0.7%
32.4%
• Corporate
25,630
26,463
26,816
22,104
-3.1%
-4.4%
16.0%
• Small and Medium Sized
21,255
20,168
19,751
13,306
5.4%
7.6%
59.7%
Mandatory Credit 1
5,711
5,637
5,881
4,652
1.3%
-2.9%
22.8%
Argentina, Chile and Uruguay
7,190
6,830
842
826
5.3%
754.1%
770.6%
104,821
101,071
93,648
74,783
3.7%
11.9%
40.2%
• Credit Cards
Total Loans
1 Rural and Mortgage Loans – linked with the balances of Demand and Savings Deposits, respectively.
6
Loan Portfolio Breakdown
100%
6.8%
6.9%
26.2%
24.5%
5.6%
5.4%
21.1%
20.0%
20.3%
41.7%
43.1%
41.5%
43.0%
Sep-06
Dec-06
Mar-07
Jun-07
1.3%
1.1%
1.1%
1.0%
1.1%
0.9%
0.9%
34.8%
33.0%
32.4%
31.9%
29.6%
30.2%
28.6%
6.3%
6.2%
6.4%
7.2%
6.7%
6.3%
6.9%
17.9%
18.2%
17.8%
17.9%
17.7%
20.8%
38.8%
41.3%
41.9%
42.6%
45.3%
Jun-05
Sep-05
Dec-05
Mar-06
Jun-06
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Individuals
Small and Medium-Sized Companies
Mandatory Loans
Corporate
Argentina / Chile / Uruguay
7
Nonperforming Loans and Coverage Ratios
Nonperforming Loans Ratio
8.1%
5.1%
1.6%
Jun-06
8.3%
8.1%
5.2%
5.3%
2.1%
2.2%
Sep-06
Dec-06
7.8%
Coverage Ratio (*)
7.5%
5.0%
5.1%
2.1%
2.3%
Mar-07
NPL Ratio
NPL Ratio- Individuals
NPL Ratio- Businesses
164%
169%
168%
166%
162%
Jun-06
Sep-06
Dec-06
Mar-07
Jun-07
Jun-07
(*) Provision for loan losses / Credits overdue for more than
60 days, which are not accrued.
8
Coverage Ratio (*)
Consolidated – Not including Itaucred Vehicles
Consolidated
164%
Jun-06
169%
Sep-06
168%
Dec-06
166%
Mar-07
162%
176%
178%
179%
180%
183%
Jun-06
Sep-06
Dec-06
Mar-07
Jun-07
Itaucred Vehicles
Jun-07
Change in the credit portfolio mix with
the growth of vehicle financing
125%
135%
128%
117%
104%
Lower risk (Real Collateral)
Lower need of provisions
Jun-06
Sep-06
Dec-06
Mar-07
Jun-07
Lower Loss Given Default
(*) Provision for loan losses / Credits overdue for more
than 60 days, which are not accrued.
9
Exceeding Provision for Loan Losses
• Maintaining the criteria standing in the 1st Q./07, it would not be
necessary to increase the exceeding provision for loan losses, and the
coverage ratio would be 154%, as a consequence of the current credit
portfolio mix.
• However, in this quarter, we reviewed our statistical basis and adopted
more conservative criteria in the projection of delinquency increases
arising from a strong reversal of the economic cycle under market
stress conditions, which resulted in the constitution of R$ 400 million
of exceeding provision for loan losses.
10
Nonperforming Loans (NPL) by Segment
R$ Million
Jun 30, 07
Credit
Portfolio
NPL
NPL
Ratio
Mar 31, 07
Dec 31, 06
NPL Ratio
NPL Ratio
Itaubanco
2,727
43,429
6.3%
6.5%
7.3%
Banking
2,460
38,798
6.3%
6.6%
7.6%
267
4,632
5.8%
5.7%
5.2%
57
20,626
0.3%
0.1%
0.7%
Itaucred
2,098
31,492
6.7%
6.5%
6.2%
Vehicles
1,293
23,984
5.4%
5.1%
4.8%
Credit Cards – Non Account
Holders
258
3,663
7.0%
5.9%
5.5%
Taií
547
3,845
14.2%
15.3%
15.2%
4,882
95,548
5.1%
5.0%
5.3%
Credit Cards – Account
Holders
Itaú BBA
Total
11
Funding
R$ Million
Variance (%)
Jun 30,07
Jun 30,06
jun/07jun/06
Deposits 1
105,055
99,533
69,910
5.5%
50.3%
Investment Funds
180,121
174,836
129,641
3.0%
38.9%
Managed Portfolios 2
21,008
11,434
9,282
83.7%
126.3%
Technical Provisions Regarding to Insurance,
Pension Plans and Capitalization
21,510
20,131
16,409
6.9%
31.1%
327,694
305,933
225,242
7.1%
45.5%
Funds from Acceptances and Securities Issued
7,899
7,831
6,791
0.9%
16.3%
On-lendings
5,443
5,348
4,188
1.8%
30.0%
Repurchase Agreement – Third Part Portfolio
9,860
14,098
5,594
-30.1%
76.3%
23,202
27,277
16,573
-14.9%
40.0%
350,896
333,210
241,815
5.3%
45.1%
Subtotal – Clients
Subtotal - Market
Total
1
Mar 31,07
jun/07mar/07
Includes Repurchase Agreement – Own Issue Securities.
2
On Jun 30, 07, include the acquisition of two companies from Bank of America: BankBoston International (Miami) and Bank of America Trust Company
Ltd (Bahamas).
12
Banking Service Fees
R$ Million
2nd Q/07
1st Q/07
Variance
1st Sem/07
1st Sem/06
Variance
Asset Management 1
504
482
4.4%
986
911
8.2%
Current Account Services
406
405
0.4%
811
739
9.7%
Credit Cards
592
576
2.7%
1,168
989
18.1%
Loan Operations and Guarantees
Provided
545
498
9.4%
1,042
778
34.0%
Receipt Services
229
222
3.0%
451
431
4.7%
Other
274
238
15.5%
512
400
28.0%
Total
2,550
2,421
5.3%
4,971
4,249
17.0%
1 Funds and Consortia Management Fees
13
Non Interest Expenses
R$ Million
2nd Q/07
1st Q/07
Variance
1st Sem/07
1st Sem/06
Variance
Personnel Expenses
(1,341)
(1,252)
7.1%
(2,593)
(2,190)
18.4%
Other Administrative Expenses
(1,624)
(1,539)
5.5%
(3,163)
(2,518)
25.6%
(460)
(377)
22.0%
(837)
(636)
31.7%
(100)
(111)
-10.5%
(211)
(145)
45.4%
(3,524)
(3,280)
7.5%
(6,804)
(5,489)
24.0%
Other Operating Expenses
Tax Expenses (CPMF and Others)
Total
1
1
Does not include PIS, Cofins and ISS
14
Efficiency Ratio
50.5% 50.1%
47.2%
49.8%
44.5%
47.4%
44.1% 45.8%
48.0%
46.7%
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
15
Segmentation (Pro forma)
Itaú
Itaubanco
Itaú BBA
Itaucred
Banking
Corporate
Operations
Vehicles
Credit Cards –
Account Holders
&
Investment Banking
Corporation
Credit Card – Non
Account Holders
Insurance,
Capitalization and
Pension Plans
Taií: FIT, FIC (CBD)
and FAI (LASA)
Investment Funds
and Managed
Portfolio
NB: The organization chart of Itaucred segment reflects, chiefly, the transactions
carried out through channels intended for non current account holders.
16
Highlights of Pro Forma Segments
R$ Million
Itaubanco
Itaú BBA
Itaucred
Corporation
Itaú 1
2nd Quarter of 2007
Recurring Net Income
1,255
302
310
52
1,919
Allocated Capital Tier I
12,454
5,425
3,313
5,354
26,546
RAROC in the Quarter (% p.y.)
40.8%
23.8%
39.6%
3.9%
29.8%
207,752
85,110
30,951
9,966
255,418
Total Assets
1st Quarter of 2007
Recurring Net Income
1,258
243
298
102
1,902
Allocated Capital Tier I
12,131
4,704
2,936
5,199
24,971
RAROC in the Quarter (% p.y.)
41.3%
18.6%
41.7%
10.2%
31.3%
202,089
81,989
27,427
9,080
257,850
Total Assets
1
Does not represent the sum of the parts, because there are transactions between the segments eliminated in the consolidated figures only.
17
Net Income and Net Income per Share
R$ Million
R$
2,500
3.0
2,000
1,383
1,500
1.19
1,352
1.21
1,425
1.29
1,397
1,477
1.26
1.33
1,592
1,919
1.59
1.60
1,628
1.38
1.39
1,902
2.5
2.0
1.5
1,000
1.0
500
0.5
0
0.0
2nd Q/05 3rd Q/05
4th Q/05
1st Q/06
Recurring Net Income (R$ Million)
2nd Q/06 3rd Q/06
4th Q/06
1st Q/07
2nd Q/07
Recurring Net Income per share (R$)
Note: The Net Income per Share was adjusted to reflect the stock split of 900% that occurred in oct/05.
18
Stock Split Proposal
To increase share liquidity, the Board of Directors has proposed for approval of the
Extraordinary General Meeting to be held on August 27 2007 the following 100% stock
split for Preferred (PN), Common Shares (ON), ADRs and CEDEARs.
Stock Split Simulation
Quantity of Shares
Unitary price on Bovespa (*)
Round lot - Bovespa (*)
ADR price (*)
Book Value
Current Situation
Situation after Split
1,221,996,220
2,443,992,440
R$ 86.00
R$ 43.00
R$ 8,600.00
R$ 4,300.00
US$ 44.44
US$ 22.22
R$ 22.11
R$ 11.05
(*) Considering closing prices as of June 29, 2007.
Following approval of the Extraordinary General Meeting, the operation will depend on further
ratification by the Brazilian Central Bank.
19
Itaucred
Conference Call of the Results of the
2nd Quarter/2007
August 08, 2007
20