BANCO BNP PARIBAS BRASIL Louis Bazire

1. BANCO BNP PARIBAS BRASILLouis Bazire 28 September 2014

2. Brazil: Stable and Foreseeable Marcelo Carvalho HeadofLatamEconomicResearch marcelo.carvalho@br.bnpparibas.com 55-11-3841-3418

3. Agenda • Brazil – A comparison with other BRIC economies • Brazil – Stable and Foreseeable • Investors want to finance the next expansion cycle in Brazil • Medium and long term scenario – a positive growth outlook • Short term scenario – “Brazilian Quarterly Outlook: Reaping Rewards” • Inflation – convergence toward targets • Fiscal and monetary policy outlook – Tug of war • Political landscape – elections in October 2010. • Forecasts 3

4. Brazil: A comparison with other BRIC economies 4

5. BRIC economies: General characteristics 5

6. BRIC economies: real GDP growth varies

7. Differences in investment rates, also in saving rates BRICs: Investment and Saving rates are still relatively low in Brazil

8. What has changed within BRICs since 2003? • All BRICs have become global players on both economic and geopolitical fronts • With similarities and differences in the globalisation process • Similarities in the process, even if differences in the magnitude • Increase in potential growth: increase in saving and investment to GDP ratios, but to a lesser extent for Brazil • Increase in globalisation: trade and financial integration and Foreign Direct Investment • Decrease in country risk(1) : increase in foreign exchange reserves, decrease in external public debt (1) In the narrow sense: sovereign risk and transfer risk

9. What has changed within BRICs since 2003? Differences in terms of growth sustainability • Brazil: Higher potential growth, probably sustainable • India: New model of growth (more linked to manufactured goods), sustainable under certain key conditions • China: Current growth model not sustainable in the medium term • Russia: Growth still highly dependent on oil price Differences in terms of external financial vulnerability • China: Very low external financial vulnerability • Brazil: Strong decrease in external financial vulnerability • India: Moderate decrease in external financial vulnerability • Large companies still depend on the financing in foreign currency • Russia: No decrease in external financial vulnerability • Even if the problem of external public debt has been solved, large private companies have become overindebted, mainly in foreign currency. Dollarization of the economy is still high.

10. Similarities and differences: quantitative illustration What has changed within BRICs since 2003?

11. BRICs: Summary • Brazil: from moderate GDP growth (2.5%-3% per year) with high vulnerabilities  to slightly higher growth (4%), more sustainable and less vulnerable • Russia: no significant changes during the decade: fairly high growth (3%-6%) but still very vulnerable to commodity prices and financial shocks • India: from fairly high growth (5%-6%) with vulnerabilities  to high and more sustainable growth (7%-8%) • China: very high growth relatively stable (roughly 10%) and not too much vulnerable(1). But the growth model relying on exports and investment may not be sustainable in the medium-long term (1) Low vulnerability to external financial shocks, high vulnerability to downturn in the global business cycle

12. Conclusion: What next in the medium term? (3) Brazil: Probably the best “mix” within BRICs in terms of growth potential and risks • GDP growth potential is accelerating progressively to 4-5% per year but probably not to 7-9% as India or China • The process of acceleration has started recently (saving, public and private investment, financial intermediation, decrease in real interest rate …). The pursuing of this movement, notably for infrastructure investment, is key to consolidate this evolution • Nevertheless, Brazil’s growth has become more sustainable and less vulnerable to external shocks than that of China and, to a lesser extent, that of India • From 1994-2007(1), Brazil has solved huge problems of macro economic imbalances, established credible economic policies, strongly increased its State and corporate governance, diversified its export base (both on a geographical and sector point of view) and reduced its external financial vulnerability • Even if is GDP growth potential considered closer to that of Russia, its sustainability is higher and its vulnerability is much lower • Notably in terms of export diversification, State and corporate governance, monetary policy capability, financial sector robustness and external financial vulnerability (1) Particularly since 2003-04

13. BNP PARIBAS GROUP IN BRAZIL

14. Asset Management Personal Finance • Since 1998 • Employees: 1619 Equipment Solutions • Since 2006 • Employees: 50 BNP Paribas in Brazil: A group of 2.328 employees Corporate & Investment Banking • Since 1998 • Employees: 35 • Intern: 7 • Since 1950 • Employees: 254 • Intern: 36 Wealth Management Brasilia Belo Horizonte • Since 1998 • Employees: 38 • Intern: 1 Rio de Janeiro São Paulo Insurance Curitiba • Since 1999 • Employees: 341

15. BNP Paribas Brazil: 4th Largest Foreign Bank by Total Assets Evolution of Group BNP Paribas Presence in Brazil Launching of Securities Services Activities Cetelem and MasterCard parternership Implementation of a reinforced organic growth strategy Establishment of a wholly owned subsidiary Launching of Arval activities Launching of Cardif activities Representative Office in Brazil 1950 1996 1999 2001 2006 2008 2010 1981-95 1998 2000 2007 2009 Acquisition of local asset management activities of UBS, ABC and IAMEX BNPP Acquired Fortis Merger of BNP and Paribas in Brazil Minority stake in Banco Cidade Cetelem acquired Banco BGN, specialized in consumer credit (Total Assets BRL 2 Billion) Launching of Asset Management and Cetelem Activities Financial Highlights of Banco BNP Paribas Brasil SA (R$ million) Brazil-National Scale (since 28 Oct 2008) AAA