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Presentation to: Annual ING LatAm & EMEA Financial Conference

Banco Itaú Holding Financeira S.A. Presentation to: Annual ING LatAm & EMEA Financial Conference. Silvio de Carvalho Executive Director. London April 2005. Agenda. Brazilian Economy Brazilian Banking System Highlights Strategy and In-depth Results Performance of the Shares.

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Presentation to: Annual ING LatAm & EMEA Financial Conference

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  1. Banco Itaú Holding Financeira S.A. Presentation to:Annual ING LatAm & EMEA Financial Conference Silvio de Carvalho Executive Director London April 2005

  2. Agenda • Brazilian Economy • Brazilian Banking System • Highlights • Strategy and In-depth Results • Performance of the Shares

  3. A Change of Perspective Brazilian Macroeconomic Scenario Pre- 2002 Post- 2003 High volatility Lower volatility High interest rates Declining interest rates Brazil risk Stable risk Low growth Moderate and sustained growth Economic Instability Political Stability

  4. Sustained Stability Control of inflation through monetary policy Adjustment in the external accounts Fiscal Austerity Measures taken for Generating Growth Gradual decline expected in interest rates (SELIC) Continuing trade balance surplus Primary Surplus Change in the public debt profile: reduction in foreign currency exposure Enhanced government payment capacity Other initiatives: Social Security Reform, Reform of the Judiciary System and Tax Reform, the Bankruptcy Law, Political Reform, Trade Unions Reform, new rules for home mortgage finance, new regulatory framework for the electricity sector (regulatory agencies)

  5. Baseline scenario 2005-2006 • Exchange rate: remains constant in real terms, taking into account the difference between Brazil’s CPI (IPCA) inflation and US PPI inflation • Inflation expectations: 5.8% in 2005 and 5.0% in 2006 (Focus Survey on March 18,2005) • Interest rate path: compatible with limiting the aggregate demand acceleration in order to bring inflation back to the announced objective • Primary budget surplus: 4.25% of GDP in 2005 and 2006 • GDP linear growth trend: 3.0% in 2005 and 3.5% in 2006 • Commodities’ prices remain constant in the forecasting horizon • World trade real growth: 9% in 2005 and 8% in 2006

  6. Agenda • Brazilian Economy • Brazilian Banking System • Highlights • Strategy and In-depth Results • Performance of the Shares

  7. High spreads • High reserve requirements • High impact over spreads • Falling due to decline in interest rates • Oriented to services • Intensive use of technology, focused on self-service and Internet • All bills are paid in the banks • Dimension • Huge fixed costs • Differentiated needs • Cost reduction / efficiency • Huge transaction volumes • Strongly capitalized • Room for growth in credit • Satisfactory level of provisioning • Conservative approach • Advanced banking supervision; preparation for Basel II • Advanced risk management • Importance of banking service fees • Specific for each segment Brazilian Banking System Macro Characteristics Micro Scenario • Target: to keep profitability in lower margins scenario • Profitable

  8. Declining Interest Rates x Increasing Loan Demand: New Revenue Dynamics Growing Fee Earnings and Tighter Cost Control To Offset Lower Treasury Gains Focus on Higher-Yielding Consumer Finance and SME Lending Efforts of Client Acquisition and Gains of Scale Government Still Attracts Large Portions of the System’s Liquidity; Gradual Replacement of Bonds By Loans Public Sector Banks Still Dominant: 45% of Deposits More Aggressive Competition, Not Price Wars Current Scenario

  9. December 2003 SE(1) Assets BIS ROA US$ Billion US$ Billion Rank Index % Rank (*) 2.1 % 0.7 % 1.2 % 2.2 % 1.3 % 0.7 % 0.9 % 1.4 % 0.4 % 0.8 % 0.9 % 1.5 % 0.3 % 4.7 % 1.6 % 2.1 % 2.8 % • Citigroup • Crédit Agricole Group • HSBC Holdings • Bank of America Corp. • JP Morgan Chase & Co. • Mizuho Financial Group • Mitsubishi Tokyo • Royal Bank of Scotland • Sumitomo Mitsui • BNP Paribas 20. ABN AMRO Bank 109. Bradesco 113. Bank of Taiwan 114. Banco Itaú 116. Standard Bank Group 117. Banco do Brasil 171. Unibanco 67 55 55 44 43 38 37 35 34 32 23 5 4 4 4 4 2 1,264 1,105 1,034 736 771 1,285 975 806 950 989 668 61 70 41 81 80 24 2nd 4th 5th 15th 13th 1st 8th 10th 9th 7th 18th 139th 125th 197th 115th 117th 268th 12.0 % 10.5 % 12.0 % 11.9 % 11.8 % 11.4 % 13.0 % 11.8 % 11.4 % 12.9 % 11.7 % 19.9 % 14.6 % 19.8 % 14.8 % 13.7 % 18.6 % 167th 633rd 401st 154th 382th 638th 536th 361st 755th 569th 510th 309th 816th 17th 283rd 169th 84th Source: The Banker Top 1000 - July/04 (1) Stockholder´ Equity

  10. Capital (Tier One) / Assets (%) Source: THE BANKER - Top 1000 – July 2004

  11. Itaú is the 2nd largest bank by Market Cap. in Emerging Markets Banks Country Market Cap. US$ Million • Citigroup • Bank of America Corp. • HSBC • JP Morgan Chase & Co. • RBS Group† • Wells Fargo & Co. • UBS AG • Wachovia Corp. • Santander • Barclays • Morgan Stanley • Merrill Lynch & Co. • US Bancorp • Credit Suisse Group • Goldman Sachs • Lloyds TSB • Hang Seng Bank • Bank of New York Co. Inc. • Banco Itaú Holding Financeira S.A. • Kookmin Bank • Bradesco • Banco do Brasil S.A. • Unibanco United States United States United Kingdom United States United Kingdom United States Switzerland United States Spain United Kingdom United States United States United States Switzerland United States United Kingdom Hong kong United States Brasil Korea Brasil Brasil Brasil 251,782 188,517 177,236 133,058 108,009 103,829 98,237 85,242 79,857 70,944 65,203 57,165 57,038 55,764 55,414 54,438 26,000 23,961 20,277 16,144 15,671 9,810 5,238 Source : UBS Global Banks Valuations 03/08/05

  12. Agenda • Brazilian Economy • Brazilian Banking System • Highlights • Strategy and In-depth Results • Performance of the Shares

  13. Highlights Stockholders’ Equity (R$ Billion) Assets (R$ Billion) Technical Provisions – Insurance, Pension Plans and Capitalization (R$ Billion) Credit Operations (R$ Billion)

  14. Highlights Net Income (R$ Million) Banking Service Fees (R$ Million) Administrative Expenses (R$ Million) Net Interest Margin (R$ Million)

  15. Highlights ROE (%) BIS Ratio (%) ROA (%) Efficiency Ratio (%)

  16. Highlights Branches+CSBs ATMs Internet Banking Clients (In million) Employees

  17. Agenda • Brazilian Economy • Brazilian Banking System • Highlights • Strategy and In-depth Results • Performance of the Shares

  18. Highlights Results: 4th Quarter/04 – Net Income of R$ 1,030 million with ROE 32.9% p.a.; 2004 - Net Income of R$ 3,776 million with ROE 27.0% p.a.; Growth of Credit Portfolio (including endorsements and sureties): Total: 4th Quarter/04 = 4.3% Excluding Corporate Clients: 4th Quarter/04 = 14.8% 2004 = 19.5% 2004 = 43.8% Growth of Credit Portfolio by Client Type (highlights): 4th Quarter/04 -Individuals 19.7% and Small and Medium Sized Companies 15.7%. 2004 -Individuals 43.1% and Small and Medium Sized Companies 70.8% Net Interest Margin* 4th Quarter/04 = 13.6% p.a. 3rd Quarter/04 = 12.4% p.a. 2004 = 13.2% p.a. 2003 = 13.9% p.a. * Excluding the nonrecurring items of 4th Quarter of 2004

  19. Highlights Solvency -Nonperforming Loans Ratio: 4th Quarter/04 = 2.9% 3rd Quarter/04 = 3.2% 2004 = 2.9% 2003 = 4.1% Full Amortization of Goodwill: (R$ Million) Without Tax Effects With Tax Effects CBD (3rd Q./04) 381 347 Credicard (4th Q./04) 721 656 Orbitall (4th Q./04) 233 212Intercap - Sales promoter (4th Q./04) 65 59 TOTAL 1,400 1,274 Technical Provisions of Pension Plans: Balance at Dec/04 of R$ 8.6 billion – Growth of 56.4% in 2004.

  20. Exposure – Loans and Securities R$ Million Dec 31, 04 Sep 30, 04 Dec 31, 03 Var Dec04/ Sep04 Var Dec04 / Dec03 53,275 51,059 44,581 4.3% 19.5% Loans Public Securities Private Securities Total 7,486 9,369 14,306 -20.1% -47.7% 12,145 11,216 8,564 8.3% 41.8% 72,906 71,644 67,451 1.8% 8.1% (*) Rural Loans and Mortgage – Loans linked to the availability of Demand deposits and Savings deposits.

  21. Credit Operations R$ Million CAGR: 21.1% CAGR: 22.5%

  22. Change in the mix of the Credit Portfolio

  23. Nonperforming Loans Ratio and Coverage Ratio (*) Provision for Loan Losses / Total Nonperforming Loans We are not expecting an ongoing improvement in these indicators, because of the focus on credit products with higher margins, but, at the same time, with a higher credit risk.

  24. Service Fees R$ Million 4th Q/04 3rd Q/04 Var 4Q04 -3Q04 2004 2003 Variation 04-03 91 228 197 263 167 98 1,044 Asset Management (*) Current Account Services Credit Cards Sureties and Credits Granted Collection Services Other Total 376 327 371 266 302 158 1,799 358 303 282 234 180 151 1,508 17 24 89 32 122 7 291 1,411 1,230 1,162 916 866 580 6,165 1,320 1,002 965 653 699 482 5,121 (*) Mutual Funds and Consortium.

  25. Financial Instruments – Market Value R$ Million 09/30/04 12/31/03 12/31/04 Unrealized Income/(Loss) (1) (2) 10 782 600 182 309 691 39 133 354 14 620 400 220 248 660 (41) 93 480 10 688 545 143 319 627 33 74 297 Interbank Deposits Securities and Derivatives Additional provision Adjustment – Securities Held to Maturity Credit Operations Investment on BPI Time and Interbank Deposits and Funds from acceptance and issuance of securities abroad Securitization of Payment Orders Abroad Subordinated Debt and Treasury Shares Stockholders’ Equity Stockholders’ Equity Stockholders’ Equity 2,074 2,319 2,048 Total Unrealized (1) Tax effects not considered. (2) Includes unrealized minority interest gains in Equity of R$ 271 million at December/04, R$ 284 million at September/04 and R$ 257 million at December/03.

  26. 2004 2003 % % 3,502 86.8% 2,737 92.7% Banco Itaú S.A. 829 750 23.8% 22.0% Banco Itaú BBA S.A. (555) (335) (10.6%) (14.7%) Corporation 3,776 3,152 100% 100% Total Net Income R$ Million Diversification of the income sources Not dependent only from interest rates

  27. Pro Forma R$ Million 2004 2003 Corpo- ration Corpo- ration Banco Itaú BBA Conso- lidated Banco Itaú Banco Itaú BBA Conso- lidated Banco Itaú 829 3,194 25.9% 17,671 34,488 (555) 2,934 -18.9% - 6,597 3,776 13.971 27.0% 47,407 130,339 2,737 7,550 36.2% 20,739 94,641 750 3,213 23.4% 17,919 30,490 (335) 1,117 -30.0% - 5,438 3,502 7,843 44.7% 29,736 109,983 3,152 11,879 26.5% 38,659 118,738 Net Income Tier I Allocated Capital ROE (%) Credit Portfolio (*) Total Assets (*) Including endorsements and sureties. Note: The Consolidated figures do not represent the sum of the parts because certain intercompany transactions were eliminated only at the Consolidated level.

  28. Consolidated Net Income Diversification of income sources Not dependent only on interest rates

  29. Credit Cards R$ Million (Except where indicated) Variation 2004 2003 Nº of Cards - Itaucard (thousands) Nº of Cards - Credicard (thousands) (*) Nº of Cards - Total (thousands) 5,780 2,246 8,026 10,603 4,787 15,390 400 99 499 1,305 1,349 2,654 2,353 1,732 4,085 (10) (9) (19) 22.6% 60.0% 33.1% 22.2% 36.2% 26.5% -2.5% -9.1% -3.8% 7,085 3,595 10,680 12,956 6,519 19,475 390 90 480 Turnover - Itaucard Turnover - Credicard (*) Turnover - Total Net Income - Itaucard Net Income - Credicard (*) Net Income - Total Participation in the Net Income of Orbitall and Redecard 63 41 22 53.7% (*) Corresponds to the share of Credicard owed by Itaú – 50% at 2004 and 33% at 2003.

  30. Insurance, Pension Plans and Capitalization R$ Billion 11.0 10.0 9.3 8.3 7.7 6.1 5.4 Technical Provisions – Pension Plans: growth of 43% from Dec. 03 to Dec. 04

  31. Combined Ratio Claim Ratio Insurance, Pension Plans and Capitalization R$ Million 4º Tri/04 Var 4ºT04 -3ºT04 Var.2004 - 2003 2004 2003 3º Tri/04 • Insurance Premiums, Pension Plans Contributions and Premium Bonds Revenues • Changes in Technical Provisions • Selling Expenses • Insurance Claims, Pension Plans Benefits and Premium Bonds Redemption • Other Operating Income/(Expenses) 6,233 (2,957) (395) (2,251) 177 5,008 (2,578) (358) (1,508) 136 24% 15% 11% 49% 30% 1,686 (843) (103) (579) 41 1,475 (636) (100) (591) 54 14% 33% 3% -2% -24% Operating Margin 807 701 15% 201 202 0% 485 (616) (141) (84) 623 (623) (166) (70) -22% -1% -15% 19% Financial Income Administrative and Tax Expenses* Income Tax and Social Contribution Other 115 (169) (23) (24) 115 (146) (39) (20) 0% 16% -41% 21% 451 465 -3% 101 113 -10% Result of Ins., Pension Plans and Cap. 94.1% 97.2% 92.3% 93.5% 53% 54% 51% 55% *Except for ISS, PIS and COFINS

  32. Resources Managed R$ Billion Volume of Mutual Funds and Portfolios under Management Technical Provisions of Insurance, Pension Plans and Capitalization Growth of 23.0% in the volume of Funds and Portfolios under Management and 43.4% in the volume of Technical Provisions in relation to Dec/2003

  33. Pro Forma R$ Million 2004 3rd Q/04 4th Q/04 Variation 04-03 2003 Net Interest Margin Result from Loan Losses Service Fees Administrative and Tax Expenses* Tax Income and Social Contribution Other Net Income Tier I Allocated Capital ROE (%) 464 31 84 (159) (151) (27) 242 3,194 33.9% 391 27 83 (133) (147) (25) 196 3,245 26.4% 1,403 213 306 (622) (416) (55) 829 3,194 25.9% 1,989 (513) 270 (613) (410) 27 750 3,213 23.4% (586) 726 36 (9) (6) (82) 79 (19) *Except for ISS, PIS and COFINS

  34. Strategy • Itaú BBA: wholesale bank integrated into a financial conglomerate; • Credit perspective for the corporate segment in Brazil: declining spreads, increase in the competition, limited client base. Currently 51% of all our revenues are non-credit related; • Challenge: to maintain current profitability levels in the next years considering lower margins in credit; • Our strategy: compensate lower gains in credit with an increase in the distribution of non-credit related products and services to our clients through: • Cross-selling – continue to take advantage of the synergy with Itaú, by increasing the selling of structured treasury operations such as hedging and also simpler products such as payroll and collection; • Investment banking – segment likely to expand in the next 5 years (we expect that by the end of this period Brazil becomes an investment grade country). • Itaú BBA is well-positioned in investment banking – leader in fixed income issuances and reinforcing our variable income team in order to build a strong investment banking. Investment banking currently stands for 5% of Itaú BBA´s revenues. In the next 5 to 6 years our goal is to increase this participation to 20%.

  35. Banco Itaú Holding in 2005 • Focus in increasing the credit portfolio to Individuals and to Small and Medium Sized Companies; • Consolidation of initiatives related to consumer loans: (Taií, CBD, Lojas Americanas, Credicard…); • Costs constant in real terms, which will lead to an improvement in the efficiency ratio (at the same basis); • New Segment – Disclosure, starting in next quarter, of a new segment to reflect the performance of business areas related to consumer loans.

  36. Vehicles 50% of • Fináustria • Itaucred Veículos • Banco Fiat • Intercap Credit for Individuals Itaucred Own Stores 100% Itaú FIC 50% CBD 50% Itaú FAI 50% LASA 50% Itaú Payroll Credit

  37. Retail partnerships CBD and LASA Taií • Expansion of Focus on direct consumer credit • Long term partnership: 20 years, and renewal option • Operating Management under the responsibility of Itaú • Exclusivity in exploitation of financial products and services to retailers’ customers • New Brand Name (Itaú-based). • Focus on lower income consumers. • Proprietary platform. • Uses the Itaú ATM network. • Diversifies credit-related revenues. • Responsive and efficient.

  38. Estimated Expansion Points of Sale Stores Currently YE 2005 Taií – Own stores 30 150 FIC (CBD) 3 250 FAI (LASA) 0 170 Subtotal 33 570 New Itaú Branches 100 Total 670

  39. Financial Products In Quantities Currently Own Credit Cards (Private Label) FIC (CBD) 3.3 million FAI (LASA) 186 thousand Credit Cards FIC (CBD) 480 thousand FAI (LASA) - Personal Loan Contracts FIC (CBD) - FAI (LASA) 137 thousand Consumer Credit Contracts FIC (CBD) 580 thousand FAI (LASA) 32 thousand Total 4.7 million

  40. Increase in Participation on CredicardCredit Card Base In Thousand Market Share: 20.3% 10,680 9,077 8,674 8,026 8,259

  41. Agenda • Brazilian Economy • Brazilian Banking System • Highlights • Strategy and In-depth Results • Performance of the Shares

  42. Evolution of Earnings per Share and Dividends per Share (*) R$ CAGR = 28.6% CAGR = 26.2% Earnings per Share (*) Dividends per Share (*) (*) In the previous years per lot of thousand shares, as in 2004 a reverse split of shares was carried out.

  43. Preferred Shares Appreciation – in US$ Evolution of US$ 100 Invested from Dec. 94 to Dec. 04 Annual Average Appreciation in US$ 1,145 US$ Itaú(1) Itaú(2) Ibov. 10 years 27.60% 23.12% 6.75% 5 years 20.05% 15.75% 0.65% 800 Attack to WTC 64.36% 58.79% 28.23% 2004 Election Period Argentine Crisis Real Devaluation Russian Crisis Asian Crisis Mexican Crisis 192 100 • With dividends reinvestment. • Without dividends reinvestment.

  44. Banco Itaú Holding Financeira S.A. Presentation to:Annual ING LatAm & EMEA Financial Conference Silvio de Carvalho Executive Director London April 2005

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