This report contains expectations, planned synergies, growth estimates, results forecasts and future
strategies references and statements related to Banco do Brasil, its subsidiaries, associated
companies and affiliates. Although these references and statements reflect management believes
they involve imprecision and hard risks to predict, leaving room for results or consequences
different from those anticipated and discussed here. These expectations highly depend on market
conditions, on Brazil’s economic performance, and on banking and international markets
deevelopments. Banco do Brasil will not be held responsible for updating any estimate contained in
this report.
This report tables and charts present rounded off financial figures in R$ million. The rounding used
complies with Regulation 886/66 of Fundação IBGE: if the last digit is equal to or higher than 5, the
last remained digit is increased by one unit; if the last digit is lower than 5, it is discarded and the
digit before it is maintained. Variations, both nominal and in percentage, were calculated using
numbers in units.
Banco do Brasil informs that studies for a eventual public offering were started. Before
investing in Banco do Brasil’s stocks, read carefully the Prospect, specially the “Risk
Factors” section.
Summary
Index of Tables.................................................................................................................................... 5
Index of Figures .................................................................................................................................. 9
Introduction........................................................................................................................................11
Summary of Results ..........................................................................................................................12
Assumptions used in 2010 Guidance Prediction .............................................................................25
1 – Economic Environment ...............................................................................................................26
2 – BB Securities................................................................................................................................33
2.1 Shares ...................................................................................................................................33
2.2 Warrants................................................................................................................................36
2.3 Performance of the Shares...................................................................................................37
3 – Corporate Governance.................................................................................................................41
4 – Other Information.........................................................................................................................43
5 – Summarized Financial Statements ..............................................................................................45
5.1 Summarized Balance Sheet .................................................................................................45
5.2 Summarized Corporate Law Income Statement ..................................................................47
5.3 Income Statement with Reallocations .................................................................................48
5.3.1 Details of the Reallocations ..............................................................................................49
6 - Balance Sheet Analysis ................................................................................................................54
6.1 Breakdown ............................................................................................................................54
6.2 Analysis of Assets ................................................................................................................55
6.3 Securities Portfolio...............................................................................................................56
6.4 Tax Credits............................................................................................................................57
6.5 Loan Portfolio .......................................................................................................................58
6.5.1 Individual Loan Portfolio ..............................................................................................60
6.5.2 Business Loan Portfolio ...............................................................................................62
6.5.3 Agribusiness Loan Portfolio ........................................................................................65
6.6 Analysis of Liabilities ...........................................................................................................75
6.7 Liquidity Analysis .................................................................................................................77
6.8 Deposits and Money Market Funding ..................................................................................78
6.8.1 Foreign Borrowing ........................................................................................................79
7 – Analysis of Results ......................................................................................................................80
7.1 Net Interest Income...............................................................................................................80
7.2 Analysis of Investments .......................................................................................................83
7.3 Analysis of Funding..............................................................................................................86
7.4 Analysis of Volume and Spread...........................................................................................88
7.5 Provision for Credit Risk ......................................................................................................90
7.5.1 Retail Loan Portfolio .....................................................................................................95
7.5.2 SMEs Loan Portfolio .....................................................................................................99
7.5.3 Commercial Loan Portfolio.........................................................................................100
7.5.4 Agribusiness Loan Portfolio ......................................................................................101
7.5.5 Foreign Trade Loan Portfolio .....................................................................................105
7.5.6 Foreign Loan Portfolio and Others ............................................................................106
7.6 Fee Income..........................................................................................................................107
7.6.1 Revenues from Account Fees ....................................................................................108
7.6.2 Asset Management .....................................................................................................109
7.6.3 Cards ...........................................................................................................................111
7.6.4 Collections ..................................................................................................................113
7.7 Administrative Expenses ...................................................................................................114
7.7.1 Personnel Expenses ...................................................................................................115
7.7.2 Other Administrative Expenses .................................................................................116
7.7.3 Distribution Network...................................................................................................117
7.7.4 Automated Channels ..................................................................................................120
7.7.5 Productivity – Coverage Ratios..................................................................................122
7.8 Operating Income ...............................................................................................................125
7.9 Net Value Added .................................................................................................................127
8 – Risk Management.......................................................................................................................128
8.1 Risk Management ...............................................................................................................128
8.1.1 Market Risks................................................................................................................128
8.1.2 Liquidity Risk ..............................................................................................................137
8.1.3 Credit Risk...................................................................................................................139
8.1.4 Operating Risk ............................................................................................................143
8.2 Capital Structure.................................................................................................................145
8.2.1 Shareholders’ Equity ..................................................................................................145
8.2.2 Regulatory Capital ......................................................................................................146
8.2.3 Economic Capital........................................................................................................152
9 – Social and Environmental Performance ...................................................................................154
9.1 Employee Relations............................................................................................................155
9.2 Eco-efficiency .....................................................................................................................159
9.3 Social Environmental focused Business...........................................................................162
9.4 Investor Market Recognition ..............................................................................................166
10 – Strategic Investments ..............................................................................................................167
10.1 Information........................................................................................................................167
10.2 Insurance, Pension Plans and Capitalization ..................................................................168
10.3 Acquisition, Incorporations and Strategic Partnership ..................................................172
10.3.1 Transactions in the Period .......................................................................................172
10.3.2 Businesses in Progress - Security...........................................................................180
11.1 Summarized Balance Sheet .............................................................................................182
11.2 Summarized Corporate Law Income Statement ..............................................................184
11.3 Income Statement with Reallocations .............................................................................185
Index of Tables
Table 1. 2009 Guidance (BB Stand-alone) .............................................................................................. 14
Table 2. Main Balance Sheet Items ......................................................................................................... 14
Table 3. Main Balance Sheet Items (Banco do Brasil stand-alone)......................................................... 15
Table 4. Loan Portfolio (Conglomerate) ................................................................................................... 15
Table 5. Loan Portfolio – Organic Growth (Banco do Brasil stand-alone) ............................................... 16
Table 6. Income Statement with reallocations ......................................................................................... 16
Table 7. Main Indicators of Income/Expenses ......................................................................................... 17
Table 8. Statement of Operations with reallocations (Banco do Brasil stand-alone) ............................... 17
Table 9. Main Indicators of Income/Expenses (Banco do Brasil stand-alone)........................................ 17
Table 10. Net Interest Income by business line ....................................................................................... 18
Table 11. Annualized spread.................................................................................................................... 19
Table 12. Loan Portfolio Quality Indicators (BB+BV+BNC) ..................................................................... 20
Table 13. Allowance for loan losses......................................................................................................... 21
Table 14. Expenses with Allowance for Loan Losses over Portfolio....................................................... 21
Table 15. Administrative expenses ......................................................................................................... 22
Table 16. Fee income.............................................................................................................................. 22
Table 17. Extraordinary Items .................................................................................................................. 24
Table 18. Guidance 2010 ......................................................................................................................... 25
Table 19. Main Macroeconomic Ratios .................................................................................................... 32
Table 20. Shareholding Breakdown ......................................................................................................... 33
Table 21. Distribution of Dividends/Interest on Own Capital.................................................................... 34
Table 22. Free Float by Range of Shares Owned.................................................................................... 34
Table 23. Breakdown of the Series “C” Warrant Holders......................................................................... 36
Table 24. Series “C” Warrants.................................................................................................................. 36
Table 25. Expected Dilution of Capital ..................................................................................................... 36
Table 26. Other Information ..................................................................................................................... 43
Table 27. Summarized Balance Sheet – Assets...................................................................................... 45
Table 28. Summarized Balance Sheet - Liabilities................................................................................... 46
Table 29. Summarized Corporate Law Income Statement ...................................................................... 47
Table 30. Income Statement with Reallocations ...................................................................................... 48
Table 31. Reallocations – Other Operating Income / Expenses .............................................................. 50
Table 32. Fiscal Effects and Statutory Profit Sharing on Extraordinary Items ........................................ 53
Table 33. Breakdown of Assets................................................................................................................ 55
Table 34. Securities Portfolio by Category ............................................................................................... 56
Table 35. Securities Portfolio by Maturity - Market Value ........................................................................ 56
Table 36. Breakdown of Tax Credit.......................................................................................................... 57
Table 37. Acquired Portfolios and Interbank Deposits with Credit Guarantee......................................... 58
Table 38. Loan Portfolio ........................................................................................................................... 59
Table 39. Credit Portfolio – Organic Growth ............................................................................................ 59
Table 40. Individual Loan Portfolio ........................................................................................................... 61
Table 41. Business Loan Portfolio............................................................................................................ 62
Table 42. Private Securities – Businesses ............................................................................................... 63
Table 43. ACC/ACE Average Volume per Contract................................................................................. 63
Table 44. SME Credit Products................................................................................................................ 64
Table 45. Exports ..................................................................................................................................... 66
Table 46. Brazil’s participation on Global Agribusiness ........................................................................... 66
Table 47. Agribusiness Loan Portfolio by Region .................................................................................... 67
Table 48. Agribusiness Loan Portfolio by Purpose .................................................................................. 68
Table 49. Agribusiness Loan Portfolio by Product ................................................................................... 68
Table 50. Agribusiness Loan Portfolio by Financed Items ....................................................................... 69
Table 51. Funds Released for the 09/10 Crop by Customer Size ........................................................... 69
Table 52. Agribusiness Portfolio by Size.................................................................................................. 69
5 - Banco do Brasil – MDA 4Q09
Table 53. Equalizationable Resources from the Loan Portfolio ............................................................... 71
Table 54. 2009/2010 Crop Plan ............................................................................................................... 73
Table 55. Costs – Transaction Profile ...................................................................................................... 73
Table 56. Liabilities................................................................................................................................... 75
Table 57. Sourcers and Uses ................................................................................................................... 76
Table 58. Liquidity Balance ...................................................................................................................... 77
Table 59. Deposits and Money Market Funding ...................................................................................... 78
Table 60. Foreign Borrowing (without BNC)............................................................................................. 79
Table 61. Foreign Issues .......................................................................................................................... 79
Table 62. Net Interest Income .................................................................................................................. 80
Table 63. Analysis of Volume (Earning Assets) and Quarterly Spread – 3Q09 and 4Q09...................... 81
Table 64. Analysis of Volume (Earning Assets) and Nine Months Spread – 2008 and 2009.................. 81
Table 65. Margin, Net of Interest and Profit Margin ................................................................................. 82
Table 66. Revenues from Loans Net of Exchange Impact (Res. 2,770).................................................. 83
Table 67. Securities Income..................................................................................................................... 84
Table 68. Avg Balance of the BS accounts and info. on interest rates - Earning assets (quarterly) ....... 85
Table 69. Avg Balance of the BS accounts and info. on interest rates - Earning assets (annual)........... 85
Table 70. Avg Balances of the BS accounts and info. on int rates – Int.Bearing Liabilities (quarterly) ... 86
Table 71. Avg Balances of the BS accounts and info. on int rates – Int.Bearing Liabilities (annual) ...... 87
Table 72. Int. increase and decrease (Inc. and Exp.) due to changes in Volume and Rates (quarterly) 88
Table 73. Int. increase and decrease (Inc. and Exp.) due to changes in Volume and Rates (annual).... 89
Table 74. Net Financial Margin ................................................................................................................ 90
Table 75. Allowance for Loan Losses Expenses over Portfolio ............................................................... 90
Table 76. Loan Portfolio by Level of Risk................................................................................................. 92
Table 77. Delinquency Ratio .................................................................................................................... 93
Table 78. Average Portfolio Risk.............................................................................................................. 94
Table 79. Retail Loan Portfolio by Level Risk........................................................................................... 95
Table 80. Changes in the Allowance – Retail .......................................................................................... 96
Table 81. Small and Micro Enterprise Loan Portfolio ............................................................................... 99
Table 82. Changes in the Allowance – SMEs .......................................................................................... 99
Table 83. Commercial Loan Portfolio by Level Risk .............................................................................. 100
Table 84. Changes in the Allowance – Commercial .............................................................................. 100
Table 85. Portfolio with and without Roll Over – Agribusiness............................................................... 101
Table 86. Changes in the Allowance – Agribusiness ............................................................................. 101
Table 87. Portfolio with and without Roll Over - Agribusiness ............................................................... 102
Table 88. Rates of the Agribusiness Portfolio ........................................................................................ 103
Table 89. Foreign Trade Loan Porfolio by Level Risk ............................................................................ 105
Table 90. Changes in Allowance – Foreign Trade ................................................................................. 105
Table 91. Foreign Loan Portfolio by Level Risk ..................................................................................... 106
Table 92. Other Transactions Portfolio – Banco Nossa Caixa and Banco Votorantim (50%) ............... 106
Table 93. Fee Income............................................................................................................................. 107
Table 94. Investment Funds and Managed Portfolios by Customer ...................................................... 109
Table 95. Investment Funds and Managed Portfolios by Type.............................................................. 110
Table 96. Total Cards Revenues............................................................................................................ 112
Table 97. Commercial Income ............................................................................................................... 114
Table 98. Personnel Expenses .............................................................................................................. 115
Table 99. Other Administrative Expenses .............................................................................................. 116
Table 100. Distribution Network ............................................................................................................. 117
Table 101. Wholesale Pillar Branches ................................................................................................... 118
Table 102. Distribution Network Abroad................................................................................................. 119
Table 103. Coverage Ratios – without extraordinary items ................................................................... 122
Table 104. Cost Income Ratio – without extraordinary items................................................................. 123
Table 105. Operating Income................................................................................................................. 125
Table 106. Accumulated Amortization.................................................................................................... 126
Table 107. Intangible .............................................................................................................................. 126
6 - Banco do Brasil – MDA 4Q09
Table 108. Net Value Added .................................................................................................................. 127
Table 109. Balance in Foreign Currency................................................................................................ 130
Table 110. Consolidated BB VaR........................................................................................................... 132
Table 111. Foreign Network's VaR ........................................................................................................ 133
Table 112. International Trading Porfolio’s VaR .................................................................................... 134
Table 113. Domestic Trading Porfolio’s VaR ......................................................................................... 135
Table 114. Sensitivity to Interest Rate – 12/31/2009 ............................................................................. 136
Table 115. Concentration of the Loan Portfolio on the 100 Largest Borrowers ..................................... 141
Table 116. Concentration of the Loan Portfolio of the 100 Largest Borrowers % in relation to RE ....... 141
Table 117. Concentration of the Loan Portfolio by Macro-sector........................................................... 142
Table 118. Monitoring of Operational Loss ............................................................................................ 144
Table 119. Shareholders’ Equity ............................................................................................................ 145
Table 120. BIS Ratio – Financial Conglomerate .................................................................................... 148
Table 121. Main accounts of the PEPR share (Economic Financial Conglomerate)............................. 148
Table 122. PRE for Market Risk by Risk Factor..................................................................................... 149
Table 123. Allocated capital for operational risk by line of business...................................................... 149
Table 124. Changes in Composition of BIS Ratio .................................................................................. 150
Table 125. Fixed Asset Ratio ................................................................................................................. 151
Table 126. Economic Capital ................................................................................................................. 152
Table 127. Distribution of Economic Capital in the Loan Portfolio ......................................................... 152
Table 128. VaR by Risk Factor .............................................................................................................. 153
Table 129. Distribution of Economic Capital in the Loan Portfolio ......................................................... 153
Table 130. Growth in the number of scholarships granted .................................................................... 156
Table 131. Employee Training – Annual Flow ....................................................................................... 157
Table 132. Quarterly Average Expense per Employee (Statement with Reallocations)........................ 157
Table 133. Expenses with Statutory Porfit Sharing ................................................................................ 157
Table 134. Employee Turnover .............................................................................................................. 158
Table 135. Use of Water......................................................................................................................... 159
Table 136. Use of Paper......................................................................................................................... 160
Table 137. Sustainable Regional Development (DRS) .......................................................................... 162
Table 138. Microcredit operations .......................................................................................................... 163
Table 139. Credit with RSA - Other Programs ...................................................................................... 164
Table 140. Investment funds with RSA criteria ...................................................................................... 164
Table 141. Complaints registered in the Central Bank........................................................................... 165
Table 142. Interest in the capital of companies...................................................................................... 167
Table 143. Insurance, Pension Plans and Capitalization....................................................................... 168
Table 144. Income Statement by Line of Business ................................................................................ 168
Table 145. Securities Operating Highlights ............................................................................................ 170
Table 146. Securities Operating Highlights ............................................................................................ 171
Table 147. Banco Votorantim – Highlights of the Result........................................................................ 173
Table 148. Banco Votorantim – Realocations - (Market to Market - MKT) ............................................ 174
Table 149. Banco Votorantim – Realocations - (Market to Market - MKT) ............................................ 174
Table 150. Banco Votorantim – Reallocations (Currency Variation)...................................................... 174
Table 151. Banco Votorantim – Reallocations (Bank Credit Bills) ......................................................... 175
Table 152. Banco Votorantim – Equity Highlights .................................................................................. 176
Table 153. Banco Votorantim – Loan Portfolio by Level of Risk ............................................................ 176
Table 154. Banco Votorantim – Delinquency Ratios.............................................................................. 177
Table 155. Banco Votorantim – Vehicle Portfolio................................................................................... 177
Table 156. Banco Votorantim – Operational and Structural Highlights.................................................. 177
Table 157. Banco Nossa Caixa – Income Statement Highlights ........................................................... 178
Table 158. Banco Nossa Caixa – Loan Portfolio ................................................................................... 179
Table 159. Banco Nossa Caixa – Operating Highlights ......................................................................... 179
Table 160. Insurance, Pension and Capitalization Companies ............................................................. 180
Table 161. Partnership Revision – Principal Financial Group................................................................ 181
Table 162. Partnership Revision – Principal Financial Group................................................................ 181
7 - Banco do Brasil – MDA 4Q09
Table 163. Balance Sheet – Assets ....................................................................................................... 182
Table 164. Balance Sheet – Liabilities ................................................................................................... 183
Table 165. Summarized Corporate Law Income Statement .................................................................. 184
Table 166. Income Statement with Reallocations .................................................................................. 185
8 - Banco do Brasil – MDA 4Q09
Index of Figures
Figure 1. Earnings (R$ million) and ROE (%) .......................................................................................... 12
Figure 2. Earnings per Share (R$) ........................................................................................................... 12
Figure 3. Dividends and Interest on Own Capital (R$ million) ................................................................. 13
Figure 4. Delinquency 15 and 90 days - BB Stand Alone ........................................................................ 19
Figure 5. Delinquency 15 and 90 days – Individuals Porfolio (loan as reference for interest rate).......... 20
Figure 6. BIS Ratio ................................................................................................................................... 23
Figure 7. International Reserves (US$ billion) ......................................................................................... 26
Figure 8. Sovereign Risk (EMBI) x Foreign Exchange Rate (R$/US$) .................................................... 27
Figure 9. Trade Balance, Exports and Imports (US$ billion).................................................................... 27
Figure 10. Industrial production, growth rate (movable average - 3 months) .......................................... 28
Figure 11. Businessmen's Confidence Index ........................................................................................... 28
Figure 12. Unemployment Rate (% of the Economically Active Population) ........................................... 29
Figure 13. IPCA (yearly variation) X Inflation Targets (%) ....................................................................... 29
Figure 14. Basic Interest Rate x Real Interest (% per annum)................................................................. 30
Figure 15. Total Credit Volume of the Brazilian Economy (% of GDP) .................................................... 30
Figure 16. Credit Evolution by Type of Financial Institution ..................................................................... 31
Figure 17. Free Float Breakdown............................................................................................................. 34
Figure 18. Share of Equity Held by Foreign Investors ............................................................................. 35
Figure 19. BB Shares vs. Ibovespa.......................................................................................................... 37
Figure 20. BBAS3 in Ibovespa ................................................................................................................. 38
Figure 21. Average financial volume – BBAS3 ........................................................................................ 38
Figure 22. Average amount traded – BBAS3 ........................................................................................... 39
Figure 23. Market Ratios .......................................................................................................................... 40
Figure 24. Decision Structure ................................................................................................................... 42
Figure 25. Earning Assets vs. Interest Bearing Liabilities ........................................................................ 54
Figure 26. Breakdown of Assets .............................................................................................................. 55
Figure 27. Agribusiness Participation in GDP and in Labor Market......................................................... 65
Figure 28. Trade Balance (FOB) .............................................................................................................. 65
Figure 29. Production vs. Planted Area.................................................................................................... 66
Figure 30. Agribusiness Loan Portfolio by Customer............................................................................... 70
Figure 31. Agribusiness Loan Portfolio by Funding Sources ................................................................... 70
Figure 32. Equalization Revenues and Weighting Factors ...................................................................... 71
Figure 33. Agricultural Insurance and Proagro ........................................................................................ 72
Figure 34. Evolution of contracted operations with mitigation.................................................................. 72
Figure 35. Price/cost relation between soybean and corn ....................................................................... 74
Figure 36. Liquidity Balance ..................................................................................................................... 77
Figure 37. Market Share of BB Funding................................................................................................... 78
Figure 38. NIM Analysis ........................................................................................................................... 82
Figure 39. NIM by Loan Portfolio.............................................................................................................. 83
Figure 40. Securities Portfolio by Index (Multiple Bank) .......................................................................... 84
Figure 41. Allowances Breakdown ........................................................................................................... 91
Figure 42. Past due Loans + 15 and 90 days .......................................................................................... 93
Figure 43. Allowance/Past Due Loans +90 days – BB x BI (%)............................................................... 94
Figure 44. Quarterly Vintage .................................................................................................................... 97
Figure 45. Annual Vintage ........................................................................................................................ 97
Figure 46. Annual vintage - Vehicle Financing Portfolio - Arena I ........................................................... 98
Figure 47. Annual vintage - Vehicle Financing Portfolio - Arena II .......................................................... 98
Figure 48. Stratified Agribusiness Portfolio ............................................................................................ 104
Figure 49. Checking Account Base ........................................................................................................ 108
Figure 50. Asset Management ............................................................................................................... 109
Figure 51. Credit and Debit Cards.......................................................................................................... 111
Figure 52. Card Revenues ..................................................................................................................... 112
9 - Banco do Brasil – MDA 4Q09
Figure 53. BB Billings Volume................................................................................................................ 113
Figure 54. Business vs. Expenses ......................................................................................................... 114
Figure 55. Changes in Workforce........................................................................................................... 115
Figure 56. Total Distribution Network ..................................................................................................... 117
Figure 57. Automated Teller Machines .................................................................................................. 120
Figure 58. Costumer Access Options - % .............................................................................................. 121
Figure 59. Coverage Ratios – without Extraordinary Items.................................................................... 122
Figure 60. Cost Income Ratio – without Extraordinary Items................................................................. 123
Figure 61. Other Productivity Ratios ...................................................................................................... 124
Figure 62. Changes in Foreign Exchange Exposure ............................................................................. 130
Figure 63. Composition of Banco do Brasil's assets and liabilities in the country ................................. 131
Figure 64. Net Position ........................................................................................................................... 131
Figure 65. Financial Consolidated BB VaR ............................................................................................ 132
Figure 66. Consolidated Foreign Network's VaR ................................................................................... 133
Figure 67. VaR for the International Trading Portfolio............................................................................ 134
Figure 68. VaR for the Domestic Trading Portfolio ................................................................................ 135
Figure 69. Liquidity Reserve - Domestic Treasury ................................................................................. 137
Figure 70. DRL Indicator ........................................................................................................................ 138
Figure 71. Liquidity Reserve - International Treasury ............................................................................ 138
Figure 72. Measuring and management instruments............................................................................. 139
Figure 73. BIS Ratio – Economic Financial Conglomerate .................................................................... 149
Figure 74. Employees Age ..................................................................................................................... 155
Figure 75. Aged Bracked........................................................................................................................ 155
Figure 76. Level of Education................................................................................................................. 156
Figure 77. Transactions without use of paper ........................................................................................ 160
Figure 78. Toner consumption – in units ................................................................................................ 161
Figure 79. PRONAF Portfolio / Proger Rural (R$ million) ...................................................................... 163
Figure 80. BBAS3 participation in ISE, ITAG and IGC........................................................................... 166
Figure 81. Combined Ratio .................................................................................................................... 169
10 - Banco do Brasil – MDA 4Q09
Introduction
The Management Discussion and Analysis (MD&A) report presents the economic/financial situation of
Banco do Brasil (BB). Geared toward market analysts, stockholders and investors, with quarterly
periodicity, this report addresses topics such as the economic environment, BB's shares performance,
corporate governance practices, and risk management. There are separate analyses of the capital
structure and the results. Moreover, in conformity with the Triple Bottom Line concept, the report also
presents Social-Environmental Performance indicators of Banco do Brasil (Chapter 9), with the purpose
of evidencing the generation of value of these initiatives to our shareholders and other stakeholders.
The reader will also find eight period historical series tables of the Summarized Balance Sheet, the
Summarized Corporate Law Income Statement, the Income Statement with Reallocations, the Analytic
Spread, and other information about profitability, productivity, loan quality portfolio, capital structure,
capital market, and structural data.
According to the paragraph 55 of CVM Regulation 371/2000, Banco do Brasil decided to adopt, from the
year-end 2009 on, in current and consistent basis, to account faster the income and losses related to the
Plano de Benefícios I (Plano I of Previ).
Aiming to allow a better comparability of the 4Q09 results with the previous quarters, the Bank decided
not to adjust the recurring net income of the period. However, the analysis of the full year 2009 already
takes into account this decision.
Considering the strategic transactions relevance announced as of the second half of 2008 (acquisitions,
mergers and partnerships), the detailing of the main information related to the companies associated
with business in course and to transactions already executed are presented in this report, evidencing the
impact of the transactions over the numbers of BB.
In relation to the partnership with Banco Votorantim (BV), as from 3Q09, the accounting information of
equity accounts is consolidated in BB's financial statements. On the other hand, income accounts were
consolidated as of this quarter. The main figures of BV are presented in a specific chapter. Throughout
this report, some indicators and tables evidence the numbers of BB separated from information of BV,
aiming to facilitate comparison and analysis.
We also emphasize that, as of 1Q09, all the financial statements and management analyses developed
will be based on the "Economic Financial Consolidation" view, which provides for the consolidation of all
the companies belonging to the economic group. Heretofore the Performance Analysis report contained
the financial companies consolidation only. For comparability, we inform that 2008 results also respect
the same vision.
At the end of the report we present the Financial Statements and Explanatory Notes for the quarter
under analysis.
ON-LINE ACCESS
The Performance Analysis report can also be read through Banco do Brasil’s Investor Relations website.
Further information about the Bank is also available there, such as: Corporate Governance, news,
frequently asked questions, a download center which contains versions of this report for the Adobe®
Reader® software. General information, Balance Sheet and Income Statement analysis and complete
financial statements; the historical series in Excel; presentations to the market; Annual and Social and
Environment Responsibility Report; Social Balance Sheet; Results Conference Calls and others are also
available on the Website.
LINKS OF INTEREST
Banco do Brasil S.A.
Investor Relations
11 - Banco do Brasil – MDA 4Q09
bb.com.br
bb.com.br/ir
Summary of Results
Banco do Brasil earns R$ 10.15 billion in 2009
Banco do Brasil reported net income of R$ 10,148 million in 2009. The result corresponds to an
annualized return on average equity (ROAE) of 30.7%. Segregating the extraordinary effects, recurring
income amounted to R$ 8,506 million, 27.2% above the amount recorded in 2008, and correspondent to
a recurring return on average equity of 25.8%. The recurring result for the year was influenced by the
amount of R$ 3,030 million, as a result of the actuarial assets and liabilities update of the “Plano de
Aposentadoria e Pensão dos Funcionários do Banco do Brasil (Previ)”.
In 4Q09, the Bank's net income reached R$ 4,155 million, which corresponds to an annualized ROAE of
56.8%. On recurring bases, the net income recorded R$ 1,819 million in 4Q09, 3.1% higher than the
income of 3Q09 and 11.9% higher than the recurring net income of 4Q08.
2,037
22.5
24.5
21.6
32.5
30.7
25.8
24.7
23.1
23.7
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
Recurring Income
Net Income
4,155
1,819
1,979
1,764
2,348
1,727
1,665
1,522
2,944
1,626
1,867
1,644
6,685
8,506
30.5
56.8
26.2
26,2
23.8
8,803
24.6
1,463
47.4
10,148
33.2
33.6
27.9
4Q09
2008
2009
Recurring ROE - %
ROE - %
Figure 1. Earnings (R$ million) and ROE (%)
Earnings per share of R$ 3.95 in 2009
Net income per share reached R$ 3.95 in 2009, 14.7% higher than that observed in 2008. In the
quarterly comparison, earnings per share recorded R$ 1.62, 109.9% higher than earnings per share of
3Q09.
3.95
3.44
1.62
0.73
3Q08
1.15
0.65
4Q08
Figure 2. Earnings per Share (R$)
12 - Banco do Brasil – MDA 4Q09
1Q09
0.91
0.77
2Q09
3Q09
4Q09
2008
2009
40% of net income distributed to shareholders
The amount distributed to shareholders totaled R$ 4,059 million in 2009, equivalent to 40% of the net
income (payout). Of this total, R$ 1,858 million were distributed as interest on own capital (IOC) and R$
2,201 million as dividends.
4,059
3,521
747
1,178
1,662
666
939
791
218
315
476
3Q09
341
406
767
410
448
483
456
3Q08
4Q08
1Q09
2Q09
Interest on Own Capital
1,184
1,973
2,201
1,548
1,858
2008
2009
478
4Q09
Dividends
Figure 3. Dividends and Interest on Own Capital (R$ million)
Performance confirms estimates for 2009
The performance of Banco do Brasil (stand alone) in 2009 has confirmed the majority of the estimates
disclosed to the market upon the announcement of the result of 4Q08, except the following items:
•
Recurring ROAE: in addition to the strong performance of the Net Interest Income, the growth of the
Fee Income and the control of the administrative expenses, the recurring ROAE for 2009 has been
affected by accounting profit/losses related to the “Plano de Benefícios I” (Plano I of Previ). As
explained in the Introduction section of this report, from now on such bookings will be held on a
consistent and recurring basis during the upcoming years. These factors were decisive to allow the
ROAE to reach a higher performance than the prediction made in the 2009 Guidance.
•
Spread: influenced by the changes in the mix of the loan portfolio, with an increase in the relative
share of operations with less associated risks, and therefore a lower spread (such as payroll loans
and vehicle financing) and by the increase of the share of short-term investments in total assets that,
as they have lower spread, they have contributed for lowering the Bank´s global spread.
•
Deposits: the non-fulfillment of the guidance of growth of total deposits was motivated by the
consolidation of Banco Nossa Caixa that added R$ 39,821 million to BB's deposit base, minimizing
the need for funding; and
•
Allowance for Loan Losses: Influenced by the deterioration of the macroeconomic panorama,
generating a greater need for provisioning.
•
Tax rate: the accounting of the actuarial profit and losses related to the Plano I of Previ on a
recurring basis generated a positive impact on the taxable income of the Bank and consequently
increase on deferred expenses with IRPJ and CSLL (at a higher tax rate than the effective tax rate
observed in the Income Statement with Reallocations with the first nine months of 2009), which led
the effective tax rate just above the range predicted in the 2009 Guidance.
13 - Banco do Brasil – MDA 4Q09
Table 1. 2009 Guidance (BB Stand-alone)
Items
Recurring Return on Equity
Net Interest Margin
Total Deposits
Domestic Loan Portfolio
Individuals
Businesses
Agribusiness
Allowance for Loan Losses
Fee Income
Administrative Expenses
Tax Rate
Performance Conglomerate
Performance - Proforma BB
Stand Alone
2009 Guidance - Proforma
BB Stand Alone
25.8%
6.7%
24.6%
35.2%
88.1%
29.0%
4.3%
4.6%
14.4%
24.9%
32.7%
24.5%
6.5%
5.4%
15.7%
30.3%
16.6%
3.1%
4.6%
5.7%
10.0%
33.5%
19% - 22%
6.8% - 7.2%
10% - 14%
13% - 17%
23% - 25%
16% - 19%
2% - 5%
3.8% - 4.2%
5% - 8%
9% - 12%
30% - 33%
The main highlights of income/expenses and indicators above are discussed below.
BB consolidates leadership: total assets reach R$ 708.5 billion
Banco do Brasil recorded R$ 708,549 million in total assets at the end of 2009, a growth of 3.3%
quarter-on-quarter and of 35.9% compared to 2008. These figures already consider consolidation of all
the interests in financial and non-financial companies, in addition to mergers (BESC and BEP), the
acquisition of equity control in Banco Nossa Caixa (BNC) and the conclusion of the strategic partnership
established with Banco Votorantim (BV). In addition to these corporate transactions, the growth of
money market borrowings and of deposits, which backed the strong expansion of the loan portfolio in
2009, merits special emphasis.
Table 2. Main Balance Sheet Items
R$ million
Total Assets
Loan Portfolio
Securities
Short-term Interbank Operations
Deposits
Demand Deposits
Savings Deposits
Interbank Deposits
Time Deposits
Money Market Borrowing
Shareholder’s Equity
Dec/08
521,273
224,808
86,909
119,408
270,841
51,949
54,965
14,065
149,618
91,130
29,937
Sep/09
685,684
285,517
129,818
157,541
326,958
50,107
72,233
9,627
194,707
153,603
33,661
Chg. %
Dec/09
On Dec/08 On Sep/09
3.3
708,549
35.9
5.4
300,829
33.8
124,337
43.1
(4.2)
168,398
41.0
6.9
337,564
24.6
3.2
56,459
8.7
12.7
75,742
37.8
4.9
11,619
(17.4)
20.7
193,516
29.3
(0.6)
160,821
76.5
4.7
36,119
20.6
7.3
For purposes of comparison with the 2009 guidance, the following table presents the main balance
sheets items of BB on a stand-alone basis, allowing the comparison between the balance at the end of
2009 and that recorded in 2008.
Segregating the effects of consolidation of BNC and BV, the growth of total assets of Banco do Brasil
was 5.0% quarter-on-quarter and 14.9% in twelve months. Among the Assets, it is worth mentioning the
loan portfolio and short-term interbank investments, which grew 15.6% and 30.1% in 12 months,
respectively.
14 - Banco do Brasil – MDA 4Q09
Table 3. Main Balance Sheet Items (Banco do Brasil stand-alone)
R$ million
Total Assets
Loan Portfolio
Securities
Short-term Interbank Operations
Deposits
Demand Deposits
Saving Deposits
Interbank Deposits
Time Deposits
Money Market Borrowing
Shareholder’s Equity
Dec/08
521,273
224,808
86,909
119,408
270,841
51,949
54,965
14,065
149,618
91,130
29,937
Sep/09
570,629
245,712
93,189
137,881
275,253
45,860
60,358
7,974
160,738
124,736
33,661
Chg. %
Dec/09
On Dec/08 On Sep/09
5.0
598,993
14.9
259,840
15.6
5.8
88,323
1.6
(5.2)
155,328
30.1
12.7
285,504
5.4
3.7
52,230
0.5
13.9
63,625
15.8
5.4
10,748
(23.6)
34.8
158,693
6.1
(1.3)
146,963
61.3
17.8
36,119
20.6
7.3
Loan Portfolio surpasses the R$ 320 billion mark
In an amplified concept, which includes guarantees provided and private securities, Banco do Brasil's
loan portfolio ended the last quarter at R$ 320,696 million (already considering the portfolios of BNC and
of BV), growth of 6.4% in the quarter and of 35.2% compared to the amplified portfolio of 2008. BB's
amplified loan portfolio on a stand-alone basis reached R$ 279,707 million, a growth of 6.9% quarter on
quarter and of 17.9% in 12 months.
The classified loan portfolio (in accordance with CMN Resolution 2682) reached R$ 300,829 million,
growth of 33.8% in 12 months and of 5.4% in the quarter. The domestic loan portfolio grew 35.2% in the
year and 4.7% over 3Q09, surpassing again the industry's growth, which recorded a progression of
14.9% in 2009 and of 4.6% in the quarter.
Table 4. Loan Portfolio (Conglomerate)
Chg. %
R$ million
Loan Portfolio
Brazil
Individuals
Payroll Loan
Auto Loans
Businesses
SME
Other
Agribusiness
Abroad
Dec/08
224,808
209,693
48,811
17,626
6,694
97,192
34,900
62,292
63,690
15,115
Sep/09
285,517
270,748
85,717
33,973
19,255
116,994
41,159
75,834
68,038
14,769
Dec/09
On Dec/08 On Sep/09
300,829
33.8
5.4
283,560
35.2
4.7
91,791
88.1
7.1
36,514
107.2
7.5
20,738
209.8
7.7
125,336
29.0
7.1
44,920
28.7
9.1
80,416
29.1
6.0
66,434
4.3
(2.4)
17,268
14.2
16.9
At the end of 2009, loans to individual clients amounted to R$ 91,791 million, an increase of 88.1% in
the year and of 7.1% quarter-on-quarter. In both comparisons, the payroll loan was the main responsible
for this growth of the individual customers portfolio, which since June has surpassed that of
agribusiness, contributing to allow the individual portfolio to reach a relative share of 30.5% of the total
portfolio at the end of 2009, as opposed to 21.7% at the end of 2008.
The business portfolio, which represents 41.7% of BB's total portfolio, amounted to R$ 125,336 million in
December 2009, expansion of 29.0% in twelve months and of 7.1% in the quarter, driven in both
comparisons by the growth of working capital operations.
Disregarding the consolidations of Banco Nossa Caixa and of Banco Votorantim, it is worth mentioning
the strong growth of the loan portfolio of BB in an organic way. BB's domestic loan portfolio reached a
15 - Banco do Brasil – MDA 4Q09
balance of R$ 242,572 million, growth of 5.0% in the quarter and of 15.7% in 12 months. Within the
same concept, the total portfolio recorded R$ 259,840 million in December 2009, growth of 5.8% in the
quarter. The following table allows the understanding of the evolution of stand-alone figures, and the
impacts of Banco Votorantim's consolidation and evolution of Banco Nossa Caixa's portfolio.
Table 5. Loan Portfolio – Organic Growth (Banco do Brasil stand-alone)
Chg. %
R$ million
Banco do Brasil
Individuals
Businesses
Agribusiness
Abroad
Nossa Caixa
Individuals
Businesses
Agribusiness
Banco Votorantim*
Individuals
Businesses
Total
Dec/08
224,808
48,811
97,192
63,690
15,115
-
Sep/09
245,712
58,747
104,958
67,237
14,769
19,308
14,524
3,984
800
20,498
12,446
8,052
224,808
285,517
Dec/09
On Dec/08 On Sep/09
15.6
5.8
259,840
63,585
30.3
8.2
16.6
8.0
113,336
65,651
3.1
(2.4)
14.2
16.9
17,268
2.4
19,766
15,080
3.8
(2.0)
3,904
(2.2)
783
21,222
3.5
5.5
13,126
0.5
8,096
300,829
33.8
5.4
*Amounts equal to 50% of BV Loan Portfolio
Recurring income reflects robustness of the financial margin, growth of banking
service fees and control of expenses
The table below, extracted from the statement of income with reallocations, presents the main highlights
of the period. The breakdown of reallocations is in Section 5.3.1 of the Performance Analysis Report.
Table 6. Income Statement with reallocations
R$ million
Financial Intermediation Income
Loan operations + Leasing
Securities
Financial Intermediation Expenses
Net Interest Income
Allowance for Loan Losses
Net Financial Margin
Fee income
Contribution Margin
Administrative expenses
Personnel Expenses
Other Administrative Expenses
Commercial Income
Legal Claims
Labor Lawsuits
Other Income and Expenses
Income Before Taxes
Income and Social Contribution Taxes
Corporate Profit Sharing
Recurring Net Income
16 - Banco do Brasil – MDA 4Q09
Quarterly Flow
Chg. %
Annual Flow
Chg. %
4Q08
3Q09
4Q09 On 4Q08 On 3Q09 2008
2009
On 2008
(11.9)
12.1
11.9
20,412
16,048
17,984
58,400
65,329
11,253
10,756
12,177
8. 2
13.2
34,821
42,303
21.5
(34.3)
4.7
4.2
8,097
5,083
5,321
20,496
21,350
(34.6)
12.8 (33,885) (32,269)
(4.8)
(13,335) (7,729) (8,715)
31. 0
11.4
24,515
33,060
34.9
7,077
8,320
9,268
31. 7
(2.2)
71.1
(2,240) (3,017) (2,950)
(6,799) (11,629)
4,837
5,303
6,318
17,716
21,431
30. 6
19.1
21.0
17. 9
2.3
14.4
3,058
3,526
3,606
11,811
13,511
24. 3
10.7
18.9
7,534
8,461
9,367
28,058
33,367
(4,344) (4,897) (5,465)
25. 8
11.6 (15,358) (19,185)
24.9
23. 6
5.6
26.7
(2,301) (2,693) (2,844)
(8,112) (10,280)
(2,043) (2,203) (2,621)
28. 3
18.9
(7,246) (8,905)
22.9
23. 3
9.5
12.1
3,144
3,540
3,876
12,560
14,083
49.8
(97)
(40)
46
(161)
(242)
(129)
(216)
(49)
(61.7)
(77.1)
(560)
(260)
(53.6)
74. 6
67.0
(537)
(562)
(938)
(1,786)
263
23. 3
7.8
37.7
2,380
2,723
2,934
10,052
13,844
53. 4
17.4
72.0
(557)
(727)
(853)
(2,416) (4,155)
32. 7
13.9
21.6
(198)
(230)
(262)
(951) (1,157)
11. 9
3.1
27.2
1,626
1,764
1,819
6,685
8,506
Table 7. Main Indicators of Income/Expenses
Indicators - %
Global Spread
Expenses with Allowance for Loan Losses over Portfolio
Efficiency Ratio¹
Recurring Return on Equity
Effective Rate of Tax
(1)
4Q08
7,2
3,6
45,7
24,5
25,5
3Q09
4Q09
6,7
4,7
44,6
23,1
29,2
6,7
4,6
44,4
22,5
31,9
2008
7,0
3,6
45,6
24,7
26,5
2009
6,7
4,6
40,7
25,8
32,7
The extraordinary effects of the period were segregated in the calculation.
Table 8. Statement of Operations with reallocations (Banco do Brasil stand-alone)
R$ million
Financial Intermediation Income
Loan operations + Leasing
Securities
Financial Intermediation Expenses
Net Interest Income
Allowance for Loan Losses
Net Financial Margin
Fee income
Contribution Margin
Administrative expenses
Personnel Expenses
Other Administrative Expenses
Commercial Income
Legal Claims
Labor Lawsuits
Other Income and Expenses
Income Before Taxes
Income and Social Contribution Taxes
Corporate Profit Sharing
Recurring Net Income
Quarterly Flow
Chg. %
Annual Flow
Chg. %
4Q08
3Q09
4Q09 On 4Q08 On 3Q09 2008
2009
On 2008
(28.9)
3.6
(0.7)
20,412
14,013
14,517
58,400
58,001
11,253
9,643
9,878
(12.2)
2.4
34,821
37,865
8.7
(48.2)
(0.8)
(9.1)
8,097
4,223
4,190
20,496
18,621
(47.9)
1.9 (33,885) (28,797)
(15.0)
(13,335) (6,820) (6,949)
6. 9
5.2
24,515
29,205
19.1
7,077
7,192
7,568
16. 6
(6.0)
58.9
(2,240) (2,779) (2,613)
(6,799) (10,802)
4,837
4,414
4,955
17,716
18,403
2. 4
12.3
3.9
4. 3
(0.7)
5.7
3,058
3,213
3,189
11,811
12,481
(0.6)
2.2
4.6
7,534
7,325
7,485
28,058
29,338
(4,344) (4,215) (4,511)
3. 8
7.0 (15,358) (16,891)
10.0
3. 0
2.4
11.8
(2,301) (2,314) (2,369)
(8,112) (9,068)
(2,043) (1,901) (2,142)
4. 8
12.7
(7,246) (7,823)
8.0
(5.4)
(4.2)
(1.2)
3,144
3,104
2,974
12,560
12,409
15.2
(97)
(14)
56
(161)
(186)
(560)
(92)
(83.6)
(129)
(142)
1
(49.8)
(41.4)
(537)
(460)
(270)
(1,786)
1,151
16. 1
11.0
32.1
2,380
2,488
2,762
10,052
13,282
69. 3
42.3
70.3
(557)
(662)
(942)
(2,416) (4,113)
5. 4
(4.6)
14.7
(198)
(218)
(208)
(951) (1,091)
(0.8)
0.4
20.8
1,626
1,606
1,612
6,685
8,078
Table 9. Main Indicators of Income/Expenses (Banco do Brasil stand-alone)
Indicators - %
Global Spread
Expenses with Allowance for Loan Losses over Portfolio
Efficiency Ratio¹
Recurring Return on Equity
Effective Rate of Tax
(1)
The extraordinary effects of the period were segregated in the calculation.
17 - Banco do Brasil – MDA 4Q09
4Q08
7.2
3.6
45.7
24.5
25.5
3Q09
6.5
4.6
42.8
20.9
29.2
4Q09
6.6
4.6
40.9
19.8
36.9
2008
7.0
3.6
45.6
24.7
26.5
2009
6.5
4.6
41.4
24.5
33.5
Loan growth drives the increase of the Net Interest Income
The Net Interest Income(NII) recorded growth of 11.4% quarter on quarter and of 31.0% year-over-year,
influenced by the consolidation of Banco Votorantim's figures as of 4Q09. In a pro forma comparison,
excluding the effects of the consolidation of BV and of BNC, the Net Interest Income of Banco do Brasil
on a stand-alone basis amounted to R$ 7,568 million in 4Q09, up 10.2% over 3Q09, driven by the
advance of revenues from loans due to the increase in the volume of these operations.
In the annual comparison, the net interest income reached R$ 33,060 million in 2009, up 34.9% over
2008. Disregarding the effects of the consolidation of BV and of BNC, BB's net interest income on standalone view totaled R$ 29,205 million, growth of 19.1% over 2008, motivated essentially by the growth of
the volume of loan operations and by the reduction of the cost of funding, offsetting the spreads
reduction.
The following table presents the breakdown of the Net Interest Income. The contribution of the loan
portfolio in its main business lines, computing the revenues and the costs associated with these
operations, including the fundraising cost, is highlighted. In addition, the amounts corresponding to
revenue with recovery of receivables written-off as loss, and the amounts of revenues relating to
compulsory deposits with remuneration are segregated. The item “Other Income”, comprised mainly of
income from treasury, resulting from transactions with securities, derivatives and foreign exchange,
completes the NII formation.
Table 10. Net Interest Income by business line
Quarterly Flow
R$ million
Net Interest Income
Loan Operations
Individuals
Businesses
Agribusiness
Other
Remunerated Compulsory
Recovery of Write-offs
Other
BB Stand-alone
Net Interest Income
4Q08
7,077
4,725
2,273
1,598
854
2,352
424
467
1,462
3Q09
8,320
5,978
3,299
1,844
834
2,342
213
525
1,603
7,077
7,192
Chg. %
Annual Flow
4Q09 On 4Q08 On 3Q09
31. 0
11.4
9,268
6,852
45. 0
14.6
64. 6
13.4
3,741
2,178
36. 3
18.1
9. 2
11.8
933
2. 7
3.2
2,416
214
(49.4)
0.5
38. 6
23.2
647
6. 4
(3.0)
1,555
7,568
6. 9
5.2
2008
24,515
16,394
8,356
5,107
3,006
8,121
1,910
1,714
4,496
24,515
Chg. %
2009
On 2008
34.9
33,060
23,570
43.8
48.6
12,413
7,576
48.3
19.1
3,581
16.9
9,490
816
(57.3)
20.1
2,059
47.1
6,615
29,205
19.1
Gross global spread ended the quarter at 6.7%, remaining stable quarter-on-quarter. In 2009, the
spread came to 6.7%, 30 basis points below the spread recorded in 2008. Several factors affected the
global spread of Banco do Brasil in 2009, with an emphasis on:
•
The consolidation of BNC, which as it has an expressive base of low-cost deposits (judicial
deposits), presented a higher spread than that of BB, which had affected positively the global spread;
And those that had a negative effect:
•
The decrease of the basic interest rate, which reduced the remuneration of the own securities
portfolio;
• The change in the loan portfolio mix, with an increase of the relative share of operations with lower
associated risk and, therefore, lower spread (such as payroll loans and vehicle financing);
• The consolidation of the interest of 50% in the capital of Banco Votorantim, which exhibits a lower
global spread than that of Banco do Brasil, as it does not have a base of low-cost deposits and
operates in segments characterized by lower risks and, therefore, lower spread;
18 - Banco do Brasil – MDA 4Q09
Table 11. Annualized spread
R$ million
Loan Operations
Individuals
Businesses
Agribusiness
Other
Global Spread
4Q08
9.8
21.6
7.3
5.6
9.7
7.2
3Q09
10.2
20.6
7.4
4.9
3.6
6.7
4Q09
10.1
18.6
7.4
5.3
3.4
6.7
2008
9.3
21.0
6.7
5.1
4.6
7.0
2009
9.8
18.7
7.2
5.3
3.7
6.7
Delinquency shows a strong decrease in 4Q09
The percentage of operations past due for more than 15 days in the conglomerate dropped to 5.1% in
December 2009, as opposed to 5.8% in September. On the other hand, the percentage of loans
overdue for more than 90 days recorded a decrease of 30 basis points in the last quarter.
The monthly monitoring of BB's domestic loan portfolio (stand-alone) also demonstrates this downslide
in default ratios: the ratio that measures the loans overdue for more than 15 days recorded a reduction
of 110 basis points since August 2009. In the same period, the ratio that measures the loans overdue
for more than 90 days fell by 50 basis points, confirming that the peak of default occurred in 3Q09.
6.3
5.9
5.2
5.2
5.3
6.2
6.0
5.9
5.6
5.5
5.1
4.0
2.9
3.0
3.1
5.9
3.2
3.5
3.6
3.6
3.9
3.9
3.6
3.5
Jan/09 Feb/09Mar/09 Apr/09 May/09 Jun/09 Jul/09 Aug/09 Sep/09Oct/09 Nov/09Dec/09
ICRED_15
ICRED_90
Figure 4. Delinquency 15 and 90 days - BB Stand Alone
The recovery of the labor market and the successful strategy of BB, concentrating the mix of its
individuals loan portfolio in low risk operations, such as payroll loans, were decisive to allow the
delinquency ratios of its portfolio to show successive drops from the peak shown in 1Q09. During this
period, the ratios of operations overdue for more than 15 days and 90 days fell respectively 170 and 110
basis points.
19 - Banco do Brasil – MDA 4Q09
10.5%
10.4%
9.7%
5.6%
5.8%
9.4%
5.8%
9.9%
9.6%
5.8%
9.2%
5.9%
8.8%
5.7%
5.2%
4.8%
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
ICRED_90 Individuals Portfolio
Jun/09
Sep/09
Dec/09
ICRED_15 Individuals Portfolio
Figure 5. Delinquency 15 and 90 days – Individuals Porfolio (loan as reference for interest rate)
Quality of the portfolio remains above the Banking Industry
On the portfolio quality, average risk stood at 5.3% in December 2009, 40 basis points below that seen
for September 2009, and below the average risk of the Banking Industry, that recorded 6.9% at the end of
December.
Delinquency above 90 days reached 3.3% of the total portfolio at the end of 2009, one more time better
than the performance of the Banking Industry, which recorded 4.4%.
Table 12. Loan Portfolio Quality Indicators (BB+BV+BNC)
%
Past Due Loans/Loan Portfolio
Allowance/Loan Portfolio
Past due loans + 60 days/Total Portfolio (%)
Past due loans + 90 days/Total Portfolio (%)
Allowance/Past Due Loans + 60 days
Allowance/Past Due Loans + 90 days
Average Risk BB
Average Risk – Banking Industry
Transactions overdue + 90 days/Total Portfolio – Banking Industry
Dec/08
Sep/09
Dec/09
4.0
6.1
2.8
2.4
218.2
257.7
5.4
6.9
6.7
4.1
3.6
161.1
183.4
5.7
6.8
6.2
3.7
3.3
166.3
190.3
5.3
5.3
3.2
7.2
4.4
6.9
4.4
Beyond the perception of improvement of the economic and business environment, Banco do Brasil
maintained its prudent attitude on the balance of provisions for credit risk and on the percentage of
coverage of the portfolio in 2009. The balance of provisions ended December 2009 at R$ 18,617 million,
growth of 36.2% over that observed in 2008, in line with the expansion of 33.8% of the loan portfolio in
12 months and with the increase in the default rates compared to 2008. In the quarterly comparison the
balance of provisions presented a downslide of 2.4%, in line with the improvement observed in the risk
profile of the operations.
The coverage ratio of provisions over the loan portfolio total balance came to 6.2%, a reduction of 50
basis points compared to the ratio of September 2009 and growth of 10 basis points in the comparison
with the ratio recorded at the end of 2008.
20 - Banco do Brasil – MDA 4Q09
Table 13. Allowance for loan losses
Chg. %
R$ million
Required
Additional
Total
Dec/08
12,079
1,594
Sep/09
16,167
2,903
13,673
19,070
Dec/09
On Dec/08 On Sep/09
31.1
(2.1)
15,835
2,782
74.5
(4.2)
36.2
18,617
(2.4)
Provision expenses recorded a decrease of 2.2% in the quarter, which contributed for the rate that
measures the ratio between these expenses and the total portfolio to end 4Q09 at 1.0%, down 20 basis
points compared to the rate of 3Q09. The ratio between expense in 12 months and the average portfolio
of the same period reached 4.6%, as opposed to 4.7% in the 12 months ended in the previous quarter.
Table 14. Expenses with Allowance for Loan Losses over Portfolio
R$ million
(A) Allowance for Loan Losses - Quarterly
(B) Allowance for Loan Losses - 12 Months
(C) Loan Portfolio
(E) Average Portfolio – 3 Months
(E) Average Portfolio – 12 Months
Expenses over Portfolio (A/D) - %
Expenses over Portfolio (B/E) - %
21 - Banco do Brasil – MDA 4Q09
4Q08
3Q09
4Q09
(2,240)
(6,800)
224,808
218,626
189,144
(3,017)
(10,919)
265,019
257,948
234,430
(2,950)
(11,629)
300,829
282,405
250,888
1.0
3.6
1.2
4.7
1.0
4.6
Operating Efficiency: expenses under control, growth of the service revenues and of
the financial margin
Disregarding the consolidation of the figures of Banco Nossa Caixa and of Banco Votorantim, the
administrative expenses of BB, which include personnel expenses and the other administrative
expenses, amounted to R$ 16,890 million in 2009, up 10.0% over 2008, in line with the guidance
proposed for 2009 (9% to 12%). Also in the stand-alone view, the administrative expenses of 4Q09
reached R$ 4,511 million, growth of 3.8% in the comparison with 4Q08.
Table 15. Administrative expenses
Quarterly Flow
R$ million
BB
Personnel Expenses
Other Administrative Expenses
BNC / BV
Personnel Expenses
Other Administrative Expenses
BB - BNC
Personnel Expenses
Other Administrative Expenses
4Q08
4,344
2,301
2,043
4,344
2,301
2,043
3Q09
4,897
2,693
2,203
682
380
302
4,215
2,314
1,901
Chg. %
4Q09 On 4Q08 On 3Q09
25. 8
11.6
5,465
23. 6
5.6
2,844
28. 3
18.9
2,621
39.9
954
25.1
475
58.5
479
4,511
3. 8
7.0
3. 0
2.4
2,369
4. 8
12.7
2,142
Annual Flow
2008
15,358
8,112
7,246
15,358
8,112
7,246
Chg. %
2009
On 2008
24.9
19,185
10,280
26.7
22.9
8,905
2,294
1,212
1,082
16,890
10.0
11.8
9,068
7.9
7,822
The control of administrative expenses was followed by an increase in fee income, which totaled R$
3,606 million in 4Q09, growth of 2.3% in the quarter and of 17.9% over 4Q08. In 2009, fee income
amounted to R$ 13,511 million, recording growth of 14.4% over 2008. Segregating the effects of the
consolidation of Banco Nossa Caixa and of Banco Votorantim, fee income of BB stand-alone, amounted
to R$ 3,189 million in 4Q09, recording a slight decrease of 0.7% in the quarter. This performance was
influenced by the discontinuation of the collection of the registration renewal fee pursuant to Circular
3,466 of September 11, 2009 of the Brazilian Central Bank. In the comparison with 4Q08, there was a
growth of 4.3%. In 2009 the growth of BB stand alone fee income reached 5.7%, within the Guidance for
the year (5% to 8% range).
Table 16. Fee income
Quarterly Flow
R$ million
BB
BNC / BV
BB - BNC
4Q08
3,058
3,058
3Q09
3,526
313
3,213
Chg. %
4Q09 On 4Q08 On 3Q09
17. 9
2.3
3,606
418
33.3
4. 3
(0.7)
3,189
Annual Flow
2008
11,811
11,811
Chg. %
2009
On 2008
14.4
13,511
1,031
5.7
12,481
The positive performance of Net Interest Income, fee income, combined with the increase of other
operating income and the control of administrative expenses, contributed toward the improvement of the
cost to income ratio.
The conglomerate ratio for 2009 was of 40.7%, an improvement of 490 basis points compared to the
2008 ratio. In the quarterly comparison, the cost to income ratio of the group recorded 44.6% in 4Q09,
remaining stable compared to 3Q09 and 109 basis points better than the rate recorded in 4Q08.
BIS Ratio records growth
Banco do Brasil's capital ratio (K) ended December 2009 at 13.7%, a 70 bps increase over the
preceding quarter. The Basel ratio shown allows the Bank to expand its loan portfolio by R$ 104,600
million in credit assets, considering a 100% weighting.
The improvement observed in the period results from the incorporation of profits, the issue of R$ 1 billion
in Subordinated Bank Deposit Certificates and the issue of US$ 1.450 billion worth of perpetual bonds.
22 - Banco do Brasil – MDA 4Q09
The Central Bank considered this last issue eligible for calculation purposes of the Tier I Capital, in the
hybrid capital and debt instrument category.
In 4Q09 Banco do Brasil released a material fact, informing the market that, with the consent of the
National Treasury, it is finalizing studies to increase its capital by at least R$ 8 billion and by a maximum
of R$ 10 billion, aiming to sustain its future growth.
12.5
4.5
15.0
15.3
4.3
4.6
4.5
10.9
10.4
10.8
Mar/09
Jun/09
15.2
14.7
13.0
4.1
4.2
10.2
8.4
8.8
Mar/08
Jun/08
Sep/08 Dec/08
Tier I
13.0
13.7
3.9
4.0
9.1
9.7
Sep/09 Dec/09
Tier II
Figure 6. BIS Ratio
Extraordinary Events
The extraordinary effects added R$ 2,336 million to BB's net income in 4Q09 and R$ 1,642 million in
2009. The main effects are as follows:
4Q09
Reversal of provisions for civil claims resulting from economic plans, generating extraordinary
income of R$ 530 million, of which R$ 161 million are expenses arising from Banco Nossa Caixa.
Assignment of credits written-off to Ativos S. A., generating extraordinary income in the amount of
R$ 242 million in 4Q09.
Extraordinary income of R$ 3,030 million regarding the partial accounting of non-recognized
actuarial gains of Plano de Aposentadoria e Pensão dos Funcionários do Banco do Brasil – PREVI.
These gains are derived from the review of actuarial assets and liabilities performed in accordance
with Resolution 26 issued by Conselho de Gestão da Previdência Complementar (CGPC) on
September 29, 2008 in accordance with CVM Regulation 371/2000.
Expenses of R$ 215 million arising from Voluntary Resignation Program for employees of Banco
Nossa Caixa.
Reversal of provision for labor claims due to changes in the methodology of recognition of these
contingencies, generating extraordinary income of R$ 644 million, that from 4Q09 on, the provisions
balance began to be established to cover the average value effectively disbursed by the Bank in
legal claims of the same origin (until the moment the provision used to be set based on the amount
requested by the applicant).
Tax Impacts and profit sharing on extraordinary items generating expenses of R$ 1,895 million.
3Q09
Exercise of the Greenshoe Option, whereby BB sold the lot of 14,330,229 shares of CIELO, which
generated extraordinary income of R$ 209 million before taxes.
Partial sale of investments, corresponding to 56.1% of the shares of the BB group (Multiple Bank,
CIELO and VisaVale) in the company Visa Inc., generating positive extraordinary result of R$ 361
million in 1Q08. In September 2009, a portion of the remaining shares was sold, generating an
extraordinary revenue of approximately R$ 141 million.
Assignment of credits written-off to Ativos SA, generating revenues in the amount of R$ 119 million.
23 - Banco do Brasil – MDA 4Q09
Expenses with civil claims regarding economic plans totaling R$ 84 million.
Tax Impacts and profit sharing on extraordinary items generating expenses in the amount of R$ 171
million.
2Q09
Extraordinary Expense incurred in 2Q09, equal to an additional allowance for loan losses, in the
amount of R$ 676 million according to a public announcement published on June 30, 2009.
Sale of shares representing 7.1% of the capital stock of Companhia Brasileira de Meios de
Pagamento - CIELO, an affiliate of BB Banco de Investimento S/A – BB-BI, a wholly-owned
subsidiary of Banco do Brasil, generating positive extraordinary result of R$ 1,415 million in 2Q09.
Expenses with civil claims regarding economic plans totaling R$ 193 million.
Assignment of credits written-off to Ativos SA, generating revenues in the amount of R$ 271 million.
Tax Impacts and profit sharing on extraordinary items generating expenses in the amount of R$ 362
million.
1Q09
Expense of R$ 1,367 million, before taxes, that refers to the supplementation of provision to cover
labor, civil and fiscal claims, according to the material fact released on April 29, 2009.
Income of R$ 1,213 million relating to the recognition of tax credits originating from the alteration of
the rate of Social Contribution on Net Income - CSLL from 9% to 15%, according to a public
announcement published on April 29, 2009.
Expenses with civil claims regarding economic plans totaling R$ 95 million.
Tax Impacts and profit sharing on extraordinary items generating income in the amount of R$ 557
million.
The table below details the extraordinary effects of the quarter and of the year 2009:
Table 17. Extraordinary Items
R$ million
Recurring Net Income
(+) Extraordinary Effects of the Period
Sale of Interest in VISA Internacional
Disposal of investments – Visanet Brasil
Economic Plans
Credit Assignment
Previ - Recognition of Actuarial Gains
Additional Allowance for Loan Losses
Provision for Labor, Civil, and Tax cCaims
Reversal of Labor Liabilities
Tax Credits - differential of CSLL rate
Voluntary Resignation Program - BNC
Tax Impacts and PLR on Extraordinary Items
Net Income
4Q09
2009
1,819
2,336
530
242
3,030
644
(215)
(1,895)
4,155
8,506
1,642
141
1,625
157
633
(676)
(1,367)
644
1,213
(215)
(513)
10,148
Guidance: Estimates for 2010 confirm BB’s confidence in the business expansion
The estimates for 2010 include the entire conglomerate of Banco do Brasil, including the consolidation
of Banco Nossa Caixa and Votorantim.
24 - Banco do Brasil – MDA 4Q09
The indicators that measure the growth of Administrative Expenses and Fee Income will be followed by
2009 pro-forma series, which consider the income and expenses from BV and BNC as these banks
have been consolidated for accounting purposes during the entire year 2009.
Table 18. Guidance 2010
Items
Recurring Return on Equity
Net Interest Margin
Total Deposits
Domestic Loan Portfolio
Individuals
Businesses
Agribusiness
Allowance for Loan Losses
Fee Income
Administrative Expenses
Tax Rate
2010 Guidance
21% - 24%
6.5% - 7.0%
12% - 16%
18% - 23%
27% - 32%
16% - 21%
4% - 9%
4.4% - 4.8%
7% - 10%
10% - 12%
31% - 34%
Assumptions used in 2010 Guidance Prediction
Assumptions affected by the Administration:
• Improve the profitability of the customers base as a way to boost revenues;
• Alignment of the cost structure to the growth of the business volume;
• Contractual adjustments and collective bargaining agreement;
• Growth of sales force appropriate to the strategy of improving the profitability of the customers
base;
• Current business model, not considering further acquisitions and/or strategic partnerships,
which may occur for the exploration of specific segments;
• Account of actuarial profit and losses of Plano de Benefícios I from Previ, in accordance with
paragraph 55 of CVM Regulation 371/2000.
Assumptions that get out of the Administration control :
• Gradual resumption of the global and Brazilian economic growth in 2010;
• Increased resistance, but not immunity, of the Brazilian economy to external shocks;
• Additional improvement of the conditions of domestic loan granting;
• Political environment without institutional rupture;
• Maintenance of the current architecture of the domestic macroeconomic policy: floating
exchange rate, inflation targeting and fiscal discipline, implying gradual and consistent reduction
of the relation between the Public Sector Net Debt (PSND) and the Gross Domestic Product
(GDP);
• Advance of the regulatory framework / microeconomic agenda, with incentives to public and
private investments;
• Gradual increase in the growth potential of the Brazilian economy (potential GDP);
• Maintenance of the status of investment grade for Brazil;
• 2009/2010 crop plan;
• Regulatory stability, including tax rates on the Bank’s activities and labor and social security
laws;
• Interest rates, inflation and GDP evolution in line with market consensus.
25 - Banco do Brasil – MDA 4Q09
1 – Economic Environment
In the fourth quarter of 2009, there were more evidences of the resumption of global economic activity,
particularly in the main emerging markets. At the same time, the signs from developed countries, despite
containing uncertainty, reveal that the level of activity has been positively responding to the effects of the
expansionary monetary and tax policies.
This recovery environment, which significantly differs from the scenario seen in the last quarter of 2008,
characterized by the collapse of the financial markets of developed economies, continues to produce
favorable developments for foreign trade and the prices of assets, particularly the commodities markets
and stock exchanges.
Brazil continued to benefit from this scenario and, in response to the anti-cyclical political policies
implemented as from the end of 2008, has been consolidating the beggining of a new cycle of economic
growth. The positive outlooks on the Brazilian economy continued to be the main factor to favor the
inflow of foreign funds, either as direct investments or investments in portfolios, easily financing the
deficit in current transactions. Such inflow led to additional accumulated reserves, the balance of which
increase by approximately US$ 15 billion in the quarter, reaching US$ 239 billion at the end of 2009.
240
220
200
US$ Billion
180
160
140
120
100
109.5
121.8
136.4
147.1
155.9
161.1
163.0
167.9
177.1
180.3
187.5
192.9
195.2
195.8
197.9
200.8
203.6
205.1
207.5
203.2
206.4
206.8
200.8
199.4
202.5
201.3
205.6
208.4
211.9
219.1
224.2
232.9
238.0
239.1
260
80
60
40
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09
Source: BCB
Figure 7. International Reserves (US$ billion)
Accordingly, despite the lower country-risk rating, from 242 to 196 basis points, between September and
December 2009, the foreign exchange rate remained relatively stable throughout the quarter averaging
R$ 1.74/US$. The apparent interruption of the cycle of appreciation of the nominal foreign exchange rate
was influenced, among other aspects, by the government's decision to introduce the collection of IOF
(Tax on Financial Transactions) on inflows of foreign capital to be invested in the financial and capital
market. In addition, there was a downturn in the trend of appreciation of the US dollar in the international
market due to the uncertainties associated with the tax issues of certain European countries, such as
Greece and Spain.
26 - Banco do Brasil – MDA 4Q09
550
3.0
2.9
EMBI + Brazil
Exchange rate
2.8
2.7
450
2.6
EMBI + Brazil (b.p)
400
2.5
2.4
350
2.3
2.2
300
2.1
250
2.0
Exchange rate (US$/R$)
500
1.9
200
1.8
1.7
150
1.6
100
Dec/06
Jun/07
Dec/07
Jun/08
Dec/08
Jun/09
1.5
Dec/09
Source: BCB and Bloomberg
Figure 8. Sovereign Risk (EMBI) x Foreign Exchange Rate (R$/US$)
In the fourth quarter, imports grew 7.3% as compared with the immediately previous quarter, whereas
the volume exported slightly decreased (-1.55%). As a result, the accumulated trade balance in the
period (US$ 4.1 billion) decreased as compared with that for the previous quarter (US$ 7.3 billion). In
2009, the trade balance accumulated a surplus of US$ 25.3 billion, slightly above that for 2008.
50
44.9
45
Trade Balancel
40
200
40.0
180
Export (right axis)
35
220
46.5
33.8
160
Import (right axis)
140
US$ Billion
25.2
25
24.7 25.3
20
15
120
US$ Billion
30
100
13.2
10.5
10
80
60
2.7
5
0
40
20
-5
-3.5
-10
-1.3
-5.6
-6.8
-0.7
-6.6
-15
0
-20
-40
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: MDIC/ Secex
Figure 9. Trade Balance, Exports and Imports (US$ billion)
In the period under analysis, the continued economic growth was ratified by the evolution of industrial
production. Despite the marginal drop in November, as compared with the previous month (in the series
free of seasonal influence), the industry grew by 5.1% as compared with November 2008, the first
positive amount in the inter-annual comparison after 12 consecutive months of downturn. In terms of the
quarterly movable average, the rate continues to increase, with a highlight to the production of consumer
durables and capital goods.
27 - Banco do Brasil – MDA 4Q09
215
215
General Index
Capital goods
Intermediate goods
Durable consumer goods
Semi-durable consumer goods
205
195
185
175
175
165
165
155
155
145
145
135
135
125
125
115
115
105
105
95
Adjusted (Base year: 2002=100)
185
Adjusted (Base year: 2002=100)
3 Months Moving Average - Seasonally
195
3 Months Moving Average - Seasonally
205
95
85
85
Mar/07
Jun/07
Sep/07
Dec/07
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
Source: IBGE
Figure 10. Industrial production, growth rate (movable average - 3 months)
113.3
120
113.4
The favorable scenario to manufacturing activity was also corroborated by the evolution of
businessmen's expectations which, based on a survey by the Getulio Vargas Foundation, recorded
113.4 points in December. This threshold is the same as that seen in August 2008, the period right
before the onset of the international financial crisis.
115
110
105
Index*
100
95
90
85
80
75
Dec/09
Aug/09
Apr/09
Dec/08
Aug/08
Apr/08
Dec/07
Aug/07
Apr/07
Dec/06
Aug/06
Apr/06
Dec/05
Aug/05
Apr/05
Dec/04
Aug/04
Apr/04
65
Dec/03
70
Source: FGV
* The Index is seasonally adjusted. Base year: average of last 10 years (jan/99 - dec/08) = 100
Figure 11. Businessmen's Confidence Index
In the labor market, the unemployment rate, calculated by the Brazilian Institute of Geography and
Statistics (IBGE), reached 7.4% of the PEA (economically active population) in November. This is the
lowest threshold since December 2008 (6.8%) and the lowest unemployment rate of the entire historic
series started in 2002 for November. The data disclosed by the Ministry of Labor and Employment,
referring to the General Register of Hired and Dismissed Employees (CAGED) were also very favorable.
November was the tenth consecutive month of net job generation in the formal market. In the period
(Feb - Nov), the net balance between hires and dismissals reached 1.512 thousand, greatly surpassing
the net number of openings lost from November 2008 to January 2009 (approximately 800 thousand), at
the culmination of the world financial crisis.
28 - Banco do Brasil – MDA 4Q09
14.0
14.0
13.0
13.0
13.0
12.2
12.0
12.0
10.5
10.9
10.0
11.0
10.7
10.5
9.6
9.8
9.6
10.0
9.6
9.6
9.0
8.7
9.0
8.3
8.4
8.0
8.4
7.5
7.5
7.6
8.0
7.4
7.5
7.0
6.8
6.8
7.0
dez/09
nov/09
out/09
dez/08
nov/08
out/08
dez/07
nov/07
out/07
dez/06
nov/06
out/06
dez/05
nov/05
out/05
dez/04
nov/04
out/04
4.0
dez/03
4.0
out/03
5.0
nov/03
5.0
dez/02
6.0
nov/02
6.0
out/02
Unemployment rate
11.0
10.9
Unemployment rate
11.2
Source: IBGE
Figure 12. Unemployment Rate (% of the Economically Active Population)
In this scenario of economic recovery, the IPCA (extended consumer price index) presented a variation
of 1.06% in the quarter ended December 2009 as compared with 0.63% in the previous quarter. In the
year, the accumulated IPCA variation reached 4.31%, a figure which is lower than the core target
defined by the National Monetary Council (of 4.50%) and also lower than the one recorded in 2008 (of
5.9%). Accordingly, 2009 was the sixth consecutive year of fulfillment of the inflation target.
12.5
13.0
10.0
7.6
Central Target
4.0
5.0
4.0
3.0
3.1
3.0
6.0
4.3
4.5
5.0
5.7
6.0
7.0
5.9
7.0
6.0
9.0
8.0
7.7
8.0
8.9
9.0
9.3
11.0
10.0
2.0
2.0
1.0
1.0
0.0
y.y
12.0
11.0
Change in the Consumer Price (IPCA) - %
12.0
y.y.
Change in the Consumer Price (IPCA) - %
13.0
0.0
1999
2000
Sources: IBGE and BCB
2001
2002
2003
2004
2005
2006
2007
2008
2009
adjusted target
Figure 13. IPCA (yearly variation) X Inflation Targets (%)
In this scenario, the Central Bank of Brazil maintained, in the last quarter of the year, a stable
benchmark interest rate at the unprecedented threshold of 8.75% per year. However, the real interest
rate (ex-ante), influenced by the increased inclination of the interest curve in the futures market (Swap
pré-DI 360), slightly rose throughout the last quarter, at 5.7% at the end of the year as compared to
5.0% as of September 2009.
29 - Banco do Brasil – MDA 4Q09
30
28
Selic: COPOM target
26
Real interest rate*
24
22
Change %a.a.
20
18
16
14
12
10
8.75
8
6
5.67
4
2
Dec/00
Dec/01
Dec/02
Dec/03
Dec/04
Dec/05
Dec/06
Dec/07
Dec/08
Dec/09
Source: BCB
*Ex-ante return. The nominal interest rate (Swap pre-DI 360 days) deflated by the consumer price expectations in a perspective of 12 month ahead
(month medium of daily survey of BCB).
Figure 14. Basic Interest Rate x Real Interest (% per annum)
Finally, it is important to highlight that, together with the tax and monetary incentives improved by the
employment and income indicators development, the loan market remained as one of the main
instruments of the economic recovery. In November 2009, the volume of loans of the financial system
amounted to 1,389 billion, which corresponds to 45% of the GDP as compared with 37.4% in September
2008. Accordingly, despite there being a significant downturn in the yearly growth rate of the credit
volume in the Brazilian economy throughout 2009, it should be highlighted that, unlike what occurred in
previous crises, the credit/GDP ratio continued to rise.
50
50
45.0
39.7
45
40
35
30
25
20
15
15
10
10
5
5
0
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: BCB
Figure 15. Total Credit Volume of the Brazilian Economy (% of GDP)
30 - Banco do Brasil – MDA 4Q09
Credit/GDP (%)
28.1
24.0
24.7
24.9
22.0
20
27.9
26.8
25
26.4
Brazilian
Energy Crisis
and Sept. 11
Attacks
28.8
30
Argentina
Crisis and
Brazilian 2002
pre-election
concerns
33.4
Asian
Crisis
32.1
Credit/GDP (%)
35
Mexican
Crisis
36.6
40
Exchange
Rate
Flotation
30.2
45
Recent
Crisis
24.5
Russian
Crisis
Such performance continues to rely on the important contribution made by publicly owned banks, whose
total share of the loan portfolio of the Brazilian financial system reached 42.3% in November as
compared with 34.2% in September 2008. The increased market share of publicly owned banks stems
from the increased volume of loans granted by these institutions since the beggining of the international
financial crisis (September 2008) as compared with the more conservative approach adopted by private
national and foreign institutions.
155
IndexSept./2008=100
150
Government-owned banks
145
Private-owned banks
140
Foreign-owned banks
135
130
125
120
115
110
105
100
Oct/08
Dec/08
Feb/09
Apr/09
Jun/09
Source: BCB
Figure 16. Credit Evolution by Type of Financial Institution
31 - Banco do Brasil – MDA 4Q09
Aug/09
Oct/09
Dec/09
Table 19. Main Macroeconomic Ratios
4Q08
Economic Activity
GDP (% YTD in 12 months)
Family Consumption
Government Consumption
Gross Fixed Capital Formation
Exports
Imports
Use of Installed Capacity (%)
Agent Population (% YTD in 12 months)
Unemployment Rate (% YTD in 12 months)
Formal employment – net creation in the quarter (thousand jobs)
Formal employment – net creation (% YTD in 12 months)
Industrial Production (% YTD in 12 months)
External Sector
Current Transactions (% YTD in 12 months)
Direct Foreign Investment (US$ billion)
International Reserves (US$ billion – year accumulated)
Sovereign Risk (base points – EOP)
Trade Balance (US$ billion – year accumulated)
Exports (US$ billion – year accumulated)
Imports (US$ billion – year accumulated)
Ptax Dollar Sale (EOP)
Ptax Dollar Sale (% YTD in 12 months)
Monetary Ratios
IGP-DI FGV (% YTD in 12 months)
IGP-M FGV (% YTD in 12 months)
IPCA – IBGE (% YTD in 12 months)
Selic (EOP %)
Accumulated Selic (% YTD in 12 months)
Accumulated TR (exBTN) (% YTD in 12 months)
TJLP - IBGE (EOP %)
Libor (EOP %)
Public Finance
Primary Surplus (% GDP 12 months accumulated)
PSGD (% GDP)
PSND (% GDP) - Without Petrobras
Credit Ratios
Credit/GDP (% YTD in 12 months)
Total Default (% past due loans over 90 days)
Individuals
Businesses
Total Investment Rate (%)
Individuals
Businesses
Total Spread (%)
Individuals
Businesses
Average Term (%)
Individuals
Businesses
32 - Banco do Brasil – MDA 4Q09
3Q09
4Q09
5.1
5.4
5.6
13.8
(0.6)
18.5
81.5
2.2
7.9
(634.4)
(10.2)
3.1
(1.0)
3.1
2.5
(10.2)
(10.9)
(10.5)
81.1
1.0
8.1
633.1
(85.8)
(10.2)
0.6
8.1
62.5
(31.5)
(7.4)
(1.8)
14.2
206.8
416.0
24.7
197.9
173.2
2.3
31.9
(1.2)
5.0
224.2
242.0
21.3
111.8
90.5
1.8
(0.1)
(1.6)
8.3
239.1
196.0
25.3
153.0
127.6
1.7
(25.5)
9.1
9.8
5.9
13.75
12.5
1.8
6.25
3.8825
(0.7)
(0.4)
4.3
8.75
11.3
1.2
6.00
0.5969
(1.4)
(1.7)
4.3
9.9
0.7
6.00
0.2897
3.7
58.6
38.8
1.2
66.6
45.0
2.1
63.0
43.0
41.3
3.2
8.0
1.8
43.3
57.9
30.7
30.7
45.0
18.4
45.7
4.4
8.2
4.0
35.3
43.6
26.3
26.0
33.4
17.7
16.3
10.1
16.9
9.0
45.0
4.4
7.8
3.8
34.3
42.7
25.5
24.3
31.6
16.5
17.3
9.4
2 – BB Securities
2.1 Shares
At the end of 2009, Banco do Brasil’s capital stock was R$ 18,566,919,466.22 made up of
2,569,860,512 ordinary shares, represented in dematerialized form and without any nominal value. The
main shareholder is the National Treasury (65.3% of capital) and, from this quarter on, the shareholding
structure will be broken down into Ministry of Finance and the various funds controlled by the agency.
The second largest shareholder is Caixa de Previdência dos Funcionários do Banco do Brasil (Previ)
with 10.4%, followed by BNDESPar – the equity investment Company of National Bank for Economic
and Social Development – which has 2.4% of the capital.
The other shares, totaling 21.8%, are spread out in the market (free float). The deadline given by BM&F
th
Bovespa for BB to reach 25% of free float is June 28 , 2011. There are studies in progress in order to
analyze the feasibility and convenience of holding a public stock offering. With the National Treasury’s
consent, there is a possibility of increasing the capital by, at minimum, R$ 8 billion and, at most, R$ 10
billion, in order to sustain the future growth of the financial institution, preserving the Union’s stock
control. Beside that, the National Treasury and BNDES Participações – BNDESPar are completing
surveys to enable the achievement of the minimum percentage of 25% of shares in free float, with the
sale of less than 5% (five per cent) of the shares that makes part of the total capital of the Bank. This
th
information was published to the market in accordance with the Material Fact on November 11 , 2009
th
and January 28 , 2010.
Treasury shares, totaling 1,150.4 thousand shares, correspond to shares of minority dissident
shareholders not in agreement with the mergers of Banco do Estado de Piauí and of Banco do Estado
de Santa Catarina. There are 1,674.0 thousand shares referring to Banco Nossa Caixa merger, that are
standing by the Central Bank authorization and will make part of the free float.
Table 20. Shareholding Breakdown
%
Shareholders
Federal Government
Ministério da Fazenda
Fundo de Garantia a Exportação
Fundo Garantidor PPP
Fundo de Inv. Caixa FHGAB
Fundo de Garantia de Operações
Fundo Garantidor para Investimentos
Previ
BNDESPar
Treasury Shares
Treasury Shares
Free Float
Individuals
Companies
Foreign Capital
Total
4Q08
3Q09
4Q09
65.6
54.3
8.9
2.3
10.4
2.5
0.0
21.5
5.8
4.5
11.3
65.4
53.7
8.9
2.3
0.1
0.1
0.3
10.4
2.5
0.0
21.7
5.3
4.8
11.7
65.3
53.7
8.9
2.3
0.1
0.3
10.4
2.4
0.1
0.0
21.8
5.4
4.7
11.8
100.0
100.0
100.0
The policy of compensation for the shareholders defined by the Board of Directors established payout of
40% of net income. The periodicity for payment of dividends and/or interest on own capital is quarterly
periodicity, pursuant to Art. 43 of the Bank's Bylaws.
Hence, as for the forth quarter of current year, the Bank disbursed the amount of R$ 1,662.2 million to
its shareholders, being R$ 478.1 million as interest on own capital (R$ 0.18620 per share in the period)
and R$ 1,184.4 million as dividends (R$ 0.46097 per share).
33 - Banco do Brasil – MDA 4Q09
Table 21. Distribution of Dividends/Interest on Own Capital
773.0
122.2
29.4
68.0
52.6
132.7
517.6
82.1
19.7
41.6
38.1
92.3
R$ million
4Q09
1,085.4
172.4
40.4
89.5
77.4
196.0
1,177.7
791.4
1,662.2
4Q08
National Treasury
PREVI
BNDES
Individuals
Companies
Foreign Capital
Total*
3Q09
* In 4Q09 it considers R$ 1.1 million referring to Banco Nossa Caixa shares incorporation.
BB's shareholder base is characterized by the great number of shareholders with a small share in the
capital. As can be seen from the table below, 329,651 shareholders (94.08%) are responsible for 1.4%
of the capital, while 20,738 shareholders (5.92%) hold 98.6% of the total of the shares.
Table 22. Free Float by Range of Shares Owned
Range of shares owned
Free Float
1 to 10 shares
11 to 50 shares
51 to 100 shares
101 to 1,000 shares
Over 1,000 shares
Controlling Shareholders (Over 1,000 shares)
Total
N. Shareholders
350,386
112,395
91,117
37,175
88,964
20,735
3
% Shareholders
100.00
32.08
26.00
10.61
25.39
5.92
0
Qty. Shares
560,867,339
588,659
2,321,550
2,741,408
30,383,392
524,832,330
2,008,993,173
% Qty. Shares
21.8
0.0
0.1
0.1
1.2
20.4
78.2
350,389
100.0
2,569,860,512
100.0
With regard to the total of the Bank’s shares that are well spread out in the market (21.8%), that is, the
free float, the predominance of foreign capital can be seen (54%), followed by Individuals (24.7%) and
Businesses (21.3%).
Dec/08
Dec/09
Sep/09
52.4%
54.0%
53.7%
20.8%
22.2%
Individuals
Figure 17. Free Float Breakdown
34 - Banco do Brasil – MDA 4Q09
24.7%
24.2%
26.8%
Businesses
Foreign Capital
21.3%
Foreign Investors Holding
From 2002 onwards, a noteworthy increase has been noted in the foreigners stake in the Bank's capital.
With the Bank's Public Stock Offerings held in 2006 and 2007 and the "B" and "C" Warrant Subscription,
the stake held by foreign parties significantly increased, from 0.9% in 2002 to 11.8% at the end of last
year.
th
As disclosed on September 17 , 2009, through a Material Fact, the equity held by foreign investors was
increased from 12.5% to 20.0%. On that occasion, another presidential decree authorized the issue of
th
American Depositary Receipts (ADR) backed by common shares of BB. On November 12 , 2009, in
New York, Banco do Brasil launched its level 1 ADRs, a fact which was also disclosed through a
th
Material Fact. On February 10 , 2010, BB had issued 3.8 million ADRs.
11.3
11.8
9.9
7.2
2.8
0.9
2002
3.4
1.6
2003
2004
2005
Figure 18. Share of Equity Held by Foreign Investors
35 - Banco do Brasil – MDA 4Q09
2006
2007
2008
2009
2.2 Warrants
In 1996, on the occasion of BB's capital increase, three series of warrants were issued: A, B, and C,
maturing in 2001, 2006, and 2011, respectively. The exercise price for these warrants was established
at R$ 8.50, with readjustment by the IGP-DI “pro rata temporis”.
The distribution and some characteristics of the "C" Warrants, in December 2009, are represented
according to the following tables:
Table 23. Breakdown of the Series “C” Warrant Holders
Individuals
Companies
Foreign Capital
Total
Dec/08
75.6
24.1
0.3
%
Dec/09
72.5
23.1
4.4
100.0
100.0
Table 24. Series “C” Warrants
Warrant
Series “C”
Code
BBAS 13
Exercise Date
03.31 to 06.30.2011
Number
5,880,483
Exercise Price R$
25.98
Quotation in R$
58.50
In a simulation, considering the total of 2,569.8 million shares, the potential dilution in the Bank's capital
is 0.7%, going from the assumption that until 2011 there will be no additional capital increases and that
all the C warrants will be exercised by or before maturity (03.31 to 06.30.2011).
Conversion:
1 Warrant = 3.131799 shares
Total of Shares= 2,569,860,512
Table 25. Expected Dilution of Capital
Warrants
Series “C”
36 - Banco do Brasil – MDA 4Q09
Qty. Warrants
5,880,483
Qty. Shares
18,416,491
Dilution of Capital - %
0.7
2.3 Performance of the Shares
Market
Unlike what occurred at the end of 2008, when the international economic environment was
characterized by a possible collapse followed by a severe economic recession, at the end of 2009 there
was a resumption of the growth trend, even though the latter is still incipient. Therefore, a gradual
resumption of the economy is also expected for 2010, with a recovery of the average prices of
commodities and increased fluidity of international liquidity, yet with selectivity in fund allocation.
Despite the improvement in economic indicators in general, in 4Q09, the international market faced new
turbulence, of lower intensity as compared with 2008, mainly caused by the declaration that the publiclyowned company Dubai World would suspend its financial commitments (US$ 4.1 billion). To some
extent, the short-term risk of a new international collapse was resolved by a loan of US$ 10 billion
granted by the government of Abu Dhabi to the financial fund of Dubai.
The Dubai event shows that the difficulties related to the international financial crisis have not yet been
fully dealt with and additional problems can still crop up in various parts of the globe. In addition to the
problems faced in the Middle East, Fitch Rating downgraded Greece's sovereign rating (from A- to
BBB+). In this context, the major concerns are now the economies which have a smaller recovery
capacity or whose tax deficits are more of a structural nature.
Internally, the Brazilian economy continued to show indicators which favor economic growth: industrial
activity advanced 5.1%, position as of November 2009; the unemployment rate calculated by the
Brazilian Institute of Geography and Statistics (IBGE) was 7.4% as of November 2009, the lowest level
since December 2008; inflation within the target established by the Central Bank of Brazil (BACEN); and
continued growth in the loan volume of the Banking Industry (SFN).
BB shares
As a consequence of the improvement of world economy prospects, the prices of the main shares from
the Brazilian financial market experienced appreciation in 2009. BBAS3 shares closed last December
quoted at R$ 29.70, appreciation of 117.0% (adjusted by earnings) in twelve months, as opposed to the
appreciation of 82.7% of Ibovespa.
117.0%
82.7%
Dec/08 Jan/09 Feb/09 Mar/09 Apr/09 May/09 Jun/09 Jul/09 Aug/09 Sep/09 Oct/09 Nov/09 Dec/09
BB
Source: Economática
Figure 19. BB Shares vs. Ibovespa
37 - Banco do Brasil – MDA 4Q09
Ibovespa
Share in Ibovespa
The Bovespa Index (Ibovespa) is a four-monthly index that represents the Brazilian stock market, made
up of shares that were traded in at least 80% of the trading sessions carried out. From this, the
Tradability Index is worked out, made up by the financial volume and by the quantity traded of each
share transacted, which determines the ranking of the stock’s share in the market. Out of the total of
shares, the 80% with the highest Tradability index are determined, to represent the Ibovespa index.
The growth of the Bank's share in the theoretical portfolio of Ibovespa can be verified in the following
chart. In the theoretical portfolio of Ibovespa for the next four months (Jan/10 - Apr/10), Banco do Brasil
occupies the 12th place. The Public Offering carried out in 2006 and 2007 and the split of shares, in the
proportion of 1:3, favored the increase of BB's liquidity in the market, permitting access by small
investors to the Bank's shares.
10.779
12.162
11.307
11.613
11.992
12.479
2.443
2.404
2.337
2.379
Sep/07 Dec/07
10.710
2.328
2.124
1.893
1.713
11.831
Jan/08 Apr/08
May/08 - Sep/08 Aug/08
Dec/08
BBAS3
Jan/09 Apr/09
May/09 - Sep/09 - Jan/10 Aug/09
Dec/09
Apr/10
Banking Industry
Source: Bovespa
Figure 20. BBAS3 in Ibovespa
The improvement in prospects of the global economy contributed to the growth of business involving
shares of Banco do Brasil. The average number of shares traded in 4Q09 (5,344) surpassed the levels
observed in the same period of 2008 (4,843) and in 3Q09 (4,439). The average volume traded reached
R$ 95.1 billion in 4Q09 as compared with R$ 69.7 billion in 4Q08 and R$ 71.7 in 3Q09.
122,000,000
102,000,000
R$
82,000,000
62,000,000
42,000,000
22,000,000
2,000,000
4Q07
1Q08
2Q08
Source: Economática
Figure 21. Average financial volume – BBAS3
38 - Banco do Brasil – MDA 4Q09
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
6,000
Units
5,000
4,000
3,000
2,000
1,000
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
Source: Economática
Figure 22. Average amount traded – BBAS3
Market Ratios
The P/L ratio, which indicates a time estimate, in years, for investors to recover the capital invested in
the purchase of shares, assuming the full distribution of company profits; attained 7.52x last December,
as opposed to 4.28x in the same period of 2008.
The EPS reached R$ 1.62 in 4Q09, compared to R$ 1.15 in 4Q08. The Price/Book value per share
(VPA) ratio of 2.10 in December 2009 denotes that the Bank's shares are traded more than twice the
BV, i.e., the Bank is worth 110% of the amount of Shareholders´ Equity at Bovespa.
Market capitalization reached R$ 76,291 million at the end of December 2009, as opposed to R$ 37,701
million in the same period of the previous year, an increase of 102.4%. The capitalization of the free float
was R$ 16,658 million, higher than the R$ 8,103 million in December 2008.
In 4Q09, the Bank disbursed R$ 1,662 million to its shareholders, being R$ 478 million as interest on
own capital (R$ 0.18620 per share in the period) and R$ 1,184 million as dividends (R$ 0.46097 per
share in the period). The Dividend Yield in 4Q09, calculated on the basis of the division of the dividend
distributed in the quarter by the market value of the Bank, reached 2.2%.
The following charts show the behavior of Banco do Brasil's main multiples over the last quarters.
39 - Banco do Brasil – MDA 4Q09
Price / Earnings 12 months **
Earning s per Share - R$ **
10.11
9.80
8.97
8.25
5.34
4.28
1.62
0.73
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
3Q08
1.15
4Q08
0.65
0.91
0.77
1Q09
2Q09
3Q09
Mar/08
2.52
2.38
2.09
Jun/08
Sep/08
1.26
1.40
Dec/08
Mar/09
4Q09
2008
2009
Book Value per Share - R$ **
Price / Book Value **
2.31
3.95
3.44
7.52
6.16
2.11
9.99
10.37
Dec/09
Mar/08
Jun/08
Sep/08 Dec/08
14.06
13.11
12.60
12.02
11.66
10.87
1.68
Jun/09
Sep/09
Mar/09 Jun/09
Sep/09 Dec/09
Free Float Capitalization - R$ million
Market Capitalization - R$ million
17,420
80,204
58,750
66,478
58,360
Mar/08
Jun/08
Sep/08
76,291
12,742
12,550
11,807
54,394
37,701
Dec/08
9,404
8,103
43,325
Mar/09
Jun/09
Sep/09
16,658
14,416
Dec/09
Mar/08
Jun/08
Sep/08 Dec/08
Mar/09 Jun/09
Sep/09 Dec/09
Dividends and Interest on Own Equity – R$ million
Net Income - R$ million
10,148
8,803
1,662
4,155
2,944
1,867
3Q08
1,665
4Q08
1Q09
2,348
1,979
2Q09
3Q09
1,178
939
4Q09
2008
2009
1Q08
658
747
2Q08
3Q08
4Q08
666
939
791
1Q09
2Q09
3Q09
4Q09
Indice Payout - %
Dividend Yield - %
4.6
3.1
40.0
40.0
40.0
40.0
40.0
40.0
40.0
40.0
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
2.2
1.6
1Q08
1.0
1.3
2Q08
3Q08
1.6
4Q08
1Q09
1.7
1.0
2Q09
3Q09
4Q09
** Adjusted series considering the stock split (1:3) occurred in the 2Q07.
Figure 23. Market Ratios
40 - Banco do Brasil – MDA 4Q09
3 – Corporate Governance
Banco do Brasil has achieved a prominent position due to practices that guarantee the balance of rights
between its shareholders, high level of accountability to investors and other stakeholders, its business
sustainability and ethics in the relationship with its audiences. Proof of this is BB's membership in
Bovespa's Novo Mercado, which is a special listing segment that assembles the institutions with the
most stringent Corporate Governance practices, and its shares listing in the ITAG and IGC indexes,
which respectively group companies with differentiated Tag Along, and those with the best Corporate
Governance practices.
Management of the businesses has been based not only on ensuring compliance with the applicable
legislation, but also on timely providing the market with as many details on the activities as possible,
always focusing on the quality of the information provided. In addition to the wide range of reports and
information made available at the Brazilian Securities Commission (CVM) and on the Investor Relations
website, Association of Capital Market Investment Analysts and Professionals (APIMEC) meetings and
other events with shareholders, the Bank has been inviting the market to attend conferences whenever
management finds it necessary to clarify specific topics concerning the Company. The attitude adopted
by BB in view of the new strategy for expanding businesses by means of acquisitions reinforces the
Bank's transparency commitment: in order to reduce the information asymmetry as much as possible,
and, in the best interest of minority shareholders, BB disclosed to the market the appraisal reports on
the companies involved in acquisitions, mergers and strategic partnerships.
Management
BB's management bodies are the Board of Directors, advised by the Audit Committee, and the
Executive Board, made up of the Executive Board of Officers (president and nine vice-presidents) and
by 27 statutory directors. The Bank also has a permanent Board of Auditors.
Decisions are taken collectively at all levels of the Bank. With the purpose of involving all the Executives
in the definition of strategies and approval of proposals for BB's different businesses, the Management
uses committees, subcommittees and commissions at a strategic level, which guarantee agility and
security for the decision taking.
The sophisticated governance structure developed by the Bank is reflected in the daily business
management, the assumptions of which include a rigid structure of levels of decision-making authority
and the segregation of duties. Loans, for example, are analyzed independently by the business areas,
which evaluate the characteristics and the attractiveness of each operation, and by the Credit
Directorate, which defines the maximum exposure by client, and sets individualized limits by business
category. In this regard, the development of new products is submitted to all the intervening
Directorships and Units, which analyze in a separate manner all the aspects involved in the deal, like its
structure, pricing and risks involved.
41 - Banco do Brasil – MDA 4Q09
Boa rd of
Aud itor s
Glo bal Risk
Manag ement Bo ard
COMITÊ DE
PREVENÇÃO A
ILÍCITOS
FINANC./CAMBIAIS
COMITÊ DE
NEGÓ CIOS
Information
Technology
Solu tion for
administrative
Inquest
Communicatio n
Business
Market a nd
Liqu idity Risk
Boa rd of Directo rs
Credit Risk
Op erational Risk
Pre ven tion of
Financial and
Exchange Fraud
Credit
Limit
Op erations
Resources
Op erations
Committee
Sub committe e
Economic
and Financial
Scenar ios
Op erational
Administrative an d
Cost Ratio nalizatio n
Debure aucratization
and Cost
rationa lization
Information
Security
Intranet
INTERNET
Work
Agr eement
Employee
Assignment
Commission
Figure 24. Decision Structure
Highlights of the period
•
Launch of level 1 American Depositary Receipt (ADR) in the US market
nd
On December 2 , 2009, BB's level 1 ADRs were launched in New York. As from this date, the ADRs
started to be issued and traded.
•
Start of Studies for the Holding of a Public Offering of Shares
A Material Fact was released to the market to inform that there are studies in progress in order to
analyze the feasibility and convenience of holding a primary and/or public stock offering, preserving the
Union’s stock control over BB’s capital. With the National Treasury’s consent, there is a possibility of
increasing the capital by, at minimum, R$ 8 billion and, at most, R$ 10 billion, in order to sustain the
future growth of the financial institution. Beside that, the National Treasury and BNDES Participações –
BNDESPar are completing surveys to enable the achievement of the minimum percentage of 25% of
shares in free float, with the sale of less than 5% (five per cent) of the shares that makes part of the total
capital of the Bank. This information was published to the market in accordance with the Material Fact
th
th
on November 11 , 2009 and January 28 , 2010.
•
Closing of the Public Offering of Shares (OPA) of Nossa Caixa
th
On November 30 , 2009, there was the merger of 100% of the capital of Banco Nossa Caixa into BB.
The National Register of Legal Entities (CNPJ) of Nossa Caixa was dissolved and the latter became a
business unit of Banco do Brasil. The Central Bank of Brazil (Bacen) has to approve the transaction.
•
Security
th
Restructuring of the insurance area (see the material fact disclosed on October 6 , 2009) and the startup of negotiations, with no binding effect, aimed at the acquisition of the ownership interest in IRB-Brasil
th
Re S.A. held by the Federal Government. (material fact dated October 15 , 2009). Reformulation of the
partnership between BB and Principal Financial Group aimed at optimizing private pension sales
th
(material fact dated October 27 , 2009). Besides that, it was signed a Memorandum of Understanding
th
(MOU) between BB and Grupo Icatu, in January 6 , 2010, in order to set a strategic partnership to the
development and marketing of “Capitalization Plan” in Brazil.
42 - Banco do Brasil – MDA 4Q09
4 – Other Information
Table 26. Other Information
1Q08
Balance Sheet Items – R$ billion
Assets
Shareholders’ Equity
Credit Portfolio
Deposits
Demand Deposits
Saving Deposits
Time Deposits
Profitability
Net Income per Share - R$ **
Recurring Income per Share – R$
ROE - Annual Basis %
Recurring ROE - Annual Basis %
ROE - Accumulated on Annual Basis %
ROA - Annual Basis %
NII / Earning Assets - Annual Basis
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
414. 2
25. 4
416.1
26.4
458.2
27.9
521.3
29.9
591.9
30.9
598.8
32.4
685.7
33.7
708.5
36.1
172. 8
189. 8
44. 1
190.1
195.2
43.6
202.2
229.8
43.0
224.8
270.8
51.9
241.9
305.0
47.3
252.5
310.8
49.1
285.5
327.0
50.1
300.8
337.6
56.5
48. 1
90. 9
49.1
96.5
52.7
127.6
55.0
149.6
70.6
178.5
69.0
185.1
72.2
194.7
75.7
193.5
0.92
0.61
43. 5
0.65
0.58
27.9
0.73
0.79
30.5
1.15
0.63
47.4
0.65
0.59
23.8
0.91
0.67
33.2
0. 77
0. 69
26.2
1.62
0.71
56.8
27. 6
25. 5
24.6
25.4
33.6
26.1
24.5
30.4
21.6
28.9
23.7
30.1
23.1
29.0
22.5
30.7
2. 5
7. 2
1.6
7.1
1.7
7.0
2.4
7.2
1.2
6.6
1.6
7.3
1.2
6.7
2.4
6.7
Productivit y
Cost/Income ratio (without extraordinary items) - %
Fee Income / Personnel Expenses - %
Fee Income / Adm. Expenses - %
Personnel Expenses per Collaborator - R$
Collaborators / (Branches + PAA + PAB)
Checking Accounts per Collaborator
Assets per Collaborator – R$ thousand
Loan Portfolio / Points of Service – R$ million
Loan Portfolio Quality
Allowance / Loan Port folio - %
Allowance / (E + F + G + H) - %
Portfolio Net of Allowance / Total Portfolio - %
Capital Structure
Leverage (t imes)
BIS Ratio - %
Total Quantity of Shares - thousand
Capital Market
Price / Earnings 12 months **
46. 7
46.9
47.6
46.0
42.0
42.3
44.6
44.4
150. 8
77. 9
136.4
72.9
123.4
66.0
125.8
66.3
93.4
50.4
137.1
63.9
121.2
64.0
110.3
57.0
20,825
17. 0
300. 2
22,730
17.1
307.6
25,033
17.3
317.2
25,071
16.4
313.4
31,900
16.8
309.4
22,100
16.6
306.4
25,422
16.7
304.8
28,719
16.8
307.2
4,463
11. 3
4,444
12.4
4,834
13.1
5,377
14.1
5,990
14.1
5,281
14.7
5,992
15.4
6,221
16.8
6. 2
108. 0
93. 8
5.9
105.3
94.1
5.5
105.4
94.5
6.1
107.5
93.9
6.4
106.0
93.6
7.0
114.2
93.0
6.7
114.0
93.3
6.2
114.5
93.8
16. 3
14. 7
2,542. 2
15.8
12.5
2,542.2
16.4
13.0
2,565.3
17.4
15.2
2,568.2
19.2
15.0
2,568.2
18.5
15.3
2,568.2
20.4
13.0
2,568.2
19.6
13.7
2,568.7
9.80
10.11
8.25
4.28
5.34
6.16
8. 98
7.52
Price of Share - R$ **
2.31
58,750
9.99
23.11
2.52
66,478
10.37
26.15
2.09
58,360
10.87
22.75
1.26
37,701
11.66
14.68
1.40
43,325
12.02
16.87
1.68
54,394
12.60
21.18
2. 38
80,204
13. 11
31. 23
2.11
76,291
14.06
29.70
Structural Information
Total of Service Points
15,324
15,353
15,438
15,964
16,207
17,203
17,234
17,929
Total of Customers - thousand
Total of Checking Account s - thousand
Individuals - thousand
44,553
27,855
26,157
46,197
28,830
27,055
47,492
30,117
28,173
48,022
30,378
28,494
53,890
30,574
28,701
53,530
34,747
32,555
54,236
34,875
32,657
52,695
34,988
32,781
Businesses - thousand
Total of Savings Accounts - thousand
1,698
17,091
1,775
17,710
1,944
18,002
1,884
18,459
1,874
19,432
2,192
19,389
2,218
19,429
2,207
23,371
Collaborators
Employees
92,801
83,417
9,384
93,733
84,258
9,475
94,935
85,392
9,543
96,938
88,972
7,966
98,825
89,534
9,291
113,401
103,458
9,943
114,432
104,139
10,293
113,888
103,971
9,917
Price / Book Value **
Market Capitalization - R$ million
Book Value per Share - R$ **
Interns
43 - Banco do Brasil – MDA 4Q09
1Q08
Global Ratings
Fitch Ratings
Individual
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
C/ D
C/ D
C/ D
C/ D
C/ D
C/ D
C/ D
C/ D
Short-Term - Local Currency
F3
F3
F3
F3
F3
F3
F3
F3
Long-Term - Local Currency
BBBF3
BBBF3
BBBF3
BBBF3
BBBF3
BBBF3
BBBF3
BBBF3
BBB-
BBB-
BBB-
BBB-
BBB-
BBB-
BBB-
BBB-
C
P-1
C
P-1
C
P-1
C
P-1
C
P-1
C
P-1
C
P-1
C+
P-1
Short-Term - Foreign Currency
Long-Term - Foreign Currency
Moody's
Financial Strength
Short-Term - Local Currency
Short-Term - Foreign Currency
Long-Term Debt- Foreign Currency
Long-Term Deposits - Local Currency
Long-Term Deposits - Foreign Currency
Standard & Poor's
Long-Term - Local Currency
Long-Term - Foreign Currency
NP
NP
NP
NP
NP
NP
NP
NP
Baa3
A1
Baa3
A1
Baa3
A1
Baa3
A1
Baa3
A1
Baa3
A1
Baa3
A1
Baa3
A2
Ba2
Ba2
Ba2
Ba2
Ba2
Ba2
Baa3
Baa3
BB+
BBB-
BBB-
BBB-
BBB-
BBB-
BBB-
BBB-
BB+
BBB-
BBB-
BBB-
BBB-
BBB-
BBB-
BBB-
National Ratings
Fitch Ratings
Short-Term
F1+(bra)
F1+(bra)
F1+(bra)
F1+(bra)
F1+(bra)
F1+(bra)
F1+(bra)
F1+(bra)
Long-Term
AA+(bra)
AA+(bra)
AA+(bra)
AA+(bra)
AA+(bra)
AA+(bra)
AA+(bra)
AA+(bra)
BR-1
Aaa.br
BR-1
Aaa.br
BR-1
Aaa.br
BR-1
Aaa.br
BR-1
Aaa.br
BR-1
Aaa.br
BR-1
Aaa.br
BR-1
Aaa.br
Demand Deposits
Rate (1)
45%
45%
45%
42%
42%
42%
42%
42%
Additional (2)
8%
8%
8%
5%
5%
5%
5%
5%
Reserve Requirements*
Reserve Requirements (micro finance)
25%
2%
25%
2%
25%
2%
30%
2%
30%
2%
30%
2%
30%
2%
30%
2%
Free
20%
20%
20%
21%
21%
21%
21%
21%
Rate (3) (5)
Additional (2)
20%
10%
20%
10%
20%
10%
15%
10%
15%
10%
15%
10%
15%
10%
15%
10%
Reserve Requirements* (5)
65%
65%
65%
70%
70%
70%
70%
70%
5%
5%
5%
5%
5%
5%
5%
5%
Rate (4)
15%
15%
15%
15%
15%
15%
15%
14%
Additional (2)
Free
8%
77%
8%
77%
8%
77%
5%
80%
5%
80%
4%
81%
4%
81%
4%
83%
Moody's
Short-Term
Long-Term
Compulsory/Reserve Requirements
Savings Deposits
Free
Time Deposits
Judicial Deposit s
Rate
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
Free
* Reserve Requirements at BB are directed to Rural Credit.
The following legends refer to the rates due to 3Q09.
(1) Collected in cash without remuneration.
(2) Since 12/01/2008, the collection started to be at public bonds linked in Selic, remunerated by PU of the linked bonds.
(3) Collected in cash at TR + interest of 6.17% p.a.
(4) Since 14/11/2008 the requirement started to be collected 60% in cash, without remuneration, and 40% in federal bonds linked in Selic.
(5) The rate informed in the table above refers to the Rural Savings. For the Housing Savings the rate remains in 20%.
44 - Banco do Brasil – MDA 4Q09
0%
100%
5 – Summarized Financial Statements
5.1 Summarized Balance Sheet
Table 27. Summarized Balance Sheet – Assets
R$ million
ASSETS
Current and Long-term Assets
Available Funds
Short-term Interbank Investments
Securities and Financial Derivatives
Securities Available for Trading
Securities Available for Sale
Securities Held to Maturity
Financial Derivatives
Interbank Accounts
Deposits with the Central Bank
Compulsory Deposits on Demand Deposits and Float
Compulsory Deposits on Savings Deposits
Other
Intrabank Accounts
Loans
Public Sector
Private Sector
( Allowance for Loan Losses)
Leasing
Leasing and Subleasing Receivables
(Unearned Lease Income)
(Allowance for Lease Losses)
Other Receivables
Receivable on Guarantees Honored
Foreign Exchange Portfolio
Income Receivable
Trading and Brokerage of Securities
Specific Credits
Specific Operations
Credits from Insurance, Pension and Capitalization Op.
Tax Credits
Actuarial Assets
Warrants Deposits Receivable
Other Credits
(Provision or Doubtful Receivables)
(With Loan Characteristics)
(Without Loan Characteristics)
Other Assets
Interest in Companies
Other Assets
(Provision for Possible Losses)
Prepaid Expenses
Permanent Assets
Investments
Property and Equipment
Leasing Assets
Intangible
Deferred Charges
45 - Banco do Brasil – MDA 4Q09
Dec/08
521,273
511,761
5,545
119,408
86,909
26,136
38,374
20,123
2,276
21,287
20,882
12,439
8,443
405
228
190,882
12,471
191,589
(13,179)
2,968
4,880
(1,842)
(71)
83,279
71
20,914
413
347
846
0
441
16,499
7,794
18,007
19,325
(1,377)
(579)
(798)
1,256
0
308
(170)
1,118
9,512
966
3,339
4
4,598
604
Balance
Sep/09
685,684
669,719
8,340
157,541
129,818
44,590
52,750
30,773
1,706
31,252
26,468
12,398
14,069
4,784
161
246,217
4,975
259,359
(18,118)
4,636
4,861
(225)
89,641
76
12,066
542
522
910
0
815
22,261
8,709
20,888
24,523
(1,671)
(728)
(943)
2,114
385
(191)
1,920
15,965
6,625
3,741
2
5,082
515
Chg. %
Dec/09
On Dec/08 On Sep/09
35.9
3.3
708,549
35.1
3.3
691,539
41.4
(6.0)
7,843
41.0
6.9
168,398
124,337
43.1
(4.2)
38,274
46.4
(14.2)
62,161
62.0
17.8
22,439
11.5
(27.1)
1,463
(35. 7)
(14.2)
26,592
24.9
(14.9)
16.3
(8.3)
24,280
(4. 2)
(3.9)
11,919
46.4
(12.1)
12,361
470.6
(51.7)
2,312
29.4
83.1
295
37.1
6.3
261,783
(54. 6)
13.9
5,667
42.9
5.6
273,801
34.2
(2.4)
(17,685)
58.4
1.4
4,701
1.1
1.5
4,932
(231)
225.0
3.0
95,233
14.4
6.2
91
27.8
19.0
8,671
(58. 5)
(28.1)
563
36.4
4.0
25.8
(16.4)
436
10.2
2.4
932
0.2
(0.2)
0
106.1
11.4
908
32.8
(1.6)
21,910
62.4
45.3
12,655
17.8
1.5
21,209
52.9
20.5
29,539
22.2
0.6
(1,682)
21.2
(3.7)
(702)
22.9
4.0
(980)
2,358
87.7
11.5
364
18.1
(5.4)
(176)
3.3
(7.7)
2,170
94.1
13.0
78.8
6.5
17,010
587.8
0.3
6,645
26.2
12.7
4,214
(68. 4)
(36.0)
1
23.5
11.7
5,677
(22. 0)
(8.3)
472
Table 28. Summarized Balance Sheet - Liabilities
Balance
R$ million
LIABILITIES AND SHAREHOLDER’S EQUITY
Current and Long-term Liabilities
Deposits
Demand Deposits
Savings Deposits
Interbank Deposits
Time Deposits
Investment Deposits
Money Market Borrowing
Funds from Acceptances and Securities Placed
Foreign Securities
Interbank Accounts
Intrabank Accounts
Borrowing
Foreign Borrowing
Domestic Onlending – Official Institutions
National Treasury
BNDES
CEF
Finame
Other Institutions
Foreign Onlending
Financial Derivatives
Other Accounts Payable
Collection of Taxes and Contributions
Foreign Exchange Portfolio
Shareholder and Statutory Distributions
Taxes and Social Security
Trading and Brokerage of Securities
Technical Prov. Insurance, Pension and Capitalization Op.
Financial and Development Funds
Perpetual Securities
Special Operations
Obligations for Lotto Operations
FCO (Subordinated Debt)
Actuarial Liabilities
Other Liabilities
Unearned Income
Corporate Profit Sharing
Shareholders’ Equity
Capital
(Unpaid Capital)
Capital Reserves
Revaluation Reserves
Revenue Reserves
Mark-to-Market – Securities and Derivatives
Retained Earnings (Accumulated losses)
(Treasury Shares)
Income Accounts
46 - Banco do Brasil – MDA 4Q09
Dec/08
521,273
491,336
270,841
51,949
54,965
14,065
149,618
243
91,130
3,479
3,210
21
2,496
7,627
7,627
22,436
3,485
11,168
6,585
1,199
98
3,895
89,312
252
15,964
1,838
17,570
401
12,675
2,458
1,185
2
11,772
5,662
19,531
(0)
29,937
13,780
5
7
15,977
199
(31)
-
Sep/09
685,684
652,002
326,958
50,107
72,233
9,627
194,707
284
153,603
6,231
3,383
2,792
1,859
8,855
8,855
26,761
2,826
14,968
153
7,780
1,034
104
6,098
118,742
2,629
15,466
1,608
22,224
378
16,081
4,052
901
2,346
16,409
5,871
30,775
21
33,661
18,549
5
7
13,299
324
(31)
1,509
Chg. %
Dec/09
On Dec/08 On Sep/09
35.9
3.3
708,549
36.9
3.1
672,429
24.6
3.2
337,564
8.7
12.7
56,459
75,742
37.8
4.9
11,619
(17.4)
20.7
193,516
29.3
(0.6)
229
(5.7)
(19.2)
160,821
76.5
4.7
7,362
111.6
18.2
43.2
35.9
4,597
0.9
(99.2)
21
29.4
73.7
3,229
(16.5)
(28.1)
6,370
(16.5)
(28.1)
6,370
39.9
17.3
31,390
(39.7)
(25.7)
2,101
75.8
31.1
19,630
(4.3)
146
27.3
7.7
8,381
(5.5)
9.5
1,133
99
1.1
(4.6)
4,724
21.3
(22.5)
120,848
35.3
1.8
377
49.2
(85.7)
12,174
(23.7)
(21.3)
2,625
42.8
63.2
38.3
9.3
24,297
31.6
39.7
528
36.8
7.8
17,339
68.2
2.0
4,135
196.6
290.1
3,516
8,736.1
(91.2)
206
57.6
13.1
18,553
4.7
0.9
5,927
59.6
1.3
31,172
0
(99.3)
36,119
20.6
7.3
18,567
34.7
0.1
5
(0.0)
7
(7.4)
(0.9)
8.3
30.1
17,301
35.9
(16.6)
270
(0.0)
(0.0)
(31)
-
5.2 Summarized Corporate Law Income Statement
Table 29. Summarized Corporate Law Income Statement
R$ million
Financial Intermediation Income
Loans
Leasing
Securities
Financial Derivatives
Foreign Exchange Portfolio
Compulsory Investments
Financial Inc. from Insur., Pension & Capit. Operations
Financial Intermediation Expenses
Money Market Funds
Borrowing, Assignments and Onlending
Allowance for Loan Losses
Gross Income from Financial Intermediation
Other Operating Income (Expenses)
Fee Income
Banking Fees Income
Personnel Expenses
Other Administrative Expenses
Taxes
Equity Interest in the Results of Subsidiaries, and Affiliates
Income f/ Insurance, Pension & Capitalization Operations
Other Operating Revenues
Other Operating Expenses
Operating Income
Non-operating Income
Income Before Taxes
Income and Social Contribution Taxes
Statutory Profit Sharing
Corporate Profit Sharing
Net Income
47 - Banco do Brasil – MDA 4Q09
Quarterly Flow
Chg. %
Annual Flow
Chg. %
4Q08
3Q09
4Q09 On 4Q08 On 3Q09 2008
2009
On 2008
18,824
15,637
17,794
(5.5)
13.8
55,641
63,285
13.7
10. 4
13.4
22.0
10,613
10,333
11,717
33,221
40,515
45. 1
44.7
106.3
147
147
213
314
647
8,097
5,083
5,321
(34.3)
4.7
20,692
21,350
3.2
(95.6)
(93.0)
(4. 7)
(1,053)
(664)
(47)
(1,283) (1,223)
(47.3)
(34.7)
47.8
503
406
265
464
686
424
213
214
1,910
816
(49.4)
0.5
(57. 3)
17. 0
(6.7)
52.2
93
117
109
324
494
(32.3)
7.6 (42,822) (45,052)
5.2
(17,226) (10,841) (11,665)
(8,432) (7,320) (7,997)
(5.2)
9.2 (25,532) (30,146)
18.1
(85.4)
21.0
(71. 1)
(4,903)
(593)
(718)
(8,685) (2,510)
(24.2)
0.8
44.0
(3,892) (2,928) (2,950)
(8,606) (12,396)
1,597
4,795
6,129
283. 7
27.8
12,819
18,233
42.2
(61.2)
303.6
2,744 (1,875)
1,065
(1,150) (4,641)
16. 1
2.5
4.1
2,338
2,647
2,714
9,771
10,172
720
879
892
2,040
3,339
24. 0
1.5
63.7
34. 6
12.4
33.5
(2,430) (2,909) (3,271)
(8,870) (11,838)
39. 8
17.6
41.6
(2,185) (2,596) (3,054)
(7,917) (11,212)
(887)
(807)
(998)
12. 5
23.6
(2,635) (3,333)
26.5
(82.1)
707
(275)
(49)
1,392
(991)
15. 4
4.0
76.4
353
392
408
892
1,574
11,782
16,974
7,090
3,162
6,794
(4.2)
114.9
44.1
(19.9)
0.2
22.6
(2,962) (2,367) (2,371)
(7,605) (9,327)
65. 7
146.3
16.5
4,342
2,921
7,194
11,669
13,592
413
1,844
5
379
22
351. 9
(94.2)
346.9
66. 0
118.7
27.8
4,347
3,300
7,217
12,082
15,435
141. 0
131.8
81.9
(1,022) (1,062) (2,463)
(2,145) (3,903)
(1,134) (1,385)
(380)
(258)
(599)
57. 5
132.0
22.1
(1)
1
0
(1)
41. 1
110.0
15.3
2,944
1,979
4,155
8,803
10,148
5.3 Income Statement with Reallocations
Table 30. Income Statement with Reallocations
Quarterly Flow
R$ million
Financial Intermediation Income
Loan Operations (4) (13)
Lease Operations
Securities (11)
Financial Derivatives
Foreign Exchange Portfolio
Compulsory Investments
Financial Income from Insurance, Pension and Capitaliz. Operatrions
FX Gain (Loss) on Foreign Investments (1)
Other Op. Inc. of a Fin. Intermed. Nature (2)
Hedge Fiscal (5)
Financial Intermediation Expenses
Money Market Funds (3)
Borrowing, Assignments and Onlending
Net Interest Income
Allowance for Loan Losses (6) (21)
Net Financial Margin
Fee Income
Services Income
Banking Fee Income
Insurance, Pension Plan and Capitalization Income
Taxes on Revenues (5) (7)
Contribution Margin
Administrative Expenses
Personnel Expenses (8) (25)
Other Administrative Expenses (8) (9) (16)
Other Tax Expenses (7)
Commercial Income
Legal Risk
Legal Claims (8) (10) (17) (20)
Labor Lawsuits (8) (17) (19)
Other Operating Income
Eq. Int. in Results of Subs. And Affil. (1) (11) (12) (15)
FX Other Operating Income / Expenses
Other Operating Income (2) (3) (4) (17) (22)
Other Operating Expenses (2) (6) (8) (9) (10) (23)
Operating Income
Non-operating Income (11) (24)
Income Before Taxes
Income and Social Contrib. Taxes (5) (14) (18) (20) (26)
Interest on Own Capital Tax Benefit
Statutory Profit Sharing (26)
Corporate Profit Sharing
Recurring Income
Extraordinary Items
Sale of Share in VISA Internacional (11)
Disposal of Investments – Telemar (15)
Revaluation of Consolidated Shares (12)
Economic Plans (10)
Credit Assignment (13)
Tax Efficiency (14)
Change of Credit Card Basis (16)
Contingent Liabilities (BESC) (17)
Tax Credit (BESC) (18)
PREVI Actuarial Assests – Adjustments (22)
CASSI Actuarial Assests – Adjustments (23)
Additional Provision for Loan Losses (21)
Provision for labor, civil and tax claims (19)
Tax Credits – differential of CSLL rate (20)
Disposal of Investments – Visanet Brasil (24)
Voluntary Resignation Program - BNC (25)
Reversal of Labor Liabilities (26)
Tax FX and Statutory Profits over Extraord. Items (27)
#REF!
48 - Banco do Brasil – MDA 4Q09
4Q08
20,412
11,106
147
8,097
(1,053)
503
424
93
711
50
334
(13,335)
(8,432)
(4,903)
7,077
(2,240)
4,837
3,058
2,338
720
353
(715)
7,534
(4,344)
(2,301)
(2,043)
(45)
3,144
(226)
(97)
(129)
(542)
(3)
(539)
1,230
(1,769)
2,375
5
2,380
(557)
140
(198)
1,626
1,318
(44)
5,326
(1,259)
(1,594)
(1,110)
2,944
3Q09
16,048
10,609
147
5,083
(664)
406
213
117
(292)
643
(216)
(7,729)
(7,136)
(593)
8,320
(3,017)
5,303
3,526
2,647
879
392
(760)
8,461
(4,897)
(2,693)
(2,203)
(23)
3,540
(256)
(40)
(216)
(590)
17
(607)
1,313
(1,920)
2,694
29
2,723
(727)
190
(230)
(1)
1,764
215
141
(84)
119
209
(171)
1,979
Chg. %
4Q09
On 4Q08 On 3Q09
17,984
(11.9)
12.1
11,963
7.7
12.8
213
45.1
44.7
5,321
(34.3)
4.7
(47)
(95.6)
(93.0)
265
(47.3)
(34.7)
214
(49.4)
0.5
109
17.0
(6.7)
(74)
(74.8)
75
51.3
(88.3)
(58)
(73.2)
(8,715)
(34.6)
12.8
(7,997)
(5.2)
12.1
(718)
(85.4)
21.0
9,268
31.0
11.4
(2,950)
31.7
(2.2)
6,318
30.6
19.1
3,606
17.9
2.3
2,714
16.1
2.5
892
24.0
1.5
408
15.4
4.0
(965)
35.0
26.9
9,367
24.3
10.7
(5,465)
25.8
11.6
(2,844)
23.6
5.6
(2,621)
28.3
18.9
(27)
(41.2)
13.6
3,876
23.3
9.5
(4)
(98.4)
(98.6)
46
(49)
(61.7)
(77.1)
(960)
77.1
62.6
24
47.1
(985)
82.7
62.2
1,463
18.9
11.4
(2,448)
38.4
27.5
2,912
22.6
8.1
22
351.9
(22.8)
2,934
23.3
7.8
(853)
53.4
17.4
191
37.1
0.5
(262)
32.7
13.9
1
1,819
11.9
3.1
2,336
77.2
988.7
530
242
102.5
3,030
(43.1)
(215)
644
(1,895)
70.7
1,007.4
4,155
41.1
110.0
Annual Flow
2008
58,400
34,507
314
20,496
(1,283)
464
1,910
324
941
392
334
(33,885)
(25,200)
(8,685)
24,515
(6,799)
17,716
11,811
9,771
2,040
892
(2,362)
28,058
(15,358)
(8,112)
(7,246)
(140)
12,560
(722)
(161)
(560)
(2,198)
(97)
(2,102)
3,698
(5,799)
9,639
413
10,052
(2,416)
526
(951)
0
6,685
2,118
361
142
241
(372)
67
412
(54)
(360)
194
5,326
(1,259)
(1,594)
(986)
8,803
Chg. %
2009
On 2008
11.9
65,329
41,656
20.7
647
106.3
21,350
4.2
(1,223)
(4.7)
686
47.8
816
(57.3)
494
52.2
(1,042)
2,721
594.0
(776)
(32,269)
(4.8)
(29,759)
18.1
(2,510)
(71.1)
33,060
34.9
(11,629)
71.1
21,431
21.0
13,511
14.4
10,172
4.1
3,339
63.7
1,574
76.4
(3,149)
33.3
33,367
18.9
(19,185)
24.9
(10,280)
26.7
(8,905)
22.9
(100)
(28.9)
14,083
12.1
(502)
(30.5)
(242)
49.8
(260)
(53.6)
185
51
134
8,036
117.3
(7,902)
36.3
13,766
42.8
78
(81.1)
13,844
37.7
(4,155)
72.0
743
41.2
(1,157)
21.6
(26)
8,506
27.2
1,642
(22.5)
141
(60.9)
157
633
840.2
(676)
(57.6)
(1,367)
1,213
1,625
(215)
644
(513)
(48.0)
10,148
15.3
5.3.1 Details of the Reallocations
In this chapter the adjustments made in the statement of income to get the Reallocated Statement of
Income are detailed below. Such adjustments aim to:
a) Separate the extraordinary items and show the recurring income for the period;
b) Change the manner that income and expenses are shown, in order to provide a better understanding
of the business and the company's performance;
c) allow the financial margin recorded in the period to reflect, effectively, the gain from all the earning
assets, seeking to inform the market what was the spread achieved from the division of this margin by
the assets, except the permanent assets. For this, it was necessary to:
•
•
•
Include in the financial margin the income recorded in Other Operating Income that had financial
intermediation characteristics and which was derived from earning assets recorded in the Balance
Sheet Under Other Receivables;
Identify the foreign exchange gain/(loss) on financial assets and liabilities abroad in the period in a
specific financial margin item (financial equity);
To keep in financial margin, amounts related to negative foreign exchange adjustments that were
recorded in Other Operating Income and Expenses to avoid inverting the balance of accounts of a
financial intermediation nature;
d) Detect and cancel the effects of Tax Hedge transactions entered into as of 4Q08, on the Effective Tax
Rate and Financial Margin. In connection with these transactions, it should be reported that:
•
•
•
•
Exchange variation on overseas investments reflect on Banco do Brasil's income by means of the
equity income account. In order to minimize the effects of exchange fluctuations on the income, the
Bank seeks to level its foreign exchange positions with transactions in the financial market or
through commercial positions assumed with customers;
Pursuant to tax legislation in force, the equity income on overseas investments does not affect the
tax calculation bases (IRPJ, CSLL, PIS/PASEP, and COFINS), as opposed to the profits arising
from foreign exchange hedge transactions which produced R$ 183 million in gains during the 3rd
quarter of 2008, and may create losses in the subsequent periods if the Brazilian real begins to
appreciate consistently again;
In order to reduce fluctuations in its profit figures, the Bank decided to assume a foreign currency
short position, considering the sum required for effective protection, including tax effects pursuant to
article 4 in Circular 3389 dated June 25, 2008;
This short position is assumed by entering into a hedge transaction in excess of the assets being
protected, by means of a transaction known as a Tax Hedge, or overhedge. The Tax Hedge's value
is specified in such a way that the outcome of the hedge transactions, net of their effects on taxes,
will be equal to the impact of the exchange fluctuation on the income, which enhances protection
and reduces the income's volatility;
Reallocations in the net interest income
(1) The foreign exchange gain (loss) on foreign financial equity is reallocated from equity interest in the
results of subsidiaries and affiliates for inclusion in the financial margin. This adjustment is required
to maintain the equilibrium and coherence of the analysis of the spread, since assets and liabilities
previously included in permanent assets are included in other balance sheet items after
consolidation. Without the reallocation, spread would be calculated incorrectly. The amounts of
these reallocations were (R$ 292 million) in 3Q09 and (R$ 74 million) in 4Q09. In the annual view,
the amounts were R$ 941 million in 2008 and (R$ 1,042 million) in 2009.
(2) The reallocations of Other Operating Income/Expenses to Other Operating Income of a financial
intermediation nature are detailed below:
49 - Banco do Brasil – MDA 4Q09
Table 31. Reallocations – Other Operating Income / Expenses
Quarterly Flow
R$ million
Income from Special Operations
Income from specific credits
FX Readjustment
FX Readjustment Income
FX Readjustment Expense
Total
4Q08
3Q09
Chg. %
4Q09
15
25
9
9
11
22
610
1,236
(626)
10
22
44
315
(272)
50
643
75
Annual Flow
On 4Q08 On 3Q09
(34.6)
(10.4)
(14.3)
(2.0)
366.3
(92.9)
(74.5)
(56.6)
51.3
(88.3)
2008
2009
Chg. %
On 2008
52
88
253
1,012
(759)
45
88
2,589
5,179
(2,590)
(13.2)
392
2,721
594.0
(0.0)
924.2
411.6
241.0
(3) Reallocation of Other Operating Income to Funding Operations in the Market. Refers to the reversal
of charges with the restatement of savings deposits recorded upon the closing of the semesters. In
the months after the closing of the Balance Sheets, this reallocation is necessary in order to
correctly evidence the Net Interest Income. This reallocation is only performed in the first and third
quarters of the year. The charges were R$ 185 million in 3Q09. In the annual view, the amounts
were R$ 331 million in 2008 and R$ 387 million in 2009.
(4) Reallocation of Other Operating Income to Loan Operations corresponding to the equalization
revenues of charges on loan operations. As of January/2008 these revenues began to be accounted
for in Other Operating Income, and had to be reallocated to the group of Loan Operations for
purposes of comparability. Equalization revenues amounted to R$ 395 million in 3Q09 and R$ 488
million in 4Q09. In the 12 months, the amounts were R$ 1,354 million in 2008 and R$ 1,773 million
in 2009.
(5) Reallocations were performed in order to cancel the Tax Hedge's effects. In the fourth quarter of
2009, in view of the devaluation of the Brazilian real against the US dollar, the Tax Hedge adversely
impacted Net interest income by R$ 57.8 million, an amount we reallocated to replace the positive
impact on Taxes on Revenues (of R$ 6.3 million) and on Income Tax (IR) and Social Contribution
on Net Profit (CSLL) (of R$ 51.5 million). If we consider the years 2008 and 2009, the amounts
regarding Tax Hedge were R$ 334 million and (R$ 776 million), respectively.
Reallocations in the net interest margin
(6) The expense with the Allowance for Loan Losses includes credits without characteristics of financial
intermediation, so this part of the allowance is reallocated to Other Operating Expenses. In 3Q09,
this reallocation was of (R$ 89 million) and in 4Q09, (R$ 4 million). In the YTD in 12 months, the
amounts were (R$ 213 million) and (R$ 90 million), considering the years 2008 and 2009,
respectively.
Reallocations in the contribution margin
(7) Considering the model used for the income statement, tax expenses on revenues are reallocated
and included in the contribution margin. In 3Q09, this reallocation was of R$ 783 million and in
4Q09, R$ 971 million. In 2008 and 2009, the amounts were R$ 2,495 million and R$ 3,233 million,
respectively.
Reallocations in the operational result
(8) The expenses with Legal Claims and Labor Lawsuits were separated in the Income Statement with
Reallocations, into a group called Legal Risk. It aims to provide a better analysis of the
administrative expenses and giving more transparency to this kind of risk. Amounts reallocated in
3Q09 and 4Q09 were, respectively:
- Labor claims: (R$ 216 million) and (R$ 87 million). In 4Q09, Banco Nossa Caixa accounted for
(R$ 33 million);
50 - Banco do Brasil – MDA 4Q09
- Civil claims: (R$ 40 million) and R$ 40 million. BNC accounted for (R$ 6.7 million) in the fourth
quarter of the year (specifically at BNC, the claims registered until November/2009 were
recorded in Other Operating Expenses, and also were reallocated to “Civil Claims”).
(9) As of 1Q09, in compliance with the resolution of the Central Bank, part of the premiums paid to
customers began to be recorded in "Other Administrative Expenses". Aiming to maintain the
comparability and considering the nature of the amounts disbursed, we reallocated the entire sum
to "Other Operating Expenses", as was recorded up to December 2008. The amounts reallocated to
3Q09 and 4Q09 were R$ 380 million and R$ 325 million, respectively. Of these amounts, R$ 117
million in 3Q09 and R$ 78 million in 4Q09 refer to BNC. In 2009, the amount was R$ 1,100 million,
of which R$ 307 million referring to BNC.
Extraordinary Items
(10) Civil claims of Economic Plans generating extraordinary expenses in the amount of R$ 84 million in
3Q09 and extraordinary revenues (due to reversal) of R$ 530 million in 4Q09 (of which R$ 161
million arising from expenses regarding Banco Nossa Caixa operations). The expenses (or
reversals) from BB were reallocated from “civil claims” to “economic plans” and those BNC were
reallocated from “other operational expenses” to “economic plans”.
(11) Partial sale of investments, corresponding to 56.1% of the shares of the BB group (Multiple Bank,
CIELO and VisaVale) in the company Visa Inc., generating positive extraordinary result of R$
361million in 1Q08. In September 2009, a portion of the remaining shares was sold, generating an
extraordinary revenue of approximately R$ 141 million in 3Q09.
(12) As of the first quarter of 2008 the Bank started to proportionately consolidate its holdings in several
companies. Extraordinary revenues of R$ 241 million were determined in 1Q08 due to the valuation
by the Equity Method of Accounting of interests in companies that were not valued in this manner.
The consolidation of the holdings was the subject of a Material Fact divulged on April 29, 2008.
(13) Assignment of credits written-off to Ativos SA, generating extraordinary revenues in the amount of
R$ 271 million in 2Q09, R$ 119 million in 3Q09, and R$ 242 million in 4Q09. In the 12 months, the
amounts were R$ 67 million in 2008 and R$ 633 million in 2009.
(14) Tax efficiency generated by the Bank in a periodic review as to the treatment of the deductibility of
tax expenses used until then. In view of this review, it was feasible to obtain tax efficiency in the
amount of approximately R$ 302 million in 1Q08 and R$ 110 million in 2Q08.
(15) Sale of shares of Telemar Participações, belonging to Alutrens Participações, controlled by
Brasilcap Capitalização S.A. and by Brasilveículos Companhia de Seguros S.A., associated
companies of BB Banco de Investimentos, wholly-owned subsidiary of Banco do Brasil, generating
positive extraordinary result of R$ 142 million in 2Q08.
(16) Expense of R$ 54 million originating from the substitution of the base of credit cards with a
magnetic stripe by cards with a chip. At the end of 2Q08 cards with a chip represented 95.5% of the
credit card base.
(17) Extraordinary expenses in 3Q08 of R$ 238 million net of taxes, corresponding to reinforcement of
provisions for Contingent Liabilities - labor, civil and fiscal - originating from BESC, aiming to adapt
them to the valuation criteria adopted by BB. The gross sums were reallocated from Other
Operating Income (R$ 79 million), Personnel Expenses (R$ 198 million), Other Administrative
Expenses (R$ 83 million), and Income and Social Contribution Taxes (R$ 122 million).
(18) Tax Credit recorded in 3Q08, in the amount of R$ 194 million, originating from timing differences
and Social Contribution recoverable generated at Besc/Bescri. Amounts not recorded at those
institutions as there was no expectation of realization within the timelines established by BACEN.
(19) As a result of the process of periodic reevaluations of the equity impacts originating from the
lawsuits in which Banco do Brasil figures as complainant, plaintiff or stakeholder, an expense of R$
51 - Banco do Brasil – MDA 4Q09
1,367 million, before taxes was realized that refers to the supplementation of provision to cover
labor, civil and fiscal claims.
(20) Also on account of the reevaluation of the expected impacts of lawsuits, income of R$ 1,213 million
was realized relating to the recognition of tax credits originating from the alteration of the rate of
Social Contribution on Net Income - CSLL from 9% to 15%. The recognition of this tax credit results
from the reevaluation of the prospect of success of the Direct Unconstitutionality Action (ADIN),
number 4101/DF, against the raise of the rate of CSLL of the financial sector.
(21) Extraordinary Expense incurred in 4Q08 and 2Q09, equal to an Additional allowance for loan
losses, in the amounts of R$ 1,594 million and R$ 676 million, respectively. The additional provision
is a result of adjustments to the Bank's statistical models in simulations and scenarios of stress,
should there be a rise in the volatility of loan portfolio default rates owing to the reflexes of a likely
downturn in the world economic crisis. As of the disclosure of CMN Resolution no. 3674/08, surplus
provisions were included in the Tier I, for the purpose of calculating the capital ratio.
(22) Extraordinary income of R$ 5,326 million and R$ 3,030 million in 4Q08 and 4Q09, respectively,
regarding the partial accounting of non-recognized actuarial gains by Plano de Aposentadoria e
Pensão dos Funcionários do Banco do Brasil - PREVI, by virtue of a review of actuarial assets and
liabilities performed in accordance with Resolution 26 issued by Conselho de Gestão da
Previdência Complementar (CGPC) on September 29, 2008.
(23) Expense of R$ 1,259 million as a result of non-recognized actuarial losses by Plano de Assistência
à Saúde – Cassi. These expenses (items 22 and 23) were being calculated on a monthly basis and
totaled R$ 440 million before taxes in 2008, which sums will no longer be stated as of 2009.
(24) Sale of shares representing 8.1% of the capital stock of CIELO (former VISANET - Companhia
Brasileira de Meios de Pagamento), an affiliate of BB Banco de Investimento S/A – BB-BI, a whollyowned subsidiary of Banco do Brasil, generating positive extraordinary result of R$ 1,415 million in
2Q09 and R$ 209 million in 3Q09 (due to greenshoe exercise, that was only accounted for in
3Q09). Banco do Brasil remains as one of the main shareholders of this company, and currently
holds 23.53% of its shares.
(25) Expense arising from Voluntary Resignation Program for employees of Banco Nossa Caixa.
(26) Reversal of provisions for labor lawsuits generating extra revenues amounting to R$ 644 million,
once since 4Q09 the allowance balance began to be established to cover the average of the
amounts effectively disbursed by the Bank in legal proceedings of the same nature (until then, the
provision was set based on the amount requested by the applicant).
(27) As of 4Q08, the DRE (Statement of Income) with Reallocations started to segregate the effects of
extraordinary items of the period on the payment of Profit Sharing (PLR), and to unify the effects of
these items on taxes (IR and CSLL). The table below shows separately the effect of each
extraordinary item on taxes and on PLR.
52 - Banco do Brasil – MDA 4Q09
Table 32. Fiscal Effects and Statutory Profit Sharing on Extraordinary Items
Quarterly Flow
R$ million
Sale of Shares in VISA International
Economic Plans
Credit Assignment
Change of Credit Card Basis
Contingent Liabilities (BESC)
Previ - Non-recognized Actuarial Gains
Cassi - Non-recognized Actuarial Losses
Additional Provision for Loan Losses
Provision for labor, civil and tax claims
Disposal of Investments – Visanet Brasil
Voluntary Resignation Program - BNC
Reversal of Labor Liabilities
Total
53 - Banco do Brasil – MDA 4Q09
4Q08
17
(2,215)
480
608
-
3Q09
(63)
37
(53)
(93)
-
(1,110)
(171)
Chg. %
4Q09
(237)
(108)
(1,357)
96
(289)
(1,895)
Annual Flow
On 4Q08 On 3Q09
(38.7)
-
-
-
-
-
-
-
2008
(129)
128
18
122
(2,215)
480
608
-
70.7
1,007.4
(986)
-
-
-
104.5
-
-
Chg. %
2009
On 2008
(51.4)
(63)
(78)
(281)
(50.8)
299
521
(719)
96
(289)
(513)
(48.0)
6 - Balance Sheet Analysis
6.1 Breakdown
Banco do Brasil attained R$ 708,549 million in total assets at the end of 2009, recording expansion of
35.9% in 12 months and of 3.3% in relation to the previous quarter. These figures already consider
consolidation of all the interests in financial and non-financial companies, in addition to mergers (Banco
Nossa Caixa, BESC, and BEP), and a 50% interest in the capital of Banco Votorantim (BV).
As of 1Q09 and 3Q09, the consolidation of accounting information of BNC and Banco Votorantim,
respectively, changed the mix of Assets and Liabilities of BB. As of those quarters, the proportion of
Earning Assets to Total Assets started to show an upward trend, movement that stabilized in 4Q09.
Earning assets kept their share of 82.6% of total assets. In December 2008, this percentage was 80.4%.
In relation to the mix of Liabilities, there was a slight increase in the relative share of Interest Bearing
Liabilities, which ended the quarter at 72.0%, whereas it stood at 71.9% and 68.7% at the end of 3Q09
and 4Q09, respectively.
Earning Assets2 vs. Interest Bearing Liabilities3 - %
30.6
69.4
17.4
82.6
Mar/08
32.3
67.7
19.8
80.2
Jun/08
31.8
68.2
19.6
80.4
Sep/08
31.3
68.7
19.6
80.4
Dec/08
29.5
70.5
19.4
80.6
Mar/09
30.5
69.5
18.6
81.4
Jun/09
Earning Assets
Other Assets
Interest Bearing Liabilities
Other Liabilities
28.1
71.9
17.4
82.6
Sep/09
28.4
28.0
71.6
72.0
17.3
82.7
Dec/09
Figure 25. Earning Assets vs. Interest Bearing Liabilities
2
Cash and equivalents in foreign currency, marketable securities, financial investments, loan operations, leasing, remunerated compulsory deposit
and other earning assets vs. interest bearing liabilities.
Savings Accounts, Interbank Deposits, Time Deposits, Money Market Borrowings, Foreign Borrowings, onlendings, Financial and Development
Funds, Subordinated Debts, Hybrid Capital and Debt Instruments and Foreign Securities Issued Abroad.
3
54 - Banco do Brasil – MDA 4Q09
6.2 Analysis of Assets
The growth of Assets in the quarter resulted mainly from the performance of “Loans and Leasing“ and
“Liquidity Assets except Securities”, that grew 6.2% in the period, reaching relative share of 37.6% and
24.9%, respectively.
Liquidity Assets except Securities have exhibited growth above other assets since 2008, increasing
gradually their relative share over Total Assets. This movement began in 2Q08 with the worsening of the
international financial crisis, in which period the Bank received deposits migrated from institutions less
recognized by the market, which led to the deposit base growing at a faster pace than the loan portfolio.
Part of the excess funding was placed in "Short-term interbank deposits", in particular with mediumsized banks and secured by the loan portfolio (mainly payroll-secured and vehicle loans, with a lower
risk).
Throughout 2009, "Short-term interbank deposits" were reinforced by Nossa Caixa. As of the acquisition
of BNC by Banco do Brasil, the former started to allocate its excess funding, at that time placed almost
all in securities transactions (representing 50% of total assets at year-end 2008), to more profitable
assets, resulting in a rise in credit transactions and Inter-bank Investments, in particular those supported
by credit portfolios.
“Loans and Leasing“ also recorded growth above the other assets in 2009. The Bank maintained its
strategy of increase its market share in the loan market, what was reflected in BB's mix of assets.
18.7
19.7
36.4
3.4
21.8
14.4
19.8
40.2
3.4
22.1
17.0
18.8
38.8
3.3
22.1
24.0
16.7
37.2
3.2
19.0
23.5
18.7
35.2
3.4
19.1
23.2
18.3
36.4
3.5
18.6
24.2
18.9
36.6
3.2
17.0
24.9
17.5
37.6
3.1
16.9
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
Other Assets
Loans and Leasings
Liquidity Assets except Securities
Tax Credit
Securities
Figure 26. Breakdown of Assets
Table 33. Breakdown of Assets
R$ million
Total Assets
Liquidity Assets except Securities
Securities
Loans and Leasing
Tax Credits
Other Assets
Mar/08
414,193
77,478
81,490
150,863
14,051
90,310
Jun/08
416,052
60,037
82,301
165,570
14,337
93,806
Sep/08
458,237
77,938
85,954
177,866
14,994
101,485
*From Mar/08 on the series were remade with Financial-Economic data.
55 - Banco do Brasil – MDA 4Q09
Dec/08
521,273
124,953
86,909
193,849
16,499
99,062
Mar/09
591,925
139,312
110,594
208,622
20,413
112,984
Jun/09
Sep/09
Dec/09
598,839
685,684
708,549
138,650
165,881
176,241
109,564
129,818
124,337
218,159
250,853
266,484
21,053
22,261
21,910
111,413
116,872
119,578
6.3 Securities Portfolio
The securities portfolio showed a decrease of 4.2%in the quarter, and growth of 43.1% in relation to the
amounts recorded at the end of 4Q08. Since loan operations and short-term interbank deposits grew at
a faster pace than funding, securities portfolio recorded decrease to supply the resources needed for
this growth. In 12 months, disregarding the effect of Banco Votorantim (R$ 9.1 billion), the growth of the
securities portfolio would be 32.6%.
Table 34. Securities Portfolio by Category
R$ million
Securities
Available for Trading
Available for Sale
Held to Maturity
Financial Derivatives
Balance
Share %
Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Dec/08 Dec/09
100.0
81,490
82,301
85,954
86,909 110,594 109,564 129,818 124,337
100.0
30.8
24,717
26,009
26,475
26,136
32,475
31,661
44,590
38,274
30.1
35,388
35,480
37,777
38,374
45,269
46,645
52,750
62,161
44.2
50.0
20,485
19,597
20,443
20,123
31,433
30,477
30,773
22,439
23.2
18.0
899
1,216
1,258
2,276
1,417
781
1,706
1,463
2.6
1.2
Considering the securities portfolio breakdown per maturity, in the quarter we note that there was a
larger concentration in shares with terms above 1 year. Securities with terms between 1 to 5 years
represented relative participation of 57.5% total portfolio, while securities with terms between 5 to 10
years, 12.8%.
Table 35. Securities Portfolio by Maturity - Market Value
R$ million
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
Up to 1 year
Balance
Share %
29,059
36.0
26,613
32.8
27,206
32.1
27,232
32.2
35,555
32.5
31,277
28.7
35,354
27.6
29,640
24.2
56 - Banco do Brasil – MDA 4Q09
1 to 5 years
Balance
Share %
37,700
46.8
37,085
45.7
40,609
47.9
39,465
46.6
55,949
51.1
64,016
58.7
72,607
56.6
70,531
57.5
5 to 10 years
Balance
Share %
9,603
11.9
13,077
16.1
11,594
13.7
12,543
14.8
12,295
11.2
7,301
6.7
14,683
11.4
15,720
12.8
Over 10 years
Balance
Share %
4,257
5.3
4,326
5.3
5,286
6.2
5,373
6.3
5,631
5.1
6,445
5.9
5,653
4.4
6,823
5.6
Total
80,619
81,101
84,695
84,612
109,430
109,040
128,298
122,715
6.4 Tax Credits
In 1998, BB went to court with an application for the full carry forward of accumulated tax loss of IT and
of negative bases of CS. Since then, the Bank has offset these tax losses in full against income tax and
social contribution taxable income and has made judicial deposits of the taxes otherwise due (on 70% of
the amount offset).
In May 2007, the tax credits that had been written off since the beginning of the lawsuit were reactivated,
in the sum of R$ 4,913.2 million, in contra account to the re-formation of provision relating to the portion
of 70% of Income Tax and Social Contribution, for which judicial deposits were formed.
The Tax Credit balance, including BNC's and BV's consolidated figures, reached R$ 21,910 million in
December, 1.6% lower than that recorded at the end of September 2009. In the annual comparison the
growth of the stock of tax credits was 32.8%. It is important to point out that, according to the material
fact disclosed to the market on April 29, 2009, Banco do Brasil transformed into assets in the 1Q09 tax
credits amounting to R$ 1,213 million. The recognition of this tax credit results from the reevaluation of
the prospect of success of the Direct Unconstitutionality Action (ADIN), number 4101/DF, against the
raise of the rate of CSLL of the financial sector, from 9% to 15%.
Tax credits originated from intertemporal differences represent 78.6% of the stock. The intertemporal
differences results from the fact that the tax legislation does not allow the inclusion of certain expenses
in the calculation basis of taxes at the time they occur (accrual basis accounting), but rather at the time
they are financially settled (cash basis accounting).
Table 36. Breakdown of Tax Credit
R$ million
Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09
Time Differences
8,395
8,872
9,560 11,018
15,188 16,238 17,470 17,170
Social contribution to offset
565
274
129
135
70
Income and social contribution taxes – Lawsuit 4,846
4,895
4,959
4,932
4,691
4,349
4,045
3,918
245
297
345
415
464
466
746
822
Other*
14,051 14,337
14,994 16,499
20,413 21,053 22,261 21,910
Total Tax Credit
30.0
28.8
22.7
25.5
31.1
30.6
29.2
31.9
Income Tax / Lair - %
* Includes Tax Losses and Negative Bases and Mark-to-Market, Tax Credits Abroad and Pasep and Cofins
The table above shows the breakdown of tax credits by type. The Tax/Lair ratio ended December at
31.9%, opposed to 29.2% in 3Q09 and 25.5% in 4Q08.
Also in relation to the tax aspects, it is important to emphasize the contracting of a Tax Hedge operation
as from 4Q08. Banco do Brasil contracted hedge operations in a higher sum than that of investments
maintained abroad (over hedge), with the objective of annulling the effect of exchange variance on the
result, considering the fiscal impacts of these operations. Further details about the Tax Hedge and about
the motives that led Banco do Brasil to contract it can be consulted in chapter 5.3.1 (Details of the
Reallocations).
During 2009, BB realized a tax credit totaling R$ 5,135 million. This amount is equivalent to 143.5% of
the projection of using of tax credits in fiscal year 2009, which was reported in the technical study
prepared on 2008.12.31 (R$ 3,578 million). For 2010, we expect the performance of R$ 4,309 million in
st
tax credits, according to a study elaborated on December 31 , 2009.
57 - Banco do Brasil – MDA 4Q09
6.5 Loan Portfolio
The loan portfolio of the National Financial System ended 2009 with a balance of R$ 1,410.3 billion,
considering free and specific funds, growth of 14.9% over 2008, and 4.6% in relation to September
2009. The Credit/GDP ratio estimated by the Central Bank of Brazil (Bacen) reached 45.0%, in line with
the figure observed in the previous quarter (45.1%) and higher than the one recorded in December 2008
(39.7%). It is important to note that part of this variation is determined by the modest GDP growth: R$
3,131.5 billion in Dec/09 and R$ 3,089.4 billion in Dec/08, according to press release disclosed by
BACEN.
In the Banking Industry, loans granted with free funds, corresponding to 67.6% of the total, amounted to
R$ 953.2 billion in December 2009, an increase of 9.4% in twelve months. Using the same comparison
basis, the loans granted to companies increased by 1.2%, whereas the loans granted to individuals grew
by 19.4%, the balances of which were R$ 482.4 billion and R$ 470.8 billion, respectively. Just as occurs
in the Banking Industry, the loans granted to individuals recorded strong growth of 30.3% in 12 months
against 16.9% growth of the loans granted to businesses, without considering BV and BNC balances.
As for BB's domestic loan portfolio, excluding the amounts of BNC (R$ 19,766 million) and BV
(R$21,222 million), Bank's expansion was 5.0% in the quarter and 15.7% in 12 months, performance in
line with the guidance proposed for 2009 (13% to 17%). Upon the inclusion of the amounts of BNC and
BV, the growth rates of the total portfolio were: 5.4% in the quarterly comparison and 33.8% in the
twelve-month period.
As of the last semester of 2008, the process of acquisitions of loan portfolios from other financial
institutions, particularly in payroll loans and vehicle financing, was intensified at BB. The table below
evidences the balances of the portfolios acquired and the interbank deposits guaranteed by a loan
portfolio of other institutions, recorded in Interbank Investments.
Table 37. Acquired Portfolios and Interbank Deposits with Credit Guarantee
R$ million
Payroll loans
Vehicle financing
Interbank with Loan Guarantee
Total
Jun/09
2,741
1,580
5,133
Sep/09
2,655
1,850
3,968
Dec/09
3,003
2,668
4,056
9,454
8,473
9,728
The total loans granted to Individuals reached R$ 91,791 million in 4Q09, an increase of 7.1% in the
quarter and of 88.1% in the twelve-month period, a result which includes acquisitions (BNC) and
partnerships (BV).
Regarding the businesses loan portfolio, the balance ended the 4Q09 reaching R$ 125,336 million, a
figure which exceeds those recorded in 4Q08 and 3Q09 by 29% and 7.1%, respectively, also including
the balances arisen from acquisitions and partnerships.
The agribusiness portfolio decreased by 2.4% as compared to the previous quarter, but increased 4.3%
in 12 months and ended 2009 with a balance of R$ 66,434 million, already including the amount of R$
782 million from BNC.
As a result of the expansion of the import and export financing abroad, the balance of the foreign
portfolio at the end of 4Q09 was R$ 17,268 million, an increase of 14.2% in the yearly comparison and
of 16.9% in the quarterly comparison. It is worth pointing out that there was a exchange devaluation
(Ptax Dollar Sale) in these periods, of 25.5% and 2.1%, respectively.
58 - Banco do Brasil – MDA 4Q09
Table 38. Loan Portfolio
Balance
R$ million
Brazil
. Individuals
. Businesses
- MSE
- Other
. Agribusiness
- Individual
- Companies
Foreign
Total
Mar/08
162,261
36,620
69,118
25,675
43,443
56,524
40,684
15,839
10,499
Jun/08
180,365
40,503
78,252
29,234
49,018
61,611
43,168
18,442
9,717
Sep/08
189,301
43,435
85,343
32,027
53,315
60,524
42,630
17,894
12,900
Dec/08
209,693
48,811
97,192
34,900
62,292
63,690
45,202
18,487
15,115
Mar/09
227,201
61,138
101,776
37,403
64,373
64,287
46,252
18,035
14,726
Jun/09
239,418
68,467
103,351
39,493
63,858
67,600
47,381
20,219
13,068
Sep/09
270,748
85,717
116,994
41,159
75,834
68,038
47,574
20,464
14,769
172,760
190,082
202,201
224,808
241,926
252,485
285,517
Chg. %
Dec/09 On Dec/08 On Sep/09
283,560
35.2
4.7
7.1
91,791
88.1
125,336
29.0
7.1
44,920
28.7
9.1
80,416
29.1
6.0
66,434
4.3
(2.4)
47,265
4.6
(0.6)
19,169
3.7
(6.3)
16.9
17,268
14.2
300,829
33.8
5.4
The table below shows the balances of the loan portfolio with the amounts of BV and BNC segregated.
Table 39. Credit Portfolio – Organic Growth
Chg. %
R$ million
Banco do Brasil
. Individuals
. Businesses
. Agribusiness
. Foreign
Nossa Caixa
. Individuals
. Businesses
. Agribusiness
Banco Votorantim
. Individuals
. Businesses
Total
59 - Banco do Brasil – MDA 4Q09
Dec/08
209,693
48,811
97,192
63,690
15,115
-
Sep/09
230,942
58,747
104,958
67,237
14,769
19,308
14,524
3,984
800
20,498
12,446
8,052
Dec/09
242,572
63,585
113,336
65,651
17,268
19,766
15,080
3,904
783
21,222
13,126
8,096
224,808
285,517
300,829
On Dec/08
On Sep/09
15.7
5.0
30.3
8.2
16.6
8.0
3.1
(2.4)
14.2
16.9
2.4
3.8
(2.0)
(2.2)
3.5
5.5
0.5
33.8
5.4
6.5.1 Individual Loan Portfolio
During this quarter, the loans granted to individuals reached R$ 91,791 million, an increase of 88.1% in
twelve months and of 7.1% as compared with September 2009. These amounts already include the
individual loan portfolios of BNC and BV.
As regards the individual loan portfolio of Banco do Brasil, payroll loans continue to increase its
participation, representing 39.8% of the total loans as compared with 36.1% in the same quarter of
2008, totaling R$ 36,514 million. This amount represents 34.4% of the total loans granted in the Banking
Industry (R$ 106,173 million). The payroll loan operations of BB stand alone increased 8.8% in relation
to 3Q09 and 33.4% in 12 months.
In 2009, there were 3,238 thousand payroll loans, with an average term of 42 months and an average
interest rate of 2.26%. In 2008, 3,392 thousand payroll loans were granted, with an average term of 36
months and an average interest rate of 2.40%. It is emphasized that these amounts do not include BNC
and BV transactions.
The loans granted to civil servants are the most representative of BB's payroll loan portfolio, accounting
for 85.05% of the total loans. The remaining loans are granted to INSS pensioners (7.4%) and
employees from the private sector (7,6%).
Another segment in which BB has been increasing its market share is the auto sector. The balance of
these operations reached R$ 9,425 million, up 9.1% over the preceding quarter and up 40.8% in twelve
months. Of this amount, R$ 2,668 million arises from purchases of portfolios.
In 4Q09, vehicle financing operations presented an average term of 45.4 months, average value per
contract of R$ 20,818 and average rate of 1.59%. With regard to leasing transactions, in the same
period, the average tenor was of roughly 49.4 months and an average value per agreement of R$
28,962 and a 1.60% average rate. Around 20.0% of BB's vehicle portfolio balance are leasing
operations. These information does not take into consideration the balances of BV and BNC. When the
balances of these institutions were added, the amount totaled R$ 20,738 billion, representing a market
share of 13.2%.
Despite incipient, in view of the growth trend promoted by the strategy adopted by BB, the balance of
Real Estate Financing operations amounted to R$ 676 million in 2009 as compared with R$ 80 million in
the previous year. The average term of these operations is 228 months, with an average ticket of R$
126 thousand. Adding the amount of R$ 854 million, accounted for by BNC, the total reaches R$ 1,530
million.
The table below presents the main products of the loan portfolio to individual clients of BB, BNC and BV.
It is important to note that, in relation to Votorantim, the amount presented refers to 50% of that portfolio.
60 - Banco do Brasil – MDA 4Q09
Table 40. Individual Loan Portfolio
R$ million
Direct Consumer Credit (CDC)
Payroll Loan
Consumer Finance
Consumer Loan Backed by Direct Deposits
Mortgage
Vehicles Loan¹¹
Credit Card
Overdraft Accounts
Microcredits
Others
BNC
Payroll Loan
Consumer Finance
Mortgage
Others
BV²
Payroll Loan
Vehicles Loan
Leasing
Others
Total
Balance
Chg. %
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09 On Dec/08On Sep/09
36.8
7.9
23,041
26,491
28,138
30,673
33,574
36,241
14,539
17,626
18,411
20,000
21,612
23,516
33.4
8.8
58.1
13.2
4,515
4,958
5,418
6,035
6,926
7,841
3,986
3,906
4,309
4,639
5,035
4,884
25.1
(3.0)
741.4
43.5
30
80
167
350
471
676
40.8
9.1
5,607
6,694
7,005
8,180
8,638
9,425
6,564
7,586
7,493
7,830
8,007
9,336
23.1
16.6
(1.4)
(15.2)
2,717
2,468
2,822
2,906
2,870
2,434
31.9
22.9
535
511
548
519
549
674
4,941
4,981
4,972
4,785
4,639
4,799
(3.7)
3.4
3.8
9,991
13,224
14,524
15,080
6,433
9,534
10,672
11,324
6.1
(1.4)
1,835
1,845
1,933
1,905
4.3
771
789
819
854
953
1,056
1,100
997
(9.4)
5.5
12,446
13,126
1,689
1,674
(0.9)
4.4
8,947
9,339
18.1
1,671
1,974
(0.1)
139
139
43,435
48,811
61,138
68,467
85,717
91,791
¹ In Dec/09, it contains balance of Finame Pro-Caminhoneiro Individuals for R$ 115.3 million and leasing for R$ 1,567.8 million.
² Amounts equal to 50% of BV Loan Portfolio
61 - Banco do Brasil – MDA 4Q09
88.1
7.1
6.5.2 Business Loan Portfolio
In the business segment, BB closed Dec/09 with a balance of R$ 125,619 million, an increase of 29.2%
in twelve months and 7.1% in relation to the prior quarter. This sum represents 41.7% of BB's total
portfolio and already includes the amounts originated from the acquisition of BNC and partnership with
BV. It is also emphasized that the amounts referring to BNC and BV are evidenced separately, and
therefore do not comprise the detailing of the business products portfolio contained in the table below.
As regards Nossa Caixa's portfolio, business portfolio represented 19.8% of the total and the main
product continued to be Working Capital, which represents 55.1% of the total. Loans to SMEs
represented 41.2% of the total.
As regards BV, the most representative product in the portfolio is Working Capital (32.8% of the total),
followed by the BNDES and FINAME investment lines (30.4%). For further information on BV's portfolio,
please refer to chapter 10 of this report.
Table 41. Business Loan Portfolio
R$ million
Working Capital
Investment
Receivables
Pré-Approved Credit
ACC/ACE
BNDES Exim
Credit Cards
Overdraft Account
Others
BNC
BV*
Working Capital
BNDES/FINAME
Export Letter of Credit
Joint Lending
Others
Total
Sep/08
40,737
17,237
11,467
2,394
7,912
3,054
764
184
1,593
85,343
Dec/08
45,199
19,183
11,887
2,548
11,101
4,417
871
130
1,691
97,192
Balance
Mar/09
Jun/09
46,630
48,550
19,415
19,934
11,282
11,406
2,565
2,568
11,807
10,711
4,105
3,988
902
1,196
155
177
1,679
1,819
3,065
3,001
101,776
103,351
Sep/09
52,789
20,671
11,249
2,713
8,945
4,692
1,639
161
2,098
3,984
8,052
2,383
2,258
1,427
681
1,304
116,994
Chg. %
Dec/09
On Dec/08 On Sep/09
31.2
12. 3
59,294
22,704
18.4
9.8
12,239
3.0
8.8
2,877
12.9
6.0
7,923
(28.6)
(11.4)
4,464
1.1
(4.9)
23.5
2,024
132.3
141
7.8
(12.8)
1,672
(1.2)
(20.3)
3,904
(2.0)
8,096
0.5
2,654
11.4
2,459
8.9
1,350
(5.4)
618
(9.3)
1,016
(22.1)
125,336
29.0
7.1
* Amounts equal to 50% of BV Loan Portfolio
Working capital lines attained a balance of R$ 59,294 billion, taking into consideration BB's stand alone
portfolio, representing a growth of 12.3% in the quarter and of 31.2% in 12 months. These operations
accounted for 52.3% of total portfolio. The lines of receivables recorded a more modest performance,
with increase of 8.8% in the quarter and 3.0% in 12 months.
It should be noted that the investment lines recorded strong growth again in the quarter (9.8%) and grew
18.4% in relation to the same quarter of 2008.
BB ended 2009 as the leading bank in global onlending of the BNDES/Finame system, with a
disbursement of R$ 12.288 million and 131.363 thousand operations carried out.
Private Securities - Banco do Brasil, mindful of the needs of its large corporate clients, operates in the
capital market, as an alternative to the traditional credit lines, by means of issues of debentures,
promissory notes and bank credit bills. The balances of these private securities are presented in the
table below:
62 - Banco do Brasil – MDA 4Q09
Table 42. Private Securities – Businesses
Chg. %
R$ million
Private Securities
Banco do Brasil
BV
Dec/08
3,405
3,405
-
Mar/09
3,939
3,939
-
Jun/09
2,436
2,436
-
Sep/09
4,936
4,936
-
Dec/09
On Dec/08
On Sep/09
155.1
76.0
8,688
5,782
69.8
17.1
2,906
* Securities issued in Brazil registered according to Circular BACEN 3,068 in Available for Sale
Considering the sum of private securities and the business loan portfolio, the growth of credit would be
33.5% in 12 months and 10.2% in relation to September 2009.
Foreign Trade Loans - The Pre-Shipment/Post-Shipment Export Financing (ACC/ACE) ended the
quarter at R$ 7,923 million, decrease of 11.4% in the quarter comparison, and of 28.6% in twelve
months. This credit facility is strongly influenced by the foreign exchange rate behavior (American dollar)
that increased 25.5% in 4Q09 in the 12-month comparison and 2.1% in relation to 3Q09, according to
PTAX dollar sale disclosed by the Central Bank of Brazil.
In 2009, the cool-down of the global economy impaired the demand for Brazilian products, impacting
ACC/ACE contracted volumes, but they began to rise again in this quarter, recording a 2.6% variation in
relation to the previous quarter. The contracted volume decreased 21.3% in 12 months.
In 2009, Banco do Brasil maintained its leadership of the export and import exchange market, with
volumes of US$ 47.1 billion and US$ 34.1 billion, respectively. As a result, BB increased its market
share in the exports lines, going from 27.9% in 2008 to 31,4% in 2009. In relation to the import
exchange market, BB market share increased from 24.7% (2008) to 25.4% (2009).
Table 43. ACC/ACE Average Volume per Contract
ACC/ACE
Volume Contracted (US$ million)
Quantity of Contracts
Average Volume per Contract (US$ thousand)
3Q08
3,906
5,760
678
4Q08
3,457
4,097
844
1Q09
2,325
3,765
617
2Q09
3,182
4,021
791
3Q09
2,653
4,332
612
Chg. %
4Q09 On 4Q08 On 3Q09
2,722
(21.3)
2.6
4,473
9.2
3.3
609
(27.9)
(0.6)
Loans to SMEs - In the delivery of services to SMEs, Banco do Brasil continued to act as principal
partner of the segment. At the end of 2009, BB had 1.98 million checking accounts, with 1.85 million
micro and small business clients. Around 652 thousand received differentiated service rendered by
specialized relationship managers.
BB has also been consolidating its share of the cooperativist credit segment, delivering appropriate
products and services to the requirements of this market. The products include the Compe/SPB
Integration Service, whereby credit cooperatives and its cooperative members have access to the
System for the Clearing of Checks and Other Instruments and to the Payment Settlement and Transfer
System (SPB). This service allowed bank products to be made available to around 356 thousand
cooperative members, associated with 323 credit cooperatives, contributing with innovation in the supply
of solutions in products and sale formats, essential functions for the growth of BB's competitiveness and
maintenance of partnerships.
BB supported 184 Local Productive Arrangements (APL) at the end of 2009, delivering services to 16.4
thousand ventures. A sum of R$ 1.38 billion was made available and contributed toward the sustainable
growth of the locations where the APLs are included, with R$ 886 million in loans for working capital and
R$ 213 million to finance the investments. The amount of R$ 134 million was set aside in funds for
foreign trade at the end of 2009 and R$ 147 million earmarked for operations geared toward
agribusiness.
Disregarding BNC, the balance of transactions in favor of SMEs in 2009 was of R$ 43.3 billion, a 24.1%
increase over 2008. In all, working capital and investment loans rose to R$ 42.7 billion of which R$ 10,7
63 - Banco do Brasil – MDA 4Q09
billion were allocated to manufacturing industries (25.2%), R$ 20,7 billion to trade (48.4%), and R$ 11,3
billion to service segment (26.4%).
Table 44. SME Credit Products
R$ million
Working Capital
Investment
Foreign Trade*
BNC
Total
Sep/08
21,645
8,438
1,944
-
Dec/08
23,616
9,314
1,970
-
32,027
34,900
Balance
Mar/09
Jun/09
25,159
26,575
9,652
10,188
1,143
1,310
1,450
1,420
37,403
39,493
Sep/09
28,151
10,840
667
1,501
41,159
Chg. %
Dec/09
On Dec/08 On Sep/09
31,250
32.3
11.0
11,466
23.1
5.8
596
(69.7)
(10.6)
7.1
1,608
44,920
28.7
9.1
* The rating methodology of operations in such credit line was reviewed as of 3Q09
It is worth emphasizing the allocation, at the end of December 2009, of R$ 31.2 billion for working
capital, which represented growth of 32.3% in relation to the same period of 2008. Among the credit
facilities, the following should be highlighted:
a) BB Giro Rápido aims to satisfy the need for working capital of the segment of micro and small
businesses, without requiring tangible collateral. In 4Q09, this line of credit reached a balance of R$
6 billion, representing 19% of the working capital block;
b) The "BB Giro Empresa Flex", has the purpose of supplying working capital and financing for
acquisition of goods and services. In this credit line, the customer can determine the form of loan
payment in accordance with the company's cash flow. This credit line has reached the balance of
R$8.4 billion, which represents growth of 63.4% in relation to 4Q08.
Financing investments reached R$ 11.5 billion in the 4Q09, an increase of 23.1% in relation to 2008.
These also deserve highlighting:
a) the Proger Urbano Empresarial program, the key credit facility for investments by SMEs, which
showed a record balance of R$ 5.3 billion;
b) the BNDES Card, a product in which BB is a leader (in terms of amounts disbursed, number of
cards and transactions) in 4Q09, presented a volume of R$ 2.4 million, an increase of R$1,7 billion
in 12 months. In the issuance of cards, BB holds 65% of the market;
In August, Banco do Brasil launched the Operation Guarantor Fund (FGO), a system which
supplements, by up to 80%, the guarantees required from legal entities for loans and financing, and
expands credit supply to companies, particularly micro and small-sized ones, with rates even more
competitives. By the end of 4Q09, 93 thousand operations had been carried out under the FGO, totaling
R$ 2.74 billion.
In September, the operations of the BB Giro Décimo Terceiro Salário were resumed, a loan which
finances the thirteenth salaries of employees, including the related payroll charges. The credit line can
be repaid in up to 13 monthly installments and its interest rate is based on the TR (a managed prime
rate) plus 1.13% per month, one of the most competitive rates in the market. In December 2009, such
line presented a balance of R$ 523 million.
64 - Banco do Brasil – MDA 4Q09
6.5.3 Agribusiness Loan Portfolio
Agribusiness is one of the main sectors of the Brazilian economy, with fundamental importance to the
growth of the Country. In its role as an agent of public policies, Banco do Brasil represents a link
between the government and the rural producer, acting as the largest financier of Brazilian agribusiness
in all its segments and in all stages of the productive chain, from the small farmer to the large
agroindustrial companies.
The figure below shows both the importance of the share of agribusiness in the Brazilian GDP and the
share of jobs generated by agribusiness in the Brazilian job market.
73.6%
33.0%
28.9%
26.4%
71.1%
67.0%
% GDP – Other Activities
% GDP – Agribusiness
Other Jobs
Agriculture Jobs
Cattle
Agriculture
Source: IPEA – Instituto de Pesquisa Econômica Aplicada (Economic Applied Research Institute)
Figure 27. Agribusiness Participation in GDP and in Labor Market
Brazilian foreign trade was affected by the world economic crisis and ended 2009 in a downturn.
However, a rising trend was possible in the course of the year, keeping pace with the world economic
recovery. For 2010, the prospect for Brazilian agribusiness is better than in 2009, due to the following
assumptions: Lower prices for inputs, availability of funding for the coming harvest, a recovery in the
price of grains, and an improved market for meat (chicken, pork, and beef).
The Brazilian trade balance surplus ended 2009 at US$ 24.6 billion, a sum 0.5% lower than the amount
recorded in 2008. The agribusiness surplus dropped by 8.4%, to US$ 54,9 billion as against US$ 60,0
billion in 2008. In 2009, this activity accounted for 42.5% of all Brazilian exports and 7.7% of total
imports.
US$ billion
60.0
54.9
44.8
34.1
33.7
38.4
42.7
46.1
49.7
40.0
24.7
2004
2005
2006
Agribusiness
2007
2008
Brazil
Source: MAPA – Ministério da Agricultura, Pecuária e Abastecimento (Ministry of Agriculture, Cattle and Supply)
* 3Q09 data not available.
Figure 28. Trade Balance (FOB)
65 - Banco do Brasil – MDA 4Q09
24.6
2009
The tables below reflect the flow of exports broken down by key products and Brazil's share in
international agribusiness.
Table 45. Exports
US$ million
US$ million
Soybeans and Related Products
Meat
Leather, Hides and Shoes
Sugar
Forest Products
Coffee, Mate and Spices
Fruit Juice
Tobacco
Other Products
2005
9,477
8,066
3,069
4,684
7,197
2,669
1,245
1,707
5,487
43,601
Total
2006
9,308
8,641
3,471
7,772
7,881
3,535
1,570
1,752
5,495
49,424
2007
11,381
11,295
3,554
6,578
8,819
4,093
2,374
2,262
8,059
58,416
2008
17,980
14,545
3,140
7,873
9,326
4,971
2,152
2,752
9,066
71,806
2009
17,240
11,787
2,041
9,716
7,223
4,470
1,752
3,046
7,480
64,756
Source: MAPA – Ministério da Agricultura, Pecuária e Abastecimento (Ministry of Agriculture, Cattle and Supply)
Table 46. Brazil’s participation on Global Agribusiness
Production
1º
1º
2º
1º
2º
3º
3º
5º
Coffee
Orange Juice
Cattle
Sugar Cane
Soybeans
Poultry
Corn
Cotton
Export
1º
1º
1º
1º
2º
1º
2º
4º
% Global Market
27%
85%
26%
47%
30%
40%
11%
6%
Source: USDA – PSD Online
180
350
160
300
140
250
120
100
200
80
150
60
100
40
50
20
0
0
95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10*
Production (million ton.)
* Estimate Conab – 4º crop survey
Figure 29. Production vs. Planted Area
66 - Banco do Brasil – MDA 4Q09
Area (million ha)
Productivity (ton./ha) - %
Productivity (ton/ha)-%
Producão (million ton)
The sector’s performance in the last years is due to the permanent quest for new technologies and for
valuing the services provided by the professionals from this area, always aiming improving profitability
and continuity in the enterprises. In the following chart, the increased productivity per planted area, as a
result of gains in productivity, can be visualized.
Agribusiness at BB
In relation to the distribution of agribusiness operations by region of the country, continuity was verified
in the distribution among Brazilian regions, with the South and Southeast regions appearing as most
relevant, while the North and Northeast continue being the least represented regions.
Table 47. Agribusiness Loan Portfolio by Region
Region
North
Northeast
Midwest
Southeast
South
Share - %
2.8
6.2
21.8
34.9
34.3
Rural credit finances the costs of producing and marketing of agricultural products, stimulates rural
investments, including warehousing, processing and the industrial transformation of agricultural
products. Furthermore, it encourages the introduction of rational methods in the productive system.
Agricultural and Livestock activity follows the agricultural calendar, known as the crop-year, which
begins in July of each year and ends in June of the following one. Hence, the current 2009/2010 crop
began in June 2009 and will end in June 2010.
In the first quarter of the crop-year, resources are required for planting (funding) the summer crop. Also
during this period there is a concentration of payments of the loans obtained for the planting of the
preceding summer crop-year.
Between October and December, the demand for financing continues, but in smaller volume than in the
first quarter of the crop.
During the crops's third quarter (January to March) the demand for financing cost of the winter crop and
the summer crop of the northern and northeastern regions begins.
In the last quarter of the crop year the demand for marketing resources grows due to the harvest period.
The rural portfolio of Brazilian Banking Industry attained R$ 112,409 million in Dec/09, an increase of
5.7% in twelve months and of 1.7% in relation to Sept/09. At BB, the balance of the agribusiness
portfolio attained R$ 66,434 million, an increase of 4.3% in 12 months and decrease of 2.4% in relation
to Sept/09. The rural portfolio represented 22.8% of BB's total portfolio as opposed to 28.3% in Dec/08.
The table below shows a breakdown of BB's agribusiness portfolio, divided into funding for costing,
investments, and marketing. Please note the costing item, which accounted for 41.3% of the total sum.
67 - Banco do Brasil – MDA 4Q09
Table 48. Agribusiness Loan Portfolio by Purpose
Balance
R$ million
Costs
Investment
Marketing
Other
Total
Chg. %
Sep/08
21,751
21,419
16,248
1,106
Dec/08
24,257
20,135
17,474
1,824
Mar/09
24,389
20,587
16,629
1,887
Jun/09
24,667
21,497
18,738
1,873
Sep/09
24,484
22,098
18,802
2,655
60,524
63,690
63,492
66,775
68,038
Dec/09
On Dec/08 On Sep/09
27,478
13.3
12.2
21,965
9.1
(0.6)
14,403
(17.6)
(23.4)
2,589
41.9
(2.5)
66,434
4.3
(2.4)
* From Sep/09 on, BNC portfolio was included.
Proger Rural is a product that offers fixed loans for Agricultural and Livestock funding, besides financial
support for fixed and semi-fixed investments; and the National Family Agriculture Empowerment
Program - Pronaf aimed the financing of agricultural activity funding. These two products added up to R$
18,279 million in December 2009, growing 21.1% in relation to the same period of the previous year,
and 3.6% in relation to the previous quarter.
FCO Rural offers a financial supplement for working capital and costs for the rural producer of the
Middle-west region of Brazil. Transactions in the product fell in the quarterly comparison (4.1%) and in
the past 12 months (4.3%), totaling R$ 5,390 million in December.
The BNDES/Finame Rural products have the objective of financing investments in the modernization of
machines and equipment intended for rural production. Transactions with these products totaled
R$ 6,706 million, with positive variations of 47.0% in 12 months and 53.2% in relation to the previous
quarter.
The financial support for agrobusiness involved in selling, processing or manufacturing of agricultural
and livestocks products are emphasized in Sales and Processing of Agricultural Goods. During this
quarter, the decline seen in this item happened due to the reclassification of a portion of the balance line
to BNDES, besides the settlement of operations. These facts also explain the significant growth of
BNDES/Finame Rural transactions.
The remaining products have been segregated in the "Others" caption as from September 2009,
including BNC's portfolio.
Table 49. Agribusiness Loan Portfolio by Product
Balance
R$ million
Agricultural and Livestock Costs
Loans to Companies
Pronaf / Proger Rural
FCO Rural
BNDES / Finame Rural¹
Others²
Total
Sep/08
16,288
14,668
13,955
4,773
4,850
5,990
60,524
Dec/08
17,813
14,862
15,088
5,634
4,561
5,730
63,690
(1) BB Agriculturand and Livestock Investiment lines are considered
(2) From Sep/09 on
68 - Banco do Brasil – MDA 4Q09
Mar/09
17,898
14,112
15,545
5,810
4,441
5,685
63,492
Jun/09
18,139
16,245
16,597
5,784
4,398
6,438
67,600
Chg. %
Sep/09
17,670
16,334
17,645
5,617
4,378
6,394
68,038
Dec/09 On Dec/08 On Sep/09
17,737
(0.4)
0.4
12,333
(17.0)
(24.5)
18,279
21.1
3.6
5,390
(4.3)
(4.1)
6,706
47.0
53.2
5,989
4.5
(6.3)
66,434
4.3
(2.4)
The following table shows the balance of the loan transactions intended for agribusiness by item
financed.
Table 50. Agribusiness Loan Portfolio by Financed Items
Chg. %
R$ million
Items Financed
Livestock
Soybeans
Corn
Sugar Cane
Machinery and Equipment
Coffee
Rice
Poultry
Fertilizers
Cotton
Manioc
Pork
Other*
Total
Dec/08
8,043
5,281
3,624
3,596
1,378
1,879
1,234
1,552
425
624
548
518
34,988
Share %
12.6
8.3
5.7
5.6
2.2
3.0
1.9
2.4
0.7
1.0
0.9
0.8
54.9
Sep/09
10,043
5,072
3,084
3,178
1,415
2,366
1,711
1,581
260
689
531
680
37,427
Share %
14.8
7.5
4.5
4.7
2.1
3.5
2.5
2.3
0.4
1.0
0.8
1.0
55.0
Dec/09
10,588
6,057
3,095
3,137
1,511
2,315
1,430
1,689
249
683
526
723
34,432
63,690
100.0
68,038
100.0
66,434
Share % On Dec/08 On Sep/09
15.9
31.6
5.4
9.1
14.7
19.4
4.7
(14.6)
0.4
4.7
(12.8)
(1.3)
2.3
9.7
6.8
3.5
23.2
(2.2)
2.2
15.9
(16.4)
2.5
8.8
6.8
0.4
(41.4)
(4.3)
1.0
9.5
(0.9)
0.8
(4.1)
(1.0)
6.2
1.1
39.5
51.8
(1.6)
(8.0)
100.0
4.3
(2.4)
* From 3Q09 on BNC will be considered.
In its work of financing Brazilian agribusiness, Banco do Brasil reaches all the segments, from the small
producer to the large agro-industrial companies. The table below reveals this work, showing that while
financing mini and small producers accounts for 88.5% of the total of contracts (27.2% of the amount
contracted), the transactions with the other agents show a 72.8% share of the amount contracted. The
information in the following table includes sums loaned during the current crop, but not efectively
disbursed. This information is explained in this chapter's table 53.
Table 51. Funds Released for the 09/10 Crop by Customer Size
R$ million
Mini
Small
Medium and Large Sized
Cooperatives
Total
Qty. Contracts
Qty. Contracts - %
Amount Contracted
Amount Contracted %
352,230
393,668
96,791
396
41.8
46.7
11.5
0.0
1,641,636,957
4,469,543,890
14,809,384,256
1,529,038,245
7.3
19.9
66.0
6.8
843,085
100.0
22,449,603,348
100.0
The table below shows the view by size of customer in relation to the total balance of the agribusiness
loan portfolio.
Table 52. Agribusiness Portfolio by Size
Segment
Micro
Small
Medium and Large
Cooperatives
BNC
Total
69 - Banco do Brasil – MDA 4Q09
3Q08
10,099
7,831
41,411
2,271
61,611
4Q08
10,181
8,195
39,688
2,461
60,524
1Q09
10,871
9,125
40,786
2,709
63,492
2Q09
11,212
9,881
43,011
2,670
66,775
3Q09
11,083
10,243
43,152
2,759
801
68,038
R$ million
4Q09
11,262
10,675
40,952
2,763
783
66,434
In the figure below we present the distribution of the balance of the Agribusiness Loan Portfolio by type
of client.
R$ billion
18.5
19.2
40.2
45.2
47.3
2007
2008
2009
4.2
5.3
8.5
11.7
25.9
30.5
36.6
2004
2005
2006
Individuals
Businesses
Figure 30. Agribusiness Loan Portfolio by Customer
Next, the Agribusiness Loan Portfolio by Funding Sources is shown.
Demand Deposits
FAT
Saving Deposits
Dec/08
Mar/09
FCO
Jun/09
Sep/09
BNDES/Finame
5.7
6.5
6.9
5.2
4.8
4.5
2.1
2.1
3.9
3.8
7.4
7.6
7.6
7.3
7.5
6.7
5.8
7.2
7.5
7.2
30.6
31.7
31.8
12.4
118
12.9
8.0
8.4
31.8
31.9
R$ million
Demais
Dec/09
Figure 31. Agribusiness Loan Portfolio by Funding Sources
The main source of funds for the agribusiness portfolio continued to be savings which in December/09
reached the sum of R$ 30,6 billion, as opposed to R$ 31,8 in the same period of 2008. It is emphasized
that these resources account for 46.1% of the total.
The Bank uses funding from Poupança Ouro (savings) and Demand Deposits, Fund for Worker
Assistance - FAT, the Federal Treasury or Constitutional Fund for the Financing of the Center-West FCO, for low-rate agricultural loans. In order to make this intermediation feasible, the National Treasury
or the Constitution Fund pays the Bank an equalization fee which is the difference between the sum
charged to the borrower and the funding costs, credit risk and administrative costs and taxes.
Moreover, weighting factors are set for financing obtained with funds from demand and savings
deposits. The weighting factor is a multiplier that helps to fulfill liabilities and raise revenues upon the
release of funds in the Bank's cash for investments. The following figure shows a history of the revenues
received by way of interest rate equalization and weighting factor.
70 - Banco do Brasil – MDA 4Q09
R$ million
488
494
85
1Q08
441
395
296
287
275
449
104
2Q08
60
3Q08
38
32
21
15
10
4Q08
1Q09
2Q09
3Q09
4Q09
Equalization Revenues
Weighting Factors
Figure 32. Equalization Revenues and Weighting Factors
In this quarter the balance of equalization revenues, including weighting factor, grew 21.4% in
comparison with the preceding quarter, following the increase of 10.9% in the balance of equalizable
resources in the same period.
In this quarter, the increase in equalizable resources occurred mainly in the investment lines (R$ 7,897
million). The table below evidences the distribution of equalizable funds from BB's agribusiness portfolio.
Table 53. Equalizationable Resources from the Loan Portfolio
R$ million
Chg. %
Equalizationable Resources
Costs
Investments
Marketing
Non-Equalizationable Resources
Total Loan Portfolio
71 - Banco do Brasil – MDA 4Q09
Sep/08
16,620
10,545
5,679
396
43,904
60,524
Dec/08
21,204
13,858
6,217
1,129
42,486
63,690
Mar/09
22,209
14,493
6,596
1,120
41,283
63,492
Jun/09
21,244
13,693
7,015
535
45,531
66,775
Sep/09
20,065
12,235
7,249
582
47,972
68,038
Dec/09 On Dec/08 On Sep/09
10.9
22,249
4.9
13,284
(4.1)
8.6
7,897
27.0
9.0
1,068
(5.4)
83.6
44,185
4.0
(7.9)
66,434
4.3
(2.4)
The Bank has mechanisms for mitigating risks from agriculture loan portfolio. For the current 2009/2010
crop, until December 2009, 67% of the costing operations (R$ 7,471 million) were contracted with the
use of mitigators. Of this amount, R$ 3,206 million were guaranteed by Agricultural insurance from
Proagro and R$ 4,265 million at the company Aliança do Brasil and at the reinsurance companies
indicated below.
The following chart shows the increase in percentage in the use of Agriculture Insurance and Proagro.
11.3%
11.3%
R$ 24.4
R$ 11.2
84.0%
6.9%
3.5%
R$ 2.6
13.5%
With Proagro and PGPAF
With Proagro
With PGPAF
Without Mitigation
23%
46.0%
13.7%
1.2%
77%
R$ 8.6
19.9%
14.5%
Family Agricultural Costs
Businesses Agricultural Costs
Agricultural Costs = R$ 11.2
58.3%
27.3%
Working Capital = R$ 4.8
Investiment = R$ 3.4
Reinsurance
IRB
PARTNER RE
SWISS RE
SCOR RE
MUNCHENER
MAPFRE RE
CATLIN RE
HANNOVER RE
EVEREST RE
TOTAL
Marketing = R$ 3.3
Agroindustrial Credit = R$ 1.7
Amounts in R$ billion
%
24
15
15
15
10
4
3
3
1
90
With Insurance / Proagro
Companies Risk / Cooperatives
Without Insurance / Proagro
Figure 33. Agricultural Insurance and Proagro
The figure below evidences the growth of operations contracted with risk mitigators since the harvest of
2007/08.
Crop 2007/2008
Crop 2008/2009
50%
38%
50%
33%
62%
Agricultural Costs with Mitigation
62%
67%
Agricultural Costs without Mitigation
Figure 34. Evolution of contracted operations with mitigation
72 - Banco do Brasil – MDA 4Q09
Crop 2009/2010
The total sum established for the harvest of 2009/2010 is R$ 39,514 million. Of this amount, 55.4% has
already been released up to December. The following table displays the 2009/2010 Harvest Plan, at
estimated and realized values.
Table 54. 2009/2010 Crop Plan
2009/2010 Crop
R$ million
Foreseen
Purpose
Business
Costs
Investment
Marketing
Total
Familiar
Realized
Total
Total
% Realized
(Jul/09 to Dec/09)
22,702
2,412
5,000
5,700
3,700
-
28,402
6,112
5,000
14,844
3,675
3,359
52.3
60.1
67.2
30,114
9,400
39,514
21,878
55.4
We detail below the four key crops subject to agricultural funding, with the percentage share of funding
for the 2009/2010 harvest and the concentration per state regarding each of these crops.
Table 55. Costs – Transaction Profile
PR
RS
GO
MS
Soybeans
25.0%
34.87%
21.51%
11.22%
10.60%
Corn
11.7%
PR
RS
MG
SC
73 - Banco do Brasil – MDA 4Q09
Rice
6.1%
21.21%
22.81%
18.74%
20.16%
RS
SC
MS
PR
Cotton
1.0%
76.62%
14.56%
1.51%
1.64%
MT
BA
GO
MS
41.09%
11.20%
15.57%
15.14%
We show below a breakdown of price and cost of the corn and soybean crops for the 2009/2010
harvest. The margin is represented by the percentage of net revenues of the costs involved in each
crop, i.e., the part designed for the producer. The figures regarding the plantations' price and costs are
referenced to those of the Parana State, using its main municipalities for the calculation of a proportional
average.
Evolution Price/Cost – Soybean
Margin – Soybean
0.74
80
70
58
0.50
53
0.49
44
R$/kg
%
41
0.63
54
60
50
0.76
70
40
30
0.43
0.35
0.30
0.29
0.24
0.21
0.22
20
10
0
04/05
05/06
06/07
07/08
08/09
04/05
09/10
05/06
06/07
07/08
Crops
Crops
Price
0.34
44
42
34
28
40
30
20
10
0.27
0.27
0.24
0.19
R$/kg
%
Cost
0.25
60
54
09/10
Evolution Price/Cost – Corn
Margin – Corn
90
80
70
60
50
08/09
0.18
0.15
0.14
0.14
0.11
0.13
0
04/05
05/06
06/07
07/08
08/09
09/10
Crops
Figure 35. Price/cost relation between soybean and corn
74 - Banco do Brasil – MDA 4Q09
04/05
05/06
06/07
07/08
Crops
Price
Cost
08/09
09/10
6.6 Analysis of Liabilities
The volume of deposits taken by Banco do Brasil ended the quarter at R$ 337,564 million, growth of
3.2% in relation to the previous quarter and of 24.6% in relation to the same prior-year period. Money
market borrowing ended December at R$ 160,821 million, growth of 4.7% over September and of 76.5%
over December 2008.
The consolidation of 50% of BV balance added R$ 12,239 million in deposits at the end of December,
and R$ 12,384 million in money market borrowing. Still regarding BV, time deposits totaled R$ 11,300
million, or 92.3% of total deposits.
The mix of liabilities presented alterations in the annual comparison, mainly due to the growth of the
deposits base and the consolidation of BNC and BV numbers. At the end of 2008, deposits and money
market borrowing represented 52.0% and 17.5% of total liabilities, respectively. At the end of 2009,
these percentages became 47.6% and 22.7%, respectively.
Table 56. Liabilities
R$ million
Deposits
Demand Deposits
Savings Deposits
Interbank Deposits
Time Deposits
Investment Deposits
Money Market Funding
Foreign Borrowing
Domestic Onlending
Other Liabilities
Shareholders’ Equity
Total Liabilities
Mar/08
189,751
44,142
48,112
6,247
90,939
310
99,716
4,510
18,250
76,558
25,407
414,193
Jun/08
195,216
43,603
49,096
5,578
96,495
443
93,097
5,270
19,255
76,844
26,371
416,052
Sep/08
229,810
42,955
52,693
6,309
127,582
270
85,339
7,672
19,640
87,887
27,889
458,237
Dec/08
270,841
51,949
54,965
14,065
149,618
243
91,130
11,106
22,436
95,822
29,937
521,273
Mar/09
305,002
47,276
70,567
8,406
178,487
266
106,452
13,065
22,220
114,327
30,859
591,925
Jun/09
310,846
49,075
69,011
7,459
185,072
228
101,508
11,209
22,626
120,290
32,360
598,839
Sep/09
326,958
50,107
72,233
9,627
194,707
284
153,603
15,086
26,761
129,615
33,661
685,684
Dec/09
337,564
56,459
75,742
11,619
193,516
229
160,821
13,733
31,390
128,922
36,119
708,549
The indicators of the following table show the relationship between funding sources and investments in
Banco do Brasil. The Net Loan Portfolio / Total Funding index ended 2009 at 73.6%, same amount
recorded at the end of 3Q09 and above the index of 70.4% observed in 2008. Cash equivalents,
measured by the difference between the total funding and the net loan portfolio, reached R$ 100,713
million, growth of 13.7% in relation to 2008 and of 5.5% over September 2009. At the end of the quarter,
cash equivalents represented 26.4% of Banco do Brasil's total funding.
75 - Banco do Brasil – MDA 4Q09
Table 57. Sourcers and Uses
Balance
R$ million
Funding Total
Total Funding
Domestic Onlending
Financial and Development Funds
FCO (Subordinated Debt)
Foreign Borrowing*
Compulsory Deposits
Net Loan Portfolio
Loan Portfolio
Allowance for Loan Losses
Disponibilidades
Index - %
Net Loan Portfolio / Total Deposits
Net Loan Portfolio / Total Funding
Available Funds / Total Funding
*
Dec/08
298,745
270,841
22,436
2,458
11,772
12,120
(20,882)
210,181
224,808
(14,627)
88,565
Sep/09
360,955
326,958
26,761
4,052
16,409
13,243
(26,468)
265,504
285,517
(20,013)
95,450
77.6
70.4
29.6
81.2
73.6
26.4
Chg. %
Dec/09
On Dec/08 On Sep/09
381,944
27.8
5.8
337,564
24.6
3.2
31,390
39.9
17.3
4,135
68.2
2.0
18,553
57.6
13.1
14,582
20.3
10.1
(24,280)
16.3
(8.3)
281,231
33.8
5.9
300,829
33.8
5.4
(19,598)
34.0
(2.1)
100,713
13.7
5.5
83.3
73.6
26.4
7.4
4.7
(11.1)
*Includes Foreign Borrowings, Obligations for Securities Abroad, Obligations for Foreign Onlendings and Hybrid Capital and Debt Instruments
76 - Banco do Brasil – MDA 4Q09
2.6
0.1
(0.3)
6.7 Liquidity Analysis
The liquidity of Banco do Brasil, determined by the difference between Liquidity Assets and Liabilities,
attained R$ 128,138 million at the end of December 2009. This sum represents a reduction of 3.3% in
the quarter but a growth of 38.3% in relation to the same prior-year period.
132,469
128,138
92,660
61,914
Sep/08 Dec/08
123,254
Jun/08
119,662
Mar/08
37,336
48,117
R$ million
Mar/09
Jun/09
Sep/09
Dec/09
Figure 36. Liquidity Balance
In the quarter, the growth of 1.6% in the liquidity assets is due, mainly, to the expansion of 6.9% in the
interbank investments. One important thing is that the securities operations (except linked to Bacen),
registered decrease of 4.2% in the same period. These two lines together represented 97.4% of the total
liquidity assets. In the other hand, the liquidity liabilities registered growth of 5.6% as opposed to
September/2009.
Table 58. Liquidity Balance
Liquidity Assets (A)
Available Funds
Interbank Investments
Securities (except linked to Bacen)
Liquidity Liabilities (B)
Interbank Deposits
Money Market Borrowing
Liquidity Balance (A - B)
77 - Banco do Brasil – MDA 4Q09
Mar/08
154,080
4,790
72,689
76,602
105,963
6,247
99,716
Jun/08
136,011
5,181
54,283
76,546
98,675
5,578
93,097
Sep/08
153,563
6,847
71,092
75,624
91,649
6,309
85,339
Dec/08
197,855
5,545
119,408
72,902
105,195
14,065
91,130
Mar/09
234,520
7,516
131,796
95,208
114,858
8,406
106,452
Jun/09
232,221
6,212
132,438
93,571
108,967
7,459
101,508
Sep/09
295,699
8,340
157,541
129,818
163,230
9,627
153,603
R$ million
Dec/09
300,578
7,843
168,398
124,337
172,440
11,619
160,821
48,117
37,336
61,914
92,660
119,662
123,254
132,469
128,138
6.8 Deposits and Money Market Funding
Banco do Brasil's market funding reached R$ 498,385 billion at the end of 2009, a growth of 3.7% in the
quarter and of 37.7% over the one recorded at the end of 2008.
The year's income figures were influenced mainly by money market borrowing and by savings deposits,
which rose respectively by 76.5% and 37.8%. Please note that with the exception of inter-bank deposits,
all the funding lines grew over the last 12 months.
Table 59. Deposits and Money Market Funding
Demand Deposits
Saving Deposits
Interbank Deposits
Time and Investment Deposits
Money Market Borrowing
TOTAL
Mar/08
44,142
48,112
6,247
91,249
99,716
Jun/08
43,603
49,096
5,578
96,938
93,097
Sep/08
42,955
52,693
6,309
127,852
85,339
Dec/08
51,949
54,965
14,065
149,862
91,130
Mar/09
47,276
70,567
8,406
178,753
106,452
Jun/09
49,075
69,011
7,459
185,300
101,508
Sep/09
50,107
72,233
9,627
194,991
153,603
R$ million
Dec/09
56,459
75,742
11,619
193,745
160,821
289,467
288,313
315,149
361,971
411,455
412,353
480,561
498,385
We present below the market shares of Banco do Brasil in deposits and money market funding of the
Brazilian Banking Industry*.
R$ million
Mar/08 Jun/08
Time Deposits
75,742
72,233
69,011
52,693
24.1
Sep/09 Dec/09
Market Share - %
Market Share - %
Mar/08 Jun/08
Sep/08 Dec/08 Mar/09 Jun/09
Market Capitalization
25.8
498,385
23.9
480,561
24.1
412,353
21.7
361,971
315,149
289,467
193,516
Sep/09 Dec/09
19.3
19.8
411,455
24.8
21.1
Sep/08 Dec/08 Mar/09 Jun/09
Sep/08 Dec/08 Mar/09 Jun/09
Saving Deposits
288,313
24.2
194,707
127,582
149,618
18.0
15.6
96,495
90,939
16.9
178,487
23.4
19.6
24.4
Sep/09 Dec/09
Market Share - %
185,072
Demand Deposits
70,567
49,096
Mar/08 Jun/08
Sep/08 Dec/08
20.3
54,965
19.8
48,112
Jun/09
19.9
20.4
56,459
Mar/09
25.4
33.2
50,107
33.4
49,075
33.5
47,276
Jun/08
32.8
51,949
Mar/08
30.8
42,955
43,603
30.9
44,142
31.1
Sep/09 Dec/09
Market Share - %
Figure 37. Market Share of BB Funding
* The information about the participation in the Financial System are from the Central Bank website. The latest position in this system until the
release ot this report was from Sep/2009.
78 - Banco do Brasil – MDA 4Q09
6.8.1 Foreign Borrowing
Except for the borrowing of the "Special" type, all foreign borrowing instruments recorded a growth in the
quarter, which resulted in the 23.0% expansion in total foreign borrowings.
The performance of the interbank market in 4Q09 increased the perception of recovery of liquidity and of
the situation of the international financial system in general. This market was one of the main
thermometers at the culmination of the financial crisis between September and October 2008, when
virtually all interbank borrowing sources dried up. The recovery of the markets, associated with a
constant improvement in the risk perception of the financial agents as regards BB and Brazil's economy,
helped interbank funding occupy a leading position in the advance of foreign fundings. This modality
advanced 28.1% in the quarter and 132.1% as compared with December 2008.
Table 60. Foreign Borrowing (without BNC)
Produtos
Interbanking
Repo
Businesses
Special
Individuals
Issues
TOTAL
Mar/08
2,709
3,074
3,255
590
2,099
2,002
Jun/08
2,951
3,101
3,546
787
2,097
1,923
Sep/08
3,019
2,855
3,967
835
2,052
2,056
Dec/08
2,707
3,441
5,304
1,018
2,032
2,305
Mar/09
3,838
2,832
6,376
0
2,021
2,112
Jun/09
3,900
1,588
5,409
0
2,021
2,119
Sep/09
4,907
2,425
5,549
0
1,972
2,508
US$ million
Dec/09
6,285
2,609
5,797
1,981
4,676
13,729
14,405
14,784
16,809
17,179
15,036
17,361
21,347
Another borrowing instrument abroad which should be highlighted in the mix of Banco do Brasil in 4Q09
was the issuance of securities. The issuance balance increased 86.4% in the quarter, reaching US$
4,676 million. In October 2009, BB issued perpetual bonuses in the amount of US$ 1.5 billion. The
bonuses are of the "junior class, non-cumulative subordinated perpetual" type, and will pay 8.5% per
year in half-yearly coupons. The subordination characteristics of the transaction allowed BB to request
from the Central Bank its classification as Tier I capital for purposes of calculation of the BIS ratio.
Table 61. Foreign Issues
Half-Yearly
03.17.03
07.10.03
07.10.03
12.19.03
09.20.04
01.23.06
07.18.07
03.06.08
04.29.08
09.05.08
07.02.09
10.20.09
Volume in
US$ million
Term in
years
Cupom (%)
120,000
178,474
7
8
7,260
5,911
44,618
250,000
8
10
4,777
6,550
300,000
500,000
186,946
10
10
8,500
7,95
9,75
250,000
150,000
6
10
L3M+0,55
5,25
200,000
7
L3M+1,2
100,000
5
L6M+2,55
1,500,000
-
8,5
79 - Banco do Brasil – MDA 4Q09
Interest
Interval
Quarterly
Quarterly
Quarterly
Quarterly
Half-Yearly
Quarterly
Half-Yearly
Quarterly
Quarterly
Quarterly
Half-Yearly
Half-Yearly
Issue price
Return for
the
Investor
(%)
100.00
100.00
95.00
100.00
99.17
100.00
100.00
100.00
100.00
100.00
98.25
100.00
7.260
5.955
5.955
6.550
8.625
7.950
9.750
L3M+0,55
5.250
L3M+1,2
L6M+2,55
8.500
Premium
over
Treasury
450
350
350
292
447
-
Rating
Program
A-/A1
MT 100
A-/A2
Visanet
A-/A2
Visanet
A-/A1
MT 100
A2 Stand Alone
Baa3 Stand Alone
Baa3
GMTN **
AAA/Aaa
MT 100
A-/A1
MT 100
A-/A1
MT 100
Baa3
GMTN
Baa2 Stand Alone
7 – Analysis of Results
7.1 Net Interest Income
Table 62. Net Interest Income
Quarterly Flow
R$ million
4Q08
Financial Intermediation Income
20,412
11,106
Loans
Leasing
147
Securities
8,097
Financial Derivatives
(1,053)
Foreign Exchange Portfolio
503
Compulsory Investments
424
Financial Income from Insur., Pension and Capital. Op.
93
FX Gain (Loss) on Foreign Investments
711
50
Other Op, Inc, of a Fin, Intermed, Nature
Over Hedge
334
Financial Intermediation Expenses
(13,335)
(8,432)
Money Market Borrowing
(4,903)
Borrowing, Assignments and Onlending
7,077
Net Interest Income
3Q09
16,048
10,609
147
5,083
(664)
406
213
117
(292)
643
(216)
(7,729)
(7,136)
(593)
8,320
Chg. %
Annual Flow
Chg. %
4Q09 On 4Q08 On 3Q09 2008
2009 On 2008
17,984
(11.9)
12.1 58,400 65,329
11.9
11,963
7.7
12.8 34,507 41,656
20.7
213
45.1
44.7
314
647
106.3
5,321
(34.3)
4.7 20,496 21,350
4.2
(47)
(95.6)
(93.0) (1,283) (1,223)
(4.7)
265
(47.3)
(34.7)
464
686
47.8
214
(49.4)
0.5
1,910
816
(57.3)
109
17.0
(6.7)
324
494
52.2
(74)
(74.8)
941 (1,042)
75
51.3
(88.3)
392
2,721
594.0
(58)
(73.2)
334
(776)
(8,715)
(34.6)
12.8 (33,885) (32,269)
(4.8)
(7,997)
(5.2)
12.1 (25,200) (29,759)
18.1
(718)
(85.4)
21.0 (8,685) (2,510)
(71.1)
9,268
31.0
11.4
24,515
33,060
34.9
The Net interest income(NII) - income from financial intermediation before provisions for credit risk totaled R$ 9,268 million in 4Q09, an increase of 11.4% in comparison to the previous quarter, and of
31.0% in relation to 4Q08. In 2009, the net interest income was R$ 33,060 million, expansion of 34.9%
over 2008.
To enable a better understanding of the information, considering that in 2009 there was the acquisition
of the controlling interest of Nossa Caixa and of 50.0% of the total capital of Banco Votorantim, we
present below a list of the impacts of these corporate transactions on BB's Interest Income:
Banco Votorantim (BV) – BV's balance sheet items sensitized those of Banco do Brasil since
September, and income accounts were recorded throughout 4Q09. To avoid distortions in the
calculation of the indicators that evidence the spread, we segregated BV's assets and liabilities in
September, since in 3Q09 the result of that Bank was not consolidated. However, in this quarter,
however, the BV’s performance accounts are considered, making part from the calculation of all
rates established in chapters 7.1 to 7.4.
Nossa Caixa (BNC) - As in the case of BV, we segregated the impact of the assets and liabilities of
Nossa Caixa in March, since the equity consolidation started in that month, but the statement of
income accounts only sensitized those of BB as from 2Q09, period in which all accounts of BNC
were included on BB’s accounting statements and integrated the contents and calculations
established in Chapters 7.1 to 7.4.
The growth of revenues from loan and lease operations merits a special emphasis in the quarter, which
advanced respectively 12.8% and 44.7%. Such performance is directly associated with the expansion of
the loan portfolio, which was benefited from the organic growth and from the loan revenues originated
from the consolidation of Banco Votorantim. On the other hand, financial intermediation expenses
recorded expansion of 12.8%.
In the year 2009, the growth of the Interest Margin is a result of the consistent expansion both of income
from loan operations, and of income originated from interbank investments and securities. As explained
in more detail further on, the expansion of volumes sustained the growth of financial revenues.
Although there was no expressive exchange rate oscillation inflating the financial intermediation income
or expenses, it is important to stress the limitation of analyzing the captions that comprise the margin
80 - Banco do Brasil – MDA 4Q09
individually. This occurs because exchange rate changes affect both the revenues and the financial
intermediation expenses, but are recorded as a contra entry to hedging instruments which offset their
effect on the income statement of BB. Therefore, revenues from foreign assets and loan operations
denominated in foreign currencies are recorded as a contra entry to expenses on hedging transactions
and vice-versa, in order for the effect on the NII to be null. There was no expressive effect in the last two
quarters, but in 4Q08 the volatility of the foreign exchange rate produced a significant impact on various
lines that form the margin.
The tables below demonstrate the formation of the NII from the changes in the spread and from the
growth in the volume of investments. It is possible to identify the impact of the reduction of spreads on
revenues, and how this effect is being offset by the growth of volumes.
Table 63. Analysis of Volume (Earning Assets) and Quarterly Spread – 3Q09 and 4Q09
R$ million
Volume: Assets – Earning Assets¹
Net Interest Income
Spread - %²
Gain/(loss) with volume
Gain/(loss) with spread
Gain/(loss) with volume and spread
3Q09
508,688
8,320
1.6355
4Q09
567,049
9,268
1.6345
Abs. Chg.
58,361
949
(0.0010)
9,274
8,314
954
(5)
(0.5922)
(1) Average Balances
(2) Net interest income/ (Earning Assets)
Table 64. Analysis of Volume (Earning Assets) and Nine Months Spread – 2008 and 2009
R$ million
Volume: Assets – Earning Assets¹
Net Interest Income
Spread - %²
Gain/(loss) with volume
Gain/(loss) with spread
Gain/(loss) with volume and spread
(1) Average Balances
(2) Net interest income/ (Earning Assets)
81 - Banco do Brasil – MDA 4Q09
2008
351,967
24,515
6.9650
2009
496,841
33,060
6.6540
Abs. Chg.
144,875
8,545
(0.3110)
34,605
23,420
10,091
(1,095)
(451)
Spread
In annualized rates, the global spread (NII over average Earning Assets) ended 4Q09 at 6.7%, keeping
the same level observed in the previous quarter and below the 7.2% observed in 4Q08. In the
comparison between annual flows, the spread also exhibited reduction, from 7.0% in 2008 to 6.7% in
2009.
In 2009 many factors affected the global spread of Banco do Brasil, including:
The consolidation of Banco Nossa Caixa, which, as it has an expressive base of low-cost deposits
(judicial deposits), presented a higher spread than that of BB;
The decrease of the basic interest rate, which reduced the remuneration of the own securities
portfolio;
The change in the loan portfolio mix, with an increase of the relative share of operations with lower
associated risk, and therefore, lower spread (such as payroll loans and vehicle financing);
The consolidation of the interest of 50% in the capital of Banco Votorantim, which presents a lower
global spread than that of Banco do Brasil, as it does not have a base of low-cost deposits and
operates in segments characterized by lower risk and therefore, lower spread;
7.2
1Q08
7.2
2Q08
7.0
3Q08
7.3
7.2
4Q08
6.6
6.7
6.7
1Q09
2Q09 3Q09
4Q09
7.0
2008
6.7
2009
NII / (Earning Assets) – Annualized
Figure 38. NIM Analysis
Table 65. Margin, Net of Interest and Profit Margin
R$ million
Average Earning Assets (AEA)
Average I nterest Bearing Liabilities (AIBL)
Net Interest Gain (1)
Interest Income
Interest Expense
Net Interest Income Other Items (2)
NII
AIBL / AEA – %
Interest Rat e on AEA (3) (7)- %
Interest Rat e on AIBL (4) (7)- %
Net Interest Rate (5) - %
Adjusted NI M (6) (7) - %
NIM (7) – %
4Q08
401,191
343,133
6,132
19,366
(13,234)
946
7,077
85.5
20.8
16.3
4.4
6.3
7.2
3Q09
508,688
436,434
7,883
15,528
(7,645)
437
8,320
85.8
12.8
7.2
5.6
6.3
6.7
4Q09
567,049
493,843
8,533
17,161
(8,628)
735
9,268
87.1
12.7
7.2
5.5
6.2
6.7
2008
351,967
298,703
22,018
55,625
(33,607)
2,496
24,515
84.9
15.8
11.3
4.6
6.3
7.0
2009
496,841
430,224
30,606
62,549
(31,943)
2,454
33,060
86.6
12.6
7.4
5.2
6.2
6.7
(1) Defined as interest income less interest expenses.
(2) Contains derivatives, debt assumption contracts, foreign exchange portfolio, recovery of write-offs, gold loans, credit guarantor fund, foreign
exchange gain/loss abroad and other income of a financial intermediation nature
(3) Total interest income divided by the average balance of assets generating income.
(4) Total interest expenses divided by the average balance of liabilities generating expenses.
(5) Difference between interest rate on AEA and interest rate on AIBL
(6) Net interest gain divided by the average earning assets
(7) Taxes are annualized
82 - Banco do Brasil – MDA 4Q09
7.2 Analysis of Investments
Loan and Lease Operation Revenues, disregarding recovery of write-offs, reached R$ 11,530 million in
4Q09, a growth of 12.7% in relation to 3Q09, and of 6.9% in relation to the same period of previous
year.
Disregarding the effect of exchange variation on operations under the terms of CMN Resolution 2770,
these revenues amounted to R$ 11,609 million, with expressive growth both in the quarterly comparison
and in relation to 4Q08, de 13.1% and 21.6% respectively.
Table 66. Revenues from Loans Net of Exchange Impact (Res. 2,770)
Quarterly Flow
R$ million
Loans and Leasing Revenues – Average Balance *
Loans and Leasing Revenues
FX Impact in Loan Portfolio (Res. 2,770)
Loans and Leasing Rev. before FX Impact (Res. 2,770)
Annualized Interest Rate
4Q08
199,332
10,788
1,245
9,543
20.6
3Q09
238,008
10,231
(38)
10,269
18.4
Chg. %
Annual Flow
4Q09 On 4Q08On 3Q09
275,174
38.0
15.6
11,530
6.9
12.7
(79)
107.9
11,609
21.6
13.1
18.0
-
2008
176,747
33,106
1,487
31,619
17.9
Chg. %
2009 On 2008
236,124
33.6
40,244
21.6
(835)
41,078
29.9
17.4
-
* Recovery of write-offs are not considered
Spread by Portfolio
The spread of loans contracted by Individual customers ended the quarter at 18.6%, as opposed to
20.6% in the previous quarter and 21.6% in 4Q08. The downslide observed since 2008 is a result of
alterations in the loan portfolio, with an increase of concentration in operations of lower spread, with an
emphasis on payroll loans and vehicle financing. In 4Q09 the consolidation of Votorantim intensified this
movement, as its individual customer loan portfolio is concentrated precisely in these two credit lines.
Operations with Business customers maintained the spread of 7.4% observed in the previous quarter, a
rate 10 base points higher than that observed in the same period of 2008. The spread of agribusiness
transactions exhibited recovery in the quarter, and reached 5.3%.
22.0%
21.6%
20.5%
21.2%
20.6%
18.6%
21.0%
18.7%
6.6%
7.3%
7.2%
7.5%
7.4%
7.4%
6.7%
5.2%
5.6%
5.9%
5.5%
4.9%
5.3%
5.1%
3Q08
4Q08
1Q09
Individuals
Figure 39. NIM by Loan Portfolio
83 - Banco do Brasil – MDA 4Q09
2Q09
3Q09
Businesses
4Q09
2008
Agribusiness
7.2%
5.3%
2009
Results with securities
The result with securities and short-term interbank investments totaled R$ 5,321 million in 4Q09, a sum
4.7% higher than that recorded in the previous quarter, but 34.3% lower in relation to that observed in
the same period of 2008. The recovery of revenues resulted from the trading of securities, besides the
increase of revenues provided by the consolidation of Banco Votorantim, merit special emphasis in the
quarter .
The downslide of these revenues in the annual comparison results from the reductions organized by the
Central Bank in the basic interest rate (SELIC) and from the currency appreciation observed in 4Q09 in
relation to the closing of 3Q09 and 4Q08. As explained previously, the fluctuations in the exchange rate
impact the different lines that constitute the margin, but without an effect on the Bank's net income.
Table 67. Securities Income
Quarterly Flow
R$ million
Securities Income
Fixed Income Securities
Revaluation – Curve
Income/Loss from Negotiation
Mark to Market
Interbank Accounts
Foreign Income
Others
4Q08
8,097
8,074
2,755
21
356
2,808
2,134
23
3Q09
5,083
5,075
2,314
16
(107)
2,852
0
8
Chg. %
Annual Flow
4Q09
On 4Q08 On 3Q09
5,321
(34.3)
4.7
5,256
(34.9)
3.5
2,392
(13.2)
3.4
102
381.4
529.9
(191)
79.1
2,951
5.1
3.5
2
(99.9)
3,638.6
66
188.8
743.4
2008
20,496
20,452
8,775
(84)
376
7,655
3,731
44
Chg. %
2009
On 2008
21,350
4.2
4.0
21,262
9,113
3.9
290
(238)
12,095
58.0
2
(99.9)
87
100.0
The figure below presents the classification of BB's portfolio of securities by type of index. The
classification below includes the portfolio of securities of Banco Nossa Caixa, but does not include the
information of Banco Votorantim.
0.0%
0.4%
2.0%
0.3%
22.3%
75.0%
Floating
Fixed
TR
Figure 40. Securities Portfolio by Index (Multiple Bank)
84 - Banco do Brasil – MDA 4Q09
Dollar
IGP-M
IPCA
Table 68. Avg Balance of the BS accounts and info. on interest rates - Earning assets (quarterly)
3Q09
R$ million
Average
Balance
Earning Assets
Available Funds in Foreign Currency
Securities + Interbank Investments on Hedge
Loans + Leasing
Remunerated Compulsory Deposits
Total
Non Earning Assets
Tax Credits
Other Assets
Permanent Assets
Total
TOTAL ASSETS
574
256,256
238,008
13,851
508,688
Interest
0
5,083
10,231
213
15,528
4Q09
Annualized
Rate (%)
0.2
8.2
18.3
6.3
12.8
Average
Balance
913
278,835
275,174
12,128
567,049
21,429
73,461
20,220
115,110
22,325
79,939
24,327
126,591
623,798
693,640
Interest
Annualized
Rate (%)
96
5,321
11,530
214
17,161
49.1
7.9
17.8
7.3
12.7
Table 69. Avg Balance of the BS accounts and info. on interest rates - Earning assets (annual)
2008
R$ million
Average
Balance
Earning Assets
Available Funds in Foreign Currency
Securities + Interbank Investments on Hedge
Loans + Leasing
Remunerated Compulsory Deposits
Total
Non Earning Assets
Tax Credits
Other Assets
Permanent Assets
Total
TOTAL ASSETS
85 - Banco do Brasil – MDA 4Q09
1,028
154,383
176,747
19,809
351,967
Interest
113
20,496
33,106
1,910
55,625
2009
Annualized
Rate (%)
11.0
13.3
18.7
9.6
15.8
Average
Balance
633
247,751
236,124
12,332
496,841
14,619
57,394
7,881
79,894
20,525
75,309
19,824
115,658
431,860
612,499
Interest
139
21,350
40,244
816
62,549
Annualized
Rate (%)
22.0
8.6
17.0
6.6
12.6
7.3 Analysis of Funding
The average balance of the Interest Bearing Liabilities rose R$ 493,843 million in the 4Q09, growth of
13.2% in relation to the same period of previous year. In spite of the slight reduction in the average cost
of borrowings (from 7.19% in 3Q09 to 7.17% in 4Q09), the expansion of volumes determined growth of
12.9% in expenses with interest in the period.
Money Market Borrowings increased their relative share among Average Interest Bearing Liabilities from
26.8% in 3Q09 to 29.5% in 4Q09. The increase of volume, associated with the growth of the annualized
rate of these operations, resulted in the increase of R$ 636 million in the interest expenses associated
with this instrument, or 26.1%. Money Market Borrowing accounted for 64.7% of the increase of interest
expenses in the period.
The consolidation of Banco Votorantim largely explains the increase in interest expenses observed in
the quarter. If the consolidation did not exist, in addition to the reduction in financial expenses, there
would also be a reduction in the Average Interest Bearing Liabilities. This happened because BB's
funding mix exhibits a higher concentration of low-cost deposits than that observed in the balance sheet
of Banco Votorantim, which recorded an average rate of 9.0% on interest-bearing liabilities in 4Q09.
Table 70. Avg Balances of the BS accounts and info. on int rates – Int.Bearing Liabilities (quarterly)
3Q09
R$ million
Average
Balance
Interest Bearing Liabilities
Saving Deposits
Interbank Deposits
Time Deposits
Money Market Borrowing
Foreign Borrowing
Onlending
Financial and Development Funds + Subordinated Debt
Foreign Securities Borrowing
Mortgage-backed Security
Total
Other Liabilities
Demand Deposits
Other Liabilities
Shareholder’s Equity
Total
TOTAL LIABILITIES
86 - Banco do Brasil – MDA 4Q09
71,552
10,033
184,537
116,849
4,708
26,408
18,977
3,064
308
436,434
Interest
(1,119)
(180)
(3,287)
(2,437)
(41)
(427)
(125)
(30)
(0)
(7,645)
4Q09
Annualized
Rate (%)
6.4
7.4
7.3
8.6
3.6
6.6
2.7
3.9
0.0
7.2
Average
Balance
49,955
104,782
32,627
187,364
74,062
10,403
197,014
145,679
6,775
30,346
21,771
6,520
1,273
493,843
52,430
112,108
35,259
199,797
623,798
693,640
Interest
(1,152)
(163)
(3,451)
(3,073)
(60)
(539)
(118)
(53)
(18)
(8,628)
Annualized
Rate (%)
6.4
6.4
7.2
8.7
3.6
7.3
2.2
3.3
5.8
7.2
Like in the quarterly view, in 2009 there was a reduction of the annualized average rate in relation to the
same period of 2008. However, there was strong expansion in the average balance of these liabilities,
which explains the growth of interest expenses in the period.
Table 71. Avg Balances of the BS accounts and info. on int rates – Int.Bearing Liabilities (annual)
2008
R$ million
Average
Balance
Interest Bearing Liabilities
Saving Deposits
Interbank Deposits
Time Deposits
Money Market Borrowing
Foreign Borrowing
Onlending
Financial and Development Funds + Subordinated Debt
Foreign Securities Borrowing
Mortgage-backed Security
Total
Other Liabilities
Demand Deposits
Other Liabilities
Shareholder’s Equity
Total
TOTAL LIABILITIES
87 - Banco do Brasil – MDA 4Q09
50,347
6,776
111,240
91,309
3,704
19,690
13,119
2,381
136
298,703
Interest
(3,868)
(432)
(10,582)
(9,825)
(6,915)
(1,282)
(487)
(215)
(33,607)
2009
Annualized
Rate (%)
7.7
6.4
9.5
10.8
186.7
6.5
3.7
9.0
11.3
Average
Balance
68,410
10,269
179,790
115,837
5,405
27,519
18,622
3,833
540
430,224
43,307
63,013
26,838
133,158
48,397
101,319
32,559
182,275
431,860
612,499
Interest
(4,406)
(788)
(13,452)
(10,639)
(192)
(1,788)
(530)
(129)
(18)
(31,943)
Annualized
Rate (%)
6.4
7.7
7.5
9.2
3.5
6.5
2.8
3.4
3.4
7.4
7.4 Analysis of Volume and Spread
The table below shows the appropriation of changes in interest income and expenses due to the change
in the average volume of earning assets and interest bearing liabilities and the change in the average
interest rate on such assets and liabilities, in the periods under analysis.
The changes in volume and interest rate were calculated based on changes in average balances in the
period and the changes in the average interest rates on assets generating income and liabilities
generating expenses. The Average Rate variation was calculated by the variation in the interest rate in
the period multiplied by the average quantity of assets generating income or by the average quantity of
liabilities generating expenses in the first period. The Net Variation is the difference between the interest
income of the present period and that of the previous period. The variation by Average Volume is the
difference between the Net Variation and that resulting from the Average Rate.
By analyzing the interest income that remunerated the earning assets in 4Q09, both in relation to the
previous quarter and in comparison with the same period of 2008, it is observed that the volume effect
has sustained the growth of these revenues over time. The growth of income resulting from the
expansion of volumes is being partially offset by the shrinkage of average rates.
The same movement can be observed in interest expenses. Interest expenses did not keep up with the
vigorous expansion of average liabilities in a proportionate manner, on account of the decline of the
annualized average rate, which ended 4Q09 at 7.2%, same level observed in 3Q09, but with a strong
reduction in relation to the 16.3% observed in 4Q08. We should again emphasize that, when we analyze
4Q09 in comparison with 4Q08, in the last quarter of 2008 there was a considerable volatility in the
exchange rate, which also inflated both financial intermediation income and expenses, hampering the
comparison of each line.
Table 72. Int. increase and decrease (Inc. and Exp.) due to changes in Volume and Rates (quarterly)
4Q09/3Q09
R$ million
Average
Average
Volume (1) Rate
(2)
Earning Assets
Available Funds in Foreign Currency
Securities + Interbank Investments on Hedge
Loans + Leasing
Remunerated Compulsory Deposits
Total
Interest Bearing Liabilities
Saving Deposits
Interbank Deposits
Time Deposits
Money Market Borrowing
Foreign Borrowing
Onlending
Financial and Development Funds + Subord. Debt
Foreign Securities Borrowing
Mortgage-backed Security
Total
(1)
(2)
(3)
4Q09/4Q08
Net
Change
(3)
Average
Average
Volume (1) Rate
(2)
36
431
1,557
(30)
1,766
60
(193)
(258)
32
(133)
96
238
1,299
1
1,634
(90)
1,819
3,178
(79)
5,020
127
(4,595)
(2,435)
(130)
(7,224)
37
(2,775)
743
(209)
(2,204)
(39)
(6)
(219)
(608)
(18)
(70)
(15)
(28)
(14)
(1,003)
5
22
55
(28)
(0)
(43)
22
5
(4)
20
(34)
17
(164)
(637)
(19)
(113)
7
(23)
(18)
(983)
(314)
(11)
(924)
(1,157)
(18)
(146)
(42)
(25)
(15)
(2,633)
347
(15)
1,653
814
4,312
40
40
70
(3)
7,239
33
(26)
729
(342)
4,293
(106)
(2)
45
(18)
4,606
Net Change - Average Rate
((Interest Current Period / Balance Current Period) x Balance Previous Period) - (Interest Previous Period)
Current Interest - Interest for Previous Period
88 - Banco do Brasil – MDA 4Q09
Net
Change
(3)
The annual analysis ratifies the perception that the growth of the financial margin is based on the
expansion of the Bank's business. The average volume effect, mainly the growth of loan operations, has
brought about constant growth of financial income. On the other hand, these earnings are being partially
annulled by the reduction of average rates.
Table 73. Int. increase and decrease (Inc. and Exp.) due to changes in Volume and Rates (annual)
2009/2008
R$ million
Average Volume (1)
Average Rate (2)
Net Change (3)
Earning Assets
Available Funds in Foreign Currency
Securities + Interbank Investments on Hedge
Loans + Leasing
Remunerated Compulsory Deposits
Total
(87)
8,046
10,120
(495)
18,239
113
(7,192)
(2,983)
(599)
(11,315)
26
854
7,137
(1,094)
6,924
Interest Bearing Liabilities
Saving Deposits
Interbank Deposits
Time Deposits
Money Market Borrowing
Foreign Borrowing
Onlending
Financial and Development Funds + Subord. Debt
Foreign Securities Borrowing
Mortgage-backed Security
Total
(1,163)
(268)
(5,129)
(2,253)
(60)
(509)
(157)
(49)
(14)
(9,765)
625
(88)
2,259
1,439
6,784
3
114
135
(5)
11,429
(538)
(356)
(2,870)
(814)
6,724
(506)
(43)
86
(18)
1,664
(1)
(2)
(3)
Net Change - Average Rate
((Interest Current Period / Balance Current Period) x Balance Previous Period) - (Interest Previous Period)
Current Interest - Interest for Previous Period
89 - Banco do Brasil – MDA 4Q09
7.5 Provision for Credit Risk
The analysis of the provision for losses included in this chapter already takes into account the figures of
Banco Nossa Caixa and Banco Votorantim.
Table 74. Net Financial Margin
Quarterly Flow
R$ million
Net Interest Income
Allowance for Loan Losses
Net Financial Margin
4Q08
7,077
(2,240)
4,837
3Q09
8,320
(3,017)
5,303
Chg. %
Annual Flow
4Q09
On 4Q08 On 3Q09
9,268
31.0
11.4
(2,950)
31.7
(2.2)
6,318
30.6
19.1
2008
24,515
(6,799)
17,716
Chg. %
2009
On 2008
33,060
34.9
(11,629)
71.1
21,431
21.0
The net financial margin is obtained by deducting expenses with allowances for loan losses from the net
interest income. During 4Q09, Allowance for Loan Losses, even considering the balance in BV (R$
143.7 million) declined by 2.3%, reflecting the general improvement in the economy in the course of
2009. The improved net interest income is explained above all by the rise in financial intermediation
revenues resulting from the inclusion of BV's income figures, which fact added close to R$ 620 million to
that item.
In a 12-month comparison, the increase seen in the Allowance for Loan Losses is explained by the loan
portfolio's expansion (33.8%), the rising default levels owing to world economic issues, and expenses
occurred in BV and BNC.
The ratio between expenses of provisions and the average total portfolio - both accumulated in 12
months - went from 3.6% in 4Q08 to 4.6% in 4Q09. During 4Q09, the relation between quarterly
provisioned expenses and the average loan portfolio for the period was below that witnessed for the
preceding quarter, and stood at 1.0%, the same level as on December 2008.
Table 75. Allowance for Loan Losses Expenses over Portfolio
R$ million
(A) Allowance for Loan Losses - Quarterly
(B) Allowance for Loan Losses - 12 Months
(C) Loan Portfolio
(D) Average Portfolio – 3 Months
(E) Average Portfolio – 12 Months
Expenses over Portfolio (A/D) - %
Expenses over Portfolio (B/E) - %
90 - Banco do Brasil – MDA 4Q09
1Q08
(1,534)
(5,483)
172,760
166,928
153,211
2Q08
(1,687)
(5,934)
190,082
185,059
162,928
3Q08
(1,338)
(6,056)
202,201
195,431
174,161
4Q08
(2,240)
(6,800)
224,808
218,626
189,144
1Q09
(2,491)
(7,757)
228,101
225,528
203,591
0.9
3.6
0.9
3.6
0.7
3.5
1.0
3.6
1.1
3.8
2Q09
3Q09
4Q09
(3,172)
(3,017)
(2,950)
(9,241) (10,919) (11,629)
252,485 265,019 300,829
246,363 257,948 282,405
219,071 234,430 250,888
1.3
4.2
1.2
4.7
1.0
4.6
The figure below details the allowance for loan losses, segregating the minimum provisions required by
CMN Resolution 2,682/99 from the total booked. A decrease can be observed in the volume of
provisions required, which dropped from R$ 16,167 million in September 2009 to R$ 15,835 million in
December 2009.
The Total Provision (Required + Additional) also presented decrease (2.4%) in relation to 3Q09, in line
with the improvement of the Brazilian economy. Yet in 12 months, growth was of 36.2%, explained
chiefly by the loan portfolio's growth (33.8%).
Without the BV effect, growth would have been of 31.2% in 12 months, a 3.7% decline as compared to
September 2009.
R$ million
12,079
13,034
14,892 16,167 15,835
Sep/08 Dec/08
Mar/09
Jun/09
Required Provision
91 - Banco do Brasil – MDA 4Q09
2,903
1,640
719
10,468
Figure 41. Allowances Breakdown
2,867
18,617
1,594
10,694
1,090 857
9,604 10,308
Jun/08
19,070
14,674
11,187
Mar/08
17,759
13,673
11,165
Additional Provision
2,782
Sep/09 Dec/09
Total Provision
The loan portfolio's risk level in December 2009 improved if compared to September 2009, 91.6% of
transactions were rated at the AA-C risk level, against 91.0% on September 2009 and 90.7% on
December 2008. Transactions rated at the AA-C level in the Brazilian Banking Industry ended
December 2009 at 91.0%, a level below those witnessed at BB.
Table 76. Loan Portfolio by Level of Risk
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Balance
63,828
42,669
73,028
24,404
8,157
2,985
1,237
1,421
7,079
Dec/08
Provision Share %
28.4
213
19.0
730
32.5
732
10.9
816
3.6
896
1.3
619
0.6
995
0.6
7,079
3.1
Balance
69,787
91,274
74,219
24,543
8,964
3,063
1,655
1,413
10,601
Sep/09¹
Provision Share %
24.4
456
32.0
742
26.0
736
8.6
896
3.1
919
1.1
827
0.6
989
0.5
10,601
3.7
Balance
75,508
95,115
79,428
25,449
9,073
2,943
1,715
1,480
10,118
Dec/09¹
Provision Share %
25.1
476
31.6
794
26.4
763
8.5
907
3.0
883
1.0
857
0.6
1,036
0.5
10,118
3.4
BI²
20.7
43.7
17.9
8.6
2.5
1.1
0.9
0.6
3.8
224,808
12,079
100.0
285,517
16,167
100.0
300,829
15,835
100.0
100.0
203,928
20,879
1,676
10,403
90.7
9.3
259,822
25,695
1,935
14,233
91.0
9.0
275,500
25,329
2,033
13,802
91.6
8.4
91.0
9.0
¹ Banco Nossa Caixa and Banco Votorantim are included
² Prior data from December/2009.
The average loan portfolio risk, considering the required provisions, was of 5.3% in December 2009, 40
base points below that witnessed in September 2009, in line with the December 2008 level (date of the
worsening world financial and economic crisis) of 5.4% at BB.
The past due loans + 15 days of the loans portfolio amounted to R$ 15,457 million, reaching 5.1% of the
total portfolio in Dec/09. The past due loans + 60 days reached 3.7%, 90 basis points above that
observed in December 2008. The past due loans + 90 days reached 3.3%, lower than the 3.6%
recorded in September 2009 and the 4.4% presented by the Brazilian Banking Industry.
92 - Banco do Brasil – MDA 4Q09
Table 77. Delinquency Ratio
R$ million
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09¹
3Q09³
4Q09
Loan Portfol io
172,760
7,574
4.4
190,082
7,089
3.7
202,201
7,414
3.7
224,808
9,019
4.0
228,101
10,819
4.7
252,485
14,177
5.6
285,517
19,625
6.9
300,829
20,381
6.8
Past Due Loans + 15 days
Past Due Loans + 15 days/Loan Portfolio
7,521
4.4
6,899
3.6
7,376
3.6
8,951
4.0
10,692
4.7
13,204
5.2
16,571
5.8
15,457
5.1
Past Due Loans + 60 days
Past Due Loans + 60 days/Loan Portfolio
4,907
2.8
5,323
2.8
5,234
2.6
6,267
2.8
7,450
3.3
9,485
3.8
11,838
4.1
11,192
3.7
Past Due Loans + 90 days
4,164
2.4
4,689
2.5
4,471
2.2
5,305
2.4
6,197
2.7
8,299
3.3
10,399
3.6
9,783
3.3
1,164
(422)
742
1.7
1,316
(425)
891
1.9
1,342
(400)
941
1.9
1,229
(467)
763
1.4
1,606
(357)
1,250
2.2
1,888
(802)
1,086
1.7
2,377
(686)
1,691
2.4
3,402
(847)
2,555
3.4
10,694
6.2
142.2
217.9
256.8
11,165
5.9
161.8
209.8
238.1
11,187
5.5
151.7
213.8
250.2
13,673
6.1
152.8
218.2
257.7
14,674
6.4
137.2
197.0
236.8
17,759
7.0
134.5
187.2
214.0
19,070
6.7
115.1
161.1
183.4
18,617
6.2
120.4
166.3
190.3
Loans overdue
Past Due Loans/ Loan Portf olio
Past Due Loans + 90 days/Loan Portfolio
Write-of f
Recovery of Writ e-of fs²
Net Loss
Net Loss/Loan Portfolio - % annualized
Provision
Allowance/Loan Port folio
Allowance/Past Due Loans + 15 days - %
Allowance/Past Due Loans + 60 days - %
Allowance/Past Due Loans + 90 days - %
¹ Considers BNC.
² Considers credit assignment for R$ 271 million on 2Q09, R$ 119 million on 3Q09 and R$ 242 million on 4Q09.
³ Considers BV.
The previous table shows numbers sensitized by BV’s figures. In the 4Q09, excluding BV´s effects,
increase of the past due of loan portfolio would be at 6.6%, 280 basis points above that of December
2008. The volume in the past due loans + 15 would total R $ 13,573 million, reaching 4.9% on 4Q09.
The past due loans + 60 days was 3.7%, 90 basis points above that of December 2008. The past due
loans + 90 days would be 3.3% higher than the 2.4% observed in December 2008.
The net loss in 4Q09 was impacted by R$ 141.0 million from BV of which R$ 158.9 refer to write-offs
and $ 17.9 million referred to recovery.
The following graph shows the monthly behavior of delinquency rates in Banco do Brasil's domestic loan
portfolio, without Banco Nossa Caixa and Banco Votorantim, of the past due loans + 15 and + 90. This
graph shows us that the delinquency peak took place in August 2009, a change in the growth trend for
December 2009.
6.3
5.9
5.2
5.2
5.3
6.0
6.2
5.9
5.6
5.5
5.1
4.0
2.9
3.0
3.1
5.9
3.2
3.5
3.6
3.9
3.6
3.9
3.6
3.5
Jan/09 Feb/09 Mar/09 Apr/09 May/09 Jun/09 Jul/09 Aug/09 Sep/09 Oct/09 Nov/09 Dec/09
ICRED_15
Figure 42. Past due Loans + 15 and 90 days
93 - Banco do Brasil – MDA 4Q09
ICRED_90
The graph below shows the relation between the required provision by the past due loans + 90 of the
Bank and of the Banking Industry. In comparison with the Banking Industry (BI), it can be observed that
the Bank has a level of provision required that is more than sufficient to cover the past due loans + 90.
Considering the total allowance (required + additional), the past due loans + 90 allowance coverage rate
ended December 2009 at 173.8%.
234.1
230.6
227.7
219.8
177.3
210.3
186.1
171.5
170.0
175.8
179.4
163.5
155.5
Mar/08
Jun/08
Sep/08
Dec/08
90 Days BB
Mar/09
Jun/09
162.2
Sep/09
173.8
156.1
Dec/09
90 Days BI
Figure 43. Allowance/Past Due Loans +90 days – BB x BI (%)
With the improvement of conjectural indicators of Brazilian economy, the allowance balance decreased
in December 2009 in relation to September 2009. The decline of the average risk in BB was of 40 base
points from September 2009 to December 2009, as against the 30 base point decline in the Banking
Industry, as found in the table below:
Table 78. Average Portfolio Risk
Sep/08
Average Risk BB
Average Risk BI
94 - Banco do Brasil – MDA 4Q09
Dec/08
5.2
5.1
Mar/09
5.4
5.3
Jun/09
5.7
6.6
Sep/09
5.9
7.2
Dec/09
5.7
7.2
5.3
6.9
7.5.1 Retail Loan Portfolio
During this quarter the retail loan portfolio was reorganized. The small and micro enterprises portfolio
(SMEs) was segregated from retail business and shown separately in a specific chapter (chap. 7.5.2).
Hence, the retail portfolio now consists practically of operations with individuals, without taking into
consideration the balance of transactions arising from the takeover of BNC and the partnership with BV.
The Retail Loan Portfolio grew 32.5% in Dec/09 in relation to the same period in the previous year and
8.6% in relation to September 2009. The operations with the largest impact on this result were
Consumer lending (CDC) and Vehicle Financing in the Individual client segment, with increase of 36.8%
and 40.8% in the Dec-08/Dec-09 period, respectively.
Another factor that contributed towards the growth of the portfolio in the individual segment were the
portfolio acquisitions. In the period, only BB (without the consolidation of the figures of BNC and BV)
holds a balance of purchased portfolio of R$ 3,003 million in payroll loan portfolios and R$ 2,668 million
in vehicle financing portfolios.
Table 79. Retail Loan Portfolio by Level Risk
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Dec/08
Balance
Provision
124
3,706
19
24,266
243
12,858
386
2,753
275
685
206
416
208
392
275
2,123
2,123
Share
0.3
7.8
51.3
27.2
5.8
1.4
0.9
0.8
4.5
Sep/09
Balance
Provision
124
23,684
118
20,003
200
8,946
268
1,558
156
472
142
382
191
332
233
2,236
2,236
Share
0.2
41.0
34.6
15.5
2.7
0.8
0.7
0.6
3.9
Dec/09
Balance
Provision
174
26,056
130
21,666
217
9,640
289
1,561
156
511
153
411
206
335
235
2,345
2,345
Share
0.3
41.6
34.6
15.4
2.5
0.8
0.7
0.5
3.7
47,323
3,733
100.0
57,737
3,544
100.0
62,700
3,732
100.0
40,955
6,369
647
3,086
86.5
13.5
52,756
4,981
587
2,957
91.4
8.6
57,535
5,165
636
3,095
91.8
8.2
BNC and BV are not considered
95 - Banco do Brasil – MDA 4Q09
The retail portfolio's average risk in December 2009 declined 10 basis points against the figure recorded
in September 2009, and 190 above the same period in 2008. The movement of Allowance for Loan
Losses of the retail portfolio is detailed in the table below:
Table 80. Changes in the Allowance – Retail
R$ million
Retail Loan Portfolio
Initial Allowance
1 - Risk Migration
a) Risk Deterioration
b) Risk Improvement
2 – New Transactions
3 – Write-offs
Total (1 + 2 + 3):
Other Impacts*
Final Allowance**
Allowance Required by CMN Resolution 2,682
Provision Flow - R$ million
a) Added Provision
b) Provision Expenses
Provision / Portfolio - %
Provision Flow / Portfolio - %
3Q08
41,320
2,865
4Q08
47,323
3,127
1Q09
49,864
3,733
2Q09
53,756
3,885
3Q09
57,737
3,511
4Q09
62,700
3,544
394
953
(559)
290
(525)
677
1,228
(551)
272
(487)
751
1,153
(402)
561
(624)
1,109
1,292
(183)
533
(754)
394
1,240
(845)
245
(883)
485
1,292
(807)
259
(799)
159
103
461
145
688
(536)
888
(1,262)
(244)
277
(55)
242
3,127
3,127
262
3,733
3,733
606
3,885
3,885
152
3,511
3,511
(374)
3,544
3,544
33
3,732
3,732
987
7.6
0.6
7.9
1.3
7.8
0.3
6.5
(0.7)
6.1
0.1
987
6.0
1.6
* Amortization, settlement, release of installments and debit from charges.
Does not consider Banco Nossa Caixa and Banco Votorantim operations.
Vintage
We present the vintage of the individual loan portfolio in the graphs below. This methodology, known
abroad as Vintage, affords greater detailing and closer to the portfolio than traditional indicators.
Vintage makes possible to monitor how the default of the set of operations contracted in a particular
period behaves over time. In the first graph, for example, the monitoring is performed in the quarterly
view. The lines show how the delinquency of operations contracted in each quarter behaved in the
subsequent periods. The longer lines, therefore, refer to the oldest monitoring period.
In the case of the graphs below, we consider operations overdue for more than 90 days at default, and
for determination of the loan portfolio for individual clients, the Overdraft accounts and Credit Card
operations and Vehicle financing do not appear in these graphs.
The monitoring shows how the operations contracted most recently present a more favorable default
curve than those contracted at the beginning of the monitoring. This result mirrors the constant
optimization in the credit analysis, concession and monitoring models.
96 - Banco do Brasil – MDA 4Q09
Delinquency 90 days
Months
crop
Figure 44. Quarterly Vintage
Delinquency 90 days
The second graph contains the vintage with annual periodicity, facilitating the viewing and interpretation
of data. The changing curve for the 2004 crop resulted from credit assignments.
Months
crop
Figure 45. Annual Vintage
97 - Banco do Brasil – MDA 4Q09
In the graphs below, we added detailing of the vehicle financing portfolio, segmented by the operation
contracting origin: Arena I - operations contracted in the sphere of the Bank's branches; Arena II operations contracted in the sphere of associated vehicle dealerships.
Delinquency 90 days
In the graph below we emphasize the vehicle financing portfolio contracted by the Bank's branches:
Months
crop
Figure 46. Annual vintage - Vehicle Financing Portfolio - Arena I
Delinquency 90 days
In this graph we emphasize the vehicle financing portfolio contracted by automobile dealing companies:
Months
crop
Figure 47. Annual vintage - Vehicle Financing Portfolio - Arena II
98 - Banco do Brasil – MDA 4Q09
7.5.2 SMEs Loan Portfolio
Since the fourth quarter, we present the SMEs loan portfolio separately. Until 3Q09 this portfolio
appeared inside the Retail Portfolio. Foreign trade transactions by MSEs are not included in this
portfolio.
The SME loan portfolio rose by 30.2% over the last 12 months and 11.8% as against 3Q09. This
performance is explained by BB Giro Empresa Flex transactions which rose to R$ 8.4 billion, a 63.4%
rise if compared to 4Q08. By late December 2009, transactions rated as AA to C risk levels showed an
80 base-point improvement as compared to September 2009, and accounted for 90.1% of the portfolio's
total balance.
Table 81. Small and Micro Enterprise Loan Portfolio
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Dec/08
Balance
Provision
5,035
8,761
44
13,639
136
624
19
663
66
314
94
204
102
175
123
900
900
Share
16.6
28.9
45.0
2.1
2.2
1.0
0.7
0.6
3.0
Sep/09
Balance
Provision
5,107
13,847
69
11,662
117
919
28
969
97
417
125
230
115
287
201
1,874
1,874
Share
14.5
39.2
33.0
2.6
2.7
1.2
0.7
0.8
5.3
Dec/09
Balance
Provision
7,350
15,384
77
11,823
118
1,018
31
1,094
109
437
131
309
155
298
208
1,766
1,766
Share
18.6
39.0
29.9
2.6
2.8
1.1
0.8
0.8
4.5
30,316
1,484
100.0
35,311
2,625
100.0
39,478
2,595
100.0
28,060
2,256
199
1,285
92.6
7.4
31,534
3,776
213
2,412
89.3
10.7
71,606
127,828
5,190
10,304
90.1
9.9
BNC and BV operations are not considered
The following table details the changes in Allowance for Loan Losses for the SMEs businesses Portfolio:
Table 82. Changes in the Allowance – SMEs
R$ million
Retail Loan Portfolio
Initial Allowance
1 - Risk Migration
a) Risk Deterioration
b) Risk Improvement
2 – New Transactions
3 – Write-offs
Total (1 + 2 + 3):
Other Impacts*
Final Allowance**
Allowance Required by CMN Resolution 2,682
Provision Flow - R$ million
a) Added Provision
b) Provision Expenses
Provision / Portfolio - %
Provision Flow / Portfolio - %
BNC and BV operations are not considered
99 - Banco do Brasil – MDA 4Q09
3Q08
27,648
1,086
4Q08
30,316
1,221
1Q09
31,637
1,484
2Q09
33,294
1,792
3Q09
35,311
2,309
4Q09
39,478
2,625
184
440
(256)
219
(254)
279
592
(313)
154
(285)
366
765
(399)
137
(394)
580
1,017
(437)
213
(412)
387
951
(565)
200
(531)
65
899
(833)
183
(815)
149
(14)
148
115
109
198
381
137
56
260
(567)
537
1,221
1,221
135
1,484
1,484
263
1,792
1,792
308
2,309
2,309
518
2,625
2,625
316
2,595
2,595
(30)
4.4
0.5
4.9
0.9
5.7
1.0
6.9
1.6
7.4
0.9
6.6
(0.1)
7.5.3 Commercial Loan Portfolio
The corporate portfolio reflected growth of 8.8% in Dec/09 over Sep/09 and of 18.1% over Dec/08. The
business loan portfolio is strongly influenced by the entering into and settlement of operations in material
amounts with large clients. At the end of December 2009, operations classified at risk levels AA to C
exhibited a downslide of 30 basis points compared to September 2009, representing 96.2% of the total
Portfolio.
Table 83. Commercial Loan Portfolio by Level Risk
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Dec/08
Balance
Provision
25,677
9,871
49
10,897
109
977
29
637
64
112
34
38
19
48
34
166
166
Share
53.0
20.4
22.5
2.0
1.3
0.2
0.1
0.1
0.3
Sep/09
Balance
Provision
29,278
8,926
45
10,244
102
2,365
71
826
83
257
77
43
21
95
67
539
539
Share
55.7
17.0
19.5
4.5
1.6
0.5
0.1
0.2
1.0
Dec/09
Balance
Provision
33,006
8,940
45
11,123
111
1,929
58
1,266
127
158
47
89
44
85
60
593
593
Share
57.7
15.6
19.4
3.4
2.2
0.3
0.2
0.1
1.0
48,422
503
100.0
52,573
1,005
100.0
57,189
1,085
100.0
47,422
1,001
188
316
97.9
2.1
50,813
1,760
218
786
96.7
3.3
54,998
2,191
214
871
96.2
3.8
BNC and BV operations are not considered
The following table details the changes in Allowance for Loan Losses for the Commercial Portfolio.
Table 84. Changes in the Allowance – Commercial
R$ million
Commercial Loan Portfolio
Initial Allowance
1 - Risk Migration
a) Risk Deterioration
b) Risk Improvement
2 – New Transactions
3 – Write-offs
3Q08
44,336
391
4Q08
48,422
421
1Q09
48,367
492
2Q09
49,889
599
3Q09
52,573
838
4Q09
57,189
1,005
13
107
(93)
85
(54)
46
164
(118)
249
(63)
27
225
(198)
86
(60)
278
330
(53)
178
(74)
215
348
(133)
109
(75)
78
373
(295)
233
(180)
Total (1 + 2 + 3):
Other Impacts¹
44
(14)
232
(141)
52
54
382
(143)
249
(82)
132
(51)
Final Allowance
Allowance Required by CMN Resolution 2,682
Changes in the Provision - in R$ million
a) Additional Provision²
b) Provision Expense
Provision / Portfolio - %
421
421
84
492
492
135
599
599
167
838
838
312
1,005
1,005
242
1,085
1,085
260
84
0.9
0.2
17
118
1.0
0.3
167
1.2
0.3
312
1.7
0.6
242
1.9
0.5
260
1.9
0.5
Changes in the Provision - % of Portfolio
¹ Amortization, settlement, release of installments and debit from charges.
² Additional Provision allocated to the agribusiness loan portfolio
BNC and BV operations are not considered
100 - Banco do Brasil – MDA 4Q09
7.5.4 Agribusiness Loan Portfolio
The agribusiness portfolio grew 3% (Dec/08-Dec/09). In December 2009 the loans ranked at risk levels
AA-C accounted for 87.8% of the portfolio, 180 basis points higher than the number presented in
December 2008.
The relationship between the provisions required (CMN Resolution 2,682) and the balance of operations
went from 7.4% in 3Q09 to 7.0% in 4Q09, 40 base points below the results observed in 3Q09 and 50
base points above the results observed in 4Q08.
Table 85. Portfolio with and without Roll Over – Agribusiness
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Dec/08
Balance
Provision
13,835
13,807
69
19,323
193
7,779
233
3,661
366
1,384
415
385
192
673
471
2,844
2,844
Share
21.7
21.7
30.3
12.2
5.7
2.2
0.6
1.1
4.5
Sep/09
Balance
Provision
13,533
19,715
99
17,672
177
7,773
233
3,351
335
1,073
322
491
245
305
214
3,326
3,326
Share
20.1
29.3
26.3
11.6
5.0
1.6
0.7
0.5
4.9
Dec/09
Balance
Provision
11,402
18,826
94
18,926
189
8,414
252
3,210
321
1,040
312
411
205
355
249
2,987
2,987
Share
17.4
28.7
28.9
12.8
4.9
1.6
0.6
0.5
4.6
63,690
4,784
100.0
67,237
4,950
100.0
65,571
4,610
100.0
54,744
8,946
496
4,289
86.0
14.0
58,693
8,545
508
4,441
87.3
12.7
57,568
8,003
536
4,074
87.8
12.2
BNC and BV operations are not considered
The following table details the changes in Allowance for Loan Losses for the Portfolio Agribusiness.
Table 86. Changes in the Allowance – Agribusiness
R$ million
Agribusiness Loan Portfolio
Initial Allowance
1 - Risk Migration
a) Risk Deterioration
b) Risk Improvement
2 – New Transactions
3 – Write-offs
3Q08
60,524
4,665
4Q08
63,690
4,329
1Q09
63,492
4,784
2Q09
66,775
5,087
3Q09
67,237
5,042
4Q09
65,571
4,950
134
521
(387)
874
(395)
580
889
(309)
1,837
(217)
647
873
(226)
974
(357)
144
774
(631)
1,301
(288)
(142)
922
(1,064)
865
(527)
(315)
899
(1,214)
564
(944)
Total (1 + 2 + 3):
Other Impacts¹
613
(949)
2,201
(1,745)
1,264
(961)
1,156
(1,201)
196
(288)
(695)
355
Final Allowance
Allowance Required by CMN Resolution 2,682
Changes in the Provision - in R$ million
a) Additional Provision²
b) Provision Expense
Provision / Portfolio - %
4,329
4,329
58
4,784
4,784
673
5,087
5,087
660
5,042
5,042
244
4,950
4,950
435
4,610
4,610
604
99
(41)
7.2
(0.1)
282
391
7.5
0.6
660
8.0
1.0
(332)
576
7.6
0.9
435
7.4
0.6
604
7.0
0.9
Changes in the Provision - % of Portfolio
(1)Amortization, settlement, release of installments and charge debt
(2)Additional Provision allocated to the agribusiness loan portfolio
BNC and BV operations are not considered
The average risk of the portfolio is strongly influenced by the operations of 2005 to 2007 crop extended
with total balance of R$ 11,743 million. In the following table, the Agribusiness Loan Portfolio is divided
in extended and unextended operations.
101 - Banco do Brasil – MDA 4Q09
Table 87. Portfolio with and without Roll Over - Agribusiness
Portfolio Without Roll Over
AA
A
B
C
D
E
F
G
H
10,346
17,940
16,484
5,765
1,620
345
158
152
1,098
Allowance
for Loan
Losses
90
165
173
162
103
79
106
1,098
Total
53,908
1,976
Balance
Risk
Portfolio with Roll Over
236¹
0
7
13
80
70
52
612
-
1,056
937
2,472
2,648
1,590
695
253
204
1,889
Allowance
for Loan
Losses
5
25
79
159
209
126
143
1,889
834
1.5
11,743
2,635
Past Due_90
Past Due 90/
Ballance²
Balance
Past Due_90
Past Due 90/
Ballance²
33¹
4
41
140
93
75
690
-
1,044
8.9
(1) Overdue operations at level AA refer to credit with third party risk
(2) The delay resulting from overdue operations with third party risk was not included in the calculation of the rate
According to the table above, transactions overdue for more than 90 days represent 1.5% of the total
unextended portfolio. If we compare this indicator to the extended operations, there is a gap of only 740
basis points.
In the table below we present the balances, rate of default 90 days and average risk of the agribusiness
portfolio segmented in total portfolio, extended and not extended.
102 - Banco do Brasil – MDA 4Q09
Table 88. Rates of the Agribusiness Portfolio
R$ million
Loan Portfolio
Provision
Past Due Loans + 90 days
Past Due Loans + 90 days/Loan Portfolio - %
Allowance/Loan Portfolio - %
Write-Off
Extended Operati ons – BB Risk + Third Parties
Provision
Past Due Loans + 90 days
Transactions overdue + 90 days/Total Portfolio (%)
Provision/Extended Operations - %
Write-Off
Unextended Operati ons – BB Risk + Third Parties
Provision
Past Due Loans + 90 days -%
Transactions overdue + 90 days/Unextended operations - %
Provision/Unextended Operations - %
Write-Off
Extended Operati ons – BB Risk
Provision
Past Due Loans + 90 days -%
Transactions overdue + 90 days/Unextended operations - %
Provision/Unextended Operations - %
Write-Off
Unextended Operati ons – BB Risk
Provision
Past Due Loans + 90 days -%
Transactions overdue + 90 days/Unextended operations - %
Provision/Unextended Operations - %
Write-Off
Simulation Operations not Extended without drag effect of Extended Operations
a- BB Risk + Third Parties
b- Provision
Average Risk (b/a)
c- BB Risk
d- Provision
Average Risk (d/c)
4Q08
63,691
4,785
877
1.4
7.5
217
1Q09
63,492
5,087
1,174
1.8
8.0
357
2Q09
66,775
5,042
1,786
2.7
7.6
288
3Q09
4Q09
67,237 65,651
4,950
4,611
2,588
2,146
3.8
3.3
7.4
7.0
527
944
14,445
2,598
259
1.8
18.0
93
14,684
2,755
377
2.6
18.8
177
14,648
2,711
738
5.0
18.5
127
14,278
2,939
1,401
9.8
20.6
371
11,743
2,635
1,076
9.2
22.4
733
49,246
2,186
619
1.3
4.4
124
48,807
2,336
797
1.6
4.8
180
52,127
2,331
1,047
2.0
4.5
162
52,959
2,011
1,187
2.2
3.8
156
53,908
1,976
1,070
2.0
3.7
211
13,102
2,598
259
2.0
19.8
93
13,366
2,755
377
2.8
20.6
177
13,431
2,711
738
5.5
20.2
127
13,077
2,939
1,401
10.7
22.5
371
10,951
2,635
1,076
9.8
24.1
733
46,471
2,186
619
1.3
4.7
93
46,021
2,336
797
1.7
5.1
177
49,315
2,331
1,047
2.1
4.7
127
50,321
2,011
1,187
2.4
4.0
371
52,078
1,976
1,070
2.1
3.8
211
49.246
995
2.0
46.471
995
2.1
48,807
1,093
2.2
46,021
1,093
2.4
52,127
1,243
2.4
49,315
1,243
2.5
52,959
1,209
2.3
50,321
1,209
2.4
53,908
1,219
2.3
52,078
1,219
2.3
In the rate calculation, the delay resulting from overdue operations with third party risk was included in the calculation of the rate
BNC and BV operations are not considered
The average risk of the extended operations in 4Q09 grew 160 base points, from 22.5% in 3Q09 to
24.1% in 4Q09.
CMN Resolution 2682/99, which regulates risk classification and the creation of allowance for loan
losses, establishes the maintenance of risk of the operations renegotiated at the same risk level
identified at the time of renegotiation. As a result of these rules, renegotiated transactions increased the
loan portfolio's average risk.
A simulation performed with BB risk transactions, after removing the drag effect caused by extended
loans, shows that there would be a 3.8% to 2.3% decline in average risk in 4Q09.
103 - Banco do Brasil – MDA 4Q09
In the agribusiness portfolio without extensions, R$ 1.83 billion refers to third-party risk transactions.
Disregarding these operations, the average risk of the unextended portfolio rises from 3.7% to 3.8% in
4Q09 (unextended portfolio) and from 2.26% to 2.34% (unextended portfolio without drag effect),
respectively.
In the figure below the agribusiness portfolio is segregated in rescheduled and non-rescheduled
operations, by appropriation and respective shares.
4Q09*
17.4%
82.6%
Cost
34.1%
Investiment
49.7%
Refinancing
16.3%
Cost
34.9%
Investiment
60.0%
Marketing
5.1%
Without Roll Over:
R$ 10.9 billion
Average Risk:24.1%
Without Roll Over:
R$ 52.1 billion
Average Risk:3.8%
• W/O Roll Over Effect:2.3%
Portfolio with
Roll Over
Portfolio without
Roll Over
* AgribusinessPortfolio without third party risk
Figure 48. Stratified Agribusiness Portfolio
104 - Banco do Brasil – MDA 4Q09
7.5.5 Foreign Trade Loan Portfolio
The foreign trade finance portfolio recorded a decrease of 22.4% (Dec/08 – Dec/09), partially justified by
the 25.5% appreciation of the real against the dollar in the same period. Loans rated at levels of risk AA
to C came to 95.8% and those rated as D-H to 4.2% in Dec/09.
Table 89. Foreign Trade Loan Porfolio by Level Risk
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Dec/08
Balance
Provision
9,255
3,686
18
2,987
30
812
24
104
10
232
70
40
20
44
31
66
66
Share
53.7
21.4
17.3
4.7
0.6
1.3
0.2
0.3
0.4
Sep/09
Balance
Provision
6,360
2,574
13
3,414
34
1,637
49
275
28
32
10
27
13
52
36
152
152
Share
43.8
17.7
23.5
11.3
1.9
0.2
0.2
0.4
1.0
Dec/09
Balance
Provision
5,511
2,401
12
3,149
31
1,739
52
279
28
48
14
27
14
6
4
201
201
Share
41.2
18.0
23.6
13.0
2.1
0.4
0.2
0.0
1.5
17,225
269
100.0
14,522
335
100.0
13,361
357
100.0
16,739
485
73
197
97.2
2.8
13,985
538
96
239
96.3
3.7
12,800
562
96
262
95.8
4.2
BNC and BV operations are not considered
The table below shows the effects of the global risk of the Foreign Trade Loan Portfolio on provisions,
the provision vs. portfolio ratio of which pushed from 180 base points of 0.9% in 4Q08 to 2.7% in 4Q09
and 40 basis points in relation to the last quarter.
Table 90. Changes in Allowance – Foreign Trade
R$ million
Foreign Trade Loan Portfolio
Initial Allowance
1 - Risk Migration
a) Risk Deterioration
b) Risk Improvement
2 – New Transactions
3 – Write-offs
3Q08
12,424
134
4Q08
17,225
132
1Q09
17,384
153
2Q09
15,732
294
3Q09
14,522
317
4Q09
13,361
335
(6)
37
(42)
47
(30)
115
132
(17)
95
(16)
15
87
(72)
88
(2)
71
84
(13)
89
(54)
6
66
(60)
89
(30)
(62)
96
(157)
161
(70)
12
(172)
194
(62)
101
40
106
(83)
65
(48)
29
(7)
132
132
28
153
153
37
294
294
143
317
317
77
335
335
47
357
357
93
38
(10)
1.1
0.2
16
21
0.9
0.2
143
1.7
0.8
77
2.0
0.5
47
2.3
0.3
93
2.7
0.7
Total (1 + 2 + 3):
Other Impacts¹
Final Allowance
Allowance Required by CMN Resolution 2,682
Changes in the Provision - in R$ million
a) Additional Provision²
b) Provision Expense
Provision / Portfolio - %
Changes in the Provision - % of Portfolio
(1)Amortization, settlement, release of installments and charge debt
(2) Additional Provision allocated to the Foreign Trade loan portfolio
BNC and BV operations are not considered
105 - Banco do Brasil – MDA 4Q09
7.5.6 Foreign Loan Portfolio and Others
The table below shows the risk profile of BB’s foreign loan portfolio. In December 2009 the loans ranked
at risk levels AA-C accounted for 97.6% of the total portfolio, 10 base points higher than the previous
quarter, and 150 base points lower than the same period of 2008.
Table 91. Foreign Loan Portfolio by Level Risk
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Dec/08
Balance
Provision
9,487
2,725
14
1,672
17
1,092
33
5
0
0
0
9
7
124
124
Share
62.8
18.0
11.1
7.2
0.0
0.0
0.1
0.8
Sep/09
Balance
Provision
8,779
3,835
19
1,486
15
293
9
181
18
79
24
116
116
Share
59.4
26.0
10.1
2.0
1.2
0.5
0.8
Dec/09
Balance
Provision
10,580
3,370
17
2,638
26
261
8
198
20
103
31
0
0
4
3
114
114
Share
61.3
19.5
15.3
1.5
1.1
0.6
0.0
0.0
0.7
15,115
194
100.0
14,769
201
100.0
17,268
219
100.0
14,977
138
63
131
99.1
0.9
14,394
376
43
158
97.5
2.5
16,849
419
51
168
97.6
2.4
BNC and BV operations are not considered
The table below exhibits the rating by risk of the other loans not classified in the Retail, Commercial,
Agribusiness, Foreign Trade and Abroad portfolios, plus the loan portfolios of BNC and BV.
Table 92. Other Transactions Portfolio – Banco Nossa Caixa and Banco Votorantim (50%)
R$ million
AA
A
B
C
D
E
F
G
H
Total
AA-C
D-H
Dec/08
Balance
Provision
414
113
1
245
2
262
8
335
33
259
78
155
78
80
56
855
855
Share
15.2
4.1
9.0
9.6
12.3
9.6
5.7
2.9
31.5
Sep/09
Balance
Provision
6,605
18,694
93
9,739
97
2,610
78
1,804
180
733
220
482
241
342
239
2,359
2,359
Share
15.2
43.1
22.5
6.0
4.2
1.7
1.1
0.8
5.4
Dec/09
Balance
Provision
7,485
20,088
100
10,074
101
2,449
73
1,466
147
646
194
467
234
396
277
2,111
2,111
Share
16.6
44.5
22.3
5.4
3.2
1.4
1.0
0.9
4.7
2,717
1,111
100.0
43,368
3,509
100.0
45,182
3,237
100.0
1,033
1,684
11
1,100
38.0
62.0
37,648
5,720
269
3,239
86.8
13.2
40,096
5,086
275
2,962
88.7
11.3
106 - Banco do Brasil – MDA 4Q09
7.6 Fee Income
Fee income, which include revenues from services provided and bank fee income (classification defined
by the Central bank in 2008), amounted to R$ 3,606 million in 4Q09, an increase of 2.3% in the quarter
and of 17.9% over 4Q08. In the YTD, fee income amounted to R$ 13,511 million, recording growth of
14.4% in relation to 2008.
We point out that the income figures for this quarter and for 2009 were affected by the consolidation of
Banco Nossa Caixa's figures since 2Q09, and those of Banco Votorantim since 4Q09. Banco Nossa
Caixa added R$ 287 million in fees in 4Q09 and R$ 900 million in 2009, and Banco Votorantim added
R$ 131 million in revenues in 4Q09. After removing these effects, BB's fee income stand alone added
up to R$ 3,189 million in 4Q09, a 0.7% slight decline for the quarter, influenced by the extinction of the
charging of renewal register fee according to Brazilian Central Bank Circular 3466 dated September 11,
2009, and 4.3% rise as against 4Q08. In the annual comparison, the growth of the revenues from BB
stand alone in 2009 reached 5.7%, within the Guidance for the year furnished by the Bank to the market
(5% to 8% range). The performance was kept in line with the expansion of the customer base and
checking accounts, in addition to the ongoing trajectory of businesses increase, particularly with credit
cards, capital market and services related to the checking accounts.
Table 93. Fee Income
Quarterly Flow
R$ million
Fee Income
Account Fees
Loan Fees
Credit Card Fees
Capital Market Fees
Investment Fund Management Fees
Collections
Interbank
Billings
Others
4Q08
3,058
836
200
571
31
465
272
124
119
440
3Q09
3,526
983
243
597
79
532
290
120
120
562
Chg. %
4Q09
On 4Q08 On 3Q09
3,606
17.9
2.3
996
19.2
1.3
236
17.7
(3.2)
657
15.1
10.1
70
121.4
(11.6)
540
16.0
1.6
308
13.2
6.1
126
1.8
4.6
133
12.4
10.9
541
23.1
(3.8)
Annual Flow
2008
11,811
3,124
856
2,043
134
1,979
1,044
553
443
1,635
2009
13,511
3,743
924
2,394
295
2,024
1,138
485
482
2,026
Chg. %
On 2008
14.4
19.8
7.9
17.2
120.5
2.2
9.0
(12.4)
8.9
23.9
Bank fee income, represented by the fees addressed by the Central Bank in Circular 3371, amounted to
R$ 892 million in 4Q09. Without the consolidation of Banco Nossa Caixa and Banco Votorantim, these
revenues added up to R$ 669 million for the quarter, a 5.4% decline over 3Q09 and of 7.0% over the
same period in 2008. It is important to highlight that the classification by product of the table above does
not segregate revenues from services from bank fee income.
107 - Banco do Brasil – MDA 4Q09
7.6.1 Revenues from Account Fees
The new regulations of the Central Bank that governs the collection of individual fees came into force
nd
during the 2 . quarter of 2008. Provisions of the Central Bank directly affected the fee income with Loan
Operations and Checking Accounts.
Account fees amounted to R$ 3,743 million in 2009, which represented an increase of 19.8% over 2008.
In 4Q09, these revenues totaled R$ 996 million, an increase of 1.3% over 3Q09 and of 19.2% over
4Q08.
The performance of checking account fees has also benefited from the expansion of the current base of
checking accounts, which increased 0.3% in 4Q09 and 15.2% in relation to December 2008, whereas a
representative portion of this growth in the 12-month period is related to the acquisition of BNC (3.1
million individual accounts and 174 thousand business accounts in December 2009).
From a broader perspective, which takes into consideration not only current accounts, but all the clients
that have some active business with the Banco do Brasil Conglomerate, such as INSS beneficiaries,
saving account holders and clients of other products (including the ones sold to non-account holders
through partnerships entered into with retail networks), the total base reaches 52,695 thousand clients. It
should also be highlighted that this number is still subjected to adjustments once BB is processing the
consolidation of BNC clients.
in thousand
32,555
32,657
32,781
1,874
2,192
2,218
2,207
Mar/09
Jun/09
Sep/09
Dec/09
26,157
27,055
28,173
28,494
28,701
1,698
1,775
1,944
1,884
Mar/08
Jun/08
Sep/08
Dec/08
Individuals
Figure 49. Checking Account Base
108 - Banco do Brasil – MDA 4Q09
Businesses
7.6.2 Asset Management
In the fourth quarter of 2009, Banco do Brasil accumulated R$ 540 million in Investment Fund
Management Fees, a growth of 1.6% in relation to the 3Q09, driven by the increase in the average
balance of funds obtained, and of 16.0% in relation to 4Q08, variation impacted by the consolidation of
BNC's figures. In the YTD, income reached R$ 2,024 million, an increase 2.2% over 2008.
BB Administração de Ativos - Distribuidora de Títulos e Valores Mobiliários (BB DTVM), a wholly-owned
subsidiary of Banco do Brasil, ended 2009 as leader in the balance of Assets under Management,
according to the AMBIMA ranking, with a total of R$ 306.7 billion. At the end of December 2009, BB held
a 21.1% market share in fund management against a 20.7% market share in 2008.
Please note that these figures still do not include funds managed by Banco Votorantim, totaling R$ 19.1
billion in late December 2009. If 50.0% of the balance managed by BV were to be consolidated, a
percentage equal to BB's interest in the latter's total equity capital, Banco do Brasil's market share would
rise to 21.7%.
R$ billion
19.3
19.4
19.8
241.3
245.9
241.5
20.7
20.9
20.3
21.7
246.3
259.3
293.9
302.6
21.1
306.7
Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09
Asset Management
Market Share - %
Figure 50. Asset Management
The table below shows the classification of assets under management per customer segment. Since
September position, the classification started to include the funds from Banco Nossa Caixa. During the
quarter, there was more noticeable growth in the funds obtained from institutional investors and
individuals, which increased its relative share of the total funds managed. As for 2008, please note the
increase of funding from governments, which share rose from 20.0% to 24.1% by year-end 2009.
Institutional customers still represent the main part of the sum managed, with 37.7% of the total.
Although the funds obtained from these investors have record growth, its relative share has been
decreased in relation to the end of 2008, collaborating to a lower concentration of the Bank's portfolio in
the main clients.
Table 94. Investment Funds and Managed Portfolios by Customer
Chg. %
R$ million
Institutional Investors
Individuals
Government
Businesses
Foreign Investors
Total
Dec/08
102,526
58,477
49,201
23,721
12,408
Share %
41.6
23.7
20.0
9.6
5.0
Sep/09
107,562
72,469
80,161
29,349
13,102
Share %
35.5
23.9
26.5
9.7
4.3
Dec/09
115,728
74,410
73,793
29,464
13,291
246,334
100.0
302,643
100.0
306,686
Share % On Dec/08 On Sep/09
37.7
12.9
7.6
24.3
27.2
2.7
24.1
50.0
(7.9)
9.6
24.2
0.4
4.3
7.1
1.4
100.0
24.5
1.3
Analyzing the breakdown of funds by types and portfolios, it is possible to observe a rise in the relative
share of variable income funds in 4Q09, which is in line with the increase of funding from institutional
investors during the quarter, which use to assume greater risks in allocating their investments. In the
annual comparison, we notice an increase mostly in the relative share of fixed income funds, a reflex of
109 - Banco do Brasil – MDA 4Q09
the rising of funding from Government and individuals as compared to 2008, which by nature are more
conservative when allocating their investments.
Table 95. Investment Funds and Managed Portfolios by Type
Chg. %
R$ million
Investment Fund
Fixed
Variable
Multimarket
Others
Managed Portfolios
Fixed
Variable
TOTAL
Dec/08
Share %
235,277
95.5
120,541
48.9
38,215
15.5
44,820
18.2
31,701
12.9
11,057
4.5
7,677
3.1
3,380
1.4
246,334
100.0
110 - Banco do Brasil – MDA 4Q09
Sep/09
289,227
164,250
44,188
44,478
36,312
13,416
11,095
2,321
302,643
Share %
95.6
54.3
14.6
14.7
12.0
4.4
3.7
0.8
100.0
Dec/09
294,622
161,817
49,790
45,048
37,967
12,064
9,919
2,145
306,686
Share % On Dec/08 On Sep/09
96.1
25.2
1.9
52.8
34.2
(1.5)
16.2
30.3
12.7
14.7
0.5
1.3
12.4
19.8
4.6
3.9
9.1
(10.1)
3.2
29.2
(10.6)
0.7
(36.5)
(7.6)
100.0
24.5
1.3
7.6.3 Cards
Fee income associated with card transactions ended the quarter at R$ 657 million (it’s included BNC’s
revenues), reflecting a 10.1% growth as compared to 3Q09 and of 15.1% against the 4T08. Specifically
in the case of these revenues, the comparison with the same period of the previous year is
recommended, considering that part of the growth in the previous quarter is explained by seasonality,
as the increased activity of the trade at the end of the year reflectes in business growth with cards.
The total card base, including credit and debit cards, besides those issued through partnerships and for
non-account holders, rose to 87.3 million items, a 2.6% increase in the quarter. A 12-month comparison
shows that the total BB card base rose by 11.9% by virtue of its organic growth as well as the
consolidation with the Nossa Caixa cards, which were included in the BB figures since June 2009.
Without the BNC cards, the increase in the BB base for the 12-month period would be 5.2%.
Credit Cards (in million)
22.3
24.9
25.0
25.4
25.2
Debit Cards (in million)
27.2
27.5
28.0
Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09
48.2
51.2
Mar/08 Jun/08
52.0
52.7
53.0
57.0
Sep/08 Dec/08 Mar/09 Jun/09
57.6
59.3
Sep/09 Dec/09
Figure 51. Credit and Debit Cards
Besides the increase of the base of credit cards issued Banco do Brasil has also expanded significantly
its quantity of transactions and the total sales. For this quarter, billings by cards rose to R$ 25.8 billion,
after the consolidation with Banco Nossa Caixa which began as of June 2009, a 8.9% expansion as
compared to 3Q09, under the effects of seasonal year-end purchases, and of 33.1% as compared to
4Q08. Under the same comparison base, the number of transactions rose by 21.3% against 3Q09 and
by 25.9% against 4Q08.
Card revenues for 2009 rose to R$ 88.6 billion, 33.9% above total billings for 2008, and the number of
transactions increased by 27.5% as compared to the total for 2008.
Considering BB stand alone (without the Nossa Caixa consolidation), card billings rose to R$ 23.7 billion
in 4Q09, 7.9% of growth for the quarter and 22.6% if compared to 4Q08. Under the same comparison
base, the number of transactions rose by 9.9% in the quarter and by 14.1% against 4Q08. 2009
accrued, card revenues topped R$ 83.3 billion, a 25.8% increase against accrued billings for 2008.
Consequence of the satisfactory performance evidenced above, BB has been gaining market share in
the indicators monitored by ABECS (Brazilian Association of Credit Card and Service Companies). In
total sales the market share climbed from 17.6% in 2008 to 18.7% in 2009. Please note that the billings
employed to find this ranking does not consider the BNC figures.
111 - Banco do Brasil – MDA 4Q09
R$ billion
8.9
7.8
9.6
10.7
11.5
6.2
6.4
7.3
8.9
9.7
10.4
10.2
11.6
13.0
14.2
8.3
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
Credit Cards
Debit Cards
Figure 52. Card Revenues
The total revenues obtained with cards, which includes besides the Fee Income (RPS), Financing
Revenues, Equivalence Revenues, Other Revenues and Other Services, reached R$ 1,196 million,
growth of 3.8% in the quarter and 16.4% in relation to 4Q08. In 2009, cards total revenues amounted R
$ 4,473 million, an increase of 24.0% compared to 2008.
Table 96. Total Cards Revenues
Quarterly Flow
R$ million
Fee Income - Cards
Financing Income
Equity Income - Visanet
Other Income and Other Services
Total Revenues*
*Since 4Q09 it is included BNC cards revenues
112 - Banco do Brasil – MDA 4Q09
4Q08
330
496
66
136
3Q09
397
566
103
86
1,027
1,152
Chg. %
Annual Flow
4Q09 On 4Q08 On 3Q09
438
32.8
10.4
561
13.2
(0.9)
111
68.6
7.9
86
(36.7)
(0.0)
1,196
16.4
3.8
2008
1,165
1,534
473
435
3,607
Chg. %
2009
On 2008
1,507
29.4
2,180
42.1
435
(8.0)
351
(19.3)
4,473
24.0
7.6.4 Collections
Revenues from collections reached R$ 308 million in 4Q09, an increase of 6.1% in relation to 3Q09 and
of 13.2% in relation to 4Q08. In 2009, these revenues totaled R$ 1,138 million, a 9.0% increase in
relation to 2008.
A total of 137,2 million bank payment slips were issued in 4Q09 (disregarding BNC's figures), an amount
3.8% higher than 3Q09 and 7.4% above the volume issued in 4Q08. The volume collected entailed an
increase of 4.9% and of 9.0%, respectively.
Figure 53. BB Billings Volume
113 - Banco do Brasil – MDA 4Q09
3Q08
4Q08
1Q09
2Q09
3Q09
152,645
145,513
132,457
125,562
2Q08
140,065
125,183
1Q08
134,621
119,190
R$ million
4Q09
7.7 Administrative Expenses
Table 97. Commercial Income
Quarterly Flow
R$ million
Contribution Margin
Administrative Expenses
Personnel Expenses
Other Administrative Expenses
Other Tax Expenses
Commercial Income
4Q08
7,534
(4,344)
(2,301)
(2,043)
(45)
3,144
3Q09
8,461
(4,897)
(2,693)
(2,203)
(23)
3,540
Chg. %
Annual Flow
4Q09
On 4Q08 On 3Q09
24.3
10.7
9,367
(5,465)
25.8
11.6
23.6
5.6
(2,844)
(2,621)
28.3
18.9
(41.2)
13.6
(27)
23.3
9.5
3,876
Chg. %
2009
On 2008
18.9
33,367
(19,185)
24.9
26.7
(10,280)
(8,905)
22.9
(28.9)
(100)
12.1
14,083
2008
28,058
(15,358)
(8,112)
(7,246)
(140)
12,560
Commercial income represents the Bank’s business earnings after the deduction of the expenses
necessary for carrying on the business. An increase of 9.6% was observed in commercial income in
4Q09 in relation to the preceding quarter. There was a 23.4% positive trend in the 12-month
comparison.
As a result of the recent acquisitions, administrative expenses were affected in 4Q09 by the sums of R$
265 million from BV and R$ 689 million in connection with BNC. If we disregard the impact of the
acquisition, there would be an increase of 3.8% in administrative expenses as compared with 4Q08 and
in the annual comparison there would be a rise to 10.0%, in line with the guidance proposed for 2009
(8% to 12%).
The graph below shows the development of commercial income as from 2005.
33,060
16,709
12,398
7,648
2005
8,888
18,107
13,020
2006
Fee Income
Figure 54. Business vs. Expenses
114 - Banco do Brasil – MDA 4Q09
20,807
24,515
9,902
2007
Net Interest Income
19,185
15,358 13,511
13,448 11,811
2008
2009
Administrative Expenses
7.7.1 Personnel Expenses
Personnel Expenses reached R$ 2,844 million in 4Q09, an increase of 23.6% in relation to the same
period of 2008, and of 5.6% in relation to the previous quarter. Please note that the takeover of Banco
Nossa Caixa added R$ 515.1 million to 4Q09 expenses and that of BV R$ 90.1 million, which sum did
not appear in the 4Q08 financial statements. Without considering the effects of the acquisition, growth
for 4Q08 would be equal to 3.0% and for 3Q09 would be equal 2.4%. Regarding the annual comparison,
2009 ended with R$ 10,280 million in personnel expenses, 30.1% above those for 2008, if the
acquisitions were not considered, the growth would reach 11.8%.
Table 98. Personnel Expenses
Quarterly Flow
R$ million
Personnel Expenses
Salaries
Benefits
Social Charges
Training
Pension Fund
Remuneration for Counselors and Directors
Administrative Personnel Provisions
4Q08
3Q09
Chg. %
4Q09
Annual Flow
On 4Q08 On 3Q09
2008
Chg. %
On 2008
2009
(2, 301)
(2,693)
(2,844)
23.6
5.6
(7,904)
(10,280)
30.1
(1, 298)
(1,258)
(1,360)
4.8
8.1
(4,015)
(5,060)
26.0
(315)
(382)
(423)
34.6
10.8
(1,197)
(1,486)
24.2
(456)
(464)
(616)
35.1
33.0
(1,372)
(1,912)
39.3
(31)
(19)
(28)
(8. 3)
46.0
(74)
(73)
(0.7)
-
(47)
(111)
-
137.5
-
(232)
-
(9)
(193)
(14)
(510)
(15)
(291)
62.9
50.5
7.0
(43.0)
(17)
(1,228)
(50)
(1,468)
187.1
19.5
The rise in personnel expenses occurred chiefly due to the 8.8% average salary readjustment in 2008
and 6.0% in 2009. The base-date for bank employees' collective wage agreement is September. From
4Q08 there was also an average increase of 8,865 staff members in BB.
Mar/08
Jun/08
Sep/08
115 - Banco do Brasil – MDA 4Q09
Employees
Interns
Jun/09
Sep/09
103,971
9,917
113,888
10,293
104,139
114,432
9,943
113,401
Mar/09
103,458
89,534
9,291
98,825
7,966
Dec/08
Total
Figure 55. Changes in Workforce
88,972
96,938
9,543
85,392
94,935
9,475
84,258
93,733
9,384
83,417
92,801
The figure below describes the growth of the total BB staff. By late December 2009, Banco do Brasil had
113,888 employees, a number 17.5% above that for the same month in 2008, due to the BNC
acquisition, and 0.5% below September 2009.
Dec/09
7.7.2 Other Administrative Expenses
Other G&A Expenses attained R$ 2,621 million in the fourth quarter of this year, growth of 28.3% in
twelve months and of 18.9% in comparison with the preceding quarter. Without other administrative
expenses arising from BNC (R$ 382.3 million) and BV (R$ 174.8 million), growth for 4Q09 would have
been 4.8% over 4Q08 and 12.7% over 3Q09. An annual comparison shows a 22.9% rise in 2009 over
2008, which would have been of 7.9% without the effects of the acquisitions.
Table 99. Other Administrative Expenses
Quarterly Flow
R$ million
Other Administrative Expenses
Telecommunications and Data Processing
Amortization and Depreciation
Security. Guard and Transport Services
Expenses with Premises and Equipment
Marketing and Public Relations
Expenses with Outsourced Services
Other Administrative Expenses
4Q08
3Q09
Chg. %
4Q09
Annual Flow
On 4Q08 On 3Q09
2008
2009
Chg. %
On 2008
(2, 043)
(2,203)
(2,621)
28.3
18.9
(7, 246)
(8,905)
22.9
(427)
(215)
(514)
(253)
(618)
(269)
44.7
25.3
20.1
6.5
(1, 734)
(761)
(2,076)
(998)
19.7
31.2
(284)
(255)
(183)
(331)
(295)
(127)
(355)
(339)
(186)
25.0
33.0
1.5
7.3
14.7
46.8
(1, 095)
(922)
(482)
(1,280)
(1,185)
(534)
16.9
28.5
10.8
(348)
(330)
(334)
(350)
(396)
(458)
13.6
38.7
18.6
30.9
(1, 149)
(1, 103)
(1,348)
(1,483)
17.3
34.5
Among the items found in other administrative expenses, the most expressive ones are communications
and data processing expenses. During this quarter, in addition to contractual renewals, there were R$
30 million in expenses from BV, which fact weighed on the 20.1% increase in 4Q09 over 3Q09. The
annual overview shows that expenses arising from Besc/Bep affected only the last three months of 2008
and influenced the comparison base, in addition to the expenses with the acquisitions of BNC and BV.
This item's growth in 2009 was of 19.7% over 2008.
In other administrative expenses, which rose by 30.9% over 3Q09, the main expenses for 4Q09
constituted philanthropic contributions (R$ 16.5 million). In addition, in this period the expenditures with
employee events increases. The annual overview shows a 34.5% increase over 2008, with adjustments
in the companies' consolidation also influencing the income figures.
The 28.5% (2009/2008) rise in expenses with property and goods for use was a result of the Besc/Bep
takeover, the increase in points of service, and readjustments in rental agreements.
116 - Banco do Brasil – MDA 4Q09
7.7.3 Distribution Network
With national coverage and presence in 3,552 Brazilian municipalities (64% of the total), besides
overseas branches located in 23 countries, Banco do Brasil has the largest network of branches in
Brazil. At the end of Dec./09, the Bank's distribution network comprised 17, 929 points of service.
The background performance of the BB conglomerate's distribution network now includes the BNC’s
points of service since June 2009 (in December, BNC added 1,542 points of service, 566 of which are
branches). Until September, the BNC network service was informed by that bank, and since the
incorporation in November, the information started to be processed in the BB corporate systems. The
difference in concepts adopted in Banco do Brasil and in Banco Nossa Caixa led to an increase in the
SAA and PAE network, as found in the table below.
Table 100. Distribution Network
Mar/08
Branches
PAA
PAB
PAE
SAA
PAP
Total*
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
4,024
4,052
4,077
4, 342
4,354
4, 928
4,958
4,897
187
1,251
5,935
188
1,249
5,911
184
1,225
5,969
187
1, 389
6, 055
182
1,360
6,061
182
1, 734
6, 102
179
1,729
6,094
178
1,697
6,529
3,925
2
3,951
2
3,980
3
3, 987
4
4,248
2
4, 262
2
4,272
2
4,626
2
15,324
15,353
15,438
15, 964
16,207
17, 210
17,234
17,929
The Bank's distribution network is divided into 5 types of points of service, besides the branches:
PAA – Advanced Service Post: is a point of service intended for towns lacking banking services. They
have a small staff and electronic services;
PAB – Banking Service Post: this type of unit is located inside the premises of companies or
government offices. This service structure requires one employee and electronic services;
PAE – Electronic Service Post: the structure of services is exclusively electronic;
SAA – Self-Service Room: exclusively electronic structure of services, installed in the main areas of the
branches; and
PAP – Payment and collection post: points of service comprised by employees and automated teller
machines located mainly in government offices (town halls);
North
Retail
247
Wholesale
2
Govern
7
High Income 2
5.2%
20.7%
Midwest
Retail
395
Wholesale
5
Govern
5
High Income 13
South
Retail
997
Wholesale 22
Govern
3
High Income 12
Figure 56. Total Distribution Network
117 - Banco do Brasil – MDA 4Q09
Northeast
Retail
1,001
Wholesale
7
Govern
9
High Income 10
8.4%
43.6%
22.1%
Southeast
Retail
2,067
Wholesale 45
Govern
5
High Income 42
To render an excellent service and improve the level of satisfaction of clients, Banco do Brasil segments
its customer base according to each profile and relationship, developing adequate strategies for each
segment.
The Retail distribution network, main element responsible for the relationship with Individual clients and
Micro and Small Businesses (MSEs), ended the quarter with 4,786 branches, 44% of this total located in
the southeast region. Moreover, in the delivery of services to individuals, BB makes available its network
of bank correspondents that serve the clients of BB without using the Bank's infrastructure, releasing the
branch network to focus on business. At the end of 4Q09, Banco do Brasil relied on a total of 9,591
correspondent banks, including 3,452 points of service that belonged to Banco Popular do Brasil and
804 correspondent banks from Banco Nossa Caixa.
In relation to the Wholesale market, the service network is comprised by 82 branches, segmented by
annual revenues, and that served 42.4 thousand customers in this quarter, figure 5.8% higher than that
attended in the same quarter of 2008. Most of the network is located in the Southeast (56%) and South
(27%) regions of Brazil with the largest concentration of large companies.
Table 101. Wholesale Pillar Branches
Corporate
Business
Industry
Over R$ 90 million
From R$ 10 to R$ 90 million
Commerce
Over R$ 150 million
From R$ 15 to R$ 150 million
Services
Over R$ 150 million
From R$ 15 to R$ 150 million
The Government market, comprised by direct administration, federal entities, foundations and public
companies, was comprised by 29 agencies, whose business focus is the relationship with the Federal
Government and the State and Municipal spheres, encompassing the Executive, Legislative, and
Judicial Authorities. The strategy of working in this market has ensured appropriate solutions for the
specific aspects of each one of the niches of its segment, by means of an innovative approach,
materialized in the proposal of new products and services, such as the exclusive electronic bidding
service.
The overseas network is comprised by 45 facilities located in 23 countries (13 branches, 8 subbranches, 11 representation offices, 7 subsidiaries, 4 associated subsidiaries, 1 shared service unit and
1 business unit). In order to supplement this structure, Banco do Brasil has an agreement with other
foreign financial institutions to serve its clients: at the end of last December, there were 1,372 banks
acting as BB's correspondent banks in 144 countries.
118 - Banco do Brasil – MDA 4Q09
Table 102. Distribution Network Abroad
Br anche s
Sub-br anche s
Re pre s e ntative Subs idiar ie s and Br anch
Office s
Office s
A ssuncion
Cidade do Leste
Caracas
Buenos A ires
Gif u
Cidade do México
Frankf urt
Gunma
Dubai
Grand Cayman
Hamamatsu
Hong Kong
La Paz
Ibaraki
Lima
Banco do Brasil Securities
LLC
BB Leasing Company Ltd.
BA MB Brazilian A merican
Merchant Bank
BB Securities Ltd. Londres
London
Nagano
Luanda
BB USA Holding Company
Madrid
Nagóia
Montevidéu
BB Money Transf ers, Inc.
Miami
Santa Cruz de La Sierra Panamá
Milan
Seul
New Y ork
Washington
Paris
Xangai
Santiago
Tokyo
119 - Banco do Brasil – MDA 4Q09
Banco do Brasil A G
Banco do Brasil A G Branch Of f ice in Portugal Cascais
Banco do Brasil A G Branch Of f ice in Portugal Marquês de Pombal
Banco do Brasil A G Branch Of f ice in Portugal Parque das Nações
Banco do Brasil A G Branch Of f ice in Portugal Porto
Share d Se rvice s
Units
BB USA Servicing
Center
Bus ine s s
Units
Rome
7.7.4 Automated Channels
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
45,442
43,772
43,976
40,543
39,714
39,918
38,766
38,692
Banco do Brasil’s self-service network represents a strategic differential, offering an extensive range of
services to BB client, besides supporting the cost control strategy of the institution. In December 2009,
BB’s network in Brazil relied on 45,442 automated teller machines (ATMs), being 3,685 ATMs from
Nossa Caixa. The acquisition of BNC and the incorporation of the BESC system explain the increase of
5,728 terminals as compared with December 2008.
Dec/09
Figure 57. Automated Teller Machines
The ATM's are responsible for the processing of an expressive portion of the total banking operations
performed by Banco do Brasil. In September 2009, 95.8% of the cash withdrawals, 80.0% of the
checkbooks delivered, 74.8% of the deposits and 68.4% of the receipts of bills and contractual
payments passed through the ATM network.
Besides the cashiers at the branches and the ATMs, Banco do Brasil offers several other options for
access to banking services, such as: Internet, Financial Manager (an Internet banking tool for
businesses), POS equipment (credit and debit card machines at the commercial establishments),
telephone, fax, and mobile banking (WAP). At the end of September, BB had approximately 1,1 million
clients capable of using the mobile banking service, responsible for 31,5 million transactions in the
quarter, and 9,3 million clients capable of using the internet channel.
Banco do Brasil, in partnership with Visa, is the only bank to operate with Visa Mobile Pay technology in
Latin America, which allows the clients of BB to pay for purchases using their mobile phones. This
technology, combined with the mobile banking services already offered, confirms the Bank's vanguard
position in banking technologies.
120 - Banco do Brasil – MDA 4Q09
The figure below presents the percentage of transactions processed by each one of the main customer
service channels made available by Banco do Brasil. In December, the automated channels were
accountable for 92.0% of the total transactions.
90.5
90.5
2.3
9.2
9.5
5.9
8.5
9.5
19.3
91.1
90.1
91.3
91.1
92.2
92.0
19.0
5.8
8.7
9.9
20.2
6.1
10.9
8.9
19.3
6.3
9.5
8.7
18.4
5.9
8.8
8.9
18.6
5.9
8.8
7.8
18.6
6.4
11.2
8.0
19.3
16.0
14.4
14.9
14.3
16.3
19.1
21.1
15.4
40.5
42.7
40.6
40.6
40.7
38.7
37.8
39.6
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
ATM
Cash
Automated Transactions
Figure 58. Costumer Access Options - %
121 - Banco do Brasil – MDA 4Q09
Internet Individuals
POS
Internet Businesses
COBAN and Others
7.7.5 Productivity – Coverage Ratios
We present below the main existing productivity ratios for the analysis of a financial institution. The
coverage ratio of personnel expenses reached 124.6% in 4Q09, opposed to 121.2% on 3Q09 and
125.8% in 4Q08. As for the Cost Income Ratio, that reached 44.4% in 4Q09, better than the 44.6%
registered in 3T09 and a slight improve comparing to the 45.7% from 4T08.
It is important to highlight that, comparing with the indexes observed in 2008, the Nossa Caixa
consolidation must be awared, which didn’t show indexes as favorable as BB did.
Table 103. Coverage Ratios – without extraordinary items
R$ million
Fee Income
Administrative Expenses
Personnel Expenses
Fee Income / Personnel Exp.¹
Fee Income / Administ. Exp.²
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
2,933
3,058
2,943
3,436
3,526
3,606
3,660
1,933
3,877
2,131
3,972
2,178
4,571
2,430
4,128
2,231
4,937
2,506
5,153
2,909
5,469
2,894
150.8
79.6
136.4
74.9
134.6
73.8
125.8
66.9
131.9
71.3
137.1
69.6
121.2
68.4
124.6
65.9
Service Revenues / Personnel Expenses
150.8
1Q08
2Q08
134.6
3Q08
125.8
131.9
4Q08
1Q09
137.1
121.2
2Q09
3Q09
124.6
4Q09
Service Revenues / Administrative Expenses
79.6
1Q08
74.9
2Q08
73.8
3Q08
66.9
71.3
4Q08
1Q09
Figure 59. Coverage Ratios – without Extraordinary Items
122 - Banco do Brasil – MDA 4Q09
4Q09
2,905
¹ In the calculation of this ratio Labor Lawsuits are included,
² In the calculation of this ratio Legal Risk is included (Legal Claims and Labor Lawsuts),
136.4
3Q09
2,915
69.6
68.4
2Q09
3Q09
65.9
4Q09
Table 104. Cost Income Ratio – without extraordinary items
R$ million
Operating Income (A)
Gross Income from Financial Intermediation
Allowance for Loan Losses
Fee Income
Equity Int. in the Results of Subs. and Affil.
Income f/ Insurance, Pension & Capit. Op.
Other Operating Revenues
Other Operating Expenses
Administrative Expenses (B)
Personnel Expenses
Other Administrative Expenses
Cost Income Ratio (B/A) - %
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
8,415
8,686
10,003
9,839
11,673
11,558
12,315
3,476
3,816
3,667
1,932
3,294
3,240
4,460
5,829
1,603
1,744
1,367
3,892
2,654
3,865
2,928
2,950
2,915
2,905
2,933
3,058
2,943
3,436
3,526
3,606
(88)
(271)
496
707
(90)
(576)
(275)
(49)
101
220
218
353
303
471
392
408
1,394
1,976
1,401
1,764
2,359
4,659
3,162
2,298
(1,272)
(1,975)
(1,396)
(1,702)
(1,625)
(3,422)
(2,635)
(2,726)
3,798
3,944
4,134
4,602
4,134
4,937
5,153
5,469
1,933
2,131
2,178
2,430
2,231
2,506
2,909
2,894
1,866
46. 7
1,813
46.9
1,956
47.6
2,172
46.0
1,903
42.0
2,431
42.3
2,244
44.6
2,575
44.4
Cost Income Ratio – %
45.0
46.1
45.7
45.7
1Q08
2Q08
3Q08
4Q08
42.0
42.3
44.6
44.4
1Q09
2Q09
3Q09
4Q09
Figure 60. Cost Income Ratio – without Extraordinary Items
123 - Banco do Brasil – MDA 4Q09
4Q09
8,128
The following figures show how the network and employees improvements have been more than
compensated by the business expansion and customers basis, which reflects to the productivity
indexes.
Assets per Employee – R$ thousand
5,990
313
5,281
4,827
4,439
317
6,221
5,992
5,377
4,463
Checking Accounts per Employee
309
308
306
305
307
300
Mar/08
Jun/08
Sep/08 Dec/08
Mar/09
Jun/09
Mar/08
Sep/09 Dec/09
Jun/08
Sep/08 Dec/08
Mar/09
Jun/09
Sep/09 Dec/09
Employees / (Branches + PAA + PAB)
17.3
17.0
17.1
Mar/08
Jun/08
16.4
Sep/08 Dec/08
16.8
16.6
Mar/09
Jun/09
16.7
16.8
Sep/09 Dec/09
Credit Portfolio / Points of Services
Service Revenues / Points of Services
190.2
14.1
14.1
14.7
15.4
189.2
190.0
16.8
11.3
12.4
13.1
15.4
15.4
16.0
16.2
17.2
17.2
17.9
15.3
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
Points of Service
Credit Portfolio / Points of Service – R$ million
15.4
15.3
15.4
Mar/08
Jun/08
191.5
16.0
Sep/08 Dec/08
181.6
148.6
153.6
17.2
17.2
151.4
17.9
16.2
Mar/09
Jun/09
Sep/09 Dec/09
Points of Service
Service Revenues / Points of Service - R$ thousand
Personnel Expenses per Employee – R$ thousand
Checking Accounts / (Branches + PAA + PAB)
5,100
5,252
5,490
5,133
5,186
5,077
5,079
5,166
43.9
21.6
23.6
Mar/08
Jun/08
23.0
Sep/08
25.1
Dec/08
Mar/09
Figure 61. Other Productivity Ratios
124 - Banco do Brasil – MDA 4Q09
25.3
25.9
Jun/09
Sep/09
27.4
Dec/09
Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09
7.8 Operating Income
Table 105. Operating Income
Quarterly Flow
R$ million
Commercial Income
Legal Risk
Legal Claims
Labor Lawsuits
Other Operating Income
Eq Int. in Results of Subs. and Affil.
Other Operating Income / Expenses
Other operating income
Other operating expenses
Operating Income
4Q08
3Q09
Chg. %
4Q09
Annual Flow
On 4Q08 On 3Q09
2008
2009
Chg. %
On 2008
3,144
3,540
3,876
23. 3
9.5
12,560
14,083
12.1
(226)
(97)
(256)
(40)
(4)
46
(98.4)
-
(98. 6)
-
(722)
(161)
(502)
(242)
(30.5)
49.8
(129)
(542)
(3)
(216)
(590)
17
(49)
(960)
24
(61.7)
77. 1
-
(77. 1)
62.6
47.1
(560)
(2, 198)
(97)
(260)
185
51
(53.6)
-
(539)
1,230
(1, 769)
(607)
1,313
(1,920)
(985)
1,463
(2,448)
82. 7
18. 9
38. 4
62.2
11.4
27.5
(2, 102)
3,698
(5, 799)
134
8,036
(7,902)
117.3
36.3
2,375
2,694
2,912
22. 6
8.1
9,639
13,766
42.8
The Operating Income of Banco do Brasil ended 2009 at R$ 10,736 million, disregarding Previ’s effects,
which represents an increase of 11.4% in relation to 2008. In the quarterly analysis, this line ended
4Q09 at R$ 2,912 million, an increase of 8.1% in relation to 3Q09 and of 22.6% in relation to the same
period of 2008. The operating income is determined with a basis on the Commercial Income, plus the
results of two major lines: "Legal Risk" and "Other Operating Income (Expenses)".
During 4Q09, BB concluded its improvement of the methodology to calculate provisions in connection
with labor and civil claims. As of 4Q09 the balance of provisions was defined in a manner to cover the
average sums actually paid by the Bank in lawsuits of the same nature (until that time provisions were
defined based on the sum required by claimants). For this reason, the legal risk line ended 4Q09 at (R$
4 million), a 98.6% decrease over the preceding quarter and of 79.2% over 4Q08.
The account "Other Operating Income (Expenses)" comprises the items "Equity Interest in Results of
Subsidiaries and Affiliated Companies", and "FX Other Operating Income/Expenses". In the 4Q09, there
was an R$ 378 million increase (negative) in this last account. The key factor responsible for this item's
change was consolidation with Banco Votorantim, which in 4Q09 resulted in - R$ 276 million for Other
Operating Income (Expenses), amount already proportional to the BB”s participation and that includes
commissions paid to agents who work in loan concession.
Comparing the years of 2009 and 2008, the “FX Other Operating Income/Expenses” results was driven
by the increase of $ 390 million in expenses with premiums paid to customers, besides R$ 3,030 million
from Previ, the acquisition of Banco Votorantim (see above), the acquisition of the BNC and the
accounting of goodwill from acquisitions and strategic partnerships.
Since 2Q09, BB is influenced by the accounting of goodwill for the acquisition of BNC, and since from
4Q09 the expenses by the accounting of goodwill for the acquisition of BV. The accounting of goodwill is
not performed in a linear fashion due to improvements in models that measure the expectation of future
earnings with strategic transactions, so that its value may change over time, maintaining relationship
with the expectation of these companies’ results.
Regarding the other companies of the conglomerate, there was no accounting of goodwill in the quarter.
With the restructuring of the security area, companies that were controlled by BB BI came to be
controlled by the holdings "BB Aliança Participações” and “BB Seguros Participações”. Unlike BB BI,
these other two companies are regulated by Law 11,638, which does not require accounting of goodwill
arising from the expectation of future results.
125 - Banco do Brasil – MDA 4Q09
Table 106. Accumulated Amortization
R$ million
Banco Nossa Caixa
Final balance for the period
Accumulated amortization
Amortization expenses for the period
Banco Votorantim
Final balance for the period (*)
Accumulated amortization
Amortization expenses for the period
Other expenses of the Conglomerate
Final balance for the period
Accumulated amortization
Amortization expenses for the period
2Q09
3Q09
4Q09
3, 659
4,957
4,961
(40)
(81)
(61)
(40)
(40)
21
-
434
444
-
-
(4)
(4)
581
487
487
(71)
(47)
(95)
(23)
(95)
-
The following table shows BB's intangible assets that include the payroll acquired from third party and
the softwares acquired/developed.
Table 107. Intangible
R$ million
Rights due to payroll acquisition
Initial Balance
Amortization expenses for the period
Other (1)
Acquisitions
Final Balance (a)
Acquisition/development of software
Initial Balance
Amortization expenses for the period
Acquisitions
Other (1)
Final Balance (b)
Balance ( a+ b)
2Q09
3Q09
6, 032
(371)
4Q09
4,896
(380)
4,785
(403)
(891)
9
(10)
125
260
933
4, 896
4,785
5,305
155
232
297
(10)
(12)
(15)
88
73
90
(1)
4
0
232
297
372
5, 128
5,082
5,677
(1) Among other itens, this line comprises the amounts registered due to the acquisition and/or incorporation of other institutions, according to the
stake owned by Banco do Brasil.
126 - Banco do Brasil – MDA 4Q09
7.9 Net Value Added
The table Net Value Added shows how Banco do Brasil’s income is made up of the generation of value
from each of the Bank’s businesses, and then shows a breakdown of the distribution of these proceeds.
The point of view used is the gross financial margin, which includes financial intermediation income and
expenses, without allowances for loan losses.
Table 108. Net Value Added
R$ million
Net interest income
Income from Non-Financial Products
Fee Income
Investment Fund Management Fees
Loans
Billings
Collections
Credit Cards Fees
Insurance
Others
Insurance – Brokerage
Insurance – Results
Others Fee Income
Equity Interest in Results of Subs.and Affiliates
Res. from Insurance, Pension Plan and Cap.Operations
Other Operational Revenues
Non Operation Income
Value Added
Distribution of Value Added (Except Shareholders)
Operational Revenues
Allowance for Loan Losses
Other Operational Income
Personnel Expenses
Personnel Expenses
Statutory Profits Sharing
Administrative Expenses
Tax Expenses
Taxes on Sale
Other Tax Expenses
Income and Social Contribution Taxes
Extraordinary Items
Value Added to Shareholders
Quarterly Flow
4Q08
3Q09
4Q09
Chg. %
On 4Q08 On 3Q09
Annual Flow
2008
2009
Chg. %
On 2008
7,077
8,320
9,268
31.0
11.4
24, 510
33,060
34.9
2,513
2,813
2,918
16.1
3.7
9, 756
10,894
11.7
836
983
996
19.2
1.3
3, 124
3,743
19.8
465
532
540
16.0
1.6
1, 979
2,024
2.2
200
272
243
290
236
308
17.7
13.2
(3.2)
6.1
929
1, 044
924
1,138
(0.5)
9.0
119
120
133
12.4
10.9
443
482
8.9
571
597
657
15.1
10.1
2, 042
2,394
17.2
50
49
48
(2.8)
(1.1)
195
189
(3.4)
2,130
2,461
2,606
22.4
5.9
6, 965
12,330
77.0
56
63
61
8.0
(3.7)
193
241
25.2
150
196
170
12.9
(13.3)
817
709
(13.2)
489
649
627
28.4
(3.4)
1, 862
2,376
27.6
(154)
(181)
(145)
(5.8)
(19.9)
(912)
(684)
(25.0)
353
392
408
15.4
4.0
892
1,574
76.4
1,230
1,313
1,463
18.9
11.4
3, 700
8,036
117.2
5
29
22
351.9
(22.8)
413
78
(81.1)
11,720
13,594
14,792
26.2
8.8
41, 231
56,284
36.5
(8,775)
(11, 616)
(10,637)
21.2
(8.4)
(32,428)
(43, 106)
32.9
(4,009)
(2,240)
(4, 937)
(3, 017)
(5,398)
(2,950)
34.6
31.7
9.3
(2.2)
(12,598)
(6,800)
(19, 531)
(11, 629)
55.0
71.0
(1,769)
(1, 920)
(2,448)
38.4
27.5
(5,798)
(7, 902)
36.3
(2,628)
(3, 139)
(3,156)
20.1
0.5
(9,623)
(11, 456)
19.0
(2,430)
(2, 909)
(2,894)
19.1
(0.5)
(8,672)
(10, 540)
21.5
(198)
(230)
(262)
32.7
13.9
(951)
(916)
(3.8)
(2,140)
(2, 244)
(2,575)
20.3
14.8
(7,408)
(9, 146)
23.5
(1,316)
(1, 511)
(1,845)
40.1
22.1
(4,917)
(6, 288)
27.9
(589)
(760)
(965)
63.7
26.9
(2,362)
(3, 149)
33.3
(170)
(23)
(27)
(84.4)
13.6
(140)
(100)
(28.9)
(557)
1,318
(727)
215
(853)
2,336
53.4
77.2
17.4
988.7
(2,416)
2, 118
(3, 039)
3,315
25.8
56.5
2,944
1,979
4,155
41.1
110.0
8, 803
13,178
49.7
The Added Value is the sum of the Net Interest Income, which represented a share of 62.7% in the
composition of the added value in 4Q09, Income from Non-Financial Products (19.7%) and Others
(17.6%). Over the past quarters, the Net Interest Income has achieved higher growth than the Other
Revenues, for which reason it increased its relative share in the composition of Net Value Added.
In turn, the added value for shareholders is the difference between the added value and its distribution
among the various accounts included in the above table. The line with the greatest share (among those
comprising distribution, except for shareholders) is the block of Risk and Operating Expenses, which
accounted for 50.6% of the distributions in 4Q09, compared to 45.7% in the same quarter of 2008. It
should be noted that, since the second half of 2008, with the worsening of the international financial
crisis, BB has been strengthening its reserves (the expenses with provisions are among the main
elements in Operating and Risk Expenses).
127 - Banco do Brasil – MDA 4Q09
8 – Risk Management
8.1 Risk Management
In this disclosure of results, the tables and graphs presented on this chapter are not impacted by the
accounting information of Banco Votorantim (BV), unless otherwise stated. Accordingly, the term BB
Consolidated is defined as Banco do Brasil in Brazil and abroad, including Banco Nossa Caixa (BNC)
and excluding Banco Votorantim (BV).
8.1.1 Market Risks
Introduction
BB uses statistical methodologies to measure the market risks of its positions. Among the metrics
resulting from the use of these methodologies, it is worth highlighting:
• Sensitivities;
• Value at Risk (VaR);
• Stress.
By using sensitivity metrics, simulations are made of the effects in the exposure values arising from
changes in interest rate levels.
VaR is a measurement used to estimate the maximum expected loss, under normal market conditions,
put into monetary values on a daily basis and considering a certain confidence interval and time horizon.
To measure VaR, Banco do Brasil adopts a Background Simulation method and the following
parameters:
• 99% of one-tailed confidence interval
• 252 retrospective scenarios of daily shock factors and
• an investment time horizon of one business day.
The risk factors used to measure VaR for market exposure risks are rated in the following classes:
•
•
•
•
interest rates;
exchange rates;
share prices; and
goods (commodities) prices.
Performance of the VAR metrics is assessed every month by applying a backtesting procedure. This
assessment is separated from the VaR metric development and its procedures.
In conclusion, BB uses the Stress metrics arising from simulations of its exposure subject to market risks
under extreme conditions, such as financial crises and economic upheavals. Stress Tests are intended
to size plausible impacts or events, but unlikely to occur, in the regulatory and economic capital
requirements. Stress Tests cover exposure simulations, retrospective and based on background series
of shocks in market risk factors, as well as of a forward-looking nature, supported on projections of
economic and financial scenarios.
Policies
The Policy on Market and Liquidity Risk and the Policy on the Use of Derivative Financial Instruments
approved by the Board of Directors, are part of the strategic documentation regarding the BB's market
and liquidity risk management.
128 - Banco do Brasil – MDA 4Q09
These documents are intended to establish guidelines to be complied with in the Company's business
decisions involving market and liquiduity risk, dealing with quantitative aspects as well as the metrics
used and the interest rate risk reference parameter, and also qualitative aspects such as the hedging
policy, scope of management, and segregation of functions.
Structure
In accordance with CMN Resolution 3,464, of 6.26.2007, financial institutions should implement a
structure for the management of market risk segregated from the business units and from the unit
executing the internal audit activity, and compatible with the nature of transactions, the complexity of
products and the dimension of exposure to market risk of the institution.
The Bank has a market risk management structure represented by the Risk Management Directorship
(Diris), compatible with the Bank's nature of transactions, and totally segregated from the business units
and the Internal Audit unit.
One of the main responsibilities of Diris in market and liquidity risk management is the proposition of
policies, guidelines, methodologies and limits of market risk, as well as the identification, assessment,
monitoring and control of the market and liquidity risk of the Financial Group, the identification and
monitoring of the market and liquidity risk of the other companies that form the Economic/Financial
Consolidate.
Foreign Exchange Exposure
Banco do Brasil adopts the policy of managing its foreign currency exposure so as not to generate
capital requirement for its coverage.
Below, we present the statement of foreign currency assets and liabilities referenced to the American
dollar of BB Consolidated. The net exchange position, at 12/31/2009, is a liability for US$ 1,323 million,
th
which reflexts the Bank’s tax hedge strategy adopted, according to Bacen’s Circular 3,389, of June 25 ,
2008.
The tax hedge is to reduce the volatility of the income, after tax effects, considering that the gains from
foreign exchange variation on abroad investments are not taxed and, similarly, the losses do not
generate a deduction in the tax rate. As a result, any change in the exchange rate takes effect on the
account that records the exchange liabilities contrary to the effect recorded in the investment account,
for instance, the effect of exchange rate changes will tend to a null result, in line with our policy.
129 - Banco do Brasil – MDA 4Q09
Table 109. Balance in Foreign Currency
R$ million
BALANCE SHEET
ASSETS
LIABILITIES
57,178.30
60,864.73
5,104.16
5,519.47
147.18
185.71
3,605.32
2,280.06
9.18
31.35
8.93
144.14
533.34
66,197.21
69,414.66
(3,217.45)
CURRENCY
U.S. Dollar
Euro
Pound Sterling
Yen
Swiss Franc
Gold
Ohters
Total
Net Position - Equity
CURRENCY
BALANCE SHEET
LONG
U.S. Dollar
Euro
Pound Sterling
Yen
Swiss Franc
Gold
Total
Net Position - Derivative
SHORT
22,800.02
5,640.57
125.13
3,499.24
1.03
170.13
32,236.12
912.77
25,036.05
5,291.28
66.27
2,135.26
620.03
33,148.89
Total Net Position
(2,304.68)
Total Net Position - in U.S. Dollar
(1,323.60)
Banco do Brasil Considated foreign exchange exposure calculated according to Bacen Circular 3,389, of
th
st
June 25 ., 2009, was R$ 512.9 million at December 31 ., 2009.
The chart that follows shows the quarterly behavior of BB Consolidated’s foreign exchange exposure in
relation to the Referential Equity (RE) since March, 2008.
Changes in Foreign Exchange Exposure in % of PR
5.00%
4.00%
3.30%
3.00%
0.08%
2.01%
1.04%
0.28%
0.22%
2.40%
2.00%
1.77%
1.23%
0.09%
1.21%
Exposure % Current Basket
Exposure % Other Currencies
Figure 62. Changes in Foreign Exchange Exposure
130 - Banco do Brasil – MDA 4Q09
Jun/09
Mar/09
Dec/08
Sep/08
Mar/08
Jun/08
0.69%
0.00%
0.11%
0.14%
“ G “ Portion
1.06%
0.77%
Dec/09
0.34%
1.00%
Sep/09
2.00%
0.18%
Balance Sheet by Index
We present below the composition of assets and liabilities, including derivatives, of BB Consolidated,
detailed by index:
R$ billion
Assets
Liabilities
184.6
338.0
139.7
Fixed
140.9
CDI/TMS/FACP
IRP/TBF/TR
138.4
51.2
Price Index
TJLP
6.2
16.7
US$/Gold
Without Index
31.3
31.4
Assets: Tax Credit; Permanent
Liabilities: Equity; Adm. Pro.; Float.
86.1
83.0
40.7
6.0
73.6
33.4
Total R$ 700.6 bi
Figure 63. Composition of Banco do Brasil's assets and liabilities in the country
The chart below shows Banco do Brasil’s net mismatches, by index in Brazil.
21.91%
R$ billion – 12.31.2009
153.5
1.51%
10.6
0.18%
1.3
0.02%
0.1
-3.2
-0.46%
-34.7
-4.96%
-40.3
-87.3
-5.75%
-12.45%
Fixed
Price
Index
Figure 64. Net Position
131 - Banco do Brasil – MDA 4Q09
CDI/TMS/FACP
TJLP US$/others
S/INDEX
PL/others
IRP/TBF/TR
Value at Risk
The figure below shows a Box-Plot analysis of the Consolidated BB Value at Risk (VaR – without BNC
and BV), since the first quarter of 2008 and shows the crisis behavior in the period in a graphical
manner:
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1Q 2008
2Q 2008
3Q 2008
4Q 2008
1Q 2009
2Q 2009
3Q 2009
4Q 2009
Figure 65. Financial Consolidated BB VaR
The following table describe the BB Consolidated minimum, average, and maximum VaR observed on
the following periods:
Table 110. Consolidated BB VaR
Period
Jan to Dec/2008
Jan to Dec/2009
132 - Banco do Brasil – MDA 4Q09
Minimum
R$ thousand
Maximum
Average
89,426
389,597
212,117
647,895
652,740
1,301,299
The following table presents the Banco do Brasil Box-Plot analysis of the Foreign Network’s VaR since
the first quarter of 2008.
120,000
100,000
US$ thousand
80,000
60,000
40,000
20,000
0
1Q 2008
2Q 2008
3Q 2008
4Q 2008
1Q 2009
2Q 2009
3Q 2009
4Q 2009
Figure 66. Consolidated Foreign Network's VaR
The following table describes the Foreign Network's minimum, average, and maximum VaR for the
following periods:
Table 111. Foreign Network's VaR
Period
Jan to Dec/2008
Jan to Dec/2009
133 - Banco do Brasil – MDA 4Q09
Minimum
US$ thousand
Maximum
Average
14,349
9,049
21,842
59,429
41,887
101,679
BB Trading portfolio
For management purposes, Banco do Brasil separates trading operations from the others, establishing
its own strategies and limits. The groups shown below, International and Domestic Trading, are
subdivisions of the Trading Portfolio (Bacen Circular 3,354).
The illustration below shows a Box-Plot analysis of the International Trading portfolio's VaR since the
first quarter of 2008.
1,000
900
800
US$ thousand
700
600
500
400
300
200
100
0
1Q 2008
2Q 2008
3Q 2008
4Q 2008
1Q 2009
2Q 2009
3Q 2009
4Q 2009
Figure 67. VaR for the International Trading Portfolio
The table below sets out the average, minimum and maximum VaR of the international trading portfolio
observed in the periods shown:
Table 112. International Trading Porfolio’s VaR
Period
Jan to Dec/2008
Jan to Dec/2009
134 - Banco do Brasil – MDA 4Q09
Minimum
US$ thousand
Maximum
Average
218
220
600
338
952
495
The illustration below shows a Box-Plot analysis of the Domestic Trading portfolio's VaR since the first
quarter of 2008.
6,000
5,000
R$ thousand
4,000
3,000
2,000
1,000
0
1Q 2008
2Q 2008
3Q 2008
4Q 2008
1Q 2009
2Q 2009
3Q 2009
4Q 2009
Figure 68. VaR for the Domestic Trading Portfolio
The following table describes the Domestic Trading portfolio's minimum, average, and maximum VaR
for the following periods:
Table 113. Domestic Trading Porfolio’s VaR
Period
Jan to Dec/2008
Jan to Dec/2009
135 - Banco do Brasil – MDA 4Q09
Minimum
R$ thousand
Maximum
Average
-
657
2,012
3,792
5,280
Sensitivity to Interest Rate
We present below a table containing the inventory of operations sensitive to the variations in the interest
rates, allocated by risk factor and by interest rate repricing period, of BB Consolidated:
Table 114. Sensitivity to Interest Rate – 12/31/2009
Assets
Fixed
CDI/TMS
Inflation
TR/IRP
TJLP
US$/ME
Total - Earning Assets
Liabilities
Fixed
CDI/TMS
Inflation
TR/IRP
TJLP
US$/ME
Total - Interest Bearing Liabilities
Gap
Accumulated Gap
Accumulated Gap as % Assets
(Earning Assets)
136 - Banco do Brasil – MDA 4Q09
R$ million
0
338,050
140,990
16,714
51,171
31,381
82,845
661,151
40,368
< 1 Mo
177,416
140,990
621
19,963
1 > 3 Mo
17,425
16,714
51,171
30,760
17,372
3 > 6 Mo
24,164
9,110
6 > 12 Mo
32,843
7,979
1 > 3 Yrs
56,410
17,845
338,990
133,442
33,274
40,822
74,255
(113,878)
(139,725)
(509)
(18,887)
(272,999)
(14,358)
(6,166)
(138,430)
(30,744)
(13,875)
(203,572)
(5,748)
(9,054)
(14,802)
(7,345)
(14,276)
(21,621)
(13,749)
(14,538)
(28,287)
(9,299)
(15,515)
(24,814)
65,991
65,991
(70,130)
(4,139)
18,472
14,333
19,201
33,534
45,968
79,502
15,554
95,056
19.5%
-52.6%
55.5%
47.0%
61.9%
> 3 Yrs
29,792
10,576
38.5%
(164,377)
(139,725)
(6,166)
(138,430)
(31,253)
(86,145)
(566,096)
95,055
14.4%
8.1.2 Liquidity Risk
Banco do Brasil maintains levels of liquidity that are adequate for the institution's commitments assumed
in Brazil and abroad, resulting from its broad and diversified depositor base and the quality of its assets,
the capillarity of its network of overseas branches and of access to the international capital market.
Stringent control over liquidity risk is in accordance with the Market and Liquidity Risk Policy established
for the BB Consolidated, fulfilling the requirements of national banking supervision and of the other
countries where the Bank operates.
Management instruments adopted in the BB Conglomerate are:
• Short, Medium and Long Term Liquidity Forecasts,
• Liquidity Risk Limits, and
• Liquidity Contingency Plan.
Short, Medium and Long-term Liquidity Forecasts permit the evaluation of the effect of mismatching
between funding and investments, with the objective of identifying situations that could compromise the
institution's liquidity, taking into consideration the budget planning of the institution, as well as market
conditions.
Regarding, liquidity risk limits, the Liquidity Reserve is utilized in short term liquidity management of the
domestic and international areas, being the minimum level of assets of high liquidity to be maintained by
the Bank, compatible with the exposure to risk resulting from the characteristic of its operations and from
the market conditions. The Liquidity Reserve is utilized as a parameter for the identification of a liquidity
crisis situation and to deploy the Liquidity Contingency Plan, being monitored on a daily basis.
Dec/08
Jan/09
Feb/09
Mar/09
Apr/09
May/09
Average Liquidity
Jun/09
Jul/09
Aug/09
Sep/09
Oct/09
Nov/09
Dec/09
Liquidity Reserve
Figure 69. Liquidity Reserve - Domestic Treasury
Still regarding liquidity risk limits BB utilizes, in the planning and execution of its annual budget, the
indicator of Availability of Free Funds (DRL), which aims to guarantee a balance between funding and
resources application from the commercial portfolio and to ensure the financing of liquidity with structural
resources.
A DRL limit is defined annually by the Global Risk Committee (CRG), and its monitoring takes place on
a monthly basis, employed to guide the budget's planning in accordance with the targets for funding and
commercial loans, and with the liquidity managing process as determined by the Board of Directors.
137 - Banco do Brasil – MDA 4Q09
Dec/08
Jan/09
Feb/09
Mar/09
Apr/09
May/09
Jun/09
Jul/09
Aug/09
Sep/09
Oct/09
Nov/09
Dec/09
Annual Limit
Monthly DRL
Figure 70. DRL Indicator
After the implementation of the liquidity re-composition plan in June 2008, resulting in the adaptation of
the DRL limit to that year, CRG established a new limit for 2009, with a view to the business strategy
and the market conditions. During this period, comfortable liquidity conditions are witnessed in the
Institution's structural liquidity as measured by this indicator.
Jan/09
Feb/09
Mar/09
Apr/09
May/09
Jun/09
Average Liquidity
Jul/09
Aug/09
Sep/09
Oct/09
Nov/09
Dec/09
Liquidity Reserve
Figure 71. Liquidity Reserve - International Treasury
The actions and steps to be taken in a liquidity crisis are defined in the Liquidity Contingency Plan. This
Plan will be activated when the sum shown or the Liquidity projection points to levels below the Liquidity
Reserve's pre-defined limit.
138 - Banco do Brasil – MDA 4Q09
8.1.3 Credit Risk
Structure
In Banco do Brasil, the credit risk management structure is composed of a Risk Management
Directorship, a Credit Directorship, an Operating Assets Restructuring Directorship. The Risk
Management Directorship, by appointment of the Board of Directors, is responsible for the Bank's credit
risk management. This structure is in accordance with CMN Resolution 3721 dated April 30, 2009.
The investor relations page in BB's website shows in detail information on the management structure
and the credit risk management process.
Credit Risk Management
With the intention of fulfilling the demands of Basel II and aligned with best risk management practices,
BB developed its own methodology for the determination of risk components: Expected Delinquency
Frequency (FEI), Loss Given Default (LGD), exposure to credit risk, which are inputs for the
measurement of the Economic Capital (EC) and of the Expected Loss (EL).
The internal model for measuring the VaR of credit has its theoretical grounds based on the actuarial
approach, used in the banking industry.
The VaR of the loan portfolio is associated with a distribution of added loss for a given level of
confidence. The mean value of this distribution is the Expected Loss, which represents how much the
Bank expects to lose on average in a given period of time, the protection of which is performed by
means of provision. The Economic Capital, which is associated with Unexpected Loss, is determined by
the difference between VaR and EL. For this portion the Bank protects itself through the allocation of
capital required for risk coverage.
Frequency %
Reliance
Level (%)
EL
Economic Capital
VaR
Losses - $
Figure 72. Measuring and management instruments
The distribution of aggregate loss is obtained utilizing the following risk components as data input: FEI,
LGD and exposure subject to credit risk.
139 - Banco do Brasil – MDA 4Q09
The measurement of the VaR of Credit provides subsidies for the appraisal of risk and return of the
Bank's loan portfolio, and for the process of establishment of limits for the loan portfolio. Its evaluation
has helped in the decision-making process of the Bank, bringing historical information and permitting an
analysis of the risk behavior trend. Furthermore, its use has proved extremely valuable in the
dissemination of the credit risk management culture at the Bank.
As regards the evaluation of the return, the values of EL and EC serve as inputs for the calculation of
the Risk-Adjusted Return on Capital (RAROC). The use of RAROC is intended to subsidize important
decision-making processes at the Bank. Its tracking in the historical perspective for the portfolios
analyzed has allowed the assessment of risk and return to be present in the decisions of the Institution.
In addition to the use of techniques for identification and measuring of risks, BB monitors and controls
the credit risk concentration in terms of risk exposure and commitment of the Referential Equity (RE).
The Bank developed a credit risk concentration control method, analyzing the interrelation among the
various economic sectors that comprise the business loan portfolio. This model evaluates the credit risk
concentration of the borrowers.
BB also has other management tools of credit risk appraisal, with an emphasis on:
•
•
•
•
•
Macrosectoral limits for the Business segment;
QIP - Quality Index of the Portfolio - qualitative and quantitative indicator of the portfolio. The
delinquency concept follows the precepts defined by CMN Resolution 2682/99;
Delinquency Rates of 15 and 90 days - correspond to the division of the balance overdue for
more than 15 and 90 days, respectively, by the balance of the portfolio;
Budget of credit risk - corresponds to the projection of Allowance for losses to form the annual
budget of BB; and
Credit risk management reports - systematic monitoring and projections for the loan portfolio
from different views.
In the regulatory sphere, special emphasis is placed on the publication of Resolution nº 3721 on
4/30/2009, which establishes guidelines for implementation of the credit risk management structure at
Financial Institutions and other institutions licensed to operate by Bacen and Release nº 18365, of
4/22/2009, which presents the preliminary criteria for use of the approaches based on internal models,
topics that already comprise the Bank's process of preparation for the new guidelines established in the
scope of Basel II.
140 - Banco do Brasil – MDA 4Q09
Concentration
BB's amplified Loan Portfolio, formed by the foreign and domestic loan portfolio, guarantees granted and
Private Securities, in addition to BNC and BV portfolio, totaled R$ 320,696 million in December 2009.
In December 2009, 24.0% of the amplified loan portfolio was concentrated in the 100 largest borrowers.
It should be noted, however, that for information on the concentration of the portfolio are set apart the
amount of BNC and BV.
Table 115. Concentration of the Loan Portfolio on the 100 Largest Borrowers
R$ million
Balance
2nd to 20th
21st to
100th
Period
1st Customer
Balance
Balance
100th largest
Balance
Dec/07
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
1.5
2.3
2,467
4,185
9.8
8.6
16,299
15,539
10.1
10.2
16,911
18,394
21.3
21.2
35,677
38,118
2.3
4,658
10.6
21,222
10.4
20,965
23.3
46,844
2.3
4,811
10.5
22,505
9.9
21,113
22.7
48,429
2.4
5,576
11.2
26,644
10.3
24,454
23.9
56,675
2.6
6,204
10.9
26,190
10.7
25,800
24.2
58,194
2.5
6,201
10.9
26,950
10.0
24,681
23.3
57,832
2.7
2.5
6,951
8,070
11.4
10.8
29,927
34,776
10.0
10.6
26,078
34,137
24.1
24.0
62,956
76,983
Does not consider Banco Nossa Caixa and Banco Votorantim operations.
Period
Dec/07
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
Portfolio
Colateral
Securities
Total
160,739
4,689
1,679
167,107
172,760
190,082
202,201
5,864
6,582
7,132
1,431
3,965
4,284
180,055
200,629
213,617
224,808
228,101
8,220
7,899
4,175
4,662
237,203
240,662
235,400
245,712
300,829
8,600
10,155
9,875
3,900
5,748
9,992
247,900
261,615
320,696
The ratio between the exposure of the largest borrower and the Referential Equity Amount ended
December 2009 in 13.9%, as per the table below:
Table 116. Concentration of the Loan Portfolio of the 100 Largest Borrowers % in relation to RE
Period
Dec/07
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
1st Customer
Balance
2nd to 20th
Balance
21st to 100th
Balance
100th largest
R$ million
Balance
7.1
11.5
13.8
2,467
4,185
4,658
46.7
42.7
62.7
16,299
15,539
21,222
48.5
50.6
61.9
16,911
18,394
20,965
102.2
104.8
138.4
35,677
38,118
46,844
13.4
12.6
4,811
5,576
62.5
60.4
22,505
26,644
58.7
55.4
21,113
24,454
134.6
128.5
48,429
56,675
13.0
6,204
55.0
26,190
54.2
25,800
122.1
58,194
12.4
13.5
13.9
6,201
6,951
8,070
53.8
58.2
59.7
26,950
29,927
34,776
49.3
50.7
58.6
24,681
26,078
34,137
115.5
122.3
132.1
57,832
62,956
76,983
141 - Banco do Brasil – MDA 4Q09
The amplified business loan portfolio, disregarding BNC and BV loan portfolio, totaled R$ 169,649
million in December/2009. The largest concentration is in transactions contracted with companies from
the Oil macro sector that corresponds to 10.7% of the amplified business portfolio, growth of 28.5% in
the last 12 months. The distribution of the Loan Portfolio Economic Macro Sectors is shown in the table
below:
Table 117. Concentration of the Loan Portfolio by Macro-sector
R$ million
Macro-sector
Oli
Foodstuffs of Vegetable Origin
Metalworking and Steel
Services
Foodstuffs of Animal Origin
Automotive
Building
Electricity
Transport
Telecommunications
Retail Trade
Textile and Garments
Paper and Pulp
Electrical and Eletronic Goods
Other Activities
Agricultural Consumables
Chemicals
Timber and Furniture
Wholesale Trade and Sundry Ind.
Beverages
Leather and Shoes
Total
Internal Loan Portfolio
Abroad Loan Portfolio
Garantees
Securities
Total
Dec/08
Share %
Sep/09
Dec/09
14,131
10.0
17,359
11.1
18,159
13,838
14,224
9.8
10.1
15,612
15,471
10.0
9.9
15,598
15,254
9,044
8,287
8,790
6.4
5.9
6.2
13,826
10,311
9,122
8.9
6.6
5.9
12,935
10,589
9,837
6,213
7,405
7,015
4.4
5.3
5.0
8,202
7,821
7,389
5.3
5.0
4.7
7,094
9,774
10,155
7,268
5,378
5.2
3.8
6,355
6,229
4.1
4.0
6,674
7,190
5,457
5,493
5,621
3.9
3.9
4.0
5,753
5,441
5,216
3.7
3.5
3.3
6,208
6,327
5,813
3,644
4,804
2.6
3.4
4,555
4,181
2.9
2.7
7,115
4,930
4,132
2,751
2,433
2.9
2.0
1.7
3,736
3,011
2,773
2.4
1.9
1.8
4,128
3,160
2,993
3,009
1,751
140,686
2.1
1.2
100.0
1,823
1,720
155,907
1.2
1.1
100.0
3,912
1,806
169,649
115,191
15,106
8,220
4,175
125,108
14,896
10,155
5,748
132,410
17,371
9,875
9,992
142,693
155,907
169,649
Does not consider Banco Nossa Caixa and Banco Votorantim operations.
142 - Banco do Brasil – MDA 4Q09
Share %
Chg. %
Share % On Dec/08 On Sep/09
10.7
28.5
4.6
9.2
12.7
(0.1)
9.0
7.2
(1.4)
43.0
(6.4)
7.6
6.2
27.8
2.7
5.8
11.9
7.8
14.2
(13.5)
4.2
5.8
32.0
25.0
6.0
44.8
37.4
3.9
(8.2)
5.0
4.2
33.7
15.4
13.8
7.9
3.7
3.7
15.2
16.3
3.4
3.4
11.4
4.2
95.3
56.2
2.9
2.6
17.9
(0.1)
10.5
2.4
1.9
14.9
5.0
1.8
23.0
7.9
30.0
114.5
2.3
1.1
3.2
5.0
100.0
20.6
8.8
8.1.4 Operating Risk
Introduction
The structure of Banco do Brasil's operating risk management is composed of a Risk Management
Directorship, Directorship of Internal Controls, and Security Management Directorship, according to
CMN Resolution 3380, which governs on the implementation of an operating risk management structure.
Information about the management structure and operating risk management process can be found in
more detail on BB's Internet page, investors relations website.
In order to meet the Basel II implementation schedule, in accordance with the Release 19.028 of the
Central Bank of Brazil (BACEN), of October 29, 2009, which provides for the use of advanced models as
from 2013, as well as the guidance defined by the Central Bank of Brazil in Release 19.217, regarding
determination of Required Referential Equity, the Bank has been carrying out actions aimed at the
adoption of an internal operating risk model which enables more accurate management and fulfills the
requirements established by the Regulator. During the fourth quarter, we emphasize the implementation
during the fourth quarter of 2009 of a monitoring and analysis procedure for operating risk scenarios.
In order to manage operational risk, Banco do Brasil, follows the best market practices, monitors
operating risks through key risk indicators, operational loss exposure limits and a systematized internal
database.
Key Risk Indicators (KRI's)
KRI is a tool that supports operational risk management. It is comprised of one or more combined and
interrelated variables that is (are) an integral part of an operating process, with behavior expected
according to predefined rules, and whose variation indicates greater or lesser exposure to the
operational risk.
At BB they are used with the objective of identifying weak points associated with the critical operating
processes and to assist in the proposition of operating loss mitigation actions. During the fourth quarter
of 2009, the KRI implemented by BB had their cause-effect relation with actual loss reviewed, in order to
contribute more in mitigating operating losses.
Operating Loss Exposure Limits
In order to ensure an effective management of operating risks, Banco do Brasil employs operating loss
exposure limits, which are intended to establish the limits acceptable to the Bank for operating losses,
which are remitted for examination every month by the Operating Risk Sub-Committee and Global Risk
Committee (GRC).
In this respect, the BB created the Operating Loss Global Limit in order to allow operating loss
management based on statistically pre-established tolerance levels, and to allow the detection of
weaknesses associated with processes likely to cause significant losses.
The table below presents the monitoring of BB's operational loss, and also includes the losses of BNC
as from the third quarter of 2009, divided by loss event category, in percentages.
143 - Banco do Brasil – MDA 4Q09
Table 118. Monitoring of Operational Loss
Loss Event Category
Labor Issues
Business Failures
External Fraud and Theft
Process Failures
Physical Assets Damage
Internal Frauds
System Failures
Activities Interruption
4Q08
1Q09
2Q09
3Q09
4Q09
40.4%
41.9%
45.2%
39.1%
39.5%
32.2%
14.5%
16.3%
22.1%
35.1%
11.0%
18.2%
16.6%
18.0%
13.3%
11.6%
19.8%
12.9%
11.8%
10.3%
3.4%
4.6%
5.3%
4.1%
0.4%
1.4%
0.9%
3.5%
4.8%
1.3%
0.0%
0.0%
0.1%
0.0%
0.2%
0.0%
0.2%
0.0%
0.1%
0.0%
The Bank also defines specific limits in order to reduce the level of exposure and to guarantee the
adoption of mitigation actions at a lower level of granularity.
The limit for foreign branches, the specific limit for losses with credit cards and the limit for self-service
channels merit special emphasis. The latter, during the fourth quarter of 2009, had its methodology
reviewed, so that in addition to giving priority to loss-reduction actions, it began to assess the
effectiveness of the security technical tools implemented for the ATM, POS, Personal Internet,
Withdrawals Abroad, CABB, Cell Phones, Lotteries, 24hr Banking, ATM (CEF), and Financial Manager
4
channels. .
4
ATM: Automated Teller Machines; POS: Storeowner debit terminal; CABB: Call Center Banco do Brasil; Lottery Ticket Sales
Outlets: withdrawals performed at lottery ticket sales outlets; ATM (CEF): Terminals of CEF shared with BB.
144 - Banco do Brasil – MDA 4Q09
8.2 Capital Structure
8.2.1 Shareholders’ Equity
Banco do Brasil’s Shareholders' Equity at year-end 2009 was of R$ 36,119 million, a sum 20.6% above
the same period in the previous year and 7.3% above September 2009. The growth of shareholders'
equity in the last 12 months was due to the incorporation of the Results.
Table 119. Shareholders’ Equity
R$ million
Shareholders’ Equity
Capital
Reserves
MTM – Securities and Derivatives
(Shares in Treasury)
Retained earnings (accumulated losses)
P&L Accounts
145 - Banco do Brasil – MDA 4Q09
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
25,407
26,371
27,889
29,937
30,859
32,360
33,661
36,119
13,212
13,212
13,699
13,780
13,780
18,549
18,549
18,567
10,131
13,101
12,762
15,990
15,771
13,626
13,311
17,313
85
58
(33)
199
124
216
324
270
1
1,978
-
0
1,461
(31)
-
(31)
1,215
(31)
-
(31)
1,509
(31)
-
8.2.2 Regulatory Capital
The implementation of the rules of Basel II in Brazil, especially in relation to the capital requirement,
produced several modifications in the method of measuring capital to bear the risks inherent to banking
activities.
The implementation schedule of Basel II in Brazil was officialized by the Brazilian Central Bank - Bacen
by means of Communication 12,746, of 12.9.2004, and subsequently adjusted by Communication 6137,
of 9.27.2007. This agenda was built in phases, initially establishing, as regards capital requirement, the
use of a standardized approach (defined by Bacen), and at the end, the use of advanced models. On
th
October 29 ., 2009, BACEN, through Release 19.028, adjusted the schedules previously disclosed, with
a view to supplementing the measures and procedures required for proper implementation of Basel II in
Brazil.
To regulate the transition from Basel I to Basel II (standardized approach), Bacen published several
rules about capital requirement (Pillar I), process of supervision and transparency of information (Pillars
II and III).
Referential Equity Amount (RE)
On 02.28.07, CMN approved alterations in the rules for definition of the RE (Referential Equity) of
financial institutions by means of Resolution 3444, revoking CMN Resolution 2837, of 05.30.2001. On
the same date, BACEN published Circular 3343/2007, which refers to the procedures to be adopted in
the request for categorization of borrowing instruments at Tier I and Tier II of RE.
5
6
The RE is formed by the sum of the Tier I and Tier II portions, being deducted the asset balances
represented by the following funding instruments issued by the financial institution: stock, hybrid capital
and debt instruments, subordinated debt instruments and other financial instruments described in CMN
Resolution 3444/2007, art. 12 and art. 13, § 3.
According to CMN Resolution no. 3444/2007, for purposes of RE composition, the value of preferred
shares issued with a redemption clause having an original term of less than ten years, increased by the
value of subordinated debt instruments (DS), is limited to 50% of RE Tier I (art. 14, clause III). On the
other hand, the amount of hybrid capital and debt instruments (IHCD) is limited to the RE Tier I value,
being deducted the existing DS amount and its remaining issue margin (art. 14, clause I). In December
2009, the IHCD margin available to compose RE was of R$ 17,0 billion, whereas for issue of DS the
same was of R$ 3.4 billion.
Required Referential Equity (RRE)
CMN Resolution 3,490, of 8.29.2007, established the Required Referential Equity (RRE) concept to
substitute the Required Shareholders' Equity (RSE) concept, revoking exhibit IV of CMN Resolution
2099/1994, and other rules concerning the topic. The RRE was henceforth comprised of the following
six portions:
RRE = PEPR + PCAM + PJUR + PCOM + PACS + POPR
Where:
PEPR - portion referring to the exposures weighted by the FPR assigned thereto;
PCAM - portion referring to the risk of exposures in gold, in foreign currency and in operations subject to
exchange variance;
PJUR - portion referring to the risk of operations subject to the variation of interest rates and classified in
the trading book, as provided for by Resolution 3,464, of 06.27.2007, where n = number of the different
5
Tier I = it is determined by the sum of the values corresponding to the net equity, to the credit income accounts balances and to a blocked account
deposit to cure capital deficiency, excluded the items mentioned in Bacen Resolution 3.444/2007, art. 1, § 1, clause I to VI.
Tier II – it comprises the sum of the values corresponding to revaluation reserves, contingency reserves and special profit reserves related to nondistributed statutory dividends, increased by values corresponding to hybrid capital and debt instruments, subordinated debt instruments and other
items described in CMN Resolution 3.444/2007, art. 1, § 2, clauses I and II.
6
146 - Banco do Brasil – MDA 4Q09
portions relating to the risk of operations subject to the variation of interest rates and classified in the
trading book;
PCOM - portion referring to the risk of operations subject to the variation of the price of commodities;
PACS - portion referring to the risk of operations subject to the variation of the price of shares and
classified in the trading book, as provided for in Resolution 3,464, of 06.27.2007;
POPR - portion referring to the operational risk.
The reviews in the Referential Equity (RE) were incorporated by BB in July 2007. As regards the
Required Referential Equity (RRE), the rule started to be required as of 07.01.2008. The following
information is in compliance with the regulation in effect.
147 - Banco do Brasil – MDA 4Q09
Performance
In December 2009, Banco do Brasil's Referential Equity reached R$ 58,264 million, 34.3% over that
observed in December 2008 and 13.2% above September 2009.
Table 120. BIS Ratio – Financial Conglomerate
R$ million
Referential Equity Amount – RE
Level I
Capital
Capital Increase
Retained earnings (accumulated losses)
Capital reserves
Revenue reserves
Reavaluation reserves
Mark-to-Market – Securit. And Derivatives
Treasury shares
Accumulated Earnings or Losses
Corporate Profit Sharing
Income accounts
Tax Credit excl. RE's Tier I – Res.3059
Deferred Assets
Mark-to-market
Additional Provision
Hybrid Capital and Debt Instruments - Tier I
Tier II
Subordinated debt
Hybrid Capital and Debt Instruments
Inst of Cap. Issued by IF with FPR of 100%
Revaluation reserves
Mark-to-market
Financial Instruments Excluded from RE
RSE/RRE
Credit Risk(1)
Market risk(2)
Operating Risk(3)
Surplus/(insufficiency) of RE
K Coefficient %
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
35,934
33,231
35,271
43,391
47,644
50,087
51,456
58,264
25,022
13,212
-
22,455
13,212
-
23,954
13,699
-
31,201
13,780
-
32,915
13,780
-
35,218
18,549
-
36,121
18,549
-
41,068
18,567
-
1
-
0
-
-
-
-
-
0
-
-
-
-
-
-
-
10,131
13,101
12,762
15,990
15,771
13,626
13,311
17,313
(6)
(6)
(7)
(7)
(15)
(14)
(7)
(7)
85
58
(33)
199
124
216
324
270
-
-
-
(31)
(31)
-
-
-
-
1
-
-
(0)
834
(31)
787
(31)
21
(31)
0
1,978
-
1,461
-
1,215
-
1,509
-
(22)
(3,743)
(3,702)
(22)
(22)
(22)
(22)
(22)
(253)
(303)
(352)
(513)
(562)
(638)
(291)
(242)
(104)
134
126
(29)
(97)
(121)
(144)
(85)
-
-
-
1,835
1,918
2,867
2,903
2,782
-
-
-
-
-
-
-
2,524
10,913
10,776
11,317
12,190
14,729
14,869
15,335
17,196
10,385
10,745
11,209
11,729
14,342
14,653
15,230
17,078
870
780
938
1,145
1,134
956
871
853
-
-
-
-
-
-
-
-
6
6
7
7
15
14
7
7
104
(134)
(126)
29
97
121
144
85
(452)
(620)
(711)
(720)
(859)
(875)
(917)
(827)
26,925
26,178
29,235
28,346
29,813
29,310
31,500
30,980
34,879
33,554
35,957
34,574
43,647
40,487
46,758
43,557
747
889
102
119
170
228
631
674
9,010
3,996
401
5,458
401
11,891
1,155
12,765
1,155
14,131
2,528
7,809
2,528
11,506
14.7
12.5
13.0
15.2
15.0
15.3
13.0
13.7
(1) Referring to the PEPR portion pursuant to circular 3,360 of 9/12/2007.
(2) Referring to the PCAM, PJUR, PCOM and PACS portions, Circulars 3,361 to 3,364/2007, 3,366/2007, 3,368/2007 and 3,389/2008.
(3) Referring to the POPR portion, pursuant to circular 3,383, of 4/30/2008.
BB's RRE reached the sum of R$ 46,785 billion in December, up 48.5% over December 2008 and 7.2%
over September 2009. The main part of the requirement was caused by the credit risk portion (PEPR),
which reflects chiefly the growth of loan operations. The following table presents the main accounts
forming the PEPR quota in the third and fourth quarters of 2009, considering the Economic-Financial
Consolidated:
Table 121. Main accounts of the PEPR share (Economic Financial Conglomerate)
R$ million
Loan Operations
Ohter Credits
Securities
Others
TOTAL
148 - Banco do Brasil – MDA 4Q09
Sep/09
Chg. %
Dec/09
22,454
23,966
6.7
5,284
1,461
11,288
6,314
1,903
11,373
19.5
30.3
0.8
40,487
43,557
7.6
With respect to market risk, we present in the following table the Required Referential Equity in
December 2009, by risk factor.
Table 122. PRE for Market Risk by Risk Factor
R$ million
Risk Factors
PRE Exchange
PRE Interest Rate
PRE Commodities
PRE Shares
PRE Market Risk¹
Dec/09
599
32
43
674
For the operational risk, BB has opted for the utilization of the Alternative Standardized Approach, with
7
requirement of 80%. of the sum required in accordance with Circular 3383. The total of R$ 2,528 million
allocated takes into account BNC and BV. The allocated capital by business line is presented as follows.
Table 123. Allocated capital for operational risk by line of business
Business Line
Asset Management
Commercial (1)
Retail
Corporative Finance (2)
Trading and Sales
Payments and Settlements
Financial Agent Services
Retail Brokerage
Amount (R$ million)
70
594
270
429
810
304
48
3
2,528
TOTAL
(1) Included R$ 95 million from BNC;
(2) Included R$ 152 million from BNC and R$ 227 million from BV.
The K Coefficient exhibited growth in relation to 3Q09, going to 13.7% in 4Q09. This ratio allows BB
leverage up to R$ 104,368 million in loan assets, considering the 100% weighting.
14.7
12.5
13.0
4.1
4.2
8.4
8.8
4.5
10.2
Mar/08 Jun/08
15.2
15.0
15.3
4.3
4.6
4.5
10.9
10.4
10.8
Sep/08 Dec/08 Mar/09 Jun/09
Tier I
Tier II
Figure 73. BIS Ratio – Economic Financial Conglomerate
7
Since January 2010, the allocated percentage will reach 100%.
149 - Banco do Brasil – MDA 4Q09
13.0
13.7
3.9
4.0
9.1
9.7
Sep/09 Dec/09
The improvement observed in the period is launched from the profits capitalization, the issuance of R$ 1
billion in Certificates of Subordinated Banking Deposits and Perpetual Bonds of US$ 1,450 billion. This
last issue was considered by the Central Bank as eligible for purposes of computing the Tier I in the
Capital, in the form of capital and debt hybrid instrument.
In 4Q09 BB released a Material Fact that informed the market that, with the consent of the National
Treasury, is finalizing studies to increase its capital, in minimum, R$ 8 billion and, in maximum, R$ 10
billion, in order to sustain its future growth.
Table 124. Changes in Composition of BIS Ratio
R$ million
Net Income deducted of Interest on Own Capital
Increase of Subordinated Debt
Other Changes in Referential Shareholders’ Equity
Tax Credit excluding RE's Tier I – Res.3059
Hybrid Capital and Debt Instruments
Increase of Market Risk Requirement
Increase of Credit Risk Requirement
Increase of Operational Risk Requirement
Required
Referential
Equity
Referential
Equity
Effect in Basel
Ratio
Effect in
Leaverage
2, 493
1, 848
-
0.6
0.4
22, 666
16, 800
2, 485
-
0.6
22, 593
(18)
-
(0.0)
(164)
-
42
(0.0)
(386)
-
3,069
-
(0.9)
-
(27,901)
-
Changes in the Quarter
6, 808
3,112
0.7
33, 608
Balance at Sep/09
Balance at Dec/09
Quarterly Net Variation
51, 456
43,647
13.0
70, 992
58, 264
46,758
13.7
104, 600
6, 808
3,112
0.7
33, 608
150 - Banco do Brasil – MDA 4Q09
Fixed Asset Ratio
In the last quarter, the Fixed Asset Ratio dropped from 11.7% to 11.4%. With the current fixed asset
level, BB was able to increase its fixed assets by R$ 22.5 billion, without leading to be out of the
maximum 50% limit of the Referential Equity.
Table 125. Fixed Asset Ratio
R$ million
Shareholders' equity
Subordinated debts eligible as Capital
Hybrid Capital and Debt Instruments
Other
Adjusted Referential Equity Amount (A)
Permanent Assets
Variable Income Securities
Stock Exchange and Cetip Clearing
Leased assets
Losses with Leasing to be Amortized
Deferred Assets (Resolution CMN 3,444)
Vested Rights Payroll up to 06/30/09 (Res. 3642 Bacen)
Equity Int. in the Results of Subs and Affil.
Total Fixed Assets (B)
Fixed Asset Ratio (B/A) - %
Margin (Surplus) - %
151 - Banco do Brasil – MDA 4Q09
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
Dec/09
25,407
26,371
27,889
29,937
30,859
32,360
33,661
36,119
10,385
10,745
11,209
11,729
14,342
14,653
15,230
17,078
870
(727)
780
(4,665)
938
(4,765)
1,145
580
1,134
1,308
956
2,118
871
1,693
853
4,214
35,934
6,284
33,231
7,042
35,270
8,217
43,391
13,606
47,643
19,421
50,087
19,779
51,455
23,729
58,264
25,178
-
39
38
28
26
31
204
308
(0)
(1,614)
(0)
(2,271)
(1)
(2,877)
(0)
(4,078)
(0)
(4,836)
(0)
(5, 221)
(1)
(7,759)
(0)
(8,166)
(55)
(253)
(58)
(303)
(62)
(352)
(55)
(513)
(48)
(562)
(42)
(638)
(39)
(291)
(35)
(242)
-
-
-
(3,921)
(6,284)
(4, 894)
(4,782)
(5,305)
-
-
-
-
-
(3, 619)
(5,028)
(5,115)
4,362
4,449
4,964
5,067
7,716
5,396
6,035
6,623
12.1
13,605
13.4
12,167
14.1
12,671
11.7
16,628
16.2
16,105
10.8
19,648
11.7
19,693
11.4
22,509
8.2.3 Economic Capital
Banco do Brasil utilizes the concept of economic capital in its internal processes of risk management.
The tables below present the total capital requirement and the requirement by sector of the economy
(excluding BV).
Table 126. Economic Capital
Economic Capital
Credit Risk Requirement (1)
Market Risk Requirement (2)
Operating Risk Requirement
TOTAL
3Q08
4,443
185
1,224
4Q08
4,809
414
1,335
5,852
6,558
Internal Model
1Q09
2Q09
5,150
5,737
338
170
1,513
1,674
7,001
7,581
3Q09
7,397
176
1,967
4Q09
8,060
104
2,250
9,540
10,414
(1) To loans portfolio and guarantees
(2) Trade portfolio, capital consumption (Circ Bacen 3,354), exchange and commodities.
We present below the economic capital requirement over the Credit Risk detailed by macro-sectors and
individuals/businesses, disregarding BNC's and BV's information .
Table 127. Distribution of Economic Capital in the Loan Portfolio
R$ million
INDIVIDUALS
COMPANIES
Agribusiness of Animal Origin
Agribusiness of Vegetable Origin
Automotive
Beverages
Wholesale Trade and Sundry Ind.
Retail Trade
Building
Leather and Shoes
Electrical and Eletronic Goods
Electricity
Agricultural Consumables
Timber and Furniture
Metalworking and Steel
Pulp and Paper
Oil
Chemicals
Services
Telecomunications
Textiles and Garments
Transport
Other Activities
TOTAL
152 - Banco do Brasil – MDA 4Q09
Dec/08
3,156
1,653
83
258
122
12
37
88
91
28
74
55
49
49
72
31
72
58
229
25
94
101
27
4,809
Share
65.6%
34.4%
1.7%
5.4%
2.5%
0.2%
0.8%
1.8%
1.9%
0.6%
1.5%
1.1%
1.0%
1.0%
1.5%
0.6%
1.5%
1.2%
4.8%
0.5%
2.0%
2.1%
0.6%
100.0%
Dec/09
4,067
2,263
213
362
125
16
65
111
116
36
84
69
45
58
105
82
109
58
297
24
110
156
23
6,330
Share
64.2%
35.8%
3.4%
5.7%
2.0%
0.3%
1.0%
1.8%
1.8%
0.6%
1.3%
1.1%
0.7%
0.9%
1.7%
1.3%
1.7%
0.9%
4.7%
0.4%
1.7%
2.5%
0.4%
100.0%
Next, we present the economic capital requirement for market risk, by risk factor, of BB Consolidated:
Table 128. VaR by Risk Factor
Risk Factors
Pre-Fixed Interest Rate
Foreign Currency Coupom
Price Index Coupon
Exchange Variation
Commodities
PRE Market Risk*
R$ million
Dec/09
63.0
15.4
4.0
19.9
1.7
104.0
*Trading Book + Exchange Variation + Commodities
Finally, we show the economic capital requirements for operational risks, according to class of
operational loss events and taking into account BNC values. This calculation includes data associated
with the severity of the loss events recorded in the internal database.
Table 129. Distribution of Economic Capital in the Loan Portfolio
Loss Event Categories
Faults in Businesses
Damage to the Physical Property
Faults in Systems
Faults in Processes
External Fraud and Theft
Internal Fraud
Labor Issues
TOTAL
153 - Banco do Brasil – MDA 4Q09
R$ million
1,004
6
11
236
280
72
641
2,250
9 – Social and Environmental Performance
Presentation
Banco do Brasil holds the pioneer iniciative in the quarterly disclosure of the highlights of its Social and
Environmental Performance (RSA), presenting historical series and analysis that allow the reader to
understand how sustainability permeates the strategy and management of the company.
The decision about the quarterly disclosure of this information is based on the commitment to the
creation of social and environmental values, materialized in Agenda 21, and the understanding that this
data is as important to the company's sustainability as the economic and financial information, deserving
a similar treatment to that is already given to it. In addition, it seeks to respond to an ever growing mass
of shareholders who take into account social and socio-environmental, and corporate governance
aspects in their investment decisions.
RSA practices selected to form a part of the MD&A were picked out based on their relevance to the
Company's business, on the tangible return to shareholders, and on market research with pension funds
and specialists on the subject. The selection of which data justifies the quarterly monitoring of its
development (the other indicators are traditionally reported in the Annual Report) was also used as a
criterion in the structuring of this report. Like the rest of the report, this set of information is constantly
reviewed and monitored with a view to better adapting its reporting to the needs of analysts and
shareholders, target audience of this publication.
This chapter is divided into four major blocks, grouping the new RSA indicators and information that the
Bank had already been disclosing, per related topics: Relationships with Staff, Ecoefficiency, Business
with Socio-environmental Emphasis and Recognition of the Investor Market.
Considering the fact that integration of the Banco Nossa Caixa systems is still in progress, part of this
chapter's tables and figures still do not include information about BNC. For a better understanding, we
suggest the careful reading of the footnotes that go together with the tables.
154 - Banco do Brasil – MDA 4Q09
9.1 Employee Relations
This block contains the main actions regarding business sustainability, in connection with investments in
people by Banco do Brasil.
Characteristics of Workforce
Banco do Brasil invests in the creation and strengthening of a bond with its collaborators, so that its
professionals feel encouraged to build a career at the institution. People that join the staff tend to spend
most of their professional lives at the Bank, which contributes to the low turnover and causes the
stratification of the staff by age and length of service to evolve in a relatively linear manner, without
abrupt oscillations.
In 4Q09 there were small fluctuations in stratification, mainly due to consolidation of the BNC employee
base resulting from that bank's takeover. There was an increase in the relative participation of the
bracket of employees "above age 45", in detriment of the others.
4Q08
4Q09
3Q09
7.9%
8.9%
8.0%
26.4%
27.5%
29.3%
34.3%
34.6%
35.4%
28.1%
29.1%
30.4%
Up to 25 years
from 26 to 35 years
from 36 to 45 years
Over 45 years
Figure 74. Employees Age
Stratification by length of service at the Bank was affected by more expressive changes in 4Q09. These
changes arose basically from inclusion of BNC staff members, once all the new employees were
admitted into BB on the date of corporate takeover, which resulted in an increase in the bracket
including personnel with less than five years of employment.
4T08
3T09
14%
4T09
16%
14%
41%
41% 14%
15%
12%
48%
4%
4%
2%
5%
2%
4%
21%
22%
Up to 5 years
16 to 20 years
Figure 75. Aged Bracked
155 - Banco do Brasil – MDA 4Q09
6 to 10 years
21 to 25 years
20%
11 to 15 years
Over 25 years
Education and Professional Development
Banco do Brasil develops countless professional education and development actions. These actions
include onsite courses, the establishment of partnerships to provide distance learning solutions and the
concession of scholarships (academic and of languages), besides the incentive to studies by means of
the internal career planning system.
The total number of scholarships granted reached 10,724 in the quarter, which corresponds to 10.3% of
the staff. This percentage is lower than the comparison with the preceding quarter and with the same
period in 2008. Part of this indicator's decline refers to the increased employee base owing to Nossa
Caixa. In addition, Banco do Brasil has recently resumed the remote MBA programs, which should
contribute to improve the indicators in the coming quarters.
Table 130. Growth in the number of scholarships granted
4Q08
Undergraduate Scholarships
MBAs, Masters' and Doctors' Scholarships
Language Scholarships
Total Scholarships Granted
Number of employees in the period
Undergraduate Scholarships per Employee
MBAs, Masters' and Doctors' Scholarships per Employee
Language Scholarships per Employee
Total Scholarships per Employee
3Q09
4Q09
7, 042
6,134
5,734
2, 535
4, 289
1,030
4,066
980
4,010
13, 865
11,230
10,724
86, 059
89,989
103,971
8.2%
2.9%
6. 8%
1. 1%
5.5%
0.9%
5.0%
16.1%
4. 5%
12. 5%
3.9%
10.3%
* On 1Q09, BESC and BEP employees are considered. On 4Q09, BNC employees were considered.
With regard to training, Banco Nossa Caixa employees had a profile very similar to those of BB, only
with a greater concentration in the "Holders of Bachelors Degree" classification and a lower percentage
of staff members in "Specialization, Master’s or Doctor’s Degree." The inclusion of BNC employees, in
conjunction with actions that aim to encourage graduation (explained in the preceding table), explain the
fluctuations in the graph below.
4Q08
3Q09
0.6%
4Q09
0.5%
0.5%
22.9%
21.1%
30.0%
20.6%
46.5%
48.2%
33.0%
30.2%
45.9%
Elementary School
High School
Holders of Bachelor’s Degree
Specialization, Master’s or Doctor’s Degree
Figure 76. Level of Education
In addition to the formal education of employees, Banco do Brasil invests in other types of training,
providing presence and distance learning courses to its staff. A significant number of these courses is
developed by the Corporate University of Banco do Brasil, which identifies knowledge and competences
that the employees have to obtain to perform their duties at the Bank. Other courses provided are those
related to the personal growth, social and environmental awareness, and incentives to voluntary work,
156 - Banco do Brasil – MDA 4Q09
among other theme areas considered important to the personal and professional experience of its
collaborators.
The total quantity of hours of training exhibited growth in relation to the previous quarter, but decrease in
relation to the same period of the previous year The index that describes the relation between training
hours and the total number of employees also reflected a decline in the period. As with the previous
indicators, it is important noting that among the main factors the inclusion of Nossa Caixa personnel,
who entered the employee base but have still not had sufficient time to enroll in the training courses held
by BB.
Table 131. Employee Training – Annual Flow
4Q08
3Q09
12,434, 598
Hours of Training**²
Total employees*¹
Hours of training by employees**²
Employees with Anbid Certification – CPA 10
Employees with Anbid Certification – CPA 20
4Q09
11,929,817
93,172
84, 782
88,694
117
146.67
134.51
39,615. 00
37, 054
39,048
7,894
7, 352
7,848
47,509
(1) BESC and BEP staff members included since 1Q09. BNC employees included since 4Q09.
(2) Index calculated with 12 months accumulated information
We also emphasize the obtainment of Legal Certification in Financial Investments. Banco do Brasil is
the institution with the highest quantity of employees certified by Anbid/Andima. From the start of the
program, 47,509 employees have been certified, of which 39,615 under the basic mode and 7,894
under the advanced mode.
Value Added to Employees
Personnel Expenses in their diverse aspects comprise an important index of value added by the Bank to
staff members. The table below shows the progress of these expenses in absolute terms and in average
sums per employee.
Not considering the consolidation of Banco Votorantim, personnel expenses rose to R$ 2,754 million in
4Q09. The average quarterly expenses per employee increased by 2.4% as compared with 3Q09 and
by 0.9% as compared with 4Q08 (when BNC employees did not integrate BB’s staff). The growth during
the quarter resulted from the wage increase granted due to the collective bargaining agreement.
Table 132. Quarterly Average Expense per Employee (Statement with Reallocations)
4Q08
Personnel expenses (reallocated) – R$
Number of employees in the period
Quarterly Average Expense per Employee – R$
3Q09
4Q09
2,301,368,747.81
86,059
2, 693,410, 368.09
104,139
2,754,282,408. 96
103,971
26,741.76
25, 863.61
26,490. 87
* Headcount does not include trainees. Since 1Q09, the employees of BESC and BEP were included. As from 4Q09, the employees of
Banco Nossa Caixa were included either.
As a manner of providing improved financial returns to staff members and at the same time confirming
the commitment by everybody in the organization with the generation of consistent profits, Banco do
Brasil has made efforts to constantly enhance its Profit Sharing Program - PSP. During 4Q09 the
average sum provisioned for paying out to each employee reached R$ 4,279.6, 3.2% higher in relation
to 4Q08. This performance was made possible by the increase in net income, which more than offset
the increased number of employees.
Table 133. Expenses with Statutory Porfit Sharing
4Q08
PLR provisioned in the quarter – R$
Number of employees in the period
Average PLR per Employee – R$
4Q09
258,337,737.46
89,989
444,949,623.79
103,971
4,421.18
2,870.77
4,279.56
* Since 1Q09, BESC and BEP employees were included. Since 4Q09 BNC employees were also included.
157 - Banco do Brasil – MDA 4Q09
3Q09
380,482,163.79
86,059
Turnover of Staff Members
Rotation ratio ended 4Q09 at 0.68% against 0.75% in the previous quarter and 0.77% in the same
period of 2008. During the quarter, the behavior arose chiefly from reduced terminations. As compared
to the same period in 2008, the rate's performance was also influenced by the growth in the employee
base (in particular due to BNC), which increased the equation denominator that calculate this rate.
Table 134. Employee Turnover
4Q08
Rate of Employee Turnover¹
Nr. Employees in Previous Quarter³
Nr. Employees in the Quarter³
Releases in the Period²
(1) Proportion of releases as compared to the average number of employees in the period.
(2) The concept of releases includes firing, retirements, early retirements, deaths and self-request release.
(3) Since 1Q09 BESC and BEP employees were included. BNC employees were included since 4Q09.
158 - Banco do Brasil – MDA 4Q09
3Q09
4Q09
0.77
0.75
0.68
85,392
86,059
658
89,194
89,989
672
89,989
103,971
660
9.2 Eco-efficiency
The disclosure of information on Eco-efficiency demonstrates the efforts of the Company in the efficient
use of resources, with reflexes not only in reducing the impact on the environment, but also on the
control of administrative expenses and on mitigating risks.
To structure the indicators, we sought to relate the items that are being evidenced (such as:
consumption of water and paper) with denominators that influence in a more direct way its fluctuation.
For example, the use of water in Banco do Brasil's main buildings is intended chiefly to meet the needs
of its staff members, and hence we relate its use to the average number of employees per period. Under
the same reasoning, the use of paper relates to the base of checking accounts
Annual Use of Water in the Main Buildings
The ratio below refers to the use of water in Banco do Brasil's main buildings. Main buildings I, II, and III
located in Brasilia concentrate a major part of Banco do Brasil's executive officers, in addition to support
bodies.
In the past 12 months, the average number of employees who were allocated in these buildings
reached 5,771. The increase in the quantity of employees that work in the main office buildings results
from the fact that a renovation is in the final stages in Edifício Sede II, which will gradually re-house
teams of Executive Committees and Strategic Units, heretofore reallocated to other sites. As of 4Q09,
BB also began to appoint to strategic positions employees who until that time had been outstanding in
the General Management of Banco Nossa Caixa. This growth should not be kept up for many quarters,
once a large portion of BNC's administrative area employees should be transferred to BB's sales force.
The use of water by employees grew significantly, as compared to 4Q08 as well as to the preceding
quarter.
Table 135. Use of Water
4Q08
Use of Water in the Main Building (m³)
Employees in Main Buildings I, II, and III (average)
Use of Water (m³) / Employees*
* Indicator calculated based on data accrued over 12 months
159 - Banco do Brasil – MDA 4Q09
3Q09
4Q09
119, 290
5, 149
132,639
5,559
124,317
5,771
23.2
23.9
21.5
White Paper - Annual Use
Banco do Brasil has also put in place a number of measures to reduce the use of paper. Corporate
systems were adapted to print preferably on both sides, there were employee awareness campaigns,
and customers are encouraged more and more to employ automated channels not involving the use o
paper.
These measures have aided paper consumption to remain stable in absolute terms, and points to a
decline in the ratio that related it to the quantity of accounts.
Table 136. Use of Paper
4Q08
Use of Paper (tons)
Checking Accounts (average)²
Use per customer (gr)¹
3Q09
4Q09
3, 412
29,294, 820
3,351
30,921,949
3,376
31,250,446
116.5
108.4
108.0
¹ Indicator calculated based on data accrued over 12 months
² As of 1Q09, BESC and BEP employees were included.
Automated Transactions without the use of paper
As informed in the preceding item, Banco do Brasil has invested in new channels for processing
transactions and for doing business with its customers. There is growing trend to employ channels that
do not involve printing and, therefore, do not consume paper. Among such channels, we may point out
the Internet, Customer Assistance, and Mobile Banking. These channels increased their relative share
from 38.6% in 4Q08 to 40.1% in 4Q09. The decline witnessed in the quarterly comparison is seasonal,
as in the year's last quarter transactions through POS terminals increase (terminals installed inside
stores and other points that use paper) in the processing of credit and charge card sales, which distorts
the comparison base.
Another important initiative is the DDA (Authorized Direct Debit), through which customers can enroll
themselves as electronic payers and avoid the use of paper payment slips. BB is a leader in the DDA
service, and reached this position because it started providing this service for customers even before it
was launched by the Brazilian Bank Federation (Febraban).
39.8% 38.6% 40.0%
42.6% 44.6% 40.1%
3Q08
2Q09
37.8% 38.3%
1Q08
2Q08
4Q08
1Q09
Transactions without use of paper
Figure 77. Transactions without use of paper
160 - Banco do Brasil – MDA 4Q09
3Q09
4Q09
Use of Toner
The use of toner is another potential creator of residues related to printing documents. Banco do Brasil
already uses 100% of reconditioned cartridges, and has concentrated efforts to reduce the use of this
kind of material.
The consumption of toner exhibited growth of 7.4% in comparison with the previous quarter, and of
17.8% in relation to 4Q08. Growth in consumer spending arises from a vigorous expansion of the
customer base and the increase in business volume. The indicator is also influenced by the program
recently undertaken by the Bank to acquire printers, which at first creates a surge in paper use.
Concurrence by DDA customers (Authorized Direct Charge) will gradually lead to a decline in the use of
paper and toner, since there will be an increased use of this service by customers and printing of bank
collection vouchers will be reduced.
26,378
24,549
22,423
22,822
1Q08
2Q08
23,096
3Q08
22,398
4Q08
22,857
21,653
1Q09
2Q09
Toner consumption – in units
Figure 78. Toner consumption – in units
161 - Banco do Brasil – MDA 4Q09
3Q09
4Q09
9.3 Social Environmental focused Business
Banco do Brasil, with its concern for contributing to the improvement in the quality of life of the society
and preserve the environment, carries out businesses that support the sustainable development of the
country. Accordingly, the Bank offers environmentally and socially responsible products and services
and designs business approaches intended to foster the sustainable development of the Brazilian
regions in which BB operates.
Sustainable Regional Development - DRS
Sustainable Regional Development (DRS) is a Business Strategy through which Banco do Brasil seeks
to drive sustainable development, by mobilizing the agents of economic, social, and political activities in
order to support productive activities that are economically feasible, socially fair, and environmentally
correct.
In order to implement DRS, Banco do Brasil's traditional credit facilities are extended, such as microcredit loans, on-lending (such as Proger), or other facilities with unrestricted funds intended for
individuals. DRS creates returns for the Bank, from a social as well as an economic viewpoint: it
provides the opening of new checking accounts and the expansion of the loan portfolio, besides
permitting the loyalty enhancement of a customer base that tends to have growing business potential.
During the quarter, despite the volume of business having maintained its growth trend, there was a
decline in the number of families assisted and in the number of active bank accounts. The decrease in
these figures arises from a process of analysis of DRS projects, which involves a revision of the number
of beneficiaries enrolled with the program. This process was started in 2009 and shall be concluded in
the first quarter of 2010.
Table 137. Sustainable Regional Development (DRS)
4Q08
DRS - Transaction concluded (R$ millions)
DRS - Programmed loans (R$ millions)
Business Plans under implementation
DRS - Families Assisted
Banking accounts opened in DRS assisted communities (*)
(*) Accumulated Position Monitoring begun as of 2008.
162 - Banco do Brasil – MDA 4Q09
3Q09
4Q09
4, 676
7,112
7,803
5, 466
4, 679
1,211, 368
114, 760
5,278
4,475
1,175,597
149,837
5,232
4,480
1,094,086
113,864
Microcredit
Microcredit consists in low volume loan transactions, normally aimed at low-income groups that do not
have access to conventional credit facilities. Law 10,735/03 regulates the concession of loans to the low
income population and refers to the allocation of funds corresponding to 2% of the demand deposits
obtained by the financial institutions for microcredit operations, at a rate of up to 2% per month.
Banco do Brasil is one of the country's key market agents in micro-finance. The distribution channels of
the lines of credit are the chain of branches of Banco do Brasil and the network of banking
correspondents (of BB itself and those previously related to Banco Popular do Brasil, that was taken
over). The micro-credit loan portfolio ended 4Q09 with R$ 674 million, an increase of 22.9% over the
preceding quarter, and of 31.9% as compared to the same period in 2008.
Table 138. Microcredit operations
4Q08
Microcredit - Portfolio (R$ thousands)
Specific Productive Microcredit - Portfolio (R$ thousands)
Loans in the Period - (R$ thousands)
Number of Agreements in Portfolio
3Q09
4Q09
511,022
1,373
1,010
924
1,373
272,735
141,944
1,237,159
185,106
1,124,588
1,137,348
-
Family Agriculture - Pronaf
Banco do Brasil is the country's largest lender to Family-run Agriculture. Besides performing the social
role of supporting small producers and the generation of income in the rural zone, PRONAF enables the
Bank to prospect new clients, generate new income and seek new business based on the increase in
the loyalty of these clients. The PRONAF portfolio ended 4Q09 at R$ 18,279 million, reflecting a growth
of 3.6% in the quarter and of 21.1% as compared to the same period in the previous year.
13,348
14,233
13,955
1Q08
2Q08
3Q08
15,088
15,545
4Q08
1Q09
Figure 79. PRONAF Portfolio / Proger Rural (R$ million)
163 - Banco do Brasil – MDA 4Q09
16,597
2Q09
17,645
3Q09
18,279
4Q09
Credit with RSA - Other Programs
In addition to the programs already described, Banco do Brasil supports the organic foodstuffs activity
(BB Produção Orgânica) and forest production (BB Florestal). The total amount invested in these two
lines was R$ 613 million at the end of the quarter, representing an increase of 8.1% as compared with
the previous quarter and of 45.7% over 4Q09.
Table 139. Credit with RSA - Other Programs
R$ million
BB Florestal
BB Produção Orgânica
TOTAL
4Q08
3Q09
4Q09
413.6
-
553.0
13.9
598.8
14.3
413.6
566.9
613.0
In the concession of loans to companies there is compliance with the criteria and rules defined by the
Bank and by the financial authorities, as well as the fulfillment of social and environmental requirements
such as those contained in the Equator Principles and in the Global Pact, rules to which the Bank
voluntarily adhered. BB also verifies whether the loan proponents are included in the list of the Ministry
of Labor and Employment which identifies companies that submit their employees to degrading forms of
labor or slave labor.
Other Business with Socioenvironmental Attributes
Banco do Brasil offers its customers two alternatives of investment funds that adopt RSA criteria. The
portfolio of BB Ações ISE is comprised of companies that form the theoretical portfolio of the Business
Sustainability Index - ISE. BB Referenciado DI Social 200 allocates 50% of its management fees, via
Fundação Banco do Brasil, to social programs. The equity of the two funds reached R$ 77 million in the
4Q09, an increase of 36.8% in the quarter, and of 46.9% over 4Q08.
Table 140. Investment funds with RSA criteria
R$ million
BB Ações ISE
BB DI Social 200
Total
164 - Banco do Brasil – MDA 4Q09
4Q08
3Q09
4Q09
17.6
34.9
24.5
31.9
28.2
48.9
52.5
56.4
77.1
Long-Term Relationship - Quality in Customer Assistance
Quality in customer assistance is directly related to the company's abilities in customer retention, fidelity,
and profitability. The table below shows the share of complaints made by Banco do Brasil customers at
the Central Bank, as compared to total complaints in the Financial System. These data refer to banks
with over one million customers in their portfolios.
The ratios which measure valid complaints recorded by BB customers with the BACEN, in relation to the
customer base and total number of complaints filed against the financial system, increased in the last
three quarters. Among the factors which explain this high we highlight the consolidation of the
complaints filed against Banco Nossa Caixa (which started to comprise BB's base) and the fact that the
ruling of the proceedings by the Central Bank of Brazil (BACEN) not to be carried out on a linear basis,
what make that in some months the concentration of judgements become accumulated.
Despite understanding that certain factors contribute to the fluctuation in indicators, BB continues to
work toward improving the quality of service, evaluating the need for a revision of the organizational and
business model and taking one-off measures with respect to branches where there have been sharp
drops in the indexes that measure the quality of service.
Table 141. Complaints registered in the Central Bank
3Q08
Complaints of BB registered at Bacen
Total complaints registered at Bacen
Customer Base¹
Complaints / Customer Base²
Complaints BB / Total Bacen
4Q08
1Q09
2Q09
4Q09
724
498
1,137
327
442
9,529
8,173
7,829
4,020
1,771
1,455
46,459,826
46,989,475
47,159,103
53,529,635
54,236,359
52,694,592
2.7
1.5
1.1
2.1
0.6
0.8
13.0%
8.9%
6.4%
28.3%
18.5%
30.4%
(1) Since 1Q09 the table includes BESC and BEP customers. BNC customers were included in 2Q09.
(2) ((Number of complaints) / (number of customers)) x 100,000
165 - Banco do Brasil – MDA 4Q09
3Q09
1,239
9.4 Investor Market Recognition
Besides having a representative share in the Ibovespa, BB participates in the following indices in the
São Paulo Stock Exchange: Differentiated Tag Along Index - ITAG; Differentiated Corporate
Governance Share Index - IGC; and Corporate Sustainability Index - ISE.
The objective of ITAG is to measure the performance of instruments of companies that offer better
terms to minority shareholders, in the event of sale of control. The portfolio is composed of shares that
grant tag along rights in excess of 80% to minority common shareholders. The Bank, as a participant of
the New Market (NM) of BOVESPA, highest degree of Corporate Governance level of the exchange,
grants 100% of tag along to minority shareholders.
IGC's purpose is to measure the behavior of shares of companies with good levels of corporate
governance and those listed in the Novo Mercado or in corporate governance levels 1 and 2 in
BM&FBOVESPA. The ISE reflects the performance of the shares of companies with recognized
commitment to social responsibility and to corporate sustainability. It is emphasized that BB has been
part of this important indicator since its creation in 2005.
3,8
3,4 3,3
3,1 3,2 3,1
3,4
3,1 3,2
3,6
2,2
1,2
1
2
ISE
3
ITAG
4
IGC
To ITAG/IGC: 1 – Jan to Apr/08; 2 – May to Aug/08; 3 – Sep to Dec/08; 4 – Jan to Apr/09
To ISE: 1 – Dec05 to Nov06; 2 – Dec06 to Nov07; 3 – Dec07 to Nov08; 4 – Dec08 to Nov09
Source: Bovespa
Figure 80. BBAS3 participation in ISE, ITAG and IGC
With the purpose of selecting the main firms for the shareholders, Capital Aberto magazine drew up a
ranking list last October. Five aspects were analyzed in this publication: Liquidity, economic result, share
appreciation, corporate governance and sustainability. To appear among the top companies in the
ranking, the firm has to fulfill some requirements: have its shares among the most liquid of
BM&Fbovespa, and have remained above the median of its category in the other 4 items analyzed.
In the category of firms with market value above R$ 15 billion, Banco do Brasil came in 2nd place, and
was the best-placed bank. This award is an acknowledgement of the work conducted by BB as regards
the corporate governance practices adopted, maintenance of profitability, besides the expansion of
sustainability actions, which promote the social and economic development of the country.
166 - Banco do Brasil – MDA 4Q09
10 – Strategic Investments
10.1 Information
Since 1Q08, the non-financial companies of the insurance, pension plan, capitalization segment and
other activities started to be included in the consolidated statements of Banco do Brasil.
Table 142. Interest in the capital of companies
R$ thousand
Activity
Financial Activity - Country
BB Gestão de Recursos - Distrib de Tít. e Val. Mobiliários S.A.
Asset Management
BB Banco de Investimento S.A.
Investment Bank
BB Banco Popular do Brasil S.A.
Banking
BB Leasing S.A. - Arrendamento Mercantil
Leasing
BESC Distribuidora de Títulos e Valores Mobiliários S.A.
Asset Management
BESC Financeira S.A. - Crédito, Financiamento e Investimentos Credit and Financing
BESC Leasing S.A. – Arrendamento Mercantil
Leasing
Banco Nossa Caixa S.A.
Multiple Bank
Banco Votorantim S.A.
Multiple Bank
Share Book Value Book Value
31.12.09 31.12.09
31.12.08
Equivalence
Results
4T09
100%
100%
100%
100%
100%
100%
99%
99%
50%
130,143
396,509
18,519
25,842
9,810
18,795
19,382
4,900,236
3,774,777
126,369
1,817,696
22,834
43,289
7,903
18,715
19,343
-
135,447
208,948
374
4,057
(88)
(12)
203
(70,671)
46,999
Financial Activity – Abroad
Banco do Brasil – Ag. Viena
BB Leasing Company Ltd.
BB Securities LLc.
BB Securities Ltd.
Brasilian American Merchant Bank – BAMB
BB USA Holding Company, Inc
Banking
Leasing
Asset Management
Asset Management
Banking
Holding
100%
100%
100%
100%
100%
100%
218,620
74,781
16,652
656,043
-
120,096
93,003
3,120
48,570
790,995
-
(20,424)
(8,530)
2,432
(61,904)
-
Insurance, Pension and Capitalization
BB Seguros Participações S.A
BB Aliança Participações
Seguradora Brasileira de Crédito à Exportação – SBCE
Nossa Caixa Capitalização
Mapfre Nossa Caixa Vida e Previdência
Insurance Company
Insurance Company
Insurance Company
Seguradora
Seguradora
100%
100%
12%
100%
49%
594,604
1,031,928
2,313
5,476
43,879
2,264
-
40,752
89,792
66
(26)
4,798
Credit Acquisition
Service Rendering
100%
100%
100%
100%
100%
99%
40%
32%
18%
12%
22%
16%
48%
9%
9%
50%
100%
435,962
21,325
10,394
16,920
33,578
44,744
56,002
202,839
30,159
1,094,988
46,331
2,087
228
6,763
14,235
32,029
-
47,021
21,342
16,920
33,574
53,620
222,049
29,709
969,609
53,181
1,975
228
6,622
13,880
2,864
26,240
1,994
(26)
12,271
24,835
51,718
7,412
103,268
614
48,673
(532)
17
99
53
1818
0
Other Activities
Ativos S.A.
BB Administradora de Cartões de Crédito S.A.
Nossa Caixa S.A. - Administradora de Cartões de Crédito
BB Administradora de Consórcios S.A.
BB Corretora de Seguros e Administradora de Bens S.A.
Cobra Tecnologia S.A.
Cia. Brasileira de Soluções e Serviços CBSS – Visavale
Cielo S.A
Kepler Weber S.A.
Neoenergia S.A.
Cadam S.A
Cia. Hidromineral Piratuba
Cia. Catarinense de Assessoria e Serviços - CCA
Companhia Brasileira de Securitização – Cibrasec
Tecnologia Bancária S.A. – Tecban
BV Participações S A
BB Money Transfers, Inc
167 - Banco do Brasil – MDA 4Q09
Consortiums
Broker
IT
Service Rendering
Service Rendering
Industry
Energy
Mineração
Saneamento
Prestação de Serviços
Credit Acquisition
Service Rendering
Holding
Service Rendering
10.2 Insurance, Pension Plans and Capitalization
Banco do Brasil, through BB Seguros Participações e BB Aliança Participações, a wholly-owned
subsidiary, maintains interest in companies in the areas of insurance, pension plans and capitalization,
which enables it to offer its clients a broad range of non-banking products. The table below details the
holdings in total capital and the line of business of each one of these companies as of Dec/09. BB is
restructuring the corporate structure of the insurance segment, as detailed in chapter 10.3.2 of this
report.
Table 143. Insurance, Pension Plans and Capitalization
Company
Share %
Cia. De Seguros Aliança do Brasil S.A.
100.00
70.00
BrasilVeículos Cia de Seguros
Brasilprev
49.99
49.99
Brasilcap
Brasilsaúde
49.92
Business
Health and Other Activities
Vehicle
Pension
Capitalization
Health
Partnership
Sul América Seguros
Principal Financial Group e Sebrae
Icatu Hartford, Sul América e Aliança da Bahia
Sul América Seguros
Companies Results
The consolidated income of the insurance companies closed 2009 at R$ 708.8 million. It should be
highlighted that life/other operations accounted for 15.9% of the total insurance revenues and 44.6% of
income. Private pension operations account for 52.0% of revenues and 36.4% of income.
Table 144. Income Statement by Line of Business
Insurance
2009
206,179
206,179
3,413,826
3,413,826
6,155,433
-
-
-
-
-
-
-
-
-
Health
1,326,918
1,326,918
Revenues from Pension Plans
Revenues from Capitalization
R$ thousand
Rev. from Insurance Pension Plans and Capitalization
Retained Insurance Premiums
Changes in Technical Provisions
Insurance
Pension Plans
Capitalization
Benefits and Redemption Expenses
Earned Premiums
Pension Plans
Life and
Other
1,880,729
1,880,729
Auto
(162,239)
(1,765)
(125,600)
(289,604)
(162,239)
(1,765)
(125,600)
(289,604)
-
-
-
Capitalizati on
Consolidated
Total
-
2,257,058
-
11,826,318
3,413,826
6,155,433
-
6,155,433
-
2,257,058
2,257,058
(5,924,307)
(1,999,847)
(8,213,759)
-
-
(289,604)
(5,924,307)
-
(5,924,307)
(1,999,847)
-
-
-
-
-
(1,999,847)
-
-
-
-
(210,220)
-
(210,220)
1,164,680
204,414
1,755,128
3,124,222
-
-
3,124,222
Retained Claims
(743,254)
(175,810)
(571,281)
(1,490,346)
-
-
(1,490,346)
Marketing Expenses
Insurances
(134,739)
(134,739)
(11,803)
(11,803)
(512,993)
(512,993)
(659,535)
(659,535)
(83,092)
-
(149,724)
-
(892,352)
(659,535)
Pension Plans
-
-
-
-
(83,092)
-
(83,092)
Capitalization
-
-
-
-
-
(149,724)
(149,724)
Other Operating Income (Expenses)
Administrative Expenses
Tax Expenses
(95,729)
(11,226)
(146,844)
(253,799)
353,979
(19,381)
80,799
(149,585)
(15,916)
(116,606)
(282,108)
(195,655)
(58,523)
(536,286)
(32,093)
Financial Income
Financial Revenues
82,372
93,388
Financial Expenses
(11,016)
(319)
6,790
7,656
(96,715)
-
(12,854)
(109,568)
204,386
291,351
336,720
2,341,912
128,332
401,893
669,438
3,035,157
(75,084)
(86,965)
(2,005,192)
(273,562)
(2,365,718)
91,651
2,446
123,323
138,454
94,776
26,469
259,699
Equity Account Adjust
190
-
2,905
3,095
-
-
3,095
Non-operating Income
2,210
(5)
(37)
2,168
(23)
(891)
1,254
94,051
(36,093)
(3,876)
1,638
461,193
(140,284)
432,835
(168,596)
144,170
(55,793)
1,128,373
(399,127)
Operating Income
Income before Taxes
Income and Social Contribution Taxes
Profit Sharing
Net Income (Loss)
168 - Banco do Brasil – MDA 4Q09
(865)
(64,303)
115,224
190,307
(4,503)
(1,385)
(4,897)
53,456
(3,623)
316,013
551,368
(174,738)
(10,784)
365,846
(6,319)
(3,301)
(20,403)
257,921
85,076
708,843
The combined ratio, which expresses the percentage of earned premiums that is consumed by
operating expenses in the insurance business (retained claims, marketing expenses, and administrative
expenses), closed the quarter at 67.7%, compared to 77.2% in 12 months and 77.3% in 3Q09.
Consolidated
Health
99.4
77.2
80.9
76.7
77.3
31.5
30.7
29.6
29.8
67.7
13.4
97.0
106.0
13.4
14.3
97.3
13.6
91.3
13.5
27.0
45.7
50.2
47.1
47.5
40.7
4Q08
1Q09
2Q09
3Q09
4Q09
86.1
82.7
4Q08
1Q09
Vehicle
92.6
2Q09
83.8
77.8
3Q09
4Q09
Life and Others
90.7
90.1
87.2
87.8
26.0
22.2
23.6
24.7
74.1
65.8
72.7
66.6
67.9
35.2
35.1
60.5
22.5
37.2
64.7
4Q08
68.0
1Q09
63.5
2Q09
63.1
3Q09
169 - Banco do Brasil – MDA 4Q09
31.7
51.6
4Q09
28.6
34.3
31.4
32.8
28.8
4Q08
1Q09
2Q09
3Q09
4Q09
Administrative Expenses + Marketing / Earned Premius
Raited Claims / Earned Premius - %
Figure 81. Combined Ratio
38.4
-%
The Insurance ratio reflects the share of insurance, social security and capitalization companies in BB's
income, that is, how much these segments added to the Conglomerate's final income. The result per
segment can be seen in the table below. The life and basic lines are the highlights, accounting for 63.2%
of the total, whereas private pension has a 18.9% share. The basic insurance line comprises insurance
on properties, except for auto insurance.
Table 145. Securities Operating Highlights
R$ thousand
Life and basic insurance result
Brokerage net revenue
Service Fee net income
Equity in the earnings (loss)
Social Security Result
Brokerage net revenue
Service Fee net income
Equity in the earnings (loss)
Auto Result
Brokerage net revenue
Service Fee net income
Equity in the earnings (loss)
Health Result
Brokerage net revenue
Service Fee net income
Equity in the earnings (loss)
Capitalization Result
Brokerage net revenue
Service Fee net income
Equity in the earnings (loss)
Total Insurance Result (A)
BB Recurrent Result (B)
Total Insurance Ratio % (A/B)
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
82,354
131,413
125,643
120,043
163,163
140,730
151,977
27,359
22,580
32,355
32,027
37,603
25,231
39,427
21,709
37,838
19,298
40,515
21,242
40,845
21,341
32,415
67,032
62,809
58,906
106,028
78,973
89,792
33,936
2,360
33,668
2,327
41,108
2,544
36,965
2,632
54,836
2,570
61,216
5,289
45,372
2,648
9,219
22,357
7,562
23,779
10,508
28,056
9,843
24,489
11,561
40,705
13,126
42,802
14,377
28,347
19,594
24,149
19,260
20,559
31,159
22,554
18,993
10,104
11,537
12,721
13,905
12,810
13,995
14,446
9,490
12,612
6,538
6,654
18,349
8,559
4,547
1,420
586
1,240
502
484
421
284
465
(698)
422
(322)
398
466
356
-
-
-
-
-
-
-
835
738
63
(181)
(1,120)
(719)
110
24,930
27,248
28,162
39,366
33,589
28,382
23,564
2,962
2,836
3,075
3,667
3,275
3,035
2,595
14,281
12,645
13,832
14,933
14,432
14,370
12,478
7,687
11,768
11,255
20,767
15,881
10,977
8,490
162,236
1,463,457
217,718
2,037,207
214,656
1,625,865
217,217
1,523,105
282,049
1,726,708
252,561
1,763,909
240,371
1,819,008
11.1
10.7
13.2
14.3
16.3
14.3
13.2
Operating Highlights
Brasilveículos was appointed as the best insurance company by the Dinheiro & Direitos magazine of the
Brazilian Association of Consumer Defense (Pro Teste), October/November 2009 issue. The analysis
included the fifteen largest insurance companies in Brazil.
Brasilveículos achieved the renewal of the quality seal "SAC Amigo do Cliente" issued by the Brazilian
Institute of Customer Relations (IBRC).
Aliança do Brasil, leader in the rural insurance sector, with a 51.4% market share.
Brasilprev remained as a leader in net funding (total volume of contributions less redemptions), and also
ranked first in the ranking of the Brazilian Federation of Private Pension Plans and Life Insurance
(FENAPREVI) in terms of PGBL Collection and Reserves in the "Lower" Segment.
Brasilcap, a leader in Collection and Technical Reserves, according to the Superintendency of Private
Insurance (SUSEP), ranked among the 100 Best Companies to Work for in Brazil, being considered as
the 5th best company to work for in Rio de Janeiro, according to the Great Place to Work Institute Brasil
was also recognized by Prêmio Segurador Brasil, Cobertura Performance, E-insurance, Destaque no
Marketing e Marketing Best, all of which are benchmarks in their related operating areas.
170 - Banco do Brasil – MDA 4Q09
Table 146. Securities Operating Highlights
R$ thousand
Aliança do Brasil
Lives Insured – thousand
Volume of the Managed Portfolio
Market share - rural line - %
Market share - life line - %
Rural line position
Life line position
Brasilcap
Quantity of Bonds – thousand
Volume of the Managed Portfolio
Quantity of Prize-winning Bonds
Sum of Prizes Distributed
Technical Reserves
Market share - collection - %
Market share - reserves - %
Brasilprev
Rate of Redemptions - %
Active agreements - thousands
Volume of the Managed Portfolio
Technical Reserves
Market share - collection - %
Market share - reserves - %
Ranking
Brasilsaúde
Lives Insured
Volume of the Managed Portfolio
Brasilveículos
Fleet – thousand
Volume of the Managed Portfolio
Rate of Portfolio Retention - %
Market share - %
Ranking
Minimum Capital Required
171 - Banco do Brasil – MDA 4Q09
Dec/08
Sep/09
Chg. %
On Dec/08
On Sep/09
Dec/09
2,105
1,139,407
2,142
1,354,369
2,866
1,436,692
48.91%
8.90%
1º
54.04%
9.40%
1º
51.40%
9.80%
1º
3º
4º
4º
4,004
3,267,883
54,165
3,638,196
77,120
3,807,120
9,100
23,755
3,059,774
7,342
21,666
3,475,934
6,900
17,348
3,807,120
23.20%
22.50%
23.10%
24.10%
22.60%
24.10%
8.53%
7.30%
7.00%
2,598
20,402,125
19,968,810
3,042
24,873,332
24,447,378
3,197
26,954,324
26,527,718
13.99%
14.06%
15.87%
14.70%
16.11%
14.94%
3º
3º
3º
127
62,488
120
57,056
36.2
26.1
2.5 p.p.
0.9 p.p.
33.8
6.1
-2.6 p.p.
0.4 p.p.
1,825.9
16.5
(24.2)
(27.0)
24.4
-0.6 p.p.
1.6 p.p.
42.4
4.6
(6.0)
(19.9)
9.5
-0.5 p.p.
0.0 p.p.
-1.5 p.p.
23.1
32.1
32.8
2.1 p.p.
0.9 p.p.
-0.3 p.p.
5.1
8.4
8.5
0.2 p.p.
0.24 p.p.
105
55,450
(17.3)
(11.3)
(12.2)
(2.8)
807
907
971
593,663
79.46%
6.53%
625,185
82.55%
7.13%
665,321
82.74%
7.30%
20.3
12.1
3.3 p.p.
0.8 p.p.
7.1
6.4
0.19 p.p.
0.2 p.p.
6º
14.27%
7º
26.33%
#N/D
20.00%
5.7 p.p.
-6.3 p.p.
10.3 Acquisition, Incorporations and Strategic Partnership
This chapter groups the main highlights of the transactions carried out by Banco do Brasil as of the first
quarter of 2009, as well as those that are in progress, in conformity with material facts released to the
market.
10.3.1 Transactions in the Period
Banco Votorantim
The strategic partnership announced between Banco Votorantim (BV) and BB was concluded on
th
September 28 ., 2009, according to material fact released to the market on the same date.
Banco do Brasil now holds 50% of the total capital and approximately 50% of the voting capital of Banco
Votorantim. The business model and the team of collaborators will be maintained, and the board of
directors will be on the same level, with the appointment of three members by every partner, and the
chairmanship of the board of directors alternated between the two partners. All strategic decisions will
be made jointly.
The operation involves the acquisition, by BB, of 33,356,791,198 BV’s common shares for the price of
R$ 3 billion, paid directly to Votorantim Finanças, besides the subscription, also by BB, of new preferred
shares issued by Banco Votorantim in the amount of R$ 1.2 billion. For further details on the payment
terms, please refer to the Material Event Fact disclosed at the portal www.bb.com.br/ri.
The consolidation of the financial statements, risk management and operating limits will be proportional
to BB's ownership interest in the total capital of BV. The Assets and Liabilities have already been
consolidated in the financial statements since 3Q09 and since this quarter the income statement
accounts also form part of BB’s net income.
The partnership presents strong strategic rationale, as it will allow Banco do Brasil:
To increase the asset origination capacity in the competitive consumption financing industry;
Access to well developed alternative distribution channels - concessionaires, partners and stores of
BV Financeira;
Model of success in the promotion of sales with national activity in the vehicle financing market;
Strengthening of the activity of BB in the capital market (Votorantim Corretora) and in the Corporate
segment.
The tables below illustrate the main highlights of the operation of BV.
As regards the income statement, the reallocations carried out are detailed below and can differ from
those made in the financial statements of BB. Accordingly, for a better understanding of BV's net
income, the income statement with reallocations was maintained, despite the fact that the net income of
BV is already consolidated in the financial statements of the BB conglomerate. Further information can
be obtained from the website of Banco Votorantim.
172 - Banco do Brasil – MDA 4Q09
Table 147. Banco Votorantim – Highlights of the Result
R$ million
Financial Intermediation Income
Loan operations (1) (2) (3) (6) (7) (8) (10) (11) (18)
Lease operations (7) (1)
Securities Income (7) (8) (10) (13)
Income from Financial Derivatives (4) (5) (7) (8) (9) (19)
Compulsory Investments
Income from Financial Intermediation
Market Borrowing (7) (8) (9)
Borrowings, Assignments and Onlendings (8)
Gross Financial Margin
Allowance for loan losses (2) (12)
Net Financial Margin
Bank fee income
Fee income (6)
Bank Fee Income (6)
Taxes on Revenues (2) (3) (5)
Contribution Margin
Administrative expenses
Personnel Expenses
Other Administrative Expenses (18) (19)
Other Tax Expenses
Commercial Income
Legal Risk
Legal Claims (14)
Labor Lawsuits (15)
Fiscal Lawsuits (16)
Other Components of the Result
Other Operating Income (Expenses)
Other Operating Income (4) (11) (12) (16) (17)
Other operating expenses (1) (2) (3) (4) (11) (12) (14) (15) (16) (17) (20)
Operating Result
Non-operating Income
Profit before taxation and profit sharing
Income and Social Contribution Taxes (2) (3) (5) (13) (17) (20)
Profit Sharing
Profit before minority interest
Minority interest
Non-Recurring Items
Extraordinary Items
Assignment (2)
REFIS (17)
Net Income
Quarterly Flow
Chg. %
4Q08
4Q09
On 4Q08
2,321
2,543
9.6
1,592
1,742
9.5
68
166
145.6
891
927
4.0
(236)
(292)
23.9
6
(1,482)
(1,622)
9.5
(1,322)
(1,488)
12.6
(160)
(134)
(16.7)
839
921
9.7
(195)
(288)
47.2
644
633
(1.8)
61
105
72.0
61
105
72.6
0
(0)
(104)
(68)
(35.2)
601
670
11.5
(349)
(450)
29.1
(114)
(159)
40.2
(234)
(290)
24.1
(1)
(1)
74.0
252
220
(12.8)
(32)
(25)
(22.0)
(7)
(3)
(54.1)
(3)
(9)
189.8
(22)
(13)
(43.1)
(48)
(43)
(10.6)
(48)
(43)
(10.6)
(17)
4
(31)
(47)
50.0
172
152
(11.7)
(21)
20
151
172
13.4
64
3
(95.4)
(135)
(108)
(19.7)
80
67
(17.2)
(0)
0
80
67
(17.0)
48
242
403.9
48
227
372.6
15
128
309
140.5
Annual Flow
Chg. %
2008
2009
On 2008
9,599
10,405
8.4
5,846
6,707
14.7
135
474
252.6
3,536
3,825
8.2
(26)
(601) 2,184.6
108
(6,128)
(6,548)
6.8
(5,675)
(6,045)
6.5
(453)
(503)
11.1
3,471
3,857
11.1
(840)
(1,598)
90.2
2,631
2,259
(14.1)
366
320
(12.6)
366
319
(12.7)
1
(303)
(298)
(1.8)
2,694
2,281
(15.3)
(1,276)
(1,567)
22.8
(427)
(564)
32.1
(846)
(999)
18.2
(3)
(4)
19.6
1,418
714
(49.6)
(80)
(108)
35.0
0
(11)
(14)
(31)
123.2
(66)
(66)
0.4
6
(23)
6
(23)
112
99
(11.5)
(106)
(122)
14.9
1,344
583
(56.6)
(56)
(86)
53.0
1,288
497
(61.4)
(160)
46
(273)
(201)
(26.2)
855
342
(60.0)
(1)
(1)
35.9
854
341
(60.1)
48
461
859.8
48
446
828.4
15
902
802
(11.1)
(1) Reclassification of Other Operating Expenses to Loan Operations and Leasing corresponding to
the amount of expenses with granted discounts on loan operations, being necessary its reallocation
for comparability purposes. The expenses for granted discounts totaled R$ 232.5 million (2008), R$
286.9 million (2009), R$ 70.8 million (4Q08) and R$ 95.5 million (4Q09).
(2) Assignment of a loan portfolio generating extraordinary revenues of R$ 48.0 million in 2008 and R$
445.9 million in 2009. In 4Q08, this amount was of R$ 48.0 million and in 4Q09, R$ 227,0 million.
(3) The effects related to assignment of the loan portfolio to (FIDCs) registered as Taxes Expenses,
Other Operating Expenses and Income and Social Contribution Taxes were reallocated to the
result of Loan Operations, in the amount of R$ 62.6 million in 2008 and R$ 39.1 million in 2009. In
the quarterly periodicity, the amounts were R$ 2.6 million (4Q08) and R$ 10.0 million (4Q09).
(4) The foreign exchange gain (loss) on foreign financial equity is reallocated from Other Operating
Income/Expenses to Income from Financial Derivatives for inclusion in the financial margin. This
adjustment is necessary to maintain the balance and consistency of spread analyses. In 2008, this
reallocation was of R$ 221.7 million and in 2009, R$ 299.7 million. In 4Q08, this reallocation was of
R$ 177.9 million and in 4Q09, R$ 18.6 million.
173 - Banco do Brasil – MDA 4Q09
(5) Reallocations were performed in order to cancel the Tax Hedge's effects. In 2008, the amount
reallocated to the income of Derivatives resulting from Tax Expenses on Revenues was R$ 20.5
million and that from Income Tax (IR) and Social Contribution on Net Profit (CSLL) was R$ 170.9
million. In 2009, the amount reallocated from Tax Expenses on Revenues was R$ 22.4 million and
that from IR and CSLL was R$ 183.8 million.
In 4Q08, the amount reallocated to the income of Derivative Financial Instruments resulting from
Tax Expenses on Revenues was R$ 15.2 million and that from IR and CSLL was R$ 124.9 million.
In 4Q09, the amount reallocated from Tax Expenses on Revenues was R$ 1.3 million and that from
IR and CSLL was R$ 10.9 million.
(6) Fee revenues resulted from loan operations recorded under Revenues from Services Provided
were reallocated to the income statement from Loan Operations in the amount of R$ 322.6 million
in 2008 and of R$ 497.1 million in 2009. In the quarters, the amounts were R$ 76.0 million in
4Q08, and R$ 157.3 million in 4Q09.
Table 148. Banco Votorantim – Realocations - (Market to Market - MKT)
R$ million
Fee Income (6)
Rate Repayment (6)
Credit Card Fees (6)
Allocation on Loan Operations (6)
4Q08
(56.4)
(17.7)
(1.9)
(76.0)
4Q09
(151.0)
(3.8)
(2.6)
(157.4)
2008
(188.6)
(130.1)
(3.9)
(322.6)
2009
(458.1)
(29.2)
(9.8)
(497.1)
(7) All market to market due to the hedge were reallocated and can be found in the Financial Derivative
Instruments, as follows:
Table 149. Banco Votorantim – Realocations - (Market to Market - MKT)
R$ million
MKT Operações de Crédito (BV Financeira)
MKT Loans Operations (BV)
MKT Leasing
MKT Securities
MLT Funding
Alocation of MKT on Derivatives
4Q08
(539.0)
(140.2)
(70.6)
(322.0)
32.3
1,039.5
4Q09
142.2
(0.3)
18.2
100.6
(1.3)
(259.4)
2008
(521.3)
115.6
(70.6)
148.4
50.5
277.5
2009
72.2
(325.6)
7.0
(18.9)
16.9
248.4
(8) All the effects of fluctuations in foreign currencies, such as the US dollar, yen, Turkish lira, euro
among others, were reallocated due to the hedge on the result of derivative financial instruments,
as follows:
Table 150. Banco Votorantim – Reallocations (Currency Variation)
R$ million
VCR Loans Operations
VCR Securities
VCR Fundings
VCR Loans and On Lending
Alocation of VCR on Derivatives
4Q08
(1,081.2)
(200.7)
998.6
963.2
(679.9)
4Q09
95.5
54.3
(47.1)
(25.3)
(77.5)
2008
(1,627.3)
(365.2)
1,487.3
1,323.1
(817.9)
2009
1,142.7
754.9
(776.8)
(1,120.9)
-
(9) The option BOX accounted in the Derivative Financial Instruments were reallocated to Money
Market Funding with the amount of R$ 383,0 million in 2008 and R$ 355,0 million in 2009. In the
quarters, the reallocations were R$ 100.2 million in 4Q08, and R$ 146.3 million in 4Q09.
(10) We reallocated the profit effect upon realization of the CCB options recorded in the Securities
results to the result of Loan Operations, as follows:
174 - Banco do Brasil – MDA 4Q09
Table 151. Banco Votorantim – Reallocations (Bank Credit Bills)
R$ million
MKT Securities (Bank Credit Bills)
Alocation MKT (Bank Credit Bills) on loans operations
4Q08
4Q09
-
-
2008
(126.6)
126.6
2009
-
(11) The Operational Income and Expenses directly associated with the loan operations were
reallocated from Other Operating Income/Expenses to Loan Operations line in the amount of R$
652.8 million in 2008 and of R$ 364.6 million in 2009. In the quarters, the amounts were R$ 119.5
million in 4Q08, and R$ 62.0 million in 4Q09.
(12) The Allowance for Loan Losses resulted from the Assignments made with Co-obligations recorded
under Other Operating Expenses were reallocated to the Allowance for Loan Losses expenses line
in the amount of R$ 9.4 million in 2008 and R$ 24.7 million in 2009. In the quarterly periodicity, the
reallocations were R$ 9.4 million in 4Q08, and R$ 16.3 million in 4Q09.
(13) The effect of the tax benefit generated by the tax-free interest of securities issued abroad was
reallocated from the Income Tax and Social Contribution line to the Result of Securities in the
amount of R$ 136.1 million in 2008 and R$ 99.3 million in 2009 (R$ 41.2 million in 4Q08 and R$
20.9 million in 4Q09).
We segregated the Expenses on Labor, Civil and Tax Lawsuits to the group named Legal Risk, in
order to facilitate the analysis of the other operating expenses and to increase the transparency of
this type of risk. The reallocated amounts were as follows:
(14) Civil Claims:
R$ 0.5 million in 2008 and (R$ 11.2 million) in 2009
R$ 7.1 million in 4Q08 and R$ 3.2 million in 4Q09
(15) Labor Lawsuits:
R$ 13.9 million in 2008 and (R$ 31.1 million) in 2009
R$ 3.3 million in 4Q08 and R$ 9.5 million in 4Q09
(16) Tax claims:
R$ 66.7 million in 2008 and R$ 65.9 million in 2009
R$ 22.1 million in 4Q08 and R$ 12.6 million in 4Q09
(17) We reallocated from Other Operating Income/Expenses and Income Tax/Social Contribution the net
effect of the payment of taxes under the program for installment and cash payment of tax debts
(REFIS), generating an extraordinary result of R$ 0 million in 2008 and of R$ 15.0 million in 2009.
In the quarters, the amounts were R$ 0 million in 4Q08, and R$ 15.0 million in 4Q09.
(18) Other Administrative Expenses directly related to loan operations were reallocated to the line Loan
Operations in the amount of $ 0 million in 2008 and $ 26.7 million in 2009. In 4Q09, R$26.7 million
were reallocated and $ 0 million in 4Q08.
(19) Other Administrative Expenses directly related to derivative operations were reallocated to the line
Income for Derivative Financial Instruments in the amount of $ 0 million in 2008 and R$ 11.1 million
in 4Q09.
(20) The amount of R$0.0 million was reallocated from Other Operational Expenses Foreign Income Tax
(IRF) to Income Tax, in 2008 and R$ 46.1 million in 2009. In 4Q09 the amount was R$ 46.1 million
and R$ 0 million in 4Q08.
175 - Banco do Brasil – MDA 4Q09
Table 152. Banco Votorantim – Equity Highlights
R$ million
Assets
Securities
Loan Portfolio
Individuals
Payroll Loan
Vehicles Loan
Leasing and Subleasing Receivables
Other
Businesses
Working Capital
BNDES/Finame
Export Letter of Credit
Other
Permanent Assets
Deposits¹
Demand Deposits
Saving Deposits
Time Deposits
Judicial
Others
Money Market Borrowing
Shareholders’ Equity
Dec/08
72,310
21,585
38,184
19,251
1,748
15,761
1,472
270
18,933
5,776
4,142
4,310
4,706
88
18,932
109
14,636
0
14,635
16,625
6,362
Balance
Sep/09
88,121
19,609
40,996
24,892
3,378
17,893
3,342
278
16,105
5,123
4,517
2,854
3,611
162
26,320
246
22,743
0
22,743
26,104
7,002
Dec/09
84,801
18,195
42,444
26,252
3,348
18,677
3,948
278
16,193
5,309
4,918
2,699
3,267
161
24,477
135
22,599
0
22,599
24,767
7,145
Chg. %
On Dec/08
On Sep/09
17.3
(3.8)
(15.7)
(7.2)
11.2
3.5
36.4
5.5
91.6
(0.9)
18.5
4.4
168.2
18.1
2.8
(0.1)
(14.5)
0.5
(8.1)
3.6
18.7
8.9
(37.4)
(5.4)
(30.6)
(9.5)
82.8
(0.8)
29.3
(7.0)
23.6
(45.2)
54.4
(0.6)
0.8
(0.0)
54.4
(0.6)
49.0
(5.1)
2.0
12.3
¹ Except other deposits
Table 153. Banco Votorantim – Loan Portfolio by Level of Risk
R$ million
AA
A
B
C
D
E
F
G
H
Total
Add. Allow.
Total Allow.
AA-C
D-H
Balance
11,655
20,054
4,194
1,182
362
142
122
83
390
38,184
37,085
1,099
Dec/08
Provision
100
42
35
36
42
61
58
390
765
9
774
178
588
176 - Banco do Brasil – MDA 4Q09
Share
30.5
52.5
11.0
3.1
0.9
0.4
0.3
0.2
1.0
100.0
97.1
2.9
Balance
7,592
25,320
4,773
1,359
496
248
236
158
813
40,996
39,044
1,952
Sep/09
Provision
127
48
41
50
75
118
111
813
1,381
11
1,392
215
1,166
Share
18.5
61.8
11.6
3.3
1.2
0.6
0.6
0.4
2.0
100.0
95.2
4.8
Balance
7,803
26,300
4,814
1,611
494
210
186
325
701
42,444
40,529
1,915
Dec/09
Provision
131
48
48
49
63
93
228
701
1,362
Share
18.4
62.0
11.3
3.8
1.2
0.5
0.4
0.8
1.7
100.0
1,362
228
1,134
95.5
4.5
Table 154. Banco Votorantim – Delinquency Ratios
R$ million
Loan Portfolio
Loans overdue
Past Due Loans/Loan Portfolio
Past Due Loans + 90 days
Past Due Loans + 90 days/Loan Portfolio
Write-off
Recovery of Write-offs
Net Loss
Saldo da Perda / Carteira de Crédito
Provision
Allowance/Loan Portfolio
Allowance/Past Due Loans + 90 days - %
Allowance Expenses / Loan Portfolio (12 months average)
Dec/08
38,183.9
2,351.9
6.2%
Sep/09
40,996.4
3,713.7
9.1%
Dec/09
42,444.3
3,768.4
8.9%
684.4
1.8%
1,375.6
3.4%
1,342.0
3.2%
(172.7)
21.4
(151.2)
1.6%
(242.0)
32.2
(209.8)
2.1%
(312.8)
35.9
(276.9)
2.6%
(774.1)
2.0%
113.11%
2.4%
(1,392.4)
3.4%
101.2%
3.7%
(1,362.0)
3.2%
101.5%
3.8%
Table 155. Banco Votorantim – Vehicle Portfolio
Dec/08
Average rate per crop (p.m.)
Average term per crop
Duration
Average Portfolio Term (p.y.)
Used Vehicles / Vehicles Portfolio - %
Average Vehicle Age (years)
Financed Value / Good Value – average %
Sep/09
2.3
44
45
26.2
85.7
6.5
66.6
Dec/09
1.7
49
46
24.5
82.9
5.8
69.9
1.7
49
48
24.3
84.1
5.5
71.2
Table 156. Banco Votorantim – Operational and Structural Highlights
Customers
Assets Under Management - R$ million
Employees*
Number of Branch Offices
*Includes employees and interns.
177 - Banco do Brasil – MDA 4Q09
Sep/09
3,559,515
17,506
5,636
243
Dec/09
3,829,581
18,552
5,859
247
Banco Nossa Caixa
On November 30, 2009 arised the corporate merger of Banco Nossa Caixa (BNC), with absorption of
100% of its capital by BB. The transaction awaits approval of the Brazilian Central Bank.
Considering that the 2009 Guidance monitoring was issued based on the pro forma segregation of
Nossa Caixa and Banco Votorantim numbers, we show below operational highlights and BNC loan
portfolio, besides a pro forma Reallocated Income Statement of 4Q09, based on the October/November
corporate DRE.
Table 157. Banco Nossa Caixa – Income Statement Highlights
R$ million
Income Statement
Income from Financial Intermediation
Loan operations
Securities Income
Expenses from Financial Intermediation
Net Interest Income
Allowance for Loan Losses
Net Financial Margin
Fee income
Contribution Margin
Administrative Expenses
Personnel Expenses
Other Administrative Expenses
Commercial Income
Legal Risk
Legal Claims
Labor Lawsuits
Other Income and Expenses
Income Before Taxes
Income and Social Contribution Taxes
Recurring Income
3Q09
2,036
1,113
860
(909)
1,127
(238)
889
313
1,135
(682)
(380)
(302)
436
(100)
(26)
(74)
(102)
235
(70)
165
4Q09
1,929
1,133
739
(849)
1,080
(194)
886
287
1,274
(689)
(385)
(304)
181
(61)
(10)
(51)
(0)
120
40
160
Chg. %
On 3Q09
(5.3)
1.8
(14.1)
(6.6)
(4.2)
(18.6)
(0.4)
(8.5)
12.2
1.0
1.4
0.6
(58.5)
(38.7)
(60.6)
(31.1)
(99.7)
(49.0)
(157.7)
(2.9)
The adjustments made in the statement of income to get the Reallocated Statement of Income are
detailed below.
Reallocations in the Net Interest Income
(1) Reallocations of Other Operating Income/ Expenses to Other Operating Income with Financial
Intermediation Characteristics, for the purpose of including in the Financial Margin the revenues with
financial intermediation characteristics recorded under "Other Operating Income", arising from earning
assets recorded under "Other Receivables" in the Balance Sheet, and to include in the Financial Margin
amounts related to negative foreign exchange adjustments which were recorded under "Other Operating
Income/Expenses" to avoid inverting the balance of accounts related to financial intermediation.
Reallocations in the net financial margin
(2) The expense with the Allowance for Loan Losses includes credits without characteristics of financial
intermediation, so this part of provision expenses to loanlosses is reallocated to Other Operating
Expenses.
Reallocations in the contribution margin
(3) Considering the model used for the income statement, tax expenses on revenues are reallocated
and included in the contribution margin.
178 - Banco do Brasil – MDA 4Q09
Reallocations in the operating income
(4) Statutory Profit Sharing was reallocated to Personnel Expenses.
(5) The expenses with Legal Claims and Labor Lawsuits were separated in the Income Statement with
Reallocations, into a group called Legal Risk. It aims to provide a better analysis of the administrative
expenses and giving more transparency to this kind of risk.
(6) As from 1Q09, in compliance with the decision of the Central Bank, a portion of the premiums paid to
clients (amortization of the rights related to the payment of the payroll of state public servants and other
payrolls) started to be recorded under "Other Administrative Expenses". Aiming to maintain the
comparability and considering the nature of the amounts disbursed, the entire sum was reallocated to
"Other Operating Expenses", as was recorded up to December 2008.
One-off Items
(7) Civil claims of Economic Plans on savings deposits and judicial deposits, generating extraordinary
expenses before taxes in October and November (4Q09 Pro forma DRE basis) in the amount of R$ 48
million and R$ 87 million in 4Q09.
(8) Tax credits arising from the equalization to the criteria adopted by Banco do Brasil, in the total
amount of R$ 242 million.
(9) Tax Credits arising from Economic Plan Expenses (item “7” above), in the amount of R$ 19 million in
October and November 2009 and R$ 35 million in 3Q09.
Table 158. Banco Nossa Caixa – Loan Portfolio
Chg. %
R$ million
Individuals
Payroll loans
Personal Loan
Housing Loan
Other
Businesses
Micro and Small
Overdraft Accounts
Working Capital
Other
Agribusiness
Dec/08
9,161
5,804
1,740
730
888
2,943
1,455
893
798
1,251
792
Sep/09
14,524
10,672
1,933
819
1,100
3,984
1,501
923
2,000
1,060
800
Dec/09
15,080
11,324
1,905
854
997
3,904
1,608
811
2,151
942
783
On Dec/08
64.6
95.1
9.5
17.1
12.3
32.7
10.5
(9.2)
169.4
(24.7)
(1.1)
On Sep/09
3.8
6.1
(1.4)
4.3
(9.4)
(2.0)
7.1
(12.1)
7.5
(11.2)
(2.2)
12,896
19,308
19,766
53.3
2.4
Total
Table 159. Banco Nossa Caixa – Operating Highlights
Chg . %
Dec/08
Sep/09
Dec/09
On Dec/08
On Sep/09
Checking Acc ounts – in thousands
3,420
3,449
3,296
(3. 6)
(4.5)
Individual Customers Check ing Accounts
Network of Branches
3,223
562
3,256
566
3,122
566
(3. 1)
0. 7
(4.1)
-
ATM
3,732
3,715
3,685
(1. 3)
(0.8)
179 - Banco do Brasil – MDA 4Q09
10.3.2 Businesses in Progress - Security
Corporate Restructuring
Moving forward with the strategy of increasing the share of the insurance area in the Bank's net income,
in the last October BB carried out a corporate restructuration of its operations. Two subsidiaries were
established: BB Seguros Participações S.A (BB Seguros) and BB Aliança Participações S.A (BB
Aliança), both of which are non-financial companies directly related to BB.
th
Moreover, BB filed a Letter of Intent without binding effect at Sul América S.A. on October 06 ., 2009,
expressing its interest in acquiring, through BB Seguros, all the shares held by SulAmerica in
Brasilveículos, representing 60% of the common shares and 30% of the total capital stock. In reference
to the company Brasilsaúde, both BB and Sul América expressed interest in reviewing its business
model and its corporate structure .
BB Aliança will be the owner of 100% of the shares of Cia. de Seguros Aliança do Brasil and BB
Seguros becomes the holder of the following interests:
Table 160. Insurance, Pension and Capitalization Companies
Company
Brasilprev Seguros e Previdência S. A.
Brasilveículos Companhia de Seguros
Brasilcap Capitalizações S. A.
Brasilsaúde Companhia de Seguros
% -Total Capital
49.99
70.00
49.99
49.92
Type of Shares
% - ON
% - PN
49.99
40.00
100.00
49.99
49.92
-
Strategic Alliance with MAPFRE
An intention to enter a strategic alliance with Grupo Segurador Espanhol MAPFRE (MAPFRE) was also
filed, for the purpose of carrying out a strategic partnership for the elaboration, in the Brazilian market, of
a risk insurance businesses, in the personal, elementary and automotive lines.
MAPFRE is the largest insurance group in Spain and operates in 45 countries, mainly in the insurance,
reinsurance and assistance markets of Latin America, where it ranks first in the non-life line. MAPFRE
has over 34 thousand employees and 13 million clients worldwide. In 2009 first half, it achieved a net
income of more than 530 million of Euros and revenues of over 10 billion Euros.
In Brazil, the company is one of the largest in the sector, with a market share of 8.69% (without including
VGBL pension plans), June 2009 position. At the end of the first semester of 2009, it recorded a profit of
R$ 166.5 million (before taxation and profit sharing). The company's total consolidated assets reached
R$ 6.48 billion and shareholders' equity R$ 1.48 billion. These figures consolidated the Group as one of
the six largest insurance groups in Brazil.
If completed, the strategic partnership will give birth to an insurance company which is a leader in the life
segment and the second largest risk insurance company in Brazil, with a 16% market share, involving
R$ 4 billion in earned premiums in the first seven months of 2009.
Ownership interest in IRB-Brasil Re
When an insurance company enters into an insurance agreement in excess of its financial capacity, it
has to transfer this risk, or a portion of it, to a reinsurance company. Reinsurance is a common practice
all over the world as a means to mitigate risk, safeguarding the stability of insurance companies and
ensuring the payment of the claim to the insured party. IRB-Brasil Re (IRB) is the largest reinsurance
group in Latin America, with assets of R$ 10.4 billion, issued premiums of R$ 1.8 billion and retained
premiums of R$ 940 million, position of July 2009. The Federal Government holds 100% of the common
shares of IRB and 50% of total capital.
180 - Banco do Brasil – MDA 4Q09
In order to supplement the operations of its insurance companies and moving forward with the
restructuring of the segment, BB has proposed, and the Federal Government, with the intermediation of
the Ministry of Finance, has accepted to start negotiations, with no binding effect, aiming to purchase an
ownership interest, in compliance with the prevailing regulations and the terms and conditions inherent
to transactions of this nature, particularly the obtaining of the previous authorizations required.
Revision of the partnership with Principal Financial Group
BB Seguros signed a memorandum of understanding with Principal Financial Group (Principal) to
increase its ownership interest in the total capital of Brasilprev from 49.99% to 74.99%. The proposal
consists of increasing the ownership interest of BB Seguros in total capital through the issue of
registered preferred shares by Brasilprev, in a manner that there will be no increase in the interest held
by BB Seguros in this company's voting capital (registered common shares).
Through this partnership, the distribution channels of Banco do Brasil will sell the pension plan products
of Brasilprev on an exclusive basis for a period of 23 years. In return, the ownership interest of BB
Seguros in total capital will be increased, as described in the previous paragraph.
Concomitantly, Principal announced that it intends to purchase the 4% ownership interest held by the
Brazilian Service of Support to Micro and Small Enterprises (SEBRAE) in Brasilprev, leading the
company to present the ownership structure described in the table below:
Table 161. Partnership Revision – Principal Financial Group
BB Seguros
Principal
SEBRAE
Current
% - ON
49.99
46.01
4.00
% - ON
49.99
50.01
-
Future
% - PN
100.00
-
% - Total Capital
74.995
25.005
-
In addition, BB Seguros and Principal intend to start negotiations aimed at the purchase of the private
pension portfolios sold by MAPFRE Nossa Caixa.
Strategic alliance with Icatu Group
In order to form a strategic alliance to develop and sell capitalization businesses in the Brazilian market,
a Memorandum of Understanding was signed between BB and Icatu Group on January 6th., 2010.
The businesses between the two institutions will be integrated in order to eliminate competition between
the partners. Accordingly, the corporate structure will be revised, as shown in the table below:
Table 162. Partnership Revision – Principal Financial Group
BB Seguros
Icatu
SulAmérica
Aliança da Bahia
Minoritários
Current
% - Common
49.99
16.67
16.67
15.80
0.87
% - Common
49.99
50.01
-
Future
% - Preferred
100.00
-
% - Total Capital
74.995
25.005
The Icatu Group is leader among the companies not related to retail banks in the capitalization market
and serves over 3.2 million people in various business lines.
The information on the security businesses were addressed in Material Facts disclosed to the market on
October 6th., 15th. and 27th., 2009 and January 6th., 2010.
181 - Banco do Brasil – MDA 4Q09
11 – Financial Statements
11.1 Summarized Balance Sheet
Table 163. Balance Sheet – Assets
R$ million
Mar/08
Jun/08
Sep/08
Dec/08
Mar/09
Jun/09
Sep/09
414,193
416,052
458,237
521,273
591,925
598,839
685,684
ASSETS
406,228
407,781
449,235
511,761
577,351
584,287
669,719
Current and long-term assets
4,790
5,754
6,847
5,545
7,516
6,212
8,340
Available funds
72,689
54,283
71,092
119,408
131,796
132,438
157,541
Short-term interbank investments
57,963
44,064
61,637
95,160
103,356
111,171
134,045
Open market investments
14,725
10,219
9,454
24,249
28,440
21,267
23,495
Interbank deposits
81,490
82,301
85,954
86,909
110,594
109,564
129,818
Marketable securities
24,717
26,009
26,475
26,136
32,475
31,661
44,590
Securities for trading
35,388
35,480
37,777
38,374
45,269
46,645
52,750
Securities available for sale
20,485
19,597
20,443
20,123
31,433
30,477
30,773
Securities held to maturity
899
1,216
1,258
2,276
1,417
781
1,706
Financial derivatives
36,340
38,260
38,238
21,287
30,925
29,127
31,252
Interbank accounts
31,102
33,666
35,564
20,882
25,543
24,507
26,468
Central Bank deposits
11,127
12,952
12,220
12,439
12,381
11,188
12,398
Compuls. dep, on demand, Dep & float
19,975
20,714
23,344
8,443
13,162
13,319
14,069
Compulsory dep, on savings dep,
5,238
4,594
2,675
405
5,382
4,620
4,784
Others
118
126
138
228
99
102
161
Interdepartmental accounts
149,507
165,558
175,599
190,882
205,376
214,906
246,217
Loans
6,286
14,670
3,038
12,471
3,767
2,816
4,975
Public sector
153,543
161,661
183,345
191,589
216,684
228,995
259,359
Private sector
(10,322)
(10,773)
(10,783)
(13,179)
(15,075)
(16,904)
(18,118)
(Allowance for loan losses)
1,355
1,839
2,267
2,968
3,246
3,253
4,636
Leasing
1,380
1,875
2,310
4,880
3,352
3,406
4,861
Leasing and sub-leasing receivables
69
58
48
55
53
60
60
Public sector
1,311
1,817
2,262
4,825
3,299
3,346
4,801
Private sector
(1,842)
(Unearned lease income)
(25)
(36)
(44)
(71)
(106)
(153)
(225)
(Allowance for lease losses)
59,211
58,917
68,375
83,279
86,156
87,034
89,641
Other receivables
55
49
51
71
81
78
76
Receivable on guarantees honored
12,608
10,060
17,053
20,914
19,041
13,957
12,066
Foreign exchange portfolio
433
435
402
413
513
502
542
Income receivable
338
183
287
347
150
1,763
522
Trading and brokerage of securities
776
797
821
846
868
888
910
Specific credits
1
0
0
0
0
0
0
Special operations
269
304
396
441
586
702
815
Credits from Insurance, Pension and Capitalization Op.
14,051
14,337
14,994
16,499
20,413
21,053
22,261
Tax credits
2,180
2,092
2,003
7,794
7,794
8,410
8,709
Atuarial Assets
16,394
16,671
17,481
18,007
20,024
20,489
20,888
Warrants Deposits Receivable
13,120
15,074
16,008
19,325
18,363
20,916
24,523
Other credits
(1,014)
(1,082)
(1,121)
(1,377)
(1,676)
(1,725)
(1,671)
(Provision or doubtful receivables)
(347)
(357)
(360)
(579)
(649)
(702)
(728)
(With loan characteristics)
(667)
(726)
(760)
(798)
(1,027)
(1,023)
(943)
(Without loan characteristics)
729
743
726
1,256
1,642
1,652
2,114
Other assets
0
0
0
0
0
0
Statutory profit sharing
300
297
304
308
356
352
385
Others
(164)
(162)
(165)
(170)
(183)
(187)
(191)
(Provision for possible losses)
593
608
586
1,118
1,469
1,487
1,920
Prepaid expenses
7,964
8,271
9,002
9,512
14,574
14,551
15,965
Permanent assets
1,055
1,190
1,589
966
961
5,184
6,625
Investments
131
360
763
163
188
4,369
5,698
Investm, in assoc. and subsidiary co,
990
893
893
871
869
901
1,007
Other investments
(66)
(62)
(66)
(68)
(96)
(87)
(80)
(Provision for losses)
2,966
2,947
3,082
3,339
3,588
3,663
3,741
Property and equipment
2,585
2,612
2,692
2,668
2,825
2,970
3,061
Land and buildings in use
152
150
150
Land and buildings in use reavaliation
4,975
5,007
5,278
5,610
6,018
6,021
6,184
Other property and equipment in use
(4,594)
(4,672)
(4,887)
(4,940)
(5,407)
(5,478)
(5,654)
(Accumulated depreciation)
7
6
5
4
3
2
2
Leased assets
464
10
10
8
429
6
4
Leases assets
(457)
(5)
(5)
(4)
(426)
(4)
(2)
(Accumulated depreciation)
3,294
3,507
3,674
4,598
9,391
5,128
5,082
Intangible
3,294
3,507
3,674
4,600
10,544
6,657
6,998
Intangible Assets
(2)
(1,154)
(1,529)
(1,916)
(Accumulated amortization)
642
622
652
604
632
574
515
Deferred charges
1,703
1,731
1,835
1,846
2,226
2,195
2,237
Organization and expansion costs
(1,060)
(1,109)
(1,183)
(1,241)
(1,594)
(1,621)
(1,722)
(Accumulated amortization)
*Adjusted series since June 2007, concerning the CMN Resolution # 3,535, of 08.31.2008. For futher information see Presentation.
182 - Banco do Brasil – MDA 4Q09
Dec/09
708,549
691,539
7,843
168,398
144,174
24,224
124,337
38,274
62,161
22,439
1,463
26,592
24,280
11,919
12,361
2,312
295
261,783
5,667
273,801
(17,685)
4,701
4,932
63
4,869
(231)
95,233
91
8,671
563
436
932
0
908
21,910
12,655
21,209
29,539
(1,682)
(702)
(980)
2,358
364
(176)
2,170
17,010
6,645
5,776
947
(78)
4,214
3,336
6,632
(5,753)
1
4
(2)
5,677
7,659
(1,982)
472
2,247
(1,775)
Table 164. Balance Sheet – Liabilities
R$ million
Mar/08
414,193
LIABILITIES AND SHAREHOLDERS' EQUITY
388,786
Current and long-term assets
189,751
Deposits
44,142
Demand deposits
48,112
Savings deposits
6,247
Interbank deposits
90,939
Time deposits
310
Investment deposits
99,716
Money market borrowing
37,545
Own portfolio
61,771
Third-party portfolio
400
Others
1,260
Funds from acceptances and securities placed
1,169
Foreign securities
3,049
Interbank accounts
3,036
Receipts and payments pending settlement
13
Correspondent banks
1,369
Interdepartmental accounts
1,273
Third-party funds in transit
96
Internal transfers of funds
3,251
Borrowing
3,251
Foreign borrowing
18,250
Domestic onlending – official institutions
3,184
Federal Treasury
9,198
National Development Bank (BNDES)
Caixa Econômica Federal (CEF)
5,194
Fed. Prog. for Cap. Equip. Finan. (FINAME)
673
Other institutions
0
Foreign onlending
1,876
Financial derivatives
70,264
Other accounts payable
2,443
Collection of taxes and contributions
10,939
Foreign exchange portfolio
1,342
Stockholders and statutory distributions
12,244
Taxes and social security
590
Trading and brokerage of securities
10,575
Technical Prov. Insurance, Pension & Capitalization. Op.
2,125
Financial and Development Funds
887
Perpetual Securities
2
Special operations
Obligations for Lotto Operations
10,405
Subordinated Debt (FCO)
4,111
Actuarial liabilities
14,600
Other liabilities
Deferred income
Corporate Profit Sharing
25,407
Shareholders’ equity
13,212
Capital
(Unpaid Capital)
0
Capital reserves
6
Revaluation reserves
10,125
Revenue reserves
85
Mark-to-market – securities and derivatives
1
Retained earnings (accumulated losses)
(Treasury shares)
1,978
Income accounts
Jun/08
416,052
389,681
195,216
43,603
49,096
5,578
96,495
443
93,097
45,999
46,418
680
2,025
1,857
3,611
3,598
13
1,185
1,160
25
3,244
3,244
19,255
3,246
9,555
5,802
652
0
1,953
70,095
2,505
7,949
1,235
13,370
155
11,183
2,251
807
2
10,774
4,166
15,698
26,371
13,212
5
6
13,090
58
-
Sep/08
458,237
430,348
229,810
42,955
52,693
6,309
127,582
270
85,339
28,632
56,707
2,664
2,465
2,438
2,423
14
1,315
1,268
46
5,008
5,008
19,640
3,276
9,380
6,085
898
0
1,367
82,767
2,770
15,761
1,549
14,540
382
12,075
2,277
971
2
11,232
4,285
16,924
27,889
13,699
5
7
12,750
(33)
1,461
Dec/08
521, 273
491, 336
270, 841
51, 949
54, 965
14, 065
149, 618
243
91, 130
21, 927
69, 203
3, 479
3, 210
21
1
20
2, 496
2, 495
0
7, 627
7, 627
22, 436
3, 485
11, 168
6, 585
1, 199
98
3, 895
89, 312
252
15, 964
1, 838
17, 570
401
12, 675
2, 458
1, 185
2
11, 772
5, 662
19, 531
(0)
29, 937
13, 780
5
7
15, 977
199
(31)
-
Mar/09
591,925
560,232
305,002
47,276
70,567
8,406
178,487
266
106,452
31,133
75,319
3,074
2,762
1,940
1,924
16
1,862
1,808
53
9,991
9,991
22,220
3,532
10,753
165
6,826
945
104
3,164
106,422
3,156
15,380
985
17,686
145
13,771
3,741
1,174
2,136
9
14,371
5,738
28,130
834
30,859
13,780
5
7
15,759
124
(31)
1,215
Jun/09
598,839
565,692
310,846
49,075
69,011
7,459
185,072
228
101,508
28,755
72,553
200
2,673
2,337
2,677
2,657
20
2,045
2,007
37
8,536
8,536
22,626
3,574
11,118
159
7,009
765
107
2,580
112,094
2,853
16,339
1,502
20,141
450
15,017
4,076
990
2,140
14,689
5,796
28,102
787
32,360
18,549
5
7
13,614
216
(31)
-
*Adjusted series since June 2007, concerning the CMN Resolution # 3,535, of 08.31.2008. For futher information see Presentation.
183 - Banco do Brasil – MDA 4Q09
Sep/09
685,684
652,002
326,958
50,107
72,233
9,627
194,707
284
153,603
45,543
106,568
1,491
6,231
3,383
2,792
2,769
23
1,859
1,840
19
8,855
8,855
26,761
2,826
14,968
153
7,780
1,034
104
6,098
118,742
2,629
15,466
1,608
22,224
378
16,081
4,052
901
2,346
16,409
5,871
30,775
21
33,661
18,549
5
7
13,299
324
(31)
1,509
Dec/09
708,549
672,429
337,564
56,459
75,742
11,619
193,516
229
160,821
31,902
128,745
174
7,362
4,597
21
1
21
3,229
3,215
14
6,370
6,370
31,390
2,101
19,630
146
8,381
1,133
99
4,724
120,848
377
12,174
2,625
24,297
528
17,339
4,135
3,516
206
18,553
5,927
31,172
0
36,119
18,567
5
7
17,301
270
(31)
-
11.2 Summarized Corporate Law Income Statement
Table 165. Summarized Corporate Law Income Statement
R$ million
Financial Intermediation Income
Loans
Leasing
Securities
Financial Derivatives
Foreign Exchange Portfolio
Compulsory Investments
Financial Inc. from Insur., Pension & Capit. Op.
Financial Intermediation Expenses
Money Market Funds
Borrowing. Assignments and Onlending
Allowance for Loan Losses
Gross Income from Financial Intermediation
Other Operating Income (Expenses)
Fee Income
Banking Fees Revenues
Personnel Expenses
Other Administrative Expenses
Taxes
Equity Int. in the Results of Subs. and Affil.
Income f/ Insur., Pension & Capitalization Op.
Other Operating Revenues
Other Operating Expenses
Operating Income
Non-operating Income
Income Before Taxes
Income and Social Contribution Taxes
Statutory Profit Sharing
Corporate Profit Sharing
Net Income
184 - Banco do Brasil – MDA 4Q09
1Q08
10,971
7,001
49
3,767
(448)
122
428
53
(7,232)
(4,909)
(720)
(1,603)
3,739
(853)
2,915
(1,933)
(1,809)
(566)
318
101
1,394
(1,272)
2,887
224
3,111
(462)
(301)
2,347
2Q08
10,770
6,910
59
3,057
302
(112)
468
85
(6,954)
(5,122)
(88)
(1,744)
3,816
(1,593)
2,259
646
(2,131)
(1,855)
(605)
(129)
220
1,976
(1,975)
2,223
79
2,301
(445)
(212)
1,644
3Q08
15,076
8,697
58
5,771
(85)
(50)
590
94
(11,409)
(7,068)
(2,973)
(1,367)
3,667
(1,449)
2,259
673
(2,377)
(2,069)
(577)
496
218
1,322
(1,396)
2,219
105
2,324
(216)
(241)
1,867
4Q08
18,824
10,613
147
8,097
(1,053)
503
424
93
(17,226)
(8,432)
(4,903)
(3,892)
1,597
2,744
2,338
720
(2,430)
(2,185)
(887)
707
353
7,090
(2,962)
4,342
5
4,347
(1,022)
(380)
2,944
1Q09
2Q09
14,489
15,365
8,502
9,963
138
148
5,730
5,215
(62)
(451)
(116)
131
176
213
121
146
(11,131) (11,415)
(7,761)
(7,067)
(716)
(483)
(2,654)
(3,865)
3,359
3,950
(2,664)
(1,167)
2,255
2,557
688
879
(3,152)
(2,506)
(2,691)
(2,871)
(667)
(860)
(90)
(576)
303
471
2,061
4,957
(1,371)
(3,217)
694
2,782
16
1,426
711
4,208
1,182 (1,559)
(227)
(300)
0
(1)
1,665
2,348
3Q09
15,637
10,333
147
5,083
(664)
406
213
117
(10,841)
(7,320)
(593)
(2,928)
4,795
(1,875)
2,647
879
(2,909)
(2,596)
(807)
(275)
392
3,162
(2,367)
2,921
379
3,300
(1,062)
(258)
(1)
1,979
4Q09
17,794
11,717
213
5,321
(47)
265
214
109
(11,665)
(7,997)
(718)
(2,950)
6,129
1,065
2,714
892
(3,271)
(3,054)
(998)
(49)
408
6,794
(2,371)
7,194
22
7,217
(2,463)
(599)
1
4,155
11.3 Income Statement with Reallocations
Table 166. Income Statement with Reallocations
R$ million
1Q08
11,046
Financial Intermediation Income
7,208
Loans
49
Leasing
3,571
Securities
(448)
Financial Derivatives
122
Foreign Exchange Portfolio
428
Compulsory Investments
53
Financial Income from Insur., Pension & Capitalization Op.
27
FX Gain(Loss)on Foreign Investments
35
Other Op. Inc. of a Fin. Intermed. Nature
Tax Hedge
(5,477)
Financial Intermediation Expenses
(4,757)
Money Market Funds
(720)
Borrowing .Assignments and Onlending
5,568
Net Interest Income
(1,534)
Allowance for Loan Losses
4,034
Net Financial Margin
2,915
Fee Income
2,915
Fee Income
Banking Fee Income
101
Res. From Insurance, Pension Plan and Capitalization Op.
(534)
Taxes on Revenues
6,516
Contribution Margin
(3,535)
Administrative Expenses
(1,801)
Personnel Expenses
(1,734)
Other Administrative Expenses
(26)
Other Tax Expenses
2,955
Commercial Income
(125)
Legal Risk
6
Legal Claims
(132)
Labor Lawsuits
(525)
Other Operating Income (Expenses)
(116)
Eq.Interest in Resul. Subs. and Affil.
(410)
Other Operating Income/Expenses
880
Other Operating Income
(1,290)
Other Operating Expenses
2,305
Operating Income
224
Non-Operating Income
2,529
Income Before Taxes
(669)
Income and Social Contribution Taxes
125
Interest on Own Capital Tax Benefit
(301)
Interest on Own Capital Tax Benefit
Statutory Profit Sharing
1,559
Recurring Income
789
Extraordinary Items
361
Sale of Interest in VISA Internacional
Disposal of investments (Telemar)
241
Revaluation of Consolidated Interest
(82)
Economic Plans
67
Credit Assignment
302
Tax Efficiency
Cards Replacement
Contingent Liabilities (BESC)
Tax Credit (BESC)
Previ – Non-recognized Actuarial Gains
Cassi – Non-recognized Actuarial Losses
Additional Provision for Loan Losses
Provision for labor, civil and tax claims
Tax credits – diffirential of CSLL rate
Disposal of Investments (Visanet Brasil)
Voluntary Resignation Program - BNC
Reversal of Labor Liabilities
(101)
Tax FX and Statutory Profit Sharing over Extraord. Items
PREVI Actuarial Assets - Adjustments
2,347
Net Income
185 - Banco do Brasil – MDA 4Q09
2Q08
11,043
7,197
59
3,057
302
(112)
468
85
(294)
280
(5,210)
(5,122)
(88)
5,833
(1,687)
4,146
2,905
2,259
646
220
(571)
6,700
(3,662)
(1,989)
(1,672)
(34)
3,004
(215)
(74)
(141)
(600)
23
(624)
701
(1,324)
2,189
79
2,267
(592)
123
(212)
1,463
181
142
(54)
110
(54)
37
1,644
3Q08
15,894
8,993
58
5,771
(85)
(50)
590
94
496
27
(9,862)
(6,889)
(2,973)
6,032
(1,338)
4,694
2,933
2,259
673
218
(541)
7,303
(3,817)
(2,020)
(1,797)
(35)
3,451
(155)
4
(159)
(525)
0
(526)
889
(1,415)
2,771
105
2,876
(598)
138
(241)
2,037
(170)
(192)
(360)
194
188
1,867
4Q08
20,412
11,106
147
8,097
(1,053)
503
424
93
711
50
334
(13,335)
(8,432)
(4,903)
7,077
(2,240)
4,837
3,058
2,338
720
353
(715)
7,534
(4,344)
(2,301)
(2,043)
(45)
3,144
(226)
(97)
(129)
(542)
(3)
(539)
1,230
(1,769)
2,375
5
2,380
(557)
140
(198)
1,626
1,318
(44)
5,326
(1,259)
(1,594)
(1,110)
2,944
1Q09
15,259
8,951
138
5,730
(62)
(116)
176
121
(85)
470
(64)
(8,275)
(7,558)
(716)
6,985
(2,491)
4,493
2,943
2,255
688
303
(618)
7,122
(3,931)
(2,129)
(1,801)
(43)
3,149
(197)
(95)
(102)
(554)
(5)
(550)
1,094
(1,643)
2,397
16
2,413
(688)
179
(203)
0
1,523
309
(95)
(1,367)
1,213
557
(166)
1,665
2Q09
16,037
10,133
148
5,215
(451)
131
213
146
(592)
1,533
(439)
(7,550)
(7,067)
(483)
8,487
(3,172)
5,316
3,436
2,557
879
471
(806)
8,417
(4,892)
(2,613)
(2,279)
(7)
3,518
(45)
(152)
107
(740)
15
(755)
1,136
(1,891)
2,733
11
2,744
(771)
182
(220)
(26)
1,727
455
(193)
271
(676)
1,415
(362)
166
2,348
3Q09
16,048
10,609
147
5,083
(664)
406
213
117
(292)
643
(216)
(7,729)
(7,136)
(593)
8,320
(3,017)
5,303
3,526
2,647
879
392
(760)
8,461
(4,897)
(2,693)
(2,203)
(23)
3,540
(256)
(40)
(216)
(590)
17
(607)
1,313
(1,920)
2,694
29
2,723
(727)
190
(230)
(1)
1,764
215
141
(84)
119
209
(171)
1,979
4Q09
17,984
11,963
213
5,321
(47)
265
214
109
(74)
75
(58)
(8,715)
(7,997)
(718)
9,268
(2,950)
6,318
3,606
2,714
892
408
(965)
9,367
(5,465)
(2,844)
(2,621)
(27)
3,876
(4)
46
(49)
(960)
24
(985)
1,463
(2,448)
2,912
22
2,934
(853)
191
(262)
1
1,819
2,336
530
242
3,030
(215)
644
(1,895)
4,155
Vice-Presidency of Finance, Capital Markets and Investor Relations
Vice-President
Ivan de Souza Monteiro
Investor Relations Manager
Marco Geovanne Tobias da Silva
Executive Manager
Gisele Campana Rodrigues
Divisional Managers
Eduardo Amaral Pilenghi
Joaquim Camilo de Castro
Analysts
Bruno Santos Garcia
Daniel Henrique Sousa Diniz
Domingos Pereira dos Santos Neto
Glauco Ribeiro Barbirato Tavares
Hilzenar Souza Alves da Cunha
Janaína Marques Storti
Joabel Martins de Oliveira
Leonardo Resende Nader
Marcelo de Campos e Silva
Marcone Edson de Vasconcelos Formiga Filho
Mariana Reschke da Cunha
Rafael Augusto Sperendio
186 - Banco do Brasil – MDA 4Q09
FINANCIAL
STATEMENTS
2009 Results
Todo
seu
INDEX
MANAGEMENT REPORT
FINANCIAL STATEMENTS
Balance Sheet
Income Statement
Statement of Changes in Stockholder’s Equity
Cash Flow Statement
Added Value Statement
EXPLANATORY NOTES
NOTE 1 – The Bank and its Operations
NOTE 2 – Presentation of the Financial Statements
NOTE 3 – Summary of Main Accounting Practices
NOTE 4 – Consolidated Financial Statements
NOTE 5 – Acquisition of Banco Nossa Caixa S.A. and Banco Votorantim S.A.
NOTE 6 – Cash and Cash Equivalents
NOTE 7 – Short-term Interbank Investments
NOTE 8 – Securities and Derivatives Financial Instruments
NOTE 9 – Interbank – Linked Credits
NOTE 10 – Loan Operations
NOTE 11 – Other Receivables
NOTE 12 – Foreign Exchange Portfólio
NOTE 13 – Other Assets
NOTE 14 – Investments
NOTE 15 – Premises and Equipment and Leased Assets
NOTE 16 – Intangible Assets
NOTE 17 – Deposits and Money Market Borrowing
NOTE 18 – Borrowings
NOTE 19 – Resources from Securities Issues
NOTE 20 – Other Liabilities
NOTE 21 – Insurance, Pension and Capitalization Operations
NOTE 22 – Other Operating Income / Expenses
NOTE 23 – Non-Operating Income / Expenses
NOTE 24 – Shareholder’s Equity
NOTE 25 – Income and Social Contribution Taxes
NOTE 26 – Tax Credit
NOTE 27 – Related-Party Transactions
NOTE 28 – Employee Benefits
NOTE 29 – Remuneration of Employees and Management
NOTE 30 – Assignment of Employees to Outside Agencies
NOTE 31 – Commitments, Responsibilities and Contingencies
NOTE 32 – Risk Management and Regulatory Capital
NOTE 33 – Other Information
INDEPENDENT AUDITORS REPORT
SUMMARY OF THE AUDIT COMMITTEE REPORT
DECLARATION OF THE BOARD OF DIRECTORS
FISCAL COUNCIL REPORT
EXECUTIVE BOARD
Management
Report
2009 Results
Todo
seu
Unidade Relações com Investidores
Management Report 2009
Dear Shareholders,
We present the Management Report and the Financial Statements of
Banco do Brasil for the year 2009, in conformity with the requirements of
the Brazilian Corporate Law, the National Monetary Council (CMN), the
Brazilian Central Bank, the Brazilian Securities Commission (CVM) and
Banco do Brasil's Bylaws.
Macroeconomic Environment
Over 2009, the effects of anti-cyclic monetary and tax incentives in global
scale were revealed through the end of the recession in central and main
emerging economies, the second economic group having presented a
performance better than the first. Despite of this fact, the world GDP
went through its first post-war negative growth rate.
Regarding the Brazilian economy, the strength of its macroeconomic
fundamentals and financial system enabled the implementation of timely
anti-cyclic measures such as those adopted in the areas of monetary
policy (reduction of benchmark interest rate and increase in liquidity in
real and dollar) and credit (with highlight to the performance of
government banks), at the fiscal level (reduction in burdens and increase
in expenditures, including investments) and the new housing program.
Such measures were important for the economic activity recovery to
occur already in the second quarter of the year and in a benign
inflationary environment, once the variation in IPCA index was slightly
below the midpoint of the inflation target for the year (4.5%).
The continued consolidation of institutional and national economic
fundamentals made the country more resilient to external adverse
shocks. This evaluation was also confirmed by the recent achievement of
the investment grade by Moody’s, the last of the main risk rating
agencies to give such grade to Brazil. The investment grade status
granted by Standard&Poor’s and Fitch Rating, in 2008, had also
occurred in the context of a global crisis.
1
Management Report 2009
Highlights of the period
The year of 2009 was full of challenges to Banco do Brasil and was
marked by a strong growth of financial institutions, whether by merger or
acquisition. Despite of this, Banco do Brasil, by means of a unique and
successful strategy in the market, increased the offer of credit, making
several economic sectors stronger.
Whereupon, a profit of R$ 10.1 billion was recorded, a growth of 15.3%
as compared to the previous year. It should be highlighted that over the
year Banco do Brasil merged Banco Nossa Caixa and completed a
strategic partnership with Banco Votorantim.
In this context, the annualized return on shareholders' equity was 30.7%
and the return on assets was 1.7%. As remuneration to shareholders, R$
4.1 billion was set aside, being R$ 1.9 billion as interest on own capital
and R$ 2.2 billion as dividends, maintaining a payout rate at 40%.
The fundings ended the year with a balance of R$ 498.4 billion, an
increase of 37.7% as compared to the previous year. Saving deposits
stood out, growing of 37.8% in 12 months.
Backed by this funding basis, the total loan portfolio grew 33.8% in
comparison to 2008, and reached a balance of R$ 300.8 billion. Loans to
individuals grew 88.1% in 12 months, as a result of the strategy followed
by the Bank in payroll and car loans. BB maintained the delinquency
level under control, which stood at levels below those estimated by the
Banking Industry (SFN).
It was noted a small decrease in the Operational Efficiency Ratio, which
stood at 44% in 2009 and 42.3% in 2008, and in the Coverage Ratio of
Personnel Expenses over Revenues from Fees stood at 114.1% in 2009
over 133.2% in 2008. These performances reflect the recent acquisitions
and mergers, in a year that BB concentrated its efforts in the integration
of these financial institutions.
The social investments of Banco do Brasil attained R$ 167.2 million,
including investments in culture (R$ 40.7 million), sports (R$ 63.5 million)
and in education programs, generation of employment and income and
dissemination of social technologies of Fundação Banco do Brasil (R$ 63
million).
In relation to business strategy of Regional Sustainable Development
(DRS), 4.5 thousand business plans were implemented for 1.1 million
families in 4.7 thousand Brazilian municipalities in 2009.
2
Management Report 2009
Outlook
Committed to staying among the leading financial groups in Latin
America, Banco do Brasil outlined the following as strategies and goals
for the next year:
• become a reference in performance and sustainable business;
• expand market share in loans;
• increase share in the capital market;
• expand product and service distribution capacity;
• refine the management of customers and service delivery
channels;
• strengthen its activity in value chains, cooperativism and
associativism;
• Increase the international activities and the use of strategic,
business and operational strategies in Brazil and abroad;
• develop and refine the management of knowledge and of
competencies of employees;
• participate in the Dow Jones Sustainability Index;
• Broaden and strengthen its activities of insurance, pension plan,
capitalization, purchasing pools and cards.
ECONOMIC-FINANCIAL PERFORMANCE
• Banco do Brasil recorded net income of R$ 10.1 billion in 2009,
15.3% higher than the recorded in the previous year, with an
annualized return on shareholders' equity of 30.7%. The earnings
per share achieved R$ 3.95 in the past 12 months (accumulated).
• Assets totaled R$ 708.5 billion, growth of 35.9% in 12 months, with a
return on assets of 1.7% in 2009, against 2% in 2008. This
performance allowed the Bank to recover its leadership in assets in
the Brazilian Financial System.
• Shareholders' equity reached R$ 36.1 billion, an increase of 20.6% in
12 months.
• The sum of R$ 1,6 billion was recorded in the year in non-recurring
items, with an impact on net income. Among these effects those that
merit special emphasis (disregarding the tax effects and statutory
3
Management Report 2009
profit sharing) R$ 1.1 billion of tax credits and R$ 900 million of
revenue derived from the IPO of Cielo (former Visanet Brasil).
Disregarding these effects, recurring net income reached R$ 8.5
billion in the year.
R$ million
Highlights
Income
Net Income
Income (without extraordinary impacts)
Net income from financial intermed.
Administrative expenses²
Net Income per Share
Return on Assets
Return on Equity
Equity
Assets
Loan portfolio
Borrowings
Assets under Management
2009¹
10,148
8,506
63,285
(23,050)
3.95
1.7
30.7
Dec/09
708,549
300,829
498,385
370,773
2008
∆2008 (%)
8,803
15.3
6,685
27.2
55,641
13.7
(16,787)
37.3
3.44
10.8
2.0
(0.4) pp
32.5
(2.8) pp
Dec/08 ∆ Dec/08 (%)
521,273
36.0
224,808
33.8
361,971
37.7
301,756
22.9
¹ Items based on Consolidated Statements, which consider BNC and BV.
² It refers to the sum of Others Administrative Expenses and Personnel Expenses.
BB in a Glance*
Customer base: 52.7 million;
Export and import foreign exchange: 31.4% and 25.4% of the market
share, respectively;
Loans
• Total portfolio: R$ 300.8 billion;
• Payroll Loan: R$ 36.5 billion, 34.4% of the market;
• Agribusiness: 58.1% of the National Farm Credit System;
• BNDES Onlending: R$ 12.3 billion, market leader;
• Foreign Loan Portfolio: R$ 17.3 billion;
Total funding: R$ 498.4 billion;
Capitalization: 23.4% of the market (collection);
Revenues from cards: R$ 88.6 billion;
Internet and Mobile Banking: 9.2 million clients enabled;
Payment of civil servants: 5.7 million officials;
Payment of retirees and INSS' beneficiaries: 6.8 million;
ATM Network: 45.4 thousand ATMs;
4
Management Report 2009
Branches Network: 4.9 thousand, distributed in 3.6 thousand Brazilian
municipalities and present in 13 countries;
Banking Correspondents Network: 8.8 thousand.
* Items based on Consolidated Statements, which consider BNC and BV.
• Income from loan operations totaled R$ 40.5 billion, an increase of
22% in relation to the previous year, which was in line with the
increase in the loan portfolio.
• Service revenues reached R$ 13.5 billion, an increase of 14.4% in
relation to 2008.
• The administrative expenses, which comprise personnel expenses
and other administrative expenses, totaled R$ 23.1 billion, which
represents growth of 37.3% in 12 months, reflected in the
productivity ratios shown in the table below:
Productivity Ratios
Service Revenues/Personnel Expenses
Service Revenues/Administr. Expenses
Efficiency Ratio - %
2009
114.1
58.6
44.0
2008
133.2
70.4
42.3
• Expenses with allowance for loan losses reached R$ 12.4 billion in
the year, growth of 44% in 12 months, accounting for 4.1% of the
loan portfolio. This movement reflects the increase of delinquency in
the banking sector as a whole resulting from the international
financial crisis and the Bank's stringency in the management of its
assets. Although the level of default of BB's loans continues at a
level below the National Financial System.
• BB's investments amounted to R$ 1.3 billion in the year, 17.5% above
2008. It is worth to highlight the investments of R$ 505 million in
properties (constructions and renovations), equipment (R$ 50.7
million), and technology (R$ 793.7 million).
• BIS ratio of BB, which measures its capacity to leverage assets and
face risks inherent to businesses, reached at the end of 2009 13.7%,
above the minimum required by the monetary authority.
• It is worth mentioning the Bank announced on January 28th, 2009 that
it finishing studies aimed at carrying out primary and secondary
offering of shares, in at least R$ 8 billion and at most R$ 10 billion, in
order to reach a minimum free float of 25% required by Novo Mercado
and sustain the future growth of the Bank’s loan portfolio.
5
Management Report 2009
See further information about the economic-financial performance of BB
in the Management Discussion and Analysis Report at BB's website
(www.bb.com.br/ir).
SHARE PERFORMANCE
Banco do Brasil's shares (BBAS3) closed the year priced at R$ 29.70,
an increase of 117% in 12 months, against appreciation of 82.7% of
Ibovespa. The performance reflects the recovery of the price of shares
after a time of instability in the capital market and was leveraged by the
admission of foreign capital in the country.
BBAS3 was traded in all Bovespa's sessions, in the daily average
amount of R$ 74.8 million in the year, as opposed to R$ 93.6 million in
the previous year, and continued to be listed in the theoretical portfolios
of the major São Paulo Stock Exchange indexes: Ibovespa, Ibrx50, Ibrx,
IGC, ISE, and Itag.
At Ibovespa, BBAS3 kept the 12th place in the current theorical portfolio.
In relation to ISE, Banco do Brasil was listed in the portfolio for the 5th
consecutive year of 34 participating companies.
In the second half of 2009, Brazilian Central Bank, the Brazilian
Securities Commission - CVM, and afterwards the Securities and
Exchange Commission - SEC authorized the registry of the program of
Level I American Depositary Receipt - ADR of Banco do Brasil. This
program will increase the participation of BB in global capital markets
and permit a broader diversification of its shareholding, as well as
increase the liquidity of its shares. The official launch of ADR of BB
occurred on December 2nd, 2009 and by February 10th, 2010 3.8 million
ADRs were issued.
Owing to its shares' apreciation, BB's market capitalization grew
102.4% and reached R$ 76.3 billion. The price/book value ratio reached
2.10x, which means that BB shares are being negotiated 2,10 times its
equity value. Earnings per share reached R$ 3.95 in the past 12 months
(accumulated).
Banco do Brasil has a policy of paying out 40% of its net income in the
form of dividends and interest on capital, at quarterly basis. The amount
of R$ 4.1 billion was allocated to shareholders: R$ 2.2 billion as
dividends and R$ 1.9 billion as Interest on Own Capital (JCP). The
remaining 60% of the net income are used as legal and bylaws
reserves and invested in business expansion.
6
Management Report 2009
BUSINESS PERFORMANCE
Customer Base
• BB closed the year with a base of with 52.7 million customers and 35
million checking accounts (32.8 million individuals checking accounts
and 2.2 million business checking accounts), a growth of 0.3% and
15.2% in the quarter and 12 months, respectively. The recent
takeover of Banco Nossa Caixa contributed with 5.5 million
additional customers and 3.3 million additional checking accounts.
• Of the non-checking account holder clients, 8.5 million are savings
account clients, 2.7 million are beneficiaries of INSS (National
Institute of Social Security) and 6.1 million consumers of other
products and services.
• From 2010 on, BB will adopt the new segmentation model for retail
customers. The model to be implemented is based on studies that
show potential for increasing the contribution margin of the customer
base.
Service Network
• 17,9 thousand domestic points of service, the largest banking
network in Brazil. BB also has 4 Private offices, 74 Estilo branches
and around 491 Estilo spaces located in retail network branches. In
order to provide special service to middle, large and corporate
companies, BB counts on a network of 15 corporate branches and
66 business ones.
• BB's own network abroad comprises 45 points of service in 23
countries. The complementary network comprises 1,372 banking
correspondents in 144 countries. BB's network overseas supports
the internationalization of Brazilian companies and the performance
of international trade operations.
• BB has the largest self-service network in Latin America, with 45.4
thousand ATMs, 8.8 thousand banking correspondents and
availability of complementary channels, such as Call Center,
Consumer Assistance Services, Ombudsman Dept., Internet's BB
Portal and mobile banking, besides terminals shared with Caixa
Econômica Federal and Banco de Brasília.
Transactions and Automated and Virtual Channels
7
Management Report 2009
• 16.5 million transactions processed in its Banking Correspondent
network. The amount of R$ 222.1 million in payroll loan operations
highlights the importance of this channel to increase the business.
• With 1.1 million electronic payers and 46.8% of market share, Banco
do Brasil became leader in DDA (Authorized Direct Debit), solution
launched in the 2nd half of 2009 aiming to improve convenience for
the customers. As the electronic forwarding of DDA does not
requires the printing of payment slips, the reduction of paper may be
significant to environment.
• 92% of the transactions undertaken by BB customers took place
through self-service channels, with the ATM network being
responsible for 39.6% of such transactions.
• 9.3 million customers registered as internet banking and mobile
banking users, which account for 34.8% of transactions performed.
• 1.1 million adhesions to the Short Message Service (SMS),
representing 59.4% of increase in relation to the end of 2008. The
convenience and promptness provided to customers is the main
reason for this growth.
• Launching of the Financial Manager on the cell phone, self-service
solution for businesses through the use of cell phones with Wap2
technology.
• 7.3 million customers enabled to carry out transactions via the Call
Center. 66.1 million transactions were carried out by means of this
channel in the period. The financial volume movement in the Center
was R$ 108.5 billion, of which the following stood out: loan
operations to companies and individuals, debt recovery, fraud
inhibition and settlement of payment orders, thus showing the
importance of this channel to increase the businesses of the Bank.
• BB makes available the e-bidding site (licitacoes-e.com.br), already
established as one of the main electronic purchasing systems used
by the public sector. In 2009 52.5 thousand public bids were held
totaling R$ 15.2 billion, an increase of 30.3% as compared to 2008.
Loans
BB's loan portfolio reached R$ 300.8 billion, an increase of 33.8% in
relation to the end of 2008. In the amplified concept, where guarantees
granted and private securities are included, BB's loan portfolio attained
R$ 320.7 billion. This progress was due over all by the growth of
transactions with individuals, who then represented 30.5% of the total
portfolio, as against 21.7% in December 2008.
8
Management Report 2009
R$ million
Brazil
Individuals
Businesses
- SMEs
- Other
Agribusiness
Abroad
Total
Loan portfolio
2009
2008
283,560
209,693
91,791
48,811
125,336
97,192
44,920
34,900
80,416
62,292
66,434
63,690
17,268
15,115
300,829
224,808
∆ (%)
35.2
88.1
29.0
28.7
29.1
4.3
14.2
33.8
Please note that the takeover of Nossa Caixa jointly with the strategic
partnership with BV contributed with R$ 41 billion in the increase in loan
operations. These effects provided BB with a significant rise in the
credit market, going from 18.3% in 2008 to 20.1% by year-end 2009.
Currently, BB is responsible for 1/5 of the country's credit market.
One of the reflexes in the financial crisis that began in 2008 was the rise
in delinquency in the National Financial System. In BB, the past due
loans over 90 days rose to 3.3% by late 2009, as compared to 2.4% in
December 2008, below the market for the whole period. Loans rated at
risk levels AA to C accounted for 91.6% of the portfolio, against the
91% verified in the Banking Industry (SFN).
A positive factor was the volume of recovered credits. In 2009 R$ 2.7
billion were recovered, which previously had been written off as losses,
a sum 57% above that of the previous year.
Loans to individual customers
• Vehicle financing portfolio reached R$ 18.8 billion, an increase of
180.3% in relation to the same prior-year period, already considering
R$ 9.3 billion of the strategic partnership with Banco Votorantim. With
the partnership, BB reached a market share of 13.2%.
• Mortgage loans, with specific and own funds, reached R$ 1.5 billion,
including R$ 854 million regarding operations of Banco Nossa Caixa.
Please note that BB concurred with the Government's policy to reduce
the housing deficiency and encouragement of civil construction,
funding undertakings according to the rules of Programa Minha Casa
Minha Vida.
9
Management Report 2009
• Payroll loans reached R$ 36.5 billion in 2009, growth of 107.2% in
relation to 2008. In this sum, R$ 13 billion are included from Banco
Nossa Caixa acquisition and strategic partnership with Banco
Votorantim. In relation to operations contracted by BB customers, Civil
servants were accountable for 85% of the total portfolio, retirees and
INSS pensioners were accountable for 7.4% and private enterprise
workers for 7.6%. Banco do Brasil is a leader with a 34.4% market
share in the activity.
• During 2009 BB reduced its interest rates practiced for loans and
personal overdraft accounts, dropping from an average 3.03% in
December 2008 to 2.3% by the year end. Besides reducing rates, the
Bank encouraged extension of maximum payment terms in a number
of credit facilities, expanded the supply of credit to low-risk and goodrelationship customers, and also refined its methodology for credit risk
rating, which led to business growth.
Financing for Companies
• Operations with working capital lines for micro and small businesses
reached R$ 31.3 billion, an increase of 32.3% as compared to the end
of 2008. Highlights are BB Giro Rápido, and BB Giro Empresa Flex,
which attained balances of R$ 6 billion and R$ 8.4 billion,
respectively, in December 2009. Considering medium, large, and
corporate companies, the balance was of R$ 33.9 billion, a 27.7%
progress as compared to the same period.
• The portfolio of investment financing operations for micro and small
enterprises (SMEs) accumulated a balance of R$ 11.5 billion in 2009,
growth of 23.1% in relation to the previous year. A highlight for the
BNDES card with R$ 2.4 billion, a service in which Banco do Brasil
maintained its market leadership during the whole of 2009.
• 93 thousand transactions entered into funded by Operation Guarantor
Fund (FGO), a mechanism which ensures as much as 80% of
working capital transactions and investment financing for medium and
small companies, rising to R$ 2.7 billion by year-end 2009. Introduced
in August, FGO is an important instrument for these customers to gain
access to more attractive interest rates.
• In investment lines for the wholesale segment, operations with
onlending from BNDES System, which attained a balance of R$ 12.3
billion, the largest volume attained by a financial institution, with a
market share of 21.1%, deserve a special mention. In 2009 Banco
do Brasil was a leader in granting credit funded by BNDES.
10
Management Report 2009
• With the Merchant Navy fund, BB funded 6 projects related to
shipbuilding and seaport infrastructure, totaling R$ 367.8 million in
disbursements. Hence, the FMM portfolio rose to R$ 680.5 million in
December, a 117.6% increase in 12 months.
• The investment loan portfolio funded by Proger rose to R$ 11.5
billion in December, a 23.1% increase in the year. Proger Urbano
Empresarial, a key service in this nature, was responsible for 46.5%
of the portfolio.
• In 2009, within the scope of the federal government's Growth
Acceleration Program -PAC, BB was present in funding 21 projects,
with special mention of the Santo Antônio and Jirau hydroelectric
projects. BB's share in these investments is R$ 3.8 billion, out of an
estimated total of R$ 19.5 billion.
Loans to States and Local Governments.
• In 2009 loan operations in the public sector were increased, with
emphasis on those with states and local governments, which rose to
R$ 2.1 billion, reflecting a 247.1% expansion as against the previous
year. These funds were employed chiefly in investments with
relevant social impacts such as infrastructure works and the
acquisition of school buses.
Foreign Trade
Banco do Brasil consolidated its historical leadership of the export and
import exchange market, with volumes of US$ 47.1 billion and US$ 34.1
billion, respectively, and market shares of 31.4% and 25.4%,
respectively.
The loan portfolio in this segment closed the year with a balance of R$
17.3 billion. Worth mentioning the leadership in Advance on Foreign
Exchange Contracts (ACC) and the Advances on Export Contracts
(ACE), which attained contracted volume of US$ 10.9 billion, and
market share of 34.7%.
BB also led the financial agent ranking in BNDES foreign trade
operations in 2009, with disbursements of US$ 1.8 billion in operations
of BNDES-Exim, reaching a market share of 26.8%. In the Union's
Export Financing Program (Proex), as the exclusive financial agent of
the Union, BB disbursed US$ 278.7 million in the Financing category,
and US$ 157.8 million in the Equalization category in the year,
leveraging exports of US$ 4.3 billion.
With regard to electronic solutions, new records: 63.9% of such export
exchange contracts and 34.7% of import contracts were agreed on
11
Management Report 2009
through the Internet, and 39.3% used digital signatures. Currently,
62.9% of the exchange and foreign trade files under BB's charge are
digitalized, and 31.4% of customers in this area also send papers to BB
through digital means.
In 2009, 16.8 thousand enterprises were trained by means of the
International Business program.
Agribusiness
Banco do Brasil leads the domestic Rural Credit System, with a market
share of 58.1%. By means of agricultural financing for the summer
2009/2010 harvest, it supported the production of roughly 15.6 million
tons of soybeans, 10.5 million tons of corn, and 4 million tons of rice.
Representing 22.1% of BB's total loans portfolio, the December 31st,
2009 balance in the agribusiness portfolio rose to R$ 66.4 billion, of
which 74% regarding transactions maturing in 24 months and 13%
between 24 and 48 months.
The Bank uses mechanisms that reduce risks from agriculture loan
portfolio: agricultural insurance, price protection instruments,
agreements with integrators, provision of guarantees by third parties,
agri-livestock technician reference system (RTA).
As the end of the summer 2009/2010 harvest, 66.5% of the costing
transactions (R$ 7.4 billion) were entered into with Agricultural
Insurance or Proagro, while during the 2008/2009 harvest, 61.6% of
funding transactions (R$ 8.7 billion) were funded by means of one of
these two mechanisms.
When Banco do Brasil enters into agricultural loans funded by FAT, the
National Treasury, or Rural Savings, with the use of rates specified by
National Monetary Council, it receives an "equalization" rate from the
National Treasury. In 2009, BB obtained R$ 1.8 billion in equalization
revenues, against R$ 1.4 billion in 2008.
International Activities
International activities by BB regards funding and encouraging business
with Brazil. In particular, support in international operations by BB's
business customers in the country, by means of relationships by its
overseas subsidiaries and controlled companies and the Banco do
Brasil overseas network.
Overseas, foreign companies with business in Brazil also receive
support. The Bank's strategy in international expansion has three
starting
points:
Overseas
Brazilian
communities,
the
12
Management Report 2009
transnationalization of large corporations, and expansion of the
country's foreign exchange with the world.
Overseas, BB's loan portfolio rose to R$ 17.3 billion, a 14.2% increase
as compared to the same period in the previous year.
The volume of business undertaken overseas (import/export loans and
other working capital solutions) rose to R$ 23.5 billion. Export prepayment transactions deserve special attention, with US$ 3.1 billion
disbursed during the period.
Funding
• The increase of R$ 136.4 billion in funding balances, a 37.7%
increase as compared to year-end 2008, reflects the confidence by
customers in BB, even in an adverse environment. Time deposits, that
grew 29.3%, deserve special emphasis. BB's market share in total
funding rose by 19.8% in 2008 to 25.8% at year-end 2009, position as
September/2009 published by Banco Central do Brasil.
R$ million
Funding
2009
Demand deposits
56,459
Savings deposits
75,742
Time deposits
193,516
Money Market Borrowing
160,821
Other
11,848
Total
498,835
2008
51,949
54,965
149,618
91,130
14,308
361,971
∆ (%)
8.7
37.8
29.3
76.5
(17.2)
37.7
• US$ 22.7 billion were obtained through overseas funding, chiefly with
regard to a US$ 1.5 billion funding transaction in October 2009 by
means of a hybrid equity and debt instrument in the form of perpetual
bonds eligible to compose Tier I capital, which makes this BB's
largest ever overseas funding transaction.
• In 2009, in managing its capital structure, BB placed a total of R$ 3.2
billion in subordinated CDs in the domestic market, for the Tier II
capital base of the Referential Equity as authorized by Banco Central
do Brasil.
Funding management and government programs
• In 2009, BB funded R$ 3.2 billion in 64.6 thousand transactions with
funds provided by Constitutional Fund for Developing the Middle-
13
Management Report 2009
west (FCO), equal to 97.5% of the year's budgeted target, which
created / maintained 150 thousand direct and 248 thousand indirect
jobs. Funds invested grew 4.4% in relation to the same period of
previous year, and the balance of the portfolio attained R$ 10.9
billion.
• With a portfolio of 56 Self-Managed Social Security Plan Systems RPPS, which invest their funds in investment funds and managed
portfolios, BB has R$ 9.2 billion under its management and is a
leader in a market valued in excess of R$ 40.8 billion.
Services
• BB Consórcios (BB Purchasing Pools) closed the year with 140.9
thousand active quotas, growth of 7.6% in 12 months. From this
amount, 93.5 thousand consortium members in this total refer to
automobiles and 7.4 participants thousand to housing.
• In tax collection, BB accounts for 23.3% of the market at federal level
and 37.3% at state level, corresponding to R$ 156 billion and R$ 97
billion collected, respectively. R$ 11.2 billion were collected in the
municipal level.
• By means of the bank collection services, collection of deposit forms
and standing orders, Banco do Brasil provides services to 700
thousand companies that brought in R$ 606.7 billion in 2009. These
services added R$ 1.6 million in revenue to BB, growth of 5.4% in 12
months.
• 52 thousand payrolls were processed, considering business clients
and public sector. Overall, BB provided these services to a total of
10.1 million people, involving civil servants and employees from
private enterprises, and kept the leadership in this market segment.
The takeover of Banco Nossa Caixa contributed with 142 thousand
civil servants payrolls.
Cards
The card business added R$ 4.5 billion to the Bank, among revenues
from financing and equity in the earnings (loss) of subsidiary and
associated companies, an increase of 24% as compared to 2008.
With a base of 87.3 million credit issued, BB obtained a turnover of R$
88.6 billion in 2009, growth of 33.9% in relation to the previous year.
This performance enabled BB to advance in its market share from
17.6% to 18.7%, maintaining its leadership in the Brazilian market of
debit cards and in Visa flagship cards.
14
Management Report 2009
During 2009 BB reinforced its strategy of placing its cards in new
market segments, such as agribusiness and corporate areas, chiefly by
means of the BNDES card. In addition, it increased the use of cards as
an instrument to pay bills, including those under the DDA (Direct
Authorized Charge) system, having increased its billings by R$ 1.6
billion, or roughly 6.8% of the Bank's total card revenues.
Banco do Brasil launched Ourocard American Express, Ourocard Visa
Copa do Mundo FIFA 2010, Ourocard Nossa Caixa, Ourocard
Empreendedor, and signed an agreement with GOL/Varig for the
issuance of a co-branded Smiles credit card.
Insurance, Private Pension Fund and Capitalization
Businesses with insurance, pension plans and capitalization, measured
by the insurance ratio, added R$ 991,5 million to the BB, comprised of
equity in the earnings of subsidiary and associated companies and fee
income, an increase of 30,7% in relation to 2008. These figures net of
taxes contributed with 11,7% of BB's recurring earnings.
Also in the fiscal year, Banco do Brasil started the insurance area's
corporate restructuring by creating two wholly-owned subsidiaries - BB
Seguros Participações S.A. and BB Aliança Participações S.A.,
intended to increase the share of earnings from this business area in
total revenues.
BB and MAPFRE entered into discussions on a strategic alliance to
exploit insurance risks (Life, Automobiles, and Property / Casualty). In
addition, the Bank entered into discussions to acquire an interest in
Instituto de Resseguros do Brasil (IRB).
In Life and Property / Casualty, Aliança do Brasil achieved R$ 316
million in Net Income, 27.4% above that for 2008. With regard to
automobiles, Brasilveículos increased its portfolio by 20.4% over 2008
and achieved a 17.8% return on shareholders' equity. In medical
insurance represented by Brasilsaúde, the dental health portfolio rose
by 66.8% and has the lowest incident rate.
With a combination of the capitalization business and a strategy for
diversifying sales channels and introducing securities for the higher
income public, with a portion of its revenues intended to social and
environmental projects, Brasilcap ended the year with revenues of R$
2.3 billion.
Open-ended private pension plans marketed by Brasilprev ended the
year with the market's largest net funding and as a leader in the PGBL
type of funds, with a 27.6% market share. With regard to closed-end
15
Management Report 2009
private pension plans, after 15 years of market activities BB Previdência
ended the year with R$ 1.1 billion in assets, 34 corporate plans by 46
sponsoring companies, 4 plans created by 4 trade and professional
entities, and over 48 thousand participants.
In the public employee social security field, BB provides advisory
services in the management of the financial, legal, accounting,
actuarial, and retiree payroll areas for Self-Managed Social Welfare
Plan Systems - RPPS, involving 338 thousand covered participants.
Investment solutions are also provided for 68% of the total RPPS area.
Asset Management
In 2009, BB DTVM, largest third-party asset manager in the country,
attained R$ 306.7 billion in assets under management, growth of 24.5%
in 12 months, and 21.1% of market share, according to the Associação
Brasileira das Entidades dos Mercados Financeiros e de Capitais –
Anbima.
In addition to the managed funds taken into account for Anbima ranking
purposes, BB DTVM manages R$ 64.1 billion for other investment funds,
ending 2009 with R$ 370.8 billion, growth of 22.9%.
Capital Market and Treasury
Banco do Brasil operates in the domestic capital market through BB
Banco de Investimento S.A. (BB-BI). There were 32 fixed income
securitiy issuances, totalling R$ 10.3 billion in 2009. In the custody of
assets in the domestic market, it occupies 3rd place in the Anbima
ranking, with 25.2% of market share.
BB offers a share purchase and sale service by means of the network of
branches, Internet (home broker) and cellular phone, with a volume of R$
20.4 billion generated in 2009.
In the variable income securities market, BB-BI coordinated share
offerings totaling R$ 16.2 billion. It also acted in the coordination and
distribution of Additional Construction Potential Certificates, holding five
auctions with total funding of R$ 444.9 million for the consortium owned
urban operation Faria Lima and Água Espraiada, both of the City Council
of São Paulo. BB-BI is the only institution that distributes and coordinates
this type of operation in the Brazilian capital market.
By means of its wholly-owned subsidiary BB-BI, Banco do Brasil
Participated in the IPO by Cielo (formerly Visanet) as a selling
shareholder and a coordinating bank. With the sale of part of its share
ownership position, BB-BI's interest in Cielo went from 31.6% to 23.5%,
16
Management Report 2009
generating a gross income of R$ 1.6 billion. The offering's total funding
was in excess of R$ 8 billion, one of the largest offerings in 2009.
In the international capital market, BB, by means of its foreign brokers
BB Securities Ltd (London) and Banco do Brasil Securities LLC (New
York), was active in 16 of the 32 Brazilian issues of fixed income
securities, including STN, Petrobras, Votorantim, Odebrecht, TAM,
Fibria, Gerdau, besides BB itself, which totaled over US$ 25.7 billion.
CORPORATE GOVERNANCE
Banco do Brasil's corporate governance structure is comprised by: the
Board of Directors, advised by the Audit Committee and Internal Audit,
and the Executive Board, made up of the Management Board
(president and nine vice-presidents) and by 27 statutory directors. The
Bank also has a permanent Fiscal Council.
Decisions are taken collectively at all levels of the Bank. With the
purpose of involving the executives in the definition of strategies and
approval of proposals for BB's different businesses, the Management
uses committees, subcommittees and commissions at a strategic level,
which ensure the agility and security for the decision making. Among
the instruments used to assure good governance, it is also worth
highlighting the Corporate Governance Code and the Code of Ethics.
Banco do Brasil is signatory of the Anbima Code of Regulation and Best
Practices for the Private Banking Activity in the Domestic Market,
ensuring high ethical standards, maximum transparency, qualification of
professionals and commitment in the quality of the recommendation of
products and services.
It is valid to highlight that Banco do Brasil, its shareholders, the Officers
and Members of the Board of Auditors undertake to resolve all and any
disputes or controversies in connection with the Novo Mercado Trading
Regulations through the Bovespa Market Arbitration Chamber, pursuant
to the specific clause in Banco do Brasil’s Bylaws.
In 2009 BB several administration changes: It created the Distribution
São Paulo Directorship, to develop a specific action plan for that State
in order to increase the Bank's competitiveness and business.
Relationship with the Market
The Bank held 21 meetings with analysts from the capital market at the
Apimec regional offices during the year. Furthermore, BB took part in 85
meetings with domestic investors and analysts, 6 road shows and 21
17
Management Report 2009
conferences, and promoted 89 teleconferences with analysts and
investors.
In addition, in 2009 Banco do Brasil sponsored the first "BB Day",
attended by 45 market analysts, besides the President, VicePresidents, Directors, and General Managers from a number of the
bank's areas.
BB's Investor Relations program was acknowledged as one of the best
among public companies with instruments of wide circulation. BB also
received honorable mentions in the categories of "Best Investor
Relations Program" and "Best meeting with the community of company
analysts", by IR Magazine Brazil 2009 award, being considered on of
the five best IR companies in Brazil.
BB provides up-to-date information to the market at the Investor
Relations site (bb.com.br/ir).
Highlights of the period
Jan
- Certificate of filing of the request for registration of Public Offering
of Acquisition of Shares of Banco Nossa Caixa for acquisition of
shares from the minority shareholders of Nossa Caixa.
- Approval, by the Central Bank, of the takeover by Banco do Brasil
of BESC and its consequent dissolution.
Mar
- Transfer of the controlling interest of Banco Nossa Caixa to Banco
do Brasil, with transfer of shares belonging to the State Government
of São Paulo.
Apr
- The appointment of Mr. Aldemir Bendine as Banco do Brasil's
President.
Jun
The table below highlights several events that occurred in BB's
business over the course of 2009:
- The sale of shares totaling 7.05% of Cielo's equity capital.
18
Nov
- Conclusion of a Strategic Partnership with Banco Votorantim, in
which BB now holds a 49.99% of voting stock and 50% of total
equity capital.
- The Public Offering of Banco Nossa Caixa Shares.
- The Election of Mr. Nelson Henrique Barbosa Filho to the office of
Chairman of the Board of Directors.
- The approval by means of a presidential decree to increase to as
much as 20% the limit for foreign ownership in the equity capital of
BB, and for the issue of ADRs (American Depositary Receipts).
- The increase of Banco do Brasil's ratings for foreign currency
deposits and debt by Moody's the risk rating agency.
- Corporate reorganization in the insurance area, with the creation of
the holding companies BB Seguros and BB Aliança.
- Overseas funding through a perpetual bond issue totaling US$ 1.5
billion. These bonds are eligible to compose tier I capital, for BIS
Ratio purposes.
- Initial discussions to acquire a shareholding in IRB-Brasil Re S.A.,
owned by the Union.
- Initial discussions with MAPFRE to create a strategic alliance for
the development of personal insurance transactions, property /
casualty, and automobiles.
- Preparation of the corporate actions for the takeover of Banco
Nossa Caixa and consolidation of the strategic partnership with
Banco Votorantim.
Dec
Oct
Sep
Management Report 2009
- Launching of the project to issue Level 1 ADRs in the US market.
Legal Information
In compliance with CVM instruction 381, Banco do Brasil informs that
KPMG Auditores Independentes did not render services to the Bank
and subsidiaries other than those related to external auditing in 2009.
In the hiring of services not related to external audits, Banco do Brasil
adopts procedures based on the applicable legislation and on
internationally accepted principles that preserve the independence of
the auditor. These principles consist of: the auditor should not audit his
own work, the auditor should not act managerially before his client nor
promote the interests of his client.
19
Management Report 2009
In compliance with article 8 of Bacen Circular 3068/01, Banco do Brasil
confirms that it has the intention and financial capacity to hold until
maturity the securities classified in the "Securities Held to Maturity"
category. The financial capacity is backed by a cash flow forecast that
does not take into consideration the possibility of selling these securities.
Pursuant to Article 243 of Law 6404/76, BB reports that investments in
subsidiary and associated companies totaled R$ 12.1 billion as of
December 31, 2009. There was a change in the company's ownership
owing to the Strategic Partnership with Banco Votoranting and the
takeover of Banco Nossa Caixa, still subject to the Central Bank
approval.
In accordance with article 14 of CVM 319/99, BB informs that as a result
of the acquisitions/partnerships made in 2009, Banco do Brasil made
investments of around R$ 11.9 billion, being R$ 7.7 billion in BNC and
R$ 4.2 billion in BV.
The Banco Nossa Caixa takeover project has resulted in advances
such as the sharing of ATMs, cost reductions by renegotiating
contracts, the start of sales in BNC branches of automobile insurance
and BB mutual funds, the adoption of the BB forms for legal entity credit
analysis, and a joint disclosure of an institutional advertising campaign.
Besides that, the substitution of BNC individuals credit cards for
Ourocard Nossa Caixa with chips reduced in 70% the losses on frauds.
There are also perspectives of economies with administrative expenses
due to BNC’s voluntary demission plan, launched on dec/2009.
BNC organizational structure was changed. The presidency and
directories were extinguished. Every BNC operations started reporting
to Banco do Brasil, in the form of an administrative unit, structure that
will make the management of the processes until the total merger,
expected for conclusion in the second half of 2010.
In accordance with criteria defined by the Brazilian Statute of Micro and
Small Businesses (General Law of Micro and Small Businesses), 94.1%
of BB's business clients are classified as micro and small businesses.
The volume of funds used by microbusinesses as working capital
totaled R$ 4.8 billion, whereas that used by small businesses totaled R$
18.1 billion. The balance of investment operations contracted by micro
enterprises totaled R$ 1.8 billion, whereas that of the small enterprises
totaled R$ 6.9 billion.
INTERNAL PROCEDURES
20
Management Report 2009
Risk Management
With the resumption of global economic activity in 2009 and improved
liquidity, BB confirmed its management strategy, based on a solid risk
management.
With conservative exposure to market risk, the level of capital required
for coverage of this risk was 13.7% of the referential equity. In
connection with liquidity risks, the Bank's exposure is minimum as it is
the owner of an expressive position in highly liquid public federal bonds.
This position has increased following the merger of Banco Nossa
Caixa's treasury with that of Banco do Brasil.
In relation to credit risk, Banco do Brasil uses its own methodologies to
rate customer credit risks. Developed concurrently with best market
practices and the concepts introduced by the Basel Accord, these
statistical models consider customer past performance (credit score),
their credit performance (behavior score) with the Bank and the market,
and the use of bank products.
The credit methodologies developed and implemented in the Bank
include customer risk analysis in every corporate and individual
customer segment, in addition to financial institutions and countries.
These methodologies have permitted the improvement of the credit
process, by virtue of a more precise assessment of customer risk profile
and contributes to the increase of credit, at levels above the
competitors, with quality and security, even in adverse scenarios.
The deliquency on loans at Banco do Brasil, in the last 24 months, has
remained at levels lower than that of the National Financial System. The
provisioning level is in line with its key competitors, while the coverage
ratio, the relation between provision and late payments, is above that of
other banks.
In order to manage operational risk, Banco do Brasil, following the best
market practices, monitors operational loss through a systemized
internal database, exposure limits and key risk indicators, besides risk
matrices to assess relevant outsourced services.
To promote a continued improvement in operating risk management,
during the 2nd half of 2009 BB implemented a procedure for Monitoring
and Analyzing Operating Risk Scenarios.
At Banco do Brasil, collegiate risk management is performed apart from
the business units. Risk and concentration policies are specified by the
Bank's Board of Directors and by the Global Risk Committee (CRG),
21
Management Report 2009
which is a discussion group composed by the President and by vicepresidents. Actions for implementing and monitoring guidelines issued
by the CRG are directed at specific sub-committees (Credit, Market,
Liquidity and Operations), which are groups formed by Directors.
Basel II
BB continued with the consolidation of the simplified standardized
approach of Basel II, and with the preparation process for adoption of
advanced models. The tables below present the capital requirement
according to the current normative provisions (Regulatory Capital) and
the consumption of capital based on internal models (Economic
Capital):
R$ m illion
Econom ic Capital
2008
Credit Risk Requirement (1)
Market Risk Requirement (2)
Operating Risk Requirement
TOTAL
2009
4,809
414
1,335
6,558
8,060
104
2,250
10,414
(1) To loans portf olio and guarantees
(2) Trade po rtf olio, capital consumption (Circ Bacen 3,354), exchange and commodities
R$ m illion
PRE
2008
Financial
Consolidated
Risk
Credit
Market
Operating
TOTAL
2009
Financial Econom ic
Consolidated
Financial
Consolidated
Financial Econom ic
Consolidated
PEPR
PCOM+PACS
30,674
119
30,980
119
43,086
674
43,557
674
POPR
401
31,194
401
31,500
2,528
46,288
2,528
46,758
To find out more on Banco do Brasil's risk management policies, got to
bb.com.br/ir.
Internal Controls
The Internal Control System adopted by Banco do Brasil observes the
drivers of COSO - Committee of Sponsoring Organizations of the
Treadway Commission and of COBIT - Control Objectives for
Information and Related Technology and the demands of the regulatory
and inspection agencies in Brazil and abroad.
The Internal Compliance Program in 2009 was concentrated on risk
management of which impacts, should they materialize, become
relevant in the financial statements. The improvements also affected the
procedures for creating and introducing BB's new products and
22
Management Report 2009
services. The CARPS - Risk Control and Assessment for Products,
Services, and Assistance Channels is now consolidated and has proved
to be an important market differential, when criteria such as positioning,
risks, conformity, and operating efficiency are considered.
Actions have also been intensified to reinforce the Conglomerate's
control culture, with a view to achieving a high commitment by staff
members with the quality of business, products, and services made
available by BB, always relying on support by senior management, (a
top down approach).
Prevention and Avoidance of Money Laundering
For Banco do Brasil, preventing and fighting against money laundering
is a legal obligation and a commitment to the Country. In its internet
website, the Bank discloses the policies adopted to prevent and avoid
money laundering, and provides suggestions to customers on how to
avoid being used by criminals in money-laundering schemes.
Moreover, the Bank permanently invests in the education of its
employees. On-site training and internal certification in the Bank's
Prevention and Avoidance of Money Laundering are certified with Seal
by Enccla - National Strategy for the Avoidance of Corruption and
Money Laundering. The Enccla seal is granted by the Ministry of Justice
to courses which should meet the requisites as defined in National
Program of Education and Training for the Avoidance of Money
Laundering.
Furthermore, in 2009, BB included this topic in the contents of its
external programs, in addition to having been honored in the 2010
Enccla meeting for its expressive contribution in the avoidance of
corruption and money laundering in the country.
PEOPLE
BB ended the year with 103,971 employees as against 88,972 in 2008,
of which 14,027 are staff members resulting from the merger with
Banco Nossa Caixa. Please note that 1,328 employees concurred with
Banco Nossa Caixa's Voluntary Resignation Program, which ended on
11.30.2009.
23
Management Report 2009
Collaborators
Temporary labor ¹
Dec/09
103,971
788
Dec/08
88,972
2,430
¹ Hired from companies specialized in providing temporary labor
In 2009 the Bank provided 5,734 undergraduate and post-graduate
scholarships, a 18.6% decrease as compared to 2008. Considering
training courses in general, BB evidenced a 12.9% drop from 2008 to
2009, having provided 6,394 thousand hours of training in 2009.
The remuneration and the benefits granted to the employees were
distributed according to the table below:
Payroll¹
Pension Plan - Previ²
Health care plans – Cassi²
Profit-Sharing Plan³
Training
2009
10,109
231.9
890
1,385
73
R$ million
2008
∆ (%)
7,895
28.0
109.0
112.7
2,132 (58.3)
1,134
22.1
78
(6.2)
¹ Expenses with salaries, benefits, social charges and personnel provisions.
² Funding of supplementary pension and health care plans, pursuant to Note 28.
³ Amount set aside for Profit and Gain Sharing, pursuant to the Income Statement.
In its structure, the Bank has a Quality of Life Area - VITAE, which
develops and manages a number of programs intended to improve its
employees' quality of life, such as PCMSO (Program for Occupational
Health Medical Control), SESMT (Specialized Services in BB's Safety
Engineering and Occupational Medicine), TABAS (Tobacco Control
Program), and PAVAS (Assistance Program for Victims of Hold-Ups
and Kidnappings).
By means of the Traveling Ombudsman Project, in 2009 Banco do
Brasil's Internal Ombudsman held training and awareness events for
employees. In its relations with trade unions, BB has adopted a system
of permanent discussions.
Moreover, a "Salary Agreement" website was made available in the
quest for improving the internal communications process, in order to
consolidate and cultivate the practice of dialogue with union officials.
SUSTAINABILITY
24
Management Report 2009
For information on the Bank's practices, please see the Sustainability
Report that is a part of this report and which summarizes the
Company's key events over the period.
MAIN AWARDS RECEIVED IN THE PERIOD
• Honorable mentions in the Grand Prix of Investor Relations in the
categories of "Best Investor Relations Program" and "Best meeting
with the community of company analysts", by IR Magazine Awards
Brazil 2009.
• Ranked in 2nd place in the "Best company for Shareholders"
sponsored by Capital Aberto magazine.
• Recognized with the "Best Investor Relations Executive" award by IR
Magazine Awards Brazil 2009.
• Given the title of "Chief Information Officer of the Year", by e-Finance
2009.
• Recognized with the Seal in Favor of Gender Equity - 2nd Edition, an
initiative of the Special Department of Policies for Women of the
Federal Government.
• Winner of the Alide Award of Recognition of Good Practices at
Financial Institutions of Development with the DRS Business
Strategy.
• One of the three finalists of the Financial Times Award of
Sustainable Finance 2009, "Sustainable Bank in Emerging Markets"
category.”. The award received 165 entries referring to the
experience of 117 institutions from 42 countries.
• Winner, for the 3rd year running, of the 2008 Storeowner Merit
Award, category Services, Segment Commercial Bank.
• Recognized with the Special Highlight in Foreign Trade Award,
offered by the Brazilian Foreign Trade Association.
• One of the world's four banks certified by the Society for Worldwide
Interbank Financial Telecommunications (Swift) to use Workers'
Remittance V1.0 - an electronic solution for international transfers
among individuals.
• Acknowledged as the first retail bank in the Americas and southern
hemisphere to be awarded an international certification in the ISO
20,000 quality norm for IT service management for electronic
clearing of checks for the National Financial System.
• Acknowledged as "The most Admired Companies in Brazil 2009", in
agribusiness, by Carta Capital magazine.
25
Management Report 2009
• The BB (São Paulo) Call Center was named "The Best Call Centers
to Work." This award is the result of a survey held by Hewitt
Associates jointly with Consumidor Moderno magazine.
ACKNOWLEDGMENTS
We thank the dedication and diligence of our employees and
collaborators, who are Banco do Brasil's greatest treasury, as well as
the trust of shareholders and clients, which are the reason for our
existence.
Further information: Investor Relations Website (www.bb.com.br/ir)
26
Banco do Brasil S.A.
Financial Statements
In thousands of reais
BALANCE
Year ended on 12.31.2009
SHEET
Banco do Brasil
BB-Consolidated
ASSETS
12.31.2009
12.31.2008
12.31.2009
12.31.2008
Current Assets
380,877,073
314,653,208
414,966,454
299,740,123
Available Funds
(Note 6)
7,596,546
5,375,268
7,842,770
5,544,850
Short-term interbank investments
Money market
Interbank deposits
(Note 7a)
166,919,021
134,937,621
31,981,400
127,830,542
95,151,703
32,678,839
166,070,192
144,173,860
21,896,332
107,237,436
95,159,610
12,077,826
Securities and derivative financial instruments
Internal portfolio
Repurchase agreements
Deposits with the Brazilian Central Bank
Pledged in guarantee
Derivative financial instruments
(Note 8)
39,370,590
29,778,301
5,239,743
3,713,112
19,300
620,134
36,839,447
24,194,172
8,571,019
1,810,537
272,710
1,991,009
59,297,166
47,295,209
5,956,127
3,817,049
1,147,243
1,081,538
42,346,332
29,695,948
8,576,649
1,810,537
272,710
1,990,488
26,421,167
153,232
25,950,674
24,167,099
148,158
1,635,417
1,254
316,007
21,206,709
178,205
20,895,605
20,823,562
10,826
61,217
325
132,574
26,574,438
153,258
26,063,340
24,279,765
148,158
1,635,417
7,746
350,094
21,286,986
178,230
20,954,167
20,882,124
10,826
61,217
325
154,264
293,950
330
293,620
228,102
-228,102
295,152
330
294,822
228,102
-228,102
Interbank Accounts
Payments and receipts pending settlement
Restricted deposits
Brazilian Central Bank deposits
National Treasury - rural credits receivable
National Housing Financing System (SFH)
Interbank onlendings
Correspondent banks
(Note 9)
Interdepartmental accounts
Third-party funds in transit
Internal transfers of funds
Loan operations
Public sector
Private sector
(Allowance for loan losses)
(Note 10)
102,016,228
2,432,592
107,102,607
-7,518,971
81,328,473
3,206,769
83,955,847
-5,834,143
110,606,691
2,794,701
115,763,862
-7,951,872
78,872,784
2,385,544
82,341,803
-5,854,563
Lease operations
Public sector
Private sector
(Unearned income from lease operation)
(Allowance for lease losses)
(Note 10)
-23,883
--23,883
--
5,697
36,670
--30,973
--
1,858,258
23,883
1,951,468
--117,093
1,235,592
36,670
1,230,066
--31,144
36,984,668
36,938
8,480,791
1,464,119
16,017
-28
-27,747,561
-760,786
41,087,222
24,135
20,913,621
1,038,371
78,896
1,701
28
-19,854,665
-824,195
40,891,329
39,588
8,671,052
533,393
435,578
-28
885,945
31,167,511
-841,766
42,070,999
24,135
20,913,621
384,803
345,819
1,701
28
440,611
20,799,150
-838,869
1,274,903
-290,210
-166,105
1,150,798
751,748
3
259,231
-154,360
646,874
1,530,458
-363,989
-175,968
1,342,437
917,042
3
308,329
-170,297
779,007
Other receivables
Receivables on guarantees honored
Foreign exchange portfolio
Income receivable
Negotiation and intermediation of securities
Specific operations
Special operations
Insurance, pension plan and capitalization
Sundry
(Provision for other losses)
Other assets
Investments
Other assets
(Provision for devaluations)
Prepaid expenses
(Note 12a)
(Note 11a)
(Note 21a)
(Note 11b)
(Note 13a)
(Note 13a)
(Note 13b)
1
Banco do Brasil
BB-Consolidated
ASSETS
12.31.2009
12.31.2008
12.31.2009
12.31.2008
NON CURRENT ASSETS
279,731,903
206,424,122
293,582,389
221,532,694
LONG-TERM RECEIVABLES
257,451,549
195,393,035
276,572,786
212,021,057
(Note 7a)
7,248,277
7,248,277
11,442,051
11,442,051
2,327,768
2,327,768
12,170,861
12,170,861
(Note 8)
57,501,256
21,131,525
20,584,267
14,527,621
1,110,340
147,503
35,371,039
7,465,983
14,061,216
12,196,175
1,361,095
286,570
65,039,715
27,638,367
20,929,518
14,590,558
1,499,726
381,546
44,562,242
16,651,310
14,061,216
12,196,175
1,367,991
285,550
17,071
17,071
274
274
17,071
17,071
274
274
Interbank Investments
Interbank deposits
Securities and derivative financial instruments
Derivatives
Internal portfolio
Subject to repurchase agreements
Deposits with the Brazilian Central Bank
Pledged in guarantee
Derivative financial instruments
Interbank transactions
Interbank transfers
Loan operations
Public sector
Private sector
(Allowance for loan losses)
(Note 10)
140,826,236
3,801,538
146,444,106
-9,419,408
108,363,702
715,058
114,851,620
-7,202,976
151,176,406
3,593,364
157,315,829
-9,732,787
112,008,779
1,654,885
117,678,416
-7,324,522
Lease operations
Public sector
Private sector
(Unearned income from lease operation)
(Allowance for lease losses)
(Note 10)
-38,967
-(38,967)
--
2,805
18,061
--15,256
--
2,842,305
38,967
2,917,455
--114,117
1,731,979
18,061
1,753,905
--39,987
51,223,436
51,384
31,069
-931,845
-51,031,510
-822,372
39,910,781
47,038
32,505
-844,186
-39,510,751
-523,699
54,341,849
51,384
30,051
427
931,845
22,265
54,145,893
-840,016
41,207,799
47,038
28,242
691
844,186
12
40,825,473
-537,843
827,672
827,672
339,123
339,123
Other receivables
Receivables on guarantees honored
Income receivable
Negotiation and intermediation of securities
Specific credits
Insurance, pension plan and capitalization
Sundry
(Provision for other losses)
Other assets
Prepaid expenses
(Note 11a)
(Note 21a)
(Note 11b)
(Note 13b)
PERMANENT ASSETS
635,273
635,273
302,383
302,383
22,280,354
11,031,087
17,009,603
9,511,637
Investments
Investments in subsidiary and associated companies
Domestic
Foreign
Other investments
(Provision for losses)
(Note 14)
12,182,867
12,143,602
11,177,506
966,096
109,093
-69,828
3,232,919
3,198,067
2,185,853
1,012,214
89,088
-54,236
6,645,339
5,775,953
5,775,953
-947,225
-77,839
1,523,840
720,879
720,879
-870,707
-67,746
Land and buildings in use
Land and buildings in use
Other property and equipment in use
(Accumulated depreciation)
(Note 15)
4,006,745
3,167,766
6,232,263
-5,393,284
3,178,471
2,488,354
5,263,162
-4,573,045
4,214,484
3,335,698
6,631,918
-5,753,132
3,338,941
2,668,282
5,610,352
-4,939,693
Applications in fixed assets for leasing
Leased assets
(Accumulated depreciation)
(Note 15)
60,775
93,876
-33,101
45,603
99,260
-53,657
1,223
3,640
-2,417
3,869
8,215
-4,346
Intangible
Intangible Assets
(Accumulated amortization)
(Note 16)
5,625,845
7,607,239
-1,981,394
4,040,645
4,042,847
(2,202)
5,676,879
7,659,321
-1,982,442
4,040,645
4,042,847
(2,202)
404,122
2,083,036
-1,678,914
533,449
1,675,713
-1,142,264
471,678
2,246,822
-1,775,144
604,342
1,845,801
-1,241,459
660,608,976
521,077,330
708,548,843
521,272,817
Deferred charges
Organization and expansion costs
(Accumulated amortization)
Total
2
Banco do Brasil
BB-Consolidated
L I A B I L I T I E S / S T O C K H O L D E R S' E Q U I T Y
12.31.2009
12.31.2008
12.31.2009
12.31.2008
CURRENT LIABILITIES
478,981,403
393,278,855
503,739,681
378,074,414
Deposits
Demand deposits
Savings deposits
Interbank deposits
Time deposits
Sundry
(Note 17a)
252,490,505
56,211,678
75,741,590
13,543,548
106,765,221
228,468
224,785,452
51,865,142
54,965,370
15,804,085
101,907,587
243,268
258,676,108
56,458,787
75,741,590
10,437,440
115,808,988
229,303
212,058,474
51,949,022
54,965,370
3,136,771
101,764,043
243,268
Deposits received under security repurchase agreements
Internal portfolio
Third-party portfolio
Subject to repurchase agreements within free movement
(Note 17c)
142,412,717
24,462,905
117,949,812
--
87,448,258
21,311,721
66,136,537
--
153,699,462
30,819,656
122,719,587
160,219
86,501,235
20,962,640
65,538,595
--
Funds from acceptance and issue of securities
Mortgage Notes
Foreign securities
(Note 19)
758,810
-758,810
835,076
-835,076
1,406,912
407,929
998,983
1,167,593
248,155
919,438
21,332
602
20,730
21,152
772
20,380
21,350
615
20,735
21,161
781
20,380
3,209,295
3,197,791
11,504
2,495,853
2,495,480
373
3,229,088
3,214,643
14,445
2,495,853
2,495,480
373
Interbank accounts
Receipts and payments pending settlement
Correspondent banks
Interdepartmental accounts
Third-party funds in transit
Internal transfers of funds
Borrowings
Domestic borrowings - Official institutions
Domestic borrowings - Other institutions
Foreign borrowings
(Note 18a)
6,274,611
--6,274,611
9,223,333
2,750,087
-6,473,246
4,810,915
70,976
86,221
4,653,718
5,845,958
2,750,087
109,115
2,986,756
Local onlendings - official institutions
National Treasury
National Bank for Economic and Social Development (BNDES)
Federal Bank (CEF)
National Industrial Financing Authority (FINAME)
Other institutions
(Note 18b)
11,472,080
2,100,693
6,078,474
21,935
2,138,406
1,132,572
13,738,050
3,485,066
6,365,619
-2,688,728
1,198,637
12,405,660
2,100,693
6,731,990
21,935
2,418,470
1,132,572
13,749,287
3,485,066
6,365,619
-2,699,965
1,198,637
868
868
3,143,690
3,143,690
576
576
95
95
1,996,875
1,996,875
3,159,952
3,159,952
2,617,011
2,617,011
3,155,962
3,155,962
60,344,310
335,641
12,106,915
2,470,489
16,568,631
95,006
-2,050,776
204,007
13,260
26,499,585
48,428,039
232,192
15,870,660
1,816,963
13,342,332
345,799
-428,517
-17,696
16,373,880
66,872,599
376,523
12,173,988
2,625,183
18,315,213
526,029
4,123,164
2,050,776
204,007
13,260
26,464,456
53,078,796
252,368
15,964,485
1,838,048
14,345,530
376,629
3,321,909
428,517
-16,817
16,534,493
Foreign onlendings
Foreign onlendings
Derivative financial instruments
Derivative financial instruments
Other liabilities
Collection and payment of taxes and social contributions
Foreign exchange portfolio
Social and statutory
Taxes and social security contributions
Negotiation and intermediation of securities
Technical provisions - insurance, pension plan and capitalization
Financial and development funds
Special operations
Hybrid capital and debt instruments
Sundry
(Nota 8d)
(Note 12a)
(Note 20b)
(Note 21b)
(Note 20a)
(Note 20c)
(Note 20e)
(Note 20f)
3
Banco do Brasil
L I A B I L I T I E S / S T O C K H O L D E R S' E Q U I T Y
12.31.2009
NON CURRENT LIABILITIES
145,508,308
LONG-TERM LIABILITIES
BB-Consolidated
12.31.2008
12.31.2009
12.31.2008
97,861,225
168,689,897
113,261,153
145,259,396
97,639,703
168,689,756
113,261,153
Deposits
Interbank deposits
Time deposits
(Note 17a)
77,614,251
2,012,595
75,601,656
51,656,948
3,802,500
47,854,448
78,887,719
1,181,133
77,706,586
58,782,622
10,928,174
47,854,448
Deposits received under security repurchase agreements
Internal portfolio
Third-party portfolio
Subject to repurchase agreements within free movement
(Note 17c)
7,108,094
1,082,487
6,025,607
--
4,631,397
966,524
3,664,873
--
7,121,725
1,082,045
6,025,607
14,073
4,629,129
964,256
3,664,873
--
Funds from acceptance and issue of securities
Features letters Real estate, mortgage, credit and similar
Debentures
Foreign Securities
(Note 19)
1,812,687
--1,812,687
365,451
--365,451
5,955,407
860,822
1,496,353
3,598,232
2,311,307
-21,020
2,290,287
Borrowings
Domestic borrowings - Official institutions
Foreign borrowings
(Note 18a)
4,776,034
-4,776,034
5,294,568
-5,294,568
1,559,348
93,859
1,465,489
1,780,855
-1,780,855
Local onlendings - official institutions
National Bank for Economic and Social Development (BNDES)
Federal Bank (CEF)
National Industrial Financing Authority (FINAME)
Other institutions
(Note 18b)
17,422,445
11,799,391
124,297
5,498,757
--
8,671,278
4,802,134
-3,869,144
--
18,984,508
12,897,512
124,297
5,962,699
--
8,687,137
4,802,134
-3,884,811
192
1,457,949
1,457,949
294,422
294,422
98,555
98,555
97,984
97,984
187,908
187,908
739,108
739,108
2,107,025
2,107,025
739,098
739,098
34,880,028
4,123,099
1,320,070
-2,083,838
2,278
16,387,569
3,503,525
7,459,649
25,986,531
2,315,952
1,784,041
-2,029,282
2,335
11,772,177
1,168,461
6,914,283
53,975,469
5,981,486
2,197
13,216,012
2,083,838
2,278
18,553,240
3,502,544
10,633,874
36,233,021
3,224,798
24,843
9,353,318
2,029,282
2,335
11,772,177
1,168,461
8,657,807
248,912
221,522
Foreign onlendings
Foreign onlendings
Derivative financial instruments
Derivative financial instruments
Other liabilities
Taxes and social security
Negotiation and intermediation of securities
Technical provisions - insurance, pension plan and capitalization
Financial and development funds
Special operations
Subordinated debt
Hybrid capital and debt instruments
Sundry
(Nota 8d)
(Note 20b)
(Note 21b)
(Note 20a)
(Note 20c)
(Note 20d)
(Note 20e)
(Note 20f)
DEFERRED INCOME
MINORITY INTEREST IN SUBSIDIARIES
STOCKHOLDERS' EQUITY
-(Note 24)
--
--
--
141
--
36,119,265
29,937,250
36,119,265
29,937,250
18,566,919
17,236,823
1,330,096
13,779,905
12,458,740
1,321,165
18,566,919
17,236,823
1,330,096
13,779,905
12,458,740
1,321,165
Capital reserves
5,188
5,188
5,188
5,188
Revaluation Reserves
6,746
7,286
6,746
7,286
17,301,439
15,977,333
17,301,439
15,977,333
270,164
198,729
270,164
198,729
-31,191
(31,191)
-31,191
(31,191)
660,608,976
521,077,330
708,548,843
521,272,817
Capital
Domestic
Foreign
Profits Reserves
Assets Valuation Adjustments
(Treasury Shares)
Total
(Nota 8f)
The accompanying notes are an integral part of these financial statements
4
Banco do Brasil S.A
Financial Statements
In thousands of reais
Year ended on 12.31.2009
Statement of Income
Banco do Brasil
2S2009
INCOME FROM FINANCIAL INTERMEDIATION
BB-Consolidated
2009
2008
2S2009
2009
2008
28,395,133
55,998,281
55,348,356
34,715,065
65,729,138
57,115,713
19,178,139
36,425,296
33,031,551
22,050,178
40,515,241
33,220,577
Loans
(Note 10b)
Leases
(Note 10i)
25,359
50,880
54,241
1,321,716
2,310,112
1,165,857
Securities
(Note 8b)
8,894,970
19,392,839
21,165,973
10,404,651
21,349,624
20,692,255
-1,283,280
Derivative financial instruments
(Note 8e)
-669,446
-1,179,684
-1,282,975
-710,122
-1,222,621
Net foreign exchange
(Note 12b)
640,068
658,721
469,764
671,033
685,917
464,154
Compulsory deposits
(Note 9b)
326,043
650,229
1,909,802
427,607
816,273
1,909,802
Insurance, pension plans and capitalization
(Note 21e)
550,002
1,274,592
946,348
--
--
--
-19,762,795
-41,183,190
-42,993,211
-23,790,654
-47,496,279
-44,296,320
Deposits and funds obtained in the money market
(Note 17d)
-13,318,317
-27,383,700
-25,542,519
-15,317,759
-30,145,928
-25,531,725
Borrowings and onlendings
(Note 18c)
-1,172,447
-2,340,688
-8,853,265
-1,311,117
-2,509,969
-8,684,551
Leases
(Note 10i)
-22,015
-44,342
-46,577
-961,050
-1,663,342
-852,352
Insurance, pension plans and capitalization
(Note 21e)
-323,386
-780,779
-621,884
EXPENSES FROM FINANCIAL INTERMEDIATION
Allowance for loan losses
(Notes 10f e 10g)
GROSS FINANCIAL INTERMEDIATION INCOME
OTHER OPERATING INCOME/EXPENSES
--
--
--
-5,250,016
-11,414,460
-8,550,850
-5,877,342
-12,396,261
-8,605,808
8,632,338
14,815,091
12,355,145
10,924,411
18,232,859
12,819,393
-1,149,919
1,110,304
-1,262,177
-1,231,461
-809,302
-4,641,058
Banking service fees
(Note 22a)
3,883,960
7,365,842
6,806,077
5,360,395
10,171,717
9,088,792
Banking Fees
(Note 22b)
1,425,918
2,829,816
2,721,886
1,771,631
3,339,464
2,722,001
Personnel expenses
(Note 22c)
-4,953,839
-10,024,943
-8,580,242
-6,179,793
-11,838,434
-8,870,069
Other administrative expenses
(Note 22d)
-4,486,952
-9,245,535
-7,375,501
-5,649,688
-11,211,953
-7,917,260
Tax Expenses
(Note 22e)
-1,367,988
-2,560,633
-2,222,744
-1,804,779
-3,332,678
-2,634,872
Equity in the (earnings)/loss of subsidiary and associated companies
(Note 14)
831,318
1,849,552
3,028,642
-324,394
-989,350
1,394,233
Insurance, pension plan and capitalization
(Note 21e)
799,565
1,574,123
892,415
Other operating income
(Note 22f)
9,244,142
15,870,347
11,245,922
9,956,403
16,972,954
11,780,014
Other operating expenses
(Note 22g)
-3,466,255
-7,346,623
-6,855,501
-4,738,642
-9,326,901
-7,605,173
9,742,642
13,552,914
11,123,684
10,115,109
13,591,801
11,669,474
412,544
OPERATING INCOME
NON-OPERATING INCOME
(Note 23)
--
--
--
148,206
176,312
100,991
401,384
1,843,628
Income
182,696
246,452
191,448
482,033
1,971,297
561,088
Expenses
-34,490
-70,140
-90,457
-80,649
-127,669
-148,544
9,890,848
13,729,226
11,224,675
10,516,493
15,435,429
12,082,018
PROFIT BEFORE TAXATION AND PROFIT SHARING
INCOME TAX AND SOCIAL CONTRIBUTION ON NET INCOME
-2,974,280
-2,286,422
-1,298,239
-3,524,943
-3,902,787
-2,145,116
Income tax
(Note 25)
-1,710,171
-3,441,524
-2,926,234
-2,497,831
-5,116,348
-3,608,692
Social contribution on net income
-1,064,005
-2,113,624
-1,810,802
-1,430,707
-2,914,093
-2,081,175
-200,104
3,268,726
3,438,797
403,595
4,127,654
3,544,751
-782,609
-1,295,282
-1,123,567
-857,615
-1,384,531
-1,134,068
24
-589
6,133,959
10,147,522
Deferred tax credits
PROFIT SHARING
MINORITY INTEREST
NET INCOME
Number of shares
(Treasury Shares)
Total shares used in calculation of earnings per share
Net income per share
-6,133,959
2,569,860,512
(1,150,369)
-10,147,522
2,569,860,512
(1,150,369)
-8,802,869
2,568,186,485
(1,150,365)
2,569,860,512
(1,150,369)
2,569,860,512
(1,150,369)
35
8,802,869
2,568,186,485
(1,150,365)
2,568,710,143
2,568,710,143
2,567,036,120
2,568,710,143
2,568,710,143
2,567,036,120
2.39
3.95
3.43
2.39
3.95
3.43
The accompanying notes are an integral part of these financial statements
14
Banco do Brasil S.A
Financial Statements
In thousands of Reais
Year ended on 12.31.2009
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Capital
Reserves
EVENTS
Balances at 12.31.2007
Capital increase through shares incorporation
(Note 24b)
Treasury shares
Ajustment to market value
(Note 8e)
Prescribed interest on own capital and dividends
Revaluations in subsidiary and associated companies
Realization of revaluation reserves in subsidiary and associated companies
(Note 24c)
Fiscal incentives
Net income for the period
Appropriantions:
- Reserves
- Dividends
(Note 24e)
- Interest on own capital
(Note 24e)
Balances at 12.31.2008
Changes in the period
Balances at 06.30.2009
Capital increase through shares incorporation
(Note 24b)
Ajustment to market value
(Note 8e)
Prescribed interest on own capital and dividends
Gain/loss in subsidiary and associated
Realization of revaluation reserves in subsidiary and associated companies
(Note 24c)
Net income for the semester
Appropriantions:
- Reserves
- Dividends
(Note 24e)
- Interest on own capital
(Note 24e)
Balances at 12.31.2009
Changes in the semester
Balances at 12.31.2008
Capital increase with reserves
(Note 24b)
Capital increase through shares incorporation
(Note 24b)
Ajustment to market value
(Note 8e)
Prescribed interest on own capital and dividends
Gain/loss in subsidiary and associated
Realization of revaluation reserves in subsidiary and associated companies
(Note 24c)
Net income for the period
Appropriantions:
- Reserves
- Dividends
(Note 24e)
- Interest on own capital
(Note 24e)
Balances at 12.31.2009
Changes in the period
The accompanying notes are an integral part of these financial statements
6
Capital Realized
Tax
Incentives
13,211,644
568,261
----------13,779,905
568,261
18,548,611
18,308
--------18,566,919
18,308
13,779,905
4,768,706
18,308
--------18,566,919
4,787,014
34
------5,154
----5,188
5,154
5,188
---------5,188
-5,188
----------5,188
--
Revaluation
Reserves in
Subsidiary
and
Associated
Companies
5,909
----1,662
(285)
-----7,286
1,377
6,948
---17
(219)
----6,746
(202)
7,286
----17
(557)
----6,746
(540)
Revenue Reserves
Legal
Reserves
1,348,772
--------440,144
--1,788,916
440,144
1,989,474
------306,817
--2,296,291
306,817
1,788,916
-------507,375
--2,296,291
507,375
Statutory Reserves
4,577,229
--------5,753,334
(910,852)
-9,419,711
4,842,482
11,624,888
------3,695,742
(315,482)
-15,005,148
3,380,260
9,419,711
-------6,119,393
(533,956)
-15,005,148
5,585,437
Expansion
Reserves
4,768,706
-----------4,768,706
-------------4,768,706
(4,768,706)
----------(4,768,706)
Assets Valuation
Treasury
Adjustments
Subsidiary
shares
Bank
and
associated
24,366
325,436
------(31,191)
(55,788)
(95,285)
-------------------------(31,422)
230,151
(31,191)
(55,788)
(95,285)
(31,191)
17,060
199,187
(31,191)
---(53,945)
107,862
----------------------(36,885)
307,049
(31,191)
(53,945)
107,862
-(31,422)
230,151
(31,191)
------(5,463)
76,898
----------------------(36,885)
307,049
(31,191)
(5,463)
76,898
--
Retained
Earnings
----620
-285
-8,802,869
(6,193,478)
(1,062,069)
(1,548,227)
-----6,483
-219
6,133,959
(4,002,559)
(1,184,090)
(954,012)
------3,742
-557
10,147,522
(6,626,768)
(1,667,187)
(1,857,866)
---
Total
24,262,096
568,261
(31,191)
(151,073)
620
1,662
-5,154
8,802,869
-(1,972,921)
(1,548,227)
29,937,250
5,675,154
32,360,165
18,308
53,917
6,483
17
-6,133,959
-(1,499,572)
(954,012)
36,119,265
3,759,100
29,937,250
-18,308
71,435
3,742
17
-10,147,522
-(2,201,143)
(1,857,866)
36,119,265
6,182,015
Banco do Brasil S.A.
Financial Statements
In thousands of Reais
Year ended on 12.31.2009
STATEMENT OF CASH FLOW
Banco do Brasil
2S2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income before taxes
Adjustments to Net Income
Provision for credit, leasing operations and other receivables
Depreciation and amortization
Resultado da avaliação do valor recuperável de ativos
Result of participation in affiliates and subsidiaries
(Profit)/ loss on the sale of assets
(Gain)/Loss on Capital
Changes in foreign exchange
Provision/(reversal) for devaluation of other assets
Amortization of goodwill on investments
(Reversal)/expenses with civil, labor and tax provisions
Changes in provision for Insurance, Pension Plans and Capitalization
Mark-to-market adjustment for trading securities and derivatives
Actuarial Assets/Liabilities
Other adjustments
Changes
Short-term interbank investments
Securities and derivative financial instruments
Interbank and interdepartmental accounts
Loan operations
Lease operations
Other claims net of deferred tax
Other assets
Income tax and social contribution
Deposits
Money Market
Repurchase agreements
Borrowing and onlendings
Other liabilities
Change Deferred Income
CASH PROVIDED/(USED IN) OPERATIONS
CASH FLOWS INVESTING ACTIVITIES
Securities and Derivatives availlable for sale
Securities and Derivatives held to maturity
Dividends receivable from subsidiary/associated companies
(Acquisition) / disposal of fixed assets in use
(Acquisition) / Disposal of investment
(Acquisition) of intangible
(Increase) / decrease of deferred
Cash and Cash Equivalents Assets and Liabilities
arising from the merger of Banco Nossa Caixa (Note 5.a.)
Cash and Cash Equivalents Assets and Liabilities
arising from the Acquisition of Banco Votorantim (Note 5.b.)
CASH PROVIDED/(USED IN) INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Change in minority interest
Subordinated debt
Hybrid capital instruments and debt
Capital increase by shares incorporation
Acquisition of shares in Treasury
Dividends and Interest on own capital paid
CASH PROVIDED/(USED IN) FINANCING ACTIVITIES
Net Cash Variation
2009
BB - Consolidated
2008
2S2009
2009
2008
9,890,848
495,366
5,250,016
1,046,220
4,063
(831,318)
(23,791)
(19,871)
(265,919)
3,131
24,799
(1,257,621)
-152,079
(3,592,923)
6,501
13,729,226
7,239,306
11,414,460
1,993,106
4,063
(1,849,552)
(32,129)
(17,187)
(762,200)
2,679
65,055
460,539
-136,144
(4,179,431)
3,759
11,224,675
4,500,814
8,550,850
790,703
83,671
(3,028,642)
(33,920)
4,215
708,177
2,826
-1,384,142
-(330,040)
(3,669,548)
38,380
10,516,493
4,695,578
5,877,342
1,305,156
4,736
324,394
(5,804)
(16,935)
(365,320)
2,594
47,956
(1,205,124)
2,267,013
115,603
(3,592,923)
(63,110)
15,435,429
16,264,335
12,396,261
2,405,841
4,736
989,350
(17,205)
(14,799)
(1,041,840)
2,074
135,509
1,097,880
4,386,295
95,905
(4,179,431)
3,759
12,082,018
9,249,594
8,605,808
814,844
83,671
(1,394,233)
(85,659)
(19,613)
932,614
2,836
-1,659,124
2,478,428
(197,058)
(3,669,548)
38,380
(54,103,737)
468,093
(7,639,479)
(30,674,715)
6,084
(1,040,091)
(538,421)
(2,774,176)
15,149,097
58,569,829
1,790,627
1,839,901
(395,690)
32,792
(8,923,672)
(53,678,169)
1,320,426
(7,999,748)
(45,135,557)
8,502
5,180,484
(556,829)
(5,555,148)
13,841,022
55,966,488
1,370,970
749,142
2,454,996
8,542
(11,056,347)
(35,462,271)
2,516,150
12,229,012
(59,645,321)
(7,852)
(17,737,666)
1,839,236
(4,737,036)
84,704,546
19,326,746
840,064
14,049,225
11,965,425
98,773
45,704,520
(70,386,685)
(2,132,742)
935,534
(34,745,540)
(38,717)
(766,306)
(491,203)
(3,928,538)
13,558,389
46,261,488
1,627,820
2,294,746
(1,410,709)
-(34,010,392)
(76,202,677)
(3,233,899)
1,247,715
(52,270,401)
(413,263)
2,875,269
(626,390)
(8,030,441)
16,897,899
48,437,052
818,837
3,101,597
3,665,912
-(32,033,026)
(26,815,774)
(6,004,885)
12,195,233
(60,005,106)
(1,779,774)
(20,798,410)
1,691,631
(5,689,867)
82,558,608
18,860,251
2,181,742
9,840,242
24,427,607
(122,749)
51,870,361
(10,562,304)
8,048,294
1,746,294
(809,327)
(185,670)
(1,180,631)
--
(9,368,347)
8,447,014
2,504,030
(1,195,496)
(555,827)
(1,497,276)
--
(418,368)
923,572
1,941,240
(911,828)
(41,413)
(4,259,421)
--
(13,073,244)
8,971,828
-(896,807)
(81,781)
(2,456,453)
--
(15,118,446)
10,771,841
-(1,300,154)
(170,022)
(1,668,061)
--
(416,147)
(3,292,597)
-(836,192)
198,362
(4,329,277)
--
(3,552,174)
(4,810,665)
(3,750,000)
(10,245,518)
(3,750,000)
(10,226,567)
-(2,766,218)
3,113,393
(6,381,987)
3,113,393
(3,515,412)
-(8,675,851)
-1,698,429
2,330,628
18,308
-(3,052,077)
995,288
-4,615,392
2,330,628
18,308
-(3,718,268)
3,246,060
-1,754,207
(448)
6,781,063
2,330,628
18,308
-(3,718,268)
5,411,283
(69)
1,760,094
568,261
(31,191)
(2,830,179)
(538,902)
(786,540)
3,864,100
2,330,628
18,308
-(3,052,077)
2,374,419
568,261
(31,191)
(2,830,179)
(533,084)
42,399,400
42,661,426
--
(1,958,923)
856,037
(18,173,902)
(18,036,854)
(38,017,960)
(30,137,155)
At the beginning of the period
67,876,413
67,739,365
25,339,965
75,892,942
68,012,137
At the end of the period
Increase (decrease) in cash and cash equivalents
49,702,511
49,702,511
67,739,365
37,874,982
37,874,982
(18,173,902)
(18,036,854)
(38,017,960)
(30,137,155)
42,399,400
--
25,350,711
68,012,137
42,661,426
The accompanying notes are an integral part of these financial statements
7
Banco do Brasil S.A.
Financial Statement
In Thousand of Reais
Year ended on 12.31.2009
STATEMENT OF ADDED VALUE
Banco do Brasil
Description
2S2009
Balance
Income
Financial Intermediation Income
Banking and service fees
Allowance for loans losses
Other income/expenses
Financial Intermediation Expense
Inputs purchased from third parties
Materials, energy and other
Services provided
Others
Communications
Data processing
Transportation
Security and surveillance services
Services of the financial system
Advertising and publicity
Other
Added Value
Amortization / depreciation
Net Value Added Produced by Entity
Added Value Received in the Transfer
Equity in the (earning)/loss of subsidiary and associated
companies
Added Value to distribute
DISTRIBUTED OF ADDED VALUE
Personnel
Salaries and fees
Profit sharing
Benefits and training
FGTS
Others
Income Taxes and Social Contribution
Federal
State
Municipal
Remuneration of Third Party Capital
Rentals
Remuneration of Equity
Interest on capital of the Union
Interest on equity to other stockholders
Dividends - main shareholder
Dividends - other shareholder
Retained earnings
Minority interests in retained earnings
%
34,123,123
28,395,133
5,309,878
(5,250,016)
5,668,128
(14,512,779)
(2,968,511)
(201,058)
(428,708)
(2,338,745)
(534,367)
(416,066)
(330,381)
(300,802)
(230,799)
(132,928)
(393,402)
16,641,833
(1,046,220)
15,595,613
831,318
Balance
2008
%
62,202,168
55,998,281
10,195,658
(11,414,460)
7,422,689
(29,768,730)
(5,573,635)
(395,819)
(793,347)
(4,384,469)
(1,016,040)
(769,997)
(604,483)
(585,981)
(444,561)
(229,320)
(734,087)
26,859,803
(1,993,106)
24,866,697
1,849,552
831,318
16,426,931
16,426,931
5,096,679
3,170,130
782,609
695,502
203,216
245,222
4,982,038
4,735,475
225
246,338
214,255
214,255
6,133,959
622,684
331,328
978,771
520,801
3,680,375
--
BB Consolidated
2009
30.33
1.30
37.34
26,716,249
26,716,249
10,118,498
6,437,910
1,295,282
1,315,641
386,336
683,329
6,048,783
5,571,089
699
476,995
401,446
401,446
10,147,522
1,215,612
642,254
1,439,002
762,141
6,088,513
--
%
59,832,719
55,348,356
9,527,963
(8,550,850)
3,507,250
(34,442,361)
(5,271,236)
(370,493)
(774,500)
(4,126,243)
(984,843)
(702,690)
(539,439)
(524,040)
(434,802)
(249,269)
(691,160)
20,119,122
(790,703)
19,328,419
3,028,642
1,849,552
100.00
100.00
31.03
Balance
2S2009
22.64
1.50
37.99
22,357,061
22,357,061
8,629,668
5,511,610
1,123,567
1,156,463
352,029
485,999
4,595,120
4,131,099
738
463,283
329,404
329,404
8,802,869
1,013,441
534,786
1,291,641
681,280
5,281,721
--
2009
%
42,029,153
34,715,065
7,132,026
(5,877,342)
6,059,404
(17,913,312)
(3,703,643)
(215,847)
(507,448)
(2,980,348)
(586,999)
(544,808)
(349,535)
(336,189)
(368,679)
(196,331)
(597,807)
20,412,198
(1,305,156)
19,107,042
(324,394)
3,028,642
100.00
100.00
37.87
Balance
20.55
1.48
39.37
18,782,648
18,782,648
6,256,403
3,893,617
857,615
853,229
316,682
335,260
6,110,728
5,765,612
242
344,874
281,582
281,582
6,133,935
622,684
331,328
978,771
520,801
3,680,375
(24)
2008
%
76,463,226
65,729,138
13,511,181
(12,396,261)
9,619,168
(35,100,018)
(6,851,748)
(421,965)
(960,148)
(5,469,635)
(1,107,054)
(969,344)
(637,815)
(641,906)
(706,601)
(336,254)
(1,070,661)
34,511,460
(2,405,841)
32,105,619
(989,350)
(324,394)
100.00
100.00
38.60
Balance
32.53
1.50
32.66
31,116,269
31,116,269
11,799,456
7,529,479
1,384,531
1,559,377
527,295
798,774
8,658,974
7,998,623
733
659,618
509,728
509,728
10,148,111
1,215,612
642,254
1,439,002
762,141
6,088,513
589
%
64,731,313
57,115,713
11,810,793
(8,605,808)
4,410,615
(35,690,512)
(5,670,403)
(387,595)
(901,679)
(4,381,129)
(1,020,894)
(713,289)
(570,499)
(524,506)
(430,414)
(299,204)
(822,323)
23,370,398
(814,844)
22,555,554
1,394,233
(989,350)
100.00
100.00
33.31
Balance
1,394,233
100.00
100.00
37.92
27.83
1.65
32.60
23,949,787
23,949,787
8,889,034
5,693,693
1,134,068
1,195,725
370,997
494,551
5,895,090
5,260,451
765
633,874
362,829
362,829
8,802,834
1,013,441
534,786
1,291,641
681,280
5,281,721
(35)
100.00
100.00
37.12
24.61
1.51
36.76
The accompanying notes are an integral part of these financial statements
8
Notes to Financial Statements
1 – The Bank and its Operations
2 – Presentation of the Financial Statements
3 – Summary of main accounting practices
4 – Consolidated Financial Statements
5 – Acquisition of Banco Nossa Caixa S.A. and Banco Votorantim S.A.
6 – Cash and cash equivalents
7 – Short-term Interbank Investments
8 – Securities and Derivative Financial Instruments
9 – Interbank - Credit Linked
10 – Loans
11 – Other Receivables
12 – Foreign exchange portfolio
13 – Other Assets
14 – Investments
15 – Premises and equipment and leased assets
16 – Intangible Assets
17 – Deposits and Money Market Borrowing
18 – Borrowings
19 – Resources from securities issues
20 – Other liabilities
21 – Insurance, pension and capitalization operations
22 – Other Income / Expenses
23 – Non operating income
24 – Stockholder’s Equity
25 – Income and Social Contribution Taxes
26 – Tax credits
27 – Related-party Transactions
28 – Employee Benefits
29 – Remuneration of Employees and Management
30 – Assignment of Employees to Outside Agencies
31 – Commitments, Responsibilities and Contingencies
32 – Risk Management and Regulatory Capital
33 – Other Information
Notes to Financial Statements
1 – The Bank and its Operations
Banco do Brasil S.A. is a publicly listed company established under private law with both public and private
stockholders. It is subject to the requirements of Brazilian corporate legislation. Its purpose is to carry out all
asset, liability and accessory banking operations, to provide banking services, to intermediate and originate
financial transactions in various forms, including foreign exchange transactions and supplementary activities,
with an emphasis on insurance, private pension, capitalization, securities brokerage, administration of
credit/debit cards, consortiums, investment funds and management portfolios, and to practice any activities
permitted for the institutions that are part of the National Finance System. It is also the main financial agent
of the Brazilian Federal Government and is therefore required to carry out the functions attributed to it by law,
specifically those of Article 19 of Law 4595/1964.
2 – Presentation of the Financial Statements
The Financial Statements have been prepared in accordance with the accounting guidelines derived from
Brazilian corporation law, the rules and instructions issued by the Conselho Monetário Nacional (CMN),
Brazilian Central Bank (BACEN), the Brazilian Securities Commission (CVM), the National Council of Private
Insurance (CNSP), the Superintendency of Private Insurance (Susep), and the National Health Agency (ANS).
Accounting Practices adopted in Brazil (BRGAAP) requiry that Management use its judgment in determining
and recording accounting estimates, when applicable. Significant assets and liabilities subject to these
estimates and assumptions include the residual value of property, plant and equipment, the allowance for
doubtful loans and deferred income tax recorded in assets, the provision for contingencies, the appreciation of
derivative financial instruments, and the assets and liabilities relating to benefits for employees. The final
amounts for transactions involving these estimates are only known upon their settlement.
They include operations of Banco do Brasil S.A. in Brazil and abroad (Banco do Brasil), and financial and nonfinancial subsidiaries in Brazil and abroad, special purpose entities, including the Investment Funds in which
the Bank controls directly or indirectly, pursuant to CVM Instruction No. 408/2004, and investments in
subsidiaries and associated companies, in accordance with BACEN requirements (BB-Consolidated). See
details of the companies included in the consolidated financial statements in Note 4.
The balances of foreign branches and subsidiaries included in the financial statements of BB are as follows:
R$ thousand
Foreign Branches
Foreign Branches and
Subsidiaries
Current assets
Non Current assets
Long-term receivables
Permanent assets
Total assets
12.31.2009
31,972,111
18,764,942
18,712,658
52,284
50,737,053
12.31.2008
39,145,989
18,306,440
18,262,771
43,669
57,452,429
12.31.2009
29,007,775
18,719,675
18,516,079
203,596
47,727,450
12.31.2008
34,790,221
19,017,554
18,949,105
68,449
53,807,775
Current liabilities
Non Current liabilities
Long-term liabilities
Deferred income
Stockholders' equity
Total liabilities
33,174,856
15,003,723
14,977,756
25,967
2,558,474
50,737,053
42,322,057
11,601,820
11,594,859
6,961
3,528,552
57,452,429
29,707,025
14,512,506
14,486,539
25,967
3,507,919
47,727,450
37,608,748
11,661,380
11,654,419
6,961
4,537,647
53,807,775
(94,658)
177,618
(29,186)
223,683
Net income (loss)
2
Notes to Financial Statements
For purposes of comparability of financial statements was made in the BB-Consolidated, on 31.12.2008, the
reclassification from R$ 557.603 thousand of the grouping of intangible investment due to the goodwill arising
on acquisition of investments.
Authorization for conclusion of these financial statements was given by the Executive Board of Directors, on
February 23, 2010.
3 – Summary of main accounting practices
a) Statements of income
Income and expenses are recognized on the accrual basis. Transactions performed using postfixed financial
charges are recorded at their value correct on a daily pro-rata basis, based on the variations of the agreed
contractual indices, and the transactions with prefixed financial charges are recorded at their remption value,
rectifiedon account of unearned discount or unexpired expenses. Transactions indexed to foreign currencies
are corrected up to the balance sheet date on a current exchange rate basis.
b) Cash and cash equivalents
Cash and cash equivalents are represented by available funds in local currency, foreign currency,
investments in gold, short-term investments with high liquidity and insignificant risk of change in value and
limits, with maturity equal to or less than 90 days and do not include short-term interbank investments –
financed position (Note 6).
c) Short-term interbank investments
Short-term interbank investments are recorded at their investment or acquisition amount, plus income
accrued up to the balance sheet date and adjustment to allowance for losses when applied.
d) Securities
The securities purchased for the Bank's portfolio are recorded at the actual amount paid, including brokerage
charges and fees, and are classified in three separate categories according to management’s intentions,
According to Bacen 3.068/2001:
Trading Securities: these are securities purchased to be actively and frequently traded. They are adjusted
monthly to market value. The increases and decreases in their value are recorded, respectively, in income
and expense accounts for the period;
Securities available for sale: these are securities purchased to be traded at any time. They are adjusted
monthly to market value. The increases and decreases in their value are recorded, net of tax effects, in a
separate stockholders' equity account (mark-to-market adjustment).
Securities held to maturity: these are securities that the Bank intends and has the financial ability to hold to
maturity. These securities are not adjusted to market value but are held at cost plus accumulated interest.
The financial capacity is supported by a cash flow projection that does not consider the possibility of sale of
these securities.
The mark-to-market methodology used for securities was established following consistent, verifiable criteria,
which consider the average price of trading on the day of calculation or, if not available, the daily adjustment
of future market transactions reported by Anbima, BM&FBovespa or the net expected realizable value
3
Notes to Financial Statements
obtained through the use of future interest rate curves, foreign exchange rates, and price and currency index
charged in the settlement.
Income accrued on the securities, irrespective of the category in which they are classified, is appropriated on
a daily pro-rata basis on the accrual basis of accounting until the date of maturity or final sale, according to
the exponential or straight-line method, based on the contractual remuneration and purchase price, and
recorded directly in the statement of income for the period.
Losses with securities classified as available for sale and held to maturity, if considered not to be temporary,
are recorded directly in expenses for the period and a new cost basis for the asset is determined.
Upon sale, the difference between the sale amount and the cost of acquisition plus accrued income is
recorded as a gain or loss on securities on the date of the transaction.
e) Derivative Financial Instruments
Derivative financial instruments are recorded at market value at each monthly trial balance and balance
sheet date. Increases or decreases in value are recorded in income or expense accounts of the respective
financial instruments.
The mark-to-market methodology used for derivative financial instruments was established following
consistent, verifiable criteria, which consider the average price of trading on the date of calculation or, if not
available, pricing models that estimate the expected net realizable value, according to the characteristics of
the derivatives.
Derivative financial instruments used to offset, in whole or in part, the risks arising from exposure to
variations in market values of financial assets or liabilities or future cash flows are considered hedge
instruments and are classified according to their nature:
Market Risk Hedge - the increases or decreases in the value of the derivative financial instruments, as well
as of the hedged item, are recorded in income accounts in the statement of income for the period;
Cash Flow Hedge - the effective portion of the increases or decreases in the value of the derivative financial
instruments classified in this category are recorded, net of tax effects, in a separate Stockholders' Equity
account. The effective portion is that where the variation in the hedged item, directly related to the
corresponding risk, is offset by the variation in the derivative financial instrument used as the hedge,
considering the accumulated effect of the transaction. Other variations in these instruments are recorded
directly in income for the period.
f) Loans, lease operations, advances on foreign exchange contracts, other receivables with loan
characteristics and allowance for loan losses
Loans, leases, advances on foreign exchange contracts and other receivables with loan characteristics are
classified according to Management's judgment with respect to the level of risk, taking into consideration
market conditions, past experience and specific risks in relation to the operation, to borrowers and guarantors,
observing the parameters established by CMN Resolution 2682/1999, which requires periodic analyses of the
portfolio and its classification into nine levels, ranging from AA (minimum risk) to H (maximum risk), as well as
the classification of operations more than 15 days overdue as non-performing.
Income from loans overdue for more than 60 days, regardless of their risk level, will only be recognized as
income when effectively received.
Operations classified at level H, which remain in this classification for 180 days, are written off against the
existing provision and monitored for five years in memorandum accounts, but do not appear in the balance
sheet.
4
Notes to Financial Statements
Renegotiated operations are maintained, at a minimum, at the same level at which they were rated.
The renegotiations of loans already written off against the allowance are rated as H and any gains from
renegotiation are only recognized as income when effectively received.
The allowance for loan losses is considered sufficient by management wich satisfies the minimum
requirements established by CMN Resolution 2682/1999 (Note 10.f).
g) Income and Social Contribution Taxes
Income tax is calculated at the basic rate of 15% plus a surcharge of 10%. As of May 1, 2008, Social
Contribution is being calculated at the rate of 15% for financial and insurance companies and 9% for other
companies. (Up to April 30, 2008 the rate was 9% for all companies).
Tax credits are recorded by applying the current tax rates to the difference between their respective fiscal
and accounting bases. The Bank follows the criteria for recording, maintaining, and writing off the tax credits
as established by CMN Resolution 3059/2002, and amended by CMN Resolution 3355/2006, and they are
supported by a study of their capacity for realization.
The deferred tax liabilities are made by applying the current rates of taxes on their respective bases.
h) Prepaid Expenses
Refer to the application of funds in payments made in advance, and the benefits will be felt or the services
will be rendered in subsequent periods.
i) Permanent assets
Investments – The investments in subsidiaries and associated companies with significant influence or with
participation of 20% or more voting shares in other companies and which are part of a group or are under
common control are evaluated by the equity method based on the value of the equity related or controlled in
accordance with the instructions and rules of the Central Bank and the CVM.
The statements of the branches and subsidiaries abroad are adapted to the prevailing accounting criteria in
Brazil and translated into Brazilian Reais using current exchange rates, in conformity with BACEN Circulars
2397, of December 29,1993 and 2571, of May 17,1995, and their impacts are recorded in the statement of
income for the period. Other permanent investments are stated at cost, restated for inflation up to December
31, 1995, and, if necessary, are adjusted to market value through the formation of a provision, according to
the current rules.
Property and equipment – Property and equipment is stated at cost less depreciation, calculated using the
straight-line method at the following annual rates: buildings and improvements - 4%; vehicles - 20%; others 10%.(Note 15)
Deferred – Deferred assets are recorded at cost of acquisition or formation, net of accrued amortizations.
They are composed mainly of expenditures with restructuring and leasehold improvements as a result of
opening branches, which are amortized according to rates based on rental terms, as well as expenditures on
the acquisition and development of information systems, which are amortized at 20% p.a.
Intangible – Intangible Assets consist of rights that have as their object intangible assets intended for the
maintenance of the company or that are exercised for that purpose, including goodwill acquired. An asset
meets the criteria for identification as an intangible asset, in accordance with CMN Resolution 3642/2008,
when it is inseparable, i.e. it can be separated from the entity and sold, transferred or licensed, rented or
exchanged, individually or jointly with a contract, related assets or liabilities, regardless of the intention for
use by the entity; or results from contractual rights or other legal rights, regardless of whether these rights
are transferable or separable from the entity or other rights and obligations.
5
Notes to Financial Statements
The carrying value of intangible assets with definite useful life subject to amortization refers to the amounts
disbursed for acquisition of rights for providing banking services (acquisition of payrolls) and acquisition/
development of software (Note 16). The amortization of intangible assets is usually done in a linear metod
during a period of economic benefit estimated and accounted for in Other Administrative Expenses.
j) Decrease in the recoverable value of non-financial assets – impairment
A loss through impairment is recognized if the carrying value of an asset or its cash-generating unit exceeds
its recoverable value. A cash-generating unit is the smallest identifiable group of assets that generates cash
entries, which are largely independent of the cash entries from other assets or groups of assets. Losses
through impairment are recognized in income for the period.
From 2008, the values of non-financial assets, excluding tax credits and other assets, are reviewed at least
annually to determine whether there is any indication of loss through impairment.
k) Benefits for employees
Short-term benefits for current employees are recognized on the accrual basis as the services are provided.
Post-employment benefits, comprising supplementary retirement benefits, medical assistance and other
benefits for which the Bank is responsible, were calculated at December 31, 2009 in accordance with criteria
established by CVM Resolution 371/2000 (Note 28.b).
The actuarial asset recognized in the balance sheet (Note 28) refers to the Actuarial gains calculated in
accordance with CVM Resolution No 371/2000 and its implementation must occur by the end of the plan.
There may be partial completion of actuarial, conditioned upon satisfying the requirements of the
Supplementary Law No 109/2001 and Resolution CGPC No 26/2008 of 29.09.2008.
l) Operations related to insurance, pension and capitalization activities
Statement of income
Insurance premiums and selling expenses are recorded upon the issuing of policies or upon billing and are
recognized in the statement of income, according to the elapsed period of coverage. Revenues from premiums
and the corresponding selling expenses, related to present risks without the issuing of respective policies are
recognized in the statement of income at the beginning of the coverage, based on estimates.
Income from insurance premiums covering future risks is deferred over the period of validity of the insurance
policies, through the recording of provision for unearned premiums, based on the net withholding of earned
premiums issued.
Accepted coinsurance, retrocession and DPVAT (Personal injuries caused by motor vehicles) convention
operations are recorded based on information received from similar companies, IRB Brasil Resseguros S.A.
and the Seguradora Lider, respectively.
The revenue from pension plans, life insurance plans with living benefits and capitalization plans are
recognized in the statement of income when effectively received, as a contra-entry to the recognition of
technical provisions, except the revenue to cover risks in cases of combined pension plans, which must be
recognized by the duration of the risk, regardless of your receipt. The selling costs are deferred on the
issuing of the contract or policy and allocated to results on a straight-line basis, over the average estimated
period for their recovery, except the ones related to capitalization.
Other income and expenses are determined according to the accrual basis of accounting.
Technical Provisions
Rules and procedures for the formation of technical provisions are regulated by Resolutions 36/2000,
162/2006, 181/2007 and 195/2008 of the National Council of Private Insurance (CNSP) and Regulatory
6
Notes to Financial Statements
Resolution 75/2004 of the National Health Agency (ANS), and calculated in accordance with the specific
actuarial technical notes approved by the Superintendency of Private Insurance (SUSEP) and the National
Health Agency (ANS).
Insurance
The Provision for Unearned Premiums represents the portions of premiums that will be allocated to income
over the course of the insurance policies, as calculated on a daily pro rata basis.
The Provision for Unearned Premiums for Present Risks But Not Yet Issued represents the adjustment for
the Provision for Unearned Premiums given the existence of risks assumed by the insurance company
where the policy covering the risk has not yet been formally issued, except fot health plan insurance.
The Provision for Premium Deficiency represents the need for coverage of possible deficiencies of the
Provision for Unearned Premiums due to the expectations of payment and re-assessment of claims incurred.
The Provision for Unsettled Loss Claims represents the forecast of probable indemnifications, judicial or
otherwise, net of recoveries, determined based on notices received up to the balance sheet date, adjusted
by the estimate for Claims Incurred But Not Enough Reported (IBNER).
The Provision for Claims Incurred but not Reported [IBNR - Incurred But Not Reported and PEONA Provision for Events Occurred but not Reported (of the health insurance segment)] represents the amount
expected of claims incurred but not reported until the base date of the financial statements.
The Premium Complementary Provision (PCP), recorded in "Other Provisions", has as object to maintain
the company protected in monthly transactions, keeping the amount of the technical premium provisions
(PPNG and PPNG-RVNE) higher or equal to the daily average of the month of calculation.
Pension plan
The mathematical reserves related to pension plans represent the current value of the liabilities in the form of
a living income, pension and savings, determined through actuarial calculations and assumptions in the
financial regimes of capitalization, allocation of hedge capital and simple allocation, respectively.
Particularly for the pension and insurance plans of the PGBL and VGBL type, the mathematical provision for
future benefit payments represents the sum of the premiums and contributions transferred by the
participants, net of the loading rate, plus the financial income earned from the investments of the resources.
This provision refers to participants whose perception of the benefits has not yet started and Mathematics
Provision of benefits refers to those already in enjoyment of benefits.
The provisions for a deficiency in contributions and in premiums are formed to meet the possible adverse
changes in the technical risks made in the mathematical provisions of benefits to be granted, resulting from
the trend for a higher survival rate of participants and the calculation is made using the Mitigated AT 2000
Male/Female mortality table and related assumptions, considering all the plans sold.
The provision for financial fluctuation is formed to account for the potential impacts of unfavorable variations
in future rates of funds earmarked for the payment of benefits and redemptions to participants, considering
the minimum remuneration guaranteed in existing contracts.
Capitalization
The mathematical reserve for redemption is calculated on the face value of the notes, restated based on
actuarial technical notes approved by Susep.
7
Notes to Financial Statements
The provisions for redemption of overdue and prepaid notes are recorded at the values of the notes with
finalized and rescinded capitalization periods, restated in the period between the date of the right to
redemption and effective settlement.
The amounts earmarked for the formation of the provision for unrealized draws for prizes are calculated on
the face value of the notes, based on actuarial technical notes approved by Susep, and the write-off of the
provision for unrealized draws for prizes is recorded at the amount equivalent to the lapsed risk, i.e., the
balance of the provision for unrealized draws for prizes represents the deferred amounts of draws for prizes
not yet made.
The provision for draws for prizes payable is formed at the amounts of the notes payable from draws for
prizes, restated for the period between the date of the draw and the effective payment.
m) Contingent Assets and Liabilities and Legal Obligations
The recognition and disclosure of contingent assets and liabilities and legal obligations are made in
accordance with the criteria defined in CVM Resolution 3535/2008 (Note 31).
Contingent assets are only recognized in the financial statements upon the existence of evidence
guaranteeing their realization usually represented by the final judgment of the lawsuit and by the
confirmation of the capacity for its recovery by receipt or offsetting by another receivable.
Contingent liabilities are recognized in the financial statements when, based on the opinion of legal advisor
and Management, the risk of loss of legal or administrative proceedings is considered probable, with a
probable outflow of financial resource fot the settlement of obligation and when the amounts involved are
measurable with sufficient assurance, and judicial figures when reporting monthly and revised as follows:
- Mass (cases concerning causes considered similar and usual and whose value is not relevant): the
following statistical parameter for the action group, type of legal body (Special Civil Court Justice or
Common) and or complaint. In labor claims and civil claims related to economic plans are considered the
average values of payments of proceedings closed in the last 14 months and 12 months, respectively, for
calculation of the value of obligations.
- Individualized (proceedings relating to causes considered unusual or whose value is considered relevant):
the value compensation desired, on the evidence presented and the evaluation of legal jurisprudence
considers that, fact subsidies raised, evidence produced in the proceedings and judgments which have to be
handed in action - on the degree of risk of loss of the lawsuit.
Contingent liabilities considered as possible losses are not recognized in the balance sheet and only need to
be disclosed in the notes to the financial statements, while those classified as remote do not require
provisioning or disclosure.
Legal obligations (tax and social security) originate from tax obligations established in the legislation, and,
regardless of the probability of success of lawsuits in progress, the amounts are recognized in full in the
financial statements.
8
Notes to Financial Statements
4 – Consolidated Financial Statements
The consolidated financial statements include the Banco do Brasil and the direct and indirect subsidiaries and
affiliates listed below:
Total Share
Financial Activities - Domestic
BB Gestão de Recursos–Distribuidora de Títulos e Valores Mobiliários S.A.
BB Banco de Investimento S.A.
BB Banco Popular do Brasil S.A.
BB Leasing S.A. – Arrendamento Mercantil
BESC Distribuidora de Títulos e Valores Mobiliários S.A.
BESC Financeira S.A. – Crédito, Financiamento e Investimentos
BESC Leasing S.A. – Arrendamento Mercantil
Banco Nossa Caixa S.A.
Banco Votorantim S.A.
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(2)
(3)
(11)
(11)
(11)
(11)
(11)
(11)
(11)
(11)
Activity
Asset Management
Investment Bank
Banking
Leasing
Asset Management
Loans and Financing
Leasing
Bank
Bank
Financial Activities - Abroad
Banco do Brasil – AG. Viena
BB Leasing Company Ltd.
BB Securities LLc.
BB Securities Ltd.
Brasilian American Merchant Bank – BAMB
BB USA Holding Company, Inc
(1)
(1)
(1)
(1)
(1)
(1)
(11)
(11)
(11)
(11)
(11)
(11)
Banking
Leasing
Broker
Broker
Banking
Holding company
Insurance, Pension Plans and Capitalization
Cia. de Seguros Aliança do Brasil
Nossa Caixa Capitalização S.A.
Brasilveículos Companhia de Seguros
Brasilcap Capitalizações S.A.
Brasilprev Seguros e Previdência S.A.
Brasilsaúde Companhia de Seguros
Seguradora Brasileira de Crédito à Exportação – SBCE
BB Seguros Participações S.A.
BB Aliança Participações S.A.
(4)
(5)
(6)
(6)
(6)
(6)
(6)
(7)
(7)
(11)
(11)
(11)
(11)
(11)
(11)
(12)
(11)
(11)
Insurance
Capitalization
Insurance
Capitalization
Insurance /Pension
Insurance /Health
Insurance
Holding the branch security
Holding the branch security
12.31.2009
12.31.2008
100%
100%
100%
100%
99.62%
99.58%
99%
-50%
100%
100%
100%
100%
99.62%
99.58%
99%
---
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
49.99%
49.99%
49.92%
12.09%
100%
100%
100%
-70%
49.99%
49.99%
49.92%
12.09%
---
Other activities
Ativos S.A.
(4)
(11) Acquisition of receivables
100%
100%
BB Administradora de Cartões de Crédito S.A.
(4)
(11)
Rendering of services
100%
100%
BB Administradora de Consórcios S.A.
(4)
(11)
Consortiums
100%
100%
BB Corretora de Seguros e Administradora de Bens S.A.
(4)
(11)
Broker
100%
100%
BB Tur Viagens e Turismo Ltda.
(4)
(12)
Tourism
100%
100%
BB Money Transfers, Inc
(4)
(11)
Rendering of services
100%
100%
Nossa Caixa S.A. – Administradora de Cartões de Crédito
(5)
(11)
IT
100%
-Cobra Tecnologia S.A.
(4)
(12)
Rendering of services
99.94%
99.39%
Cia. Brasileira de Soluções e Serviços CBSS – Visavale
(6)
(12)
Rendering of services
40.35%
40.35%
Cielo S.A. (Cia. Brasileira de Meios de Pagamento CBMP – Visanet)
(8)
(11)
Rendering of services
23.60%
31.63%
Kepler Weber S.A.
(8)
(12)
Industry
17.65%
17.67%
Neoenergia S.A.
(8)
(11)
Power
11.99%
11.99%
Companhia Brasileira de Securitização – Cibrasec
(6)
(12) Acquisition of receivables
9.09%
9.09%
Tecnologia Bancária S.A. – Tecban
(6)
(12)
Rendering of services
9.02%
8.96%
Dollar Diversified Payment Rights Finance Company
(9)
(11) Acquisition of receivables
--(10 (11)
BV Participações S.A.
Holding
50%
-)
(1) Financial subsidiaries.
(2) On 11.30.2009, the Shareholders approved the merger of Banco Nossa Caixa. The balances of equity accounts have been absorbed by BBCommercial Bank on the date of incorporation, after the lifting of the Balance of Absorption. The financial statements of BB-Consolidated suite drives
revenue and expenditure of Nossa Caixa, the period between the date of purchase and date of incorporation (April to November/2009).
(3) Financial company, with joint control with Votorantim Finanças, included proportionately in the consolidation (Note 5). Including the investments funds,
in which the Bank directly or indirectly controls, according to CVM Instruction No. 408/2004.
(4) Non financial subsidiaries. The Alliance Insurance Co. of Brazil set up temporarily as "sole proprietorship", in the form of art. 206, paragraph I, item d, of Law
No. 6404/1976, in view of the process of reorganization of the security sector (Note 33.i).
9
Notes to Financial Statements
(5) Non financial subsidiaries of Banco Nossa Caixa S.A. which was embedded by the Banco do Brasil on November 30,2009.
(6) Jointly controlled non-financial companies, included proportionally in the consolidation as recommended by the Banco Central, based on paragraph 2 of
Article 22 of Law 6385/1976, complemented by Law 9447/1997, with the wording given by Decree 3995/2001.
(7) Non financial subsidiaries set up in September/2009. (Note 33.i).
(8) Non financial affiliated companies included proportionally in the consolidation as recommended by the Central Bank, based on paragraph 2 of Article 22 of
Law 6385/1976, complemented by Law 9447/1997, with the wording given by Decree 3995/2001.
(9) Non financial of a Special Purpose Entity.
(10) Non-financial company, with joint control with Votorantim Finanças, included proportionately in the consolidation (Note 5).
(11) Data for consolidation related to December 2009.
(12) Data for consolidation related to November 2009.
We present below, the consolidated balances comprising the financial group (branches and financial
subsidiaries in Brazil and abroad) and the Non-Financial Subsidiaries/Associated Companies presented in
the financial statements of the Bank.
Balance Sheet
Financial
Current and Long-Term Assets
Cash and cash equivalents
Short-term interbank deposits
Securities and derivatives
Loans and leasing operations
Non-Financial
Eliminations
Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
12.31.2009
12.31.2008
12.31.2009
12.31.2008
669,389,221
495,339,095
26,485,905
17,503,018
(4,335,886)
(1,080,933)
691,539,240
511,761,180
7,741,969
5,385,499
130,964
220,714
(30,163)
(61,363)
7,842,770
5,544,850
168,353,947
119,299,453
459,155
311,640
(415,142)
(202,796)
168,397,960
119,408,297
107,244,986
73,223,320
19,044,243
13,909,009
(1,952,348)
(223,755)
124,336,881
86,908,574
266,659,173
193,849,134
--
--
(175,513)
--
266,483,660
193,849,134
Other receivables
119,389,146
103,581,689
6,851,543
3,061,655
(1,762,720)
(593,019)
124,477,969
106,050,325
Permanent Assets
19,290,689
10,876,110
2,540,898
990,683
(4,821,984)
(2,355,156)
17,009,603
9,511,637
Investments
9,143,477
3,068,920
2,323,846
810,076
(4,821,984)
(2,355,156)
6,645,339
1,523,840
Property and equipment
4,070,208
3,217,848
145,499
124,962
--
--
4,215,707
3,342,810
Intangible
5,646,143
4,040,645
30,736
--
--
--
5,676,879
4,040,645
430,861
548,697
40,817
55,645
--
--
471,678
604,342
Total Assets
688,679,910
506,215,205
29,026,803
18,493,701
(9,157,870)
(3,436,089)
708,548,843
521,272,817
Current and Long-Term Liabilities
652,560,529
476,277,652
23,313,077
16,208,004
(3,444,169)
(1,150,089)
672,429,437
491,335,567
Deposits
337,850,442
271,121,700
38,317
--
(324,932)
(280,604)
337,563,827
270,841,096
Money Market repurchase commitment
161,231,327
91,434,096
--
--
(410,140)
(303,732)
160,821,187
91,130,364
37,701,801
30,052,203
333,523
199,701
(175,762)
(90,588)
37,859,562
30,161,316
115,776,959
83,669,653
22,941,237
16,008,303
(2,533,335)
(475,165)
136,184,861
99,202,791
116
303
25
--
--
(303)
141
--
Deferred charges
Borrowings and onlendings
Other liabilities
Minority Interest in Subsidiaries
Stockholders' equity
Total Liabilities
36,119,265
29,937,250
5,713,701
2,285,697
(5,713,701)
(2,285,697)
36,119,265
29,937,250
688,679,910
506,215,205
29,026,803
18,493,701
(9,157,870)
(3,436,089)
708,548,843
521,272,817
Income Statement
Financial
Income from Financial Intermediation
Expenses from Financial Intermediation
Non-Financial
Eliminations
Consolidated
2009
2008
2009
2008
2009
2008
2009
2008
64,351,226
56,105,725
1,384,408
1,039,159
(6,496)
(29,171)
65,729,138
57,115,713
(46,685,265) (43,587,794)
(44,296,320)
(825,127)
(621,244)
14,113
(87,282)
(47,496,279)
Gross Financial Intermediation Income
17,665,961
12,517,931
559,281
417,915
7,617
(116,453)
18,232,859
12,819,393
Other Operating Income / Expenses
(4,728,797)
(1,110,924)
1,522,443
1,099,250
(1,434,704)
(1,138,245)
(4,641,058)
(1,149,919)
Operating Net income
12,937,164
11,407,007
2,081,724
1,517,165
(1,427,087)
(1,254,698)
13,591,801
11,669,474
1,840,531
150,801
3,097
261,743
--
--
1,843,628
412,544
Income before taxes
14,777,695
11,557,808
2,084,821
1,778,908
(1,427,087)
(1,254,698)
15,435,429
12,082,018
Income Tax and Social Contribution
(3,275,906)
(1,626,005)
(626,881)
(519,111)
--
--
(3,902,787)
(2,145,116)
Profit Sharing
(1,353,627)
(1,128,932)
(30,904)
(5,136)
--
--
(1,384,531)
(1,134,068)
(640)
(2)
51
37
--
--
(589)
35
10,147,522
8,802,869
1,427,087
1,254,698
(1,427,087)
(1,254,698)
10,147,522
8,802,869
Non-operating Net income
Minority Interest Sharing
Net Income
10
Notes to Financial Statements
5 – Acquisition of Banco Nossa Caixa S.A. and Banco Votorantim S.A.
(a) Banco Nossa Caixa S.A.
On December 19, 2008, Banco do Brasil and the State Government of São Paulo entered into a share
purchase agreement for acquisition of the share control of Banco Nossa Caixa S.A., through the sale of
76,262,912 common shares, belonging to the State, equivalent to 71.25% of the total capital stock and of the
voting capital of Banco do Brasil. The transaction was authorized by the São Paulo State Legislature, under
the terms of State Law 13286 of December 18, 2008, and approved by the Special General Shareholders’
Meeting of Banco do Brasil on December 23, 2008.
The price stipulated for the sale was R$ 5,386,496 thousand (R$ 70.63 per share), payable in 18 monthly
installments of R$ 299,250 thousand, calculated based on an economic/financial evaluation, considering the
prospects of future profitability and the discounted cash flow of Banco Nossa Caixa, in conformity with article
224 of Law 6404/1976.
On March 10, 2009, the Banco Central do Brazil sent correspondence to Banco do Brasil communicating the
approval of the transfer of share control from Nossa Caixa to Banco do Brasil.
On March 16, 2009, after fulfilling all the precedent conditions for the closing of the transaction for acquisition
of the share control of Banco Nossa Caixa, there was the payment to the Statement Government of São
Paulo of the first installment and the transfer of shares to Banco do Brasil, which became its controlling
shareholder.
Banco do Brasil already paid 10 installments to the Government of the State of São Paulo, totaling R$
3,217,414 thousand, leaving 8 installments, with balance due on 12.31.2009 of R$2,657,611 thousand.
These values were adjusted to the Selic rate of 11.20.2008 as per the respective terms of the contract. The
balance due is recorded in Other Liabilities - Obligations for purchase of goods and rights (Note 20.f).
The initial records of the transaction involved the accounting, in Banco do Brasil, of the amount of the
investment and the respective goodwill as per the terms negotiated with the State Government of São Paulo,
and in Nossa Caixa, of the amount of the adjustments resulting from the adaptation of accounting criteria and
estimates to those adopted by the new controlling shareholder. The amounts of the investment and the
goodwill were determined based on the balance sheet of Nossa Caixa as of December 31, 2008, restated
until March 31, 2009, by the existing differences in criteria.
On 07.21.2009, the Banco do Brasil published the Notice of Public Offer to acquire up to all the common
shares issued by the Banco Nossa Caixa, representing 28.749781953% of the total share capital and voting,
not included in the operation of disposal of control.
On 04.09.2009, in accordance with Article 254 of Law No 6404/1976 and Regulation of Bovespa's New
Market, the auction was conducted through electronic trading on the BM & F Bovespa - Bovespa segment,
where they were 30,041,404 shares traded, with a total value of R$ 2,304,984 thousand, representing
97.62% of the total held by minority shareholders (30,772,541), ensuring the right to sell their shares at least
under the same terms offered to the Government of the State of Sao Paulo. Thus, completion of the Offer,
the Banco do Brasil held 106,304,316 shares, representing 99.32% of Banco Nossa Caixa.
On November 30, 2009 the Extraordinary General Meeting approved the merger of Banco Nossa Caixa by
Banco do Brasil, as well as the R$ 18,308 thousand capital increase by Banco do Brasil arising from the
issue of 1,674,027 common registered shares with no par value, with the rights and entitlements as found in
the By-laws. Equity capital rose from R$ 18,548,611 thousand to R$ 18,566,919 thousand, by transferring
the merged company's shareholders' equity into the merging company. As a natural outcome, Banco Nossa
Caixa was extinguished pleno jure as a legal entity, and Banco do Brasil became the universal successor of
Banco Nossa Caixa's rights and obligations.
11
Notes to Financial Statements
Pursuant to article 264 in Law 6404/1976, assessments were performed on Banco do Brasil (at fair market
value) and on Banco Nossa Caixa (at its economic and financial value by means of a discounted cash flow)
in accordance with article 224 of Law 6404/1976.Based on this assessment, Nossa Caixa's minority
shareholders received Banco do Brasil shares at a replacement rate of 2.28873181 common registered
shares issued by Banco do Brasil for one common registered share issued by Nossa Caixa.
The right to withdrawal of the minority shareholders of Nossa Caixa does not apply to shares acquired after
October 10, 2009, as provided for by art. 137, § 1 of Law 6404/76. Dissident shareholders may only exercise
their right to withdraw at the Nossa Caixa share's book value on June 30, 2009, equal to R$ 25.42 pursuant
to Law 6404/1976, article 264, § 3, and article 137, indentation II.
The total value of goodwill determined, shown in the following table, mainly based on future income/losses
forecast, is accounted for in permanent assets - Investment, being amortized according to Bacen circular
1273/1987 (Nota 14.c)
We present below the calculation of the investment and the goodwill, after the adjustments made in Banco
Nossa Caixa, for unification of accounting criteria and after the publics offering:
R$ thousand
Acquisition of shares held by the Government of Sao Paulo, 03.16.2009
Shareholders' Equity of Banco Nossa Caixa on 12.31.2008
Increase in Shareholders' Equity in the 1Q 2009 (prior-year adjustment and mark-to-market of securities)
Results for the 1st quarter of 2009, before the adjustments for unification of accounting practices
Adjustments made in Nossa Caixa for unification of accounting practices with Banco do Brasil (1)
3,180,682
29,184
(36,236)
Shareholders' Equity of Nossa Caixa
Amount of the Investment in Banco do Brasil (71.2499527144%)
(216,917)
2,956,713
2,106,657
(a) Amount of goodwill for the acquisition
Price for the acquisition of shares, restated on 3.16.2009
- Price for the acquisition of shares, pursuant to the contract signed on 11.20.2008
3,490,097
5,596,754
5,386,496
- Restatement of the price for the acquisition of shares, on 3.16.2009 (Selic rate)
Public Offering of shares, held on 04.09.2009
210,258
Adjusted Shareholders' Equity of Nossa Caixa, on 07.31. 2009
2,971,655
Amount of the Investment in Banco do Brasil (28.0667044877%)
(b) Amount of goodwill for the acquisition
834,053
1,470,931
Price for the acquisition of shares, on 09.04. 2009
Total value of goodwill for the acquisition of 99.32% of Banco Nossa Caixa (a + b) (2)
2,304,984
4,961,028
(1) Adjustments made in the financial statements of Nossa Caixa, resulting from standardization of accounting criteria and estimates to those adopted by
the new controlling shareholder, Banco do Brasil. The responsibility for the obligations resulting from these adjustments was under discussion with the
former controlling shareholder of Nossa Caixa. With the change in share control, on March 16, 2009, this responsibility was formally assigned to Banco do
Brasil. Adjustments included: reinforcement of the provision for loan losses, civil, labor and tax contingencies; and the liabilities with health and pension
plans. In addition, tax credits were recorded on temporary differences originating from the adjustments made as well as on tax credits not recorded in prior
years. These adjustments totaled R$288,135 thousand in the 1st quarter of 2009 and R$166,406 thousand, the 2nd quarter of 2009, and R$241,822
thousand, the 3rd quarter of 2009, and R$4,198 thousand, the 4th quarter of 2009.
(2) Until 12.31.2009, the amortization of goodwill to R$ 60,792 thousand, based on projections of results that supported the business in accordance with
Circular No. 1273/1987 of the Banco Central do Brasil (Note 14c).
The equity interests of Banco Nossa Caixa, absorved by the Bank are as follows:
Nossa Caixa Capitalização S.A.
Nossa Caixa S.A. – Administradora de Cartões de Crédito
Mapfre Nossa Caixa Vida e Previdência S.A.
Subsidiary
Subsidiary
Associated company
100%
100%
49%
b) Partnership with Votorantim Finanças S.A.
12
Notes to Financial Statements
On 9.28.2009, after approval by the Banco Central do Brasil on 9.11.2009, Banco do Brasil and Votorantim
Finanças S.A. concluded the strategic partnership establishment operation, commenced on 1.9.2009,
through a contract of sale and subscription of shares executed between them, in which Banco do Brasil
became the holder of 50.00% of the total capital stock (49.99% of the common shares and 50.01% of the
preference shares) and 50% of the total capital stock of BV Participações S.A. The operation cost Banco do
Brasil the amount of R$ 4,200,000 thousand, as follows:
a) acquisition, by Banco do Brasil, of 33,356,791,198 common shares issued by Banco Votorantim and
belonging to Votorantim Finanças for the price of R$ 2,969,789 thousand;
b) subscription, by Banco do Brasil, of 7,412,620,277 new preferred shares issued by Banco Votorantim for
the price of R$ 1,200,000 thousand;
c) acquisition, by Banco do Brasil, of 15,105,692 common shares and 15,105,702 preference shares of BV
Participações S.A., holding company that owns all the shares issued by the companies BV Sistemas, CP
Promotora de Vendas and Votorantim Corretora de Seguros, for the price of R$ 30,211 thousand.
The payment to Votorantim Finanças was negotiated as follows:
a) on 9.28.2009, cash deposits in assigned accounts at Banco Votorantim, in the amount of R$ 2,160,000
thousand and at Banco do Brasil, in the amount of R$ 840,000 thousand (earmarked for a price
adjustment as a result of possible contingencies identified in the future in the Due Diligence in progress);
b) cash payment in the amount of R$ 750,000 thousand, on 9.28.2009, plus R$ 450,000 thousand 180
days after this date, relating to the subscription of the preference shares of Banco Votorantim.
In view of the complexity of the subject and the time required to identify and measure all the differences of
criteria that exist, it was defined that the initial recording would be performed with a basis on the "best
estimate" possible under the circumstances, and that the final recording of all the differences would be
performed over time, preferably by June 01, 2009 and necessarily by the date of takeover of Nossa Caixa by
Banco do Brasil, having as a contra entry the adjustment of the initial goodwill of the transaction. The total
value of goodwill determined, shown in the following table, mainly based on future income/losses forecast, is
accounted for in Permanent Assets - Investment, being amortized according to Bacen circular no.
1.273/1987 (Note 14.c).
The governance of Banco Votorantim and of BV Participações S.A. is shared between Votorantim Finanças
and Banco do Brasil. The Board of Directors is on the same level, with 3 members appointed by each
institution, and the chairmanship of the Board will be alternated annually. All strategic decisions will be made
jointly.
Hence the book balances of Banco Votorantim and of BV Participações S.A. are henceforth included in the
consolidated financial statements, in proportion to the share in the total capital stock, as follows: assets and
liabilities consolidated as of September/2009 and recognition of the equity accounting results and consolidation
of the balances of income and expenses, as from October/2009.
We present below the calculation of the amount of the investment and of the goodwill/negative goodwill from
the acquisition of the interest in Banco Votorantim and Votorantim Participações S.A.:
R$ Thousand
Banco Votorantim S.A.
(1)
Adjusted Shareholders' Equity of Banco Votorantim on 09.30.2009
Amount of the Investment at Banco do Brasil (50%)
(2)
Amount of goodwill for the acquisition
Price for the acquisition of shares, on 09.28.2009
7,451,908
3,725,954
443,835
4,169,789
Votorantim Participações S.A.
13
Notes to Financial Statements
Adjusted Shareholders' Equity of Votorantim Participações on
09.30.2009
Amount
of the Investment at Banco do Brasil (50%)
Amount of the discount for the acquisition
Price for the acquisition of shares, on 09.28.2009
76,676
38,338
(8,127)
30,211
(1) Shareholders' Equity adjusted by the result accumulated up to 9.30.2009 and considering the capital realization of R$ 450,000 thousand (recorded in
Unrealized Capital at Banco Votorantim).
(2) Goodwill on the acquisition of the 33,356,791,198 common shares, in the amount of R$ 218,834 thousand, is recorded in Permanent Assets Investments, while goodwill on the acquisition of the 7,412,620,277 new preference shares in the amount of R$ 225,001 thousand, is recorded in Other
Receivables, until approval by Bacen of the minutes of the Extraordinary General Meeting of Banco Votorantim that decided on the capital increase. The
total amount of goodwill, determined with a basis on the forecast of future results, and is being amortized in accordance with Bacen Circular n.º 1273/1987
(Note 14c).
The relevant equity interests of Banco Votorantim S.A. are as follows:
BV Financeira S.A. – Crédito, Financiamento e Investimento
BV Leasing – Arrendamento Mercantil S.A.
Votorantim Corretora de Títulos e Valores Mobiliários Ltda.
Votorantim Asset Management DTVM Ltda.
Votorantim Bank Limited
Banco Votorantim Securities Inc.
Domestic subsidiary
Domestic subsidiary
Domestic subsidiary
Domestic subsidiary
Foreign subsidiary
Foreign subsidiary
99.99%
99.99%
99.98%
99.99%
100%
100%
Domestic subsidiary
Domestic subsidiary
Domestic subsidiary
100%
100%
100%
The equity interests of BV Participações S.A. are as follows:
CP Promotora de Vendas Ltda.
BV Sistemas Ltda.
Votorantim Corretora de Seguros Ltda.
c) Financial statements
We present below the financial position and that of results, encompassing the Economic and Financial
Conglomerate, with the BB-Consolidated position without Banco Nossa Caixa and Banco Votorantim and
BB-Consolidated with Banco Nossa Caixa and Banco Votorantim:
Balance Sheet
We present below, for comparative purposes, the consolidated balances involving the Economic/Financial
Group, with the position prior to and subsequent to the acquisition of Banco Nossa Caixa and Banco
Votorantim:
R$ Thousand
12.31.2009
BB-Consolidated
without Banco Nossa
Caixa and Banco
Votorantim
Current Assets and Long-Term Receivables
Cash and cash equivalents
Short-term Interbank Investments
Securities and Derivatives
Loan and lease operations
Other receivables
Permanent Assets
Investments (3)
Property, plant and equipment
Intangible assets
Deferred charges
588,926,142
7,189,474
155,327,992
88,323,185
227,281,857
110,803,634
10,066,717
1,359,731
3,883,469
4,451,847
371,670
Banco Nossa Caixa
(1)
60,293,047
533,340
2,357,235
26,916,336
19,009,985
11,476,151
1,682,670
78,955
303,173
1,222,471
78,071
(2)
Banco Votorantim
42,320,051
119,956
10,712,733
9,097,360
20,191,818
2,198,184
80,354
26,791
29,065
2,561
21,937
BB-Consolidated
including Banco Nossa
Caixa and Banco
Votorantim
691,539,240
7,842,770
168,397,960
124,336,881
266,483,660
124,477,969
17,009,603
6,645,339
4,215,707
5,676,879
471,678
14
Notes to Financial Statements
Total Assets
598,992,859
61,975,717
42,400,405
708,548,843
Current and Long-Term Liabilities
Deposits
Funding in the open market
562,873,453
285,503,783
146,962,785
33,918,681
96,488,204
141
36,119,265
598,992,859
58,966,558
39,821,334
1,474,668
289,504
17,381,052
-3,009,159
61,975,717
38,732,461
12,238,710
12,383,734
3,651,377
10,458,640
-3,667,944
42,400,405
672,429,437
337,563,827
160,821,187
37,859,562
136,184,861
141
36,119,265
708,548,843
Borrowings and onlendings
Other liabilities (4)
Minority Interest in subsidiaries
Shareholders' equity
Total Liabilities
(1) Refers to to the balances embedded in 11.30.2009.
(2) Refers to Banco Votorantim only. The balances of BV Participações S.A. (R$ 67,916 thousand of Total Assets) are not included in this chart.
(3) Includes the goodwill recorded in Permanent Assets - Investments, in the amounts of R$ 4,961,028 thousand (on the acquisition of Banco Nossa Caixa)
and R$ 218,834 thousand (on the acquisition of Banco Votorantim) in BB-Consolidated with Banco Nossa Caixa and Banco Votorantim;
(4) The amounts of the Shareholders' Equity of Banco Nossa Caixa and Banco Votorantim, as well as the amounts of the goodwill mentioned in item 3,
corresponding to the adjusted value of the obligation for the acquisitions of these companies, were excluded from the BB-Consolidated without Banco
Nossa Caixa and Banco Votorantim.
Statement of Income
R$ Thousand
2009
Financial operations income
Financial operations expenses
Gross income on financial operations
Other operating income/expenses
Operating result
Non operating result
Net income before taxes
Income and social contribution taxes
Profit sharing
Minority interest
BB-Consolidated
without Nossa Caixa and
Votorantim
Nossa Caixa(1)
Votorantim(2)
BB-Consolidated
59,049,880
(43,535,315)
15,514,565
(2,029,509)
13,485,056
1,838,805
15,323,861
(3,950,156)
(1,330,522)
(589)
10,042,594
5,140,870
(2,899,664)
2,241,206
(2,181,952)
59,254
(5,116)
54,138
4,199
--58,337
1,538,388
(1,061,300)
477,088
(429,597)
47,491
9,939
57,430
43,170
(54,009)
-46,591
65,729,138
(47,496,279)
18,232,859
(4,641,058)
13,591,801
1,843,628
15,435,429
(3,902,787)
(1,384,531)
(589)
10,147,522
Net income
(1) Refers to transaction occurred between the acquisition date and the takeover date of Banco Nossa Caixa (April to November/2009)
(2) Refers to 4th quarter 2009 transactions in Banco Votorantim. Unearned income from credit assignments by Banco Votorantim to Banco do Brasil were
eliminated, which resulted in a R$ 107,737 thousand reduction in consolidated net income (a R$ 188,319 drop in financial intermediation revenues, R$
5,254 thousand in Pasep / Cofins expenses, and R$ 75,328 thousand in income tax and social contribution expenses).
As of December 31, 2008, Banco Nossa Caixa and Banco Votorantim had the following balance:
R$ Thousand
Banco Nossa Caixa
Banco Votorantim
54,272,860
72,309,956
3,180,682
6,362,195
646,537
901,786
Assets
Shareholder’s Equity
Net income for 2008
6 – Cash and cash equivalents
R$ Thousand
Banco do Brasil
Total Cash
Local currency
Foreign currency
Investments in Gold
Short-term interbank investments (1)
Subject to repurchase agreements
Interbank deposits
Investments in foreign currency
12.31.2009
7,596,546
6,676,414
920,132
-42,105,965
14,362,844
24,039,500
3,703,621
12.31.2008
5,375,268
4,993,470
381,798
-62,364,097
31,450,195
28,866,068
2,047,834
BB-Consolidated
12.31.2009
7,842,770
6,799,390
1,033,480
9,900
30,032,212
18,186,491
8,053,192
3,792,529
12.31.2008
5,544,850
5,153,849
381,269
9,732
62,467,287
31,458,102
28,874,572
2,134,613
15
Notes to Financial Statements
Total cash and cash equivalents
49,702,511
67,739,365
37,874,982
68,012,137
(1) Refer to investments whose maturity is less than or equal to 90 days.
7 – Short-term Interbank Investments
a) Breakdown
R$ Thousand
Banco do Brasil
BB-Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
Money market
Sales pending settlement - held position
Financial Treasury Bills
National Treasury Bills
National Treasury Notes
Others securities - domestic
Others securities - Foreign
Sales pending settlement - financed position
Financial Treasury Bills
National Treasury Bills
National Treasury Notes
Others securities – Foreign
Sales pending settlement - sold position
Federal securities - Treasury
Interbank deposits
Investments in local currency
Investments in foreign currency
Total
134,937,621
14,362,844
1,772,231
804,732
11,785,881
--120,574,777
111,804,532
8,303,407
466,608
230
--39,229,677
33,845,063
5,384,614
174,167,298
95,151,703
31,450,195
24,060,768
1,338
7,388,089
--63,701,508
61,520,566
1,117,194
1,063,748
---44,120,890
41,986,277
2,134,613
139,272,593
144,173,860
18,220,295
1,878,624
2,189,355
14,118,511
-33,805
125,793,918
112,554,529
9,851,852
3,387,307
230
159,647
159,647
24,224,100
18,750,578
5,473,522
168,397,960
95,159,610
31,458,102
24,061,453
1,338
7,388,089
7,222
-63,701,508
61,520,566
1,117,194
1,063,748
---24,248,687
22,114,074
2,134,613
119,408,297
Current Assets
Non Current Assets
166,919,021
7,248,277
127,830,542
11,442,051
166,070,192
2,327,768
107,237,436
12,170,861
b) Income from short-term interbank deposits
R$ Thousand
Banco do Brasil
Income from Money Market
Held position
Financed position
Sold position
Income from interbank deposits(1)
Total
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
5,092,344
1,344,483
3,747,861
-552,413
5,644,757
10,850,522
3,221,993
7,628,529
-1,343,540
12,194,062
7,219,837
709,652
6,510,185
-1,077,542
8,297,379
5,528,723
1,518,145
3,996,503
14,075
288,688
5,817,411
11,390,684
3,479,991
7,896,618
14,075
718,416
12,109,100
7,216,772
709,670
6,507,102
-438,415
7,655,187
(1) Refer to income on the applications in Interbank deposits in local currency. The income on applications in Interbank deposits in foreign currency totaled
R$44,385 thousand at December 31, 2009 (R$120,182 thousand at December 31, 2008), which are recorded under Other Operating Income.
16
Notes to Financial Statements
8 – Securities and Derivative Financial Instruments
a) Securities
R$ Thousand
Banco do Brasil
12.31.2009
12.31.2008
Total
Market Value
Maturity in days
With
no maturity
0-30
31-180
181-360
over 360
Total
Market
Value
Cost
Unrealized
gain (loss)
Market
Value
Cost
Unrealized
gain (loss)
1 – Trading securities
Government bonds
Financial Treasury Bills
National Treasury Bills
9,688
----
19,736
19,736
-10,321
1,473,759
1,473,759
1,473,759
--
2,895,181
2,895,181
1,531,229
1,107,086
15,257,258
15,123,215
9,705,723
2,935,224
19,606,486
19,466,189
12,710,659
4,052,388
19,655,622
19,511,891
12,710,711
4,052,631
-----
16,855,740
16,804,091
4,529,939
5,780,146
17,087,621
17,038,040
4,526,917
5,828,363
-----
National Treasury Notes
Corporate bonds
Debentures
Promissory Notes
Shares in listed companies
-9,688
--9,688
9,415
-----
------
256,866
-----
2,482,268
134,043
134,043
---
2,703,142
140,297
135,918
-4,379
2,748,549
143,731
134,043
-9,688
------
6,494,006
51,649
49,649
6,682,760
49,581
47,581
----
2,000
2,000
--
2 - Securities available for sale
Government bonds
Financial Treasury Bills
National Treasury Bills
National Treasury Notes
Agricultural debt securities
74,876
------
85,739
13,468
378
11,260
-31
5,570,093
4,036,877
4,000,197
--408
4,521,384
4,093,996
560,323
2,987,377
544,899
1,397
47,837,261
40,453,633
30,897,059
1,546,002
4,525,330
9,076
57,880,134
48,280,005
35,459,266
4,502,914
5,017,154
11,572
58,089,353
48,597,974
35,457,957
4,544,639
5,070,229
10,912
209,219
317,969
(1,309)
41,725
53,075
(660)
36,772,916
32,723,285
23,250,478
2,525,431
3,716,478
12,223
36,938,599
32,884,916
23,250,285
2,517,102
3,682,020
10,651
165,683
161,631
(193)
(8,329)
(34,458)
(1,572)
Brazilian foreign debt securities
Foreign government bonds
Others
Corporate bonds
Debentures
Promissory notes– Commercial Papers
---74,876
---
-1,799
-72,271
---
36,272
--1,533,216
-1,159,916
---427,388
80,323
182,237
2,694,068
591,750
190,348
7,383,628
7,222,485
--
2,484,527
592,647
211,925
9,600,129
7,424,945
1,339,479
2,730,340
593,549
190,348
9,491,379
7,302,808
1,342,153
245,813
902
(21,577)
(108,750)
(122,137)
2,674
2,423,162
745,947
49,566
4,049,631
710,291
2,741,715
2,637,672
749,651
37,535
4,053,683
702,428
2,744,631
214,510
3,704
(12,031)
4,052
(7,863)
2,916
-17,647
725
56,504
---
-----70,883
-----283,784
-----155,703
29,674
------
30,385
15,001
2,211
33,122
-508,429
29,674
17,647
725
56,504
-510,370
(711)
2,646
(1,486)
23,382
-1,941
30,561
413
2,078
7,364
912
556,297
29,365
413
699
13,571
912
561,664
(1,196)
-(1,379)
6,207
-5,367
---
-1,388
83,722
5,794
-9,125
-131,469
83,419
163,138
83,722
147,776
303
(15,362)
3 - Securities held to maturity
Government bonds
Financial Treasury Bills
----
5,605,050
5,605,050
1,862
149,969
149,969
149,448
3,088,528
3,088,528
3,088,528
9,340,649
9,255,304
9,091,355
18,359,234
18,081,948
12,331,114
18,184,196
18,098,851
12,331,193
----
15,906,687
15,906,687
15,543,667
15,909,866
15,909,866
15,543,259
----
National Treasury Notes
National Treasury Bills
Brazilian foreign debt securities
Foreign government bonds
Others
Corporate bonds
-------
807,317
4,795,871
-----
--521
----
-------
19,083
-144,866
--85,345
829,207
4,795,191
126,436
--277,286
826,400
4,795,871
145,387
--85,345
-------
46,937
109,951
172,661
33,471
43,692
109,944
179,500
33,471
-----
69,535,343
69,936,086
165,683
Credit Notes
Quotas in investment funds
Quotas in Funds for Social Development
Shares in listed companies
Shares in restrict companies
Rural Product Bills -Commodities
Certificate of Deposits
Others
Others
Total
--
--
--
--
85,345
277,286
85,345
--
84,564
5,710,525
7,193,821
10,505,093
72,435,168
95,845,854
95,929,171
209,219
R$ Thousand
12.31.2009
12.31.2008
Market Value
Maturity in days
With
no maturity
0-30
Total
31-180
181-360
over 360
Market
Value
Cost
Total
Unrealized
gain (loss)
Cost
Market
Value
Unrealized
gain (loss)
Total by portfolio
84,564
5,710,525
7,193,821
10,505,093
72,435,168
95,845,854
95,929,171
209,219
69,535,343
69,936,086
Own portfolio
84,564
5,710,525
2,863,431
6,868,777
35,205,234
50,796,768
50,732,531
63,909
31,364,953
31,656,365
165,683
62,365
Subject to repurchase agreements
--
--
1,055,706
3,188,652
21,582,142
25,678,841
25,826,500
145,182
22,526,345
22,639,022
106,845
Deposits with the Brazilian Central Bank
--
--
3,271,071
441,930
14,527,499
18,239,914
18,240,500
819
14,009,610
14,006,718
(2,898)
Pledged in guarantee
--
--
3,613
5,734
1,120,293
1,130,331
1,129,640
(691)
1,634,435
1,633,981
(629)
R$ Thousand
12.31.2009
12.31.2008
Market Value
Maturity in years
Total by category
1 - Trading securities
2 - Securities available for sale
3 - Securities held to maturity
With
no maturity
Due in up
to one year
Due from
1 to 5 years
Total
Due from
5 to 10 years
Due after
10 years
Cost
Total
Market
Value
Market
Value
Cost
84,564
23,409,439
57,344,234
11,863,529
3,227,405
95,845,854
95,929,171
69,535,343
69,936,086
9,688
4,388,676
10,851,870
4,405,388
--
19,606,486
19,655,622
16,855,740
17,087,621
74,876
10,177,216
37,237,060
7,426,512
3,173,689
57,880,134
58,089,353
36,772,916
36,938,599
--
8,843,547
9,255,304
31,629
53,716
18,359,234
18,184,196
15,906,687
15,909,866
17
Notes to Financial Statements
R$ Thousand
12.31.2009
12.31.2008
Book Value
Book Value
Current
Non Current
Total
Total by portfolio
38,750,456
57,353,753
96,104,209
34,848,438
35,084,469
69,932,907
Own portfolio
29,778,301
21,131,525
50,909,826
24,194,172
7,465,983
31,660,155
Subject to repurchase agreements
5,239,743
20,584,267
25,824,010
8,571,019
14,061,216
22,632,235
Deposits with the Brazilian Central Bank
3,713,112
14,527,621
18,240,733
1,810,537
12,196,175
14,006,712
19,300
1,110,340
1,129,640
272,710
1,361,095
1,633,805
Pledged in guarantee
Current
Total
Non Current
R$ Thousand
12.31.2009
12.31.2008
Total by category
19,655,622
58,089,353
18,359,234
96,104,209
(175,038)
95,929,171
Trading Securities
Securities available for sale
Securities held to maturity
Carrying value of portfolio
Mark-to-market - Category 3
Market value of portfolio
20%
60%
19%
100%
17,087,621
36,938,599
15,906,687
69,932,907
3,179
69,936,086
24%
53%
23%
100%
R$ Thousand
BB-Consolidated
12.31.2009
12.31.2008
Market Value
Maturity in days
1 - Trading securities
With
no maturity
0-30
Total
Total
31-180
181-360
over 360
With
no maturity
Market Value
Unrealized
Gain/loss
With
no maturity
Market Value
Unrealized
Gain/loss
1,398,483
1,467,501
2,558,495
4,198,546
28,651,175
38,110,829
38,274,200
-- 25,391,984
26,135,804
--
11,716
1,181,948
1,742,689
4,029,542
25,716,532
32,516,057
32,682,427
-- 23,349,513
23,497,896
--
6,975
7,030
1,477,575
1,542,199
13,097,474
16,132,667
16,131,253
--
6,590,193
6,585,266
--
National Treasury Bills
--
210,321
122,434
1,323,195
5,437,424
7,085,711
7,093,374
--
6,775,555
6,814,729
--
National Treasury Notes
--
225,384
2,968
770,994
6,664,331
7,533,019
7,663,677
--
8,468,422
8,575,646
--
Agricultural debt securities
--
10,511
5,086
6,680
28,097
47,492
50,374
--
--
--
--
Government bonds
Financial Treasury Bills
Federal Government securities - other
--
--
--
--
--
--
--
--
1,489,074
1,497,575
--
Brazilian foreign debt securities
--
93,562
7,500
5,648
107,803
211,419
214,513
--
23,921
22,332
--
Foreign government bonds
--
14,069
7,485
380,826
222,545
626,320
624,925
--
2,348
2,348
--
4,741
621,071
119,641
--
158,858
879,429
904,311
--
--
--
--
1,386,767
285,553
815,806
169,004
2,934,643
5,594,772
5,591,773
--
2,042,471
2,637,908
--
2,757
44,337
10,304
63,781
1,255,611
1,369,764
1,376,790
--
722,000
952,757
--
--
48,461
271,645
--
--
319,116
320,106
--
52,531
52,531
--
Shares in listed companies
696,545
--
--
--
--
582,190
696,545
--
261,650
259,176
--
Quotas in investment funds
431,669
56,888
--
--
61,584
550,141
550,141
--
109,251
109,719
--
72,648
23,833
34,039
9,512
53,062
192,056
193,094
--
--
--
--
2,325
69,556
471,936
91,683
1,148,362
1,788,467
1,783,862
--
860,031
1,231,463
--
--
1,844
1,114
2,420
8,046
13,317
13,424
--
36,978
32,253
--
180,823
40,634
26,768
1,608
407,978
779,721
657,811
--
30
9
--
285,307
88,908
5,714,939
4,609,714
51,461,924
62,035,094
62,160,792
125,698 38,206,421
38,373,876
167,455
39,973
13,468
4,075,806
4,122,607
41,835,787
49,758,712
50,087,641
328,929 33,251,289
33,446,268
194,979
Financial Treasury Bills
--
378
4,039,126
568,958
31,248,818
35,858,772
35,857,280
(1,492) 23,619,133
23,618,537
(596)
National Treasury Bills
--
11,260
--
2,987,377
1,571,340
4,528,295
4,569,977
5,439,394
5,987,334
6,002,387
Others
Corporate bonds
Debentures
Promissory Notes
Rural Product Bills - Commodities
Certificate of deposit
Eurobonds
Others
2 - Securities available for sale
Government bonds
41,682
2,539,276
2,530,939
(8,337)
15,053
3,775,998
3,741,316
(34,682)
National Treasury Notes
--
--
--
562,993
Agricultural debt securities
--
31
408
1,397
9,076
11,572
10,912
(660)
12,223
10,651
(1,572)
Brazilian foreign debt securities
--
--
36,272
1,882
2,784,248
2,545,937
2,822,402
276,465
2,509,144
2,757,639
248,495
Foreign government bonds
--
1,799
--
--
592,564
593,433
594,363
930
745,949
749,651
3,702
39,973
--
--
--
190,347
233,369
230,320
(3,049)
49,566
37,535
(12,031)
Others
Corporate bonds
245,334
75,440
1,639,133
487,107
9,626,137
12,276,382
12,073,151
(203,231)
4,955,132
4,927,608
(27,524)
Debentures
--
623
47,059
90,402
8,395,981
8,674,870
8,534,065
(140,805)
1,348,711
1,324,715
(23,996)
Promissory Notes - Commercial Papers
--
--
1,177,503
182,237
7,110
1,364,005
1,366,850
2,845
2,741,715
2,744,631
2,916
Credit Notes
--
--
--
--
29,674
30,385
29,674
(711)
30,561
29,365
(1,196)
Quotas of Credit Assignment Investment
Funds (FIDC)
Quotas of participation funds
Quotas of Funds in Emerging Companies
Quotes of investment funds
Funds for Social Development
Shares in listed companies
--
--
1,024
--
--
1,024
1,024
--
3,229
3,225
(4)
--
--
--
--
334,451
327,597
334,451
6,854
97,455
100,148
2,693
(1,388)
--
--
--
--
12,004
14,480
12,004
(2,476)
3,400
2,012
26,279
--
--
--
--
27,229
26,279
(950)
35,926
42,414
6,488
725
--
--
--
--
2,211
725
(1,486)
2,078
699
(1,379)
6,655
85,023
--
--
--
--
43,096
85,023
41,927
11,650
18,305
127,695
--
--
--
--
163,828
127,695
(36,133)
2,118
2,436
318
1,771
--
--
--
--
8,508
1,771
(6,737)
8,509
1,723
(6,786)
Rural Product Bills - Commodities
--
70,883
283,784
155,703
--
508,429
510,370
1,941
556,297
561,664
5,367
Certificate of deposit
--
--
83,722
20,236
20,978
127,827
124,936
(2,891)
91,163
91,081
(82)
Eurobonds
--
--
--
5,970
32,985
38,955
38,955
--
--
--
--
3,841
3,934
46,041
32,559
792,954
943,938
879,329
(64,609)
22,320
5,190
(17,130)
Shares in close corporations
Quotes of a variable income fund is
Others
18
Notes to Financial Statements
3 - Held to Maturity
--
5,790,998
178,652
3,348,668
12,961,363
22,438,805
22,279,681
-- 20,122,856
20,101,912
--
Government bonds
--
5,790,998
178,652
3,348,668
12,876,018
22,161,519
22,194,336
-- 20,122,856
20,101,912
--
Financial Treasury Bills
--
1,862
178,131
3,088,581
9,092,665
12,361,163
12,361,239
-- 15,700,936
15,700,668
--
National Treasury Notes
--
958,283
--
165,353
3,559,183
4,670,990
4,682,819
--
3,900,406
3,873,828
--
National Treasury Bills
--
4,830,853
--
94,727
79,288
5,002,907
5,004,868
--
315,186
314,249
--
Títulos da Dívida Agrária
--
--
--
7
16
23
23
--
196
196
--
Brazilian foreign debt securities
--
--
521
--
144,866
126,436
145,387
--
172,661
179,500
--
Foreign government bonds
--
--
--
--
--
--
--
--
33,471
33,471
--
--
--
--
--
85,345
277,286
85,345
--
--
--
--
--
--
--
--
85,345
277,286
85,345
--
--
--
--
1,683,790
7,347,407
8,452,086
12,156,928
93,074,462 122,584,728
122,714,673
125,698 83,721,261
84,611,592
167,455
Corporate bonds
Others
Total
R$ Thousand
12.31.2009
12.31.2008
Market Value
Maturity in days
With
no maturity
0-30
31-180
Total
181-360
Cost
Market
Value
over 360
Total
Unrealized
gain (loss)
Cost
Market
Value
Unrealized
gain (loss)
Total by portfolio
1,683,790
7,347,407
8,452,086
12,156,928
93,074,462
122,584,728
122,714,673
125,698
83,721,261
84,611,592
167,455
Own portfolio
Subject to repurchase agreements
Deposits with the Brazilian Central Bank
1,679,797
3,993
--
7,207,903
139,504
--
3,961,061
1,099,118
3,271,686
8,137,876
3,190,526
441,967
53,785,562
22,454,994
14,693,720
74,768,787
26,734,553
18,413,608
74,772,199
26,888,135
18,407,373
1,403
151,106
(5,999)
45,543,973
22,526,346
14,009,611
46,319,344
22,644,653
14,006,719
64,139
106,845
(2,898)
--
--
120,221
386,559
2,140,186
2,667,780
2,646,966
(20,812)
1,641,331
1,640,876
(631)
Pledged in guarantee
R$ Thousand
12.31.2009
12.31.2008
Market Value
Maturity in years
Total by category
1 - Trading securities
2 - Securities available for sale
3 - Securities held to maturity
With
no maturity
1,683,790
1,398,483
285,307
--
Due in up
to one year
Due from
1 to 5 years
27,956,421
8,224,542
10,413,561
9,318,318
70,530,851
21,858,476
38,654,609
10,017,766
Total
Due from
5 to 10 years
Due after
10 years
15,720,486
5,998,279
9,499,196
223,011
Cost
6,823,125
794,420
3,308,119
2,720,586
122,584,728
38,110,829
62,035,094
22,438,805
Total
Market
Value
Cost
Market
Value
122,714,673
38,274,200
62,160,792
22,279,681
83,721,261
25,391,984
38,206,421
20,122,856
84,611,592
26,135,804
38,373,876
20,101,912
R$ Thousand
12.31.2009
12.31.2008
Book value
Current
Non Current
Book Value
Total
Current
Non Current
Total
By Portfolio
58,215,628
64,658,169
122,873,797
40,355,844
44,276,692
84,632,536
Own portfolio
Subject to repurchase agreements
Deposits with the Brazilian Central Bank
47,295,209
5,956,127
3,817,049
27,638,367
20,929,518
14,590,558
74,933,576
26,885,645
18,407,607
29,695,948
8,576,649
1,810,537
16,651,310
14,061,216
12,196,175
46,347,258
22,637,865
14,006,712
1,147,243
1,499,726
2,646,969
272,710
1,367,991
1,640,701
Pledged in guarantee
R$ Thousand
12.31.2009
Total by category
Trading Securities
Securities available for sale
Securities held to maturity
Carrying value of portfolio
Mark-to-market - Category 3
Market value of portfolio
38,274,200
62,160,792
22,438,805
122,873,797
(159,124)
122,714,673
12.31.2008
31%
51%
18%
100%
26,135,804
38,373,876
20,122,856
84,632,536
(20,944)
84,611,592
31%
45%
24%
100%
b) Results from securities
R$ Thousand
Banco do Brasil
Applications of Interbank Liquidity
Fixed income securities
Variable income securities
Total
2S2009
5,644,757
3,249,055
1,158
8,894,970
2009
12,194,062
7,197,733
1,044
19,392,839
BB-Consolidated
2008
8,297,379
8,941,407
3,927,187
21,165,973
2S2009
5,817,411
4,566,267
20,973
10,404,651
2009
12,109,100
9,220,192
20,332
21,349,624
2008
7,655,187
9,095,064
3,942,004
20,692,255
19
Notes to Financial Statements
c) Reclassification of Securities
During 2009, with the intention to adjust to the management strategy of Banco do Brasil, were made the
following reclassifications of securities in the "held to maturity" for the "Available for Sale", with the aim of
adapting the strategy of managing the Bank of Brazil, was made to reclassify 4,952,690 public securities and
private securities 9,900,740, incorporated Banco Nossa Caixa, the book value of R$ 6.080 thousand (market
value of R$ 6,138 thousand) and R$ 410 thousand (market value of R$ 386 thousand), respectively, no
effect on the outcome. Moreover, considering the projections and scenarios outlined for the management of
their assets and liabilities as well as the natural choice of products by customers in its portfolio and the
impact of the crisis in international financial markets and the Brazilian economy, as the prerogative in the
item 16.9 of Annex I to Circular Letter No. 379 of December 19, 2008, Brasilprev, affiliate of BB Insurance
reclassified the bonds in investment funds amounting to R$ 191,007 thousand (market value of R$ 204,348
thousand ), no effect on the outcome.
d) Derivative financial instruments
The Bank uses derivative financial instruments to manage, at the consolidated level, its positions and to
meet clients' needs, classifying its own positions as either Hedge (market risk) or Trading, both with limits of
approval. This information is made available to the departments responsible for pricing, trading, controls and
calculation of results, which are separate departments and within the Bank.
In the options market, asset or long positions have the Bank as holder, while liability or short positions have
the Bank as writer.
The models used to manage risks with derivatives are reviewed periodically and decisions are made in
accordance with the best risk/return ratio, estimating possible losses based on the analysis of
macroeconomic scenarios.
The Bank uses appropriate tools and systems to manage the derivatives. Trading in new derivatives,
whether standardized or not, is subject to a formal risk analysis prior to any transaction.
The hedge strategy of the equity positions is in line with the macroeconomic analyses and is approved by the
Executive Board of Directors.
Risk analysis of the subsidiaries is undertaken on an individual basis and its management is undertaken at
the consolidated level. The Bank uses statistical methods and simulations to measure the risks of its
positions, including derivatives, using value at risk, sensitivity and stress analysis models.
Risks
The main risks inherent to derivative financial instruments resulting from the business dealings of the bank
and its subsidiaries are credit, market and operating risks, all of which are similar to those related to other
types of financial instruments.
Credit risk is reflected by the exposure to losses in the event of default by a counterparty to fulfill its part in
the operation. Exposure to credit risk in futures contracts is minimized due to daily settlement in cash. The
swap contracts, recorded in Cetip are subject to credit risk if the counterparty is not able or willing to perform
its contractual obligations, while the swap contracts registered in the BM & F are not subject to the same risk,
given that the Bank operations in Brazil that have the same bag as guarantor.
Total credit exposure in swaps at December 31, 2009 is R$ 1,664,115 thousand (R$ 1,543,722 thousand at
December 31, 2008).
Market risk is the exposure created by a potential fluctuation in interest rates, exchange rates, quotation of
goods, and prices quoted on markets for shares and other securities, and varies according to the type of
product, the volume of operations, the term and conditions of the contract and the underlying volatility.
20
Notes to Financial Statements
The operating risk is the probability of financial losses resulting from failures or inadequacy of people,
processes and / or systems, or factors such as catastrophes or criminal activities.
Breakdown of the Portfolio of Derivatives for Trading by Index
R$ Thousand
Banco do Brasil
By index
BB-Consolidated
12.31.2009
Counterparty
Notional
value
Cost
12.31.2008
Market Value
Notional
value
12.31.2009
Market
Value
Cost
Notional
value
Cost
12.31.2008
Market Value
Notional
value
Cost
Market Value
Exchange trading
Futures contracts
Purchase commitments
Interbank deposit
Currencies
T-Note
Index
Foreign exchange coupon
Libor
Commodities
SCC (1 )
B
B
B
B
B
IF
B
B
9,455,522
266,247
3,050,767
--167,933
5,858,885
-111,690
(361,209)
(5,548)
(363,111)
-(314)
(35,537)
-(238)
43,539
(361,209)
(5,548)
(363,111)
-(314)
(35,537)
-(238)
43,539
5,144,305
1,747,851
3,078,331
--80,545
237,578
---
369,608
(30,800)
419,143
-(6)
30,057
14,845
(28)
(63,603)
369,608
(30,800)
419,143
-(6)
30,057
14,845
(28)
(63,603)
14,730,585
2,180,381
4,206,988
197,354
18,832
1,299,024
5,858,885
-969,121
(361,209)
(5,548)
(363,111)
-(314)
(35,537)
-(238)
43,539
(361,209)
(5,548)
(363,111)
-(314)
(35,537)
-(238)
43,539
5,144,305
1,747,851
3,078,331
--80,545
237,578
---
369,608
(30,800)
419,143
-(6)
30,057
14,845
(28)
(63,603)
369,608
(30,800)
419,143
-(6)
30,057
14,845
(28)
(63,603)
Sales commitments
Interbank deposit
Currencies
BGI
Index
Foreign exchange coupon
Libor
Commodities
SCC (1 )
9,787,449
2,271,052
231,663
--709,139
6,571,602
3,993
--
(10,748)
8,518
(37,847)
-(142)
69,039
-448
(29,268)
(10,748)
8,518
(37,847)
-(142)
69,039
-448
(29,268)
9,062,708
8,077,289
48,125
--605,955
325,673
5,666
(630,074)
(268,295)
(292,183)
-(6)
(52,843)
(16,690)
(57)
(630,074)
(268,295)
(292,183)
-(6)
(52,843)
(16,690)
(57)
33,571,644
--
--
B
B
B
B
B
IF
B
B
20,956,312
938,605
37
-3,892,713
6,571,602
344,699
867,676
---------
---------
9,062,708
8,077,289
48,125
--605,955
325,673
5,666
(630,074)
(268,295)
(292,183)
-(6)
(52,843)
(16,690)
(57)
(630,074)
(268,295)
(292,183)
-(6)
(52,843)
(16,690)
(57)
Forward operations
Asset position
Termo de títulos
Currencies
Currencies
Currencies
B
B
C
IF
3,288,699
37,760
-3,250,939
--
185,408
37,760
-147,648
--
130,195
37,760
-92,435
--
1,323,982
86,170
1,237,812
---
654,491
86,170
568,321
---
752,428
86,170
666,258
---
3,340,965
37,760
-3,250,939
52,266
185,805
37,760
-147,648
397
130,591
37,760
-92,434
397
1,323,982
86,170
1,237,812
---
654,491
86,170
568,321
---
752,428
86,170
666,258
---
Liability position
Termo de títulos
Currencies
Currencies
Currencies
3,454,614
(37,762)
-3,492,376
--
(365,811)
(37,762)
-(328,049)
--
(237,453)
(37,762)
-(199,691)
--
3,627,657
(86,182)
3,713,839
---
(163,174)
(86,182)
(76,992)
---
(155,875)
(86,182)
(69,693)
---
3,506,880
(366,030)
(237,673)
B
B
C
IF
(37,762)
-3,492,376
52,266
(37,762)
-(328,049)
(219)
(37,762)
-(199,692)
(219)
3,627,657
(86,182)
3,713,839
---
(163,174)
(86,182)
(76,992)
---
(155,875)
(86,182)
(69,693)
---
Options market
Long position
Flexible Currency Options
Flexible Currency Options
Other financial assets
Other financial assets
B
C
B
C
3,335
3,335
----
106
106
----
1,190
1,190
----
8,471,551
5,197,702
348
3,273,501
--
222,805
157,327
4
65,474
--
194,375
126,083
5
68,287
--
7,260
3,335
--3,925
364
106
--258
1,787
1,190
--597
Sales options
Flexible Currency Options
Flexible Currency Options
Other financial assets
Other financial assets
Other financial assets
(1,134,671)
(1,064,528)
(1,075,655)
(14,612,454)
(3,077,020)
(3,118,028)
B
C
B
IF
C
(1,134,671)
(1,064,528)
(1,075,655)
-----
-----
-----
(6,897,303)
(2,152,406)
(3,073,527)
-(2,489,218)
(114,192)
(589,620)
(36,781)
-(2,336,427)
(81,892)
(660,039)
(39,670)
-(2,336,427)
(1,130,746)
(1,134,671)
--3,925
--
Over-the-counter trading
Swap contracts
Asset position
Interbank deposit
Interbank deposit
Foreign currency
Foreign currency
Prefixed
Prefixed
IPCA
IPCA
IGPM
IGPM
Commodities
5,789,647
1,966,082
2,276,302
131,561
759,687
639,565
-16,450
-----
495,928
105,134
360,965
3,007
22,960
2,804
-1,058
-----
493,185
104,885
351,317
4,072
27,356
3,350
-2,205
-----
5,652,791
817,992
642,857
797,379
3,168,128
207,583
-18,852
-----
1,287,659
10,573
39,390
165,429
1,071,492
189
-586
-----
1,289,961
13,171
14,910
164,164
1,095,533
1,048
-1,135
-----
10,490,970
776,937
880,677
C
IF
C
IF
C
IF
C
IF
C
IF
C
2,481,497
3,026,790
286,634
862,666
2,342,053
698,947
9,842
501,862
17,004
240,104
23,571
182,948
415,493
2,274
25,303
18,305
55,338
347
10,150
26,847
30,070
9,862
178,016
401,377
7,639
30,210
75,888
87,041
1,375
20,556
31,350
37,363
9,862
Liability position
Interbank deposit
Interbank deposit
Foreign currency
Foreign currency
Prefixed
Prefixed
TMS
Referential rate
IGPM
IPCA
Commodities
8,422,593
1,729,248
2,738,406
543,643
1,184,106
1,411,272
-390,462
425,456
----
(486,871)
(70,099)
(297,057)
(33,544)
9,070
(78,305)
-(5,253)
(11,683)
----
(501,247)
(69,775)
(292,125)
(33,722)
(21,787)
(65,734)
-(6,421)
(11,683)
----
23,655,535
4,920,564
96,446
3,085,466
2,965,110
13,700
-11,927,809
646,440
----
(2,194,280)
(2,205,395)
14,218,331
(1,031,067)
(1,108,800)
C
IF
C
IF
C
IF
C
C
IF
IF
C
(177,961)
(3,255)
(177,360)
(2,884)
(1,130,262)
(1,133,925)
(767,582)
(59)
-(104,410)
(10,751)
----
(776,051)
(14)
-(104,410)
(10,751)
----
1,699,597
4,423,418
734,496
2,908,508
2,189,594
410,370
390,462
425,456
566,200
462,500
7,730
(12,705)
(378,626)
(59,626)
(457,795)
(84,298)
(4,340)
(5,253)
(11,683)
(15,738)
1,121
(2,124)
(12,803)
(420,064)
(60,036)
(488,041)
-74,850
(24,466)
(6,421)
(11,683)
(7,707)
(516)
(2,213)
Others Securities
Asset position
Foreign currency
8,089,892
8,089,892
150,715
150,715
144,252
144,252
2,220,305
2,220,305
220,971
220,971
234,000
234,000
9,053,091
245,071
238.952
IF
7,909,507
149,892
143.773
348
4
5
--
--
--
348
---
4
---
5
---
(1,346,844) (1,287,324) (1,357,383)
(39,246)
(1,056)
(695)
(1,307,598) (1,286,268) (1,356,688)
----------
5,602,939
817,992
642,857
797,379
3,168,128
176,583
------23,649,348
4,914,377
96,446
3,085,466
2,965,110
13,700
-11,927,809
646,440
----
2,194,066
2,194,066
(1,064,786) (1,076,252)
(1,064,528) (1,075,655)
----(258)
(597)
---
1,286,881
10,560
39,390
165,429
1,071,492
10
-------
1,288,469
13,171
14,910
164,164
1,095,533
691
-------
(2,189,790) (2,200,895)
(177,961)
(177,350)
(3,255)
(2,884)
(1,130,262) (1,133,925)
(767,582)
(776,051)
(59)
(14)
--(104,410)
(104,410)
(6,261)
(6,261)
-------
220,541
220,541
21
233,354
233,354
Notes to Financial Statements
Foreign currency
Liability position
Foreign currency
Foreign currency
Others
Others
C
--
--
--
--
--
--
1,143,584
95,179
95,179
(47,316)
(47,016)
-(300)
--
(47,921)
(47,621)
-(300)
--
3,766,287
3,003,380
--762,907
(375,054)
(371,938)
--(3,116)
(400,849)
(397,733)
--(3,116)
8,496,336
(105,199)
(105,832)
IF
C
IF
7,297,615
7,210,342
-87,273
--
7,215,124
1,193,939
87,273
--
(48,237)
(56,662)
(300)
--
(48,869)
(56,663)
(300)
--
-3,765,836
3,002,929
--762,907
-(374,955)
(371,839)
--(3,116)
-(400,752)
(397,636)
--(3,116)
Counterpart: (B) Stock Exchange, (IF) Financial Institution, (C) Client.
(1) Foreign exchange swap with regular adjustments.
Breakdown of the portfolio of derivative by maturity
R$ Thousand
Banco do Brasil
By Maturity
BB-Consolidated
12.31.2009
Notional
value
12.31.2008
Market
value
Cost
Notional
value
12.31.2009
Market
value
Cost
Notional
value
12.31.2008
Market
value
Cost
Notional
value
Market
value
Cost
Futures contracts
Purchase commitments
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
More than 5 years
9,455,522
99,062
2,825,276
2,333,681
2,370,039
889,013
938,451
--
---------
--------- --
5,144,305
1,353,270
2,291,586
50,969
895,763
417,041
135,676
--
---------
---------
14,730,585
906,000
2,847,882
2,374,059
2,547,568
1,806,855
3,812,461
435,760
---------
---------
5,144,305
1,353,270
2,291,586
50,969
895,763
417,041
135,676
--
---------
---------
Sales commitments
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
More than 5 years
9,787,449
1,192,776
-778,310
782,712
1,693,423
5,248,320
91,908
---------
---------
9,062,708
--20,103
212,537
1,758,054
7,034,086
37,928
---------
---------
33,571,644
2,549,090
1,973,867
1,885,364
2,818,236
5,556,727
17,863,013
925,347
---------
---------
9,062,708
--20,103
212,537
1,758,054
7,034,086
37,928
---------
---------
37,760
37,760
--
37,760
37,760
--
37,760
37,760
--
86,170
86,170
--
86,170
86,170
--
86,170
86,170
--
90,026
37,760
52,266
38,158
37,760
397
38,158
37,760
397
86,170
86,170
--
86,170
86,170
--
86,170
86,170
--
Liability position
Up to 30 days
31 to 60 days
(37,762)
(37,762)
--
(37,762)
(37,762)
--
(37,762)
(37,762)
--
(86,182)
(86,182)
--
(86,182)
(86,182)
--
(86,182)
(86,182)
--
14,504
(37,762)
52,266
(37,981)
(37,762)
(219)
(37,981)
(37,762)
(219)
(86,182)
(86,182)
--
(86,182)
(86,182)
--
(86,182)
(86,182)
--
Currency futures
Asset position
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
3,250,939
563,903
416,544
390,667
697,857
592,319
589,649
147,648
49,089
25,073
11,020
29,848
25,943
6,675
92,435
46,656
18,425
4,469
13,879
8,493
513
1,237,812
565,371
225,582
152,448
55,401
237,246
1,764
568,321
82,149
72,802
75,610
99,972
177,645
60,143
666,258
82,246
74,852
79,417
113,189
212,334
104,220
3,250,939
563,903
416,544
390,667
697,857
592,319
589,649
147,647
49,088
25,073
11,020
29,848
25,943
6,675
92,433
46,654
18,425
4,469
13,879
8,493
513
1,237,812
565,371
225,582
152,448
55,401
237,246
1,764
568,321
82,149
72,802
75,610
99,972
177,645
60,143
666,258
82,246
74,852
79,417
113,189
212,334
104,220
Liability position
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
3,492,376
1,035,288
792,696
449,921
789,453
356,863
68,155
(328,049)
(39,904)
(37,568)
(25,577)
(65,491)
(67,160)
(92,349)
(199,691)
(38,867)
(34,437)
(19,608)
(50,478)
(36,365)
(19,936)
3,713,839
659,542
376,961
415,269
617,835
1,029,508
614,724
(76,992)
(25,020)
(10,027)
(11,142)
(12,592)
(12,633)
(5,578)
(69,693)
(23,793)
(10,257)
(9,831)
(10,755)
(14,465)
(592)
3,492,376
1,035,288
792,696
449,921
789,453
356,863
68,155
(328,049)
(39,904)
(37,568)
(25,577)
(65,491)
(67,160)
(92,349)
(199,692)
(38,868)
(34,437)
(19,608)
(50,478)
(36,365)
(19,936)
3,713,839
659,542
376,961
415,269
617,835
1,029,508
614,724
(76,992)
(25,020)
(10,027)
(11,142)
(12,592)
(12,633)
(5,578)
(69,693)
(23,793)
(10,257)
(9,831)
(10,755)
(14,465)
(592)
348
4
5
3,335
106
1,190
8,471,551
222,805
194,375
7,260
364
1,787
174
174
-----
2
2
-----
2
3
-----
----3,335
--
----106
--
----1,190
--
2,959,069
418,816
38,717
922,601
992,784
3,139,564
47,923
12,736
2,649
31,566
88,973
38,958
19,453
5,770
1,862
25,479
90,283
51,528
---3,925
3,335
--
---258
106
--
---597
1,190
--
(1,346,844)
(1,287,324)
(1,357,383)
(1,134,671)
(1,064,528)
(1,075,655)
(14,612,454)
(3,077,020)
(3,118,028)
(1,130,746)
(1,064,786)
(1,076,252)
(187,614)
(202,190)
(395,547)
(185,246)
(368,828)
(7,419)
(169,306)
(200,699)
(370,200)
(173,850)
(366,226)
(7,043)
(176,673)
(209,968)
(390,442)
(185,940)
(385,434)
(8,926)
(399,746)
(455,404)
(246,163)
(10,190)
(1,668)
(21,500)
(372,479)
(454,103)
(216,204)
(136)
(106)
(21,500)
(373,017)
(459,844)
(218,634)
(15)
(64)
(24,081)
(3,974,802)
(693,525)
(465,958)
(1,719,300)
(1,541,899)
(6,216,970)
(209,574)
(205,018)
(370,976)
(475,673)
(452,624)
(1,363,155)
(190,403)
(212,523)
(390,884)
(486,597)
(463,897)
(1,373,724)
(399,746)
(455,404)
(246,163)
(6,265)
(1,668)
(21,500)
(372,479)
(454,103)
(216,204)
(394)
(106)
(21,500)
(373,017)
(459,844)
(218,634)
(612)
(64)
(24,081)
Swap contracts
Assets
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
5 to 10 years
5,789,647
816,923
215,593
558,971
663,783
1,245,192
2,071,635
217,550
495,928
214,905
7,779
27,267
78,798
27,944
137,884
1,351
493,185
214,444
7,516
27,584
78,396
26,921
132,812
5,512
5,652,791
986,439
460,599
269,482
1,027,706
1,001,533
1,907,032
--
1,287,659
320,743
111,237
77,926
243,045
347,869
186,839
--
1,289,961
319,969
112,415
78,324
264,508
346,546
168,199
--
10,490,970
964,466
464,018
646,323
1,191,456
2,918,254
3,785,155
640,360
776,937
244,138
19,492
29,286
125,483
125,691
325,339
26,570
880,677
243,529
25,478
30,674
141,899
181,151
346,002
30,867
5,602,939
985,354
460,599
269,482
1,027,706
969,216
1,890,582
--
1,286,881
320,701
111,237
77,926
243,045
347,661
186,311
--
1,288,469
319,924
112,415
78,324
264,508
346,119
167,179
--
Liabilities
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
5 to 10 years
8,422,593
1,440,843
573,491
343,006
1,282,452
2,649,000
2,003,271
130,530
(486,871)
(203,263)
(42,821)
(15,017)
(54,090)
(82,720)
(89,325)
365
(501,249)
(203,127)
(41,817)
(13,925)
(50,605)
(82,039)
(105,868)
(3,868)
23,655,535
1,479,211
7,859,415
506,314
2,145,810
6,679,606
4,751,559
233,620
(2,194,280)
(353,813)
(235,624)
(83,172)
(435,811)
(445,252)
(629,955)
(10,653)
(2,205,395)
(353,575)
(237,966)
(83,537)
(440,736)
(449,560)
(628,846)
(11,175)
14,218,331
1,657,485
942,997
662,929
1,619,461
3,748,092
5,233,890
353,480
(1,031,067)
(167,572)
(55,939)
(19,996)
(93,790)
(181,053)
(506,755)
(5,962)
(1,108,800)
(174,522)
(56,458)
(19,477)
(90,800)
(185,531)
(556,297)
(25,715)
23,649,348
1,479,211
7,859,415
506,314
2,145,810
6,679,606
4,745,372
233,620
(2,189,790)
(349,323)
(235,624)
(83,172)
(435,811)
(445,252)
(629,955)
(10,653)
(2,200,895)
(349,085)
(237,966)
(83,537)
(440,736)
(449,560)
(628,836)
(11,175)
Operações de Termo
Termo de Títulos
Asset position
Up to 30 days
31 to 60 days
Options market
Sold position
Ações
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
For sale position
Ações
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
Others Securities
22
Notes to Financial Statements
Assets
Up to 30 days
31 to 60 days
61 a 90 dias
91 a 180 dias
181 to 360 days
1 to 5 years
5 to 10 years
8,089,892
2,258,411
951,439
3,309,171
570,194
390,176
540,683
69,818
150,715
28,867
25,822
54,985
29,634
2,741
8,387
279
144,252
25,878
24,574
53,900
28,650
2,584
8,387
279
2,220,305
1,188,886
243,400
488,990
80,003
81,085
137,941
--
220,971
26,567
15,985
26,679
127,725
9,757
14,258
--
234,000
34,168
18,751
28,367
127,913
10,650
14,151
--
9,053,091
2,483,818
1,410,188
3,316,649
655,529
451,178
665,911
69,818
245,071
37,581
56,634
55,792
31,990
4,466
58,329
279
238,952
34,936
55,386
54,707
31,006
4,309
58,329
279
2,194,066
1,162,647
243,400
488,990
80,003
81,085
137,941
--
220,541
26,137
15,985
26,679
127,725
9,757
14,258
--
233,354
33,522
18,751
28,367
127,913
10,650
14,151
--
Liabilities
Up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
1 to 5 years
5 to 10 years
7,297,615
951,444
49,361
842,354
1,534,281
1,281,570
2,638,605
--
(47,316)
(4,142)
(1,878)
(5,341)
(8,189)
(19,334)
(8,432)
--
(47,921)
(4,258)
(1,802)
(5,235)
(8,202)
(19,891)
(8,533)
--
3,766,287
476,257
631,655
893,507
1,260,195
266,617
237,244
812
(375,054)
(113,352)
(48,921)
(49,211)
(143,280)
(7,162)
(13,078)
(50)
(400,849)
(117,932)
(53,072)
(52,048)
(155,193)
(9,476)
(13,078)
(50)
8,496,336
1,515,405
134,164
1,030,640
1,651,684
1,457,563
2,706,880
--
(105,199)
(11,490)
(3,888)
(24,986)
(17,047)
(34,732)
(13,056)
--
(105,832)
(11,632)
(3,812)
(24,880)
(17,061)
(35,290)
(13,157)
--
3,765,836
475,864
631,655
893,507
1,260,195
266,559
237,244
812
(374,955)
(113,255)
(48,921)
(49,211)
(143,280)
(7,160)
(13,078)
(50)
(400,752)
(117,836)
(53,072)
(52,048)
(155,193)
(9,475)
(13,078)
(50)
Breakdown of the credit derivatives portfolio
R$ Thousand
Banco do Brasil
12.31.2009
Notional
value
BB-Consolidado
12.31.2008
Market
value
Notional
value
12.31.2009
Market
value
Notional
value
12.31.2008
Market
value
Notional
value
Market
value
Asset position - Transferred risk
Credit swaps - Derivatives with Banks
--
--
--
--
4,460,954
18,489
--
--
Liability position - Received risk
Credit swaps - Derivatives with Banks
--
--
--
--
4,775,870
(112,926)
--
--
Breakdown of margin given as guarantee for transactions with derivative financial instruments
R$ Thousand
Banco do Brasil
Government bonds
BB-Consolidated
12.31.2009
12.31.2008
12.31. 2009
12.31. 2008
589,281
----589,281
967,531
----967,531
594,669
755,078
203,261
544,018
4,410
2,101,436
967,531
----967,531
LFT
NTN
LTN
Foreign Government bonds
Outros
Total
Breakdown of the portfolio of derivatives designated as market risk hedge
The Bank, in order to hedge against possible fluctuations in interest and exchange rates issued securities on
the international capitals market in the amount R$ 350 million, contracted derivative operations in the forma
of currency and interest rate swaps (Cross Currency Interest Rate Swaps), with the same volume, term and
interest rates. The hedge was assessed as effective at December 31, 2009, in accordance with the
provisions of Central Bank Circular 3082 dated January 30, 2002, which require evidence of hedge
effectiveness between 80% and 125%. The breakdown of the portfolio is as follows:
R$ Thousand
Banco do Brasil
By index
12.31.2009
Notional
value
Counterparty
Cost
BB-Consolidated
12.31.2008
Market
value
Notional
value
Cost
12.31.2009
Market
value
Notional
value
Cost
12.31.2008
Market
value
Notional
value
Cost
Market
value
Over-the-counter trading
Swap contracts
Liability position
Foreign currency and interest
IF
350,000
28,441
(40,777)
350,000
(86,825)
(61,286)
350,000
28,441
(40,777)
350,000
(86,825)
(61,286)
350,000
28,441
(40,777)
350,000
(86,825)
(61,286)
350,000
28,441
(40,777)
350,000
(86,825)
(61,286)
Counterparty: (IF) Financial Institution.
R$ Thousand
Banco do Brasil
By maturity
12.31.2009
BB-Consolidated
12.31.2008
12.31.2009
12.31.2008
23
Notes to Financial Statements
Notional
value
Market
value
Cost
Notional
value
Market
value
Cost
Notional
value
Market
value
Cost
Notional
value
Market
value
Cost
Swap contracts
Liabilities
5 to 10 years
350,000
28,441
(40,777)
350,000
(86,825)
(61,286)
350,000
350,000
28,441
(40,777)
350,000
(86,825)
(61,286)
350,000
28,441
(40,777)
28,441
(40,777)
350,000
(86,825)
(61,286)
350,000
(86,825)
(61,286)
Derivative financial instruments divided into current and long-term
R$ Thousand
Banco do Brasil
12.31.2009
BB-Consolidated
12.31.2008
12.31.2009
12.31.2008
Current
Long-term
Current
Long-term
Current
Long-term
Current
Long-term
ASSETS
Forward operations
Options market
Swap contracts
Forward contracts
Credit swaps
Total
129,682
5
354,861
135,586
-620,134
513
-138,324
8,666
-147,503
648,208
1,190
1,121,762
219,849
-1,991,009
104,220
-168,199
14,151
-286,570
130,078
142,847
622,871
180,344
5,398
513
51,528
257,806
58,608
13,091
1,081,538
381,546
648,208
1,787
1,121,290
219,203
-1,990,488
104,220
-167,179
14,151
-285,550
LIABILITIES
Forward operations
Options market
Swap contracts
Forward contracts
Credit swaps
Hedge Derivatives
Total
(217,517)
(1,348,457)
(391,513)
(39,388)
--(1,996,875)
(19,936)
(8,926)
(109,736)
(8,533)
-(40,777)
(187,908)
(155,283)
(1,051,574)
(1,565,374)
(387,721)
--(3,159,952)
(592)
(24,081)
(640,021)
(13,128)
-(61,286)
(739,108)
(217,737)
(1,744,304)
(526,788)
(92,675)
(35,507)
-(2,617,011)
(19,936)
(1,373,724)
(582,012)
(13,157)
(77,419)
(40,777)
(2,107,025)
(155,283)
(1,052,171)
(1,560,884)
(387,624)
--(3,155,962)
(592)
(24,081)
(640,011)
(13,128)
-(61,286)
(739,098)
e) Results from Derivatives
R$ Thousand
BB-Consolidated
Banco do Brasil
Swap
Forward
Options
Future
Derivatives
Others
Total
2S2009
(156,468)
55,319
(68,271)
(327,480)
-(172,546)
(669,446)
2009
312,220
(307,275)
(145,104)
(777,459)
-(262,066)
(1,179,684)
2008
(1,534,085)
784,650
(77,751)
41,235
29
(497,053)
(1,282,975)
2S2009
(211,023)
59,418
(80,831)
(263,957)
3,579
(217,308)
(710,122)
2009
255,337
(303,176)
(157,663)
(713,936)
3,579
(306,762)
(1,222,621)
2008
(1,535,054)
784,650
(77,751)
41,235
29
(496,389)
(1,283,280)
f) Equity Valuation Adjustment – Securities and Derivatives recognized in the Stockholders’ equity
R$ Thousand
Semester
Securities available for sale
Bank
Affiliates and subsidiaries
Tax effects
Total
2009
2008
06.30.2009 Net change in 12.31.2009
Balance
the semester Balance
06.30. 2008 Net change in 12.31.2008
Balance
the semester Balance
31,380
180,529
4,338
216,247
Period
Securities available for sale
Bank
Affiliates and subsidiaries
Tax effects
Total
(89,281)
125,729
17,469
53,917
(57,901)
306,258
21,807
270,164
(128,143)
130,714
55,420
57,991
78,289
86,752
(24,303)
140,738
(49,854)
217,466
31,117
198,729
2009
2008
12.31.2008 Net change in 12.31.2009
Balance
the period
Balance
12.31.2007 Net change in 12.31.2008
Balance
the period
Balance
(49,854)
217,466
31,117
198,729
(8,047)
88,792
(9,310)
71,435
(57,901)
306,258
21,807
270,164
39,099
399,395
(88,692)
349,802
(88,953)
(181,929)
119,809
(151,073)
(49,854)
217,466
31,117
198,729
24
Notes to Financial Statements
9 – Interbank - Credit Linked
a) Credit Linked
R$ Thousand
Banco do Brasil
BB-Consolidated
12.31. 2009
12.31.2008
12.31. 2009
12.31.2008
Credit Linked
Compulsory reserves - resources
Mandatory payment – savings account
Mandatory payment – funds from farm loans
SFH – Housing Finance System
Mandatory payment – funds from microfinance
National Treasury – Rural Credit
Mandatory payment – additional liabilities (1)
Total
11,878,270
11,941,112
204,008
1,635,416
143,711
148,157
-25,950,674
12,435,864
8,285,370
-61,217
81,472
10,826
20,856
20,895,605
11,919,022
11,941,112
204,008
1,635,416
215,625
148,157
-26,063,340
12,439,265
8,285,370
-61,217
136,633
10,826
20,856
20,954,167
Current assets
Non current assets
25,950,674
--
20,895,605
--
26,063,340
--
20,954,167
--
(1) As Bacen Circular 3426/2008, was amended in order to comply with the requirement for additional in-kind due to additional federal government
securities.
b) Income on Compulsory Deposits
R$ mil
Banco Brasil
Income Credit Linked to Central Bank (1)
Savings Bank gold Circular No. 3093/2002
Additional requirement CMN Resolution No. 3607/2008
Additional requirement Circular Letter No. 3144/2002
Other
Income Credit Linked
Income Credit Linked to Rural Credit
Devaluation Credit Linked
Total
2S2009
306,040
-2,668
303,372
-9,090
9,946
967
326,043
BB-Consolidated
2009
2008
628,865 1,906,576
-- 1,163,981
27,216
-601,649
740,445
-2,150
9,113
19
11,281
3,207
970
-650,229 1,909,802
2S2009
368,164
-2,668
303,372
62,124
49,336
9,946
161
427,607
2009
730,210
-27,216
601,649
101,345
74,603
11,281
179
816,273
2008
1,906,576
1,163,981
-740,445
2,150
19
3,207
-1,909,802
(1) As of 12.01.2008, the additional chargeability became linked to the federal public as Circular No. 3419/2008.
10 – Loans
a) Breakdown of the Loan Portfolio, Leasing and Loans Classified as "Other Receivables"
R$ Thousand
Bando do Brasil
BB-Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
Loans
242,842,464
189,692,175
261,783,097
190,881,563
Loans and bills discounted
124,255,540
84,912,155
129,828,585
85,249,181
Financing
67,023,572
53,988,308
80,858,134
54,983,289
Rural and agribusiness financing
66,887,223
63,682,917
67,166,529
63,682,917
1,610,578
145,261
1,610,578
145,261
Real estate financing
25
Notes to Financial Statements
Securities Financing
Financing of Infrastructure and development
(Allowance for loan losses)
Other receivables with loan characteristics
--
653
--
3,930
--
3,930
---
(16,938,379)
(13,037,119)
(17,684,659)
(13,179,085)
15,378,421
17,061,138
15,727,764
17,129,398
Advances on foreign exchange contracts
7,967,810
11,142,855
8,192,660
11,142,855
Credit card operations
7,747,968
6,022,594
7,747,968
6,022,594
88,322
71,173
90,972
71,173
247,848
403,212
397,675
471,619
Guarantees honored
Sundry
(Provision for other losses)
(673,528)
(578,696)
(701,511)
(578,843)
Lease operations
60,775
54,105
4,700,563
2,967,571
Lease operations
60,775
54,105
4,931,773
3,038,702
--
--
(231,210)
(71,131)
258,281,659
206,807,418
282,211,424
210,978,532
(Allowance for lease losses)
Total
b) Loan and lease operations income
R$ Thousand
Banco do Brasil
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
Loan Income
19,178,139
36,425,296
33,031,551
22,050,178
40,515,241
33,220,577
Loans and bills discounted
11,612,368
21,838,644
19,716,324
13,663,735
25,024,527
19,843,626
Financing
3,298,882
6,393,804
5,385,169
3,928,203
7,027,890
5,381,054
Rural and agribusiness financing
2,330,238
4,614,922
4,602,191
2,363,679
4,662,144
4,602,191
Recovery of loans and lowered injury (Note 10.j)
1,443,921
2,576,780
1,703,866
1,533,294
2,691,780
1,714,384
173,957
350,157
313,415
198,146
374,347
313,415
4,009
8,700
7,753
4,105
8,796
7,753
314,764
642,289
1,302,833
359,016
725,757
1,358,154
Advances on foreign exchange contracts
Guarantees honored
Other
Lease Operations Income
Total
25,359
50,880
54,241
1,321,716
2,310,112
1,165,857
19,203,498
36,476,176
33,085,792
23,371,894
42,825,353
34,386,434
c) Breakdown of the Loan Portfolio by Sector, Including Operations with Loan Characteristics
Classified as "Other Receivables"
R$ Thousand
Banco do Brasil
BB-Consolidated
12.31.2009
%
12.31.2008
%
12.31.2009
%
12.31.2008
%
PUBLIC SECTOR
6,234,130
2.3
3,921,827
1.8
6,388,065
2.1
4,040,429
1.8
Government
2,716,210
1.0
2,736,429
1.2
2,716,210
0.9
2,753,911
1.2
Direct administration
2,556,027
0.9
2,672,853
1.2
2,556,027
0.8
2,690,335
1.2
160,183
0.1
63,576
0.0
160,183
0.1
63,576
0.0
3,517,920
1.3
1,185,398
0.6
3,671,855
1.2
1,286,518
0.6
4,405
-
8,183
-
--
-
--
-
2,046,213
0.7
818,092
0.4
2,126,049
0.6
925,509
0.4
Indirect administration
Business entities
BB Group
Industry
Commerce
185
-
9,758
-
185
-
9,758
-
151,226
0.1
340,716
0.2
151,288
0.1
342,602
0.2
1,313,488
0.5
8,649
-
1,391,930
0.5
8,649
-
2,403
-
--
-
2,403
-
--
-
269,659,436
97.7
216,501,406
98.2
294,440,739
97.9
220,767,162
98.2
Rural
54,489,403
19.8
51,009,253
23.1
54,768,700
18.3
51,009,253
22.7
Industry
79,466,709
28.8
70,557,500
32.0
84,798,895
28.2
71,909,303
32.0
Commerce
30,881,818
11.2
24,393,053
11.1
32,175,132
10.7
24,990,952
11.1
Financial services
1,044,364
0.4
732,671
0.3
1,010,506
0.3
742,646
0.3
Private Individuals
66,367,114
24.0
40,285,308
18.3
81,295,241
27.0
41,628,501
18.5
1,456,778
0.5
62,905
0.0
1,456,778
0.5
62,905
-
Financial services
Other services
Housing Companies
PRIVATE SECTOR
Housing
26
Notes to Financial Statements
Other services
Total
35,953,250
13.0
29,460,716
13.4
38,935,487
12.9
30,423,602
13.6
275,893,566
100.0
220,423,233
100.0
300,828,804
100.0
224,807,591
100.0
d) Loan portfolio by risk level and maturity, including operations with loan characteristics classified
as "Other receivables"
R$ Thousand
Banco do Brasil
Performing loans
AA
12.31.2009
12.31.2008
Total
portfolio
Total portfolio
A
B
C
D
E
F
G
H
01 to 30
4,940,857 11,179,163
3,918,003
1,400,495
475,774
93,498
26,126
13,108
99,224
22,146,248
19,463,634
31 to 60
4,582,235
6,674,969
3,341,031
1,010,521
351,167
45,515
19,353
15,101
130,549
16,170,441
11,745,619
61 to 90
5,387,406
3,701,123
3,147,673
741,745
247,657
32,147
11,273
6,613
43,522
13,319,159
9,643,234
91 to 180
9,358,054
9,817,904
8,684,700
3,051,470
771,026
128,077
42,276
27,068
172,355
32,052,930
27,102,936
5,796,120 1,595,967
225,601
77,294
48,199
374,271
46,627,198
41,546,532
35,942,947 33,912,103 40,854,490 11,096,982 3,838,144
986,854
399,041
269,579 1,967,174
129,267,314
97,361,538
Installments falling due
181 to 360
Over 360
8,276,747 14,963,224 15,269,775
Installments overdue
Up to 14
106,545
days
Others
(1)
Subtotal
168,656
109,648
94,922
45,107
15,672
9,139
4,990
23,169
577,848
522,747
--
--
--
--
--
--
--
--
2,643,182
4,097,480
71,237,973 80,417,142 75,325,320 23,192,255 7,324,842 1,527,364
584,502
384,658 2,810,264
262,804,320
211,483,720
2,643,182
R$ Thousand
Non-performing loans
12.31.2009
AA
A
B
C
D
E
F
G
H
Total
portfolio
12.31.2008
Total
portfolio
Installments falling due
01 to 30
--
--
166,265
191,183
152,267
150,444
131,306
113,404
865,627
1,770,496
1,449,243
31 to 60
--
--
35,886
40,320
44,417
32,994
28,392
26,602
143,308
351,919
268,283
61 to 90
--
--
25,493
32,503
30,144
29,031
26,214
21,872
125,742
290,999
223,901
91 to 180
--
--
67,713
90,026
91,523
92,902
76,681
64,259
388,011
871,115
723,680
181 to 360
--
--
120,344
177,650
188,287
172,251
144,788
131,877
727,077
1,662,274
1,144,202
Over 360
--
--
176,938
516,682
483,078
409,635
315,493
270,610
1,580,550
3,752,986
2,462,591
Installments overdue
01 to 14
--
--
9,942
14,762
13,751
12,804
9,529
8,063
46,296
115,147
98,594
15 to 30
--
73
105,728
55,865
68,155
38,809
21,637
19,089
113,118
422,474
407,421
31 to 60
--
--
6,500
113,787
73,471
64,967
44,798
37,050
196,385
536,958
445,785
61 to 90
--
--
115
7,200
94,932
62,210
49,073
39,458
212,105
465,093
369,180
91 to 180
--
--
165
2,621
14,112
120,211
163,672
176,668
768,354
1,245,803
749,479
181 to 360
--
--
30
--
--
21,526
1,301
1,844
1,563,809
1,588,510
568,448
Over 360
--
--
--
--
--
--
--
--
15,472
15,472
28,706
Subtotal
--
73
715,119
1,242,599 1,254,137 1,207,784 1,012,884
910,796
6,745,854
13,089,246
8,939,513
9,556,118 275,893,566
220,423,233
Total
71,237,973
80,417,215 76,040,439 24,434,854 8,578,979 2,735,148 1,597,386 1,295,454
R$ Thousand
BB-Consolidated
Performing loans
12.31.2009
27
12.31.2008
Notes to Financial Statements
AA
A
B
C
D
E
F
G
H
Total
portfolio
Total
portfolio
Installments falling due
01 to 30
5,182,708 11,932,372
4,145,532
1,480,850
494,084
94,547
26,520
21,587
108,701
23,486,901
19,610,006
31 to 60
4,816,427
7,265,280
3,492,871
1,072,458
364,873
46,628
19,614
15,303
131,756
17,225,210
11,868,669
61 to 90
5,522,058
4,241,845
3,282,567
779,839
261,923
33,171
11,496
6,791
44,861
14,184,551
9,796,709
91 to 180
9,719,264 11,395,020
8,949,859
3,121,802
801,362
131,029
42,925
27,568
175,441
34,364,270
27,473,144
8,816,843 17,693,672 15,793,768
5,910,012
1,643,794
230,758
78,407
48,999
379,617
50,595,870
42,152,931
3,990,800 1,047,077
402,143
272,049
181 to 360
Over 360
38,700,816 42,410,870 42,274,021 11,333,042
2,073,226 142,504,044 100,157,767
Installments overdue
Up to 14 days
Other (¹)
Subtotal
106,549
175,758
110,142
95,395
46,054
15,843
9,178
5,009
23,254
587,182
524,646
2,643,182
--
--
--
--
--
--
--
--
2,643,182
4,097,480
7,602,890 1,599,053
590,283
397,306
75,507,847 95,114,817 78,048,760 23,793,398
2,936,856 285,591,210 215,681,352
(1) Operations with third party risk tied to Government Funds and Programs, mainly Pronaf, Procera, FAT, BNDES and FCO. They include the amount of
overdue installments in the total amount of R$ 165 million, which comply with rules defined in each program for reimbursement with the managers and do
not imply a credit risk for the Bank.
R$ Thousand
Non-performing loans
AA
A
B
C
D
E
F
G
H
12.31.2009
12.31.2008
Total
portfolio
Total
portfolio
Installments falling due
01 to 30
--
--
201,137
214,026
165,056
158,231
137,528
118,932
894,212
1,889,122
1,453,400
31 to 60
--
--
66,072
58,305
53,176
37,535
31,842
31,238
156,287
434,455
272,440
61 to 90
--
--
52,583
48,994
38,342
33,005
29,339
24,464
137,302
364,029
227,416
91 to 180
--
--
145,347
135,508
113,765
104,110
87,080
75,901
420,575
1,082,286
733,880
181 to 360
--
--
253,549
253,546
226,243
191,842
160,026
145,819
783,488
2,014,513
1,161,785
Over 360
--
--
495,091
694,808
575,417
461,655
358,736
345,535
1,700,912
4,632,154
2,595,579
Installments overdue
01 to 14
--
--
12,958
23,189
17,836
14,585
10,846
9,107
51,567
140,088
99,854
15 to 30
--
73
138,799
65,881
72,519
41,368
23,487
25,969
120,932
489,028
410,007
31 to 60
--
--
13,807
144,895
82,899
69,421
48,255
40,028
209,912
609,217
448,407
61 to 90
--
--
115
11,874
105,488
66,855
55,799
47,802
225,377
513,310
370,989
91 to 180
--
--
165
4,163
19,154
128,339
172,639
200,925
810,813
1,336,198
752,798
181 to 360
--
--
30
--
--
37,152
8,662
17,294
1,640,310
1,703,448
570,955
Over 360
--
--
--
--
--
--
--
--
29,746
29,746
28,729
Subtotal
--
73
1,379,653
1,655,189 1,469,895 1,344,098 1,124,239 1,083,014
7,181,433
15,237,594
9,126,239
75,507,847
95,114,890
79,428,413
Total
25,448,587 9,072,785 2,943,151 1,714,522 1,480,320 10,118,289 300,828,804 224,807,591
e) Allowance for loan losses by risk level, including operations with loan characteristics classified as
"Other receivables"
R$ Thousand
Level of
Risk
AA
A
B
C
D
E
%
Provision
0
0.5
1
3
10
30
Value of
loans
71,237,973
80,417,215
76,040,439
24,434,854
8,578,979
2,735,148
Banco do Brasil
12.31.2009
Value of
Additonal (1)
allowance
allowance
--402,086
537,279
760,404
138,278
733,046
165,229
857,898
269,590
820,544
882,156
Total
allowance
-939,365
898,682
898,275
1,127,488
1,702,700
Value of
loans
62,931,745
41,934,746
70,889,768
24,155,373
7,951,963
2,969,718
12.31.2008
Value of
allowance
-209,673
708,898
724,661
795,196
890,915
28
Notes to Financial Statements
F
50
G
70
H
100
Subtotal
Additional allowance abroad
Additional allowance in Brazil
Total
1,597,386
1,295,454
9,556,118
275,893,566
--275,893,566
798,693
906,818
9,556,118
14,835,607
--14,835,607
481,568
302,200
-2,776,300
--2,776,300
Value of
loans
75,507,847
95,114,890
79,428,413
25,448,587
9,072,785
2,943,151
1,714,522
1,480,320
10,118,289
300,828,804
--300,828,804
BB-Consolidated
12.31.2009
Value of
Additonal (1)
allowance
allowance
--475,574
543,045
794,284
138,278
763,458
165,229
907,279
269,590
882,945
882,156
857,261
481,568
1,036,225
302,199
10,118,289
-15,835,315
2,782,065
----15,835,315
2,782,065
1,280,261
1,209,018
9,556,118
17,611,907
--17,611,907
1,230,378
1,416,260
6,943,282
220,423,233
--220,423,233
615,189
991,382
6,943,282
11,879,196
29,435
1,707,184
13,615,815
R$ Thousand
Level of
%
Risk
Provision
AA
0
A
0.5
B
1
C
3
D
10
E
30
F
50
G
70
H
100
Subtotal
Additional allowance abroad
Additional allowance in Brazil
Total
Total
allowance
-1,018,619
932,562
928,687
1,176,869
1,765,101
1,338,829
1,338,424
10,118,289
18,617,380
--18,617,380
12.31.2008
Value of
Value of
loans
allowance
63,857,947
-42,669,500
213,347
72,996,665
729,966
24,403,040
732,091
8,151,466
815,147
2,988,363
896,509
1,237,927
618,964
1,421,482
995,037
7,081,201
7,081,201
224,807,591
12,082,262
-39,497
-1,707,300
224,807,591
13,829,059
(1) Refers to the additional provision to the minimum required by CMN Resolution No. 2682/1999, up from the experience of management, by simulation on
the loan portfolio, considering the history of default of operations in accordance with the good banking practice. It aims to cover variations in unexpected
losses, due to the expectation of an increase in default rates due to reflections of the worsening global economic and financial crisis, as well as other events
not fully captured by the model's risk classification.
f) Changes in the allowance for doubtful loans, doubtful lease receivable and other doubtful
receivables, with loan characteristics
R$ Thousand
Banco do Brasil
2S2009
Amount
Allowance
Opening balance
Provision/(reversal)
Exchange variation on allowances - foreign
Compensation as losses
Added Values (1)
Closing balance
13,499,424
5,600,117
(10,232)
(5,225,749)
972,047
14,835,607
2009
Additional
Provision
Existent
Allowance
Amount
Allowance
2,753,355 16,252,779
(264,435)
5,335,682
-(10,232)
-- (5,225,749)
287,380
1,259,427
2,776,300 17,611,907
11,879,197
10,575,447
(28,397)
(8,562,687)
972,047
14,835,607
2008
Additional
Provision
Existent
Allowance
Total
1,736,618 13,615,815
752,302 11,327,749
-(28,397)
-- (8,562,687)
287,380
1,259,427
2,776,300 17,611,907
10,167,306
8,463,646
12,074
(5,027,211)
-13,615,815
R$ Thousand
Banco do Brasil
2S2009
Amount
Allowance
Opening balance
Provision/(reversal)
Exchange variation on allowances - foreign
Compensation as losses
Added Values (1)
Closing balance
14,891,673
6,049,591
(22,945)
(5,779,183)
696,179
15,835,315
2009
Additional
Provision
Existent
Allowance
Amount
Allowance
2,867,342 17,759,015
(85,277)
5,964,314
-(22,945)
-- (5,779,183)
-696,179
2,782,065 18,617,380
12,082,262
11,381,078
(61,045)
(9,273,388)
1,706,408
15,835,315
2008
Additional
Provision
Existent
Allowance
Total
1,746,797 13,829,059
927,629 12,308,707
-(61,045)
-- (9,273,388)
107,639
1,814,047
2,782,065 18,617,380
10,313,369
8,519,170
47,243
(5,050,723)
-13,829,059
(1) Refers to balances arising from the acquisition of Banco Nossa Caixa occurred in March 2009 and participation in Banco Votorantim occurred in
September 2009.
g) Changes in the allowance for other doubtful receivables, without loan characteristics
R$ Thousand
Banco do Brasil
2S2009
2009
BB-Consolidated
2008
2S2009
2009
29
2008
Notes to Financial Statements
Opening balance
939,568
769,198
574,171
1,023,190
797,869
585,295
Provision/(reversal)
(85,666)
86,711
87,204
(86,972)
87,554
86,638
Exchange variation on allowances - foreign
(163)
(969)
1,094
(163)
(969)
1,094
Compensation as losses / Other settings
(470)
(1,671)
106,729
9,498
(1,732)
111,771
Added values(1)
Closing balance
56,361
56,361
--
34,718
97,549
13,071
909,630
909,630
769,198
980,271
980,271
797,869
(1) Refers to balances arising from the acquisition of Banco Nossa Caixa occurred in March 2009, participation in Banco Votorantim occurred in September
2009 and the inclusion of non-financial enterprises consolidated in March 2008.
h) Leasing portfolio by maturity
R$ Thousand
Banco do Brasil
BB-Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
(1)
23,195
38,976
1,975,351
1,266,736
1 to 5 Years
37,580
15,129
2,939,741
1,729,174
--
--
16,681
42,792
60,775
54,105
4,931,773
3,038,702
Up 1 year
Over 5 years
Total Present Value
(1) Includes amounts related to installments overdue.
i) Income from Leasing Operations
R$ Thousand
Banco do Brasil
Lease revenue
Leasing
Operating leases
Lease expenses
Leasing
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
25,359
50,880
54,241
1,321,716
2,310,112
1,165,857
25,359
50,880
54,228
1,321,192
2,308,530
1,163,336
--
--
13
524
1,582
2,521
(22,015)
(44,342)
(46,577)
(961,050)
(1,663,342)
(852,352)
(838,143)
(22,015)
(44,342)
(46,573)
(953,506)
(1,646,300)
Operating leases
--
--
(4)
(300)
(909)
(1,658)
Loss on disposal of leased assets
--
--
--
(6,964)
(15,542)
(11,597)
Other costs of leases
Total
--
--
--
(280)
(591)
(954)
3,344
6,538
7,664
360,666
646,770
313,505
j) Supplementary information
R$ Thousand
Banco do Brasil
Renegotiated loans
Recovery of loans written off as loss(1)
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
10,732,892
20,127,897
13,243,677
10,859,356
20,355,896
13,245,325
1,443,921
2,576,780
1,703,866
1,533,294
2,691,780
1,714,384
(1) Recorded in income in Revenue from Loans, pursuant to CMN Resolution 2836/2001, Of this total, in 2009, R$ 57,571 thousand (book value - R$
39,011 thousand) refer to loans cession to individuals and corporate entities. In 2008, these amounts totaled R$ 64,286 thousand (book value - R$ 39,732
thousand).
11 – Other Receivables
a) Specific credits
These are credits from the Federal Treasury of R$ 931,845 thousand (R$845,887 thousand at December 31,
2008) for the extension of terms of rural financing as determined by Law 9138/1995.
b) Sundry
Banco do Brasil
12.31.2009
12.31.2008
BB-Consolidated
12.31.2009
12.31.2008
30
Notes to Financial Statements
Tax credit (note 26.a)
(1)
Sundry debtors from escrow deposits
Actuarial Assets CVM 371(Note 28.g)
(2)
Notes and credits receivable - credit card operations
Income tax and social contribution on net income to offset
Notes and credits receivable - other
Sundry debtors - Brazil
Parity Fund Assets (Note 28g)
Advances to Credit Guarante or Fund (FGC)
Notes and credits receivable - Federal Treasury
Advances on and prepayment of salaries
Purchase of assets receivable
Sundry debtors - foreign
Other
Total
20,206,935
20,076,982
12,655,345
7,911,276
6,802,424
4,413,235
2,342,653
1,778,366
955,693
793,727
222,970
223,576
30,938
364,951
78,779,071
16,071,248
17,004,869
7,793,671
6,130,646
3,529,824
2,216,543
2,058,195
2,195,802
1,063,035
374,904
206,579
293,352
41,685
385,063
59,365,416
21,909,801
21,209,340
12,655,345
7,911,276
7,407,346
7,084,658
2,722,568
1,778,366
955,693
793,727
229,878
223,577
32,383
399,446
85,313,404
16,499,482
18,006,940
7,793,671
6,130,646
3,972,656
2,911,852
1,809,367
2,195,802
1,063,035
374,904
216,876
293,355
41,983
314,054
61,624,623
Current Assets
Non Current Assets
27,747,561
51,031,510
19,854,665
39,510,751
31,167,511
54,145,893
20,799,150
40,825,473
(1) Includes value of R$ 11,752,804 thousand (R$ 10,998,898 thousand on 12.31.2008) in BB-bank and the BB-Consolidated, referring to judicial deposits
related to the lawsuit of income tax and social contribution ( Note 25.C). It also includes the value of R$ 8,266,094 thousand (R$ 5,807,327 thousand on 12.31.
2008) on BB bank and R$ 9,392,161 thousand (R$ 6,804,880 thousand at 31.12.2008) in BB Consolidated, referring to security deposit requirements for labor,
civil and tax (Note 31.c).
(2) Includes the installments falling due on credit card purchases in installments payable to shopkeepers, in the amount of R$ 3,398,166 thousand
(R$ 2,661,833 thousand at December 31, 2008).
12 – Foreign exchange portfolio
a) Breakdown
R$ Thousand
Banco do Brasil
12.31.2009
Assets
Other Receivables
Forward foreign exchange purchases pending settlement
Bills of exchange and time drafts in foreign currency
Receivables from sales of foreign exchange
(Advances received in local currency)
Foreign currency receivables
Income receivable on advances granted and financed imports
12.31.2008
BB-Consolidated
12.31.2009
12.31.2008
8,480,791
7,911,582
79,758
12,353,989
(12,034,235)
5,629
164,068
20,913,621
16,683,836
104,101
10,012,642
(6,115,676)
7,348
221,370
8,671,052
8,077,670
79,758
12,379,924
(12,046,972)
5,629
175,043
20,913,621
16,683,836
104,101
10,012,642
(6,115,676)
7,348
221,370
8,480,791
20,913,621
8,671,052
20,913,621
Other liabilities
Forward foreign exchange sales pending settlement
Financed imports - contracted exchange
Foreign exchange purchase liabilities
(Advances on foreign exchange contracts)
Foreign currency payables
Unearned income on advances granted
12,106,915
11,372,666
(11,026)
8,465,559
(7,737,233)
11,025
5,924
15,870,660
12,317,084
(14,623)
14,388,411
(10,838,585)
14,408
3,965
12,173,988
11,398,606
(23,585)
8,658,303
(7,938,549)
73,289
5,924
15,964,485
12,317,084
(14,623)
14,388,411
(10,838,585)
108,233
3,965
Current Liabilities
12,106,915
15,870,660
12,173,988
15,964,485
Foreign exchange portfolio, net
(3,626,124)
5,042,961
(3,502,936)
4,949,136
1,513,521
351,645
741,775
266,261
1,524,184
353,947
741,944
267,676
Current Assets
Liabilities
Memorandum accounts
Credit opened for imports
Confirmed export credit
31
Notes to Financial Statements
b) Foreign exchange results
R$ Thousand
Banco do Brasil
Foreign exchange income
Foreign exchange expenses
Foreign exchange results
2S2009
3,412,124
(2,772,056)
640,068
BB-Consolidated
2009
2008
8,131,691 11,124,317
(7,472,970) (10,654,553)
658,721
469,764
2S2009
3,680,090
(3,009,057)
2009
8,417,821
(7,731,904)
2008
11,144,993
(10,680,839)
671,033
685,917
464,154
13 – Other Assets
a) Assets not for use / Others
R$ Thousand
Banco do Brasil
Assets in special regime
Buildings
Vehicles
Material in stock
Property
Machinery and Equipment
Others
Subtotal Other Assets
(Provision for devaluations)
Total
Current Assets
BB-Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
160,705
80,073
172,079
51,619
160,998
80,507
172,372
51,301
612
765
51,281
20,743
19,217
18,787
7,400
19,319
544
11,656
40,705
18,787
8,174
47,579
544
12,431
3,416
3,249
3,537
3,359
290,210
(166,105)
124,105
259,231
(154,360)
104,871
363,989
(175,968)
188,021
308,329
(170,297)
138,032
124,105
104,871
188,021
138,032
b) Prepaid Expenses
R$ Thousand
Banco do Brasil
BB-Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
Contracts for providing banking services
Insurance selling expenses
(1)
Commissions for credit intermediation
(2)
Personnel expenses
Others
Total
1,501,834
731,102
1,409,162
731,102
-52,893
72,911
-30,738
155,035
307,048
175,296
72,911
42,112
30,738
155,035
158,433
1,786,071
32,382
949,257
205,692
2,170,109
159,143
1,118,130
Current Assets
Non Current Assets
1,150,798
635,273
646,874
302,383
1,342,437
827,672
779,007
339,123
(1) Commissions paid to retailers - financing of vehicles.
(2) It basically refers to the benefits of the Workers’ Meal Program.
32
Notes to Financial Statements
14 – Investments
a) BB – Banco do Brasil
R$ thousand
Discrimination
Capital Held
Net Equity
Book Value
Number /
Type of Participat
Shares (in
ion %
thousands)
12.31.2009
Income of Equity
12.31.2008
Operational
Change
Currency
2009
2008
Subsidiaries in Brazil
Banco Nossa Caixa S.A .(1)
--
--
--
--
4,900,236
--
39,207
--
39,207
--
9,300
21,325
398,158 ON
100,00
21,325
21,342
7,538
--
7,538
6,569
BB Administradora de Consórcios S.A.
14,100
16,920
14 ON
100,00
16,920
16,920
43,095
--
43,095
36,648
BB Corretora de Seguros e Administradora de Bens S.A.
26,918
33,578
1,000 ON
100,00
33,578
33,573
94,660
--
94,660
72,786
103,142
130,143
100,000 ON
100,00
130,143
126,370
417,043
--
417,043
415,252
BB Banco de Investimento S.A. (2)
46,455
396,509
3,249 ON
100,00
396,509
1,817,697 2,121,040
--
2,121,040
1,535,852
BB Leasing S.A. - Arrendamento Mercantil
61,860
25,842
3,000 ON
100,00
25,842
43,289
(17,447)
--
(17,447)
(10,706)
BB Banco Popular do Brasil S.A.
173,271
18,519
568 ON
100,00
18,519
22,834
(12,436)
--
(12,436)
2,082
BESC Financeira S.A.- Bescredi
15,473
18,874
296,797 ON
99,58
18,795
18,715
787
--
787
129
9,847 10,168,625 ON
99,62
9,810
7,903
76
--
76
(24)
BB Administradora de Cartões de Crédito S.A.
BB Gestão de Recursos - Distribuidora de Títulos e Valores
Mobiliários S.A.
BESC Distribuidora de Títulos e Valores Mobiliários S.A. Bescval
BESC S.A. Arrendamento Mercantil - BESC Leasing
Nossa Caixa Capitalização S.A. (3)
Nossa Caixa S.A. - Administradora de Cartões de Crédito (3)
Cobra Tecnologia S.A . (4)
BB Seguros Participações S.A. (5)
BB Aliança Participações S.A.
(6)
5,857
17,969
19,578
16,318 ON
99,00
19,382
19,343
252
--
252
181
5,400
5,476
5,400 ON
100,00
5,476
--
25
--
25
--
10,000
10,364
100,00
10,364
--
51
--
51
--
107,267
46,025
10,000 ON
22,654 ON
22,680 PN
99,94
44,744
--
(61,250)
--
(61,250)
348
592,251
594,604
53,221 ON
100,00
594,604
--
40,752
--
40,752
--
964,493
1,031,928
102,513 ON
100,00
1,031,928
--
89,792
--
89,792
--
3,544,909
7,120,412
50,00
3,774,777
--
46,999
--
46,999
--
50,00
32,029
--
1,818
--
1,818
--
Jointly Affiliates in Brazil
Banco Votorantim S.A. (7)
BV Participações S.A.
(8)
60,423
33,356,791 ON
7,412,620 PN
15,105 ON
80,311
15,106 PN
Affiliates in Brazil
Cadam S.A. (4)
Cia. Hidromineral Piratuba (9)
Cia. Catarinense de Assessoria e Serviços - CCA (10)
Santa Catarina Seguros e Previdência
(11)
Mapfre Nossa Caixa Vida e Previdência S.A. (3) (4)
183,904
214,097
4,762 PN
21,64
46,331
53,181
(6,851)
--
(6,851)
(12,567)
2,047
12,355
63,931 ON
16,19
2,087
1,975
109
--
109
(10)
780
474
48,13
228
228
--
--
--
--
--
--
260 ON
520 PN
--
--
--
2,483
637
--
637
75
50,000
89,549
20,000 ON
--
4,798
--
4,798
--
2,185,853 2,810,695
--
2,810,695
2,046,615
49,00
Subtotal Subsidiaries / Affiliates in Brazil
43,879
11,177,506
Subsidiaries Abroad
BAMB-Brasilian American Merchant Bank
419,476
656,043
241,023 ON
100,00
656,043
790,995
55,855
(193,284)
(137,429)
210,803
83,122
218,620
188 ON
100,00
218,620
120,096
7,708
(61,261)
(53,553)
32,643
--
74,781
1,000 ON
100,00
74,781
98,003
1,872
(25,095)
(23,222)
27,057
8,702
16,652
5,000 ON
100,00
16,652
3,120
15,183
--
15,183
(2,615)
Ganhos / (perdas) cambiais nas agências
--
--
--
(762,200)
(762,200)
708,177
Increase / decrease in PL from other movements
--
--
78
--
78
5,962
966,096
1,012,214
80,696
(1,041,840)
(961,143)
982,027
3,198,067 2,891,391
(1,041,840)
1,849,552
3,028,642
Banco do Brasil AG. Viena (Áustria) (12)
BB Leasing Company Ltd.
BB Securities LLC
Subtotal – Subsidiaries abroad
Total Investments in the country and abroad
12,143,602
Others Investments
Investments for tax incentives
Title property
18,742
17,800
58
447
Shares and Quotes
57,962
57,045
Others Investments
21,895
3,195
Others participations Abroad
10,436
10,601
Total of other investments
109,093
89,088
Provision for losses
(69,828)
(54,236)
Total of Investments
12,182,867
3,232,919
(1) Goodwill on acquisition of Banco Nossa Caixa, built on 11.30.2009. The result of equivalence refers to the period from April to November/2009 (Note 5).
(2) On 30.09.2009, the capital of BB Investment Bank has been reduced from $ 1,542,944 thousand, due to spin off its holdings in Alliance in Brazil,
Brasilcap Brasilprev, and Brasilveículos Brasilsaúde to BB and Insurance BB Alliance (see items 5 and 6 below).
(3) Company of Banco Nossa Caixa, built on 11.30.2009.
(4) The information relates to the period of December/2008 the November/2009.
(5) Company of the developer portion of the spun BB Banco de Investimento, represented by the shares in Brasilcap Brasilprev, and Brasilveículos
Brasilsaúde.
(6) Enterprise developer portion of the spun BB Banco de Investimento, represented by the participation in the Alliance of Brazil.
(7) includes in the book value of 12.31.2009, the amount of R$ 214,571 thousand relating to goodwill in the acquisition on 09.28.2009.
33
Notes to Financial Statements
(8) Includes, in the book value of 12.31. 2009, the amount of R$ 8,127 thousand, relating to negative goodwill on the acquisition on 09.28.2009.
(9) The information relates to the period of november/2008 to October/2009.
(10) Company in liquidation court, not assessed by MEP.
(11) The Bank of Brazil has sold shares of Santa Catarina Insurance and Pensions for the Alliance of Brazil, in May/2009.
(12) On 01.01.2009, was made an investment of R$ 149.7 million (EUR 46.3 million) in Bank of Brazil AG. Vienna, due to absorption of the subsidiary
Lisbon.
b) BB-Consolidated
R$ thousand
Discrimination
Capital Held
Net Equity
Book Value
Income of Equity
Number /
Type of Participat
Shares (in
ion %
thousands)
09.30.2009
09.30.2008
Operational
Change
Currency
3Q2009
3Q2008
Shares of BB Bank Multiple
Subsidiaries in Brazil
Goodwill on acquisition of Banco Nossa Caixa
--
--
--
--
4,900,236
--
--
--
--
--
--
--
--
--
--
--
--
--
--
240.818
Ágio na aquisição do Banco Votorantim S.A.
--
--
--
--
214,571
--
--
--
--
--
Deságio na aquisição da BV Participações S.A.
--
--
--
--
(8,127)
--
--
--
--
--
183,904
214,097
4,762 PN
21,64
46,331
53,181
(6,851)
--
(6.851)
(12.567)
2,047
12,355
16,19
2,087
1,975
109
--
109
(10)
780
474
48,13
228
228
--
--
--
--
--
--
63,931 ON
260 ON
520 PN
--
--
--
2,483
637
--
637
75
50,000
89,549
20,000 ON
49,00
Increase / decrease in PL from other movements
(1)
Jointly Subsidiaries in Brazil
Affiliates in Brazil
Cadam S.A. (2)
Cia, Hidromineral Piratuba(3)
Cia, Catarinense de Assessoria e Serviços – CCA (4)
Santa Catarina Seguros e Previdência
(5)
Mapfre Nossa Caixa Vida e Previdência S.A. (2) (6)
Subtotal – Shares of BB Bank Multiple
43,879
--
4,798
--
4.798
--
5,199,205
57,867
(1,307)
--
(1,307)
228,316
Shares of BB Investment Bank
Affiliates in Brazil
Goodwill / losses on acquisition of investments
(7)
Itapebi (2)
Estruturadora Brasileira de Projetos - EBP
BAF S.A.
(8)
Others participations
(9)
--
--
--
--
485,095
557,603
--
--
--
--
105,000
287,481
19,950 ON
19,00
54,621
38,917
24,138
--
24.138
21.662
20,970
16,054
2,330 ON
11,11
1,784
805
(462)
--
(462)
(84)
--
--
--
--
--
4,369
--
--
--
5.050
--
--
--
--
Subtotal - Shares of BB Investment Bank
9,750
41,294
24,606
--
24.606
202.218
551,250
642,988
48,282
--
48,282
228,846
25,498
20,024
5,474
--
5,474
(1,505)
25,498
20,024
5,474
--
5,474
(1,505)
5,775,953
720,879
52,449
--
52,449
455,657
Participation of BB Resource Management – Distribuidora de Títulos e Valores Mobiliários S.A.
Affiliates in Brazil
Pronor (2)
154,686
212,130
5,542 ON
12,02
Subtotal – Participation of BB Resource Management - DTVM S.A.
Subtotal Subsidiaries / Affiliates in Brazil
Subsidiaries Abroad
Gains / (losses) on foreign exchange agencies
--
--
--
--
--
--
--
(762,200)
(762,200)
708,177
Gains / (losses) on foreign exchange subsidiaries
--
--
--
--
--
--
--
(279,640)
(279,640)
224,437
Increase / decrease in PL from other movements
--
--
--
--
--
--
41
--
41
5,962
Subtotal - Subsidiaries Abroad
--
--
--
--
--
--
41
(1,041,840)
(1,041,799)
938,576
5,775,953
720,879
52,490
(1,041,840)
(989,350)
1,394,233
Total shares in the Country and Abroad
Other Investments
Investments for tax incentives
--
--
--
--
59,081
29,268
--
--
--
--
Title property
--
--
--
--
146
1,474
--
--
--
--
Shares and quotes
Others Investments (10)
--
--
--
--
61,868
58,306
--
--
--
--
--
--
--
--
814,893
770,257
--
--
--
--
Others participations abroad
--
--
--
--
11,237
11,402
--
--
--
--
Total – Other Investments
--
--
--
--
947,225
870,707
--
--
--
--
Provision for losses
--
--
--
--
(77,839)
(67,746)
--
--
--
--
Total of Investments
--
--
--
--
6,645,339
1,523,840
--
--
--
--
(1) Increase in equity of BB Banco de Investimento, following the change of criteria for evaluating the investment in this subsidiary Neoenergia in 1Q
2008.The information relates to the period of December/2008 to november/2009.
(2) The information relates to the period of November/2008 to october/2009.
(3) Company in liquidation court, not carried at equity method.
(4) The Banco do Brasil sold the common shares of Santa Catarina Insurance and Pensions for the Alliance of Brazil in may/2009.
(5) Related undertaking of Nossa Caixa Bank, which was acquired by Banco do Brasil on 11.30.2009.
(6) It is the goodwill for the acquisition of the Alliance of Brazil, R$ 486,767 thousand and discount on investments in Brasilprev, R$ 1,561 thousand and
Brasilsaúde, R$ 111 thousand.
(7) Company incorporated by BB Investment Bank on 05.20.2009.
(8) Refer to the holdings of non-financial related companies.
(9) It is mainly related to other investments of Neoenergia, R$ 732,687 thousand (R$ 761,070 thousand at 12.31.2008).
34
Notes to Financial Statements
c) Expected Goodwill Amortization
The figures below, as the expected amortization of goodwill, supports on the projection of justifying the
business, prepared by a specialized firm.
Goodwill for acquisitions of Banco Nossa Caixa and Banco Votorantim are depreciated according to Central
Bank Circular No. 1273/1987.
R$ thousand
BB-Banco Múltiplo
BB-Consolidated
Banco Nossa
Caixa
Banco
Votorantim
Total Bruto
Total net
of tax
effects (1)
Aliança do
Brasil (2)
Total Bruto
Total net
of tax
effects (3)
Em 2010
151,211
20,809
172,020
103,212
142,068
314,088
196,977
Em 2011
Em 2012
Em 2013
232,491
473,923
617,846
23,036
24,696
27,397
255,527
498,619
645,243
153,316
299,171
387,146
184,247
160,452
--
439,774
659,071
645,243
274,919
405,070
387,146
Em 2014
Em 2015
Em 2016
709,394
807,756
900,156
28,477
29,109
30,357
737,871
836,865
930,513
442,723
502,119
558,308
----
737,871
836,865
930,513
442,723
502,119
558,308
Em 2017
Total
1,007,459
4,900,236
30,690
214,571
1,038,149
5,114,807
622,889
3,068,884
-486,767
1,038,149
5,601,574
622,889
3,390,151
(1) Amount of depreciation to be held in the period, net of tax (25% of income tax and social contribution of 15%).
(2) The premium for the acquisition of the Alliance of Brazil is registered with controlled non-financial BB-Alliance Holdings SA and will be amortized in the
consolidation for harmonization of accounting practices with the conglomerate Bank of Brazil.
(3) Amount of repayments to be made in the period, net of tax (25% income tax and social contribution of 15% for the bank and 25% of income tax and
social contribution of 9% for the BB-Alliance Holdings SA).
15 – Premises and equipment and leased assets
R$ Thousand
Banco do Brasil
Annual rate of
depreciation
(by group)
Premises and equipment
Buildings
Data processing systems
Furniture and equipment for
use
Land
Facilities
Furniture and equipment in
stock
Communication systems
Fixed assets under
construction
Security systems
Transport systems
Leased fixed assets
Total
2009
Final Balance
12.31.2008
Residual
Cost
Added
Values(1)
Movements
Depreciation
4%
3,178,471
1,051,725
303,174
30,543
1,180,324
472,065
20 a 50%
1,007,486
76,944
10%
-10%
393,630
167,284
171,745
--
Impairment
(3)
12.31.2009
(650,726)
(117,515)
(4,498)
(3,104)
4,006,745
1,433,714
537,614
(375,107)
(1,394)
1,245,543
28,359
76,193
3,227
97,782
(11,507)
54,503
(75,743)
-(39,568)
----
444,028
231,970
189,907
52,053
67,233
31,718
--
--
151,004
10%
--
90,354
151,169
2,828
7,649
36,430
(56,112)
(19,986)
--
---
109,626
102,706
10%
92,752
10,198
17,869
(22,701)
--
98,118
20%
273
45,603
---
(38)
15,172
(106)
--
---
129
60,775
3,224,074
303,174
1,195,496
(650,726)
(4,498)
4,067,520
35
Notes to Financial Statements
R$ Thousand
BB-Consolidated
Annual rate of
Residual
depreciation
Cost
(by group) 12.31.2008
Premises and equipment
Buildings
Data processing systems
4%
20 a 50%
2009
Final Balance
Added
Values(2)
Movements
Depreciation
Impairment (3)
12.31.2009
3,338,94
1
1,095,37
1
1,045,74
0
459,494
171,172
176,664
332,239
30,543
1,254,598
473,810
(706,123)
(122,198)
(5,171)
(3,104)
4,214,484
1,474,422
86,310
578,849
(405,706)
(1,394)
1,303,799
43,507
76,192
3,991
123,644
(12,244)
54,546
(92,663)
-(40,737)
(673)
---
533,309
235,120
194,464
Furniture and equipment for use
Land
Facilities
10%
-10%
Furniture and equipment in stock
--
52,053
67,233
31,718
--
--
151,004
Communication systems
Fixed assets under construction
10%
--
91,507
152,786
5,937
7,704
37,205
(53,394)
(20,678)
--
---
113,971
107,096
Security systems
10%
92,751
10,664
19,174
(23,911)
--
98,678
Transport systems
Leased fixed assets
20%
1,403
3,869
158
--
1,290
(2,646)
(230)
--
---
2,621
1,223
3,342,81
0
332,239
1,251,952
(706,123)
(5,171)
4,215,707
Total
(1) Amounts resulting from the merger of Banco Nossa Caixa.
(2) Amounts resulting from the consolidation of the balances of Banco Nossa Caixa, Banco Votorantim and BV Holdings SA pursuant to the acquisition of
equity during the accounting year 2009.
(3) Amounts mainly due to the effects of impairment test of property and self-service terminals (Note 3j).
16 – Intangible Assets
a) Changes in Intangible Assets by Class
R$ Thousand
Banco do Brasil
Rights due to payroll acquisition
Acquisition/development of software
Total
Balance at
12.31.2008
Acquisitions
3,920,849
119,796
4,040,645
1,297,779
202,899
1,500,678
Added Accumulated
Impairment(3)
Values(1) amortization
1,185,766
36,705
1,222,471
(1,099,631)
(38,753)
(1,138,384)
435
-435
Balance at
12.31.2009
5,305,198
320,647
5,625,845
R$ Thousand
BB-Consolidated
Rights due to payroll acquisition
Acquisition/development of software
Total
Balance at
12.31.2008
Acquisitions
3,920,849
119,796
4,040,645
1,414,832
275,613
1,690,445
Added Accumulated
Impairment(3)
Values(1) amortization
1,376,935
18,875
1,395,810
(1,407,853)
(42,603)
(1,450,456)
435
-435
Balance at
12.31.2009
5,305,198
371,681
5,676,879
(1) Amounts resulting from the merger of Banco Nossa Caixa.
(2) Amounts resulting from the consolidation of the balances of Banco Nossa Caixa, Banco Votorantim and BV Holdings SA pursuant to the acquisition of
equity during the accounting year 2009.
(3) Reversal of provision for impairment losses resulting from the impairment test of intangible assets.
b) Breakdown of the carrying value of intangible assets
R$ Thousand
Banco do Brasil
Rate of
Amortization
Rights due to payroll acquisition
contrato
Cost value
7,283,229
Accumulated Accumulated
amortization
Impairment
(1,936,182)
(41,849)
Balance at
12.31.2009
Balance at
12.31.2008
5,305,198
3,920,849
36
Notes to Financial Statements
20%
Acquisition/development of software
365,859
7,649,088
Total
(45,212)
(1,981,394)
-(41,849)
320,647
5,625,845
119,796
4,040,645
R$ Thousand
BB-Consolidated
Rate of
Amortization
contrato
20%
Rights due to payroll acquisition
Acquisition/development of software
Accumulated Accumulated
amortization
Impairment
Cost value
7,283,229
417,941
7,701,170
Total
(1,936,182)
(46,260)
(1,982,442)
(41,849)
-(41,849)
Balance at
12.31.2009
Balance at
12.31.2008
5,305,198
371,681
5,676,879
3,920,849
119,796
4,040,645
c) Estimate for Amortization of Intangible Assets
R$ Thousand
Banco do Brasil
For the year ending:
Amounts to be amortized
2010
2011
2012
2013
2014
Total
1,461,272
1,447,065
1,373,367
1,005,199
338,942
5,625,845
R$ Thousand
BB-Consolidated
For the year ending:
Amounts to be amortized
2010
2011
2012
2013
2014
Total
1,471,478
1,457,271
1,383,573
1,015,405
349,152
5,676,879
17 – Deposits and Money Market Borrowing
a) Deposits
R$ Thousand
Banco do Brasil
Demand deposits
Corporate entities
Individuals
Restricted
Government
Special from Federal Treasury
Related companies
In foreign currencies
Institutions of the financial system
Domiciled abroad
Others
Savings deposits
Individuals
Corporate entities
Related companies
Institutions of the financial system
Interbank deposits
Time deposits
Local currency
Remunerated deposits in court
Funds and programs – FAT (Note 17e)
Foreign currency
Obligations for special– Poupex/Funprogrer
Others
Deposits for investments
Total
BB-Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
56,211,678
22,351,731
22,455,365
5,213,954
3,858,059
567,598
505,424
442,299
378,812
19,811
418,625
75,741,590
71,159,163
4,318,971
255,963
7,493
15,556,143
182,366,877
111,039,706
51,865,142
19,123,206
17,272,282
6,997,602
3,854,447
434,602
792,014
2,545,663
330,230
57,873
457,223
54,965,370
51,485,000
3,182,343
290,638
7,389
19,606,585
149,762,035
100,331,988
56,458,787
22,563,646
22,499,124
5,214,026
3,858,059
567,598
505,424
442,299
370,394
19,591
418,626
75,741,590
71,159,163
4,318,971
255,963
7,493
11,618,573
193,515,574
122,188,161
51,949,022
19,199,985
17,280,150
6,997,672
3,854,447
434,602
792,014
2,545,663
329,511
57,755
457,223
54,965,370
51,485,000
3,182,343
290,638
7,389
14,064,945
149,618,491
100,188,444
57,479,585
33,325,979
57,479,827
33,325,979
12,667,714
594,890
510,834
74,148
228,468
330,104,756
14,882,588
557,115
574,813
89,552
243,268
276,442,400
12,667,714
594,890
510,834
74,148
229,303
337,563,827
14,882,588
557,115
574,813
89,552
243,268
270,841,096
37
Notes to Financial Statements
252,490,505
77,614,251
Current Liabilities
Non Current Liabilities
224,785,452
51,656,948
258,676,108
78,887,719
212,058,474
58,782,622
b) Segregation of Deposits by deadline Chargeability
R$ Thousand
Banco do Brasil
No expiration
(1)
Time deposits
Savings deposits
Demand deposits
Interbank deposits
Investment deposits
Total
Up to 3
months
3 to 12
months
1 to 3 years
3 to 5 years
72,343,935 13,746,169 20,675,117 23,976,864 51,624,651
75,741,590
----56,211,678
------ 9,312,640 4,230,908 1,917,971
86,052
228,468
----204,525,671 23,058,809 24,906,025 25,894,835 51,710,703
Over 5
years
12.31.2009
12.31.2008
141 182,366,877 149,762,035
-- 75,741,590 54,965,370
-- 56,211,678 51,865,142
8,572 15,556,143 19,606,585
-228,468
243,268
8,713 330,104,756 276,442,400
R$ Thousand
BB-Consolidated
No expiration
(1)
Time deposits
Savings deposits
Demand deposits
Interbank deposits
Investment deposits
Total
Up to 3
months
3 to 12
months
1 to 3 years
3 to 5 years
72,343,935 15,427,008 28,038,045 25,959,126 51,739,682
75,741,590
----56,458,787
------ 6,089,248 4,348,192 1,079,142
92,109
229,303
----204,773,615 21,516,256 32,386,237 27,038,268 51,831,791
Over 5
years
12.31.2009
12.31.2008
7,778 193,515,574 149,618,491
-- 75,741,590 54,965,370
-- 56,458,787 51,949,022
9,882 11,618,573 14,064,945
-229,303
243,268
17,660 337,563,827 270,841,096
(1) It includes the amount of R$ 41,102,468 thousand (R$ 39,253,517 thousand on December 31, 2008) at BB-Multiple Bank and R$ 54,735,133 thousand
(R$ 39,253,517 thousand on December 31, 2008) at BB Consolidated, related to term deposits with clause of anticipated repurchase (liquidity
commitment), considering the terms established in funding.
c) Money market repurchase commitments
R$ Thousand
Banco do Brasil
12.31.2009
12.31.2008
BB-Consolidated
12.31.2009
12.31.2008
Financial Treasury Bills
National Treasury Bills
National Treasury Notes
Debentures
Securities abroad
Other
Third-party portfolio
National Treasury Bills
National Treasury Bills
National Treasury Notes
Securities abroad
Free movement of Portfolio
Total
25,545,392
23,503,150
--858,162
1,184,080
-123,975,419
111,805,277
8,305,309
466,563
3,398,270
-149,520,811
22,278,245
17,916,364
--411,927
1,986,863
1,963,091
69,801,410
61,521,332
1,147,509
1,080,036
6,052,533
-92,079,655
31,901,701
22,467,046
22,897
147,744
7,946,156
1,304,041
13,817
128,745,194
112,555,277
9,469,372
3,322,275
3,398,270
174,292
160,821,187
21,926,896
17,565,015
--411,927
1,986,863
1,963,091
69,203,468
60,923,632
1,147,509
1,079,794
6,052,533
-91,130,364
Current Liabilities
Non Current Liabilities
142,412,717
7,108,094
87,448,258
4,631,397
153,699,462
7,121,725
86,501,235
4,629,129
38
Notes to Financial Statements
d) Expenses with money market repurchase commitments
R$ Thousand
Banco do Brasil
2S2009
2009
BB-Consolidated
2008
2S2009
2009
2008
Expenses borrowings with deposits
Time deposits
(8,552,545) (17,646,964) (15,655,076)
(9,808,034) (19,507,059) (15,706,826)
(4,625,933)
(9,724,960)
(8,224,898)
(4,975,283) (10,165,988)
(8,212,451)
Savings deposits
Demand deposits
Interbank deposits
(2,152,011)
(4,302,756)
(4,199,032)
(2,455,783)
(4,793,347)
(4,199,032)
(1,253,367)
(2,487,302)
(2,369,919)
(1,762,219)
(3,286,474)
(2,369,919)
(328,679)
(771,081)
(469,968)
(343,049)
(788,114)
(432,353)
(271,700)
(473,136)
(493,071)
Others
Expenses with money market repurchase commitments
(192,555)
(360,865)
(391,259)
(4,765,772)
(9,736,736)
(9,887,443)
(5,509,725) (10,638,869)
(9,824,899)
Third-party portfolio
(3,789,510)
(7,736,749)
(6,739,057)
(3,988,119)
(7,954,791)
(6,739,057)
(972,733)
(1,980,323)
(3,102,575)
(1,465,720)
(2,612,057)
(3,040,031)
(3,529)
(19,664)
(45,811)
(55,886)
(72,021)
(45,811)
Own portfolio
Subject to repurchase agreements with free movement
Expenses with money market
(13,318,317) (27,383,700) (25,542,519) (15,317,759) (30,145,928) (25,531,725)
e) Fund for Workers’ Assistance (FAT) and Guarantee Fund for Generation of Employment and
Earnings (FUNPROGER)
Shown below are the deposits of the Fund for workers assistance (FAT) in Banco do Brasil:
R$ Thousand
Return of FAT funds
12.31.2009
Resolution/
TADE
Type
(1)
Opening
Date
Closing
Date
04/2005
05/2005
03/2005
14/2006
02/2006
13/2005
RA
RA
SD
RA
RA
RA
11/2005
11/2005
01/2008
08/2006
11/2005
11/2005
----01/2014
-------
18/2005
15/2005
01/2006
RA
RA
RA
11/2005
11/2005
11/2005
-------
27/2005
26/2005
25/2005
09/2005
08/2006
RA
RA
RA
RA
RA
11/2005
11/2005
11/2005
11/2005
09/2007
-----------
Available
(2)
TMS
254,282
148,895
--35,856
21,387
48,144
82,925
74,258
-8,667
282,976
89
40
20
15
14,755
09/2006
RA
09/2007
---
30,654
FAT Fomentar Micro e Peq, Empresas
09/2006
08/2006
10/2006
11/2006
RA
RA
RA
RA
02/2009
02/2009
07/2006
08/2006
---------
-80,358
11
1,114
FAT Fomentar Médias e Grandes
Empresas
FAT Taxista
FAT Encargos a capitalizar
12/2006
RA
07/2006
---
--
113,165
02/2009
---
RA
---
09/2009
---
-----
150,000
5,920
620,183
-59,303
12,047,531
Programa
Proger Rural and Pronaf
Pronaf Custeio
Pronaf Investimento
Giro Rural - Aquisição de Títulos
Giro Rural Fornecedores
Rural Custeio
Rural Investimento
Proger Urbano
Urbano Investimento
Urbano Capital de Giro
Empreendedor Popular
Others
Exportação
Integrar Área Rural
Integrar Área Urbana
Inclusão Digital
FAT Giro Setorial Micro e Peq, Empresas
FAT Giro Setorial Médias e Grandes
Empresas
FAT Giro Setorial Veículos MGE
FAT Giro Setorial Veículos MPE
FAT Giro Cooperativo Agropecuário
Total
Invested
(3)
TJLP
5,603,916
186,654
3,205,371
1,241,887
520,301
43,317
406,386
6,120,472
5,434,647
630,527
55,298
323,143
2,647
38
10,299
23
6,959
12.31.2008
5,858,198
335,549
3,205,371
1,241,887
556,157
64,704
454,530
6,203,397
5,508,905
630,527
63,965
606,119
2,736
78
10,319
38
21,714
Available
(2)
TMS
814,659
438,381
--2,945
350,250
23,083
888,040
876,195
1
11,844
242,179
1,095
--259
60,373
Invested
(3)
TJLP
6,939,835
224,832
3,847,313
1,658,249
664,754
7,498
537,189
5,238,618
4,390,247
755,501
92,870
759,257
3,690
13,831
12,177
542
172,230
7,754,494
663,213
3,847,313
1,658,249
667,699
357,748
560,272
6,126,658
5,266,442
755,502
104,714
1,001,436
4,785
13,831
12,177
801
232,603
5,627
36,281
167,145
327,825
494,970
11,217
97,160
73
16,632
11,217
177,518
84
17,746
--809
747
--1,229
20,627
--2,038
21,374
113,165
--
135,818
135,818
150,000
65,223
12,667,714
-11,751
1,944,878
-71,288
12,937,710
-83,039
14,882,588
Total
Total
(1) RA - Auto Return (monthly, 2% on the balance) and SD - Available Balance.
(2) Funds remunerated by the Average Selic Rate (TMS).
(3) Funds remunerated by the long-term interest rate (TJLP).
FAT is a special accounting and financial fund, established by Law 7998/1990, attached to the Ministry of Labor
and Employment (MTE) and managed by the Executive Council of the Workers’ Assistance Fund (Codefat),
CODEFAT is a collective, tripartite, equal level organization, composed of representatives of workers,
employers and government, which acts as the manager of FAT.
39
Notes to Financial Statements
The main actions to promote employment using FAT funds are structured around the Programs for the
Generating Employment and Earnings (PROGER), whose resources are allocated through special deposits,
established by Law 8352/1991, in official federal financial institutions (including, among others, PROGER in
the urban program- Investment and Working Capital - and rural program, the National Program for
Strengthening Family Farming - Pronaf, the program that allocates resources for the purchase of
construction materials - FAT Housing, in addition to the special lines such as FAT Rural and Urban
Integration, FAT Giro Setorial - Micro and Small-Sized Companies, FAT Giro Setorial - Medium and LargeSized Companies, FAT Fomentar - Micro and Small-Sized Companies, FAT Fomentar - Medium and LargeSized Companies, FAT Giro Agropecuário, FAT Digital Inclusion and FAT Taxi).
The FAT special deposits, allocated with Banco do Brasil, while available, incur interest on a daily pro rata
basis using the Average Selic Rate (TMS), As they are applied on loans, the interest rate is changed to the
Long-term Interest Rate (TJLP) during the effective period of the loans, The earnings on the Bank’s funds
are paid to FAT on a monthly basis, as established in CODEFAT Resolution 439/2005 and 489/2006.
The Guarantee Fund for Generation of Employment and Earnings (Funproger) is a special accounting fund
established on November 23, 1999 by Law 9872/1999, amended by Law 10360/2001 and by Law
11110/2005 and regulated by Codefat Resolution 409/2004, It is managed by Banco do Brasil under the
supervision of Codefat/MTE, and the balance is R$ 225,565 thousand (R$ 321,522 thousand at December
31, 2008).
The purpose of FUNPROGER is provide guarantees to entrepreneurs who do not have the necessary
guarantees of their own to contract PROGER Urbano and PNMPO financing, through payment of a fee, The
net assets of FUNPROGER are accumulated through funds arising from the difference between the average
SELIC Rate and the Long-Term Interest Rate (TJLP) in respect of the remuneration of the special deposit
balances available in FAT, Other sources of funds are the earnings from its operations and the income on its
cash resources paid to Banco do Brasil, the Fund manager.
18 – Borrowings
a) Borrowings
R$ Thousand
Banco do Brasil
up to from 91 to
90 days
360 days
In Brazil
Exports
Abroad
Borrowings from BB Group companies abroad
Borrowings by BB branches abroad
Public sector repass borrowing
Imports
Exports
Others
Total
--
--
from 1 to from 3 to
3 years
5 years
--
--
2,214,054
110,299 3,459,426
978,442 2,286,977
137,619
-234,344
418,514
92,554
80,065
124,444
7,168
20,178
-250,530
--3,542,748 2,731,863 4,140,003
-6,991
418,514
70,762
--496,267
from 5 to
Total
Total
15 years 12.31.2009 12.31.2008
--
--
2,750,087
-5,783,779 6,675,750
-3,410,029 1,976,764
104,628 1,176,000 1,885,271
35,136
402,961
721,041
-27,346
78,627
-250,530
430,361
139,764 11,050,645 14,517,901
Current Liabilities
Non Current Liabilities
6,274,611
4,776,034
9,223,333
5,294,568
R$ Thousand
BB-Consolidated
In Brazil
Borrowing by non financial companies
Exports
Others
up to
90 days
from 91 to
360 days
74,785
-5,995
-70,976
5,441
from 1 to from 3 to from 5 to
Total
Total
3 years 5 years
15 years 12.31.2009 12.31.2008
82,976
-10,883
----
----
157,761
70,976
22,319
40
109,115
2,750,087
--
Notes to Financial Statements
Abroad
Borrowings by BB Group companies abroad
Public sector repass borrowing
Imports
Exports
Others
Total
993,631
-79,202
122,085
250,531
1,526,229
2,551,062
234,344
44,867
60,694
317,302
3,284,686
382,537 12,119
418,514 418,514
61,500 42,678
4,587
---960,997 473,311
-104,628
20,412
--125,040
Current Liabilities
Non Current Liabilities
3,939,349
1,176,000
248,659
187,366
567,833
6,370,263
1,976,780
1,885,271
475,199
-430,361
7,626,813
4,810,915
1,559,348
5,845,958
1,780,855
b) Repass Borrowings from Public Sector
R$ Thousand
Programs
Financial Charges
Banco do Brasil
12.31.2009
National Treasury - Rural credit
Pronaf
TMS (Available) ou
0.5% p.a. a 5.5% p.a. (Allocated)
Recoop
Cocoa
5.75% p.a. to 7.25% p.a.
TJLP + 0.6% p.a. or 6.35% p.a.
Farming/livestock breeding
TR or 9% p.a.
BNDES
Banco do Brasil
Banco Votorantim
0.6305%p.a. to 15.35%p.a. or
TJLP/fx. variation+0.50%p.a to 8.55%p.a.
1.50%p.a. to 16.50%p.a or
TJLP/ fx. variation +1.30%p.a. to 10.50%p.a.
Finame
Banco Votorantim
1.50%p.a to 11.00%p.a or
TJLP/fx. variation +0.5%p.a to 5.50%p.a.
12.31.2008
2,100,693
3,485,066
1,840,672
3,201,636
1,840,672
3,201,636
150,041
67,668
175,843
65,597
150,041
67,668
175,843
65,597
40,957
40,635
40,957
40,635
1,355
1,355
1,355
1,355
17,877,865 11,167,753
19,629,502 11,167,753
17,877,865 11,167,753
16,126,227 11,167,753
TMS (available) or 9.5%p.a. (before 06.30.07),
7.5%p.a. (betwen 07.01.07 and 06.30.09) and
6.75%p.a. (after 07.01.09)
Other
Total
--
Current Liabilities
Non Current Liabilities
--
3,503,275
--
146,232
--
146,232
--
7,637,163
6,557,872
8,381,169
6,584,776
7,637,163
6,557,872
6,931,615
6,584,776
--
--
1,449,554
--
1,132,572
1,198,637
1,132,572
1,198,829
1,132,409
1,198,178
1,132,409
1,198,178
4.55%a.a to 11.00%a.a or
TJLP/ fx. variation +0.50%p.a to 5.50%p.a.
Other
Funcafé
12.31.2009
3,485,066
--
Repass borrowings - CEF
Banco do Brasil
12.31.2008
2,100,693
--
Others
BB-Consolidated
163
459
28,894,525 22,409,328
163
651
31,390,168 22,436,424
11,472,080 13,738,050
17,422,445 8,671,278
12,405,660 13,749,287
18,984,508
8,687,137
c) Cost of Borrowings and Transfers (official institutions)
R$Thousand
Banco do Brasil
Cost of Borrowings
Expenses Onlendings
BNDES
Finame
Treasury
CEF
Foreign
Other
Expenditure obligations with foreign banks
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
(78,875)
(169,021)
(1,757,377)
(110,569)
(199,882)
(1,664,567)
(894,668)
(1,712,578)
(2,851,508)
(949,427)
(1,771,166)
(2,787,307)
(471,789)
(919,387)
(642,906)
(497,057)
(945,006)
(642,906)
(308,785)
(553,236)
(388,592)
(336,076)
(582,326)
(390,637)
(75,030)
(165,932)
(181,553)
(75,030)
(165,932)
(181,553)
(463)
(473)
(38)
(2,655)
(4,336)
(38)
--
--
(1,571,577)
--
--
(1,505,311)
(38,601)
(73,550)
(66,842)
(38,609)
(73,566)
(66,862)
--
--
(3,757,099)
(8,050)
(8,640)
(3,745,396)
41
Notes to Financial Statements
Expenses for Financial and Development
liabilities
Total
(198,904)
(459,089)
(487,281)
(243,071)
(530,281)
(487,281)
(1,172,447)
(2,340,688)
(8,853,265)
(1,311,117)
(2,509,969)
(8,684,551)
19 – Resources from securities issues
R$ Thousand
Amount
Issued
Resources
Data
Capture
Remuneration
Maturity
12.31.2009
R$ thous
12.31.2008
R$ thous
Banco do Brasil
Global Medium - Term Note Program
R$
350,000
9.75% p.a.
07/2007
07/2017
316,244
330,318
Global Medium - Term Note Program
US$
100,000
Libor 6m+2.55%p.a.
07/2009
07/2014
171,160
--
US$
4,000
3.80% p.a.
11/2009
12/2012
6,962
--
US$
1,000
3.67% p.a.
12/2009
12/2012
1,740
--
US$
199,889
3.88% p.a.
06/2009
06/2012
347,886
--
US$
98,105
3.08% p.a.
07/2009
07/2012
170,742
--
US$
4,908
2.92% p.a.
07/2009
06/2012
8,542
--
US$
98,100
3.00% p.a.
08/2009
07/2012
170,734
--
US$
98,127
2.85% p.a.
09/2009
08/2012
170,780
--
US$
9,920
3.46% p.a.
08/2009
08/2016
17,265
--
US$
99,941
3.36% p.a.
10/2009
10/2012
173,938
--
US$
97,975
2.53% p.a.
10/2009
10/2012
170,516
--
US$
48,986
2.53% p.a.
10/2009
10/2012
85,255
--
Certificates of deposits - Long Term
Certificates of deposits - Short Term
--
(1)
R$
8,000
--
--
--
--
7,240
US$
423,543
--
--
--
754,753
849,422
EUR
1,991
--
--
--
4,979
13,546
2,571,497
1,200,526
Total Banco do Brasil
Special purpose entities - EPE Abroad
(2)
Securitization of future flow of payment orders from abroad
US$
300,000
Libor 3m+0.60% p.a.
07/2002
06/2009
--
67,007
US$
40,000
7.890% p.a.
09/2002
09/2009
--
13,397
US$
120,000
7.26% p.a.
03/2003
03/2010
12,362
80,040
US$
250,000
6.55% p.a.
12/2003
12/2013
273,289
444,603
US$
250,000
Libor 3m+0.55% p.a.
03/2008
03/2014
435,265
584,979
US$
200,000
Libor 3m+1.20% p.a.
09/2008
09/2015
348,319
467,925
US$
150,000
5.25% p.a.
04/2008
06/2018
261,707
351,248
1,330,942
2,009,199
Total Special purpose entities - EPE Abroad
Banco Votorantim
Debentures
--
Foreign Exchange
R$
PTAX+12.0436%p.a.
12/2006
07/2012
818,833
--
Pós-fixFloating rateado
R$
DI + 0.35% p.a.
12/2006
07/2012
656,726
--
02/2009
01/2012
53,156
--
07/2007
03/2020
909,132
--
Resources letters of credit real estate
(3)
Resources letters of credit agribusiness
(3)
Liabilities for securities abroad - Program Global Medium - Term Notes
-R$
111,000
16.2% p.a.
11/2005
11/2010
37,548
--
R$
200,000
9.5% p.a.
12/2005
12/2012
79,806
--
R$
200,000
10.625% p.a.
04/2007
04/2014
89,888
--
US$
100,000
Libor 3m+2.0% p.a.
08/2005
08/2010
75,767
--
US$
200,000
6.875% p.a.
10/2005
10/2015
1,858
--
US$
200,000
6.75% p.a.
09/2006
09/2016
84,007
--
US$
42,810
1.25% p.a.
10/2009
01/2010
37,379
--
US$
7,770
1.1% p.a.
10/2009
01/2010
6,781
--
US$
5,000
1.1% p.a.
10/2009
01/2010
4,363
--
US$
23,070
4.184% p.a.
02/2008
01/2010
1,338
--
US$
4,510
1.0% p.a.
10/2009
01/2010
3,933
--
US$
28,640
1.0% p.a.
11/2009
02/2010
24,905
--
US$
7,600
1.0% p.a.
11/2009
02/2010
6,609
--
US$
1,100
1.0% p.a.
11/2009
02/2010
957
--
US$
5,000
0.9% p.a.
11/2009
02/2010
4,358
--
US$
37,000
1.2% p.a.
12/2009
03/2010
32,244
--
42
Notes to Financial Statements
US$
116.500
1,1% p.a.
12/2009
03/2010
13,231
--
US$
32,150
1.15% p.a.
12/2009
03/2010
28,014
--
US$
7,000
1.1% p.a.
12/2009
03/2010
6,098
--
US$
7,170
0.95% p.a.
12/2009
03/2010
6,243
--
US$
1,000
0.95% p.a.
12/2009
03/2010
871
--
US$
9,240
0.95% p.a.
12/2009
03/2010
8,045
--
US$
30,000
0.95% p.a.
12/2009
03/2010
26,120
--
US$
10,000
1.0% p.a.
12/2009
04/2010
8,680
--
US$
24,000
3.76% p.a.
07/2009
05/2010
102
--
US$
19,500
3.70% p.a.
07/2009
05/2010
78
--
US$
24,000
3.76% p.a.
07/2009
05/2010
102
--
US$
14,500
3.79% p.a.
07/2009
06/2010
64
--
US$
9,990
4.0% p.a.
07/2008
07/2010
379
--
US$
2,900
5.08% p.a.
04/2008
03/2011
--
--
US$
4,000
3.98% p.a.
07/2009
04/2012
21
--
US$
15,500
3.9088% p.a.
07/2009
04/2012
76
--
US$
1,500
4.0538% p.a.
07/2009
05/2012
9
--
US$
5,000
8.9% p.a.
07/2009
07/2014
134
--
US$
120,000
5.1% p.a.
06/2008
06/2015
104,679
--
EUR
250
1.0% p.a.
08/2009
12/2011
135
--
EUR
1,000
5.2648% p.a.
05/2007
03/2012
5
EUR
10,000
4.0538% p.a.
07/2009
05/2012
55
--
EUR
9,000
4.0538% p.a.
07/2009
05/2012
49
--
3,132,778
--
306,463
248,155
20,794
21,020
327,257
269,175
(155)
--
Total - BB Consolidated
7,362,319
3,478,900
Current Asset
1,406,912
1,167,593
Non Current Asset
5,955,407
2,311,307
Total Banco Votorantim
Non-Financial Corporations
Real Estate Receivables Certificates
(4)
Debentures
R$
R$
TJLP+3.8% p.a.
09/2007
Total Non-Financial Corporations
Eliminated amount on consolidation(5)
09/2020
(1) Securities maturing in less than 360 days and interest rates of the certificate issued in U.S. dollars (U.S.$ 423,543 thousand) between 0.33% and 3.80%
p.a. and issued in euros (EUR 1,992 thousand) of 0.86% p.a.
(2) The Special Purpose Entity - EPE "Dollar Diversified Payment Rights Finance Company" was organized under the laws of the Cayman Islands for the
following purposes: (a) the issuance and sale of securities in the international market, (b) use of resources obtained by issuing securities to pay for the
purchase, with the BB, the rights to payment orders issued by banking correspondents located in the U.S. and by the agency of BB New York in U.S.
dollars, for an agency for BB Brazil ( "Rights in Russia") and (c) making payments of principal and interest on securities and other payments payable on the
issuance of these securities. EPE did not claim to have no assets or liabilities other than the relevant rights and obligations from the contracts issue of
securities. The BB has no control, is not a shareholder, it owns and participates in either the results of EPE. The obligations of the securities issued by EPE
are paid with funds accumulated in your account.
(3) Refresh rates are substantially to 90% of DI.
(4) Debt with the average maturity of 132 months, average effective rate of 9.7% per year, with the indices Reference Rate - TR General Price IndexMarket - IGP-M Index and Consumer Price Index - IPCA .
(5) Refers to securities issued by Banco do Brasil S.A., in possession of controlled company sabroad.
20 – Other liabilities
a) Financial and development funds
R$ Thousand
Banco do Brasil
PIS/Pasep
Judicial Deposit Reserve Fund (1)
Merchant Navy
Funds from the State Government of Sao Paulo
Special Lending Program for Agrarian Reform - Procera
Consolidation of Family Farming (CAF)
Land and Agrarian Reform - BB Banco da Terra
Combating Rural Poverty/Our First Plot of Land (CPR/NPT)
Other
BB-Consolidated
12.31.2009
12.31.2008
12.31.2009
12.31.2008
1,916,461
755,281
750,151
475,925
181,594
4,049
2,218
1,674
1,706,439
-269,843
-322,502
68,742
2,178
22,585
1,916,461
755,281
750,151
475,925
181,594
4,049
2,218
1,674
1,706,439
-269,843
-322,502
68,742
2,178
22,585
47,261
65,510
47,261
65,510
43
Notes to Financial Statements
Total
4,134,614
Current Liabilities
Non Current Liabilities
2,457,799
4,134,614
2,457,799
2,050,776
428,517
2,050,776
428,517
2,083,838
2,029,282
2,083,838
2,029,282
(1) It refers to funds specific for guarantee of judicial deposits transferred by Banco Nossa Caixa, incorporated on 11/30/2009, to the State Treasury of São
Paulo and to the City Councils of such State.
b) Taxes and social security
R$ Thousand
Banco do Brasil
BB-Consolidated
12.31.2009
12.31.2008
Taxes and contributions on net income payable (1)
Provision for deferred taxes and contributions (2)
Provision for correction of legal process (3)
Taxes payable
Provision for tax litigation (note 31.a)
Provision for taxes and contributions on profits
Total
12.31.2009 12.31.2008
10,249,606
4,576,390
4,964,805
661,898
174,696
64,335
20,691,730
8,109,469
2,673,217
4,124,963
539,365
122,456
88,814
15,658,284
10,609,674
5,429,405
4,955,905
1,509,752
1,138,706
653,257
24,296,699
8,448,055
2,866,020
4,124,963
870,783
1,004,031
256,476
17,570,328
Current Liabilities
Non Current Liabilities
16,568,631
4,123,099
13,342,332
2,315,952
18,315,213
5,981,486
14,345,530
3,224,798
(1)
(2)
(3)
Includes the amount of R$ 6,571,673 thousand (R$ 6,541,553 thousand at 12.31.2008), related to the legal process for full offsetting of accumulated
income tax loss carry forwards and negative bases of Social Contribution (Note 31.e).
Includes the amount of R$ 4,123,099 thousand (R$ 2,315,952 thousand at 12.31.2008), referring to the deferral of taxes on the actuarial gain of the Previ
retirement and pension plan.
to the restatement of the legal process for full offsetting of accumulated income tax loss carry forwards and negative bases of Social Contribution (Note
31.e).
c) Special Operations
R$ Thousand
Banco do Brasil
12.31.2009
Government, Special procurement
Investment fund sector
Other special operations
Total
(1)
Current liabilitites
Long Term Liabilities
BB-Consolidated
12.31.2008
12.31.2009
12.31.2008
204,007
2,138
140
206,285
-2,195
140
2,335
204,007
2,138
140
206,285
-2,195
140
2,335
204,007
2,278
-2,335
204,007
2,278
-2,335
(1) Refers to the transfer of funds, according to Resolution No. 3.607/2008 Bank, for use in rural credit.
d) Subordinated debt
R$ Thousand
Resources
Amount
Issued (1)
Remuneration
(1)
Data
Capture(1)
Maturity(1)
12.31.2009
12.31.2008
Banco do Brasil
FCO – Recursos do Fundo Constitucional do Centro-Oeste
Subordinated CDB issued in the country
(1)
R$
--
--
--
--
12.422.046
11.057.272
R$
500,000
113,8% do CDI
03/2009
09/2014
3.432.247
--
541.187
R$
100,000
113,8% do CDI
03/2009
--
09/2014
108.237
R$
172,000
113,8% do CDI
--
03/2009
09/2014
186.168
R$
38,000
--
113,8% do CDI
03/2009
09/2014
41.131
R$
--
14,000
113,8% do CDI
03/2009
09/2014
15.153
--
R$
76,000
113,8% do CDI
03/2009
09/2014
82.261
--
R$
851,400
115% do CDI
03/2009
03/2015
921.860
--
R$
9,790
115% do CDI
03/2009
03/2015
10.600
--
R$
1,550
115% do CDI
03/2009
03/2015
1.678
--
(2)
44
Notes to Financial Statements
R$
8,630
115% do CDI
03/2009
03/2015
9.344
--
R$
63,180
115% do CDI
03/2009
03/2015
68.409
--
R$
450
115% do CDI
03/2009
03/2015
487
--
R$
360,000
115% do CDI
03/2009
03/2015
388.668
--
115% do CDI
105% do CDI
03/2009
11/2009
03/2015
11/2015
43.185
1.013.879
---
8,5% a, a,
09/2004
09/2014
533.276
714.905
16,387,569
11,772,177
R$
R$
Subordinated debt Abroad (2)
40,000
1,000,000,000
US$
300,000
Total Subordinated debt Banco do Brasil
Banco Votorantim
1.463.908
--
312,500
CDI+ 0,491417% a, a,
11/2007
11/2012
393.717
--
8,500
193,150
32,500
6,850
57,500
260,000
CDI+0,491417% a, a,
12/2007
12/2007
12/2007
12/2007
03/2008
08/2009
12/2012
12/2012
12/2012
12/2012
03/2013
08/2014
10.690
243.172
41.352
8.620
72.052
270.585
-------
08/2009
08/2009
08/2009
08/2009
12/2009
12/2009
08/2014
08/2014
08/2014
08/2014
12/2014
12/2014
7.814
5.471
20.326
2.605
251.670
50.335
-------
Subordinated CDB issued in the country
Debentures
CDI+0,540556% a, a,
IGPM+7,219701% a, a,
CDI+0,540556% a, a,
IPCA+7,934241% a, a,
CDI+1,670229% a, a,
7,500
5,250
19,500
2,500,000
250,000,000
50,000,000
IPCA+7,855736% a, a,
75,000,000
10,000,000
CDI+1,674668% a, a,
CDI+1,674668% a, a,
12/2009
12/2009
12/2014
12/2014
75.475
10.024
---
693,575
CDI+0,5% a, a,
04/2006
04/2016
703.621
--
703,904
--
IPCA+7,924428% a, a,
IPCA+8,002932% a, a,
IPCA+7,953867% a, a,
CDI+1,635268% a, a,
CDI+1,674668% a, a,
Total Subordinated debt Banco Votorantim
Eliminated amount on consolidation
(3)
(1.858)
16,558,197
Total Subordinated debt BB Consolidated
11,772,177
(1) classified as Subordinated Debt Capital Base Level II (Note 32), due to low chargeability and long-term permanence of these resources in the Bank (Vote
CMN n ° 067/2001 and Official Bank - Diret n ° 1.602 / 2001 )
(2) The full value of the Subordinated CDB issued in the country and the amount of R$ 500,403 thousand of subordinated debt abroad make up the Capital (PR),
level II, in accordance with Resolution CMN n º 3.444 / 2007, 02.28.2007 (Note 32g).
(3) refers to securities issued by BB-Commercial Bank, in possession of controlled abroad.
e) Hybrid
capital and debt instruments
R$/US$ Thousand
Bando do Brasil and Consolidated
Funding
Issued value
Perpetual Bonuses
US$
US$
Current Liabilities
Long term Liabilities
2,000,000
1,500,000
500,000
Remuneration
8.50% p.a.
7.95% p.a.
Date of funding
10/2009
01/2006
12.31.2009
R$ thous
12.31.2008
R$ thous
3,515,804
2,646,319
869,485
1,185,278
-1,185,278
13,260
3,502,544
16,817
1,168,461
The amount of R$ 2,523,580 thousand of the perpetual bonuses comprise the Referential Shareholders'
Equity (PR), level II, in conformity with CMN Resolution 3.444, of February 28, 2007, and authorization of
Central Bank of Brazil (Note 32f).
The amount of R$ 852,796 thousand of the perpetual bonuses comprise the Referential Shareholders' Equity
(PR), level II, in conformity with CMN Resolution 3.444, of February 28, 2007(Note 32f).
The operation of US$ 500,000 thousand, issued in January 2006, has a redemption option by initiative of the
Bank as from 2011 or in each subsequent quarterly payment of interest, providing it is authorized beforehand
45
Notes to Financial Statements
by the Central Bank of Brazil. The terms of these Perpetual Bonuses allow the Bank to suspend quarterly
payments of interest and/or accessory payments on the aforesaid securities issued (which will neither be due
or accumulated) if: (i) the Bank determines that it is incapable or the payment of these charges does not
allow the Bank to be in conformity with the capital adequacy levels then required by the Central Bank of
Brazil or its financial indicators are below the minimum level required by the regulations applicable to
Brazilian banks; (ii) the Central Bank of Brazil or the Regulatory Authorities determine the suspension of
payments of the aforesaid charges; (iii) some insolvency or bankruptcy event occurs; (iv) some default
occurs; or (v) the Bank decides to suspend these payments for any other reason. If the Bank decides to
suspend the payment of interest and accessories due to the Perpetual Bonuses on account of the contents
of item (v) above, the terms of the Perpetual Bonuses provide that, until such payments have been resumed
for a period equivalent to 12 months, the Bank (a) cannot recommend to its stockholders and, and as
established by the applicable legislation, will act in order to avoid the statement, payment or distribution of
dividends or interest on own capital on its common stock and (b) will suffer restrictions on its capacity to
redeem or otherwise acquire its common stock.
The transaction of US$ 1,500,000 thousand, issued in October 2009, has the option of redemption at the
initiative of the Bank from 2020 and on each monthly payment of interest thereafter, provided that prior
authorization by the Central Bank of Brazil. If the Bank does not exercise the option to redeem in October 2020,
interest on the bonds will be corrected by this date and every 10 years, taking into account the trading price of
the Treasury of the U.S. 10 years. The terms of Perpetual determine that the Bank has suspended payments of
monthly interest and / or accessories on those securities issued (which shall not be paid or accrued) if: (i) the
Bank is not framed or such charges do not allow the Bank is in accordance with the levels of capital adequacy
and operational limits expressed in Resolution 3444 and / or Resolution 2099, the Central Bank of Brazil, or its
financial indicators are below the minimum level required by the rules applicable to Brazilian banks, (ii ) The
Central Bank of Brazil or the Regulatory Authorities to determine the suspension of payments of these costs,
(iii) any event of insolvency occurs, (iv) any default occurs, or (v) the Bank has not distributed dividend
payments or interest on equity to common shareholders for the period corresponding to the period of
calculation of such interest and / or accessories.
f) Sundry
R$ Thousand
Banco do Brasil
Credit card operations (1)
Liabilities for purchase of goods and rights(2)
Cassi Actuarial Liability (Note 28.g).
Provisions for payments
Provisions for labor grievances (Note 31.a)
Provisions for civil claims (Note 31.a)
Sundry creditors - Brazil
Previ Actuarial Liability (Note 28.g).
Liabilities for official agreements
Obligations for premiums paid by the customer loyalty
Funds subject to loans
(3)
Obligations for the sale / transfer of financial assets
(4)
Other provisions
Accounts payable for payment services provided
Assumption of obligations - Securitization (Note 20.g)
Provisions for guarantees provided
Sundry creditors - abroads
Other
Total
Current Liabilities
Long term Liabilities
BB-Consolidated
12.31.2009
7,982,813
4,529,979
4,357,455
3,475,940
3,242,209
3,036,381
1,878,724
1,569,047
1,191,354
1,170,060
627,782
-281,720
280,874
109,288
70,191
61,661
93,757
33,959,234
12.31.2008
5,426,068
294,964
4,096,062
3,453,380
2,456,461
1,719,947
1,748,973
1,565,632
716,897
677,665
157,678
--425,744
420,029
40,442
63,634
24,587
23,288,163
12.31.2009
7,982,813
4,530,311
4,357,455
3,900,020
3,300,749
3,131,472
3,093,899
1,569,047
1,191,354
1,170,060
1,056,660
565,784
281,720
280,874
109,288
70,204
70,098
436,523
37,098,330
12.31.2008
5,426,068
294,975
4,096,062
3,721,067
2,475,231
1,760,175
2,655,751
1,565,632
716,897
677,665
757,642
--425,744
237,756
40,479
67,897
273,259
25,192,300
26,499,585
7,459,649
16,373,880
6,914,283
26,464,456
10,633,874
16,534,493
8,657,807
(1) Includes the value of the installments of shopping with credit cards by retailers installments in the amount of R$ 3,398,166 thousand (R$ 2,661,833 thousand
on 12.31.2008).
46
Notes to Financial Statements
(2) Includes, on 12.31.2009, the value of the bonds for the acquisition of Banco Nossa Caixa, R$ 2,657,611 thousand to be paid to the State of Sao Paulo (the
acquisition occurred on 03.16.2009) and R$ 1,016,713 thousand to be paid to shareholders (at the IPO, which occurred on 09.04.2009). It also includes the
amount to be paid to Banco Votorantim on the subscription of preferred shares, R$ 450,000 thousand (Note 5).
(3) refers to obligations to the other shareholders of the financial funds of Banco Votorantim, consolidated from 2009 (Note 2).
(4) Includes the value of R$ 269,309 thousand, relating to provisions of Banco Nossa Caixa to cover, especially loss with FCVS (book loans), recognized based
on estimates of losses due to negative coverage of all or part of operations transferred.
g) Securitization
R$/US$/EUR Thousand
Bando do Brasil and Consolidated
Issued
value
Funding
Remuneration
Date of
funding
Maturity
12.31.2009
R$ thous
12.31.2008
R$ thous
Future flow of credit card invoice receivables
US$
178,474
5.911% p.a.
07/2003
06/2011
88,418
US$
44,618
4.777% p.a.
07/2003
06/2011
20,870
45,554
109,288
237,756
Total
223,092
192,202
The Special Purpose Company - SPC "Brazilian Merchant Voucher Receivables" was created under the laws of the Cayman Islands with the following
purposes: (a) issue and sell securities in the international market; (b) to use funds raised with the issue of securities to pay for the purchase of current and
future rights of Companhia Brasileira de Meios de Pagamento ("Visanet") against Visa International Service Association over the Receivables arising from:
(i) credit or charge purchases made in Brazilian territory, in any currency processed by Visanet, with Visa cards issued by financial institutions located
outside of Brazil, or (ii) credit or charge purchases processed by Visanet in foreign currency and made with Visa cards issued by financial institutions
located in Brazil; and (c) to make payments of principal and interest with regard to securities and other payments provided in the agreements covering the
issue of such securities. BB is the beneficiary of 44.618488% of the funds, calculated based on the equity interest held in Visanet, on the issuing date, and
the remaining funds made available to the other Brazilian financial institution which holds an interest in Visanet. The SPE declares that it has no relevant
asset or liability other than the rights and duties originating from the contracts for issue of securities. BB does not hold the control, is not a shareholder, the
owner, or is a beneficiary of any of the results of operations of the SPE. The liabilities arising from the issued securities are paid by the SPC using the funds
accumulated in its account.
21 – Insurance, pension and capitalization operations
a) Claims Operations
R$ Thousand
BB-Consolidated
12.31.2009
12.31.2008
612,282
9,447
286,481
908,210
885,945
22,265
421,475
6,544
12,604
440,623
440,611
12
Direct insurance premiums receivable
Credit insurance business with insurers
Credit insurance transactions with reinsurers
Total
Current assets
Non current assets
b) Technical Provisions
R$ Thousand
12.31.2009
12.31.2008
BB–Consolidated
Mathematical provision for future benefits
Mathematical provision for vested benefits
Mathematical provision for redemptions
Mathematical provision for unearned premiums
Insurance
Pension
8,984
12,271,198
222
358,872
--
14,862
Capitalization
Total
Insurance
Pension
Capitalization
Total
12,280,182
625
8,763,423
--
8,764,048
--
359,094
265
327,651
--
327,916
1,743,419
1,758,281
--
943
1,447,841
1,448,784
--
1,041,045
--
--
1,041,045
644,799
--
--
644,799
Provision for unsettled claims
858,902
--
--
858,902
658,628
--
--
658,628
Provision for financial surplus
--
255,445
--
255,445
--
281,853
--
281,853
Provision for insufficiency of contributions
--
154,005
--
154,005
--
142,659
--
142,659
Provision for financial fluctuation
--
151,937
--
151,937
--
130,813
--
130,813
232,495
3,441
--
235,936
127,543
3,380
--
130,923
92,689
26,777
--
119,466
36,494
15,225
--
51,719
--
--
56,430
56,430
--
--
50,722
50,722
33,913
24,669
9,871
68,453
23,602
17,588
1,173
42,363
2,268,250
13,261,206
1,809,720
17,339,176
1,491,956
9,683,535
1,499,736
12,675,227
Provision for IBNR
Provision for premiums deficiency
Provision for draws for prizes and redemptions
Other provisions
Total
47
Notes to Financial Statements
Short-Term
1,940,475
372,969
1,809,720
4,123,164
1,478,585
343,588
1,499,736
3,321,909
Long-Term
327,775
12,888,237
--
13,216,012
13,371
9,339,947
--
9,353,318
c) Technical Provisions by product
R$ Thousand
12.31. 2009
12.31.2008
BB–Consolidated
Total
Insurance
Pension
Capitalization
Total
Automotive
Insurance
654,000
--
--
654,000
497,188
--
--
497,188
Life
755,536
--
--
755,536
613,005
--
--
613,005
Property/casualty
781,925
--
--
781,925
319,985
--
--
319,985
DPVAT
59,879
--
--
59,879
45,898
--
--
45,898
Health
16,910
--
--
16,910
15,880
--
--
15,880
--
--
1,809,720
1,809,720
--
--
1,499,736
1,499,736
PGBL Free benefit generating plan
--
5,391,560
--
5,391,560
--
3,620,813
--
3,620,813
VGBL Living benefits life insurance
--
5,091,497
--
5,091,497
--
2,916,245
--
2,916,245
Traditional plans
--
2,778,149
--
2,778,149
--
3,146,477
--
3,146,477
2,268,250
13,261,206
1,809,720
17,339,176
1,491,956
9,683,535
1,499,736
12,675,227
Capitalization
Total
Pension Capitalization
d) Guarantee of Technical Provisions
R$ Thousand
12.31. 2009
BB–Consolidated
Insurance
Shares in Investment Funds (VGBL and
PGBL)
12.31.2008
Pension Capitalization
Total
Insurance
Pension Capitalization
Total
--
10,331,995
--
10,331,995
--
6,441,433
--
6,441,433
Shares in Investment Funds (except VGBL
and PGBL)
886,671
2,021,878
1,250,781
4,159,330
806,055
2,336,692
1,013,549
4,156,296
Government bonds
665,987
1,087,281
241,904
1,995,172
439,073
1,129,650
319,210
1,887,933
Corporate bonds
197,670
33,337
410,494
641,501
244,507
28
250,347
494,882
Credit rights
364,346
--
--
364,346
242,951
--
--
242,951
1,338
--
--
1,338
3,225
--
--
3,225
416
--
--
416
626
--
--
626
2,116,428
13,474,491
1,903,179
17,494,098
1,736,437
9,907,803
Real estate properties
Deposits held at IRB and deposits in court
Total
1,583,106 13,227,346
e) Results of Insurance, Pension Plan and Capitalization Operations
2S2009
BB Consolidated
Insurance
Financial results
Financial income
Financial expenses
Restatement and
interest on technical
reserves
Operating results
Retained premiums and
contributions
Change in technical
provisions
Retained claims
Selling expenses
Expenses with draws for
prize & redemptions of
capitalization certificates
Expenses with pension
plans benefits and
redemptions
Total
95,185
122,591
(27,406)
368,605
575,193
(206,588)
86,212
92,482
(6,270)
550,002
790,266
(240,264)
f)
Pension
Capitalizatio
n
R$ Thousand
2008
2009
Total
Insurance
Pension
Capitalizatio
n
224,870
292,220
(67,350)
827,474
1,273,783
(446,309)
222,248
230,208
(7,960)
Total
Insurance
Pension
Capitalizatio
n
Total
1,274,592
1,796,211
(521,619)
144,901
188,406
(43,505)
645,080
754,307
(109,227)
156,367
157,347
(980)
946,348
1,100,060
(153,712)
(621,884)
1,745
(272,090)
(53,041)
(323,386)
(14,127)
(649,346)
(117,306)
(780,779)
(31,524)
(496,285)
(94,075)
784,589
(13,973)
28,949
799,565
1,537,251
(19,309)
56,181
1,574,123
863,658
(22,726)
51,483
892,415
1,610,636
1,755,208
586,140
3,951,984
3,150,833
3,350,226
1,220,654
7,721,713
1,865,622
1,750,529
943,119
4,559,270
(190,881)
(1,745,428)
(7,318)
(1,943,627)
(269,295)
(3,323,021)
(13,200)
(3,605,516)
(143,171)
(1,711,679)
(1,694)
(1,856,544)
(619,931)
(15,235)
-(14,972)
-(34,736)
(619,931)
(64,943)
(1,266,711)
(77,576)
-(30,722)
-(82,163)
(1,266,711)
(190,461)
(788,730)
(70,063)
-(18,404)
-(55,580)
(788,730)
(144,047)
--
--
(515,137)
(515,137)
--
--
(1,069,110)
(1,069,110)
--
--
(834,362)
(834,362)
--
(8,781)
--
(8,781)
--
(15,792)
--
(15,792)
--
(43,172)
--
(43,172)
881,519
82,542
62,120
1,026,181
1,747,994
158,819
161,123
2,067,936
977,035
126,069
113,775
1,216,879
Retained insurance premiums, pension plan contributions and capitalization certificates
R$ Thousand
2S2009
BB Consolidated
Premiums issued (VGBL
retirement)
Supplementary pension
contributions (includes
VGBL risk portion)
2009
Insurance
Pension
Capitali
zation
1,881,461
1,224,711
--
535,329
Total
Insurance
Pension
--
3,106,172
3,583,473
2,243,955
--
535,329
--
1,118,239
2008
Capitalizati
on
Capitali
zation
Total
Insurance
Pension
--
5,827,428
2,125,084
1,006,849
--
3,131,933
--
1,118,239
--
747,742
--
747,742
48
Total
Notes to Financial Statements
Revenues from
capitalization certificates
Coinsurance premiums
ceded
Reimbursed premiums
(return of VGBL
contribution)
Premiums issued net
(premium issued premium reimbursed)
Reinsurance premiums
ceded, consortiums and
funds
Retained insurance
premiums, pension plans
and capitalization
--
--
586,140
586,140
--
--
1,220,654
1,220,654
--
--
943,119
943,119
(10,851)
--
--
(10,851)
(21,074)
--
--
(21,074)
(11,514)
--
--
(11,514)
(6,266)
(4,832)
--
(11,098)
(16,388)
(11,968)
--
(28,356)
(14,653)
(4,062)
--
(18,715)
1,864,344
1,755,208
586,140
4,205,692
3,546,011
3,350,226
1,220,654
8,116,891
2,098,917
1,750,529
943,119
4,792,565
(253,708)
--
--
(253,708)
(395,178)
--
--
(395,178)
(233,295)
--
--
(233,295)
1,610,636
1,755,208
586,140
3,951,984
3,150,833
3,350,226
1,220,654
7,721,713
1,865,622
1,750,529
943,119
4,559,270
22 – Other Income / Expenses
a) Service fees income
R$ Thousand
Banco do Brasil
2S2009
Income from cards
Fund Management
Collections
(1)
BB-Consolidated
2009
2008
2S2009
2009
2008
907,249 1,668,034 1,329,568
611,755 1,177,042 1,237,133
577,848 1,106,376 1,043,240
1,310,272
1,071,615
597,328
2,483,296
2,023,542
1,138,111
2,042,804
1,979,196
1,043,934
Current Account
Loans and guarantees provided
Interbank
384,008
307,380
249,761
753,460
610,348
491,011
698,186
626,621
555,285
394,634
345,708
267,482
772,421
660,940
519,780
698,586
626,645
555,285
Collection
Services provided by non-financial associated companies
Insurance, pension and capitalization
255,195
-116,108
485,531
-206,755
438,144
-151,739
272,203
179,205
215,028
512,470
435,625
401,805
438,144
608,584
262,692
144,732
156,600
--
290,560
298,623
--
265,001
223,663
--
144,732
123,270
42,010
290,560
163,865
80,300
265,001
69,333
73,597
19,270
38,512
37,448
154,054
239,590
200,049
3,883,960 7,365,842 6,806,077
42,359
354,549
5,360,395
77,825
611,177
10,171,717
77,040
347,951
9,088,792
(2)
Official services
Provided to the related
Consortium administration fees
Brokerage and custody
Other services
Total
(1) Includes, in BB-Consolidated at 2009, the amount of R$ 726,241 thousand (R$347,337 thousand at second semester of 2008 and R$713,237 on 2008),
referring to results (proportional to the interest of BB BI) of the operations of Cia. Cielo - Visanet.
(2) Refers mainly to services provided by the National Treasury and Management of official Funds.
b) Bank fees income
R$ Thousand
Banco do Brasil
Service package
Loans and registration file
Deposit account
Transfer of funds
Total
2S2009
995,525
233,245
133,586
63,562
1,425,918
2009
1,922,398
550,067
240,427
116,924
2,829,816
2008
1,883,180
447,560
257,068
134,078
2,721,886
BB-Consolidated
2S2009
1,192,645
365,331
143,140
70,515
1,771,631
2009
2,237,880
716,407
257,252
127,925
3,339,464
2008
1,883,180
447,560
257,183
134,078
2,722,001
c) Personnel expenses
R$ Thousand
Banco do Brasil
Salaries
Payroll charges
Benefits
Personnel administrative provisions
Provision for labor grievances
Supplementary welfare
Training
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
(2,373,040)
(813,072)
(4,530,941)
(1,527,870)
(3,960,151)
(1,355,197)
(2,832,874)
(1,079,980)
(5,238,800)
(1,911,433)
(4,128,529)
(1,420,255)
(653,880)
(662,371)
(319,200)
(1,252,487)
(1,301,106)
(1,191,920)
(1,083,978)
(1,228,276)
(758,512)
(805,638)
(800,398)
(427,086)
(1,486,053)
(1,472,570)
(1,374,700)
(1,117,552)
(1,228,276)
(758,512)
(80,192)
(41,622)
(137,242)
(63,154)
(105,600)
(72,485)
(158,024)
(47,591)
(231,865)
(73,324)
(109,023)
(78,173)
49
Notes to Financial Statements
Directors’ and officers’ honoraries
Total
(20,223)
(16,043)
(4,953,839) (10,024,943)
(10,462)
(8,580,242)
(49,689)
(29,749)
(6,179,793) (11,838,434)
(28,202)
(8,870,069)
d) Other Administrative Expenses
R$ Thousand
Banco do Brasil
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
Amortization (1)
Communications
(704,685)
(534,367)
(1,342,380)
(1,016,040)
(224,500)
(984,843)
(931,252)
(586,999)
(1,699,718)
(1,107,054)
(233,155)
(1,020,894)
Data processing
Third party services
Litigation
(416,066)
(428,708)
(42,383)
(769,997)
(793,347)
(899,525)
(702,690)
(774,499)
(629,035)
(544,808)
(507,448)
(42,383)
(969,344)
(960,148)
(899,525)
(713,289)
(901,679)
(629,035)
Financial system services
Depreciation
Security services
(230,799)
(341,535)
(300,802)
(444,561)
(650,726)
(585,981)
(434,802)
(566,203)
(524,040)
(368,679)
(373,904)
(336,189)
(706,601)
(706,123)
(641,906)
(430,414)
(581,689)
(524,506)
Transport
Rent
Specialized technical services
(330,381)
(214,255)
(86,124)
(604,483)
(401,446)
(154,401)
(539,439)
(329,403)
(149,506)
(349,535)
(281,582)
(221,796)
(637,815)
(509,728)
(387,812)
(570,499)
(362,829)
(247,440)
Maintenance and upkeep
Advertising and publicity
Water, electricity and gas
(159,548)
(132,928)
(144,377)
(306,001)
(229,320)
(289,546)
(263,212)
(249,269)
(269,390)
(185,741)
(196,331)
(155,062)
(351,256)
(336,254)
(307,462)
(270,978)
(299,204)
(272,614)
(89,684)
(58,046)
(56,681)
(162,152)
(111,533)
(106,273)
(165,397)
(113,044)
(101,103)
(116,596)
(73,673)
(60,785)
(198,112)
(133,478)
(114,502)
(183,118)
(120,786)
(114,981)
(215,583)
(4,486,952)
(377,823)
(9,245,535)
(355,126)
(7,375,501)
(316,925)
(545,115)
(5,649,688) (11,211,953)
(440,150)
(7,917,260)
Advertising and public relations
Domestic travel
Materials
Other
Total
(1) Includes in 2009, the amount of R$ 1,099,631 thousand (R$1,407,853 thousand on 2008) for expenses derived of payroll rights aquisitions , previously
reported in Other operating expenses, which began to be recorded in this group as from December 2008, in accordance with BACEN Resolution
3357/2008.
e) Tax Expenses
R$ Thousand
Banco do Brasil
2S2009
(964,668)
(215,218)
(156,757)
(31,345)
(1,367,988)
Cofins
ISSQN
PIS/Pasep
Other
Total
f)
2009
(1,791,777)
(418,016)
(291,162)
(59,678)
(2,560,633)
BB-Consolidated
2008
(1,512,986)
(406,338)
(245,736)
(57,684)
(2,222,744)
2S2009
(1,247,995)
(295,094)
(206,949)
(54,741)
(1,804,779)
2009
(2,287,683)
(560,696)
(379,455)
(104,844)
(3,332,678)
2008
(1,715,376)
(494,464)
(283,935)
(141,097)
(2,634,872)
Other Operating Income
R$ Thousand
Banco do Brasil
(1)
Foreign exchange gains
Previ – Adjustment by CVM 371
Equalization of rates - Law 8427
Labor, civil and tax claims - Reversal of provisions
Income from guarantee deposits
Recovery of charges and expenses
Equipment Rental - POS (Cielo)
Previ – Parity agreement contributions
Gain on Equity Pickup (Neoenergia)
Revenue Receive Credit - Securitization (Ativos S.A.)
Credit card transactions
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
1,521,522
3,626,722
883,082
1,674,881
518,682
550,799
-96,587
--81,785
5,158,306
4,223,294
1,773,404
1,705,481
1,079,437
1,066,621
-220,755
--157,130
1,012,206
5,412,367
1,351,649
218,534
1,192,476
920,081
-221,273
--244,260
1,530,549
3,626,722
883,082
1,674,881
556,700
632,827
129,148
96,587
101,335
109,022
85,538
5,177,825
4,223,294
1,773,404
1,705,481
1,143,105
1,061,330
279,425
220,755
181,625
173,048
162,970
1,012,206
5,412,367
1,351,649
218,534
1,192,476
752,131
284,679
221,273
102,744
101,266
244,260
50
Notes to Financial Statements
Administrative expenses - Reversal of provisions
Cards emission income (Visavale)
Income from specific credits
Income from Special Operations
Dividends received
Personnel expenses - Reversal of provisions
Others
Total
64,231
-43,708
20,756
22,113
5,736
133,538
9,244,142
142,994
-87,659
44,878
43,166
8,141
159,081
15,870,347
127,415
-87,666
51,713
46,070
34,178
326,034
11,245,922
64,231
63,710
43,708
20,756
22,113
5,736
309,758
9,956,403
142,994
110,280
87,659
44,878
43,166
8,141
433,574
16,972,954
127,415
88,829
87,666
51,713
46,070
34,178
450,558
11,780,014
(1) Refers to the revenue obtained with the liabilities in foreign currencies, due to the appreciation of the Real in the period, which offset the costs
generated by assets in foreign currencies, mainly, the group highlighted in other operating expenses – Negative foreign exchange adjustment (Note 22.g)
and exchange variation on investments abroad (Note 14.b).
g) Other operating expenses
R$ Thousand
Banco do Brasil
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
(958,709)
(2,717,098)
(759,444)
(963,866)
(2,726,357)
(759,444)
--
--
--
(518,042)
(1,016,952)
(815,590)
Credit card transactions
(401,148)
(733,999)
(495,825)
(422,944)
(759,711)
(495,825)
Restatement of guarantee deposits
(263,896)
(552,634)
(653,963)
(263,896)
(552,634)
(653,963)
CASSI - Expense with provision (CVM Resolution 371)
(270,984)
(541,968)
(1,830,769)
(270,984)
(541,968)
(1,830,769)
Premiums paid to clients - Loyalty Program(1)
(266,406)
(490,347)
(1,199,771)
(266,406)
(490,347)
(1,199,771)
Sundry losses
(243,953)
(369,875)
(129,420)
(278,298)
(411,693)
(129,420)
Updating of the pension liability
(171,839)
(299,790)
(359,684)
(171,839)
(299,790)
(359,684)
Updating the acquisition of investment
(150,046)
(291,426)
--
(150,046)
(291,426)
--
Payroll guaranteed loans acquired
(147,042)
(251,497)
(96,416)
(147,042)
(251,497)
(96,416)
Discounts granted on renegotiations
(66,588)
(115,907)
(81,828)
(94,494)
(145,779)
(84,720)
Hybrid capital and debt instruments
(80,855)
(115,938)
(94,724)
(80,855)
(115,938)
(94,724)
Expenses of BB – ATM
(43,411)
(80,102)
(80,628)
(43,411)
(80,102)
(80,628)
Amortization of goodwill
(24,799)
(65,055)
--
(24,799)
(65,055)
--
Law 9138/95 - Restatement of funds to be returned to
the Federal Treasury
(21,121)
(43,941)
(50,857)
(21,121)
(43,941)
(50,857)
Update interest own capital / Dividends
(13,376)
(37,070)
(21,895)
(13,376)
(37,070)
(21,895)
INSS
Fees for the use of Sisbacen – Central Bank of Brazil
System
Securitization SWIFT MT100 - liabilities with the SPE
(13,465)
(27,032)
(47,137)
(13,465)
(27,032)
(47,137)
(13,532)
Foreign exchange losses
Other operating expenses from non-financial associated
companies
(2)
Previ- Actuarial Asset Amortization - CVM Resolution
371
Other (3)
Total
(6,477)
(13,571)
(13,532)
(6,477)
(13,571)
(24,610)
(56,835)
(106,762)
--
--
--
--
--
(353,503)
--
--
(353,503)
(297,530)
(542,538)
(479,343)
(987,281)
(1,456,038)
(517,295)
(3,466,255)
(7,346,623)
(6,855,501)
(4,738,642)
(9,326,901)
(7,605,173)
(1) The decrease on 2009, totaling R$ 832,887 thousand, refers to the reclassification of expenditure from the budget negotiating relationship (Note 22.d).
The reclassification is being made since December 2008, in accordance with Bacen Circular Letter 3357/2008.
(2) In BB-Consolidated, these expense are classified as “Expense for marketable securities abroad”.
(3) Includes, on 2009 the BB-Consolidated, the value of R$ 407,913 thousand (R$ 206,782 thousand on 2008) on other operating expenses of the Banco
Nossa Caixa.
23 – Non operating income
R$ Thousand
Banco do Brasil
Non-operating income
(1)
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
182,696
246,452
191,448
482,033
1,971,297
561,088
76,696
76,696
--
350,541
1,765,663
17,704
Capital gains
Reversal of provision for devaluation of other
assets
Profit on the sale of assets
27,781
34,226
20,291
44,874
52,100
48,779
21,731
44,593
45,489
22,572
45,768
45,584
24,946
34,514
37,918
26,683
40,246
127,220
Sale of real estate
17,784
30,416
62,139
17,784
30,416
62,139
Profit on the sale of investments
51
Notes to Financial Statements
6,772
14,322
15,284
1,728
4,421
7,141
1,728
4,421
13,296
5,258
7,264
3,186
10,926
17,781
228,198
Non-operating expenses
(34,490)
(70,140)
(90,457)
(80,649)
(127,669)
(148,544)
Devaluation of other assets
(24,863)
(47,272)
(48,316)
(25,166)
(47,842)
(48,420)
Capital losses
(7,911)
(17,040)
(24,506)
(27,939)
(37,301)
(29,166)
Loss on sale of assets
(1,155)
(2,386)
(3,999)
(20,880)
(23,042)
(41,561)
(561)
(3,442)
(13,636)
(6,664)
(19,484)
(29,397)
148,206
176,312
100,991
401,384
1,843,628
412,544
Rental income
Provision for/(reversal of) loss with shares and
quotas
(2)
Other non-operating income
Other non-operating expenses
(3)
Total
6,925
14,902
18,168
(1) Refers mainly to the profit made by Banco do Brasil on the sale of shares of Visa Incorporated (R$ 76,696 thousand) and BB Banco de Investimento
with the sale of shares in Visanet (R$ 1,624,575 thousand) and Visa Incorporated (R$ 64,287 thousand).
(2) Includes on 2009 at BB-Consolidated, the value of R$ 224,752 thousand relating to Other non-operating income of non-financial associated companies.
24 – Stockholder’s Equity
a) Capital
The capital of R$ 18,566,919 thousand (R$ 13,779,905 thousand at 12.31.2008) is represented by
2,569,860,512 book-entry common shares with no par value. The Federal Union is the controlling
stockholder.
The R$ 4,787,014 thousand capital increase in the 2009 fiscal year arose from the capitalization of the
Expansion Reserve (R$ 4,768,706 thousand) without issuing new shares, as approved by the General
Shareholders' Meeting dated April 23, 2009, and the issue of 1,674,027 common registered shares (R$ 18,308
thousand) with no par value, resulting from the merger of Banco Nossa Caixa on November 30, 2009.In 2008,
the R$ 568,261thousand capital increase was a result of the takeovers of Besc S.A. and Besc S.A. - Crédito
Imobiliário (Bescri), and of BEP S.A. - Banco do Estado do Piauí.
The stockholders' equity of R$ 36,119,265 thousand (R$ 29,937,250 thousand at December 31, 2008)
corresponds to an equity value of R$ 14,05 per share (R$ 11,66 at December 31, 2008). The market value of
per common share at December 31, 2009 was R$ 29,70 (R$ 14,68 at December 31, 2008).
b) Revaluation reserves
The revaluation reserves, totaling R$ 6,746 thousand (R$ 7,286 thousand in 12.31.2008), refer to
revaluations of assets made by the companies Kepler Weber S.A., Pronor, and Cobra Tecnologia S.A. The
realizations of the reserves in the period, totaling R$ 557 thousand (R$ 285 thousand 2008 and R$219
thousand at the second half of 2008), were transferred to "Retained earnings (accumulated losses)". The
remaining balance will be held until to the date of its effective realization, in conformity with CMN Resolution
3565, of 5.29.2008.
c) Capital and profit reserves
R$ Thousand
12.31.2009
Capital reserves
Profit reserves
Legal Reserve
Statutory Reserves
(1)
Operating margin
Equalization of dividends (2)
Expansion Reserve
(3)
12.31.2008
5,188
5,188
17,301,439
2,296,291
15,005,148
15,977,333
1,788,916
9,419,711
12,308,413
2,696,735
--
7,412,899
2,006,813
4,768,706
(1) The purpose is to guarantee an operating margin compatible with the development of the company's transactions. It is formed by up to 100% of the
balance of net income after legal distributions, including dividends, up to the limit of 80% of the capital.
(2) Guarantees financial resources for the payment of dividends and is formed by up to 50% of the balance of net income after legal distributions, including
dividends, up to the limit of 20% of the capital.
(3) Reserve capitalized in the 1st half of 2009 without issuing new shares, after approval by the General Assembly of Shareholders 04.23.2009.
52
Notes to Financial Statements
d) Interest on own capital / Dividends
R$ Thousand
2S2009
2009
2008
1 - Net income for the period
6,133,959
10,147,522
8,802,869
2 - Interest on own capital allocated to stockholders
3 - Dividends allocated to stockholders
954,012
1,499,572
2,453,584
1,857,866
2,201,143
4,059,009
1,548,227
1,972,921
3,521,148
Total allocated to stockholders (Item 2 + Item 3)
In accordance with Laws 9249/1995 and 9430/1996 and the Bank's Bylaws, Management decided on the payment of Interest on Own Capital to its
stockholders, imputed to the value of the dividends, plus additional dividends, equivalent to 40% of net income.
During the year of 2009 R$ 533,956 were allocated (R$ 910,852 thousand during 2008), of which
R$ 218,474 thousand during the first half of 2009 and R$ 315,482 during the second half as interim
dividends for account of the Statutory Reserve for Dividend Equalization, and R$ 1,667,187 thousand (R$
1,062,069 thousand for the 2008 fiscal year) for account of the income for the year.
The total amount of Interest on Own Capital on 2009 totaled R$ 1,857,866 thousand. The amount of Interest
on Own Capital permitted a decrease on tax charges in the amount of R$ 743,146 thousand.
The Interest on Own Capital and Dividends on 2009 will be based on the shareholding position of
12.21.2009 and will be paid on 03.10.2010.
To comply with the Income Tax legislation, the amount of interest on capital was recorded as corresponding
entries against "Financial expenses" and, for purposes of disclosure of the financial statements, reclassified
to "Retained earnings".
e) Payments of/Provisions for Interest on Own Capital and Dividends
R$ Thousand
Interest on own capital/Dividends allocated
Interest on own capital
Paid
Payable
Dividends
Paid
Payable
Interest on own capital/Dividends allocated
Interest on own capital paid
Dividends paid
2009
Per share
Gross amount
Income tax
1.580
0.723
0.537
0.186
0.857
0.857
0.396
4,059,009
1,857,866
1,379,776
478,090
2,201,143
2,201,143
1,017,053
(278,680)
(278,680)
(206,966)
(71,714)
----
2008
Per share
Gross amount
Income tax
1.372
0.603
0.769
3,521,148
1,548,227
1,972,921
(232,234)
(232,234)
--
Net amount
3,780,329
1,579,186
1,172,810
406,376
2,201,143
2,201,143
1,017,053
Net amount
3,288,914
1,315,993
1,972,921
f) Stockholdings (Number of shares)
Stockholdings at December 31, 2009 of all those who hold, directly or indirectly, more than 5% of the Bank’s
capital:
Stockholders
Federal Government
Ministério da Fazenda
Fundo de Garantia a Exportação
(1)
Fundo Garantidor de Parcerias Público-Privadas – FGP
Fundo Garantidor de Habitação Popular – FGHab
Fundo Garantidor para Investimentos
Banco do Brasil Employees Retirement Fund (PREVI)
(2)
BNDES Participações S,A, - BNDESPar
Total shares
% Total
1,677,309,058
1,378,734,058
229,400,000
60,000,000
1,675,000
7,500,000
266,446,187
62,409,779
65.27%
53.65%
8.93%
2.33%
0.07%
0.29%
10.37%
2.43%
53
Notes to Financial Statements
Treasury Stock
Other shareholders
1,150,369
562,545,119
2,569,860,512
Total
0.05%
21.89%
100.00%
(1) Shares transferred by the Union to pay up the capital of FGP, as authorized by Ordinance No. 413/2005 of the Ministry of Finance.
(2) Connected to the Controller.
Evolution of the quantity of shares issued by the Bank's shareholders hold, directly or indirectly, of more than
5% of the shares and the directors and members of the Fiscal Council and Audit Committee:
Controlling Group
Federal Government
Ministério da Fazenda
Fundo de Garantia a Exportação
Fundo Garantidor de Parcerias Público-Privadas – FGP
Fundo Garantidor de Habitação Popular – FGHab
Fundo Garantidor para Investimentos
Previ
BNDESPar
Total
12.31.2009
12.31.2008
1,677,309,058
1,378,734,058
229,400,000
60,000,000
1,675,000
7,500,000
266,446,187
62,409,779
2,006,165,024
1,684,809,058
1,395,409,058
229,400,000
60,000,000
--266,253,012
64,005,679
2,015,067,749
(1)
Common shares (ON)
12.31.2009
12.31.2008
Board of Directors(Except for the shares of the President that are included in the Board of Directors)
Steering committee (2)
Executive Committee
Fiscal Council
Audit Committee
14
7,665
9,686
-823
33
7,017
14,753
-1,729
(1) The shareholding interest of the Board of Directors, Steering Committee, Executive Committee, Fiscal Council and Audit Committee represents
approximately 0,001%, at 12.31.2009 (0,001% at 12.31.2008), of the Bank's capital stock.
g) Number of Shares beingTraded on the Market (Free Float)
BB Shares
Being traded (Free Float)
Total issued
Number
(1)
Percentage
562,527,754
2,569,860,512
21.89%
100.00%
(1) Pursuant Law 6404/1976 and Pursuant to the regulations of the Bovespa New Market.
h) “C” subscription bonuses
From the subscription bonuses issued by the Bank in 1996, remains the balance of 5,880,483 “C” Bonuses
on 12.31.2009, wich provides the holder of the document the right to subscribe shares of the capital by
issuing the deadlines originally – 03.31.2011 to 6.30.2011. The market value from these bonuses on
12.31.2009 was R$58,50 (R$17,93 on 12.31.2008).
25 – Income and Social Contribution Taxes
a) Breakdown of income tax and social contribution expenses
R$ Thousand
Banco do Brasil
2S2009
2009
BB-Consolidated
2008
2S2009
2009
2008
Present values
(1,362,195)
(3,745,029)
(2,110,886)
(2,344,468)
(5,895,124)
(2,952,054)
Income and social contribution taxes in Brazil
(1,350,925)
(3,725,621)
(2,077,247)
(2,327,485)
(5,868,228)
(2,914,792)
(11,270)
(19,408)
(33,639)
(16,983)
(26,896)
(37,262)
(1,411,981)
(1,810,119)
(2,626,150)
(1,584,070)
(2,135,317)
(2,737,813)
Income tax abroad
Deferred tax liabilities
54
Notes to Financial Statements
Leasing Operations – Portfolio adjustment and
encoureged depreciation
MTM gains
Actuarial gains
Restatement of litigation deposits
Income abroad
--
--
--
(125,561)
(260,847)
(106,220)
84,305
49,286
(155,494)
32,110
(16,870)
(155,208)
(1,383,232)
(1,610,764)
(2,064,277)
(1,383,231)
(1,610,764)
(2,064,277)
(126,284)
(248,607)
(413,175)
(126,285)
(248,607)
(413,175)
13,195
--
--
13,195
--
--
35
(34)
6,796
(3,177)
(7,108)
7,091
Transactions carried out on the futures market
Time investments disposal
--
--
--
8,879
8,879
(6,024)
(2,774,176)
(5,555,148)
(4,737,036)
(3,928,538)
(8,030,441)
(5,689,867)
Income tax
(1,710,171)
(3,441,524)
(2,926,234)
(2,497,831)
(5,116,348)
(3,608,692)
Social Contribution
(1,064,005)
(2,113,624)
(1,810,802)
(1,430,707)
(2,914,093)
(2,081,175)
(200,104)
3,268,726
3,438,797
403,595
4,127,654
3,544,751
(227,443)
3,131,118
3,718,423
279,876
3,781,893
3,739,461
Income tax and social contribution losses
42,819
42,819
38,149
138,386
251,305
119,578
MTM losses
49,493
175,308
(317,874)
50,306
174,975
(314,250)
(64,973)
(80,519)
99
(64,973)
(80,519)
99
--
--
--
--
--
(137)
(2,974,280)
(2,286,422)
(1,298,239)
(3,524,943)
(3,902,787)
(2,145,116)
Provision
Deferred tax credits
Temporary differences
Transactions Carried out on the Futures Market
Others
Total income tax and social contribution expense
b) Reconciliation of income tax and social contribution expense
R$ Thousand
Banco do Brasil
2S2009
Earnings before taxation and profit sharing
Total charges of IR (25%) and CSLL (15%)
Interest on Own Capital
(1)
Equity in subsidiaries and associated
Profit sharing
2008
2S2009
2009
2008
9,890,848
13,729,226 11,224,675
10,516,493
15,435,429
12,082,018
(3,956,339)
381,605
332,527
313,045
(4,206,597)
381,605
(129,758)
343,045
86,762
(6,174,172)
743,146
(396,277)
553,812
1,213,177
157,527
(4,107,886)
619,291
557,693
453,627
(45,118)
(5,491,690) (3,816,390)
743,146
619,291
739,821 1,211,457
518,114
449,427
-1,213,177
(8,990)
237,976
(2,974,280)
(2,286,422) (1,298,239)
(3,524,943)
(3,902,787)
(2,145,116)
Activation of Tax Credits (CSLL previous years)
Other amounts
Social contribution expense
--
2009
BB – Consolidated
--
--
332,159
(1) From 1.1.2003 to 4.30.2008, the prevailing rate for CSLL was 9%, pursuant to Law 10637, of 12.30.2002. As of May 2008, the rate for CSLL was
increased to 15%, pursuant to Law 11727/2008.
c) Lawsuit: Interest on Own Capital Tax Benefit
c.1) In February 1998, the Bank filed a request for full offsetting of accumulated income tax loss carry forwards
and negative basis of social contribution against taxable income. Since then, the Bank has been fully offsetting
tax loss carry forwards and negative basis of social contribution against income tax and social contribution and
has made judicial deposits in the full amount due (70% of the amount offset). These deposits prompted the
Federal District 16th Court to issue an order recognizing the suspension of chargebility of these taxes until final
judgment of the Bank's request, based on article 151, item II, of the Tax Code. Since 10.1.2002, the
proceedings have been awaiting hearing of an extraordinary appeal by the Federal Supreme Court.
c.2) The offsetting of tax loss carry forward and recoverable CSLL has resulted in the write-off of deferred tax
credits, observing the limitation of 30%.
c.3) In compliance with the prohibition contained in CMN Resolution 3535/2008, judicial deposits of the
amount of R$ 11,752,804 thousand (principal plus interest) were not deducted from the corresponding
provisions in the manner established in item 53 of CVM Resolution 489/2005, with a negative impact on the
Basel Index.
55
Notes to Financial Statements
c.4) Deferred taxes (including corporate income tax (IRPJ) and social contribution on net income (CSLL)) on
the restatement of judicial deposits are being offset with the tax credits resulting from the provision related to
that judicial deposit, in conformity with paragraph 1, item II, article 1 of CMN Resolution 3059/2002, with no
impact on income.
c.5) The hypothesis of a successful outcome to its lawsuit, we verified that in September 2005 and January
2009 the Bank would have consumed the entire stock of tax loss carry forward and recoverable social
contribution, respectively, Therefore, since the accrual period of October 2005 and February 2009, the
amount of Income Tax and Social Contribution are being paid in full.
Additionally, there would be the transfer of funds from the account used to record judicial deposits to cash and
cash equivalents, The tax credits related to judicial deposits (principal) would be written off against the provision
for IRPJ and CSLL and the provision for tax risks related to the restatement of deposits, in the amount of R$
3,414,002 thousand.
c.6) If the Bank were unsuccessful in its lawsuit the amounts deposited judicially would be converted into
income in favor of the National Treasury. The portions of IRPJ tax credits on tax loss carry forward that could
be used since the accrual period of October 2005 and February 2009, observing the limitation of 30%, would
be reclassified to the account representing "recoverable IRPJ" and “recoverable CSLL” assets. The
recoverable IRPJ and CSLL that would result from the adjustments to the Economic-Tax Information
Returns for Corporate Entities, corresponds to R$ 2,693,864 thousand as of December 2009 and its
restatement using the Selic rate corresponds to R$ 356,231 thousand. This sum adjusts the provision for tax
risks with respect to the updating of court deposits (see item 25c.5) so that it will be sufficient to fully cancel
the risk of a likely loss.
c.7) The amounts related to this matter are as follows:
R$ Thousand
Judicial Deposits
Amount realized
Restatement
70% thereof
Income tax losses
Negative basis of CSLL / Recoverable CSLL
12.31.2009
12.31.2008
11,752,804
10,998,898
7,817,011
6,525,020
3,935,793
4,473,878
6,585,045
6,555,657
3,002,033
3,002,033
3,583,012
3,553,624
26 – Tax credits
a) Tax credits recorded as assets
R$ Thousand
BB-Banco Múltiplo
BB-Consolidado
12.31.2009
12.31.2008
12.31.2009
12.31. 2008
20,184,814
16,044,556
21,882,803
16,470,207
42,819
--
558,221
158,311
Temporary differences
16,028,657
10,768,426
17,170,069
11,017,836
Mark-to-market losses
150,764
84,719
190,908
102,555
--
134,805
--
134,805
30,452
113,222
30,452
113,222
3,917,634
4,932,165
3,917,634
4,932,165
14,488
11,219
15,519
11,313
22,121
26,692
26,998
29,275
18,424
10,525
23,301
13,108
Total income tax and social contribution credits recorded
Fiscal losses/ negative bases
Recoverable social contribution
Futures market transaction losses
Tax credits - writ of security
Tax credits abroad
Total PASEP and COFINS credits recorded
Mark-to-market losses
56
Notes to Financial Statements
Adjustments of futures market transactions
3,697
16,167
3,697
16,167
20,206,935
16,071,248
21,909,801
16,499,482
10,886,269
9,047,753
12,127,634
9,398,169
9,298,545
6,996,803
9,755,169
7,072,038
Pasep
3,092
3,731
3,475
4,092
Cofins
19,029
22,961
23,523
25,183
Total tax credits recorded
Income Tax
Social Contribution
The tax credits recorded include Recoverable Social Contribution related to tax credits calculated at the rate
of 18% on tax losses and temporary differences existing at December 31, 1998, Article 8 of Provisional
Measure (MP) 2158-35/2001 reduced the rate of social contribution from 18% to 8% and authorized the
maintenance of this credit classified in Other Receivables – Other.
From January 1, 2003 to April 30, 2008, the rate of CSLL in force was 9%, pursuant to Law 10637/2002.
Provisional Measure 413/2008, converted into Law 11727/2008, raised the financial industry's Social
Contribution rate from 9% to 15% as of May 1, 2008, giving rise to an increase in the Social Contribution
expenses, as well as in the corresponding tax credits.
Considering that some financial institutions have been going to court with individual lawsuits challenging the
increase of the rate of CSLL and that the National Confederation of the Financial System - Consif filed a
Direct Unconstitutionality Lawsuit - ADIN, the Multiple Bank has been recognizing tax credits in a sum
sufficient to annul, exclusively, the impact on income resulting from the increase of the rate (6%) on the
CSLL tax liabilities (current and deferred).Banco do Brasil performed an assessment of the arguments
employed by ADIN, concluding on the remote likelihood of success by Consif, for which reason the Bank
posted an additional sum of CSLL tax credits in order to complete the increased 15% tax rate, totaling R$
1,213,177 thousand.
b) Tax credits not recorded
R$ Thousand
BB-Banco Múltiplo
12.31.2009
BB-Consolidado
12.31.2008
12.31.2009
12.31.2008
Nature and origin
Total income tax and social contribution credits not Recorded
Fiscal losses/ negative bases
Temporary differences
Mark-to-market losses
Tax credit abroad
108,345
108,345
1,252,473
1,251,195
1,278
-
188,429
60,302
19,782
108,345
1,357,362
48,264
1,255,923
3,490
49,685
c) Entries and write-offs for the period
R$ Thousand
BB-Banco Múltiplo
Opening balance
Total income tax and social contribution tax recorded
Income tax and social contribution losses
On timing differences
On mark-to-market losses
Tax credits abroad
Futures market adjustment losses
Tax credits - writ of security
Added Values
BB-Consolidado
12.31.2009
12.31.2008
12.31.2009
12.31.2008
16,071,342
13,680,433
16,571,106
13,825,929
6,892,786
42,819
6,613,608
144,032
14,613
49,927
27,787
3,492,765
2,830,198
5,270
3,700
113,222
540,375
8,218,251
413,625
7,532,315
179,984
14,613
49,927
27,787
--
--
--
3,839,285
82,013
2,860,093
69,661
4,155
113,222
540,375
169,766
--
57
Notes to Financial Statements
23,012
17,564
5,448
6,915,798
Total Pasep and Cofins tax credits recorded
Mark-to-market losses
Futures market transaction losses
Total tax credits recorded
16,167
--
16,167
3,508,932
(2,752,622)
25,122
8,955
16,167
3,864,407
(1,179,877)
(23,196)
(7,416)
(598,187)
(72,463)
(1,971)
16,499,482
Total tax credits reversed
(1,353,376)
(134,805)
(77,988)
(11,438)
(132,697)
(1,042,318)
(27,583)
(9,665)
(17,918)
(2,780,205)
(1,118,117)
(2,877,280)
(13,715)
(1,451,708)
(134,805)
(91,631)
(10,406)
(132,697)
(1,042,318)
(29,030)
(11,112)
(17,918)
(2,906,310)
Closing balance
20,206,935
16,071,248
21,909,801
Total IRPJ and CSLL tax credit write-offs
Income tax and social contribution losses
(1,114,648)
(21,950)
26,754
21,306
5,448
8,245,005
--
Temporary differences
Relating recoverable social contribution (MP 1858/1999)
On mark-to-market losses
Tax credits abroad
Futures market adjustment losses
Tax credits - writ of security
Total PASEP and COFINS credits reversed
Mark-to-market losses
Futures market transaction losses
--
(598,187)
(17,867)
---
(476,644)
(3,469)
(3,469)
--
--
(476,644)
(10,977)
(10,977)
--
(1,190,854)
d) Deferred tax liabilities
R$ Thousand
Banco do Brasil
12.31.2009
12.31.2008
BB-Consolidated
12.31.2009
12.31.2008
Arising from mark-to-market adjustments
3,925,500
159,765
2,246,518
180,384
Arising from leasing portfolio adjustments
--
--
Foreign branches
--
--
2,286,671
278,273
256,435
3,480
(26,835)
--
4,756,058
171,063
635,040
3,834
(26,835)
--
--
--
113,702
3,675,041
3,827
--
2,064,277
1,857
113,950
3,675,041
183,965
11,845
31,399
2,064,277
(359,038)
650,890
19,478
183,343
426,699
21,991
153,033
673,347
20,853
183,343
448,058
11
251,675
Total deferred income tax and social contribution liabilities
Arising from restatement of judicial deposits
Arising from foreign profits
Arising from futures market transactions
Arising from unrecognized actuarial gains (1)
Others
Total amount of deferred Pasep and Cofins tax liabilities
Arising from mark-to-market adjustments
Arising from restatement of judicial deposits
Arising from futures market transactions
--
579,349
33,906
287,876
1,670
251,675
4,222
--
Arising from unrecognized actuarial gains (1)
Others
--
448,058
21,093
Total deferred tax liabilities
4,576,390
2,673,217
5,429,405
(1) The realization of deferred tax liabilities on actuarial gains is related to the achievement of the values of actuarial (Note 28.a)
2,866,020
e) Estimates for the realization of tax credits recorded
The value indicated below on the expectation of implementation of tax credits is based on technical study
was prepared in 12.31.2009, and the present value determined based on the average rate of funding of
Banco do Brasil.
R$ Thousand
Banco do Brasil
In 2010
In 2011
In 2012
BB-Consolidated
Face Value
3,599,072
Present Value
3,487,744
Face Value
4,309,231
Present Value
4,144,897
3,691,862
3,426,080
3,927,365
3,609,999
4,471,155
3,962,659
4,679,543
4,103,863
58
Notes to Financial Statements
In 2013
In 2014
From 2015
Total tax credits
4,321,715
3,671,803
4,334,061
3,671,495
3,666,788
2,994,811
3,701,628
3,005,591
456,343
361,063
957,973
400,727
20,206,935
17,904,160
21,909,801
18,936,572
During the period of 2009, the realization of tax credits in Banco do Brasil was observed in the amount of R$
5,134,762 thousand, corresponding to 143,51% of the forecast for use reported in a technical study prepared
as of 12.31.2008 (R$ 3,578,000 thousand).
f) Realization of Face Values of Credits
The realization of face values of recorded tax credits, considering the re-composition of those written off over
the course of the lawsuit (70%), based on a technical study carried out by the Banco do Brasil (as of
12.31.2008), is projected for 5,5 years, in the following proportions:
R$ Thousand
Banco Brasil
BB-Consolidated
Tax loss /CSLL
(1)
recoverable
Intertemporal Differences
Tax loss /CSLL
(1)
recoverable
Intertemporal Differences
39%
24%
29%
8%
-
14%
17%
20%
24%
22%
3%
34%
23%
27%
7%
1%
8%
16%
16%
20%
23%
21%
4%
In 2010
In 2011
In 2012
In 2013
In 2014
From 2015
(2)
(2)
(1) Projection of consumption associated with the capacity to generate taxable bases of IRPJ and CSLL in subsequent periods,
(2) The consumption capacity results from the changes in the provisions (expectation of reversals, write-offs and uses),
27 – Related-party Transactions
The costs of salaries and other benefits granted to key management personnel of the Banco do Brasil Group
(Board of Directors, Executive Directors, Audit Committee and Fiscal Council) are listed as follows:
R$ Thousand
Short-term benefits
2009
23,546
2008
20,446
Benefits for termination of employment
Total
9,311
32,857
2,313
22,759
Banco do Brasil has no variable remuneration based on shares and other long-term benefits and does not offer
post-employment benefits to its key management personnel. The post employment benefits are restricted to
the staff of Banco do Brasil.
The balances referring to transactions between the consolidated companies of Banco do Brasil are eliminated
in the Consolidated Financial Statements. With respect to the majority shareholder, transactions with the
National Treasury and with the agencies of the direct administration of the Federal government that maintain
banking operations with the Bank, are included.
The Bank has only normal banking transactions with these related parties, such as interest bearing and noninterest bearing deposits, loans, and sale and repurchases transactions. There are also service provision and
guarantee agreements.
These transactions with related parties are conducted under normal market conditions, mainly under the terms
and conditions for comparable transactions with unrelated parties, including interest rates and collateral. These
transactions do not involve payment risks.
The Bank does not grant loans to its officers or members of its Board of Directors, Audit Committee and Fiscal
Council, because this practice is prohibited in all the financial institutions regulated by Banco Central do Brasil.
59
Notes to Financial Statements
The funds invested in federal government bonds, and those earmarked for funds and programs for onlending
from public institutions are listed in conformity with Note 8 and 18, respectively.
The information related to onlending and other transactions with entities linked to employees are disclosed in
Note 28.
Summary of transactions with related parties
The balances of the assets and liabilities of Banco do Brasil from transactions with related at 12.31.2009 and
12.31.2008 and their results in the year 2009 and 2008 are as follows:
R$ Thousand
12.31.2009
Affiliated
companies
Parent
company (1)
(2)
Subsidiaries (3)
Jointly
controled
subsidiaries
Key
management
Personnel (5)
(4)
Other Related
Parties (6)
Total
Assets
Interbank deposits
Securities
Loans
Receivables
Other Assets
Total
Liabilities
Demand deposits
Saving deposits
Remunerated time deposits
Obligations related to
Committed Operations
Borrowings and transfers BNDES
Borrowings and transfers FINAME
Borrowings
Other Liabilities
Total
STATEMENT OF INCOME
Income from interest and
servicesfrom raising funds
Expenses
Total Net
--1,218,927
--1,218,927
----110,536
110,536
16,559,827
3,930
234,136
29,329
1,001,087
17,828,309
-41,139
44,223
-47,478
132,840
-------
--262,227
--262,227
16,559,827
45,069
1,759,513
29,329
1,159,101
19,552,839
582,578
--
6,310
--
30,129
--
6,973
--
809
994
890,960
--
1,517,759
994
--
119,969
5,082,990
101,504
5,136
4,903,586
10,213,185
--
--
1,036,103
47,256
--
1,174,283
2,257,642
--
--
--
--
--
19,629,502
19,629,502
--
--
--
--
--
8,381,169
8,381,169
2,100,693
-2,683,271
-15,881
142,160
7,328,589
1,381,220
14,859,031
-28,545
184,278
--6,939
1,278,804
17,531
36,275,835
10,708,086
1,443,177
54,151,514
111,541
(75,030)
36,511
31,639
(3,379)
28,260
666,311
(129,289)
537,022
210,313
(109,983)
100,330
-(613)
(613)
402,309
(1,455,911)
(1,053,602)
1,422,113
(1,774,205)
(352,092)
12.31.2008
Parent
company (1)
Affiliated
companies (2)
Subsidiaries
(3)
Key management
Personnel (5)
Jointly
controled
subsidiaries
(4)
Other Related
Parties (6)
Total
Assets
Interbank deposits
Securities
Loans
Receivables from related
companies
Other Assets
Total
--
--
20,131,285
--
--
--
20,131,285
-1,953,790
---
1,492
61,720
---
---
-290,874
1,492
2,306,384
--
--
34,150
--
--
--
34,150
-1,953,790
2,268
2,268
1,234,008
21,462,655
10,600
10,600
---
-290,874
1,246,876
23,720,187
60
Notes to Financial Statements
Liabilities
Demand deposits
Savings deposits
Remunerated time deposits
Obligations related to Committed
Operations
Borrowings and transfers BNDES
----
14,898
-101,673
77,516
-5,952,798
2,555
-31,625
833
935
3,992
2,211,130
-3,655,130
2,306,932
935
9,745,218
--
--
949,292
--
--
1,640,551
2,589,843
--
--
--
--
--
11,167,753
11,167,753
--
--
--
--
--
6,584,776
6,584,776
3,485,006
-3,485,006
--116,571
10,348,434
2,270,840
19,598,880
--34,180
--5,760
2,132,992
-27,392,332
15,966,432
2,270,840
50,632,729
Income from interest and
services
176,810
17,527
463,507
23,979
--
212,720
894,543
Expenses from raising funds
Total Net
(98,096)
78,714
(7,346)
10,181
(551,751)
(88,244)
(1,778)
22,201
(447)
(447)
(1,094,432)
(881,712)
(1,753,850)
(859,307)
Borrowings and transfers FINAME
Borrowings
Other Liabilities
Total
STATEMENT OF INCOME
(1) National Treasury and agencies of the direct administration of the Federal Government.
(2) They include related companies Note as identified in item (6).
(3) They include related companies Note 4 as identified in item (1) ,(4), (5), (7) e (9).
(4) They include related companies Note as identified in item (3), (8) e (10).
(5) Key Personnel Administration - Audit Committee, Audit Committee, Board of Directors, Executive Directors and Auditor General.
(6) They include private and public companies controlled by the Federal Government, entities linked to employees (Caixa de Previdência dos Funcionários do
Banco do Brasil - Previ, Fundação Codesc de Seguridade Social - Fusesc, Caixa de Assistência dos Funcionários do Banco do Brasil) and Fundação Banco do
Brasil - FBB.
28 – Employee Benefits
a) Caixa de Previdência dos Funcionários do Banco do Brasil - Previ
Banco do Brasil is the sponsor of Caixa de Previdência dos Funcionários do Banco do Brasil (PREVI) which
provides participants and their dependents with benefits which are supplementary or similar to those of the
Basic Government Retirement Plan. The plans offered through PREVI include both defined contribution
(Plano Previ Futuro) and defined benefit (Plan 1) plans. Plan 1 has adopted the capitalization method for
actuarial calculations. On December 31, 2009 Previ had 149,740 participants, with 33,814 active and 63,930
retirees participants of Plan 1, 51,923 active and 73 retirees participants of Plano Previ Futuro, (At December
31, 2008 there were 147,229 participants, of which: 34,897 were active and 63,929 retirees participants of
Benefit Plan 1, 48,354 were active and 49 retirees participants of Plano Previ Futuro).
a.1) The funding of the vested and unvested benefits is summarized as follows:
Participants hired before April 14, 1967, who were not retired and who were not in a position on that date to
request their retirement, included in the contract signed on December 24, 1997 between the Bank and PREVI
(Plan n,° 1): the sponsor assumes the commitment fo r the payment of pensions for this group; mathematical
reserves ensuring benefits corresponding to this group are fully paid-up at Previ. The retirement benefit for this
group is defined as a defined benefit.
Participants hired between April 15, 1967 and December 23, 1997 (Plan n,°1): Due to the accumulated
surplus, in June 2007, the contributions of participants, beneficiaries (retirees and pensioners) and of the
sponsor (Banco do Brasil) were suspended, retroactive to January 2007. This measure will be evaluated
every twelve months, with its maintenance depending on the existence of the Special Reserve of Benefit
Plan 1, resulting from the surplus in the Plan. The suspension continues to be maintained until December
2009.
Participants hired as from December 24, 1997 (Plano Previ Futuro): active participants contribute to PREVI
an amount between 7% and 17% of their contribution salary, which varies based on time of service and the
amount of the contribution salary. There is no contribution for retired participants, The sponsor contributes
61
Notes to Financial Statements
an amount equal to the contributions of the participants, limited to 14% of the total contribution payroll of
these participants. The retirement benefit for this group is characterized as a defined contribution.
a.2) Effects of Plan 1, based on actuarial valuations as of December 31, 2008 and 2009 carried out by an
independent actuary, and of the Plano Previ Futuro as required by CVM Resolution 371 of December 13,
2000:
Equity effect (reconciliation of assets and liabilities):
Specification
12.31.2009
Plan 1
1) Present value of actuarial liabilities with coverage
2) Present value of unsecured actuarial liabilities
80,270,786
--
3) Present value of actuarial liabilities (1 + 2)
4) Fair value of the plan’s assets
5) Present value of liabilities in excess of (less than) the fair value of the assets (3 + 4)
6) Unrecognized actuarial (gains) or losses
7) Amount not recognized as (assets) / liabilities (1)
8) Net actuarial liability/(asset) recorded (5 – 6-7)
12.31.2008
Plan 1
76,109,636
--
80,270,786
76,109,636
(137,814,150)
(57,543,364)
(16,116,336)
(28,771,682)
(12,655,346)
(104,778,828)
(28,669,192)
(6,540,925)
(14,334,596)
(7,793,671)
(1) Value calculated in accordance with paragraph 49,g of CVM Deliberation 371/2000,
The actuarial assets of R$ 12,655,346 thousand (R$ 7,793,671 thousand, on 12.31.2008) the present value
is recorded as actuarial calculations required by CVM Deliberation No, 371/2000. Their implementation must
take place by the end of the plan. The term end of the plan is the date that the final compromise will be paid
(pension) of the Plan 1. Achievements that may be partial actuarial assets, subject to fulfilling the
requirements laid down in Complementary Law No, 109/2001 and CGPC Resolution No, 26 of 09.29.2008.
The Previ Futuro Plan, as it is a defined contribution plan, is not required to record actuarial assets or
liabilities.
Amounts paid to Previ:
2009
Specification
Sponsors’ contributions
2008
Previ Futuro
Plan
Plan 1(1)
189
144,127
Total
144,316
Previ Futuro
Plan
Plan 1(1)
(489)
118,354
Total
117,865
Refers to adjustments to the sponsors’ contribution for the periods prior to January/2007.
Effects on the results for the period:
12.31.2009
Specification
1) Cost of current service (with interest)
Plano 1
Plano Previ
Futuro
12.31.2008
Total
Plano 1
Plano Previ
Futuro
Total
(204,672)
(281,251)
(485,923)
(335,702)
(230,908)
(566,610)
(4,038,035)
--
(4,038,035)
(7,420,834)
--
(7,420,834)
3) Expected earnings on the plan’s assets
4) Amortization of gains or (losses) actuarial
5) Suspension of the net earnings from assets and liabilities
5,435,852
3,030,149
--
----
5,435,852
3,030,149
--
13,841,349
5,058,864
(6,084,813)
----
13,841,349
5,058,864
(6,084,813)
6) Total (expenses)/ gross income (1+2+3+4+5)
2) Interest on actuarial liabilities
4,223,294
(281,251)
3,942,043
5,058,864
(230,908)
4,827,956
7) Expected contributions from participants
--
144,330
144,330
--
118,472
118,472
8) Previ management fee (5% of the employers’ union dues)
--
(7,206)
(7,206)
--
(5,918)
(5,918)
4,223,294
(144,127)
4,079,167
5,058,864
(118,354)
4,940,510
9) Effect of (expenses)/ net income ( 8 + 9)
As noted in the material fact of 02.01.2010, the Bank adopted from the year 2009, faster recognition of gains
(losses) actuarial, as permitted by paragraph 55 of CVM Instruction 371/00.
62
Notes to Financial Statements
a.3) Main economic assumptions adopted for the actuarial calculations:
Specification
Real interest rate used for discounting actuarial liabilities to present value
Real expected yield on plans’ assets
Estimated salary increases:
Benefit Plan 1
Plano Previ Futuro
12.31.2009
12.31.2008
6,3% p.a.
6,3% p.a.
6,3% p.a.
6,3% p.a.
1,2619% p.a.
2,7783% p.a.
0,5881% p.a.
3,4337% p.a.
b) Benefits of sole responsibility of the Bank
Banco do Brasil is responsible for: (a) retirement pensions to founder participants and pension payments to
survivors of participants deceased up to April 14, 1967; (b) payment of retirement supplements to the other
participants employed by Banco do Brasil who retired up to April 14, 1967 or who, on that date, would have
the right through length of service to retire and who had at least 20 years of effective service with the Bank;
and (c) increase in the amount of retirement benefits and of pensions in addition to that provided for in the
Benefit Plan of Previ, resulting from judicial decisions and from administrative decisions on account of
restructuring of the job and salary plan and of incentives created by the Bank. This plan is of the defined
benefit type, and adopts the capitalization regime in actuarial valuations, and had 7,703 retirees and
pensioners participating as of December 31, 2009 (7,942 retirees and pensioners participating as of
December 31, 2008).
b.1) Effects on the financial statements of the Benefit Plan, based on actuarial valuations as of December 31,
2008 and 2009 carried out by an independent actuary, and of the Previ Futuro Plan as required by CVM
Resolution 371 of December 13, 2000:
Equity effect (reconciliation of assets and liabilities):
Specification
1) Present value of actuarial liabilities with coverage
12.31.2009
12.31.2008
--
--
2) Present value of unsecured actuarial liabilities (Plans without financial assets)
1,743,386
1,739,592
3) Present value of actuarial liabilities (1 + 2)
1,743,386
1,739,592
4) Fair value of the plan’s assets
--
--
5) Present value of liabilities in excess of the fair value of the assets (3 + 4)
1,743,386
1,739,592
6) Unrecognized actuarial (gains) or losses
7) Net actuarial liability/(asset) to be recorded (5 - 6) (1)
174,339
1,569,047
173,960
1,565,632
2009
2008
296,759
294,231
2009
2008
--
--
-(194,472)
-(167,978)
(105,318)
(191,707)
(1) Recorded in Other Liabilities - Sundry (Note 20.f).
Amounts paid to Previ:
Specification
Total benefits paid to Previ
Effects on the results:
Specification
1) Cost of current service
2) Expected contributions from participants
3) Interest on actuarial liabilities
4) Amortization of gains or (losses) actuarial
63
Notes to Financial Statements
5) Expected earnings on assets
6) Effect of the expense recorded (1 - 2 + 3 + 4 - 5)
--
--
(299,790)
(359,685)
b.2) The economic assumptions adopted for the actuarial calculations are the same as those adopted for the
PREVI Plan 1 (item a.3.), except regarding the adoption of mortality table AT-83, since a transitory table
between modified GAM-71 and GAM-83 is used for the Informal Plan.
c) Fundação Codesc de Seguridade Social - Fusesc
Following the merger of Besc S.A. and Besc S.A. - Crédito Imobiliário (Bescri) by Banco do Brasil on
December 31, 2009, the Bank became a successor to the sponsorship obligations for the following Private
Pension Plans administered by the Fundação Codesc de Seguridade Social – Fusesc.
Multifuturo I, a Defined Contribution Plan (CD) - maintained by Fusesc, set up in June 2002 through the
migration of participants from the Defined Benefit Plan. This plan at 09.30.2009 covers 6,170 employees, of
which 3,469 are retired, 49 beneficiaries and 2,652 active employees (6.204 employees, of which 3.081 are
retired, 46 beneficiaries and 3.077 active employees at 12.31.2008).
The Defined Benefit Plan (BD) - maintained by Fusesc since 1978, structured under a joint contribution plan
with other companies, intended for their employees and dependents. This plan at 12.31.2009 covers 1,368
employees, of which 1,000 retired, 365 beneficiaries and 3 active employees. At 12.31.2008 convers 1,373
employees, of which 1,014 retired, 354 beneficiaries e 05 active employees. On December 31, 2009 this plan
had an actuarial surplus of R$ 126,799 thousand.
The AT-83 mortality table was used for the actuarial calculation of the Defined Benefit Plan (BD), for the
December 31, 2009 base date.
The key assumptions employed in the actuarial appraisal are:
Specification
Real interest rate used to discount actuarial obligations to present value
Real rate of return expected from the retirement and pension plans’ assets
Future Nominal Growth of Salaries
Annual Inflation
2009
2008
6,3%p.a.
6,3%p.a.
2,13%p.a.
4,11%p.a.
6,3%p.a.
6,3%p.a.
2,83%p.a.
6,48%p.a.
To determine the present value of liabilities and costs, we used the method of projected unit credit.
During 2009, the contributions made which amounted to R$6,004 thousand.
The normal contribution by the sponsors as of December 2000 was defined as being the sum of the
contributions owed by active and assisted participants, in compliance with the contributing parity between the
sponsors’ and participants’ normal contributions, as provided for in article 5 of Constitutional Amendment
20/1998.
d) Economus - Instituto de Seguridade Social
Banco Nossa Caixa, incorporated on November 30, 2009 by Banco do Brasil, was the sponsor of Private
Pension and Medical Assistance Plans managed by Economus - Instituto de Seguridade Social, a closed-end
supplementary pension plan with its own assets and management independence. As a natural result of the
merger, the Bank of Brazil has provided the successor of the obligations (Note 5a), including pension plans.
d.1) Private Pension Plans:
Defined benefit plan - general regulations: organized on January 1, 1978, it provides supplementary retirement
benefits, pensions owing to death, illness assistance, and benefits owing to death and disability. On August 1,
2006 the plan was satisfied, i.e.: participants were assured a benefit in proportion to their contribution to the
plan, to be updated pursuant to the INPC index up to the date of eligibility to receive payments, which was also
64
Notes to Financial Statements
defined. This plan at 12.31.2009 includes 4,779 assisted persons, 395 pensions, and 6,761 participants who
concluded their contributions (6,713 active participants paid up, and 48 self-sponsored participants), 33
participants with proportional deferred benefits, and 71 participants with unconcluded contributions (70 active,
and 01 self-sponsored participants). At 12.31.2008 includes 4,754 assisted persons, 378 pensions e 6.883
participants who concluded their contributions (6,830 active and 53 self-sponsored participants), 49 participants
with proportional deferred benefits and 79 participants with unconcluded contributions. The cost of the plan is
the responsibility of the sponsor, participants and assisted. The sponsor's contribution focuses on real salary to
participate in equal numbers with participants.
Defined benefit plan - supplementary regulation no, 1: organized on January 1, 1978, it provides supplementary
illness assistance benefits and benefits owing to death and disability, 9 assisted persons are enrolled, 2
pensions, and 1,273 participants (9 assisted persons, 2 pensions and 1,261 participants at 12.31.2008). The
cost of the plan is the responsibility of the sponsor, participants and assisted. The sponsor's contribution
focuses on real salary to participate in equal numbers with participants.
Defined benefit plan - supplementary regulation no, 2: organized on January 1, 1978, it provides benefits owing
to death and disability, 7 pensions are enrolled and 1,488 participants (7 pensions and 1,544 participants at
12.31.2008). The cost of the plan is the responsibility of participants and retirees.
Variable contribution plan - PREVMAIS: organized on August 1, 2006, it provides supplementary income
benefits supplementary disability retirement, pensions owing to death, illness assistance, and funeral subsidies.
The plan in its contribution stage is a defined contribution arrangement, and in its receiving stage there is the
likelihood of the participant opting for income in quotas or for life. At 12.31.2009 includes 10,551 participants
are enrolled (10,485 active and 53 self-sponsored, 13 self-sponsored settled), of which 6,713 are also paid-up
participants under the defined benefit plan - general regulations. At 12.31.2008 included 10,338 participants
(10,295 active and 43 self-sponsored), of which 6,830 are also paid-up participants under the defined benefit
plan - general regulations. The plan is structured in the form of variable contribution to the cost and benefits of
the joint venture between the sponsor and participants. The cost for the benefits of joint income is limited to 8%
of the wages of participants.
Plans for funding are evaluated annually to determine the rates of contributions necessary for the constitution of
guarantors of benefits, funds, supplies and cover other expenses the responsibility of sponsors and participants
attended.
According to actuarial valuations, pension plans from defined benefit administered by Economus had actuarial
assets, on 31.12.2009, amounting to R$ 339,251 thousand, as shown below:
Specification
2009
2008
(3,508,139)
3,895,845
(3,194,089)
2,843,603
387,706
(636,858)
90,099
(350,486)
248,878
(269,772)
(7) Current service cost
(8) Cost amortization technical deficit equated
(339,251)
(97,048)
(12,603)
168,164
(83,915)
(12,165)
(9) Return on assets
(10) Interest on actuarial liabilities
(11) Return on net assets of interest on the actuarial
512,874
(415,709)
97,165
508,920
(400,745)
106,724
(1) Fair value of the assets of the plans
(2) Present value of actuarial liabilities
(3) Present value of actuarial liabilities
(4) (gains) or losses, not recognized
(5) Amount not recognized as (assets) / liabilities (paragraph 49g) (1)
(6) Liabilities / (Assets), net (3 +4-5) (2)
(1) Calculated in accordance with the provisions of the Supplementary Law No 109/2001 and 26/2008 CGPC resolution, noting the contributions of current
and future sponsors and participants, including assisted, according to the rules of the plan current funding.
(2) In case of active, can only be recognized by the sponsor if the regulation allows a reduction in future contributions or may be reimbursed to the sponsor.
65
Notes to Financial Statements
Main economic assumptions adopted for the actuarial calculations:
Specification
2009
2008
14,71%
15,42%
14,38%
17,15%
AT83M
IAPB-57
ZIMMER (D)26
Capitalização, pelo método
de crédito unitário projetado
AT83M
IAPB-57
ÁLVARO VINDAS
Capitalização, pelo método
de crédito unitário projetado
Discount rate at beginning of year (interest cost)
Expected gross return on assets
Survival table
Disabled mortality table
Invalidity entrance table
Retirement funding system
The calculation system above, based on the assumptions found in CVM Resolution no, 371/2000, are
applicable to the treatment afforded by the sponsor in its Financial Statements, with the purpose of confirming
the need or absence thereof, of additional provisioning.
During 2009 contributions made by Banco Nossa Caixa to PREVMAIS and to the defined benefit plan totaled
R$ 72,995 thousand (R$ 65,902 thousand during 2008), of which R$ 12,603 thousand (R$ 12,165 thousand
during 2008) refer to extra contributions intended to cover the technical deficit found.
d.2) Medical Assistance Plans:
Unified health plan - PLUS: participation in this plan takes place by means of a 1,5% (one and one-half percent)
contribution of gross salary, without limitation, covering the owner and his/her preferred dependants, deducted
from the owner's payroll and 10% (ten percent) as a co-participation in the price of each medical visit and lowcost exams, made by the owner and his/her dependants (preferred and non-preferred).
Unified Health Plan - PLUS II: participation in this plan takes place by means of a 1,5% (one and one-half
percent) contribution of gross salary, without limitation, covering the owner and his/her preferred dependants,
deducted from the owner's payroll and 10% (ten percent) as a co-participation in the price of each medical visit
and low-cost exams, made by the owner and his/her preferred dependants and children of age. The plan does
not provide for non-preferred dependants.
PAMC - Supplementary Medical Assistance Plan: Intended for employees in the State and the Capital City of
the state of São Paulo, Plan owners are those employees retired due to disability in Groups "B" and "C", and
their dependants, who participate in costs inasmuch as they use it, and according to the salary range
progressive table.
A 1,5% contribution will be charged on the benefits of ex-statutory retirees and their pensioners who have
opted for the CLT labor system, which according to studies begun and assumptions by the new controller, is
insufficient to cover expenses with this group's medical assistance.
The above-described plans are seeking their sustainability between contributions and expenses incurred, with
the exception of retirees and pensioners, who are subject to a 1,5% contribution.
e) CASSI - Caixa de Assistência dos Funcionários do Banco do Brasil
The Bank is the sponsor of a Health Plan managed by CASSI - Caixa de Assistência dos Funcionários do
Banco do Brasil. The main objective is to provide coverage for expenses related to the promotion, protection,
recovery and rehabilitation of a member's health and of his/her enrolled beneficiaries. At December 31, 2009
this plan had 172,723 participants, with 91,364 active and 81,359 retired participants and pensioners (at
66
Notes to Financial Statements
December 31, 2008 the plan had 172,456 participants, of which 91,508 were active and 80,948 were retired
participants and pensioners).
A contract was executed between the Bank and CASSI on 11.13.2007 aiming at reformulating the By-laws of
Plano de Associados da Caixa de Assistência dos Funcionários do Banco do Brasil (Plan of Members of the
Banco do Brasil Employee Welfare Fund).
On account of this, each month the Bank contributed a sum equivalent to 4.5p.p. of the total payroll or of the
total retirement or pension plan benefit, Monthly contributions from members and pension beneficiaries amount
to 3% of the total payroll or the total retirement or pension plan benefits.
e.1) Effects of the Plan Cassis in the financial statements, based on actuarial revaluations made as of
12.31.2009 and 12.31.2008, by an external actuary, in accordance with CVM Resolution, 371,12.13.2000:
Equity effect (reconciliation of assets and liabilities):
Specification
12.31.2009
1) Present value of actuarial liabilities with coverage
12.31.2008
--
--
2) Present value of unsecured actuarial liabilities (Plans without financial assets)
3) Present value of actuarial liabilities (1 + 2)
4) Fair value of the plan’s assets
4,943,220
4,943,220
--
4,677,766
4,677,766
--
5) Present value of liabilities in excess of the fair value of the assets (3 + 4)
6) Unrecognized actuarial (gains) or losses
7) Unrecognized past service cost- Indirect Dependents
4,943,220
481,750
22,656
4,677,766
467,777
27,408
8) Unrecognized past service cost - Change in Plan
9) Net actuarial liability/(asset) recorded (5 - 6 - 7 - 8) (1)
81,359
4,357,455
86,519
4,096,062
(1) Recorded in Other Liabilities - Sundry (Note 20.f).
Amounts paid to Cassi:
Specification
Sponsor’s contributions
2009
2008
635,342
594,826
On 2009 the amount of R$ 635,342 thousand is comprised of employer contributions, as follows: Active
Employees R$ 221,336 thousand, Retirees and Pensioners R$ 335,034 thousand, Onlending R$ 71,961
thousand and Cassi Complement, due to Voluntary Resignation Plans R$ 7,011 thousand.
On 2008 the amount of R$ 594,826 thousand consists of the employer contributions for active employees:
R$ 199,701 thousand and retirees and pensioners: R$ 321,811 thousand, onlending – R$ 65,375 thousand,
Cassi Complement, due to Voluntary Resignation Plans R$ 7,939 thousand.
Effects on the results for the period:
Specification
1) Cost of current service (with interest)
2) Expected contributions from participants
2009
2008
(61,463)
--
(37,667)
--
3) Interest on actuarial liabilities
4) Actuarial (gains) or losses
5) Unrecognized past service cost
(541,968)
-(9,913)
(482,259)
(1,348,508)
(10,882)
6) Expense with active employees
7) Expenses with extraordinary contribution
8) Expected return on assets
(221,336)
(55,042)
--
(199,701)
(52,773)
--
9) Effect of the expense recorded (1 - 2 + 3 + 4 + 5 + 6 + 7 - 8)
(889,722)
(2,131,790)
67
Notes to Financial Statements
e.2) The economic assumptions adopted for the actuarial calculations are the same as those adopted for the
PREVI Plan (item a.3.).
f) Policy for the recognition of actuarial gains and losses
In accordance with CVM Resolution 371, the actuarial gains or losses to be recognized as income or
expenses in a defined benefit plan are the amount of unrecognized gains and losses that exceed, in each
period, the higher of the following limits:
- 10% of the present value of the total actuarial liability of the defined benefit; or
- 10% of the fair value of the plan’s assets.
f.1) The Bank, as permitted by paragraph 55 of Resolution No. 371/00, adopted the procedure of recognizing
the fastest gains / losses for the very year in which he conducted the actuarial calculation..
f.2) CASSI Actuarial Liability: the actuarial losses related to this liability are recognized over the average
remaining working time estimated for the employees participating in the plan (15,9 years as of 12.31.2007
and 16,85 as of 12.31.2008).
f.3) As permitted by CVM Resolution 371/2000, the Bank will verify, when recognizing actuarial gains, if
there is an amount of actuarial losses not recognized, above the bracket, in other post-employment plans,
Should this amount exist, the value to be amortized in the Bank's results will be the higher between a) the
amount of actuarial losses not recognized above the bracket up to the value of the actuarial gain recognized
in another plan, and b) the actuarial loss determined according to that described in the previous items.
g) Summary of Assets/Liabilities of Previ and Cassi
12.31.2009
Specification
Actuarial
liabilities/
(assets) at
12.31.2008
A
Actuarial assets CVM 371
Unamortized reserves (1997 contract)
Parity Fund Assets
Actuarial liabilities in respect of the Informal Plan (sole
responsibility of the Bank)
CASSI actuarial liabilities
CASSI accord
B
C
D
F=
(A-B+C+D+E)
E
(7,793,671)
4,223,295
--
--
(638,380)
(12,655,346)
--
--
--
--
--
--
Actuarial assets/liabilities (1997 contract)
Early amortization (1997 contract)
(Expenses) income
recorded in the Transfer between Amortization/ Use
Sponsor’s
Actuarial liabilities/
unamortized
of the Actuarial
income statement
contributions
(assets) at
considering
reserves and Assets and Parity
made in the year
12.31.2009
actuarial
early amortization Fund Assets
adjustments
(12,103,281)
1,167,699
716,545
--
--
(12,554,435)
12,103,281
(2,195,802)
(1,167,699)
220,755
(716,545)
--
---
-638,191
12,554,435
(1,778,366)
1,565,632
(299,790)
--
--
(296,375)
1,569,047
4,096,062
--
(613,344)
(55,042)
---
---
(351,951)
(55,042)
4,357,455
--
12.31.2008
Specification
Net Liabilities/
(Assets) at
12.31.2007
A
(Expenses)
income recorded
Sponsor’s
Transfer between Amortization/ Use
contribution
in the income
unamortized
of the Actuarial
statement
conveyed/
reserves and Assets and Parity
compensated in
considering
early amortization
Fund Assets
actuarial
the quarter
adjustments
B
C
D
E
Actuarial liabilities/
(assets) at
12.31.2008
F=
(A-B+C+D+E)
68
Notes to Financial Statements
(2,268,313)
5,058,864
--
(466,494)
--
--
--
--
--
--
--
(11,912,949)
11,912,949
(2,440,534)
1,438,816
(1,438,816)
221,273
1,248,484
(1,248,484)
--
--466,494
--(489)
(12,103,281)
12,103,281
(2,195,802)
Actuarial liabilities in respect of the Informal Plan
(sole responsibility of the Bank)
1,499,458
(359,685)
--
--
(293,511)
1,565,632
CASSI actuarial liabilities
2,551,159
(1,879,316)
--
--
(334,413)
4,096,062
--
--
--
--
--
--
Actuarial asset sCVM 371
Actuarial assets/liabilities (1997 contract)
Early amortization (1997 contract)
Unamortized reserves (1997 contract)
Parity Fund Asset
CASSI accord
(7,793,671)
h) Impacts on Net Income Resulting of 2008 from the Review of the Calculations of Actuarial Assets
and Liabilities according to CVM Resolution 371/00
Banco do Brasil published a material fact on 1.23.2009 notifying the Market that it had reviewed the
calculations of its actuarial assets and liabilities according to CVM Resolution 371/00, of the Securities
Commission, and as a result of CGPC Resolution 26, of the Supplementary Pension Steering Committee, of
9.29.2008.
This review resulted in the accounting of part of the unrecognized actuarial gains of the Retirement and
Pension Plan (Plan 1, of Previ), of unrecognized actuarial losses of the Health Care Plan (Cassi) and the
respective deferred tax effects in conformity with the publication of Provisional Measure no. 453, of
1.23.2009.
Resolution CVM 371, in line with international accounting principles, determines the recording of a liability
when the sum of obligations exceeds the amount of assets from the benefit plan, and of an asset, when the
sum of assets exceeds the amount of obligations of the plan, In the latter circumstance, the asset should
only be recorded when there is evidence that it may effectively reduce the sponsor’s contributions or that it
will be reimbursable in the future, as established in the aforementioned resolution.
Resolution CGPC 26 served to throw light on issues related to the interpretation of the right of sponsors and
of participants to the surplus resources originating from the contributions (and their yields) of both parties.
According to that Resolution, the surplus should be assigned to the sponsors and participants in proportion
to the contributions made.
Certain trade associations and other associations filed lawsuits challenging the legality of CGCP Resolution
26, In some of them the request for a preliminary injunction to suspend the effects of aforesaid resolution
was refused, while in others the request was granted, Bank management, based on the opinion of its legal
advisors, understands that CGCP Resolution 26 is of a legitimate nature, and that the Judiciary will conciliate
the understanding with respect to the right and form of division of the surplus as defined in the
abovementioned resolution.
In view of the various lawsuits filed in relation to CGPC Resolution 26, Banco do Brasil understands that
although this norm has thrown light on some issues previously under discussion, especially as regards the
amounts to be assigned to the sponsors and participants in the event of existence of a surplus in the
supplementary pension entities, this Resolution does not change the definitions existing in the current
regulations and, therefore, does not have effects on the need for records of the actuarial assets and liabilities
required by public institutions, regulated through CVM Resolution 371/00.
As regards the actuarial losses of the Health Care Plan, these are part of the sum that the Bank is required
to record in its liabilities, corresponding to the future contributions of all the employees according to the stage
of their retirement. The accrual basis requires that these expenses are recorded while the employees are still
active, even if the payments are made monthly, in the future, The Bank has already been appropriating these
losses, also in the form of CVM Resolution 371, since 2001, as described in note 28 to its balance sheet of
6.30.2008, Since the aforementioned Resolution enables quicker recognition of these losses, the Bank opted
to do it in this manner.
69
Notes to Financial Statements
R$ Thousand
Specification
2008
Retirement and Pension Plan - Accounting of part of the unrecognized actuarial gains
Health Care Plan - Accounting of unrecognized actuarial losses
5,412,367
(1,259,381)
Parity Fund Assets - Reversal of revenue
Tax effects
Impact on Net Income for the Year
(86,356)
(1,546,163)
2,520,467
29 – Remuneration of Employees and Management
R$ Thousand
12.312009
Lowest salary
Highest salary
Average salary
Management
President
Vice-President
Director
12.31.2008
1,416,00
25,247,10
1,296,75
23,817,90
4,567,70
3,827,71
41,592,00
37,469,40
37,566,00
32,130,00
33,841,50
28,943,40
30 – Assignment of Employees to Outside Agencies
Federal government assignments are regulated by article 93 of Law 8112/1990 (amended by Law
10470/2002), by Decree 925/1993, and by PGFN/CJN Note 088/1996 issued by the General Counsel of the
Federal Treasury.
R$ Thousand
2009
Employees
assigned (1)
2008
Cost for the
period(thousand)
Employees
assigned (2)
Cost for the
period(thousand)
With costs for the Bank
Federal Government
Labor unions
Other agencies/entities:
11
217
4
2,677
15,729
1,350
13
163
3
2,522
12,971
1,196
Without cost to the Bank
Federal, state and municipal governments
Outside agencies (Cassi, FBB, Previ)
Employee entities
Subsidiaries and associated companies
318
725
73
311
-----
288
699
51
293
-----
Total
1,659
19,756
1,510
16,689
(1) Balance at 12.31.2009
31 – Commitments, Responsibilities and Contingencies
a) Contingent liabilities
Labor Lawsuits
The Bank is a party to labor lawsuits mainly filed by former employees or trade unions of the banking
industry. The provisions for probable losses represent various claims, such as: severance pay, overtime,
allowance per job and representation, supplement per Individual BACEN 40% (parity with the employees of
BACEN) and others.
Tax Lawsuits
70
Notes to Financial Statements
The Bank is subject to a number of challenges by the tax authorities with respect to taxes, which can give rise
to assessments regarding the jurisdiction where taxes are incurred or the sum of taxable income or deductible
expenses, Most of the lawsuits originating from tax assessment notices are related to ISSQN (service tax),
CPMF, CSLL, IRPJ and IOF, and, some are guaranteed by cash or real estate properties.
Civil Lawsuits
The most significant lawsuits classified as probable losses are those aimed at the collection of the difference
between the actual rates of inflation suffered and the rate used for inflation correction of financial
investments during the period of the various economic Plans (Collor Plan, Bresser Plan and Summer Plan).
The changes in the provision for civil, tax and labor claims classified as probable were as follows:
Banco do Brasil
BB-Consolidated
2S2009
2009
2008
2S2009
2009
2008
Labor claims
Opening balance
Formation
Reversal of the provision
Provision used
Amount added (1)
Closing balance
3,054,039
525,338
(1,132,447)
(288,055)
1,083,333
3,242,208
2,456,461
1,716,476
(1,475,351)
(538,711)
1,083,333
3,242,208
2,455,538
1,124,674
(583,908)
(593,028)
53,185
2,456,461
4,079,426
679,628
(1,181,981)
(308,138)
31,813
3,300,748
2,475,231
1,932,707
(1,544,250)
(570,609)
1,007,669
3,300,748
2,455,538
1,126,412
(585,856)
(593,089)
72,226
2,475,231
Tax claims
Opening balance
Formation
Reversal of the provision
Provision used
Amount added (2)
Closing balance
188,098
29,340
(41,957)
(785)
-174,696
122,456
104,434
(51,296)
(898)
-174,696
88,638
55,322
(28,394)
(11,151)
18,041
122,456
1,424,844
90,445
(357,721)
(27,600)
8,738
1,138,706
1,004,031
240,760
(86,410)
(28,413)
8,738
1,138,706
132,076
328,606
(40,270)
(15,713)
599,332
1,004,031
Civil Claims
Opening balance
Formation
Reversal of the provision
Provision used
Amount added (3)
Closing balance
2,472,361
358,559
(996,454)
(107,976)
1,309,891
3,036,381
1,719,947
1,191,053
(1,024,777)
(159,733)
1,309,891
3,036,381
1,244,693
882,040
(65,592)
(397,228)
56,034
1,719,947
3,806,430
621,936
(1,057,431)
(254,560)
15,097
3,131,472
1,760,175
1,689,241
(1,134,168)
(334,944)
1,151,168
3,131,472
1,249,754
912,719
(82,487)
(399,199)
79,388
1,760,175
(1) In 2009 in BB-Banco Multiple, refers to the balance corporate Nossa Caixa, on 11.30.2009, and BB-Consolidated, refers primarily to the balance
existing at the date of acquisition of Banco Nossa Caixa, R$ 973,587 thousand (03.31.2009) and Banco Votorantim, for R$ 29,448 thousand (proportional
to the shareholding of the Bank of Brazil on 09.30.2009). In 2008, refers to the labor demands of Banco do Estado de Santa Catarina (R$ 52,410
thousand), Banco do Estado do Piauí (R$ 775 thousand) and the related companies / controlled non-financial statements from the 1st quarter of 2008 (R$
19,041 thousand).
(2) In 2009 in BB-Consolidated, refers to the fiscal demands of the Banco Votorantim, proportional to the shareholding of the Bank of Brazil at 09.30.2009.
In 2008, refer to the fiscal demands of the Besc (R$ 18,041 thousand) and the related companies / non-financial subsidiaries, consolidated as from the 1st
quarter of 2008 (R$ 581,291 thousand).
(3) In 2009 in BB-Banco Multiple, refers to the corporate balance Banco Nossa Caixa, on 30.11.2009, and BB-Consolidated, refers to the balance existing
at the date of acquisition of Banco Nossa Caixa R$ 1,136,072 thousand (03.31.2009) and Banco Votorantim, for R$ 15,096 thousand (proportional to the
shareholding of the Bank of Brazil on 30.09.2009). In exercício/2008, refer to the civil claims of Banco do Estado de Santa Catarina and its subsidiaries (R$
55,741 thousand), Banco do Estado do Piauí (R$ 366 thousand) and the related companies / non-financial subsidiaries, consolidated from the 1st quarter
of 2008 (R$ 23,281 thousand).
b) Contingent liabilities – Possible
Labor Lawsuits
The lawsuits risk classified "possible" are exempted from any provisions on the Resolution CVM No.
3535/2008, representing various applications demanded as compensation for overtime, distortion of the
working day , Additional Function and Representation, and others.
71
Notes to Financial Statements
Tax Lawsuits
The tax lawsuits considered as possible risk are exempt from the formation of provisions and represent a
number of claims made such as: ISSQN (service tax), collection and other tax obligations originating from
the Federal Revenue Department and Institute of Social Security. The main contingencies originate from:
- Notices of labor infraction drawn by the National Institute of Social Security (INSS), aiming at the payment
of contributions applicable on year-end bonuses paid in the collective agreements in the period from 1995 to
2006, in the amount of R$ 1,013,524 thousand, public transport pay and use of private car by employees of
Banco do Brasil, in the amount of R$ 139,581 thousand, conversions into cash, for the period from January
1993 to April 2001, in the amount of R$ 104,650 thousand and employee profit sharing corresponding to the
period from April 2001 to October 2003, in the amount of R$ 23,232 thousand.
- Notices of tax assessment drawn by the Treasuries of the Municipalities, aiming at the collection of ISSQN,
which amounts R$ 282,834 thousand.
Civil Lawsuits
In civil lawsuits there are actions that seek to recover the difference between inflation and the index used to
restate financial investments during the period of economic plans (Collor Plan, Bresser Plan and Summer
Plan).
The balances of contingent liabilities classified as possible were as follows:
Banco do Brasil
Labor claims
Tax Claims
Civil Claim
Total
12.31.2009
40,950
1,843,559
2,620,763
4,505,272
BB-Consolidated
12.31.2008
418,573
2,291,770
2,582,142
5,292,485
12.31.2009
62,301
2,079,151
2,723,460
4,864,912
12.31.2008
424,927
2,562,420
2,630,539
5,617,886
c) Deposits in Guarantee of Funds
The balances of deposits in guarantee recorded for probable, possible and / or remote contingencies are as
follows:
Banco do brasil
Labor claims
Tax Claims
Civil Claims(1)
Total
12.31.2009
2,228,067
3,790,881
2,247,146
8,266,094
BB-Consolidated
12.31.2008
1,681,588
3,039,341
1,086,398
5,807,327
12.31.2009
2,254,502
4,628,601
2,509,058
9,392,161
12.31.2008
1,698,793
3,748,973
1,357,114
6,804,880
d) Contingent tax assets
The Bank is an active part in proceedings to restore indebts tax and prevent the launch of tax credits by tax
authorities, recognized in the financial statements only on the assumption favorable to the Bank (not
counted), according Resolution CVM 3535/2008, It is the actions of most relevance:
- Unconstitutionality of Income Tax on Net Income paid in 1989 and in the 1st semester of 1992,
in the amount of R$ 13,101 thousand (R$ 12,553 thousand on 09.30.2008);
- Tax on Financial Transactions (IOF) - Law 8033/1990 (Price-level restatement), in the amount of R$
203,470 thousand (R$ 195,128 thousand on 09.30.2008).
72
Notes to Financial Statements
e) Legal Obligations
The Bank has a provision in the amount of R$ 11,245,230 thousand (R$ 10,662,475 thousand at
12.31.2008) related to the proceedings for full offsetting of accumulated income tax loss carry forward and
the negative bases of Social Contribution Tax, the enforceability of which has been suspended due to the
judicial deposits made since the beginning of the suit. This amount is recorded in “Other Liabilities - Taxes
and Social Security Charges”.
f) Other Commitments
The Bank is the sponsor of Fundação Banco do Brasil whose purpose is the promotion, support,
advancement and sponsorship of educational, cultural, social, philanthropic, and recreational/sporting
activities, as well as the promotion of research activities of a technological and scientific nature, and rural
and urban community assistance services.
During 2009, the Bank made R$ R$35,632 thousand on contribution to the Fundação Banco do Brasil
(R$54,166 on 2008).
Guarantees to third parties, for a fee and with counter-guarantees from the beneficiaries - guarantees,
sureties and bonds - amounted to R$ 12,553,149 thousand at December, 31 2009 (R$ 6,437,279 thousand
at December 31, 2008), A provision of R$ 70,204 thousand (R$40,470 on December 31, 2008) , recorded in
“Other Liabilities”, is considered sufficient to cover any potential loss arising on these guarantees.
Available credit limits for loans and lease operations amount to R$ 74,834,057 thousand (R$ 36,955,149
thousand at December 31, 2008).
The confirmed import and export letters of credit total R$ 1,262,775 thousand (R$ 830,328 thousand at
December 31, 2008).
The Bank is the operator of the Fund for Sectorial Investments (FISET), with net assets of
R$ 2,138 thousand (R$ 2,195 thousand at December 31, 2008), and is the manager of the Public Service
Employee Savings Program (PASEP), with net assets of R$ 1,916,461 thousand (R$ 1,706,439 thousand at
December 31, 2008), The Bank guarantees the latter a minimum remuneration equivalent to the Long-Term
Interest Rate (TJLP).
g) Policy on Insurance and Property Values
Despite the reduced level of risk to which its assets are subject, the Bank contracts insurance cover for its
assets in amounts considered sufficient to cover any losses.
32 – Risk Management and Regulatory Capital
a) Risk Management Process
Banco do Brasil considers the management of risks and of capital the main vectors for the decision-making
process.
In the Banco do Brasil, collegiate risk management is performed completely apart from the business units.
Risk and concentration policies are specified by the Bank's Board of Directors and by the Global Risk
Committee (CRG), which is a discussion group composed by the President and by Vice-Presidents. Actions
for implementing and monitoring guidelines issued by the CRG are directed at specific sub-committees
(Credit, Market, and Operations), which are groups formed by Directors.
73
Notes to Financial Statements
To find out more about the risk management process at Banco do Brasil, access the website bb.com.br/ri.
b) Credit Risk
Credit Risk is associated with the possibility of loss resulting from uncertainty regarding the receipt of
amounts agreed on with borrowers, counterparts of contracts or issues of securities.
For alignment with the best practices of credit risk management and to increase efficiency in the management
of its economic capital, Banco do Brasil uses risk and return metrics as instruments for dissemination of the
culture at the Institution, present throughout its loan process.
c) Market Risk
Market Risk reflects the possibility of loss that can be caused by changes in the behavior of interest and
exchange rates and of prices of shares and commodities.
Financial Instruments – Market Value
The table below presents financial instruments recorded in equity accounts, compared to market value:
R$ Thousand
BB-Consolidated
12.31.2009
Book
value
12.31.2008
Market Value
Unrealized gain/loss, net of tax effects
On Income
Book
value
Market Value
On Stockholders´ Equity
12.31.2009
12.31.2008
12.31.2009
12.31.2008
ASSETS
Short-term interbank deposits
168,397,960
168,377,532
119,408,297
119,332,288
(20,428)
(76,009)
(20,428)
(76,009)
Securities
122,873,797
122,714,673
84,632,536
84,611,592
(33,426)
146,511
(159,124)
(20,944)
Adjustment of securities available for sale (Note 8.a)
--
--
--
--
125,698
167,455
--
--
Adjustment of securities held to maturity (Note 8.a)
--
--
--
--
(159,124)
(20,944)
(159,124)
(20,944)
Derivative financial instruments
Loan operations
1,463,084
1,463,084
2,276,038
2,276,038
--
--
--
--
261,783,097
262,062,450
190,881,563
191,211,865
279,353
330,302
279,353
330,302
LIABILITIES
11,618,573
11,631,606
14,064,945
14,187,597
(13,033)
(122,652)
(13,033)
(122,652)
Time deposits
Interbank deposits
193,515,574
193,575,751
149,618,491
149,677,676
(60,177)
(59,185)
(60,177)
(59,185)
Obligations related to Committed Operations
160,821,187
160,648,661
91,130,364
91,031,600
172,526
98,764
172,526
98,764
37,859,562
37,925,250
30,161,316
30,161,602
(65,688)
(286)
(65,688)
(286)
4,724,036
4,724,036
3,895,060
3,895,060
--
--
--
--
120,848,069
120,655,895
89,311,817
89,047,136
192,174
264,681
192,174
264,681
451,301
582,126
325,603
414,671
Borrowings and onlendings
Derivative financial instruments
Other liabilities
Unrealized gain/loss, net of tax effects
Financial Instruments
Short-term interbank investments: The market value was obtained by future cash flows discount, adopting
interest rates exercised by the market in similar operations in the balance sheet date.
Securities: Securities and derivative financial instruments are accounted for by the market value, as provided
for in BACEN Circular 3068 of 11.08.2001, excluding from such criterion, securities held to maturity.
Determination of securities' market value, including those held to maturity, is obtained according to rates
collected at the market.
Loan operations: Operations remunerated at pre-fixed rates have been estimated through future cash flow
discount, adopting for such, interest rates utilized by the Bank for contracting of similar operations in the
74
Notes to Financial Statements
balance sheet date. For operations of such group remunerated at post-fixed rates, it was considered as market
value the book value itself due to equivalence among them.
Interbank deposits: The market value has been calculated through discount of the difference between future
cash flows and rates currently applicable in the pre-fixed operations market. In case of post-fixed operations
which maturities did not exceed 30 days, the book value was deemed to be approximately equivalent to the
market value.
Time deposits: The same criteria adopted for interbank deposits are utilized in the determination of the
market value.
Deposits received under security repurchase agreements: For operations at pre-fixed rates, the market value
was determined calculating the discount of the estimated cash flows adopting a discount rate equivalent to
the rates applicable in contracting of similar operations in the last market day. For post-fixed operations,
book values have been deemed approximately equivalent to market value.
Borrowing and onlendings: Said operations are exclusive to the Bank, without similarity in the market. In face
of their specific characteristics, exclusive rates for each fund entered, inexistence of an active market and
similar instrument, the market values of such operations are equivalent to the book value.
Other liabilities: Market values have been determined by means of the discounted cash flow, which takes into
account interest rates offered in the market for obligations which maturities, risks and terms are similar.
Other financial instruments: Included or not in the balance sheet, book values are approximately equivalent
to their correspondent market value.
Derivatives: According to BACEN Circular 3082, of 1.30.2002, derivatives are recorded at market value.
Determination of derivatives' market value is estimated in accordance with an internal pricing model, with the
use of the rates disclosed for transactions with similar terms and indices on the fiscal years' last business
day.
Sensitivity Analysis (CVM Instruction no. 475)
In line with best market practices, Banco do Brasil manages its risks in a dynamic manner, seeking to detect,
assess, monitor, and control market risk exposures in its own positions. To this end, the Bank takes into
account the risk limits defined by the Strategic Committees and likely scenarios, to act in a timely manner in
reversing any occasional adverse results.
In accordance with CMN Resolution no 3464/07 and with Bacen Circular no. 3354/07, and in an effort to
manage more efficiently its transactions exposed to market risks, Banco do Brasil separates its transactions
as follows:
1) Trading Book: consisting in all the transactions in its own position undertaken as business deals or
intended as a hedge for its trading portfolio, for which there is an intention of trading prior to their contractual
expiry, subject to normal market conditions and that do not have a non-trading clause.
2) Banking Book: consisting in transactions not classified in the Trading Book and the key feature of which is
the intention of keeping these transactions until expiry.
The sensitivity analysis for all the operations with assets and liabilities of the balance sheet, in compliance with
CVM Instruction n.º 475/2008, of 12.17.2008, does not adequately reflect the management of market risks
adopted by the Institution, and does not represent the Bank’s accounting practices.
In order to determine the sensitivity of the Bank's capital to the reflexes of market trends, simulations were
performed with three likely scenarios, two of which with an ensuing adverse outcome for the Bank. The
scenarios employed are seen as follows:
75
Notes to Financial Statements
Scenario I: Likely situation, which reflects the perception of senior management of the Bank, the scenario most
likely to occur for a 3-month horizon, considering macroeconomic factors and market information (BM & F
Bovespa, Andima etc.). Assumptions used: real exchange rate / dollar rate of R$ 1.74 and maintaining the Selic
rate of 8.75% per year of interest based on market conditions observed on 12.31.2009.
Scenario II: Situation possible. Assumptions used: parallel shock of 25.0% in the risk variables, based on
market conditions observed on 12.31.2009and is considered the worst losses by risk factor and, therefore,
neglecting the dynamics of macroeconomic factors.
Scenario III: Situation possible. Assumptions used: parallel shock of 50.0% in the risk variables, based on
market conditions observed on 12.31.2009 and is considered the worst losses by risk factor and, therefore,
neglecting the dynamics of macroeconomic factors..
In the table below may be seen a summary of the Trading Portfolio profit figures (Trading), which included
public and private securities, derivatives financial instrument and funding based on transactions subject to
repurchase agreements showing the values observed in 12.31.2009 and 12.31.2008:
R$ Thousand
Scenario I
12.31.2009
Risk Factor
Concept
Prefixed rate
Foreign currency coupons
Exchange variation
Price Indexes
Others
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of price index coupons
Risk of variation of Others coupons
Rate
Variation
Maintaining
-Maintaining
Decrease
--
12.31.2008
Income
Rate
Variation
---394
--
Decrease
Increase
Decrease
Decrease
Increase
Income
2,532
1,010
1,271
(811)
R$ Thousand
Scenario II
12.31.2009
12.31.2008
Risk Factor
Concept
Rate
Variation
Income
Rate
Variation
Prefixed rate
Foreign currency coupons
Exchange variation
Price Indexes
Others
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of price index coupons
Risk of variation of Others coupons
Increase
-Decrease
Increase
--
(206,888)
-(17,419)
(1,638)
--
Increase
Increase
Decrease
Increase
Increase
Income
(105,076)
(14,157)
(15,463)
(2,275)
R$ Thousand
Scenario III
12.31.2009
12.31.2008
Risk Factor
Concept
Rate
Variation
Income
Rate
Variation
Prefixed rate
Foreign currency coupons
Exchange variation
Price Indexes
Others
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of price index coupons
Risk of variation of Others coupons
Increase
-Decrease
Increase
--
(400,577)
-(34,837)
(3,184)
--
Increase
Increase
Decrease
Increase
Increase
Income
(251,150)
(8,731)
(18,883)
(4,413)
In the case of transactions classified in the Banking Book, appreciations or depreciations resulting from
changes in interest rates practiced in the market do not imply in a significant financial and bookkeeping impact
on the Bank's income. This is so because this portfolio is composed chiefly of loan operations (consumer credit,
agribusiness, working capital, etc.); retail funding (demand, time, and savings deposits), and securities, which
are recorded in the books according to the agreed on rates when contracting these operations. In addition, it
should be pointed out that these portfolios have as their key feature the intention of helding the respective
positions to maturity, and hence they are not subject to the effects of fluctuating interest rates, or the fact that
76
Notes to Financial Statements
such transactions are naturally related to other transactions (natural hedge), hence minimizing the reflexes of a
stress scenario.
In the table below may be seen a summary of the Trading Portfolio (Trading) and Non-Trading Portfolio
(Banking), except from Banco Votorantim:
R$ Thousand
Scenario I
12.31.2009
Risk Factor
Concept
Prefixed rate
Foreign currency coupons
Exchange variation(1)
TJLP
TR/TBF
Price Indexes
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of long-term interest rate (TJLP) coupon
Risk of variation of TR and TBF coupon
Risk of variation of price index coupons
Rate
Variation
Maintaining
Increase
Maintaining
Maintaining
Increase
Decrease
12.31.2008
Income
Rate
Variation
Income
-12,954
--145,330
134,964
Decrease
Increase
Decrease
Decrease
Decrease
Increase
1,074,642
(41,415)
(7,573)
(127,907)
(44,230)
(16,614)
(1) Net tax purpose.
R$ Thousand
Scenario II
12.31.2009
Risk Factor
Concept
Prefixed rate
Foreign currency coupons
Exchange variation(1)
TJLP
TR/TBF
Price Indexes
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of long-term interest rate (TJLP) coupon
Risk of variation of TR and TBF coupon
Risk of variation of price index coupons
Rate
Variation
Increase
Increase
Decrease
Decrease
Decrease
Increase
12.31.2008
Income
Rate
Variation
Income
(4,332,688)
(17,337)
(275,403)
(20,391)
(3,602,616)
(772,021)
Increase
Increase
Decrease
Decrease
Decrease
Increase
(3,064,943)
(70,318)
(119,576)
(267,425)
(1,919,040)
(529,316)
(1) Net tax purpose.
R$ Thousand
Scenario III
12.31.2009
Risk Factor
Concept
Prefixed rate
Foreign currency coupons
Exchange variation(1)
TJLP
TR/TBF
Price Indexes
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of long-term interest rate (TJLP) coupon
Risk of variation of TR and TBF coupon
Risk of variation of price index coupons
Rate
Variation
Increase
Increase
Decrease
Decrease
Decrease
Increase
12.31.2008
Income
Rate
Variation
Income
(8,303,533)
(34,482)
(550,806)
(41,838)
(7,474,159)
(1,458,284)
Increase
Increase
Decrease
Decrease
Decrease
Increase
(5,942,384)
(137,794)
(239,152)
(551,608)
(4,014,906)
(999,614)
(1) Net tax purpose.
It is noteworthy that the figures relating to 12.31.2009 include the impacts generated by the positions of the
Non-Trading Portfolio of Banco Nossa Caixa, with a view to their effective incorporation into the Bank of Brazil
in 11.30.2009.
The scenarios used for preparing the framework of sensitivity analysis must necessarily use situations of
deterioration of at least 25% and 50% for variable risk for isolation, as determined by CVM Instruction No.
475/2008. Therefore, the analysis of the results is impaired. For example, simultaneous shocks of increase in
the rate of advance and reduction in interest coupon of TR are not consistent from a macroeconomic.
In particular with regard to derivative transactions found in the Banking Book, these do not represent a relevant
market risk to Banco do Brasil, as these positions originated mainly to fulfill the following situations:
- Change of the indexation of funding and lending transactions performed to meet customer needs;
77
Notes to Financial Statements
- "Tax Hedge " consisting in eliminating the volatility risk to the Bank's profit figures owing to the fiscal effect on
foreign currency variations in connection with overseas investments (gains in exchange variations on overseas
investments are not taxed, and similarly losses do not create tax deductions). As a result, any exchange rate
variation will affect the account that records the derivative contrary to the effect recorded in the investment
account, i.e.: the exchange variation's effect will be zero;
- Market risk hedge with purpose and efficacy as described in Note 8.b. Also in this transaction, the interest and
exchange rate variations have no effects on the Bank's income.
The Banco do Brasil did not enter into any transaction likely to be classified as an exotic derivative, as
described in CVM Instruction no. 475 - Attachment II.
Participation in Banco Votorantim
In order to determine the sensitivity of the Bank's participation in Banco Votorantim, simulations were
performed with three likely scenarios, two of which with an ensuing adverse outcome. The scenarios employed
are seen as follows:
Scenario I: Situation likely, which reflects the perception of top management of Banco Votorantim in the
scenario most likely to occur. Assumptions used: real exchange rate / dollar from R$ 1.80 and the Selic rate
of interest 11.75% per year.
Scenario II: Assumptions used: parallel shock of 25.0% in the risk variables, based on market conditions
observed on 12.31.2009 and is considered the worst losses by risk factor and thus ignoring the dynamics of
macroeconomic factors .
Scenario III: Assumptions used: parallel shock of 50.0% in the risk variables, based on market conditions
observed on 12.31.2009 and is considered the worst losses by risk factor and, therefore, neglecting the
dynamics of macroeconomic factors .
In the table below are the results for the positions of the Bank for its participation in Banco Votorantim, with
values from 12.31.2009 and 09.30.2009:
R$ Thousand
Scenario I
12.31. 2009
Factor Risk
Concept
Prefixed rate
Foreign currency coupons
Exchange variation
Price Indexes
Interest Rates
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of price index coupons
Risk of change coupon interest rate
Risk of change of prices of goods
Risk of change in stock prices
Risk of change in interest rates paper traded in the international
market
Risk of variation of others coupons
Commodities
Equity
Sovereign Eurobonds and
Treasuries
Others
Rate
Variation
09.30.2009
Income
Rate
Variation
Income
---
(142,478)
-(65,497)
(46,908)
(9,781)
---
Maintance
Increase
Increase
Increase
Increase
Decrease
Increase
3,012
425
(3,094)
(1,816)
(823)
18
(1,968)
--
--
Maintance
(12,299)
Increase
3,136
--
--
Increase
Increase
Increase
Increase
Increase
R$ Thousand
Scenario II
12.31. 2009
Factor Risk
Concept
Prefixed rate
Foreign currency coupons
Exchange variation
Price Indexes
Interest Rates
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of price index coupons
Risk of change coupon interest rate
Risk of change of prices of goods
Commodities
Rate
Variation
Increase
Increase
Increase
Increase
Increase
--
09.30.2009
Income
Rate
Variation
Income
(324,976)
-(236,751)
(96,030)
(15,820)
--
Increase
Increase
Increase
Increase
Increase
Increase
(38,195)
(3,867)
(52,655)
(60,518)
(2,566)
(504)
78
Notes to Financial Statements
Equity
Sovereign Eurobonds and
Treasuries
Others
Risk of change in stock prices
Risk of change in interest rates paper traded in the international
market
Risk of variation of others coupons
--
--
Increase
(22,944)
--
--
Increase
(42,667)
Increase
(1,809)
--
--
R$ Thousand
Scenario III
12.31. 2009
Factor Risk
Concept
Prefixed rate
Foreign currency coupons
Exchange variation
Price Indexes
Interest Rates
Risk of variation of prefixed interest rates
Risk of variation of foreign exchange coupon
Risk of variation of exchange rates
Risk of variation of price index coupons
Risk of change coupon interest rate
Risk of change of prices of goods
Risk of change in stock prices
Risk of change in interest rates paper traded in the international
market
Risk of variation of others coupons
Commodities
Equity
Sovereign Eurobonds and
Treasuries
Others
Rate
Variation
Increase
Increase
Increase
Increase
Increase
---
09.30.2009
Income
Rate
Variation
Income
(479,181)
-(398,723)
(139,799)
(21,165)
---
Increase
Increase
Increase
Increase
Increase
Increase
Increase
(66,783)
(7,184)
(102,223)
(115,441)
(4,173)
(1,025)
(44,758)
--
--
Increase
(70,681)
Decrease
(9,299)
--
--
d) Liquidity Risk - this type of risk takes two forms: market liquidity risk and cash flow liquidity risk (funding).
The first is the possibility of loss resulting from the incapacity to perform a transaction in a reasonable period of
time and without significant loss of value. The second is associated with the possibility of a shortage of funds to
honor commitments assumed on account of the mismatching between assets and liabilities.
e) Operating Risk reflects the possibility of loss resulting from faults, deficiencies, or the inadequacy of internal
processes, personnel and systems, or external events. This concept includes legal risks.
f) Regulatory Capital
The BIS ratio of 03.31.2009 was determined according to the criteria established by CMN Resolutions
3444/2007 and 3490/2007, which address the calculation of Referential Equity Amount (RE) and of Required
Referential Equity Amount (RRE), respectively. We present below the calculation of the BIS ratio, pursuant
to regulations in force and applicability as of July/2008:
R$ Thousand
RE - REFERENTIAL EQUITY AMOUNT
Level I
Shareholders' equity (BACEN)
Minority Shares
Shareholders' equity
Revaluation reserves
Deferred Assets
Mark-to-market
Tax credits excluded from Level I of RE
Additional provision to the minimum required by resolution CMN 2682/1999
Hybrid Capital and Debt Instruments - Level I
Level II
Mark-to-market
Subordinated Debt Qualifying as Capital
Funds obtained from the FCO
Funds obtained abroad
Funds obtained from the CDB
Funds obtained from the debentures
Hybrid Capital and Debt Instruments – Level II
Revaluation reserves
Deduction from the PR
12.31.2009
Economic
Financial
- Financial
12.31. 2008
Economic
Financial
- Financial
58,264,435
41,068,472
36,119,407
142
36,119,265
(6,746)
(242,296)
(85,061)
(22,477)
2,782,065
2,523,580
18,022,810
85,061
17,078,207
12,422,046
400,323
4,115,114
140,724
852,796
6,746
(826,847)
43,390,964
31,200,901
29,937,146
(104)
29,937,250
(7,303)
(513,248)
(28,589)
(22,477)
1,835,372
-12,909,611
28,589
11,728,981
11,057,272
671,709
--1,144,738
7,303
(719,548)
59,092,639
41,068,446
36,119,381
116
36,119,265
(6,746)
(242,296)
(85,061)
(22,477)
2,782,065
2,523,580
18,025,986
85,061
17,081,383
12,422,046
400,323
4,115,114
143,900
852,796
6,746
(1,793)
44,110,455
31,205,472
29,937,553
303
29,937,250
(7,286)
(509,101)
(28,589)
(22,477)
1,835,372
-12,909,594
28,589
11,728,981
11,057,272
671,709
--1,144,738
7,286
(4,611)
79
Notes to Financial Statements
Financial instruments excluded from the PR
RRE - Required Referential Equity Amount
Credit Risk
Market Risk
Operating Risk
Surplus of stockholders' equity: RE – RRE
BIS Ratio: (RE x 100)/ (RRE / 0.11)
(826,847)
46,758,968
43,556,535
673,909
2,528,524
11,505,467
13.71
(1,793) (719,548)
46,288,519 31,500,063
43,086,086 30,980,231
673,909
118,927
2,528,524
400,905
12,804,120 11,890,901
14.04
15.15
(4,611)
31,193,866
30,674,034
118,927
400,905
12,916,589
15.55
In the event of successful legal action for compensation in full of accumulated tax losses of income tax and
negative basis of social contribution (Note 25c.), there would be a positive effect on the BIS ratio Financial
1.28 percentage points (from 14.04% to 15.32%) and from the economic financial consolidated from 1.24
p.p. (from 13.71 % to 14.95%).
Among the events planned for the year 2010, under the rules of the Central Bank of Brazil - Central Bank, we
highlight the application of the adjustment factor (Z) equal to 1.0 in the calculation of the requirement for
operational risk from 1 January, according to Central Bank Circular No. 3383/2008, the entry into force of
Resolution CMN 3825/2009 from April 1, repealing the CMN Resolution 3674/2008, which grants the privilege
to add to the Capital Base Level I the full value of the additional provision to the minimum percentage required
by Resolution CMN 2682/1999, and the completion of the share Popr considering the operational risk of nonfinancial companies from June 30, as Central Bank Circular No. 3476/2009. Considering the occurrence of
these events on 12.31.2009, the Index of the Basel Economic-Financial Consolidated would be negatively
impacted by 0.15, 0.65 and 0.04 percentage points, respectively.
g) Fixed Assets
The Index of Construction in relation to RE - Referential Equity is 14.55% (14.59% on 12.31.2008) to the
Consolidated Financial and 11.37% (11.68% on 12.31.2008) to the Economic-Financial Consolidated pursuant
to CMN Resolution No. 2669/1999. The difference between the Fixed Assets of Consolidated Financial and
Economic-Financial results from the inclusion of subsidiaries / affiliates have no financial, high liquidity and low
level of restraint, with consequent reduction in Fixed Assets of Consolidated Financial and Economic.
33 – Other Information
a) New Market
At 5.31.2006, Banco do Brasil signed a contract with the São Paulo Stock Exchange for adhesion to the New
Market segment of Bovespa, which assembles a group of companies with the best corporate governance
practices in Brazil.
Moreover, Banco do Brasil, its Shareholders, the Officers, and the members of the Audit Committee
undertake to resolve all and any dispute or controversy related to the New Market Listing Regulations
through the Arbitration Chamber of the Bovespa Market, in conformity with an arbitration clause included in
the By-laws of Banco do Brasil.
b) Distribution of Dividends and/or Interest on Own Capital
During a meeting held on 2.18.2009, the Board of Directors approved the setting, for the year 2009, of the
payout rate equivalent to the minimum percentage of 40% of net income, fulfilling the policy for payment of
dividends and/or interest on own capital on a quarterly basis, pursuant to article 43 of the Bank's By-Laws.
c) New Market - Extension of Deadline (Free Float)
On 03.31.2009, BM&FBovespa granted the request for a new term for classification of the minimum
percentage of outstanding shares of the Banco do Brasil, under the Listing Rules of the New Market (Novo
Mercado) (free float = 25%,), With the new term, the Banco do Brasil will have until 06.28.2011 to reach the
minimum percentage of outstanding shares required by the regulations.
80
Notes to Financial Statements
d) Banestes – Suspension of the study for acquisition of the controlling interest
On 2.5.2009, Banco do Brasil notified the market the start of negotiations with the State government of
Espírito Santo, without any binding effect, aiming at the acquisition of the controlling interest of Banestes –
Banco do Estado do Espírito Santo, with subsequent statutory merger.
On June 22, 2009, Banco do Brasil and the Governo do Estado do Espírito Santo agreed, to suspend
negotiations aiming at the acquisition of the controlling interest of BANESTES S.A. - Banco do Estado do
Espírito Santo by BB.
e) Besc - Approval by Bacen
The Central Bank of Brazil (Bacen) informed that its Collegial Board, by means of a decision on 1.23.2009,
approved the merger, by Banco do Brasil, of Banco do Estado de Santa Catarina S.A. - Besc and of Besc
S.A. Crédito Imobiliário - Bescri, through the conversion of all their equity and consequent winding up, with
Banco do Brasil (merging company) acting as their successor in all rights and obligations.
f)
Visanet Public Offering and other events
On 6.30.2009, Banco do Brasil announced the sale of shares representing 7.05% of the capital stock of
Companhia Brasileira de Meios de Pagamento - Visanet Brasil, an affiliate of BB Banco de Investimento S/A
(BB-BI). With the sale BB recorded revenue in the amount of R$ 1,415 million, before taxes, in the second
quarter of 2009. The total sum of R$ 676 million, before taxes, will also be accounted for in the 2nd quarter,
as expense of provision in addition to the minimum criteria established by Resolution 2682/99.
To supplement the Public Announcement made on 6.30.2009, Banco do Brasil informed that upon the
conclusion of the Public Offering of Secondary Distribution of Visanet Brasil, its coordinators exercised the
Supplementary Share Option (greenshoe). As a result, the quantity sold by BB-BI in the greenshoe exercise
was 14,330,229 shares, at the price of R$ 15,00 per share, which will represent, in the balance sheet of
Banco do Brasil for the 3rd quarter of 2009, a positive impact of approximately R$ 200 million before taxes.
Initial situation
Quantity
431,665,222
g)
% interest
31.63
BB Banco de Investimento S,A, (BB-BI)
Shares traded
Greenshoe
Public Offering of Shares
96,217,259
14,330,229
Final situation
Quantity
321,117,734
% interest
23.53
Partnership of Banco do Brasil with American Express for issuance of cards
On 6.18.2009, Banco do Brasil and American Express announced a partnership for the issuance of credit
cards geared towards the high income segment. Banco do Brasil expects to issue 100 thousand cards by the
end of the year. Under the agreement signed, the Bank will be responsible for all the stages involved in the
issuance of the cards - including credit analysis, delivery of consumer service and marketing strategy. The
Bank will also be in charge of the authorization, invoicing, credit management and risks and accounting.
h)
Foreign interest and ADR (American Depositary Receipts)
Presidential Decrees were signed on 9.16.2009 that allow the raising of the limit of interest of foreigners in
the capital of Banco do Brasil from 12.5% to 20% and authorize the issuance of ADR (American Depositary
Receipts) backed by common shares of Banco do Brasil.
On December 2, 2009 the launch of the Level I ADR program took place.Trading takes place by means of
Over-the-Counter - OTC transactions, with Bank of New York Mellon as the depositary bank. The receipts
81
Notes to Financial Statements
were issued and started to be traded as of that day. The rate of one ADR for one common BBAS3 share was
considered.
i)
Corporate Reorganization Insurance Activities
Banco do Brasil organized the corporate reorganization of its insurance activities area on 10.6.2009. The
reorganization consists of (i) the establishment of two wholly-owned subsidiaries - BB Seguros Participações
S.A. (BB Seguros) and BB Aliança Participações S.A. (BB Aliança) -, non-financial companies, both directly
connected to BB; and (ii) the partial spin-off, effective as from September 30, 2009, of the wholly-owned
subsidiary BB Banco de Investimento S.A. (BB BI) followed by transfer of the spun-off assets to BB Seguros
and to BB Aliança.
As a consequence of the reorganization, BB Aliança will be the owner of 100% of the shares of Cia. de
Seguros Aliança do Brasil. BB Seguros becomes the holder of the following interests:
Company
% - Total Capital
Brasilprev Seguros e Previdência S.A.
Brasilveículos Companhia de Seguros
Brasilcap Capitalizações S.A.
Brasilsaúde Companhia de Seguros
49.99
70.00
49.99
49.92
Type of Shares
% - ON
% PN
49.99
40.00
100.00
49.99
49.92
-
Moreover, BB filed a Letter of Intent without binding effect at Sul América S.A. on 10.6.2009, expressing its
interest in acquiring, through BB Seguros, all the shares held by SulAmerica in Brasilveículos, representing
60% of the common shares and 30% of the total capital stock. As concerns the company Brasilsaúde, both
BB and SulAmerica expressed interest in reviewing its business model and its corporate structure.
In addition, Banco do Brasil and the Spanish Insurer Group Mapfre signed a Protocol of Intentions on the
same date, aiming to form a strategic alliance for the development, in the Brazilian market, of the risk
insurance businesses, in the people, non -life and automotive insurance segments, an alliance that will
benefit from the existing structures and capacities of BB and of Mapfre.
j) Corporate Restructuring BrasilPrev and BrasilCap
On October 27, 2009 pursuant to the corporate reorganization in the insurance business, Banco do Brasil
announced that BB Seguros Participações S.A (BB Seguros), a wholly owned subsidiary of Banco do Brasil,
and Principal Financial Group (Principal) entered into a Memorandum of Understanding aimed at reviewing
their partnership in developing and marketing open-ended private pension plans in Brazil. Banco do Brasil
and Principal also informed that it is in their common interest to start discussions with a view to acquiring the
private pension portfolios marketed by Mapfre Nossa Caixa.
On January 6, 2010 Banco do Brasil announced that BB Seguros Participações S.A. (BB Seguros) and
Grupo Icatu (Icatu), entered into a Memorandum of Understanding with a view to forming a strategic alliance
in the Brazilian market to develop and sell capitalization products.
Once the strategic alliance is reviewed, the Company will consolidate its leadership in capitalization, going
on from 22.6% to 30.6% of its market share. Brasilcap and Grupo Icatu had revenues in the region of R$ 2.8
billion for the first eleven months of 2009.
Icatu is a leader among companies not connected to retail banks in the capitalization market. After 18 years
in the market, it serves over 3.2 million people by means of different lines in its activity. During the last five
years it paid out R$ 240 million in capitalization prizes.
82
Notes to Financial Statements
k) IRB - Negotiations for Acquisition of Equity Interest
On 10.15.2009 Banco do Brasil communicated that it has agreed to start negotiations without binding effect,
aiming at the acquisition of equity interest in IRB-Brasil Re S.A., in compliance with the current regulations
and the terms inherent to operations of this nature, notably the obtainment of the necessary prior
authorizations.
l)
Funding Perpetual Bonuses
Banco do Brasil concluded the pricing of overseas funding of perpetual bonuses, in the amount of US$ 1.5
billion, on October 2009. The bonuses are of the "junior class, non-cumulative subordinated perpetual" type,
and pay 8.5% per year in half-yearly coupons.
Given the characteristics of subordination of that broadcast, the Bank of Brazil Bank pleaded with the
framework of the amount raised as Tier I Capital, for the calculation of the index of Basel. On 02.08.2010, the
Central Bank considered the issue qualifies as Tier I Capital as of December 2009.
m) Overseas Funding
In January 2010 Banco do Brasil contracted funding to the sum of US$ 1 billion by means of securities
issued overseas, of which US$ 500 million with 4.5% p.a. coupons in five-year papers, and an additional
US$ 500 million with 6.0% p.a. coupons in ten-year paper.Banco do Brasil will allocate funds to grant credit,
in particular to finance foreign trade transactions. These transactions are not of a subordinated nature and
are not considered in the BIS Ratio.
n) Start of Studies for the Initial Public Offering
On November 27, 2009 Banco do Brasil and the National Treasury put in place studies to examine the
feasibility and convenience of undertaking a primary or secondary share public offering, maintaining the Union's
shareholding under conditions to be detailed and disclosed in due time, as provided for in legislation.
o) Management of Investment Funds
At the end of December, 2009, BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A. wholly-owned subsidiary of Banco do Brasil S.A., exhibited a portfolio of R$ 306.7 billion, with R$ 296 billion
in investment funds (444 investment funds) and R$ 10.7 billion in managed portfolios (20 managed funds).
p) Consortium funds
Forecast of funds receivable from consortium members
Obligations of the group for contributions
Consortium - goods to granted
(In Units)
Number of groups managed
Number of active consortium members
Number of goods delivered to consortium winners
Number of goods in the period
12.31.2009
12.31.2008
45,856
2,383,273
2,177,640
42,545
1,686,029
1,549,538
316
140,860
21,450
334
130,940
21,832
31,164
45,888
q) Shares on the market
BB shares
Number
%
83
Notes to Financial Statements
On the market as of 12.31.2009
Total
(1)
562,527,754
2,569,860,512
21.89%
100.00%
(1) Pursuant to Law 6404/76 and the Bovespa New Market regulations
84
ABCD
Banco do Brasil S.A.
Independent auditors’ opinion
KPMG Auditores Independentes
February 2010
KPMG Auditores Independentes
Financial Services
SBS - Qd. 02 - Bl. Q - Lote 03 - Salas 708 a 711
Edifício João Carlos Saad
70070-120 - Brasília, DF - Brasil
Caixa Postal 8723
70312-970 - Brasília, DF - Brasil
Central Tel
Fax
Internet
55 (61) 2104-2400
55 (61) 2104-2406
www.kpmg.com.br
Independent auditors’ opinion
To
The Board of Directors, Shareholders and Management
Banco do Brasil S.A.
Brasília - DF
1. We have examined the balance sheets of Banco do Brasil S.A. (Banco do Brasil) and the
consolidated balance sheets of Banco do Brasil S.A. and its subsidiaries (BB – Consolidated)
as of December 31, 2009 and 2008 and the related statements of income, changes in
shareholders’ equity, and changes in cash flows and in added value for the years then ended,
which are the responsibility of its management. Our responsibility is to express an opinion on
these financial statements. The financial statements of the indirect investments, Brasilcap
Capitalização S.A., Brasilsaúde Companhia de Seguros, Brasilveículos Companhia de
Seguros, Brasilprev Seguros e Previdência S.A., Cielo S.A., Neoenergia S.A. (Notes 4 and
14), were examined by other independent auditors. Thus, our opinion on the balances of the
investments aforementioned and of the respective income arising from the application of the
equity pick-up method, which totaled R$1,865 million (R$1,773 as of December 31, 2008)
and R$840 (R$981 million as of December 31, 2008), respectively, are based on the reports
issued by those independent auditors. Additionally, the net assets used in the calculation of
the Retirement and Pension Plan (Note 28.a), were examined by other independent auditors
and our evaluation, with respect to these net assets, is based on the report issued by those
independent auditors.
2. Our examination was conducted in accordance with auditing standards generally accepted in
Brazil and included: (a) planning of the audit work, considering the materiality of the
balances, the volume of transactions and the accounting systems and internal accounting
controls of the Bank and its subsidiaries; (b) verification, on a test basis, of the evidence and
records which support the amounts and accounting information disclosed; and (c) evaluation
of the most significant accounting policies and estimates adopted by Management of the
Bank and its subsidiaries, as well as the presentation of the financial statements taken as a
whole.
2
KPMG Auditores Independentes, uma sociedade simples brasileira e
firma-membro da rede KPMG de firmas-membro independentes e
afiliadas à KPMG International Cooperative (“KPMG International”),
uma entidade suíça.
KPMG Auditores Independentes, a Brazilian entity and a member
firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a
Swiss entity.
ABCD
3. In our opinion, based on our examination and on the reports of other independent auditors,
pursuant to the aforementioned in paragraph one, the financial statements aforementioned
represent fairly, in all material respects, the financial position of Banco do Brasil S.A. (Banco
do Brasil) and Banco do Brasil S.A. and its subsidiaries (BB-Consolidated) as of December
31, 2009 and 2008, and the results of their operations, changes in shareholders’ equity and
changes in cash flows and the added value in their operations for the year then ended, in
conformity with accounting practices adopted in Brazil.
4. The Bank has recorded in its assets, as of December 31, 2009, the amount of R$12,655
million (R$7,794 as of December 31, 2008) corresponding to the surplus of PREVI –
Employee Benefits (Note 28.a), which was determined based on criteria established by the
Bank’s Management, which are considered adequate in the circumstance. These criteria
incorporate long-term estimates and assumptions of actuarial and financial nature, as well as
the fulfillment of the requirements established in the regulations in force. Therefore, the
inaccuracies inherent to the process of using estimates and assumptions may result in
differences between the amount recorded and the amount effectively realized.
February 24, 2010
KPMG Auditores Independentes
CRC SP-014428/O-6 F-DF
The original version in Portuguese was signed by
Francesco Luigi Celso
Accountant CRC SP-175348/O-5 S-DF
3
José Claudio Costa
Accountant CRC SP-167720/O-1 S-DF
SUMMARY OF THE AUDIT COMMITTEE REPORT
Second semester of 2009
Introduction
The Audit Committee is an advisory body to the Board of Directors and its main functions are to
independently evaluate the effectiveness of the internal control system and internal and independent
audits, and to review the financial statements prior to publication. The bylaws of the Audit Committee are
available at www.bb.com.br in the Investor Relations section of the web page.
The Audit Committee is organized to attend Banco do Brasil S.A. and its wholly-owned subsidiaries:
BB - Banco de Investimento S.A., BB - Leasing S.A. Arrendamento Mercantil,BB – Gestão de Recursos Distribuidora de Títulos e Valores Mobiliários S.A., BB - Administradora de Cartões de Crédito S.A., BB Banco Popular do Brasil S.A. and BB - Administradora de Consórcios S.A.
The managements of Banco do Brasil and its subsidiaries are responsible for preparing and assuring
the integrity of the financial statements, for managing risks, for maintaining an effective, consistent internal
control system and for monitoring conformity with applicable legal and regulatory standards.
The Internal Audit is responsible for periodically and independently performing its activities including
internal controls reviews in order to evaluate whether they are adequate and effective, as well as to
evaluate whether risk management procedures are adequately performed.
KPMG Auditores Independentes is responsible for auditing the financial statements and for issuing an
opinion on whether the financial position is presented fairly, in all material aspects, in conformity with
accounting practices adopted in Brazil, and on its internal controls, including the electronic data processing
and risk management systems, and the compliance with the legal and regulatory provisions.
Activities
In compliance with its 2009 annual plan, the Committee had 122 meetings in the quarter, of a total of
245 in the year, with the Board, internal and external auditors, external inspecting bodies and senior
management responsible for the main directorate including strategic business, internal controls, legal,
technology and logistics, as well as HR, risk and security management.
During these meetings, the Committee discussed mainly the issues related to the improvement of
internal control mechanisms, adherence to applicable rules and regulations, risk management, the New
Capital Accord (Novo Acordo de Capital - Basel II), money laundering prevention procedures,
reconciliation of funds and governmental programs, process of assignment of credits, information security,
benefits to employees – health care and pension, IT building structure, ombudsman department
(ouvidoria), judicial contingencies, acquisitions and mergers of financial institutions,
and
recommendations for internal controls reported by the internal and external auditors and external
regulators, technological solutions implemented or undergoing implementation, and the legal portal
system.
In addition, the Committee held periodic meetings with the internal and external audit teams, where it
verified the performance of its annual planning, understood the methodologies employed, the qualification
of the technical team and examined the conclusions and main recommendations made.
The Audit Committee followed the process used for preparing the financial statements, examined the
accounting practices adopted, the criteria used to establish provisions, the most significant variations in
account balances and the extraordinary events that occurred during the period.
It evaluated the relevant aspects of the financial statements, the comprehensiveness,compliance and
clarity of the notes to the financial statements and assessed the opinion expressed by KPMG.
Where suggestions for improvement were observed, the Committee suggested improvements to the
various instances of the Institution’s organizational structure.
Conclusions
97
Based on the activities undertaken during the period, observation on the system and internal control
environment, Board management interviews, assessment of activities performed by internal control and
risk/security management directorate, the internal and external audit reports and their conclusions, and
taking into consideration the responsibilities of the Committee and the limitations on the scope of its
activities, the Committee concluded that:
a. the internal control system has been the object of permanent attention by senior management, is
considered adequate in relation to the size and complexity of the business; and have been constantly
improved;
b. the Group adopts a conservative posture in the assumption of risks and has appropriate instruments in
place for risk management and mitigation;
c. the internal auditors’ functions have been assessed as effective and independent, as well as
adequately reported to the Committee’s request;
d. the external auditors work is being carried out effectively and nothing was noted that
e. would indicate non-compliance with applicable independence rules and regulations; and
f. the financial statements for the year ended December 31, 2009 were prepared in conformity with legal
standards and accounting practices adopted in Brazil, and present fairly, in all material respects, the
financial situation of the Group for the period then ended.
Brasília-DF, February 23, 2010.
José Danúbio Rozo
Coordinator
Celene Carvalho de Jesus
José Gilberto Jaloretto
98
DECLARATION OF THE BOARD OF DIRECTORS
In compliance with paragraph V of Art. 142 of Law 6404 of December 15,
1976, the Board of Directors of Banco do Brasil S.A. declares that, in a meeting
performed on this date, it became aware and recommended the approval of the
accounts of the Directors, and of the Management's Report related to 2009.
Brasília-DF, February 24, 2010.
_____________________________
Nelson Henrique Barbosa Filho
__________________________________
Aldemir Bendine
__________________________________
Adriana Queiroz de Carvalho
__________________________________
Bernardo Gouthier Macedo
__________________________________
Henrique Jager
__________________________________
Sérgio Eduardo Arbulu Mendonça
__________________________________
Tarcísio José Massote de Godoy
99
FISCAL COUNCIL REPORT
THE FISCAL COUNCIL OF BANCO DO BRASIL S.A., according to
its legal and statutory responsibilities, examined the Management Report, the
Balance Sheet and other Financial Statements, including the proposal
concerning the net income for the year destinations, related to the fiscal year
ended December 31, 2009, which were approved, in this date, by the Board of
Directors.
Our opinion, based on our exams performed, on the information and
the clarifications provided throughout the year, and taking into consideration the
unqualified Independent Auditor's Report issued by KPMG Auditores
Independentes, on this date, is that the aforementioned corporate documents are
fairly reflected to be sent for approval by the Stockholder's General Meeting.
Brasília (DF), february 24, 2010.
Ênio Alexandre Gomes Bezerra da Silva
Conselheiro
Marcos Machado Guimarães
Conselheiro
Eustáquio Wagner Guimarães Gomes
Conselheiro
Pedro Carvalho de Mello
Conselheiro
Daniel Sigelmann
Presidente
100
EXECUTIVE BOARD
CEO
Aldemir Bendine
BOARD OF OFFICERS
Alexandre Corrêa Abreu
Allan Simões Toledo
Ivan de Souza Monteiro
José Luis Prola Salinas
Luís Carlos Guedes Pinto
Paulo Rogério Caffarelli
Ricardo Antônio de Oliveira
Ricardo José da Costa Flores
Robson Rocha
MANAGING DIRECTORS
Adilson do Nascimento Anísio
Admilson Monteiro Garcia
Amauri Sebastião Niehues
Armando Medeiros de Faria
Ary Joel de Abreu Lanzarin
Carlos Eduardo Leal Neri
Dan Antônio Marinho Conrado
Danilo Angst
Denilson Gonçalves Molina
Edson de Araújo Lôbo
Janio Carlos Endo Macedo
José Carlos Vaz
José Francisco Alvarez Raya
José Mauricio Pereira Coelho
Márcio Hamilton Ferreira
Marco Antonio Ascoli Mastroeni
Marco Antônio da Silva Barros
Nilo José Panazzolo
Nilson Martiniano Moreira
Orival Grahl
Paulo Roberto Evangelista de Lima
Renato Donatello Ribeiro
Renê Sanda
Sandro Kohler Marcondes
Sérgio Ricardo Miranda Nazaré
Walter Malieni Júnior
BOARD OF DIRECTORS
Nelson Henrique Barbosa Filho (Presidente)
Aldemir Bendine (Vice-Presidente)
Henrique Jäger
Sérgio Eduardo Arbulu Mendonça
Bernardo Gouthier Macedo
Adriana Queiroz de Carvalho
Tarcísio José Massote de Godoy
BOARD OF AUDITORS
Daniel Sigelmann (Presidente)
Ênio Alexandre Gomes Bezerra da Silva
Eustáquio Wagner Guimarães Gomes
Marcos Machado Guimarães
Pedro Carvalho de Mello
AUDIT COMMITTEE
José Danúbio Rozo (Coordenador)
Celene Carvalho de Jesus
José Gilberto Jaloretto
ACCOUNTING
Eduardo Cesar Pasa
Contador Geral
Contador CRC-DF 017601/O-5
CPF 541.035.920-87
Daniel André Stieler
Contador CRC-DF 013931/O-2
CPF 391.145.110-53
93