PINE
Av. das Nacóes Unidas 8,501/30* andar, Sáo Paulo, SP PIN l
BMáFBovespa: PINE4
www.pine.com/ir
Quarterly Earnings Release – 2012 (BR GAAP)
PINE REPORTS NET INCOME OF R$187 MILLION IN 2012, UP 15.4% FROM 2011
SHAREHOLDERS” EQUITY SURPASSES R$1.2 BILLION, UP 20% YoY
LOAN PORTFOLIO OF R$7.9 BILLION, +12.5% YoY
Sáo Paulo, February 6, 2013 – PINE (BMAFBOVESPA: PINE4), a wholesale bank focused on establishing and maintaining long-
term relationships with large corporate clients and investors, announces today ¡ts consolidated results for 2012, presented in
BR GAAP. Key data for the period follows.
R$ millions
Total Credit Risk! Total Funding Shareholders’ Equity
12.5% 19% 20.2%
7,062
6,544 xx 1,220
ee 7,948
1,015
Dec-11 Dec-12 Dec-11 Dec-12 Dec-11 Dec-12
Fee Income Net Income ROAE
15.4% >
96.7% >, 70 bps
– >
17.9%?
162
187
120 17.2% 16.8%
61
2011 2012 2011 2012 2011 2012
* Includes Letters of Credit to be used, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, DRIs, eurobonds and fund shares)
? Excludes capital increase of R$139.6 million incorporated into shareholders “equity in September 2012
Other Highlights
Positive revenue contributions from all business lines in 2012: 62.8% from Corporate Credit, 16.7% from FICC, 10.2%
from Treasury and 10.3% from PINE Investimentos, consolidating its strategy.
PINE ¡issues the first Brazilian Huaso Bond in Chile. The transaction amounted to US$73 million with a 5-year term
and the 2″* Islamic format issuance in the amount of US$37.5 million, with a 1-year term.
As announced in August, 2012, Proparco subscribed in February 2013 to approximately R$27 million in PINE4 shares.
Positive liquidity gap maintained for over 10 quarters: 14 months for credit, versus 17 months for funding.
Liquid balance sheet, influenced by increased funding that raised the cash position to R$1.8 billion, equivalent to
50% of time deposits.
Once again, PINE ¡is one of the 15 largest players in derivative transactions and the 2nd largest in commodity
derivative according to Cetip (OTC Clearing House).
According to Anbima’s Fixed Income Origination ranking, PINE was 9′ in origination by number of transactions and
11′ by financial volume.
9th in credit to large companies, 15th largest bank in Brazil offering corporate credit, and 5th in wealth generated
per employee, according to the “Maiores e Melhores” ranking compiled by Exame magazine.
On December 11, 2012, PINE adopted the Equator Principles.
Investor Relations +55 11 3372-5343 |Raquel Varela
Alejandra Hidalgo
Eduardo Pinotti
Ana Carolina Lopes
Contents
Macroeconomic Scenario
Business Performance
Financial Performance
Financial Margin
Fee Income
Personnel and Administrative Expenses
Efficiency Ratio
Corporate Credit
Loan Quality and Provision for Loan Losses
FICC
PINE Investimentos
Funding
Asset and Liability Management
Capital Structure
Capital Increase – Proparco
About PINE
Balance Sheet
Income Statement
10
10
10
11
12
13
PINE
Macroeconomic Scenario
4Q12 was characterized by improvements in the external environment and a deteriorating domestic economic scenario.
Recently, the external environment has been permeated with a certain “optimistic uncertainty” regarding the ongoing
economic crisis in Europe, the resumption of economic activity in China and the timing of the definitive resolution of the
fiscal issue in the United States, which included not only an increase in taxes (addressed only at the beginning of this year),
but also cuts in government spending and, once again, an increase in the government’s debt ceiling, which will be voted on
in February. The outlook for the global economy is one of moderate growth, with the end to the recession in the euro zone
still far off in the distance, contrasting with accelerated economic growth in some emerging economies. The heterogeneity
of the economic recovery reflects its fragility; yet, the proactive approach by monetary authorities around the world
suggests the availability of a greater liquidity cushion against potential setbacks.
It is along these lines that the U.S. Federal Reserve (Fed), once again innovated by introducing specific conditions for
maintaining its Fed Funds rate between 0% and 0.25%, linking them to specific levels of unemployment (above 6.5%) and
inflation (when projected inflation between one and two years is less than 2.5%). In addition, the FOMC opted to increase the
supply of money by purchasing longer-term Treasuries as part of its Quantitative Easing 3 (QE3) program. As a result, QE3
includes the monthly purchase of both US$40 billion in Mortgage Backed Securities and US$45 billion in U.S. Treasuries. In
other words, the Fed will be responsible for the gross injection of nearly US$1.0 trillion in currency in 12 months.
In the euro zone, two events marked the improving scenario. First, the EFSF/ESM fund allocated €10 billion to the Greek
government to buy back approximately €30 billion of its sovereign bonds (at 1/3 of their face value). At the same time, given
the success of the repurchase, the Troika (IMF, EU, ECB) released €34 billion that had been blocked since last June; in this
context, the yields on five-year Greek sovereign bonds, although still high, fell from 16% to 11% per year. Obviously, this does
not provide much alleviation to the cost of public and private financing in Greece and delays its exit from the strong
recession that is affecting the Greek economy (it is estimated that the Greek GDP will shrink 5.5% in 2013).
Spain formally applied for assistance in recapitalizing its banks, involving the release of just over €30 billion. This step is
important to ensure the Spanish government’s commitment to the pursuit of fiscal adjustments, in order to guarantee the
EFSF/ESM’s purchase of Spanish government bonds on the primary market and the ECB’s purchase of Spanish government
bonds on the secondary market.
In China, industrial production and retail sales grew more significantly in the last quarter, and were responsible for a more
pronounced year-over-year expansion of the GDP in 40Q12, equal to 7.8% (versus 7.4% in 3Q12), confirming the Chinese
economy”s average real growth of 7.7% in 2012. The Chinese economy should maintain a real expansion rate of 8.0% in 2013,
partially accounting for the stability of the main commodities exported by Brazil.
In Brazil, the highlight in 4012 was the release of the frustrating GDP figure for 3Q12, which showed growth of only 0.6%
Q0Q, and 0.9% YoY. From an industry standpoint, the main force driving down the quarterly comparison was the “Financial
Services, Insurance, Pension Plans and Related Services” sector, which accounts for 5.7% of the GDP (the quarterly drop was
1.3%, against forecasted stability). Much of the blame could be found in the reduction of the Selic interest rate,
accompanied by a decrease in bank spreads, which partially measure the value added by the financial sector and were not
offset by the increase of the other portion, which measures the real change in the volume of loans in the financial sector.
On the aggregate demand side, once again the gross investment (government and private sector) was down from the previous
quarter (-1.9%, marking the fifth consecutive quarter in which gross investment showed a quarterly decline).
These results led to a major debate about the causes behind this performance and the trajectory of the GDP in 2013. The
more optimistic view, in the context of aggregate demand, calls attention to last quarter”s decline in inventories, which are
(methodologically) subtracted from the GDP; removing the inventory variation, annual GDP growth would have reached 2.6%,
instead of 0.9%.
However, the reasons behind Brazil’s decline in gross investment have more to do with: (a) the deterioration of the external
environment, (b) the growth in average real wages, outpacing productivity gains, (c) the increases in industry costs and
decreases in the corporate operating margins, (d) the persistent decrease of the internal rates of return and the general rate
of profit, and (e) the difficulty in funding investments in specific sectors, which account for a significant portion of gross
investment, such as the oil and gas, mining and steel sectors.
In order to face these difficulties, the government continued on its path of monetary easing, despite rising inflation,
maintaining the BNDES loan rates relatively low, reducing the IPl tax for the purchase of capital goods and the TJLP rate. In
addition, measures such as the extension of the reduced IPl tax for the purchase of automobiles and white goods until mid-
2013, as well as an expansion of the payroll tax relief for other sectors, including the services sector, are aimed at preserving
jobs, gains in real wages (despite the relatively lower increase in labor productivity) and household consumption.
Unfortunately, this type of solution preserves the economic growth model driven by consumption and led by high real wages
in the context of full employment, implying higher unit costs (particularly in industry), reduction of operating margins and
internal rates of return and, as a result, underperformance in terms of the increase in gross investment and GDP in 2013.
PINE
Business Performance
PINE is a wholesale bank focused on establishing and maintaining long-term relationships with large corporate clients and
investors. lts strategy is based on knowing its clients well and understanding their businesses and potential in order to build
customized financial solutions and alternatives. This strategy requires a diverse range of products, highly qualified human
capital and efficient and agile risk management, areas in which the Bank is consistently evolving.
The contribution to overall revenue from products and services complementary to credit has been increasing, and today 40%
of PINE”s revenues come from these sources. This confirms the increasingly more efficient allocation of capital and the value
creation in all of the Bank”s business lines.
2011 2012
PINE
Investimentos
10.3%
PINE Corporate
Investimentos Credit
3.0% 63.7%
Treasury
Treasury 10.2% Corporate
3.0% Credit
62.8%
FICC
16.7%
FiCC
24.7%
Financial Performance
With the capital increase announced in August, PINE surpassed R$1.2 billion in Shareholders” Equity, 20.2% higher when
compared to December 2011. Annualized Return on Average Equity (ROAE) ended 2012 at 16.8%. Excluding the capital
increase in the amount of R$139.6 million, ROAE would have been 17.9%. Net income for the full year was R$187 million, a
15.4% YoY increase.
yTzyl 3Q12 TE na 2011
Earnings and Profitability
Net income (R$ millions) 48 47 56 187 162
Annualized ROAE 16.8% 17.7% 24.4% 16.8% 17.2%
Annualized ROAAw’ 2.4% 2.5% 3.5% 2.5% 2.6%
Annualized financial margin before provision 5.0% 6.0% 7.3% 6.3% 6.5%
Annualized financial margin after provision 3.9% 4.7% 4.3% 5.1% 5.2%
Balance Sheet (R$ millions)
Total assets 10,406 10,175 11,144 10,406 11,144
Loan portfolio? 7,948 7,444 7,065 7,948 7,065
Risk weighted assets 8,179 7,745 6,914 8,179 6,914
Deposits? 3,716 3,655 3,794 3,716 3,794
Funding 7,062 6,804 6,544 7,062 6,544
Shareholders’ equity 1,220 1,216 1,015 1,220 1,015
Credit portfolio quality
Non performing loans – 90 days 0.6% 0.4% 0.2% 0.6% 0.2%
Credit coverage index 3.3% 3.5% 3.4% 3.3% 3.4%
Performance
BIS ratio 16.2% 17.0% 18.5% 16.2% 18.5%
Efficiency ratio 39.3% 35.7% 38.6% 32.8% 36.9%
Earnings per share* (R$) 0.44 0.43 0.65 1.73 1.87
Book value per share* (RS) 11.23 11.19 11.72 11.23 11.72
Market Cap* (R$) 1,629 1,597 1,005 1,629 1,005
TRisk weighted assets
2 Includes Letters of Credit to be used, Bank Guarantees, Credit Securities to be Received and Private Securities (bonds, CRIs,
eurobonds and fund shares)
3 Includes Agribusiness and Real Estate Letters of Credit
4 It considers 108,631,100 stocks for the 2012 periods and 86,577,870 stocks for the 2011 periods
PINE
Financial Margin
In 2012, Income from Financial Intermediation before provisions for loan losses was R$462 million. Net interest margin (NIM)
was 6.3%, within the guidance range. The main impacts on this line during the quarter were the reduction in the SELIC basic
interest rate, and the cash position that increased to R$1.8 billion.
R$ millions
Eo xyA 2012 yo]
Income from financial intermediation 112 459 422
Cayman branch overhedge effect (1) 3 10
Income from financial intermediation desconsidering overhedge (A) 92 112 462 432
Provision for loan losses (19) (24) (83) (89)
Income from financial intermediation after provision (B) 73 88 75 379 343
Average earning assets (C ) 7,515 7,572 7,040 7,361 6,650
Interbank Investments 418 501 343 451 285
Securities! 2,260 2,163 1,946 2,075 1,568
Credit transactions 4,972 5,072 4,976 5,009 4,911
(-) FIDC senior shares (135) (164) (225) (174) (114)
Annualized Financial Margin before provision (%) (A/C) 5.0% 6.0% 7.3% 6.3% 6.5%
Annualized Financial Margin after provision (%) (B/C) 3.9% 4.7% 4.3% 5.1% 5.2%
1 Excludes repo transactions and the liability portion of derivatives
Fee Income
Fee income soared 96.7% in the year, positively impacted by fees related to PINE Investimentos, which performed
accordingly to its strategy and investment applied on this business over the past years.
RS millions
4012 3Q12 xk] YY) yk]
Bank 21 10 17 59 46
PINE Investimentos 9 18 1 61 15
Total 30 28 18 120 61
Personnel and Administrative Expenses
PINE continues to focus on the rigorous control of its expenses. In 2012, personnel and administrative expenses growth stood
at 4.6%, below the 8%-12% guidance. In December 2012, PINE”s workforce numbered 424, compared to 407 in December
2011.
RS millions
exp) Ey] 4011 2012 2011
Personnelexpenses 23 22 22 89 71
Other administrative expenses 22 27 35 92 102
Subtotal 45 48 57 181 173
Efficiency Ratio
The Efficiency Ratio ended the year at 32.8%, improving 410 bps YoY.
RS millions
4012 Exp] Ele El 2012 yk]
Operating expenses * 49 53 73 198 210
(-) Non-recurring expenses 1 3 17 7 28
Recurring Operating Expenses (A) 48 50 55 191 182
Revenues ? (B) 122 140 143 582 493
Ratio (A/B) 39.3% 35.7% 38.6% 32.8% 36.9%
1 Other administrative expenses + tax expenses + personnel expenses
2 Gross Income from financial intermediation – provision for loan losses + fee income + overhedge effect
PINE
Corporate Credit
Total credit risk, which includes Letters of Credit, Bank Guarantees, Credit Receivables and Private Securities, reached
R$7,948 million on December 31, increasing 12.5% YoY. The Working Capital portfolio, combined with the portfolio of Private
Securities and Negotiable Instruments Receivable, which have similar characteristics, grew by 15.3% YoY. We highlight bank
guarantees” growth, which was positively impacted by the inclusion of the new product Fianca BNDES, offered to PINE clients
since September 2012. The Trade Finance portfolio was negatively impacted by the seasonality of the agriculture sector. The
average term of the Corporate portfolio remained at 14 months in December 2012.
R$ millions
TY NU YA Dec-11 Q00 YoY
Working capital 3,377 3,274 3,289 3.1% 2.7%
Onlending 853 800 883 6.6% -3.4%
Trade finance’ 781 942 782 -17.1% -0.1%
Bank guarantees 2,114 1,699 1,687 24.4% 25.3%
Loan Portfolio 7,125 6,714 6,641 6.1% 7.3%
Private securities ? 787 683 322 15.2% 144.4%
Expanded Loan Portfolio 7,912 7,397 6,963 7.0% 13.6%
Acquired portfolio * 7 9 22 -22.2% -68.2%
Ajusted Total Corporate Risk 7,919 7,406 6,985 6.9% 13.4%
Remaining retail portfolio 29 38 80 -23.7% -63.8%
Total Credit Risk 7,948 7,444 7,065 6.8% 12.5%
1 Includes letters of credit to use
2 Includes debentures, CRIs, Hedge Fund Shares and Eurobonds
3 Loan portfolio with recourse acquired from financial institutions
Loan Portfolio Profile
PINE”S loan transactions are mostly short-term, with 58% of the portfolio due in less than 360 days, and adequately
collateralized. PINE has broad expertise in formalizing and monitoring the collateral of its transactions, bolstering PINE*s
balance sheet.
Loan Maturity profile Collateral Mix
42% Products
Guarantees Ma
34% 2% 46:
Investments
[en A
Properties
Pledge
23%
From0to90 From91to 360 More than 360 Receivables
days days days 28%
Loan Quality and Provision for Loan Losses
4012 3Q12
Provision
Provision
Total
O NC CAOS
Expanded
TE Cn
O TN ETT TO
AA 1,560 1,560 26.8% MA 1,070 1,070 18.8%
A 1,411 1,411 24.2% 7 – 7 A 1,415 1,415 24.9% 7 – 7
B 0 2,150 2,151 36.9% 22 – 22 B 0 2,304 2,304 40.5% 23 27 50
Cc 1 442 443 7.6% 13 – 13 Cc 7 659 666 11.7% 20 18 38
D 0 76 76 1.3% 8 – 8 D 7 43 50 0.9% 5 – 5
E 1 7 7 0.1% 2 – 2 E 28 63 91 1.6% 27 – 27
F 0 26 27 0.5% 13 – 13 F 2 13 14 0.2% 7 – 7
G 11 71 82 1.4% 57 – 57 G 0 39 39 0.7% 27 – 27
H 25 42 67 12% 67 – 67 H 6 33 39 0.7% 39 – 39
Total 39 5,785 5,824 100.0% 190 – 19 Total 50 5,638 5,687 100.0% 155 45 200
Required provision according to the transaction rating: AA: 0%, A: 0.5%, B: 1%, C: 3%, D: 10%, E: 30%, F: 50%, G: 70%, H: 100%
Includes provision of investment fund shares and private securities
PINE
Following a conservative policy and according to best practice, PINE voluntarily accrues provisions for investment funds
shares and private securities that are based on the same criteria used for credit rating analyses. These provisions, amounting
to R$1.6 million, are recorded mainly under “Provision for Devaluation of Investment Fund Quotes”. Therefore, the coverage
of the total loan portfolio ended 2012 at 3.3%, compared to 3.4% in 2011. The coverage of the D-H portfolio ended the year
at 73% and total coverage of the overdue portfolio was approximately 500%.
In 4Q12, in response to a regulatory recommendation, the additional provision was reclassified. This provision was
constituted in 2010 and 2011 and amounted to R$45 million. It was reclassified according to Resolution 2.682, maintaining
the stability of the total loan portfolio coverage.
Loan Portfolio Coverage Ratio
Dec-11 Mar-12 Jun-12 Sept-12 Dec-12
Portfolio by Risk Rating
Dec-12
D-H D-H
= Ma o Mo
ARE AA-C
95.5% 95.9%
The ratio of installments overdue more than 15 days stood at 0.7%, compared to 0.9% in September 2012, while the ratio of
installments overdue more than 90 days was 0.6%, compared to 0.4% in September 2012. Considering total loan contracts
overdue more than 90 days, the ratio increased to 1.2% in December 2012.
Non-Performing Loans (Overdue Installments)
DAYA YA PAK
More than 15 days 0.7% 0.9% 0.4%
More than 30 days 0.7% 0.9% 0.4%
More than 60 days 0.6% 0.7% 0.3%
More than 90 days 0.6% 0.4% 0.2%
More than 120 days 0.6% 0.1% 0.2%
More than 180 days 0.4% 0.1% 0.1%
Non-Performing Loans (Total Contract)
DITEA YA YA TEE
More than 15 days 1.5% 2.6% 1.2%
More than 30 days 1.5% 2.3% 1.2%
More than 60 days 1.3% 2.1% 0.9%
More than 90 days 1.2% 0.8% 0.6%
More than 120 days 1.1% 0.3% 0.5%
More than 180 days 0.5% 0.2% 0.1%
PINE
Active Management of the Loan Portfolio
In 4Q12, PINE kept diversifying its loan portfolio, seeking to further increase the solidity of ¡ts balance sheet. As a result, we
observed:
1.
Greater Diversification across Industries
The allocation of the portfolio by industry changed. The exposure to the Sugar and Ethanol sector decreased to 15% from
18% in the last twelve months. In addition to the increased participation of various other sectors. Among them, we
highlight Electricity and Renewable Energy, Agriculture and Construction.
4012 4011
Financial Other
Institutions Other 11%
Metallurs
Meatpacking ¡26 10% : Etanol A
2% ugar 5% ¡ano! Sugar and Ethanol
Construction Chemicals.
Material. 2%
2 Beverages and A
Telecom
2%
Chemicals
2%
Metaland Mining _- 4%
2%
Vehicles and Parts
3%
13%
Food Industry.
3%
Foreign Trade
4%
NX Construction
4%
Specialized Services.
Transportation Infrastructure
and Logistics 6%
5%
Agriculture
%%
2. Rebalancing of the 20 Largest Clients
Electric and
Renewable Energy
Tobacco
3%
Vehicles and Parts__-A4
3%
Telecom_ 4
3%
Financial
Institutions
3%
Food Industry
3%
Meatpacking
4%
Specialized /
Services
4% ForeignTrade
Construction
Infrastructure
8%
Electric and
Renewable Energy
8%
Agriculture
Transportation 7%
and Logistics
6%
Once again, the composition of the portfolio of the 20 largest clients changed by approximately 25%, demonstrating the
liquidity and flexibility of the Bank’s operations. It is also important to note that PINE operates with low levels of
leverage. The 20 largest clients over the total portfolio is still adequate, at approximately 28%, and with individual ratios
proportionally lower.
FICC
FICC (Fixed Income, Commodities and Currencies) business provides risk management products and hedging solutions on
interest rates, currencies, and commodities to help clients manage the risks on their balance sheets. The key markets in this
business line are Fixed Income, Currencies, and Commodities. PINE offers to its clients the main derivative instruments,
which include non-deliverable forwards (NDFs), swaps and some options-based structures.
The total notional value of the derivatives portfolio for clients reached R$5.0 billion, with an average duration of 204 days as
of December 31, 2012. The Mark-to-Market value of the portfolio closed the quarter at R$197 million. Based on the stress
test performed on the derivatives portfolio with clients, under an extremely negative scenario consisting of the U.S. dollar
strengthening by 31%, against the Brazilian Real to reach R$2.67/USD, and commodity prices falling by 30%, the potential
Mark-to-Market from clients in the portfolio was R$498 million. This shows that the derivatives portfolio is well balanced and
represents relatively low credit risk exposure even under a stressed scenario.
According to the ranking compiled by CETIP – OTC Clearing House (CETIP) published in December 2012, PINE remains as one
of the 15 largest players in derivative transactions for clients and the 2”* largest player in commodity derivatives. Since 2011,
PINE has been presenting prominent position in this ranking.
Client Notional Derivatives by Market – 4012
Fixed
Income Currencies
15% 67%
Commodities
18%
Notional Amount and Counterparty Credit Risk
(MEM)
Notional value
— min
– – Stressed MM 597 629
== “- 498
, =
354 354, 7
– — e
256 238
157 197
126
3,712 4,287 4,720 4,875 5,036
Dec-11 Mar-12 Jun-12 Sept-12 Dec-12
PINE
PINE Investimentos
PINE Investimentos, the Bank’s Investment Banking unit, works closely with its clients to offer customized and unique
solutions in the Capital Markets, Financial Advisory, and Project €: Structured Finance areas.
In 2012, PINE Investimentos led and structured more than R$1.0 billion in fixed income transactions, through its different
areas of expertise. The transaction volume increased 21.5% compared to 2011. During 2012, PINE Investimentos posted
recurring results and executed transactions in Capital Markets, Project Finance and M€.A, consolidating its strategy.
In December, PINE was ranked 9* in origination by number of transactions and 11′
Financial and Capital Markets Association (Anbima).
by volume, according to the Brazilian
Funding
Total funding was R$7,062 million in December 2012, increasing 7.9% YoY. The balance of time deposits, including
Agribusiness Credit Notes (LCA) and Real Estate Credit Notes (LCI), reached R$3,565 million, in line with the year-ago period.
The weighted average term of deposits was 11 months, while the weighted average term of funding transactions was 17
months.
RS millions
AAA Sept-12 IAE] Q0Q YoY
Local Funding 4,617 4,295 4,076 7.5% 13.3%
Demand deposits 30 33 112 -9.1% -73.2%
Interbank deposits 121 176 106 -31.3% 14.2%
Time deposits + LCA + LCI 3,565 3,446 3,576 3.5% -0.3%
Individuals 146 213 250 -31.5% -41.6%
Companies 1,174 1,177 1,196 -0.3% -1.8%
Institutionals 2,245 2,056 2,130 9.2% 5.4%
Capital Markets 901 640 281 40.8% 220.6%
Onlendings + Trade Finance 1,711 1,912 1,620 -10.5% 5.6%
Onlendings 892 829 867 7.6% 2.9%
Trade finance 808 1,073 686 -24.7% 17.8%
Offshore onlendings 10 10 67 – -85.1%
International Funding 734 596 849 23.2% -13.5%
Capital Markets 409 260 246 57.3% 66.3%
Multilaterals 152 156 353 -2.6% -56.9%
Other private placements and syndicated
bans 173 180 250 -3.9% -30.8%
Total 7,062 6,804 6,544 3.8% 7.9%
On December 13, 2012, PINE concluded its first funding transaction in Chile, under the modality denominated Huaso Bond.
The transaction amounted to UF1.5 million, roughly US$73 million, with a 5-year term. This was the first funding transaction
of this type issued in the Chilean market by a non spanish speaking entity. Yet during the 4012, PINE concluded its 2nd
Islamic format issuance (Sharia compliant) with Al Rajhi Bank, also with the participation of Commerzbank, JP Morgan and
Citigroup.
PINE maintains a conservative policy regarding its liquidity position. During the 4012, the deposits growth, the financial bills
and the Huaso Bond issuances raised PINE*s cash position to R$1.8 billion, equivalent to 50% of time deposits. This level is
above the policy of maintaining the cash position around 30% of deposits.
In the international arena, PINE maintained its base of correspondent banks at around 60 institutions. These institutions
include banks in various countries and multilateral agencies such as DEG, Proparco, IFC, IDB, and FMO.
PINE
Asset and Liability Management
In accordance with PINE”s asset and liability management, funding sources are aligned in terms of maturity and cost with
their respective credit transactions. While the weighted average maturity of the loan portfolio is 14 months, the funding
period is 17 months, ensuring a comfortable situation for the Bank. This positive liquidity gap has been maintained for over
30 months.
RS million
3,256 Mi Credit Funding
2,312 2,148
[2,017
1,628
1,447
1,030
449
209
– 30 Ml 133
A
No maturity- Upto3 From3to12 Fromíto3 From3to5 Morethan5
months months years years years
(includes
Cash)
Capital Structure
In 4012, the capital adequacy ratio (BIS) reached 16.2%, well above the minimum required by law (11%). In 4012, the ratio
includes the capital increase of R$139.6 million, which was incorporated into Shareholders” Equity in September.
R$ millions
Dec-12 5 YA Dec-11
Reference Equity 1,477 1,466 1,314
Tier | 1,220 1,210 1,017
Tier | – BIS Ratio % 13.4% 14.0% 14.3%
Tier Il 257 257 297
Tier 11 – BIS Ratio % 2.8% 3.0% 4.2%
Required Reference Equity 1,004 948 782
Credit Risk 900 852 760
Market Risk 95 87 12
Operational Risk 9 9 10
Excess of Reference Equity 473 518 532
BIS Ratio – % 16.2% 17.0% 18.5%
Capital Increase – Proparco
On February 4, 2013 PINE, its controlling shareholder and Proparco have signed a share subscription agreement, concluding
the second phase of the capital increase transactions announced in August 2012. Proparco subscribed a total of
R$26,954,999.40 at a price of R$14.28 per share. On February 5, 2013, the regulatory period to exercise the subscription
rights and leftovers of this capital increase began. During this period, PINE will issue, a minimum of 1,887,605 and a
maximum of 6,030,087 shares (in case all minority shareholders choose to join).
Accordingly, the BIS ratio will increase in a minimum of 30 bps and a maximum of 60 bps.
10
PINE
About PINE
PINE is a wholesale bank focused on long-term relationships with large companies. The bank offers Credit, including Working
Capital, Onlending lines from BNDES and Multilateral Organizations, Trade Finance, Bank Guarantees, as well as hedging
products (Fixed Income, Currencies, and Commodities), Capital Markets, Financial Advisory Services, Project €: Structured
Finance.
Corporate Governance
PINE has active corporate governance policies, given its permanent commitment to shareholders and other stakeholders.
Besides integrating Level 2 of Corporate Governance of BMáFBovespa, some of PINE”s practices include:
Y” Two independent members and one external member to the Board of Directors
Y 100% tag-along rights for all shares, including preferred shares
y” Adoption of arbitration procedures for rapid settlement of disputes
y” Quarterly disclosure of earnings in two accounting standards: BR GAAP and IFRS
Y” Compensation and Audit committees, which report directly to the Board of Directors
Sustainability
On December 11, 2012, PINE adopted the Equator Principles, which are principles applied to Project
Finance transactions where total project capital costs exceed US$10 million and are based on EQUATOR
International Finance Corporation Performance Standards on social and environmental sustainability and PRINCIPLES
on the World Bank Group Environmental, Health, and Safety Guidelines (EHS Guidelines).
PINE4
In 4012, PINE repurchased 600,000 of its own shares. These shares are currently held in treasury and will be used as
compensation for executive officers, in accordance with Central Bank Resolution 3,921. At the end of the quarter, the total
amount held in treasury was 994,840 shares.
As of December 31, 2012
(el Preferred Total %
Controlling Shareholder 58,444,889 15,595,863 74,040,752 68.2%
Management . 5,916,784 5,916,784 5.4%
Free Float . 27,678,724 27,678,724
Individuals a 1,949,271 1,949,271
Local Institutional Investors a 13,038,846 13,038,846
Foreign Investors – 12,690,607 12,690,607
Treasury . 994,840 994,840
Total 58,444,889 50,186,211 108,631,100
Interest on Own Capital and Dividends
On January 11, 2013, PINE paid a total of R$29.9 million as dividends and interest on own capital, which corresponds to a
gross payout per share of R$0.28. Of this total, R$16.1 million represents interest on own capital and R$13.8 million,
dividends. During 2012, PINE distributed a total of R$60.2 million of interest on own capital and R$39.7 million of dividends,
representing a dividend yield of 6.4%. Since 2008, PINE has distributed Dividends/Interest on own capital quarterly.
Ratings
STANDARD – FitchRi
ngs Moodys.com RISKbank
¿POORS
u Long Term BB+ BB Ba2
E >
EE E Short Term B B
532
vu-5 Long Term BB+ BB Ba2
AS
E Short Term B B
El Long Term brAA A+(bra) At.br
S
E 10.49
z Short Term Fi(bra) Br-1
11
Balance Sheet
RS millions
Dec-12 TL YA DEA
Assets 10,406 10,175 11,144
Cash 126 169 114
Interbank investments 405 431 496
Securities 4,261 3,900 5,125
Interbank accounts 1 3 13
Lending operations 5,038 4,905 4,980
(-) Provisions for loan losses (190) (196) (173)
Net lending operations 4,848 4,708 4,807
Other receivables 734 932 579
Property and equipments 31 31 10
Investments – – –
Property and equipment in use 29 29 7
Intangible 2 2 2
Liabilities 9,186 8,959 10,128
Deposits 3,319 3,212 3,484
Money market funding 1,833 1,602 3,190
Funds from acceptance and securities issued 1,292 994 655
Interbank and Interbranch accounts 22 12 9
Borrowings and onlendings 1,975 2,414 2,101
Derivative financial instruments 100 107 113
Other liabilities 588 570 523
Deferred Results 56 48 53
Shareholders’ equity 1,220 1,216 1,015
Liabilities and shareholders’ equity 10,406 10,175 11,144
PINE
12
PINE
Income Statement
RS millions
4012 3Q12 oq] 2012 yl K
Income from financial intermediation 252 265 281 1,237 1,401
Lending transactions 115 137 158 548 658
Securities transactions 117 84 107 480 444
Derivative financial instruments 7 28 45 64 162
Foreign exchange transactions 13 17 (29) 145 137
Expenses with financial intermediation (178) (177) (206) (860) (1,067)
Funding transactions (127) (122) (174) (607) (700)
Borrowings and onlendings (32) (31) 19 (170) (278)
Provision for loan losses (19) (24) (50) (83) (89)
Gross income from financial intermediation 74 88 76 376 333
Other operating (expenses) income (21) (24) 41 (115) (49)
Fee income 30 28 18 120 61
Personnel expenses (23) (22) (22) (89) (71)
Other administrative expenses (22) (27) (35) (92) (102)
Tax expenses (4) (4) (16) (17) (37)
Other operating income 3 13 202 48 232
Other operating expenses (5) (12) (107) (85) (132)
Operating income 52 64 116 261 285
Non-operating income 15 – (3) 20 4
Income before taxes and profit sharing 68 64 113 281 289
Income tax and social contribution (17) (14) (25) (58) (66)
Profit sharing (Q) (4) (32) (36) (61)
Net income 48 47 56 187 162
This report may contain forward-looking statements concerning the business prospects, projections of operating and financial results and
growth outlook of PINE. These are merely projections and as such are based solely on management’s expectations regarding the future of
the business. These statements depend substantially on market conditions, the performance of the sector and the Brazilian economy
(political and economic changes, volatility in interest and exchange rates, technological changes, inflation, financial disintermediation,
competitive pressures on products and prices and changes in tax legislation) and therefore are subject to change without prior notice.
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