Banking Sector Brazil March 2014

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Table of Contents III. Private Banks 1. Subsector Highlights 2. Private Banks’ Loan Portfolio 3. Profitability of Private Banks 4. Financial Performance and Market Share 5. Efficiency and Expenses

I. Overview 1. Sector Highlights 2. Key Indicators 3. Market Share Public vs. Private Banks 4. Evolution of Bank Institutions 5. Financial Performance 6. Forecast 7. Liquidity and Funding 8. Loan Portfolio Evolution 9. Credit Distribution 10. Non Performing Loans 11. Spread and Delinquency Evolution 12. Corporate Credits Key Indicators 13. Lending Rate/Corporate Credits 14. Credit to Individuals Key Indicators 15. Lending Rate/Individuals 16. Deposits 17. Bank Cards 18. Government Policy

IV. Main Players 1. BNDES 2. BNDES (cont’d) 3. Banco do Brasil 4. Banco do Brasil (cont’d) 5. Itaú Unibanco Holding S.A. 6. Itaú Unibanco Holding S.A. (cont’d) 7. Caixa Econômica Federal 8. Caixa Econômica Federal (cont’d) 9. Banco Bradesco S.A. 10. Banco Bradesco S.A. (cont’d) 11. Banco Bradesco S.A. (cont’d)

II. Public Banks 1. Subsector Highlights 2. Public Banks’ Loan Portfolio 3. Profitability of Public Banks 4. Efficiency and Expenses

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V. Appendix 1. Abbreviations

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I. Sector Overview

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Sector Highlights Overview The Brazilian banking system is highly consolidated as a result of significant M&A activity. The six leading banks in the country account for 80% of the overall bank assets. Federal public banks (Banco do Brazil and Caixa Economica Federal) have maintained a solid position among the four largest banks in terms of assets over the past years, despite the emergence of large private conglomerates. The largest private banks, Bradesco and Itaú, have made considerable gains through an accelerated growth and the acquisition of foreign and domestic institutions (BBV by Bradesco, Bank Boston by Itaú).

Financial Stability In 2013, Brazil participated in the Regulatory Consistency Assessment Program (RCAP), an assessment program of the Basel Committee on Banking Supervision (BCBS), that evaluates the degree of adherence of prudential regulation of a country to the minimum standards approved by BCBS and endorsed by the Group of 20 leading economies. Brazil received the highest score for capital regulation of the financial system. Out of the 14 components evaluated, 11 were considered as "Compliant". The other components of the evaluation were considered "Largely Compliant”. The RCAP, in conjunction with the Financial Sector Assessment Program (FSAP) conducted in 2012 by the World Bank and the IMF, confirmed that the Brazilian financial system was sound and resilient.

Credit Rating The Brazilian government has lately been accused of lack of control over public spending due to the sharp increase in lending by state banks, funded predominantly by public money. Analysts note that if public banks reduce their credit portfolios they will not need contributions from the National Treasury, which will improve control over public spending. As a consequence of uncontrolled lending by state-run financial institutions, Standard & Poor's has cut Brazil's credit rating to BBB-, citing fiscal deficit, fragile economic growth and the galloping rise in public banks' loan portfolio as the main reasons for the downgrade.

Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

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Key Indicators Key Indicators 2009

2010

2011

2012

2013

GDP per Capita (USD)

8,469

11,068

12,689

11,611

11,210

GDP (%)

-0.3%

7.5%

2.7%

1.0%

2.3%

Credit (% of GDP)

43.7%

45.2%

49.0%

53.8%

56.5%

905

1,058

1,232

1,399

1,504

Credit Growth (%)

15.1%

20.6%

18.8%

16.4%

14.7%

Mortgage Evolution/GDP (%)

3.1%

4.1%

5.3%

6.8%

8.2%

Delinquency Rate > 90 days (%)

5.4%

4.4%

5.6%

5.8%

4.9%

Long Term Interest Rate (TJLP)

6.0%

6.0%

6.0%

5.5%

5.0%

Average SELIC (%)

9.9%

10.0%

11.7%

8.5%

8.3%

Consumer Price Index % (IPCA)

4.3%

5.9%

6.5%

5.8%

5.9%

Total Free Credit (BRL bn)

Source: Bacen, Itau Unibanco, Bradesco Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

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Market Share Public vs. Private Banks Bank Agencies by Origin of Capital (%)

Market Share (%)

17.6%

17.0%

16.6%

16.4%

40.4%

42.9%

41.4%

40.1%

State Owned Banks 51.2%

Foreign Private Banks 15.5%

Domestic Private Banks 33.2%

Public and Private Banks Performance Dec 2013 (%)

42.0%

40.1%

41.9%

60.3%

43.4%

39.7% Dec 2010

Dec 2011

Public Banks

Dec 2012

National Private Banks

Dec 2013

Total Assets

Foreign Banks

53.8%

51.7%

46.2%

Deposits

Credit Operations

Public

Source: Bacen, Itau Unibanco Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

48.3%

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Private

Evolution of Bank Institutions Evolution of Bank Institutions Type of Institution

Distribution of Bank Agencies by Region Dec 2013

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Multiple Banks

139

137

139

137

132

Domestic without foreign participation

86

72

69

66

62

Domestic with foreign participation

0

Under foreign control Commercial Banks Domestic without foreign participation Domestic with foreign participation

Under foreign control Foreign Banks full branches

Southeast 12 024

South 4,359 12

16

15

15

53

53

54

56

55

18

19

20

22

22

11

12

11

12

Central West 1 820 North 1,106

Bank Concentration 2013 (%) 12.5%

12.9%

87.5%

87.1%

Total Assets

Deposits

11

-

-

1

1

1

1

1

2

3

4

6

6

6

6

6

10 Major Banks

Source: Bacen, Falke Information Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Northeast 3 609

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Others

Financial Performance Top 10 Banks in Terms of Revenue 2013 (USD bn)

41.6 38.3 37.0 43.2 46.0 48.6 52.2 53.9 55.5 58.3 61.2 59.7 58.9 56.7 53.7 54.9 54.7 59.6 61.1 60.6

Evolution of Banks' Net Profit* (BRL bn)

Net Revenue

ROA (%)

8.9

50.6

1.5%

7

41.8

1.4%

Caixa Econômica Federal

3.7

34.3

0.9%

Bradesco

5.7

42.2

1.5%

Santander

2.7

25.2

1.2%

HSBC

0.5

7.3

0.6%

Safra

0.6

5.1

0.9%

BTG Pactual

1.3

1.7

2.2%

Votorantim

-0.4

6.4

-0.7%

Citibank

0.2

2.9

0.8%

Banco do Brasil

Mar 2009 Jun 2009 Sep 2009 Dec 2009 Mar 2010 Jun 2010 Sep 2010 Dec 2010 Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013

Itau Unibanco

Source: Bacen, Falke Information, * - Accumulated in the last 12 months ended Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Net Profit

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Financial Performance cont’d Revenues from Services & Operating Income* (BRL bn)

223.94

226.18

225.10

228.34

230.03

232.01

238.30

233.28

49.3 20.47

49.3 21.37

49.9 21.83

51.3 21.85

52.7 22.05

12.97

13.82

14.69

15.40

15.95

54.4 22.04 16.53

55.7 22.56 17.17

56.1 22.84 17.63

Apr 2012

Jul Oct 2012 2012 Bank Tariffs Revenues (Indiv. & Corp.)

Jan 2013 Credit Cards Revenues

Apr 2013 Other Services

Jul Oct 2013 2013 Operating profit (before administrative expenses)

Annual Return on Equity * (%) 20 15 10 5 0 Jan 2010 -5

Jul 2010

Jan 2011

Annual Roe

Jul 2011

Jan 2012

Equity Growth Rate

Jan 2013

Jul 2013

Growth Rate of Gross Income from Loans

Source: Bacen, * - Accumulated in the last 12 months ended Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Jul 2012

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Dec 2013

Sector Forecast Financial Services Output, value-added index

190.67

201.57

212.65

223.63

Credit Evolution (%)

234.75 61.5%

13.8%

2015

2016

2017

2018

10.8%

3.7%

Credit as % of GDP

Crediting is expected to witness a moderate expansion in Brazil in the coming years due to a slower pace of economic growth. The lending will be pushed up mainly by real estate financing. Considering the expansion of credit supply, the diversification in the activities of national banks and banks' policies to focus on the main, more secure, credit lines, the expectation is that the industry will continue to maintain good levels of growth and profitability. In addition, there are some important events for the country's economy in the near future such as the start of exploration of the pre-salt area of Brazil, the FIFA World Cup 2014 and the Olympics in 2016, that are expected to stimulate employment and personal income levels. These factors will contribute to the positive development of local banking services.

12.5% 10.5% 7.6%

7.2%

6.0%

6.0%

2015

2016

Selic rate target - end of year Real Interest Rate (IPCA deflated) Interest Rate over Exchange Rate Source: Oxford Economics, Parallaxis Economic Research Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

2016

Comments

1.0% 2014

2015 Credit Growth

Interest Rate (% yoy)

17.1%

10.2%

2014 2014

69.5%

63.9%

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Liquidity and Funding Liquidity (BRL bn)

524.1

532.4

321.7

325.4

574.0

622.0

625.9

Profile of Attracted Funds (BRL bn) 4,000

587.8

543.3

Others

3,500

541.7 529.3

IHCD + LFS

3,000 343.4

323.5

335.7

323.9

339.6

2,500

323.1 347.3

LCA + LCI + LF + DPGE

2,000 1,500

Commitments (with private securities)

Net Assets

Loans and Transfers

500

Dec 2013

Oct 2013

Jul 2013

Apr 2013

Jan 2013

Oct 2012

Jul 2012

Apr 2012

Jan 2012

1,000

0 Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 2009200920102010201120112012201220132013

Stressed Cash Flow

Deposits

Comments Brazil's banking system is characterised by low liquidity risk, despite its small increase in the second half of 2013. According to the Central Bank, the liquidity index of the system is 1.52, down from 1.63, due to the decrease in net assets, which coincided with an increase of stressed cash flow. The latter's growth is explained by the rising trend of the Selic rate in last few months.  Other factors which contributed to the slight rise in liquidity risk were the growth of demand deposits and repurchase agreements, which increased the banks' liabilities. In 2013, Brazilian banks joined the REFIS, a government tax debt installment programme, which was followed by capital disbursement and drop in assets and also helped to increase the liquidity risk. Source: Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

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Loan Portfolio Evolution Outstanding Loans by Sector (BRL mn) 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Jan 2011 Public Sector Rural Other Services

Annual Growth of the Loan Portfolio (BRL bn) 6,000 5,000 4,000

3,000 2,000 1,000 Jan 2012

Jan 2013 Industry Commerce

Jan 2014

0 Dec 2009

Real Estate Households

Jun 2010

Dec 2010

Jun 2011

Nonearmarked

Dec 2011

Jun 2012

Earmarked

Dec 2012

Jun 2013

Total

Comments In 2013, the Brazilian banks' loan portfolio saw an increase of 14.6% compared to 2012. The Central Banks expects that in 2014 crediting activity will register a more moderate expansion of about 13%. Notably, the credit growth rate started to slow down in the second half of last year and caused a negative effect on the profitability of the system. Individual real estate financing is expected to grow by 15% in 2014 to BRL 126bn. Although this rise is higher than the forecast for the total loan portfolio, it is less than half of the 32% growth in 2013. Last year's results were due to a 41% increase in individual financing. As of November 2013, mortgage lending accounted for 8.1% of the GDP.

Source: CEIC, Bacen, Abecip Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

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Dec 2013

Credit Distribution

56.5%

Loans as % of GDP 53.9%

Total Credit Distribution (March 2013)

49.1%

BNDES 20%

43.9%

45.4%

Agricultural 6%

29.4% 24.5%

26.9% 22.2%

19.4%

Non-earmarked Credit Distribution (March 2013)

24.8% 20.6%

Others 3% 24.5%

Nonearmarked Credit 58%

30.5% 26.0%

Housing 13%

Corporate Entities 50%

Dec 2009 Individuals 50%

Dec 2011

Corporate Loans as % of GDP Loans: % of GDP

Source: CEIC, Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Dec 2010

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Dec 2012

Dec 2013

Households Loans as % of GDP

Non Performing Loans

4.4 1.8

4.4 1.8

4.5 1.9

4.6 2

4.8 2

4.8 2

5.0 2

2.1

5.0

5.3 2.3

2.3

5.3

5.4 2.2

5.4 2.2

5.5 2.2

5.6 2.2

5.7 2.3

5.8

2.4

5.9 2.2

5.9 2.3

5.9 2.2

5.9 2.2

6.0 2.2

5.9 2.3

5.9

5.8 2.2

2.1

2.2

5.9

Evolution of Non Performing Loans (%)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 Corporate Entities

Households

NPL per Financial Institution (%) 5.4 5.3

5.2

5.2

5.2

3.8

3.8

3.8

3.9

3.9

1.9

1.9

1.9

2.0

5.3

5.4

5.6

5.2 5.2

1.9

5.6

5.6

5.6

5.5 5.4

5.6 5.7

5.2

5.3

5.5

5.5 5.5

5.3 5.6

5.3 5.8

5.2 5.7

5.0 5.6

5.0 5.5

5.0 5.5

4.7 5.2

4.7 5.1

4.6 4.9

4.5

3.8

3.9

3.8

4.6 4.6

3.8

3.8

3.9

3.7

3.7

3.6

3.6

3.6

3.6

3.4

3.3

3.2

3.3

1.8

1.8

1.9

1.9

2.0

1.9

1.8

1.8

1.9

1.9

2.0

2.0

1.9

1.9

1.9

2.0

4.3

4.3

4.3

4.3 4.3

4.1

4.2

3.2

3.1

3.0

3.0

1.9

1.9

1.8

1.8

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 NPL

NPL Public Financial Institutions

NPL: National Private Financial Institutions

Source: CEIC Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

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NPL: Foreign Financial Institutions

Spread and Delinquency Evolution Overall Spread and Delinquency (%) 14.8% 12.7%

11.6%

11.7%

7.5%

7.3%

8.0%

3.9%

3.7%

3.6%

Corporate Spread and Delinquency (%) 10.3% 10.0%

11.1%

8.3%

11.3% 9.0%

10.0%

7.5% 7.0% 7.6% 6.7% 7.1% 7.2% 7.1% 7.1% 7.0%

3.3%

3.0%

2.2% 2.3% 2.2% 2.3% 2.4% 2.2% 2.1% 2.0% 2.0% 2.0% 1.9% 1.8%

Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013

Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013

9.0% 3.9%

NPL 90 days

SELIC

Total Spread

Corporate Spread

Individual Spread and Delinquency (%) 21.0%

22.5%

21.1%

18.7% 18.6% 17.7% 17.9%

Comments  The overall spread of the Brazilian economy remains very high compared to global averages. In Argentina, Chile, Mexico, South Africa, China, Russia, for example, spreads lie between 3 and 4 percentage points per year, compared to 11.1 pp in Brazil.  Individual real estate financing has the lowest delinquency rate of the overall banking system (1.8%). Overdraft has the highest delinquency rate of 8.1%. In terms of corporate loans, the crediting of SMEs is characterised by higher delinquency rate than the loans to large corporations. In 2013, the corporate non-performing loans grew by 2.5% in comparison to 2012.

17.3% 16.3% 16.6% 17.0% 16.4%

5.7% 5.9% 5.9% 5.8% 5.6% 5.4% 5.0% 5.3% 4.8% 4.6% 4.5% 4.4% Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 Individual Spread

NPL 90 days

Source: Itau Unibanco Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

NPL 90 days

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Corporate Credits Key Indicators Distribution of Lending for Corporate Entities (%)

Delinquency of Corporate Loans (%) 8

3.7%

6

4.6%

3.3%

4

3.8%

2

8.3%

7.9%

16.0%

0

15.0%

Dec 2012

Mar 2013

Jun 2013

Delinqunecy SMEs Average Provision/SMEs

19.5%

Nonearmarked 2012

Delinquency Large Corp. Average Provision/Large Corp.

In 2013, corporate lending accounted for 63.1% of the overall companies financing, compared to 66% in 2012. In December 2013, the corporate credit portfolio reached BRL 1.46 trillion, up by 13.3% from the end of 2012. Rural credit and real estate financing increased the most during 2013 (by 37.6% and 25.2% respectively.) Despite government intentions to decrease the share of public lending, the BNDES financing continued to receive the highest share in earmarked credit. Free loans to corporations reached BRL 763.2bn in 2013, up by 8% from 2012. The moderate expansion is mainly explained by the slowdown in working capital credit, which represents more than half of this portfolio and grew by only 5.9% during the year.

19.2%

Earmarked 2012 Nonearmarked 2013 Earmarked 2013

Working Capital

Foreign Trade

BNDES direct

BNDES indirect

Rural

Real Estate Financing

Source: Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Dec 2013

Comments

26.5%

28.3%

Sep 2013

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Lending Rate/Corporate Credits Average Lending Rate for Corporate Entities, Earmarked (% pa) 10.0 9.0 7.3 7.7 6.6

10.3

9.8

10.1

10.1

8.2 8.1 7.3

8.1 7.9 7.3

8.0 7.8 6.7

8.1 8.0 6.4

8.6 8.0 6.9

8.9 9.0 6.6

5.6

5.8

6.0

5.6

5.6

Apr 2013

May 2013

Jun 2013

Jul 2013

Aug 2013

6.5

5.5

Jan 2013

10.8

10.0

Feb 2013

Rural Credit

Mar 2013

Real Estate Financing

BNDES Funds: Working Capital

10.2 10.0 8.8 6.6

10.3

11.4

10.8

9.9

10.7

11.1 13.0

9.9 9.7

9.8

6.8

7.0

6.7 6.4

9.2 6.6

8.8 9.2 6.8

6.0

5.8

6.0

5.8

Sep 2013

Oct 2013

Nov 2013

Dec 2013

Jan 2014

9.0

BNDES Funds: Fixed Capital Investment

BNDES Funds: Agroindustry

Average Lending Rate for Corporate Entities, Nonearmarked (% pa)

36.7

36.7

36.8

37.3

36.8

36.5

37.3

37.5

37.7

38.0

37.5

37.2

38.8

16.5 15.7 10.7

15.7 16.0 10.7

16.4

15.8 16.2 10.1

17.3

18.9 17.0

19.2

18.7

17.3 12.4

17.5 13.2

19.8 17.3

9.6

11.4

13.2 12.5

19.9 17.3 13.8

11.6

16.4 11.6 11.8

18.0 16.3 11.9 11.0

21.3

16.2

May 2013

Jun 2013

Jul 2013

Aug 2013

Sep 2013

Oct 2013

Nov 2013

7.8

15.5 9.6 9.3

Jan 2013

Feb 2013

Working Capital

9.5

16.2 12.3 10.1

Mar 2013

Apr 2013

Guaranteed Overdraft Accounts

Vehicles Financing

Source: CEIC Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

11.9 11.8

- 17 -

Imports Financing

12.3

18.3 13.8 13.4

Dec 2013

Jan 2014

Exports Financing

Credit to Individuals Key Indicators Distribution of Lending to Individuals (%)

Delinquency of Individual Credits by Modality (%) 10

10.1%

16.0%

10.7%

15.7%

8.6%

9.1%

9.3%

7.9%

25.4%

17.1%

13.4% Dec 2009 Real Estate

22.2%

8.7%

7.5%

6.4%

15.8%

15.3%

14.0%

8.6%

8.8%

8.4%

7.9%

19.0%

20.9%

8 6 4

8.7%

2

9.2%

0 Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 Free Credit Assignment Vehicles Real Estate

16.7%

Payroll Rural

Comments

17.6%

16.9%

Dec 2010 Payroll

Vehicles

17.6%

17.3%

20.6%

23.7%

Dec 2011

Dec 2012

Rural

No Interest Card

17.7%

27.3%

Dec 2013 High Risk

Others

Source: Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 18 -

Domestic credit to individuals increased by 16.3% in 2013 compared to 2012 and reached BRL 1.25 trillion in December 2013. Mortgage loans had the highest share in individual lending, followed by rural credits and payroll. Having in mind that mortgage loans are characterised by high security, their highest share in the household credit portfolio explains the fall of delinquency rates in the last months of 2013. Rural credit to individuals increased by 27.2% in 2013. This rise was driven by the growing needs of the fast-developing agricultural sector in Brazil as well as by the increase in rural savings deposits and the demand deposits to be applied for agriculture financing.

Lending Rate/Individuals Average Lending Rate for Individuals, Earmarked (% pa)

15.3 9.0

14.3 8.1

12.2

11.9

11.9

7.1 5.5 6.0

8.1 6.3 5.1 4.9

8.0

4.9 7.9

5.9

7.9 5.9 5.9

4.5 4.2 3.8

4.1 3.7

Jan 2012

Apr 2012

Jul 2012

Oct 2012

Jan 2013

Apr 2013

14.8 10.0 7.8 5.4

Rural Credit

Real Estate Financing

BNDES Funds: Fixed Capital Investment

9.6 4.9 8.0

9.6 9.3 4.6

4.5

9.2 8.7 4.7 4.8

4.0

3.5

3.8

Jul 2013

Oct 2013

Jan 2014

BNDES Funds: Agroindustry

4.5

Microcredit

Average Lending Rate for Individuals, Non-earmarked (% pa) 169.5

163.2 144.2

140.0 69.0

70.6

68.3

37.8

37.3

20.5 Oct 2012

20.5 Jan 2013

75.4

72.0

44.8

41.4

66.8 38.6

25.5 Jan 2012

24.8 Apr 2012

20.7 Jul 2012 Overdraft

Personal Credit

138.5

- 19 -

154.0

71.2 42.2

74.1

36.8

67.5 39.8

19.9 Apr 2013

20.3 Jul 2013

20.8 Oct 2013

22.7 Jan 2014

Vehicles Financing

Source: CEIC Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

146.4

138.9

136.3

Other Goods Financing

43.0

Deposits

Jan 2011

Jan 2012

Northeast

2012 Southeast

South

0.59 0.61 0.52 0.50 0.51 0.50

0.52

0.50

0.50

602,795

0.55

0.52

94.4

2013*

Jan 2012

Central West

Source: CEIC, * - by June 2013 Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

0.59

31.9

71.3 14.9

27.6

82.9

13.1 62.8

71.4 23.8

11.2 54.1

63 20.4

46.5 9.7

North

2011

597,943

0.61

0.50

2010

583,729

574,251

566,883

557,481

550,217

538,446

526,649

513,829

505,603

500,836

518,726

Jan 2014

Saving Deposits Rate (% per month)

304.9

268.4

236.4

496,302

Jan 2013

Average Monthly Saving Deposits by Region (BRL bn)

207.1

484,922

478,665

473,262

465,135

459,442

449,041

441,722

433,321

428,998

424,333

422,399

420,009

414,169

411,878

408,442

401,764

397,085

388,728

386,152

385,375

384,897

382,643

381,241

Saving Deposits (BRL mn)

- 20 -

Jan 2013 Savings Deposits Rate

Jan 2014

Bank Cards Number Of Cards (mn)

565 196

686

627

247

225

751 270

292

249

266

285

305

233 136

153

173

196

222

2009

2010

2011

2012

2013

Credit Cards

Debit Cards

 Despite the overall slowdown of Brazilian economy, the bank cards are expanding both in terms of number of cards issued and terminals installed as well as in transactions value.  Bank cards are becoming more popular as payment method compared to cash and cheques.  Credit cards are expanding their share among corporate customers as well. Notably, only in February 2014, Brazilian companies spent BRL 5.95bn through credit cards, an increase of 2.6% compared to the same period of 2013. Almost 99% of the total amount was accumulated by payments from micro and small companies. The increase of the share of credit cards for corporate entities was driven most by the BNDES card and its low interest rates. The card offers a pre-approved revolving credit line for small business owners for up to BRL 1mn and is offered by the following banks: Banco do Brasil, Caixa Economica Federal, Banrisul, Bradesco, BRDE, Itaú and Sicoob. 41% of all BNDES disbursements in 2013 were dedicated to this type of financing.  The main card issuers in 2013 were domestic banks Banco Bradesco, Banco do Brasil, and Caixa Econômica Federal. Itau Unibanco is expected to become a leader on the Brazilian credit cards market after it received regulatory approval for its acquisition of Credicard at the end of 2013.

819

Private Label

Number of ATMs (thou)

41.5

2009

45

2010

48

2011

51.8

2012

55.7

2013

Source: Abecs, Falke Information Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 21 -

Bank Cards (cont'd) Number of Transactions (mn)

Value of Transaction (BRL bn) 4,783

2,684

3,624

3,150

3,522 2,430

2009

1,000

4,109

853 4,509

4,041

401

2,905

130

2010

2011 Credit Cards

2012

2013

6.1 19.6 54.1 Dec 2009

6.9 22.3 70.9

81.0

Dec 2010

Dec 2011

Full Payment (no interest)

161 337

2009

2010

2011

480

553

638

2012

2013

2014f

Debit Cards

62%61%

108.6

92.4

15% 11%

15% 12% 3% 4%

Dec 2012

Revolving Credit

362

Card Spending by Region 2Q 2013 (%)

10.6 25.5

9.8 24.3

300

245

203

Credit Cards

Dec 2013

North

Northeast

Southeast

Credit Cards

Installment Credit

Source: Abecs Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

498

271

Transactions by Type of Used Credit/Individuals (BRL bn)

8.9 24.1

614

411

Debit Cards

725

- 22 -

South

Debit Cards

7% 9% Central West

Government Policy

SCR

The Credit Information System (SCR) of the Brazilian Central Bank is an instrument for registration and information about the loans, sureties, guarantees and credit limits granted by financial institutions to individuals and corporations in the country. It was established by the National Monetary Council (CMN) and is administered by the Central Bank, which has to store the information, regulate the correction process and update the information delivered by the participating financial institutions. This is the main tool for bank supervision and monitoring of the loan portfolios of the financial institutions. Currently, the financial institutions are obliged to declare all customer operations with full liability equal to or greater than BRL 1,000, and values ​related to sureties and guarantees provided by financial institutions to their customers. The legal base of the system is the Complementary Law 105/01 and Resolution 3,658 of 17/12/2008. The Credit Information System is not a restrictive registry, as it contains both positive and negative information. To be in the system is not a negative fact in itself and does not prevent the client to request a credit, and may also contribute positively in the institution's decision to grant a credit. The system is regulated by the Consumer Protection Code and contain records for up to five years.

SELIC

The Sistema Especial de Liquidação e de Custódia (Special Clearance and Escrow System) is an index used for the calculation of interest rates in Brazil. It is also a reference for the monetary policy of the country. There are even several investments that use the index directly in the calculation of income. The overnight rate of the Selic, expressed on an annual basis, is the weighted average rate for the volume of financing operations for a day, backed by federal government bonds. The Selic rate is set by the Monetary Policy Committee (Copom), a committee formed by the eight members of the board of the Central Bank of Brazil and led by its President. In the beginning of 2012, in an attempt to reduce the interest rates in Brazil and to stimulate the stagnant economy, the Brazilian government started to gradually decrease the Selic index. It reached its lowest level ever in October 2012 at 7.25%, and was kept at that level until April 2013. Thus, the banks' interest rates also fell although the effect on the private banks rates was limited. However, since April 2013, the Copom is gradually increasing the Selic rate, which currently stands at 11%, in accordance with government's policy to suppress inflation. Analysts expect that this will be the last increase of Selic, as there are rising concerns by investors that the government is abusing the monetary policy to keep prices in the country on hold.

Source: Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 23 -

II. Public Banks

Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 24 -

Subsector Highlights

Overview

In the last few years, crediting by public banks was the main instrument used by the Brazilian government to stimulate the local industry and households and avoid a sharper slowdown of the economy. The loan portfolio of public banks in the country is double that of the private banks. State-owned banks in Brazil operate in segments of more credits like consumer credit, vehicle financing and credit to small businesses, which are avoided by private banks in an attempt to prevent a rise in their delinquency rates. Recently, the government has urged the three main public banks to decrease their loan portfolios in order to stimulate the competition from private banks. The assessment is that public banks should prioritise the credit lines of little interest to private players – the individuals real estate financing (Caixa Economica Federal), agribusiness (Banco do Brasil) and heavy infrastructure (BNDES). According to the government's strategy, the Caixa and BNDES have to limit their financing of large corporations.

Market Shares

In 2013, more than 50% of the credit stock in Brazil was offered by public banks. The overall growth of the credit market during the year was 14%, but the increase in lending by private banks was much lower – around 6%. Notably, Banco do Brasil alone accounted for 21% of the overall credit market in Brazil. The expectations are that the bank will focus predominantly on credits to companies in the infrastructure and agriculture businesses, sectors in which private banks are less interested in. At the end of 2013, BNDES announced that it will decrease the stimuli to the Brazilian economy due to the global economical recovery. Since 2009, BNDES has extended loans for about BRL 300bn.

Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 25 -

Public Banks Loan Portfolio Annual Growth Rate of Public Banks Loans (%) 376.9

Loans by Type (BRL bn)

325.8

39.2

40.3

282.4

32.2 21.1

19.8

23.6

28.6 22.6

3.03%

123.3

15.3 19.1

2.83%

0.13%

Dec 2012

Dec 2013 SMEs

Dec 2013

Source: Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

28.4

Delinquency of Corporate Loans (%)

0.14%

Dec 2012

27.7

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Dec 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2013

89.0

76.3 95.3

74.4 89.8

89.4 111.0

85.0

112.8

150.0 177.4

210.5

24.8

- 26 -

Large

Profitability of Public Banks

9.2%

Margin of Provisions (%)

Dec 2009

Dec 2010

Dec 2011

7.0%

5.6% 3.6%

6.8%

4.9%

4.9% Dec 2012

Gross Profitability of the Loan Portfolio

Dec 2013

Dec 2009

Funding Cost

Dec 2010

Dec 2011

Gross Margin

Source: Bacen, * - Accumulated in the last 12 months ended Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

6.1%

8.7%

7.0%

7.5%

7.7%

5.6%

12.4%

7.3%

14.0%

8.4%

16.0%

16.1%

16.7%

Profitability of the Loan Portfolio and Funding Costs* (%)

- 27 -

Dec 2012 Net Margin

Dec 2013

Efficiency and Expenses Efficiency Index Adjusted to Risk* (%) 76.78 73.07 69.37

69.19

68.94

66.79

67.34

68.59

68.19

69.24

71.72

70.42

73.36

72.93

78.36 76.00

73.73

Dec 2009 Mar 2010 Jun 2010 Sep 2010 Dec 2010 Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013

Jul 2012

Oct 2012 Personnel

Jan 2013

Apr 2013

Other Administrative Expenses

Source: Bacen, * - Accumulated in the last 12 months ended Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 28 -

Jul 2013 Operating Income

Oct 2013

83.94 25.30

40.47

84.02 24.26

40.00

81.79 24.21

38.87

24.26

37.88

81.59 24.30

36.04

80.46 24.24

35.04

79.52 23.17

34.03

77.82 22.33

32.92

Apr 2012

82.85

Personnel and Administrative Expenses* (BRL bn)

Dec 2013

III. Private Banks

Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 29 -

Subsector Highlights

Overview

In 2013, private banks in Brazil focused on offering more secure credit lines, in order to avoid growth of their non-performing loans. The drop in delinquency rates has helped the banks to increase their profits despite the lower income from safer loans. During the year, private banks concentrated their operations predominantly on household mortgage financing, payroll deductable loans, and earmarked credits to companies. In the real estate financing segment, the growth of private banks (31.5%) was very close to the increase of this type of credit from public banks (34.2%).

Market Share

There are signs that the private banks in Brazil are preparing to return on the credit market and to compete against the public banks. Analysts note that a signal for such move is the fact that Itau Unibanco has cut its default expenses to BRL 5.6bn and Bradesco has increased its total reserves to BRL 388mn. In comparison, state-run Banco do Brasil has raised its default reserves by 6.5% in 2013, or an increase of BRL 949mn since December 2012. In addition, lately, the government has often declared its intentions to reduce lending by state banks (Banco do Brasil, Caixa Economica Federal and BNDES) in response to criticism from rating agencies. Fitch Ratings has already affirmed that the expected slowdown in public bank lending should help the private sector regain market share. On the other hand, the rating agency, together with Moody's Investor Service, have classified the government strategy as doubtful as the decrease in financing by state banks could hamper support for the ruling party in the presidential elections to be held in October 2014. The prospect for growth of private banks has already had a positive effect on the share price of the two largest private banks in the country – Itau Unibanco and Bradesco.

Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 30 -

Private Banks’ Loan Portfolio Annual Growth Rate of Private Banks Loans (%)

19.4

120.9 137.6

Jan 2009

14.5

Jul 2009

10.6 7.0

6.5

Jan 2010

Jul 2010

Jan 2011

Jul 2011

Jan 2012

Jul 2012

Jan 2013

Delinquency of Corporate Loans (%)

50.4 63.1

99.5 110.8

19.5

14.3

9.5

42.7 51.7

44.9 59.1

24.6

216.4 210.7

217.8 233.1

197.3 181.4

262.9 279.6

Loans by Type (BRL bn)

4.36% 3.54%

0.69%

0.62% Dec 2012 Dec 2012

SMEs

Dec 2013

Source: Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Dec 2013

- 31 -

Large

5.5

7.3

Jul Dec 2013 2013

Profitability of Private Banks

Dec 2009

Dec 2010

Dec 2011

10.0%

10.8%

10.6%

Gross Profitability of the Loan Portfolio

Dec 2013

Dec 2009

Funding Cost

Dec 2010

Dec 2011

Gross Margin

Source: Bacen, * - Accumulated in the last 12 months ended Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

5.7%

5.6%

6.0%

6.0% Dec 2012

7.2%

7.7%

9.9%

8.7%

9.0%

8.1%

17.2%

18.5%

11.7%

11.9%

Margin of Provisions (%)

20.5%

20.3%

20.9%

Profitability of the Loan Portfolio and Funding Costs* (%)

- 32 -

Dec 2012 Net Margin

Dec 2013

Financial Performance and Market Share Share of Foreign Private Banks (%)

Santander Revenues

HSBC Operating Profit

24.8%

14.8%

18.8%

0.2

0.3

2.9

0.5

0.6

2.7

2.8

7.3

25.2

Performance of Foreign Private Banks 2013 (USD bn)

16.6% 14.9%

0.6

0.8

5.1 Net Profit

18.0% 15.7%

Operating Profit

Safra

18.6% 16.9%

Revenues

Bradesco

18.2% 17.8%

Itaú Unibanco

5.7

8.6

7

8.7

25.8%

27.9%

29.8%

30.5%

41.8

42.2

Performance of National Private Banks 2013 (USD bn)

2009

Citibank

Equity

Net Profit

Source: Falke Information Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

2010

- 33 -

2011 Assets

2012 Deposits

2013

Efficiency and Expenses Efficiency Index Adjusted to Risk* (%) 72.94

71.89 69.64 67.59

70.10

Dec 2013

Sep 2013

Jun 2013

Mar 2013

Dec 2012

Sep 2012

Jun 2012

Mar 2011

72.23

71.31

65.04

Mar 2012

Dec 2010

65.71

71.76

69.60

68.94

Dec 2011

64.45

Sep 2011

63.92

Jun 2011

64.01

Sep 2010

Jun 2010

Mar 2010

Dec 2009

67.07

71.70

Apr 2012

Jul 2012

Oct 2012 Personnel

Apr 2013

Other Administrative Expenses

Source: Bacen, * - Accumulated in the last 12 months ended Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 34 -

Jul 2013 Operating Income

Oct 2013

59.04

48.83

149.34

154.03 59.30

48.67

149.71 58.41

47.92

146.50 47.63

Jan 2013

57.60

145.93 57.15

47.54

143.71 56.42

45.93

56.54

45.74

56.05

44.26

145.35

145.73

Personnel and Administrative Expenses* (BRL bn)

Dec 2013

IV. Main Players

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- 35 -

BNDES

2009 Net Profit

2011

11,688

25.5%

2,452

2012

Income of Financial Operations

2013 Equity Earnings

50,246

55,000

1.6%

1.3%

1.1%

0.20% 2009

0.15% 2010

0.14% 2011

0.06% 2012

0.01% 2013

Return on Assets

Delinquency Rate

 BNDES is a Brazilian federal public development bank. The bank is the most important long-term credit provider for the Brazilian business due to its rates, which are lower than the overall market ones. Infrastructure and technological projects, as well as large and medium-sized companies are a priority for BNDES.  Despite its plans to reduce its credit operations in 2013 in order to increase the competitiveness of private banks, BNDES's lending surged by 20% during the past year, reaching BRL 190bn – this amount is more than double the money disbursed by the World Bank each year. In 2013, BNDES accounted for 7% of the country's gross debt.

41,000

10,127

12,230

15,434

17,042

15,441

2009

2010

2011

2012

2013

National Treasury

Source: Company data, Wall Street Journal, FAT – Workers Support Fund Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

2.2%

Comments

107,052

FAT

16.9%

2.0%

Return on Net Equity

Funding (BRL mn) 105,000

23.1% 18.8%

2,644 2010

31.0%

8,150

11,908

Performance (%)

8,126

9,048 6,488 6,962

7,039 6,159

6,735 5,821 3,990

9,913

Financial Indicators (BRL mn)

- 36 -

BNDES (cont'd) Loan Portfolio (BRL mn)

Loan Portfolio by Sector 2013 (%) 565,243 Industry 30.5%

492,148 425,518 361,575

Commerce & Services 27.0%

283,671

Infrastructure 32.7% Dec 2009

Dec 2010

Dec 2011

Dec 2012

Agribusiness 9.8%

Dec 2013

Loan Portfolio by Type of Company 2013 (%) Medium to Large 5.6%

Loan Portfolio by Region (%)

Medium 6.5% South 22.6%

Southeast 45.7%

Central West 11.0%

Micro/Small 24.9% Large Corporation 61.0%

North 7.2%

Source: Company data Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 37 -

Northeast 13.5%

Banco do Brasil Financial Performance (BRL mn)

2011

2,349 2012

693 492

472

388.2

465.1

519

498.4 3,230

300.8 2010

2,265

1,354

992 2009

581

637.6

23,301 15,758

21,071 12,205

18,242 12,126

11,703 16,125

10,148 13,511

Equity (BRL bn)

2013 Dec 2009

Net Profit Fee Income Income from Insurance, Pension Plans e Savings Bonds

Dec 2010

Dec 2011

Loan Portfolio

Dec 2012

Dec 2013

Deposits

Comments Banco do Brasil is a state bank and the largest bank in terms of assets in Latin America. The loan portfolio of the bank amounts at almost USD 300bn, accounting for about 20% of the overall financial system in Brazil. Banco do Brasil has the largest distribution network of banking services in the country, with 19,143 service points and 5,450 bank agencies, accounting for 23.8% of the total number of bank agencies in Brazil. In recent years, Banco do Brasil started to expand its operations abroad - in 2010 it acquired Argentina's fourth largest bank, Banco Patagonia SA, followed by the acquisition of Florida-based Eurobank in 2012. The overseas operations of the bank accounted for about 10% of its total revenue for 2013. In addition, the bank offers services in more than 20 countries around the world. Source: Company data Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 38 -

Banco do Brasil (cont'd) Loan Portfolio Evolution (BRL bn)

321.4 18.4 67.1 144.0

Transport & Automobiles 12% Services 6% Electric Energy 7%

323.2

270.6

210.2

176.4

692.9 56.8 144.8

580.8 50.2 108.0

465.1 35.0 89.4

388.2 23.0 75.7

Loan Portfolio Segmentation Dec 2013 (%)

Others 33% Foods 12%

91.8

113.1

130.6

152.0

168.1

Dec 2009

Dec 2010

Dec 2011

Dec 2012

Dec 2013

Individuals

Corporate Entities

Agribusiness

Civil Construction 10%

Outside Brazil

Loan Portfolio by Risk Level (%) 8.4%

91.6%

Dec 2009

94.5%

93.9%

93.7%

Dec 2010

5.5%

6.1%

6.3%

Dec 2011 AA-C

Dec 2012

Oil 10%

Comments 5.0%

 In the beginning of 2014, Banco do Brasil announced plans to expand on the investment banking market with the aim of diversifying its portfolio. Analysts note that the creation of a capital market arm of the bank is due to a slowdown in the overall retail banking in Brazil.

95.0%

 In March 2014, Banco do Brasil raised its first syndicated loan with a group of 22 banks, amounting to USD 1bn. The loan will be used for the diversification of the funding structure of the bank.

Dec 2013

D-H

Source: Company data Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Metallurgy 10%

- 39 -

Itaú Unibanco Holding S.A. Financial Performance (BRL mn)

Funding (BRL bn)

2011

78,475 2012

449.7 293.3 15,836

22,148

14,043

18,139

14,641

16,716

73,368

78,474

628.3 562

284 154.4

131.6

2013

Dec 2011

Dec 2012

271.3 192.1

Dec 2013

Demand Deposits & Saving Deposits & Onlending Time Deposits & Debentures Assets under Management

Operating Revenues Banking Service Fee & Income from Banking Charges Net Income

Comments Itau Unibanco is the largest private bank in Brazil and the 13th largest bank in the world by market capitalisation. At the beginning of 2014, in a move to fortify its presence in the region, the bank announced a USD 3bn acquisition of a controlling stake in CorpBanca - the fourth largest bank in Chile and the fifth largest in Colombia. The deal is yet to receive a regulatory approval. The bank has operations in 20 countries in the Americas, Asia and Europe. In Brazil, the bank operates around 5,000 full-service branches. In 2013, the bank was named the most valuable Brazilian brand by Interbrand's research, for the 10th consecutive year, with a brand value estimated at BRL 19.3bn. Source: Company data, Financial Times Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 40 -

Itaú Unibanco Holding S.A. (cont'd) Loans Portfolio Breakdown 2013 (%) Vehicles 8.3%

Delinquency Ratio > 90 days (%)

Personal Loans 5.7% Credit Cards 11.2%

7.4% 6.6% 5.6%

5.8%

4.0%

4.2%

5.8% 4.9%

International 8.1% SMEs 16.3%

2.9%

6.9%

3.5%

4.8%

3.7%

3.2%

2.0%

Mortgage 9.1%

Payroll 4.7% Corporate 36.6%

Individuals

Corporate

Total

Comments Itau Unibanco's income increased by 12.8% in 2013, mainly due to growth of lower risk products and decrease in non-performing loans. The bank is likely to become the strongest player in Brazil's card industry, after it acquired the Credicard unit from Citigroup for BRL 2.77bn in 2013. Itau Unibanco also owns the second-largest card payment company in the country Redecard. Through these two companies, Itau controls 40% of the bank cards market in Brazil. To meet the rising processing needs, the bank plans to invest BRL 11.1bn by 2015 in technology, most of the funds are dedicated to the construction of a new data centre, scheduled to be completed in Q1 2014, that will increase the data processing capacity of the bank by ten times.

Source: Company data Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

- 41 -

Caixa Econômica Federal Fee Income (BRL mn) 8,093

46,494 6,723

6,811

5,195

73,049 4,325

5,640

34,391 5,183

4,603

27,967

14,227

58,147

Financial Indicators (BRL mn)

5,881

6,439

1,376 1,603 212 216

2011

2012

2013

Income from Financial Intermediation

Loans Operation Income

Operating Income

Net Profit

Banking Fees

2012

Performance (%) 66.1% 59.0%

26.3%

1.01% 2010 Return on Assets

29.6%

1.14% 2011

60.4%

25.9%

26.2%

Return on Equity

Others

 Caixa Economica Federal is a state-controlled financial institution, which focuses on providing credits to individuals, families and small businesses. Today, it is the largest mortgage lender in Brazil, thanks to the low rates it offers to its customers.  In 2013, the credit portfolio of the bank grew by 37% compared to 2012. However, the expectations for 2014 are for a slower expansion. The loans granted by Caixa in 2013 were about 19% of the overall banking system crediting for the year.

0.86% 2013 Operating Efficiency Ratio

Source: Company data, Reuters Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Government Services 2013

Comments

61.2%

0.93% 2012

Asset Management

- 42 -

Caixa Econômica Federal (cont'd)

69.1% 68.5%

Market Share (%)

Amplified Loan Portfolio Dec 2013 (%) 2013

Housing 55%

15.2% 18.1%

10.3% 11.2%

7.5% 8.7%

42.6% 52.8% 15.7% 14.0%

7.3% 9.6%

35.5% 35.1%

2012

Infrastructure & Development 8%

Personal Loans 1% Home Equity 1%

Payroll Deductable Loans 9%

Delinquency Ratio > 90 days (%) 3.6%

3.8%

3.8%

3.8%

3.7%

2.0%

2.1%

2.0%

2.0%

2.1%

Dec 2011

Mar 2012

Jun 2012

Sep 2012

Dec 2012

Caixa

3.6%

3.4%

SMEs 11%

Government Large 3% Corporations 5%

Comments 3.3%

3.0%

2.3%

2.3%

2.4%

2.3%

Mar 2013

Jun 2013

Sep 2013

Dec 2013

 In 2012, Caixa Economica announced plans to create an investment banking arm, which was forecast to provide 20% of the bank's revenue within a period of five years.  However, analysts estimate that the bank would probably abandon the expansion into investment banking as the government has decided to stop providing more capital to the state-run bank and recommended that Caixa should focus on services for individuals and small companies.

Market

Source: Company data Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Others 7%

- 43 -

Banco Bradesco S.A.

2009

2010

2012

Operating Income

Securities 6% 12,202

11,523

2011

Fee Income

Net Income Breakdown 2013 (%) 19,786 18,884

17,512 17,552

15,223 16,289 11,198

13,372 14,288 9,804

11,616 10,066 7,586

Financial Performance (BRL mn)

Checking Accounts 18%

2013

Fees 28%

Net Income

Comments

Asset Management 12% Collection 7% Tax Payments 2% Consortium 4% Custody/Broke rage 3%

 Bradesco operates in two main business segments – financial services and insurance, pension plans and capitalization, which account respectively for 69% and 31% of its total income for 2013.  It is the largest insurance group in Brazil, in terms of both revenue and technical provisions.

Others 7%

 By the end of 2013, Bradesco had 59,307 service points. In terms of presence, the bank holds a market share of 20.7% in Brazil.

Cards 36% Source: Company data Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Insurance 31%

Loans 28%

Fee Income 2013 (%) Credit Operation 11%

Funding 7%

- 44 -

Banco Bradesco S.A. (cont'd) Funding (BRL bn)

Market Share 2013 (%) 34.6%

30.3%

21.9%

431.1 388.4 26.9 321.1 265.2 23.1 7.5 27.3

26.3 17.7 38.2

41.5

401.7 34.9

10.7%

53.2

44.2

49.8

59.8

Loan Portfolio 56.1 64.4

124.1

104.0

95.8

69.0

80.7

33.1

38.4

40.6

Dec 2011

Dec 2012

Dec 2013

53.4

59.7

35.7

37.5

Dec 2009

Dec 2010

Asset Insurance, Management Private Pension Plans and Savings Bonds Premiums Private Banks

At the end of 2013, Bradesco announced that it would raise two private-equity funds with a total amount of USD 800mn to invest in infrastructure.  The bank's investment unit, Bradesco Asset Management, is the third-largest asset manager in Brazil, with USD 130bn of assets under management.

Since 2013, Bradesco Asset Management is authorised to operate on the U.S. market. The bank plans to raise funds from North American investors and invest them into Brazilian and Latin American assets.

Saving Deposits Debentures Funds from Issuance of Securities

Source: Company data, Wall Street Journal Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

Saving Depaosits

Comments

44.2

Demand Deposits Time Deposits Borrowing & Onlending Subordinated Debts

Demand Deposits

Banking System

46.0

102.2

13.4%

24.2%

18.1%

57.7

51.4

36.9 90.5

35.9

17.1%

32.7% 26.3%

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Banco Bradesco S.A. (cont'd) Loan Portfolio Segmentation/Individuals Dec 2013 (%)

Loan Portfolio Segmentation/Corporate Dec 2013 (%) Vehicles 3%

Personal 13%

Credit Card 18%

Leasing 2% Sureties & Guarantees 23%

Overdraft 4% Credit Card 4%

Mortgage 10% Rural 6%

Export Financing 5%

BNDES Finame 5% Overdraft 3%

Payroll 20%

Rural 2%

Commercial Portfolio 11%

Mortgage 5% Operations Abroad 11%

Others 4%

Others 4% Working Capital 15%

BNDES Finame 11%

Vehicle 21%

Delinquency Ratio > 90 days (%) 6.2%

6.2%

6.2%

6.2%

6.0%

4.2%

4.2%

4.3%

4.2%

4.2%

4.1%

4.2%

4.1%

4.1%

4.0%

0.4%

0.3%

Sep 2012

Dec 2012

0.4% Mar 2012

0.9% Jun 2012

Individuals

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5.2% 4.0%

3.7%

3.6%

0.3%

0.2%

0.4%

Mar 2013

Jun 2013

Sep 2013

Large Corporates

Source: Company data Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

5.5% 4.0%

SMEs

Total

5.0%

3.7% 3.5% 0.7% Dec 2013

V. Appendix

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Abbreviations DPGE - Term Deposits with Special Guarantee IHCD - Hybrid Capital and Debt Instruments LCI -Letras de Credito Imobiliario - Real Estate Credit Bills LCA - Letras de Credito do Agronegocio - Agribusiness Credit Notes LF - Letra Financeira - Financial Bill LFS - Subordinate Financing Bill

Source: Bacen Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved.

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