,
Banco Votorantim S.A.
Financial Statements September 30, 2011 and 2010 (A free translation of the original report in Portuguese containing financial statements prepared in accordance with accounting practices adopted in Brazil applicable to financial institutions authorized to operate by the Central Bank of Brazil)
Banco Votorantim S.A. Financial statements September 30, 2011 and 2010
Contents Independent auditors' report on the review of consolidated financial statements Consolidated balance sheets Consolidated statements of income Statements of changes in shareholders' equity Consolidated statements of cash flows Consolidated statements for added value Notes to the consolidated financial statements
Independent auditors' report on the review of quarterly consolidated financial statements To The Board of Directors and Shareholders of Banco Votorantim S.A. São Paulo - SP
Introduction We have reviewed the consolidated balance sheet of Banco Votorantim S.A. as of September 30, 2011 and the related consolidated statements of income, changes in shareholders’equity and cash flows for the nine months period then ended, as well as the summary of significant accounting policies and other explanatory notes, which are the responsibility of its Management. Our responsibility is to express a conclusion on these consolidated financial statements based on our review. The Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting practices adopted in Brazil, applicable to financial institutions authorized to operate by the Central Bank of Brazil. Our responsibility is to express a conclusion on this consolidated financial statements based on our review. Scope of review We conducted our review in accordance with the Brazilian and international review standards for interim information (NBC TR 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accounting information contained in the consolidated financial statements referred above were not prepared, in all material aspects, in accordance with accounting practices adopted in Brazil, applicable to financial institutions authorized to operate by the Central Bank of Brazil. Other matters We also reviewed the consolidated statement of added value for the nine months period ended September 30, 2011, presented as supplemental information. The accounting information contained in this statement was submitted to the same review procedures described in paragraph
of review scope and, based on the adoption of these review procedures, we are not aware of any facts that would lead us to believe that the accounting information was not presented in conformity with the consolidated financial statements referred to in the introduction paragraph, taken as a whole. São Paulo, November 3, 2011 KPMG Auditores Independentes CRC 2SP014428/O-6 Original report in Portuguese signed by Alberto Spilborghs Neto Accountant CRC 1SP167455/O-0
Luciana Liberal Sâmia Accountant CRC 1SP198502/O-8
Banco Votorantim S.A. Consolidated balance sheets at September 30, 2011 and 2010 (In thousands of Reais) Assets Current assets Cash Interbank investments Money market repurchase agreements Interbank deposits Foreign currency investments
2011
2010
79,135,402
71,960,289
124,913
156,334
17,304,266
19,532,336
15,435,644 1,414,463 454,159
17,874,010 1,630,499 27,827
20,185,320
20,227,534
9,675,500 6,957,654 1,394,869 2,157,297
8,633,466 4,849,713 1,137,583 5,606,772
6,254,077
4,544,730
1,709 6,117,134 134,939 295
859 4,465,733 71,052 7,086
31
-
Liabilities Current liabilities Deposits Demand deposits Interbank deposits Time deposits Other deposits Money market repurchase agreements
Securities and derivative financial instruments Own portfolio Subject to repurchase agreements Derivative financial instruments Subject to guarantees provided Interbank investments Payments and receivables to be settled Brazilian Central Bank deposits Interbank repasses Correspondent Interbank investments Third-party funds in transit Loan operations
31
-
24,992,477
18,858,695
26,539 26,376,058
82,959 19,655,613
(1,410,120)
(879,877)
3,112,419
1,273,758
4,489,553 (1,288,588)
2,186,906 (870,697)
(88,546)
(42,451)
6,855,138
7,269,847
2,336,270 140,252 2,215,889 2,210,143
5,314,301 15,974 173,910 1,796,677
Own portfolio Third-party portfolio Free portfolio Acceptances and endorsements Funds from housing bonds, mortgage notes, letters of credit and alike Debenture funds Securities issued abroad Interbank investments Unsettled payables and receivables
Lease operations Lease receivable - Private sector Unearned income from leasing Allowance for losses on lease operations Other receivables Foreign exchange portfolio Income receivable Securities Clearing Accounts Other Allowance for other doubtful accounts Other assets
(47,416)
(31,015)
306,761
97,055
89,883 216,878
80,322 16,733
Long-term assets
44,960,919
39,977,054
Interbank investments
338,257
888,819
Securities and derivative financial instruments
338,257
5,848,315
2,664,016 2,662,961 847,514 1,045,762
2,092,653 2,366,302 783,986 605,374
Loan operations
32,079,771
27,550,361
Public sector Private sector Allowance for loan losses
25,645 33,057,815
50,974 28,028,744
(1,003,689)
(529,357)
397,099
3,067,837
2,211,104 (1,707,805)
5,287,310 (2,160,471)
Lease operations Lease receivable - Private sector Unearned income from leasing Allowance for losses on lease operations
4,645,185
4,281,762
Derivative financial instruments
4,645,185
4,281,762
6,438,502
10,038,632
32,069 2,095,934 203,389 2,374,383 263,208 34,436 1,435,083
29,323 5,221,740 232,270 1,464,314 312,348 1,413,094 1,365,543
33,658,743
29,421,309
4,715,984
5,351,760
22,498 4,693,486
50,970 5,300,790
3,807,920
1,113,995
3,779,888 28,032
1,108,561 5,434
11,099,924
8,415,600
4,958,536 400 6,140,988
3,572,754 3,061,465 1,781,381
Liabilities from borrowings and repass
5,644,855
5,489,537
Foreign borrowings Local onlendings - Official institutions National Treasury BNDES FINAME
1,855,769 3,789,086 21,000 1,830,322 1,937,764
965,178 4,524,359 14,999 2,931,333 1,578,027
Derivative financial instruments
679,668
2,356,001
Derivative financial instruments
679,668
2,356,001
7,710,392
6,694,416
954,319 6,677,859 78,214
1,512,572 936 5,142,827 38,081
32,309
37,549
Other liabilities Collection and levy of taxes and alike Foreign exchange portfolio Social and statutory Tax and social security Securities Clearing Accounts Subordinated debts Other
Deposits Interbank deposits Time deposits
Own portfolio Third-party portfolio Free portfolio Acceptances and endorsements Funds from housing bonds, mortgage notes, letters of credit and alike Debenture funds Securities issued abroad
287,960 287,960
Deferred income
Permanent assets
242,785
193,204
Interest of non-controlling shareholders
Investments
65,354
58,494
340 65,014
58,494
Intangible assets Accumulated amortization Deferred assets Organizational and expansion expenses Accumulated amortization Total assets See the accompanying notes to the financial statements.
9,778
Derivative financial instruments
5,108 1,297,841
Intangible assets
10,381
21,472 3,878,257 1,909,004 30,393 1,041,062 837,549
1,302,949
Other property for use Accumulated depreciation
619,157 634,824
5,808,733
8,262 2,325,500
Fixed assets for use
1,253,981
3,210,659 3,348,592 233,479
3,515,783 3,489,804 122,337 2,042,710 1,324,757
2,333,762
Ownership interest in Brazilian subsidiaries Other investments
6,792,730
7,005,587
Borrowings in local currency - Other institutions Foreign borrowings Onlending in the country - Official institutions National Treasury BNDES FINAME
3,622,590
Other assets Prepaid expenses
24,243,161 8,218,870 1,617,200
40,745 -
3,622,590
Other assets
34,079,231
26,158,549 8,696,773 1,860,160
72,432 1
Third-party funds in transit Internal funds transfer
(59,002)
Securities Clearing Accounts Other
36,715,482
9,778
(106,200)
Other receivables
376,890 720,436 17,786,474 240
888,819
7,220,253
Own portfolio Subject to repurchase agreements Derivative financial instruments Subject to guarantees provided
18,884,040
379,299 2,170,436 17,699,762 103
40,745
Money market repurchase agreements Interbank deposits
20,249,600
72,433
Interbank investments
Long-term liabilities Other assets Prepaid expenses
2010 74,396,902
10,381
Liabilities from borrowings and repass Public sector Private sector Allowance for doubtful accounts
2011 81,929,900
109,756
71,764
191,064 (81,308)
133,744 (61,980)
35,688
17,614
41,832 (6,144)
19,990 (2,376)
31,987
45,332
43,507 (11,520)
82,541 (37,209)
124,339,106
112,130,547
Other liabilities Tax and social security Securities Clearing Accounts Subordinated debts Other
Quotaholders' equity Subscribed Domestic Capital reserves Profit reserves Equity evaluation adjustments Retained Earnings
Total liabilities
59
59
8,718,095
8,274,728
4,026,841 585,104 3,861,317 (55,020) 299,853
3,994,896 617,049 3,086,397 (27,806) 604,192
124,339,106
112,130,547
Banco Votorantim S.A. Consolidated statements of income Period from January 1st to September 30th, 2011 and 2010 (In thousands of Reais, except net income for the period per thousand shares)
Financial operations income Loan operations Lease operations Securities income Derivative financial instruments Foreign exchange income Compulsory investments Financial intermediation expenses Money market repurchase agreements Loans, assignments and repasses Lease operations Allowance for doubtful accounts Gross income from financial intermediation Other operating income/ (expenses) Service fee income Income from bank fees Personnel expenses Other Administrative Expenses Tax expenses Equity in income of associated companies and subsidiaries Other operating income Other operating expenses Operating income Non-operating income Income before taxes on taxable income and profit sharing Income and social contribution taxes Provision for income tax Provision for social contribution payable Deferred tax assets Statutory profit sharing Net income before minority interest Interest of non-controlling shareholders Net income (loss) for the period Net income (loss) per thousand shares - R$ See the accompanying notes to the financial statements.
2011
2010
14,150,629
9,929,438
8,194,307 1,628,601 4,090,880 (363,318) 95,464 504,695
6,073,126 2,008,376 3,109,107 (1,498,628) 37,516 199,941
(12,191,492)
(7,367,529)
(7,910,932) (784,416) (1,250,105) (2,246,039)
(4,516,520) (134,627) (1,522,705) (1,193,677)
1,959,137
2,561,909
(1,321,139)
(1,081,802)
318,364 640,242 (649,541) (1,134,731) (473,272) (262) 215,875 (237,814)
407,373 567,215 (550,817) (1,009,622) (411,290) 47,529 (132,190)
637,998 9,718 647,716
1,480,107 (27,126) 1,452,981
78,135
(402,132)
(201,376) (254,109) 533,620
(663,677) (225,309) 486,854
(270,578)
(307,604)
455,273
743,245
(2)
5
455,271
743,250
5.58
9.12
Banco Votorantim S.A. Statements of changes in shareholders' equity Period from January 1st to September 30, 2011 and 2010 (In thousands of Reais)
Capital Realized capital Balances at December 31, 2009 Paid-up capital
Profit reserves Capital increase
Capital reserves
Legal
Expansion
Tax incentives
Equitv evaluation adjustment (76,664)
3,544,896
-
617,049
343,821
2,716,341
-
Retained earnings
Total
-
7,145,443 450,000
450,000
-
-
-
-
-
-
-
Equity evaluation adjustments
-
-
-
-
-
-
48,858
-
48,858
Net income
-
-
-
-
-
-
-
743,250
743,250
Distribution of net income: Legal reserve Fiscal incentive reserve Dividends and interest on own capital
-
-
-
23,875 -
-
2,360 -
-
(23,875) (2,360) (112,823)
(112,823)
Balances at September 30, 2010
3,994,896
-
617,049
367,696
2,716,341
2,360
(27,806)
604,192
8,274,728
Balances at December 31, 2010
3,994,896
31,945
585,104
394,583
3,439,705
-
(57,356)
-
8,388,877
31,945
(31,945)
-
-
-
-
-
-
-
Capital increase Equity evaluation adjustments
-
-
-
-
-
-
2,336
-
2,336
Net income
-
-
-
-
-
-
-
455,271
455,271
Distribution of net income: Legal reserve Dividends and interest on own capital
-
-
-
27,029 -
-
-
-
(27,029) (128,389)
(128,389)
4,026,841
-
585,104
421,612
3,439,705
-
299,853
8,718,095
Balances at September 30, 2011
(55,020)
Banco Votorantim S.A. Consolidated statements of cash flows Period from January 1st to September 30, 2011 and 2010 (In thousands of Reais) Cash flows originating from operations Net income Adjustments to net income Depreciation and amortization Allowance for doubtful accounts Provision for loss in investments Provision for contingent liabilities/legal obligations Non-operating income Minority interest Equity variations Interbank investments Securities and derivative financial instruments Interbank accounts and investments Loans and lease operations Other receivables Other assets Other liabilities Deferred income Equity evaluation adjustment - securities available for sale Cash generated (consumed) by operations Cash flows from financing activities Deposits Money market repurchase agreements Acceptances and endorsements Liabilities from borrowings and repass Capital increase Dividends and bonuses paid Interest of non-controlling shareholders Subordinated debts Net cash generated in financing activities
2011
2010
455,271
743,250
2,428,463
1,495,901
29,497 2,246,039 162,645 (9,718) -
20,805 1,193,677 12,901 295,649 (27,126) (5)
(497,459) (3,338,708) 107,086 (8,000,225) (4,931,002) (989,733) 775,191 (9,451) 2,336
(2,736,207) (7,842,932) (4,438,395) (11,236,529) (6,020,598) 48,128 6,162,796 2,630 48,858
(13,998,231)
(23,773,098)
1,367,128 6,143,482 7,594,523 1,395,962 (128,301) (191,967)
(241,621) 10,425,758 3,399,088 3,995,515 450,000 (190,421) 36 2,189,100
16,180,827
20,027,455
Cash flows from investment activities Sales of investments Sale of fixed assets for use and lease property Disposal of deferred assets Disposal of intangible assets Acquistion of fixed assets for use and leases Investment acquisition Deferred charges Investments in intangible assets Investment subsidy Dividends and bonuses received
2,813 273 813 (39,734) (340) (18,722) (10,253) -
(12,251) 810 229 428 (25,216) (10,351) (14,288) (17,813) -
Net cash generated (consumed) in investment activities
(65,150)
(78,452)
2,117,446
(3,824,095)
1,496,890 3,614,336
9,119,278 5,295,183
2,117,446
(3,824,095)
Net variation of cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the períod Increase (decrease) in cash and cash equivalents
See the accompanying notes to the financial statements.
Banco Votorantim S.A. Consolidated statements for added value Period from January 1st to September 30, 2011 and 2010 (In thousands of Reais) 2011
2,010
Revenues Income from financial intermediation Revenue from services rendered and bank fees Allowance for doubtful accounts Other income (expenses) Non-operating income
12,850,975 14,150,629 958,606 (2,246,039) (21,939) 9,718
9,598,562 9,929,438 974,588 (1,193,677) (84,661) (27,126)
Financial operations expenses
(9,945,453)
(6,173,852)
Inputs acquired from third parties Materials, energy, and other Outsourced services Other Communications Maintenance and preservation of assets Data processing Promotions and public relations Publications Advertising and publicity Services of the financial system Specialized technical services Transportation Other
(1,005,304) (8,037) (13,049) (984,218) (74,347) (13,623) (112,108) (13,729) (940) (7,456) (144,151) (341,324) (17,933) (258,607)
(912,865) (7,202) (14,520) (891,143) (72,572) (10,070) (79,636) (15,774) (1,776) (29,774) (135,969) (309,064) (15,416) (221,092)
Gross added value Amortization/depreciation expenses Net added value produced by the Entity Added value received as transfer Equity in income of associated companies and subsidiaries
1,900,218
2,511,845
(29,497)
(20,805)
1,870,721
2,491,040
(262)
-
(262)
-
Added value payable
1,870,459
2,491,040
Total added value paid
1,870,459
2,491,040
Personnel Salaries and fees Profit sharing Benefits and training programs FGTS Other
818,528 409,016 270,578 101,872 36,863 199
772,000 349,189 307,604 87,100 27,837 270
Taxes, duties and contributions INSS on salaries Tax expenses (excepting income and social contribution taxes) Income tax / Social contribution
496,728 101,591 473,272 (78,135)
899,843 86,421 411,290 402,132
99,930 99,930
75,952 75,952
455,273 128,389 326,882 2
743,245 112,823 630,417 5
Third-party capital remuneration Rents Remuneration of own capital Dividends/ Interest on own capital Retained earnings Minority interests in retained earnings See the accompanying notes to the financial statements.
Banco Votorantim S.A. Notes to the financial statements Period from January 1st to September 30th, 2011 and 2010 (In thousands of Reais)
1
Operations Banco Votorantim S.A. is a closed corporation that, operating in the form of a Multiple Bank, develops banking activities in authorized categories, by means of its commercial, financing and foreign exchange operation portfolios. Through its subsidiaries, the Company also operates in various other categories, with an emphasis on the activities of consumer credit, leasing, administration of investment funds and credit cards. Transactions are conducted in the context of a set of institutions that operate in an integrated manner in the financial market, including in relation to risk management, and certain transactions have the joint participation or the intermediation of member institutions, which form an integral part of the financial system. The benefits of the services provided between these institutions and the costs of the operational and administrative structure, are absorbed based on the practicality and reasonableness of the allocation of benefits and costs, jointly or individually.
2
Presentation of consolidated financial statements The financial statements were prepared on a basis of the accounting guidelines derived from Corporation Law and rules and instructions of the National Monetary Council (CMN). Law 11638/07 was enacted on December 28, 2007, amended by Law 11941/09, which amended Corporate Law regarding accounting practices adopted in Brazil. Although said Law is already effective, some changes it introduced depend on normatization by the National Monetary Council. The amendments approved by CMN were: 1) accounting treatment of intangible assets; 2) procedures to measure the recoverable value of assets; 3) elaboration of the statement of cash flows in place of the statement of changes in financial position; 4) the disclosure of related party information in notes to the financial statements; 5) procedures for the recognition, measurement and disclosure of provisions, contingent assets and liabilities; 6) share based payment; and 7) subsequent events.
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
The consolidated financial statements include Banco Votorantim and the direct subsidiaries in the country and overseas, listed below: Ownership interest 09/30/2011
09/30/2010
99.98% 99.99% 100% 99.99% 100% 100%
99.98% 99.99% 100% 99.99% 100% -
100% 100%
100% 100%
Direct subsidiaries in Brazil Votorantim Corretora de Títulos e Valores Mob. Ltda. Votorantim Asset Management Distrib. de TVM Ltda. BV Financeira S.A. Crédito, Financiamento e Investimento BV Leasing Arrendamento Mercantil S.A. BVIP - BV Investimentos e Participações S.A. BVIA - BV Inv. Alternativos e Gestão de Recursos S.A. Direct subsidiaries overseas Votorantim Bank Limited Banco Votorantim Securities Inc.
The consolidated financial statements were prepared in conformity with the consolidation rules and instructions of National Monetary Council (CMN). The main procedures in the consolidation process of the financial statements are: a. Elimination of the balances of accounts of assets, liabilities, income and expenses between parent company and subsidiary companies; b. Elimination of investments in the subsidiaries’ capital, reserves and retained earnings; c. Presentation of lease operations under the financial method, reclassifying "Lease property" to "Lease operations", net of the residual value received in advance;
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
d. The book balances of the overseas direct subsidiaries, which are prepared according to international accounting standards, were translated into reais, using the US dollar quotation on the closing date of the period, and were adjusted to accounting practices described in Note 4; e. The exchange variation of the operations of the branch and of the subsidiary companies overseas was distributed on the lines of the statement of income, according to the respective assets and liabilities that originated them; f.
The consolidation process does not include the consolidation of the exclusive investment funds and of the credit receivable investment funds in conformity with the consolidation rules established by the National Monetary Council (CMN), and
g.
Income statement balances as of September 30, 2010 were reclassified to permit comparability of financial statements, as a result of the change in internal aggregation policies of revenue and expense accounts, in order to provide users with a better understanding of the Company's results. In the Consolidated, the main reclassifications were: i)
Balances previously presented in the item "Other operational income", in the amount of R$1,343,215 and "Other operational expenses" in the amount of R$1,980,375, for the items "Income from loan operations" in the amount of R$890,652 and "Income from derivative financial instruments" in the amount of R$187,872 on September 30, 2010.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Consolidated 2010
Previous disclosure
Balance reclassified
Loan operations
6,963,778
(890,652)
6,073,126
Lease transactions
2,038,941
(30,565)
2,008,376
Securities income
3,126,714
(17,607)
3,109,107
(1,686,500)
187,872
(1,498,628)
82,317
(44,801)
37,516
(4,548,433)
31,913
(4,516,520)
(163,101)
28,474
(134,627)
(1,455,044)
(67,661)
(1,522,705)
300,131
107,242
407,373
(1,096,164)
86,542
(1,009,622)
Income from derivative financial instruments Foreign exchange income Money market repurchase agreements Loans, assignments and onlendings Lease expenses Service fee income Other administrative expenses Tax expenses
(344,721)
(66,569)
(411,290)
Other operational income
1,390,744
(1,343,215)
47,529
(2,112,565)
1,980,375
(132,190)
(65,778)
38,652
(27,126)
Other operational expenses Non-operating results
3
Reclassification
Risk management Risk management policies comply with market best practices and are in line with the guidelines defined by the CMN. They encompass Bank Institutions that comprise Votorantim Financial Conglomerate (“Conglomerate”). The Company implemented policies and procedures and management system capable of managing, evaluating and mitigating the risks inherent to its business, providing the Management with a view of all risks.
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
Market risk Market risk is defined as the possibility of financial losses arising from the variation in the market value of positions held. Management is executed in a centralized manner, by an area that maintains independence in relation to the front office. The basic procedures adopted for risk management are: (a) integrity of the pricing of assets and derivatives; (b) assessment of the risk using the Value at Risk methodology and from simulating scenarios; and (c) accompanying the daily results using the back-test methodology. The Conglomerate undertakes operations that involve derivative financial instruments, operating in organized and over the counter markets, in order to ensure the management of market risk appropriate to its policy. These instruments are used for hedging positions to meet the demand of counterparties and as a means of reversing the positions at times of significant oscillations. Operational risk Operating risk is defined as the possibility of losses resulting fromfault, deficiency or inadequacy of internal processes, people and systems or external events. It also includes the legal risk associated to the inadequacy or deficiency in contracts signed by the institution, and to fines due to failure to abide by legal provisions and indemnities for damages to third parties arising from activities performed. The operating risk management process starts with the application of an appropriate methodology for mapping the risks. Management risks are: risk identification, assessment, monitoring, control and mitigation, plus the communication and the action plan. The combination of risk mapping and monitoring actions with the information obtained from the records of incurred losses allows a continuous improvement in the adopted policies and procedures, as well as the reduction of existing risks.
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
Credit risk Credit risk consists of the possibility of occurring losses associated to a borrower or a counterpart's failure to fulfill their respective financial obligations under the agreed-upon conditions, and losses associated to devaluation of a loan agreement due to deterioration of the borrower's risk classification, reduction in gains or compensations, advantages granted in renegotiations and loan recovery costs. As part of the credit risk management process, monitoring are conducted for policies, rules, processes, established limits, in addition to risk analysis and submission to appropriate levels and approving committees. The credit policy is formulated upon the analysis of internal indicators in the portfolio, company pricing and assessment processes, and of external factors related to the financial situation of the companies and the economic situation of the country and foreign countries. Conglomerate carries out credit risk assessments of their operations, determined by means of judgment and statistical models. It is worth emphasizing that in the identification of the deterioration of the loan portfolio quality, risk mitigation measures are taken, such as reassessment of customer risk profile and industry analysis that influence threshold management and management and control of guarantees.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Asset and liability management The Assets & Liabilities Operating Committee ("ALM") is in charge of managing the structural risks of interest rate, liquidity and exchange rate, as well as the capital management, aiming to optimize the risk/return ratio and seeking greater efficiency when composing the factors that impact the Solvability Index (Basel).
Basel Index
09/30/2011
09/30/2010
Capital (PR)
13,057,070
11,944,734
8,741,394 4,315,676
8,261,072 3,683,662
Capital Requirement (PRE)
11,294,555
9,716,492
Pepr Pjur Pcom Pacs Popr
10,717,695 275,464 6,668 25,815 268,913
8,431,542 832,503 1,531 33,983 416,933
1,762,515
2,228,242
12.7%
13.5%
Level I Level II
Excess of Capital Basel Index (PR x 100/(PRE/0.11)
4
Significant accounting policies a. Statement of income The Income and expenses are recorded according to the accrual basis and are recorded by the pro rata criterion and calculated with a basis on the exponential method, excepting those related to transactions with foreign countries, which are calculated by the straight-line method.
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
b. Cash and cash equivalents Cash and cash equivalents are represented by available funds, interbank deposits, investments in foreign currency and money market repurchase agreements – own portfolio, maturity up to 90 days.
c. Interbank investments Interbank investments are recorded at investment value, plus income accrued up to the balance sheet date, calculated pro rata with a basis on the variation of the index and on the agreed interest rate.
d. Securities Securities are recorded by the amount effectively paid and classified in keeping with Management's intention in three different categories: i. Securities for trading - Acquired for the purpose of being actively and frequently traded. Adjusted to its market value with the corresponding entry to the results for the period; ii. Securities available for sale - Securities that are not for trading or held to maturity. Adjusted to its market value with the corresponding entry to a separate account in shareholders' equity, reduced for any tax effects; and iii. Securities held to maturity - Securities acquired with the intention and financial capacity to hold them in the portfolio to maturity. Recorded at cost of acquisition, plus income accrued in contra account to results for the period. In this category, the securities are not adjusted to market value. The market valuation methodology was established in compliance with consistent and verifiable criteria, which take into consideration the average price of trading on the date of calculation, or, in the absence thereof, the daily adjustment value of future market transactions disclosed byexternal sources, or the probable net realizable value obtained using interest rate future value curves, exchange rates, price and currency indexes, besides any adjustments in the prices of securities of low liquidity.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Income accrued with securities, regardless of the category in which it is classified, is calculated pro rata with a basis on the variation of the index and on the agreed interest rate, by the exponential or straight-line method, up to the date of maturity or of the final sale of the security, and is recognized directly in income for the period.
e. Derivative financial instruments Derivative financial instruments are stated at its market value, with consistent and verifiable criteria, considering the average price of trading on the date of calculation, or, in the absence thereof, conventional and proven methodologies. The derivative financial instruments are classified according to the intention of Management, taking into account its purpose. Financial instruments used to offset, in whole or in part, the risks arising from exposure to variations in asset or liability market values are considered hedge instruments and are classified according to their nature as: i.
Market risk hedge - adjustments to market value of the derivative financial instruments classified in this category, as well as of the item hedged , are recorded in counter entry to income (loss) for the period; and
ii. Cash flow hedge - Derivative financial instruments classified in this category have their adjustments to market value recorded in the account in shareholders' equity, reduced for any tax effects. Derivative financial instruments that do not fulfill the hedge criteria have their adjustments to market value recorded directly in income for the period. For derivative financial instruments traded in association with funding operations, both the derivative and the funding are accounted for by the intrinsic conditions contracted, and are not adjusted by the market value.
f. Hedge accounting The Conglomerate uses financial hedge derivatives to hedge its exposures to foreign currency and interest rate changes.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Upon initial designation of the hedge, the Conglomerate formally documents the relationship between the hedge instruments and the hedgeable instruments, including the risk management goals and the strategy in the execution of the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedge relationship, considering the conventional and well-established calculation methods. The Conglomerate makes an assessment, both in the beginning of this relationship, and continuously, to check if it is expected that these instruments are highly effective in the compensation of changes in fair value of respective items object of hedge during the period for which is designed, and if actual results are within the range of 80-125 per cent.
g. Loan and lease operations, advances on foreign exchange contracts, other receivables with loan characteristics and allowance for possible loan losses Loan and lease operations, advances on foreign exchange contracts and other receivables with loan characteristics are classified according to Management's discernment with respect to the level of risk, taking into consideration the economic panorama, past experience and specific risks in relation to the operation, to obligators and guarantors, periods of delinquency, and economic group, observing the parameters established by CMN, which requires the analysis of the portfolio and its rating at nine levels, ranging from AA (minimum risk) to H (maximum risk). In relation to the period of delinquency verified in retail operations with a term of over thirty-six (36) months, a double count is permitted over intervals of delinquency defined for the nine levels. Income from loans overdue for more than 60 days, regardless of their level of risk, are only recognized as income when effectively received. Operations rated at level H continue in this status for 180 days, when they are written off against the existing provision and controlled in memorandum accounts. Renegotiated operations are maintained, at a minimum, at the same level at which they were rated, in conformity with CMN Resolution nº 2682. Renegotiations of loans that had already been written off against provision that were in memorandum accounts are rated as H and any gains from renegotiation are recognized as income when effectively received. Loan and lease operations that are subjects of hedges of derivative financial instruments are stated at market value using consistent and verifiable criterion. The adjustments of valuation at market value of these operations are recorded, when positive, in Other Receivables Sundry, and, when negative, in Other Liabilities - Sundry, in counter entry to income from loans and income from leases.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Loan assignment calculated recognizing income at the time of assignment, irrespectively of retention or not of risk. For the portfolio of loan operations granted with recourse, Management established a provision for losses, recorded under "Other liabilities - Sundry".
h. Prepaid expenses Funds applied in prepayments, where the benefits or rendering of services are to occur in future periods, are recorded.
i. Accounting estimates Preparation of the financial statements requires that Management use its judgment in determining and recording accounting estimates. The settlement of transactions involving these estimates may result in significantly different amounts due to the lack of precision inherent to the process of their determination. Significant items subject to theses estimates and assumptions include assessment of financial assets and liabilities and derivative financial instruments at their fair value, analysis of credit risk to determine allowance for doubtful accounts, as well as analysis on contingent liabilities. The The Management reviews the estimates and assumptions on a regular basis. The main amounts recognized in the Financial Statements through estimates are included in the following notes: nº 8 – Securities; nº 9 – Derivative Financial Instruments; nº 12 – Loans Credit; and nº 50 – Contingent assets and liabilities and Legal obligations.
j. Permanent assets i.
Investments in equity interest are valued using the equity method. Other permanent investments are valued at cost of acquisition less allowance for losses, when applicable;
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
ii. Property, plant and equipment stated at acquisition cost, less accumulated depreciation. Depreciation of fixed assets is calculated using the straight line method, based on the following annual rates according to the useful economic lives of the assets, as follows: Facilities, furniture and equipment in use - 10%; Communication, security, and transportation system - 10%; and 20 years. iii. Deferred assets are stated at acquisition or formation cost, deduced from respective composed amortization, basically, for expenses on third-party properties. Amortization is calculated by the straight-line method, based on the period over which the benefit is generated. During the period, there were no acquisitions as a result of regulation in force; and iv. Intangible assets include rights relating to intangibles that are intended for the maintenance of the company or exercised for this purpose. Amortization is calculated by the straight-line method, based on the period over which the benefit is generated. Non-financial assets are subject to evaluation of the recoverable value yearly.
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
k. Income and social contribution taxes Income tax was determined with a basis on the rate of 15%, plus a surcharge of 10%, and social contribution was determined with a basis on the rate of 15%, both applicable to the taxable income. Deferred income tax is recognized at the subsidiary BV Leasing, calculated at the rate of 25%, on the adjustment of supervenience of depreciation of the lease portfolio. Income tax and social contribution tax credits are formed in accordance with a study of future realization prepared by Management.
l. Contingent assets and liabilities and legal obligations The recognition, measuring and disclosure of contingent assets, contingent liabilities and legal obligations are carried out according to the following criteria: i.
Contingent assets- These are not recorded except when Management has full control over the situation or when there are secured guarantees or favorable sentences to which no further appeals are applicable, characterizing a favorable judgment as practically certain;
ii. Contingent liabilities - These are recognized in the financial statements when, based on the opinion of the legal counsel and of Management, the risk of loss of a lawsuit or administrative proceeding is considered probable, with a probable outflow of financial resources for the settlement of obligations and when the sums involved are measurable with sufficient assurance. Contingent liabilities classified as possible losses are not accounted for, and should only be disclosed in the notes to the financial statements, whereas those classified as remote do not require provision and disclosure. e iii. Legal obligations - Fiscal and social security - Are lawsuits related to tax obligations, where the subject being contested is their legality or constitutionality which, regardless of the probability of success of the lawsuits in progress, have their amounts recognized in full in the financial statements.
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
m. Other assets and liabilities Assets are stated at realizable values, including, when applicable, monetary and exchange variations earned (on a pro rata daily basis) and a provision for losses, when considered necessary. Liabilities are stated at known or calculated amounts, plus charges and monetary variations and exchange variations incurred (on a pro rata daily basis).
5
Breakdown of cash and cash equivalents 09/30/2011
6
09/30/2010
Cash Interbank funds applied Purchase and sale commitments - own portfolio Interbank deposits Investments in foreign currency
124,913 3,489,423 2,369,527 665,737 454,159
156,334 5,138,849 4,187,737 923,285 27,827
Total
3,614,336
5,295,183
Cash 09/30/2011 Cash Bank deposits Cash and cash equivalents in foreign currency Total
09/30/2010
332 59,559 65,022
407 49,358 106,569
124,913
156,334
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
7
Interbank funds applied 09/30/2011
09/30/2010
Purchase and sale commitments - own portfolio
4,993,348
6,161,069
Financial treasury bills National treasury bills National treasury notes Other
648,679 3,393,872 897,313 53,484
253,126 633,485 5,074,990 199,468
Purchase and sale commitments - Financed operations
8,657,522
10,096,105
Financial treasury bills National treasury bills National treasury notes
2,004,529 3,596,506 3,056,487
1,194,867 7,351,494 1,549,744
Purchase and sale commitments - Short position
1,784,774
1,616,836
National treasury bills National treasury notes
130,693 1,654,081
1,616,836
Interbank deposits
1,752,720
2,519,318
454,159
27,827
17,642,523
20,421,155
Foreign currency investments Total
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
8
Securities Composition by category, in the Country and Overseas 09/30/2011 Trading securities
09/30/2010
Accrual value
Market value (book)
11,352,021
11,586,741
234,720
12,524,645
12,607,576
82,931
Financial treasury bills National treasury bills National Treasury notes Debentures Agricultural debt securities Rural Product Bills Promissory notes Shares in investment funds Quotas of FIDC Shares of listed companies Certificate of real estate receivables
1,115,926 2,484,953 5,805,482 313,547 34,890 338,442 159,948 711,834 341,988 38,094
1,115,878 2,510,518 5,953,300 364,533 36,584 349,239 159,948 711,834 341,988 36,002
(48) 25,565 147,818 50,986 1,694 10,797 (2,092)
66,502 3,491,070 5,695,313 385,830 63,147 389,587 249,681 1,470,839 519,592 193,084
66,503 3,485,537 5,732,507 432,280 65,014 390,297 249,637 1,470,839 519,592 195,370
1 (5,533) 37,194 46,450 1,867 710 (44) 2,286
6,917
6,917
-
-
-
-
Overseas
1,157,431
1,150,338
(7,093)
4,357,587
4,122,094
(235,493)
696,537 153,250 307,644
695,662 153,588 301,088
(875) 338 (6,556)
95,135 2,656,783 120,097 1,485,572
104,072 2,668,508 118,047 1,231,467
8,937 11,725 (2,050) (254,105)
12,509,452
12,737,079
227,627
16,882,232
16,729,670
(152,562)
Domestic
Brazilian foreign debt Foreign governments National Treasury Other securities Total
Unrealized gain/ (Loss)
Accrual value
Market value (book)
Unrealized gain/ (Loss)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
09/30/2011 Securities available for sale
Accrual value
Market value (book)
Domestic
9,899,065
9,887,950
National Treasury notes Real estate receivables certificates Debentures Promissory notes Shares in investment funds Quotas of FIDC FIP shares Shares of listed companies Shares of non-listed companies
3,080,409
09/30/2010 Accrual value
Market value (book)
Unrealized gain/ (Loss)
(11,115)
6,578,978
6,507,591
(71,387)
3,088,467
8,058
3,235,821
3,217,244
(18,577)
15,518 1,901,901 151,016 1,812,945 959,945 255,251
17,211 1,941,247 151,016 1,812,945 959,945 193,034
1,693 39,346 (62,217)
37,776 1,089,386 541,351 34,462 60,614 -
39,976 1,060,684 541,351 35,421 60,614 -
2,200 (28,702) 959 -
1,722,080
1,724,085
2,005
1,579,568
1,552,301
(27,267)
Overseas
2,548,368
2,538,161
(10,207)
873,123
917,019
43,896
Foreign governments Other securities
1,457,952 1,090,416
1,504,825 1,033,336
46,873 (57,080)
873,123
917,019
43,896
12,447,433
12,426,111
(21,322)
7,452,101
7,424,610
(27,491)
Total
Unrealized gain/ (Loss)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
9
Derivative financial instruments a. Composition in assets and liabilities 09/30/2011
09/30/2010
Assets Differential receivable from swap Term currency contracts Purchase of call options - shares Purchase of put options - shares Purchase of call options - financial assets/goods Purchase of put options - financial assets/goods Credit derivatives Non Deliverable Forward Other
1,025,088 2,771 1,766 38,862 684,760 207,134 59,322 222,658 22
884,021 434 10,060 469 203,084 334,551 328,307 107,125 53,518
Total
2,242,383
1,921,569
Differential payable from swap Term currency contracts Sale of call options - Shares Sale of put options - Shares Sale of call options - financial assets/goods Sale of put options - financial assets/goods Option box - Fixed income strategy Credit derivatives Non Deliverable Forward
1,875,538 605 1,274 49,931 530,596 302,604 2,390,395 62,387 111,523
1,915,698 298 7,465 112 261,772 186,451 4,002,488 159,159 104,320
Total
5,324,853
6,637,763
Liabilities
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
b. Composition of the swap contracts by index 09/30/2011
09/30/2010
Original value
Accrual value
Market value
Original value
Accrual value
Market value
Asset position
27,737,437
29,927,567
31,983,726
24,896,836
26,865,339
27,076,543
DI Dollar Euro IGPM IPCA Pre-fixed Libor Commodities Swiss Franc Other
10,958,286 6,278,796 461,685 1,221,209 3,033,534 3,340,422 1,982,773 19,685 441,047 -
11,069,030 7,337,234 497,799 1,544,628 3,400,030 3,577,831 1,956,670 19,565 524,780 -
12,720,073 7,578,204 503,462 1,594,213 3,457,541 3,619,266 1,952,289 18,680 539,998 -
8,667,254 8,312,076 37,130 790,162 847,800 4,834,502 1,383,372 1,732 22,808
9,838,987 8,457,748 33,099 1,001,664 1,098,197 5,034,151 1,383,976 1,732 15,785
9,852,560 8,538,785 33,099 1,044,987 1,118,821 5,086,024 1,381,112 1,878 19,277
Asset position
27,737,437
30,616,976
32,834,176
24,896,836
27,866,098
28,108,220
DI Dollar Euro IGPM IPCA Pre-fixed Libor Yen Long Term Interest Rate (TJLP) Commodities Other
8,693,684 1,677,421 10,972 847,270 5,793,896 10,446,629 193,433 -
10,995,483 1,848,237 11,532 1,192,859 7,183,274 9,119,814 178,153 -
10,990,364 1,903,626 11,647 1,235,110 7,409,777 11,013,916 178,640 -
8,329,269 4,786,306 282,613 900,000 3,879,974 5,743,246 863,917 43,418
10,008,424 4,759,930 288,896 1,153,619 4,572,529 6,106,376 864,582 42,912
10,019,477 4,834,289 286,425 1,194,476 4,642,695 6,153,455 864,311 42,706
37,399 24,491 12,242
44,587 24,843 18,194
49,213 22,711 19,172
40,579 6,513 21,001
44,745 6,377 17,708
44,745 6,588 19,053
Net differential
-
(689,409)
(850,450)
-
(1,000,759)
(1,031,677)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
c. Composition of the forward contracts by index 09/30/2011
09/30/2010
Original value
Accrual value
Market value
Original value
Accrual value
Market value
Forward currency
48,207
13,641
2,771
19,337
434
434
Total
48,207
13,641
2,771
19,337
434
434
Forward currency
48,207
605
605
19,337
298
298
Total
48,207
605
605
19,337
298
298
Asset position
Liability position
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
d. Composition of the options contracts by index 09/30/2011
09/30/2010
Long position
Amount contracted
Market (book) value
Amount contracted
Market (book) value
Dollar Index DI Shares Commodities Flexible
5,826,638 472,663,230 26 1,058,828 10,065 1,232,784
570,536 205,700 1,069 40,628 147 114,442
11,841,888 561,670,409 150 365,700 217,222 6,353,365
202,634 826 258,505 10,529 5,230 70,440
Total
480,791,571
932,522
580,448,734
548,164
09/30/2011
Short position
09/30/2010
Amount contracted
Market (book) value
Amount contracted
Market (book) value
Dollar Index DI Shares Commodities Flexible
8,431,275 502,773,421 677 955,575 32,649 2,136,170
496,398 219,889 50,856 51,205 2,211 63,846
17,303,575 631,301,112 566,840 234,148 7,158,279
146,533 152,967 7,577 15 148,708
Total
514,329,767
884,405
656,563,954
455,800
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
e. Composition of the futures contracts by index 09/30/2011
09/30/2010
Commitment of purchase
65,647,480
25,852,186
DDI Dollar DI Exchange Coupon Commodities T-Note Index SCC
13,987,401 118,164 49,946,610 433,195 7,564 569,725 20,477 564,344
8,001,533 2,663,131 13,182,528 112,625 263,409 1,628,960
Commitment of sale
77,948,933
71,631,437
DDI Euro Dollar Exchange Coupon DI Commodities T-Note Index BGI SCC
13,144,677 27,516 2,836,479 489,903 60,262,001 25,491 526,207 53,044 9,556 574,059
8,685,955 392,315 1,248,602 59,318,991 12,817 340,450 3,529 153 1,628,625
(12,301,453)
(45,779,251)
Net differential
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
f. Composition of the NDF contracts by index 09/30/2011
09/30/2010
Amount contracted
Market (book) value
Amount contracted
Market (book) value
Assets Dollar Euro Other
1,836,337 6,791 271,216
148,523 476 73,659
1,465,007 -
107,125 -
Total
2,114,344
222,658
1,465,007
107,125
748,968 10,609 567,775
80,559 365 30,599
958,335 3,573 -
104,243 77 -
1,327,352
111,523
961,908
104,320
786,992
111,135
503,099
2,805
Liabilities Dollar Euro Other Total
Net differential
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
g. Credit derivatives 09/30/2011
09/30/2010
Reference value
Market (book) value
Reference value
Market (book) value
Risk taken Credit swaps Credit Linked Notes Total
3,560,448 3,560,448
(47,331) (47,331)
3,862,776 310,039 4,172,815
14,018 315,559 329,577
Risk transferred Credit swaps Credit linked notes Equity linked notes Total
1,511,336 1,511,336
44,266 44,266
418,467 143,397 4,574 566,438
8,630 144,692 4,567 157,889
h. Credit derivatives by index 09/30/2011
09/30/2010
Original value
Accrual value
Market (book) value
Original value
Accrual value
Market (book) value
Asset position Pre fixed
2,707,424
41,541
59,322
4,172,815
318,098
328,307
Total
2,707,424
41,541
59,322
4,172,815
318,098
328,307
Liability position Pre fixed Total
2,364,360 2,364,360
552 552
62,387 62,387
566,438 566,438
150,120 150,120
159,159 159,159
343,064
40,989
(3,065)
3,606,377
167,978
169,148
Net differential
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
i. Composition of the Option box contracts - fixed income strategy 09/30/2011
09/30/2010
Amount contracted
Market (book) value / Risk exposure
Amount contracted
Market (book) value / Risk exposure
805,459 1,421,382
868,257 1,522,138
1,355,943 2,484,598
1,137,381 2,865,107
2,226,841
2,390,395
3,840,541
4,002,488
-
2,255,372
-
3,324,954
-
2,255,372
-
3,324,954
-
2,255,372
-
3,324,954
Subtotal
-
2,255,372
-
3,324,954
Total
-
-
-
-
Prefixed Risk Liability position Sale of Call with high limit Sale of Put with low limit Total Dollar risk Asset position Sale of Put with low limit Subtotal Liability position Sale of Call with high limit
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
j. Securities given in guarantee 09/30/2011 Stock Exchange transactions National Treasury notes Financial treasury bills National treasury bills Clearing National Treasury notes National treasury bills Other Financial treasury bills Other (a) Total
09/30/2010
1,124,160
2,113,853
310,440 24,448 789,272
466,434 17,980 1,629,439
87,454
164,551
15,800 71,654
49,463 115,088
1,991,445
3,933,742
19,808 1,971,637
12,660 3,921,082
3,203,059
6,212,146
(a) In 2010, basically refer to securities of foreign governments, in the amount of R$2,454,680, and other securities overseas, in the amount of R$ 1,466,402; and in 2011, basically refer to securities of foreign governments, in the amount of R$1,472,187, in the amount of R$499,450.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
k. Financial derivative instruments segregated by trading location Asset position Stock exchange transactions Over-the-Counter Financial institutions Trade accounts receivable Total Liability position Stock exchange transactions Over-the-Counter Financial institutions Trade accounts receivable Total
10
09/30/2011 932,522 1,309,861 928,766 381,095 2,242,383 09/30/2011 884,405 4,440,448 4,297,796 142,652 5,324,853
09/30/2010 548,164 1,373,405 900,619 472,786 1,921,569 09/30/2010 455,800 6,181,963 6,048,819 133,144 6,637,763
Interbank accounts Assets 09/30/2011
Payments and receivables to be settled Mandatory reserves - BACEN Interbank onlendings Correspondent relations Total
09/30/2010
1,709 6,117,134 134,939 295
859 4,465,733 71,052 7,086
6,254,077
4,544,730
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Liabilities 09/30/2011
11
09/30/2010
Payments and receivables to be settled
10,381
9,778
Total
10,381
9,778
Interbank relations Assets
09/30/2011
09/30/2010
Local transfer of funds
31
-
Total
31
-
Liabilities
09/30/2011
09/30/2010
Funds in transit - Associated companies Funds in transit - Third parties Payment orders in foreign currency Local transfer of funds
7,464 64,968 1
12,102 104 28,539 -
Total
72,433
40,745
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
12
Loan and lease operations, advances on foreign exchange contracts, other receivables with loan characteristics and allowance for loan losses a. Composition of operations by category and past due and falling due installments 09/30/2011
09/30/2010
Advances to depositors Loans Discounted securities Loans and financing Export financing Financing in foreign currency Rural financing agreements Real estate financing agreements
1,325 15,689,503 58,657 38,615,595 3,217,292 524,968 1,155,654 223,063
559 12,943,263 22,690 30,571,408 2,967,359 207,618 1,105,393 -
Subtotal
59,486,057
47,818,290
787,807 3,704,264
491,337 4,443,048
63,978,128
52,752,675
1,538,938
812,096
Payments falling due
62,439,190
51,940,579
Total installments
63,978,128
52,752,675
Advances on exchange contracts Lease operations Total lending operations Installments past due (from 15 days)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
b. Concentration of operations 09/30/2011
09/30/2010
Ten largest debtors Fifty following largest debtors Hundred following largest debtors Other debtors
3,051,965 4,477,052 3,664,402 52,784,709
3,653,048 4,618,003 3,534,369 40,947,255
Total
63,978,128
52,752,675
c. Composition of operations by sector of economic activity 09/30/2011
09/30/2010
Corporate entities Public sector Services
22,684,194
18,763,701
52,185
133,933
Private sector Industry Commerce Rural Services Financial institutions
22,632,009 10,982,893 3,995,607 1,145,372 6,508,137 -
18,629,768 9,416,456 2,934,172 1,105,394 5,148,053 25,693
Individuals
41,293,934
33,988,974
Total
63,978,128
52,752,675
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
d. Composition of the operations at the corresponding levels of risk 09/30/2011 Risk level
Loans to fall due
09/30/2010
Loans overdue
Total
Loans to fall due
operations AA
11,672,812
A B
Loans overdue operations
Total Operations
-
12,099,459
-
11,672,812
12,099,459
40,877,491
-
40,877,491
34,250,485
-
34,250,485
2,708,346
1,928,846
4,637,192
2,006,655
1,198,495
3,205,150
C
575,293
1,739,755
2,315,048
143,492
819,025
962,517
D
235,087
929,318
1,164,405
68,501
429,151
497,652
E
336,492
644,019
980,511
119,323
279,675
398,998
F
27,906
489,945
517,851
5,653
212,075
217,728
G
127,721
360,870
488,591
111,369
191,939
303,308
H
59,289
1,264,938
1,324,227
51,065
766,313
817,378
56,620,437
7,357,691
63,978,128
48,856,002
3,896,673
52,752,675
Total
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
e. Formation of allowance for loan losses by level of risk 09/30/2011 Levels of risk A B C D E F G H
09/30/2010
% Provision 0.5
204,387
172,752
1
46,372
32,050
3
69,451
28,876
10
116,441
49,765
30
294,153
119,700
50
258,926
108,863
70
342,014
212,316
100
1,324,227
817,380
2,655,971
1,541,702
4.2%
2.9%
Total Percentage of the portfolio
f. Movement of allowance for loan losses in the period 09/30/2011
09/30/2010
Opening balance
1,153,336
1,361,982
Formations/(reversals) Write-offs to loss
2,246,039 (743,404)
1,193,677 (1,013,957)
Closing balance
2,655,971
1,541,702
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
g. Information on credit assignments Assignments with recourse carried out by the subsidiary BV Financeira 09/30/2011
09/30/2010
11,000,009 (9,582,651)
10,228,020 (8,909,302)
Gross income from assignments
1,417,358
1,318,718
Expenses with assigned contracts' early settlement Provision for losses on assigned contracts
(457,254) (113,095)
(331,573) (25,111)
847,009
962,034
(344,542)
(300,616)
502,467
661,418
(189,742)
(301,359)
312,725
360,059
Transfer amount of assets assigned in the period Book value of assets assigned in the period
Income from assignments before costs and taxes Acceleration of the recognition in profit or loss of the costs associated with the asset assigned Income from assignments before taxes Tax effects Net Income (loss) from assignments
09/30/2011
09/30/2010
Balance of credit assignments with recourse Financial institutions – Related parties Other financial institutions
14,286,439 1,094,774
7,908,563 2,052,039
Total
15,381,213
9,960,602
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Banco Votorantim and its subsidiary BV Financeira hold 100% of subordinated quotas of investment funds in credit right described as follows: 09/30/2011
09/30/2010
BV Financeira FIDC I BV Financeira FIDC II BV Financeira FIDC III BV Financeira FIDC IV BV Financeira FIDC V BV Financeira FIDC VI
50,342 90,781 470,666 200,865
247,364 142,280 127,833 -
Total investments in shares
812,654
517,477
h. Accounting hedge strategies Credit portfolio market value was determined as defined in BACEN Resolution 3,082/02. This determination considered the respective derivative hedge that reflects the effects of interest rate change in credit portfolio, in accordance with installment maturities flow, to offset adjustments carried out in derivatives market. 09/30/2011
09/30/2010
Accrual value
Market (book) value
Unrealized gain/ (Loss)
Loan and Lease Operations
45,510,219
46,913,040
1,402,821
Total
45,510,219
46,913,040
1,402,821
Accrual value
Market (book) value
Unrealized gain/ (Loss)
37,974,587
38,694,408
719,821
37,974,587
38,694,408
719,821
On September 30, 2011, the evaluation of such assets generated an unrealized positive adjustment of R$1,402,821 (R$719,821 in 2010), recorded under Other Credits - Sundry. In order to hedge the risks of the pre-fixed interest rate of loans, financing and lease operations, the Conglomerate entered into contracts on the Interbank Deposit (DI) futures market with BM&FBOVESPA, in accordance with the maturity schedule of the installments. The market value of these derivatives amounts totalized R$ 47.461.025.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
i. Supplementary information 09/30/2011 Amount of credit renegotiated in the period Amount part of credits recovered, written-off as loss
13
7,870,535 131,925
09/30/2010 6,142,752 40,627
Foreign exchange portfolio Other receivables 09/30/2011
09/30/2010
Purchased foreign exchange to be settled Receivables from foreign exchange sales Advances in national currency received Advances in foreign currency received Earnings receivable from granted advances Income receivable on financed imports
2,118,567 847,072 (3,093) (648,807) 22,531 -
3,533,855 2,108,024 (7,244) (338,680) 18,304 42
Total
2,336,270
5,314,301
Other liabilities 09/30/2011
09/30/2010
Sold foreign exchange to be settled Financed imports - Foreign exchange contracted Liabilities for foreign exchange purchases Advances against exchange Amount in foreign currency - payable
857,785 2,003,424 (765,275) -
2,089,516 (2,172) 3,605,203 (470,819) 12
Total
2,095,934
5,221,740
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
14
Securities clearing accounts Other receivables 09/30/2011
09/30/2010
Cash pending settlement Debtors accounting settlement pending Oper. with unsettled financial assets and commodities Other receivables
114 1,913,559 51,084 251,132
26,185 25,703 57,725 72,559
Total
2,215,889
182,172
Other liabilities 09/30/2011
09/30/2010
Cash pending settlement Commissions and brokerage fees payable Creditors - unsettled accounts Stock loan creditors Operations with unsettled financial assets and commodities
56,007 1,137 113,234 20,620 72,210
53,051 1,661 53,559 35,392 169,621
Total
263,208
313,284
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
15
Other receivables - Sundry 09/30/2011
16
09/30/2010
Advanced and prepaid salaries Advances to suppliers Tax credit of taxes and contributions Deposits in guarantee Taxes and contributions recoverable Recoverable taxes and contributions Credit card transactions Market adjustment s for loans and lease Settlement of securities overseas Other
11,769 3,609 2,653,724 468,177 454,989 3 232,596 1,402,821 298,351 306,694
9,480 151,731 2,189,324 114,580 403,804 2 152,589 719,821 171,522 209,324
Total
5,832,733
4,122,177
Other assets 09/30/2011 Insurance costs Data processing expenses Commission for intermediation of operations Expenses with issue of securities Financial system service expenses Specialized technical service expenses Non operating assets Provision to devaluation of other assets Usufruct right on securities Other Total
09/30/2010
6,375 5,192 1,135,980 2,506 59,014 35,934 102,334 (7,753) 254,843 15,285
1,164 5,810 254,843 2,970 14,984 22,653 78,484 4,107
1,609,710
385,015
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
17
Investments a. Other investments
Investments via tax incentives Provision for loss in investments due to tax incentives Membership certificates Shares and quotas Other Total
09/30/2011
09/30/2010
104,760
94,506
(40,057) 176 6 129 65,014
(36,323) 176 6 129 58,494
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
18
Fixed assets for use 09/30/2011
09/30/2010
Depreciation
Net
Net
Cost Constructions in progress Facilities Furniture and equipment in use Communication system System data processing Security system Transportation system Total
111 46,076 54,634 11,897 74,399 2,264 1,683
(4,673) (17,693) (6,820) (50,029) (668) (1,425)
111 41,403 36,941 5,077 24,370 1,596 258
111 1,930 33,056 5,904 28,608 1,651 504
191,064
(81,308)
109,756
71,764
09/30/2011
09/30/2010
87,786
58,131
Acquisitions Disposals Depreciation
39,734 (2,813) (14,951)
25,216 (810) (10,773)
Closing balance
109,756
71,764
Opening balance
On September 30, 2011, there were no relevant assets indicating impairment loss.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
19
Intangible 09/30/2011 Cost
09/30/2010
Amortization
Net
Net
SISBEX BMF&Bovespa Software Licenses Trading right agreement Corporate projects
200 1,675 16,737 5,001 18,219
(659) (4,507) (978) -
200 1,016 12,230 4,023 18,219
200 1,095 8,040 4,835 3,444
Total
41,832
(6,144)
35,688
17,614
09/30/2011
09/30/2010
Opening balance
20,691
5,121
Acquisitions Write-offs Amortization
18,722 (813) (2,912)
14,288 (428) (1,367)
Closing balance
35,688
17,614
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Amortization estimates for software, licenses and trading right agreement 09/30/2011 2nd semester of 2011
1,106
In 2012
4,423
In 2013
4,423
In 2014
4,280
In 2015
2,164
Above 5 years Total
On September 30, 2011, there were no relevant assets indicating impairment loss.
873 17,269
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
20
Deferred charges 09/30/2011 Depreciation
09/30/2010 Net
Net
Cost Expenses on third-party properties Expenses on software acquisition and development
41,898 1,609
(10,216) (1,304)
31,682 305
44,612 720
Total
43,507
(11,520)
31,987
45,332
09/30/2011 Opening balance Acquisitions Write-offs Amortization Closing balance
09/30/2010
43,894
43,875
(273) (11,634)
10,351 (229) (8,665)
31,987
45,332
On September 30, 2011, there were no relevant assets indicating impairment loss.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
21
Deposits 09/30/2011
09/30/2010
Demand deposits Interbank deposits Time deposits Other deposits
379,299 2,192,934 22,393,248 103
376,890 771,406 23,087,264 240
Total
24,965,584
24,235,800
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
22
Money market repurchase commitments 09/30/2011
09/30/2010
Own portfolio Financial treasury bills National treasury bills National treasury notes Other
29,938,437 96,173 437,585 7,099,611 22,305,068
24,243,161 1,150,427 4,418,573 18,674,161
Third-party portfolio Financial treasury bills National treasury bills National treasury notes
8,696,773 2,004,531 3,601,219 3,091,023
9,327,431 1,194,867 6,582,888 1,549,676
Free portfolio National treasury bills National treasury notes Other
1,888,192 132,384 1,727,776 28,032
1,622,634 1,617,150 5,484
40,523,402
35,193,226
Total
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
23
Acceptances and endorsements 09/30/2011
09/30/2010
Debentures With exchange variation Post-fixed
(a) (b)
1,772,315 1,576,677
1,652,358 1,409,107
Real estate credit note funds Post-fixed
(c)
2,975
18,249
Agribusiness credit bill funds Post-fixed Pre-fixed
(d) (e)
1,547,909 16,076
1,664,018 -
Financing bills Pre-fixed Post-fixed
(f) (g)
53,970 6,548,265
13,240 2,496,404
Foreign securities Pre-fixed With exchange variation
(h)
6,374,467
443,025 1,973,180
17,892,654
9,669,581
Total
(a) Rate of restatement in 2011: PTAX + 12.04% p.a. (b) Rate of restatement in 2011: DI + 0.35% p.a. / 100% of DI (c) Rate of restatement in 2011: 93.50% of DI (d) Rate of restatement in 2011: from 30% to 96.50% of DI (e) Rate of restatement in 2011: from 11.86% p.a. to 12.35% p.a. (f) Rate of restatement in 2011: from 11.60% p.a. to 14% p.a. (g) Rate of restatement in 2011: from 100% to 112% of DI / 108% of Selic / from 5.48% p.a. to 7.81% p.a. + IPCA / from 4.95% p.a. to 5.99% p.a. + IGPM (h) Rate of restatement in 2011: from 2.28% p.a. to 14.30% p.a. + foreign exchange variation
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Accounting hedge strategies 09/30/2011
09/30/2010
Accrual value
Market value
Unrealized gain/ (Loss)
Accrual value
Market value
Unrealized gain/ (Loss)
Foreign securities
2,716,980
2,827,829
110,849
-
-
-
Total
2,716,980
2,827,829
110,849
-
-
-
To hedge against variable foreign exchange risks (US dollar) of securities overseas, Conglomerate traded contracts in the DDI futures market with BM&FBOVESPA, in accordance with installment maturities flow. The market value of these derivatives amounts totalized R$ 3,067,521.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
24
Liabilities from borrowings and onlendings 09/30/2011 Local Loans With exchange variation
09/30/2010
-
21,472
Foreign borrowings With exchange variation
(a)
5,371,552
4,843,435
Local Onlendings – National Treasury Pre-fixed
(b)
143,337
45,392
Local Onlendings - BNDES Pre-fixed Post-fixed With exchange variation
(c) (d) (e)
1,518,779 2,276,500 77,753
1,318,793 2,587,069 66,533
Local Onlendings - FINAME Pre-fixed Post-fixed
(f) (g)
2,661,957 600,564
1,777,591 637,985
12,650,442
11,298,270
Total
(a) Rate of restatement in 2011: from 0.90% p.a. to 4.10% p.a. + foreign exchange variation (b) Rate of restatement in 2011: 6.75% p.a. (c) Rate of restatement in 2011: from 1.50% p.a. to 8.00% p.a. (d) Rate of restatement in 2011: from 6.90% p.a. to 10.50% p.a. + Long Term Interest Rate (TJLP) (e) Rate of restatement in 2011: from 0.90% p.a. to 2.50% p.a. + foreign exchange variation (f) Rate of restatement in 2011: from 0.30% p.a. to 9.80% p.a. (g) Rate of restatement in 2011: from 3.30% p.a. to 11.50% p.a. + Long Term Interest Rate (TJLP)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
25
Other liabilities - Social and statutory 09/30/2011
26
09/30/2010
Dividends and bonuses payable Provision for profit sharing Bonuses and profit sharing payable
128,389 75,000 -
112,821 119,374 75
Total
203,389
232,270
Other liabilities - Taxes and social security contributions payable 09/30/2011
09/30/2010
Taxes and contributions on income payable Taxes and contributions on outsourced services Taxes and contribution on the salary Taxes and contributions on interest earning bank deposits PIS COFINS ISS Provision for tax risks Provision for deferred taxes and contributions Other taxes and contributions
406,100 8,675 68,830 37,091 9,580 27,039 6,360 1,494,524 1,270,503 -
498,625 10,056 11,535 13,490 12,923 5,175 4,999 1,313,902 1,106,145 36
Total
3,328,702
2,976,886
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
27
Other liabilities - Subordinated debts 09/30/2011
09/30/2010
Subordinated financing bills Post-fixed
(a)
1,526,171
-
Bank deposit certificates Post-fixed
(b)
2,997,373
3,167,315
-
1,413,094
2,188,751
1,975,512
6,712,295
6,555,921
Debentures Post-fixed Subordinated bill With exchange variation
(c)
Total
(a) Rate of restatement in 2011: from 1.30% p.a. to 1.94% p.a.+ 100% CDI / from 115% to 117% p.a. of DI / from 7.00% p.a. to 8.02% p.a. + IPCA / from 6.74% p.a. to 7.70% p.a. + IGPM (b) Rate of restatement in 2011: from 0.49% p.a. to 1.67% p.a. + CDI / from 7.22% p.a. + IGPM / from 7.85% p.a. to 8.00% p.a. + IPCA (c) Rate of restatement in 2011: 7.38% p.a. + PTAX
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Accounting hedge strategies 09/30/2011
09/30/2010
Accrual value
Market (book) value
Unrealized gain/ (Loss)
Subordinated bill
2,166,076
2,188,751
22,675
Total
2,166,076
2,188,751
22,675
Accrual value
Market (book)value
Unrealized gain/ (Loss)
1,975,512
1,975,512
-
1,975,512
1,975,512
-
To hedge against risks (US dollar) of subordinated debts, Conglomerate traded contracts in the DDI futures market with BM&FBOVESPA, in accordance with installment maturities flow. The market value of these derivatives amounts totalizes R$ 2.836.577.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
28
Other liabilities - Sundry 09/30/2011 Provision for personnel expenses Provision for Administrative Expenses Provision for contingent liabilities Commission for intermediation of operations Amounts subject to onlendings to assignees Provision for assigned credit losses Credit card transactions Settlement of securities overseas Loan operations and leases to be released Other (a) Total
09/30/2010
123,164 75,117 182,159 62,701 271,861 193,185 230,331 16,410 50,158 308,211
85,048 58,585 144,915 76,240 375,903 49,803 151,621 125,773 111,905 223,831
1,513,297
1,403,624
(a) In the Consolidated, it basically refers to unprocessed amounts arising from the operating cash flow from the loan operation portfolio and lease.
29
Shareholders' equity a. Capital Capital is represented by 81,538,822,950 nominative shares, 66,713,582,406 of which are common shares with no par value and 14,825,240,544 nominative preferred shares with no par value. In accordance with the Extraordinary Shareholders' Meeting held on December 22, 2010, the shareholders approved the allocation of the balances of capital reserves comprised of tax incentives and updating of membership participates to increase capital by R$ 31,945 thousand. The capital increase was approved by the Brazilian Central Bank (BACEN) on June 24, 2011.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
b. Profit reserve Legal reserve Formed compulsorily on the basis of 5% of net income for the period, until it reaches 20% of the capital stock. Legal reserve may not be formed when the result of its addition to capital reserves is greater than 30% of capital stock. The legal reserve can only be used for capital increase or to offset loss.
Expansion reserve To fulfill the requirements established in the corporate legislation and rules of the Central Bank of Brazil, Management proposes that the portion of retained profits not distributed is destined for “Expansion reserve”. The balance in reserves will remain at the shareholders' disposal for a subsequent resolution by the General Shareholders' Meeting.
c. Adjustments to equity value recognized in shareholders' equity in the period 09/30/2011
09/30/2010
Opening balance
(57,356)
(76,664)
Securities available for sale Banco Votorantim Subsidiaries
38,736 91,001 (52,265)
89,798 102,351 (12,553)
Tax effects Closing balance
(36,400) (55,020)
(40,940) (27,806)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
30
Balance sheet by maturity brackets The "balance sheet by maturity brackets" statement of September 30, 2011 was prepared considering the maturity term of the assets and liabilities, regardless of the category in which they are classified. Regarding assets and liabilities of indefinite term, operations with assets are classified in noncurrent assets and operations with liabilities in current liabilities. Permanent assets and shareholders' equity are being presented as "over 5 years". In the "Balance Sheet" statement, securities classified in the "Trading securities" category are presented as Current Assets, regardless of the maturity terms. Lease operations are presented at the financial method, which consists in reclassifying leased property, plant and equipment to the caption lease transactions, less residual value received in advance.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
a. Assets Up to 90 days
From 91 to 360 days
From 1 to 3 years
From 3 to 5 years
Over 5 years
Total
124,913
-
-
-
-
124,913
11,991,540
5,312,726
338,257
-
-
17,642,523
3,437,916
1,555,432
-
-
-
4,993,348
6,557,033
2,100,488
-
-
-
8,657,521
750,160
1,034,615
-
-
-
1,784,775
792,272 454,159
622,191 -
338,257 -
-
-
1,752,720 454,159
6,519,914 1,363,769 5,156,145
2,212,306 1,315,078 897,228
6,849,864 5,502,329 1,347,535
2,845,938 1,999,590 846,348
6,735,168 2,556,312 4,178,856
25,163,190 12,737,078 12,426,112
310,864 55,252 1,969 40,628
1,084,005 228,184 780 -
479,237 375,465 22 -
294,969 292,879 -
73,308 73,308 -
2,242,383 1,025,088 2,771 40,628
113,977
736,838
41,023
56
-
891,894
57,068 41,970 -
2,254 115,949 -
62,705 22
2,034 -
-
59,322 222,658 22
Interbank accounts/Relations
6,254,108
-
-
-
-
6,254,108
Loans
9,796,147
16,606,450
24,361,252
6,643,488
2,078,720
59,486,057
Lease Operations
2,930,672
270,293
439,445
63,854
-
3,704,264
Allowance for loan losses
(969,858)
(528,808)
(754,306)
(248,994)
(106,589)
(2,608,555)
Other receivables Foreign exchange portfolio Income receivable NIV Other Allowance for loan losses
5,747,526 2,336,270 140,252 2,215,889 1,093,558 (38,443)
1,107,612 1,116,585 (8,973)
2,865,212 2,865,212 -
616,945 616,945 -
140,433 140,433 -
10,477,728 2,336,270 140,252 2,215,889 5,832,733 (47,416)
255,369
51,392
985,182
300,892
16,875
1,609,710
-
-
-
-
242,785
242,785
42,961,195
26,115,976
35,564,143
10,517,092
9,180,700
124,339,106
Cash Interbank funds applied Purchase and sale commitments – own portfolio Purchase and sale commitments Financed operations Purchase and sale commitments - free movement Interbank deposits Foreign currency investments Securities Trading securities Securities available for sale Derivative financial instruments Differential from swap Term currency contracts Purchase of options - shares Purchase of options – financial assets/goods Credit derivatives NDF Other
Other assets Permanent assets Total
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
b. Liabilities Up to 90 days
From 91 to 360 days
From 1 to 3 years
From 3 to 5 years
Over 5 years
Total
5,319,739 379,299 1,000,953 3,939,384 103
14,929,861 1,169,483 13,760,378 -
4,590,890 18,598 4,572,292 -
111,549 3,575 107,974 -
13,545 325 13,220 -
24,965,584 379,299 2,192,934 22,393,248 103
18,185,743
18,529,739
3,413,108
179,969
214,843
40,523,402
9,848,629 7,551,837 785,277
16,309,920 1,144,936 1,074,883
3,412,785 323
179,969 -
187,134 27,709
29,938,437 8,696,773 1,888,192
Acceptances and endorsements
2,008,959
4,783,771
6,921,399
4,095,426
83,099
17,892,654
Interbank accounts/Relations .
82,814
-
-
-
-
82,814
2,868,154
4,137,433
4,169,009
787,618
688,228
12,650,442
Derivative financial instruments Differential from swap Term currency contracts Purchase of options - shares Purchase of options – financial assets/goods Option box Credit derivatives NDF
2,127,350 1,082,929 19 50,630
2,517,835 176,129 586 575
384,138 320,980 -
178,448 178,418 -
117,082 117,082 -
5,324,853 1,875,538 605 51,205
93,574
724,487
15,109
30
-
833,200
791,788 23,906 84,504
1,559,288 38,481 18,289
39,319 8,730
-
-
2,390,395 62,387 111,523
Other liabilities Collection and levy of taxes and alike Foreign exchange portfolio Social and statutory Tax and social security NIV Subordinated debts Other
5,109,022 32,069 1,611,332 203,389 1,758,173 261,330 1,242,729
1,329,480 484,602 616,210 1,878 34,436 192,354
2,985,722 861,757 2,045,751 78,214
1,158,122 63,252 1,094,870 -
3,566,548 29,310 3,537,238 -
14,148,894 32,069 2,095,934 203,389 3,328,702 263,208 6,712,295 1,513,297
32,309
-
-
-
-
32,309
-
-
-
-
8,718,154
8,718,154
35,734,090
46,228,119
22,464,266
6,511,132
13,401,499
124,339,106
Deposits Demand deposits Interbank deposits Time deposits Other deposits Money market repurchase commitments Own portfolio Third-party portfolio Free portfolio
Liabilities from borrowings and onlendings
Deferred income Shareholders' equity Total
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
31
Loan operations income 09/30/2011 Advances to depositors Loans Discounted securities Loans and financing Export financing Financing operations in foreign currency Rural financing agreements Income from credit assignments Recovery of loans written off Income from real estate project financing Income from rights arising from share loans Other (a) Total
158 2,251,185 6,792 5,270,491 431,999 25,746 93,764 847,009 131,925 14,043 5,847 (884,652) 8,194,307
09/30/2010 62 1,696,221 3,446 3,752,615 244,899 4,490 46,387 962,034 107,914 8,064 (753,006) 6,073,126
(a) Refer basically to revenue and costs related to the production of credit transactions.
32
Lease operations income 09/30/2011 Income from consideration Profit on sale of leased assets Income with excess depreciation Other Total
678,390 540,399 441,650 (31,838) 1,628,601
09/30/2010 513,325 210,119 1,253,893 31,039 2,008,376
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
33
Securities income 09/30/2011 Money market repurchase agreements Interbank deposits Fixed income securities Securities overseas Variable income securities Investments in investment funds Adjustment to market value Other Total
34
1,297,673 87,545 1,620,102 320,900 398,737 301,099 81,853 (17,029) 4,090,880
09/30/2010 942,847 81,728 1,538,469 263,471 26,703 206,802 41,380 7,707 3,109,107
Income from derivative financial instruments 09/30/2011 Swap contracts Forward contracts Futures contracts Agreements of share options Option agreement – financial assets/goods Credit derivatives “Box” of options NDF- Non Deliverable Forward Adjustment to market (book) value Other Total
4,630 4,068 (1,328,128) (10,977) 123,528 11,656 (276,454) 33,702 1,077,013 (2,356) (363,318)
09/30/2010 (512,101) (9,052) (857,848) (21,377) 27,551 30,941 (330,393) (2,453) 187,871 (11,767) (1,498,628)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
35
Foreign exchange income 09/30/2011 Income from exports Income from imports Financial income (loss) Variations and differences in rates Cash and cash equivalents in foreign currencies Other Total
36
31,432 7,489 (200) 10,220 46,319 204 95,464
09/30/2010 18,011 4,820 (542) (17,764) 34,951 (1,960) 37,516
Expenses on funding from the market 09/30/2011 Securities transactions overseas Interbank deposits Time deposits Purchase and sale commitments Agribusiness credit bills (LCA) Real estate credit note Financing bills Debentures Adjustment to market value Other Total
(1,417,070) (107,892) (2,164,860) (3,309,882) (125,301) (266) (506,511) (474,361) 219,520 (24,309) (7,910,932)
09/30/2010 13,737 (56,228) (1,767,764) (2,214,996) (107,732) (3,228) (40,853) (316,032) (23,424) (4,516,520)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
37
Expenses with loans, assignments and onlendings 09/30/2011 Domestic loans Foreign borrowings National Treasury Onlendings BNDES Onlendings Onlending - FINAME Obligations to foreign bankers Adjustment to market value Foreign exchange Total
38
(754) (563,603) (3,506) (195,995) (115,863) (108,678) (24,156) 228,139 (784,416)
09/30/2010 (3,725) (73,642) (492) (190,176) (79,762) (33,256) (2,573) 248,999 (134,627)
Lease expenses 09/30/2011 Depreciation of leased assets Amortization of leased assets Income (loss) on sale of leased properties Other Total
(1,206,962) (1,922) (600) (40,621) (1,250,105)
09/30/2010 (1,426,524) (1,201) (82) (94,898) (1,522,705)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
39
Income from rendered services 09/30/2011 Management of investment funds Collection income Commissions on placing of securities Brokerage of Stock Exchange transactions Income from custody services Income from guarantees granted Credit card transactions Commissions receivable Financial advisory Income from banking services Other Total
40
70,599 7,826 48,958 19,427 401 104,495 13,773 1,729 7,559 13,629 29,968 318,364
09/30/2010 77,951 3,968 40,167 22,555 256 112,665 9,088 2,920 7,895 107,320 22,588 407,373
Income from banking fees 09/30/2011
09/30/2010
Individual Master file registration Transfers Contract amendments Appraisal of assets Credit cards Other
618,466 402,040 1 7,519 170,035 16,561 22,310
556,800 428,937 1 9,611 108,192 10,059 -
Legal entity Master file registration Transfers Appraisal of assets Other Total
21,776 9,929 8,716 2,501 630 640,242
10,415 8,358 600 1,238 219 567,215
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
41
Personnel expenses 09/30/2011 Fees Benefits Social charges Dividends Training Total
42
(20,286) (99,107) (138,653) (388,730) (2,765) (649,541)
09/30/2010 (19,718) (82,560) (114,528) (329,471) (4,540) (550,817)
Other administrative expenses 09/30/2011 Water, energy and gas Rents Communications Maintenance and preservation of assets Material Data processing Promotions and public relations Advertising and publicity Publications Insurance Services of the financial system Outsourced services Surveillance and security Specialized technical services Transportation Traveling Judicial/notary public fees Amortization Depreciation Other Total
(3,910) (99,930) (74,347) (13,623) (4,127) (112,108) (13,729) (7,456) (940) (8,695) (144,151) (13,049) (4,593) (341,324) (17,933) (26,708) (139,393) (14,546) (14,951) (79,218) (1,134,731)
09/30/2010 (3,749) (75,952) (72,572) (10,070) (3,453) (79,636) (15,774) (29,774) (1,776) (19,199) (135,969) (14,520) (2,893) (309,064) (15,416) (27,512) (96,321) (10,032) (10,773) (75,167) (1,009,622)
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
43
Tax expenses 09/30/2011 ISS PIS COFINS Federal taxes State taxes Local taxes Foreign taxes Price-level restatement of liabilities Other Total
44
(50,735) (42,427) (261,075) (4,563) (60) (3,593) (163) (90,763) (19,893) (473,272)
09/30/2010 (42,615) (41,060) (253,476) (3,688) (26) (3,581) (277) (59,202) (7,365) (411,290)
Other operational income 09/30/2011 Recovery of charges and expenses Foreign exchange variation of foreign investment Reversal of provision for contingent liabilities Monetary variation assets Reimbursement of costs associated Other income Total
282 126,253 5,542 48,949 31,661 3,188 215,875
09/30/2010 567 24,167 3,704 3,224 8,384 7,483 47,529
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
45
Other operational expenses 09/30/2011 Costs associated with production Provision for contingent liabilities Foreign exchange variation of foreign investment Civil reparations Other
Total
46
(1,671) (77,516) (46,462) (54,167) (57,998) (237,814)
09/30/2010 (3,252) (36,658) (43,517) (24,256) (24,507) (132,190)
Non-operating results 09/30/2011 Disposal of assets Sales of investments Investment in tax incentive Other
Total
(21,982) 84 10,253 21,363 9,718
09/30/2010 (52,170) 116 12,135 12,793 (27,126)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
47
Income and social contribution taxes a. Charges due on operations 09/30/2011 Income before income tax, social contribution and interest
09/30/2010
647,716
1,452,981
Charges at the current nominal rate
(259,086)
(581,192)
Exclusions / (Additions)
(127,001)
281,634
(57,343) 9,201 (95,794)
(271,473) 10,540 20,283
Derivatives - Adjustment to market value Market adjustments for loans analysis Market adjustments for lease Profit sharing Allowance for doubtful accounts Provision for assigned credit losses Provision for contingencies Derivatives – Cash basis Excess (insufficient) depreciation Income from foreign branches Other
(318,540) 368,405 48,712 108,231 (429,254) (45,239) (30,509) (7,528) 110,412 (12,522) 224,767
(27,962) 17,308 57,841 123,042 (197,384) (9,929) (13,581) (18,759) 313,473 29,955 248,280
Current income and social contribution taxes
(386,087)
(299,558)
Deferred income and social contribution taxes
(69,398)
(397,361)
Total income and social contribution taxes
(455,485)
(696,919)
Tax losses for income tax Negative basis for social contribution Market adjustments of securities
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
b. Deferred income and social contribution taxes with an impact on result in the period 09/30/2011
09/30/2010
Tax credit Additions / (Exclusions) Tax losses for income tax Negative basis for social contribution Market adjustments of securities Derivatives - Adjustment to market value Profit sharing Allowance for doubtful accounts Provision for assigned credit losses Provision for contingencies Derivatives – Cash basis Compensation excess (insufficient) depreciation offsetting Income from foreign branches Other Total
57,343 (9,201) 236,043 429,254 45,239
271,473 (10,540) (898) 44,469 (114) 197,384 9,929
30,509 (1,600)
13,581 (8,395)
(270,712) 12,522 4,223
(29,955) (80)
533,620
486,854
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
09/30/2011
09/30/2010
Deferred tax obligation Additions / (Exclusions) Market adjustments of securities Derivatives - Adjustment to market value Market adjustments for loans analysis Derivatives – Cash basis Excess (insufficient) depreciation Compensation excess (insufficient) depreciation offsetting Total
95,794 82,497 (417,117) 9,128 (110,412)
(19,386) (16,507) (75,149) 27,154 (313,473)
270,712
-
(69,398)
(397,361)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
c. Deferred income and social contribution taxes with effects on equity accounts in the period 09/30/2011
09/30/2010
Assets (Other credits - Sundry) Opening balance Tax losses for income tax Negative basis for social contribution Market adjustments of securities Derivatives - Adjustment to market value Profit sharing Allowance for doubtful accounts Provision for assigned credit losses Provision for contingencies Derivatives - Cash basis Income from foreign branches Compensation excess (insufficient) depreciation offsetting Other Closing balance
2,120,104
1,788,321
57,343 (9,201) 236,043 429,254 45,239 30,509 (1,600) 12,522
271,473 (10,540) (50,567) 8,287 (114) 197,384 9,929 13,581 (8,395) (29,955)
(270,712) 4,223 2,653,724
(80) 2,189,324
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
09/30/2011
09/30/2010
Liabilities (Other liabilities - Tax and social security) Opening balance Market adjustments of securities Derivatives - Adjustment to market value Market adjustments for loans analysis Derivatives – Cash basis Excess (insufficient) depreciation Compensation excess (insufficient) depreciation offsetting Closing balance
1,164,706
753,695
(59,395) (82,497) 417,117 (9,128) 110,412
10,657 (19,675) 75,149 (27,154) 313,473
(270,712) 1,270,503
1,106,145
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
d. Composition of tax credit 09/30/2011 Tax losses for income tax Negative basis for social contribution Derivatives - Adjustment to market value Allowance for doubtful accounts Provision for assigned credit losses Provision for contingencies Derivatives – Cash basis Provision for legal obligation Income from foreign branches Compensation excess (insufficient) depreciation offsetting Other Total
891,171 47,587 238,763 1,255,912 77,274 73,984 223,003 107,010 (270,712) 9,732 2,653,724
09/30/2010 775,434 62,559 10,202 969,435 19,921 53,838 8,141 223,003 64,533 2,258 2,189,324
e. Tax credit collection expectation Nominal value
Present value
In 2011
196,981
191,865
In 2012
699,675
619,249
In 2013
654,597
520,257
In 2014
297,581
211,622
In 2015
238,829
152,237
As of 2016
566,061
262,798
2,653,724
1,958,028
Total
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
f. Breakdown of deferred tax liabilities 09/30/2011
Market adjustments of securities Derivatives - Adjustment to market value Market adjustments for loans analysis Derivatives – Cash basis Compensation excess (insufficient) depreciation offsetting Excess (insufficient) depreciation Total
20,827 67,869 547,440 2,705 (270,712) 902,374 1,270,503
09/30/2010
21,893 59,575 287,928 15,768 720,981 1,106,145
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
48
Related party transactions Related party transactions are carried out at usual market values, terms and average rates in effect at the respective dates and in commutative conditions. Income / (expenses)
Assets / (liabilities) 09/30/2011 Cash Banco do Brasil S.A. and subsidiaries Interbank investments Banco do Brasil S.A. and subsidiaries BV Financeira S.A. - Crédito, Financiamento e Investimento Securities and derivative financial instruments Votorantim Finanças S.A. and subsidiary companies BV Leasing Arrendamento Mercantil S.A. Banco Votorantim - Nassau Branch Deposits Banco do Brasil S.A. and subsidiary companies Votorantim Finanças S.A. and subsidiaries BV Financeira S.A. - Crédito, Financiamento e Investimento BV Leasing Arrendamento Mercantil S.A. Votorantim C.T.V.M. Ltda. Votorantim Asset Management D.T.V.M. Ltda. Banco Votorantim - Nassau Branch BV Participações S.A. and subsidiaries Obligations related to committed operations Banco do Brasil S.A. and subsidiaries Votorantim Finanças S.A. and subsidiaries BV Financeira S.A. - Crédito, Financiamento e Investimento
09/30/2010
09/30/2011
09/30/2010
330
4.829
-
-
5.136.969
250.000
55.288
15.445
40.428.987
29.293.686
-
826.625
-
915
(39)
32
-
16,461,737 275,360
-
418,833 (1,123)
(5,698,066)
(255,706)
(2,500)
(2,825)
(179,817)
(1,364,626)
(15,371)
(36,096)
(985)
(2,136)
-
-
(581) (214,713)
(90) (219,513)
-
(6,457)
(73,944) (7) (201,159)
(58,256)
(1,695)
(120,558)
(13,660)
(10,185,207)
(133,456)
(4,347)
(5,240)
(299,331)
(612,412)
(61,908)
(16,779)
(1,743,534)
(1,167,621)
-
(29,825)
(3,141)
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
Assets / (liabilities)
Income / (expenses)
09/30/2011
09/30/2010
09/30/2011
09/30/2010
Foreign exchange acceptances, Real Estate and Mortgage Notes, Debentures and Other Banco do Brasil S.A. and subsidiaries Banco Votorantim - Nassau Branch
-
(270,770) (714,662)
-
(7,228) -
Liabilities from borrowings and onlendings Banco Votorantim - Nassau Branch
-
(115,935)
-
(892)
(479,162)
(35,681)
27,793
16,972
(1,572,086)
1,503,230
(5,004)
385,313
-
(16,677,460) 39,839 (191,856)
-
(668,890) 1,746 33,151
(13,143,494)
(322,840)
(168,877)
15,164
(1,521)
(288)
520
(51)
-
(55,154)
-
-
-
55,970
-
-
-
7,691 1,166
-
-
(10,370)
3,257 (3,356)
-
-
Service income BV Participações S.A. and subsidiaries
-
-
(54,927)
19,655
Revenues / (Expenses) Rent BV Participações S.A. and subsidiaries
-
-
468
(678)
-
-
1,298,664
1,425,397
Derivative financial instruments Banco do Brasil S.A. and subsidiaries Votorantim Finanças S.A. and subsidiaries BV Leasing Arrendamento Mercantil S.A. Votorantim C.T.V.M. Ltda. Banco Votorantim - Nassau Branch Foreign exchange portfolio - Liability position Banco do Brasil S.A. and subsidiaries Votorantim Finanças S.A. and subsidiaries Other values to receive (payable) from Associated Companies Banco do Brasil S.A. and subsidiaries BV Financeira S.A. - Crédito, Financiamento e Investimento BV Leasing Arrendamento Mercantil S.A. Votorantim C.T.V.M. Ltda. Votorantim Asset Management D.T.V.M. Ltda. BV Participações S.A. and subsidiaries
Loans (Gross income from assignment)
Banco do Brasil S.A. and subsidiaries
Banco Votorantim S.A. Notes to the financial statements (In thousands of Reais)
b. Remuneration of management key personnel On September 30, 2011, Banco Votorantim spent R$ 31,277 as remuneration of Management key personnel. 09/30/2011 Fees Bonuses Social charges
(6,705) (17,262) (7,310)
Total
(31,277)
c. Employee´s benefits There are no post-employment benefits, such as pensions, other retirement benefits, post employment life insurance and medical care, other long-term benefits to employees and managers, including long service leave and other leaves, jubilee or other benefits per years of service, share-based remuneration and rescission of contract benefits, except those provided for in collective bargaining of the category.
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
49
Related credit transactions Bank operates with related credit transactions pursuant to CMN Resolution no. 2921/02 of CMN. On September 30, 2011 the balances of restricted operations on assets and of funds raised for investment, as well as respective results determined, were composed of the following amounts: 09/30/2011 Assets / Income / liabilities (expenses) Related credit transactions Loan operations
81,491
1,491
Liabilities from restricted operations on assets Time deposits
81,355
(1,354) 137
Net income (loss) of related transactions
On September 30, 2011, there were no delinquent restricted operations on assets, or challenge in court involving the asset operations or the funds raised for investment in these operations. There were no restricted operations on assets recorded on September 30, 2010.
50
Contingent assets and liabilities and legal obligations a. Breakdown of contingent liabilities classified in the probable risk category and presented in Other liabilities - Sundry. 09/30/2011
09/30/2010
Tax contingencies (a) Civil contingencies (b) Labor contingencies (c)
3,651 52,685 129,474
13,746 54,026 77,143
Closing balance
185,810
144,915
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
(a) In the Consolidated, they refer to inspections of Tax Authorities in relation to taxes charged on their activities, such as: IRPJ (income tax), CSL (social contribution) and ISSQN (service tax of any nature). (b) The Consolidated refers to, basically, to collection actions. (c) In the Consolidated, they mostly refer to lawsuits filed by former employees involving indemnities, overtime, working time exemption, supplement per function and representation, among other matters.
b. Changes in contingent liabilities classified in the probable risk category in the period Tax claims
Opening balance Constitutions Reversals Restatements Closing balance
Civil claims
Labor claims
09/30/2011
09/30/2010
09/30/2011
09/30/2010
09/30/2011
09/30/2010
6,413
13,208
23,290
49,714
83,988
75,902
1,934 (4,841) 145
374 164
29,395 -
4,312 -
46,187 (701) -
1,241 -
3,651
13,746
52,685
54,026
129,474
77,143
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
c. Breakdown of contingent liabilities classified in the possible risk category 09/30/2011
09/30/2010
Tax contingencies (a) Civil contingencies (b) Labor contingencies (c)
687,794 100,426 43,379
167,280 36,502 2,620
Closing balance
831,599
206,402
(a) In the Consolidated, basically refer to tax issues: IRPJ/CS on equity investments overseas in the amount of R$182,955 and IRPJ/CS on contingent COFINS and inflation adjustment amounting to R$372,141. (b) The Consolidated refers to, basically, to collection actions. (c) In the Consolidated, they mostly refer to lawsuits filed by former employees involving indemnities, overtime, working time exemption, supplement per function and representation, among other matters.
d. Breakdown of legal obligations presented in Other liabilities – Tax and social security 09/30/2011
09/30/2010
Fiscal issues (a)
1,490,873
1,313,902
Closing balance
1,490,873
1,313,902
(a) Refer, basically, to claims of non-payment of Cofins based on the revenues not derived from monthly invoicing (expansion of the calculation basis introduced by Law 9718/98).
Banco Votorantim S.A. Notes to the quartely consolidated financial statements (In thousands of Reais)
e. Judicial deposits presented in Other credits - Sundry 09/30/2011
09/30/2010
Tax contingencies Civil contingencies Labor contingencies Other
388,999 47,088 31,947 143
75,757 22,781 15,904 138
Total
468,177
114,580
f. Contingent assets There is no contingent asset recorded.
g. Other commitments The Bank filed at the Internal Revenue Service its adhesion to the Special Installment Payment Program - PAES, created by Law 10684/03, of the Federal Government. Adhesion to the program allowed the scheduling of PIS, relating to the period from January 2000 to January 2003. The amount included in the program is R$ 5,186.