Apresentação Sr. Roberto Dumas Damas - CEBC

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Bilateral Meeting
Conselho Empresarial Brasil – China (CEBC)
BRAZIL OUTLOOK
Roberto Dumas Damas
Banco Itau BBA Shanghai Representative Office
Xiamen, 10th September 2007
Itaú Group – A Global Brazilian Financial Institution
The Itaú Group has an important presence in key financial centers, strong recognition and a broad
range of products
Member of the Dow
Jones Sustainability
Group Index 06/07
1st
Bank of the Year 2006
Best Brazilian Bank
Best Brazilian Bank
Best Brazilian Bank
Latin America
2006, 2005, 2004, 2003
2004, 2003, 2002, 2000
2004, 2003, 2002, 2001
Itaú Europa
London Branch
Itaú Europa
Itaú BBA NY
Rep. Office
Itaú Securities (NY)
Itaú NY Branch
7th consecutive year
The only Latin American bank
member since the DJSI creation
Itaú’s shares are traded on the
Sao Paulo, New York and
Buenos Aires Stock Exchanges
Itaú Europa
Luxembourg
Itaú Tokyo Branch
Itaú BBA Shanghai
Rep. Office
Itaú Securities (Hong Kong)
Itaú Bank (Cayman)
Itaú BBA Nassau Branch
Banco Itaú
Banco Itaú BBA
In August 2006, Itaú acquired
BankBoston operations in
Chile and Uruguay
(still pending approval)
Itaú BBA Uruguay Branch
Itaú BBA Buenos Aires Rep. Office
Banco Itaú Buen Ayre
Sarbanes-Oxley: Itaú Holding is the first foreign bank listed on the NYSE to attain all Section 404
requirements of Sarbanes-Oxley Act, one year prior to the compliance deadline set by the U.S. authorities.
2
Itaú Holding Financeira – Highlights
Performance leadership is reflected on the high market capitalization and outstanding results
Selected Pro Forma Figures (consolidated) 1
Return on Equity – ROE (% - Y/Y)
1
62,421²
►
# of employees
►
Net income
US$ 0.9 billion
►
Total assets
US$ 125.8 billion
►
Loan book (including guarantees) US$ 49.3 billion
►
Shareholders’ Equity
US$ 12.2 billion
►
Assets under Management
US$ 90.8 billion
►
Market Cap
US$ 42.1 billion
Note: 1 Recurrent ROE (excluding Goodwill amortization from BankBoston
Brazil acquisition)
Market Cap – US$ billion
Note:
1
As of March 31st 2007
2
Includes 2,504 employees from Itau Chile and Itau Uruguay
3
SECTION 1
Brazil Outlook - Macroeconomics
Inflation – CPI-A
Until 1994 inflation in Brazil was a chronic phenomenon that jeopardized production capacity.
3000%
2477%
2500%
2000%
1500%
```
1000%
500%
0%
1989
1990
1991
Year
1992
1993
1994
25%
… nevertheless, after July 1994,
stabilization program managed
to slash inflation to international
levels
20%
15%
10%
5%
3.1%
0%
1995
Source: Central Bank of Brazil
1996
1997
1998
1999
2000
2001
Year
2002
2003
2004
2005
2006
5
Current Account and Trade Balance
From 1981 to 1994, Brazil had an erratic trend on its current account…..
Current Account
US$MM
20,000
US$ MM
10,000
…… despite Brazil’s
favorite trade balance
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
-10,000
-20,000
-30,000
-40,000
Year
Trade Balance
US$MM
50,000
US$MM
40,000
30,000
20,000
10,000
Source: Central Bank of Brazil
Year
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
-10,000
19
81
-
6
Current Account and Trade Balance
From 1994 to 1999, stabilization program based on pegged FX deteriorated current account dramatically…..
Current Account
US$MM
20,000
Inflation Targeting
US$ MM
10,000
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
-10,000
-20,000
-30,000
-40,000
Year
Trade Balance
US$MM
50,000
40,000
US$MM
Despite successful
results in lowering
inflation, current account
became to follow an
unsustainable trend.
30,000
20,000
10,000
Source: Central Bank of Brazil
Year
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
-10,000
19
81
-
7
International Reserves and External Debt
Thanks to higher productivity and world economic growth, the built up of International reserves allowed the
country to reduce significantly its external exposure and ended up its debt with International Monetary Fund
(IMF)
International Reserves (US$bn)
170
US$162bn
130
110
90
70
50
30
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
T otal External Debt (US$bn)
300
250
…. as well as to
reduce its
external debt by
35% since 1998
242
241
200
US$bn
US$bn
150
236
210
211
215
201
150
169
158
100
50
0
Source: Central Bank of Brazil
1998
1999
2000
2001
2002
2003
2004
2005
2006
8
External Solvency Indicators
Since 2002, Brazil has witnessed an impressive improvement in terms of liquidity building important buffer
against international turbulences
Source: Central Bank of Brazil
9
Brazil Country Risk (EMBI+)
Better solvency indicators indeed led to better perceived country risk by international market players
Brazil Country Risk
EMBI+ and Relative EMBI+
1,600
180
EMBI+1445 bps
Relative EMBI+ 168
1,400
160
140
1,200
120
bps
1,000
100
800
80
600
60
400
EMBI+ 211bps
Relative EMBI+ 24
200
40
20
0
0
Mar-07
Oct-06
May-06
Dec-05
Jul-05
Feb-05
Dec-01
Source: JP Morgan
10
Brazil Rating - Moody’s
Senior Unsecured / Foreign Currency
Nov-86
Upper
Inv.
Grade
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Lower
Inv.
Grade
Baa1
Baa2
Baa3
Non-Inv.
Grade
Dec-87
Oct-89
Nov-94
Sep-98
Oct-00
Aug-02
Sep-04
Oct-05
Aug-06
Aug-07
Ba1
Ba2
Ba3
B1
B2
B3
Lower
Caa1
Non-Inv.
Caa2
Grade
Caa3
Ca
C
Outlook
Stable
11
Brazil Rating - S&P
S&P - Issuer Credit Rating / Foreign Currency
-
Upper
Inv.
Grade
AAA
AA+
AA
AAA+
A
A-
Lower
Inv.
Grade
BBB+
BBB
BBB-
Non-Inv.
Grade
-
Dec-94
Jul-95
Apr-97
Jan-99
Jan-01
Jul-02
Sep-04
Feb-06
May-07
BB+
BB
BB-
B+
B
BLower
CCC+
Non-Inv.
CCC
Grade
CCCCC
C
Outlook
Positive
12
Brazil Rating - Fitch
Long Term Issuer Default Rating
-
Upper
Inv.
Grade
AAA
AA+
AA
AAA+
A
A-
Lower
Inv.
Grade
BBB+
BBB
BBB-
Non-Inv.
Grade
Dec-94
Jan-99
Feb-00
May-00
Jun-02
Oct-02
Nov-03
Sep-04
Jun-06
May-07
BB+
BB
BB-
B+
B
BLower
CCC+
Non-Inv.
CCC
Grade
CCCCC
C
Outlook
Stable
13
► SECTION
2
Business Opportunities
14
Infrastructure Business Opportunities
• Macroeconomic stabilization is complete and well based to face international
turmoil due to high level of international reserves and low external debt.
• Nevertheless, Brazil is thirsty for investments in infra structure. The Federal and
State government have no available resources to invest in important sectors of the
economy.
• If Brazil wants to pursue a sustainable path of growth, it has to attract the private
sector (domestic and mainly international) to invest in order to avoid production
bottlenecks.
• Investments in electric energy generation, logistics (highway and railway) are
crucial to seek lasting economic growth in the long term.
15
Electric Energy - Business Opportunities
• Should Brazilian economy grow at 5%p.a. in average until 2010, the current situation foresees a energy
deficit scenario .
Demand Scenario
Energy Supply (average)
90,000
5% GDP
2% GDP
4% GDP
80,000
average MW
70,000
60,000
50,000
40,000
30,000
20,000
10,000
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
……. nevertheless, given the time constrain to build large hydro plants, the opportunity to establish new
thermal plants based on biomass (sugar cane, ethanol) and coal are at large in Brazil.
16
Infrastructure Business Opportunities
• In June 2007, the Federal government along with the Ministry of Transports
launched a very ambitious program named National Plan of Logistics and
Transports (PNLT), for the next 15 years.
Source: Ministerio dos Transportes
Through Public Private Partnership (PPP) and concession grants to private
sector, the government aims to accomplish US$ 86.2bn of investments from
2007 to 2022.
17
Highway - Business Opportunities
Highway Net
1,724,931 Km
Ppp
Paved
P paved
Not
P
Under
construction
196,244 Km
Paved
58, 149 Km
Federal
115,360 Km
State
22,735 Km
Municipal
BRAZIL – Highways
Source: ANTT – Ministerio dos transportes
11%
Highway Conservation
120%
100%
80%
60%
66%
52%
39%
52%
89%
56%
48%
44%
40%
20%
34%
48%
61%
0%
2000Not Paved 2001
Good
Source: CNT 2004
2002
Paved
2003
Bad
2004
18
Railway - Business Opportunities
Extension of 28,977Km as 28,225 Km
concession granted
90,119 cars
2,394 locomotives
11 concessionaires
CVRD – 9,890Km
ALL do Brasil: 7,225 Km
MRS Logistica: 1,674 Km
Others: 9,436 Km
19
Railway Business Opportunities
• According to estimates of National Association of Railway Transport (ANTF),
railway net should have 55,000 Km of extension or 89% higher!!!!!!
• Approximately 85% of the products transported by railways is towards
international markets (exports):
. 83% iron ore
. 8% soybeans
. 7% steel industry
• Envisages window of opportunities for international manufacturers.
20
Banco Itau BBA S.A. Shanghai Representative Office
Room 1009, 10/F, One Corporate Avenue,
No 222 – Hu Bin Road – Shanghai 200021
Phone: +86 21 3311 3466
dcovre@itaubba.com.br
rddamas@itaubba.com.br
Xiamen, 10th September 2007
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